visit coventrydirect.com. welcome back to "squawk on the street." i'm carl quintanilla with mike santoli at the new york stock exchange setting at again da for us today. fundstrat says their conviction that another 10% rally is ahead is getting stronger as we go into the month of june tom lee will break down what's adding to his bullishness. apple will add its newest product and wall street is excited. with the stock at all-time highs, is the enthusiasm overdone we'll speak with the morgan stanley analyst who says this could be a $20 billion

opportunity for the company. and jonathan tisch will cover the state of travel, sports valuations, nat gas, a lot to get to. first a look at the markets. a mixed picture. the s&p 500 hovering just above the flat line. another one of those days where it's the nasdaq stocks that are keeping the broader s&p around the flat line. you do see weakness in things like regional banks, another 3% down small caps suffering, but this a familiar pattern it's the big growth stocks hanging things together. topping the tape, what else but technology apple at an all-time high this morning. nasdaq is on pace for the best first half of a year since 1991. even the s&p is on the verge of entering a bull market, led by tech nvidia, meta, amazon, the magnificent seven as b of a called them last week. the argument on friday, mike, was leadership is beginning to

broaden. >> we saw hints of that. that friday move was definitely macro driven you got the good jobs number this idea we have good economic news combined with a potential fed pause of rate hikes was enough for the rest of the market to do catch-up. not following through today. we mentioned banks giving back half of friday's gain. you have the big growth stocks somewhat overbought. things are looking stressed in terms of that relationship s&p looks like it's overheat coming into today. definitely an interesting breakout in the index. there's always a handful of stocks up huge in a given three, four-month period. what we have now is the unusual situation where it's the very largest stocks that are in that situation. so, that's why they're piling on the market cap and you have the weighted s&p around flat year to date. >> where does it leave the whole seasonality discussion, which we would ordinarily be having this time of year if things weren't this excited

>> we would. you get choppiness in june normally none of those trends have followed through some would point out we actually have seen some patterns hold you had some february weakness, that's often the case when you have a strong start to january so, i don't think that's really the key driver it's much more about we're testing the appetite of people to just own more of the largest, most expensive stocks. >> i loved on friday when you said this market was about subtracting fears. we have subtracted some fears about, say, regional banks we subtracted some fears about the debt ceiling, which is going to result in more issuance, which is, perhaps, going to be worth a quarter point hike you sort of discount a lot of that. >> people keep rolling their anxiety forward into the next potential challenge. there's going to be a big rush of short-term treasury the chatter was loud about it. you did see a rise in yields even when they thought we were going to get a debt ceiling

deal it's the fact people have been shoveling money into money market accounts. if the yields on the t-bills are higher than the yields the fed is offering on deposit at their facility, they're going to just buy t-bills. you kind of solve your problem it doesn't mean that the market shouldn't take a little bit of a break and reset a little lower to me that's not some kind of big, surprising thing that's going to create a market air pocket. >> just classic disintermediation which we've been talking about for several quarters our next guest does see the s&p climbing more higher, becoming more confident we will see greater than 20% gains by the end of the year. join, us is fundstrat global adviser co-founder and cnbc contributor tom lee. hope you have a great weekend. interesting to see your stuff last night you mentioned a lot of different things the price breakout, better leadership on friday, better participation in some inflows. can you rank some of those dynamics >> yes

i mean, i guess the fundamental question we're asking is, you know, on the second week of june, is there still a case for markets to build upon these gains? and i do believe that's the case, carl foremost, i think that the big -- the faangs do the heavy lifting, but i do think breadth is starting to expand. eight out of 11 sectors are above their 20-day moving average, but that's starting from a point of pretty reasonable valuations. we're talking 15 times ex-faang for the market at a time when interest rates seem to be stab stabilizing. i think there's a case for multiple expansion 18, 20 times that and that will get you 20% i also think the earnings outlook is improving it's close to 60% now have raised earnings estimates for the year for industrials it's actually closer to 81%. that's pretty shocking and if we talk about earnings growth improving at a time when

the fed could be pausing and then we know short interest rose 7% last week when you look at futures contracts, i mean, it's all-time high short positions by institutions, i think that's fuel for the big stocks to kind of stay where they are and the rest of the group to catch up. and i think that's actually why markets could advance another 10%. >> right your point about fading inflation came alive this morning in the eurozone ppi data i know this is year-on-year, but going from 5.5 to 1 in a month really speaks to the base effects. i wonder, could we be replicating even some of that here in the states if not for june, then maybe july >> that's what we think is very possible when you look at real-time measures of inflation, there's things like trueflation or professor seigal's use of real-time rent measures, inflation is close to zero right now but it's lagged in statistical cpi.

i think the market is starting to realize there is disinflation and that's going to allow the fed to tolerate -- conditions. but if that's also the case, you know, for the last 18 months, companies have been cautious they kind of did a recession in earnings because they stopped spending i think that's why we could actually -- the cycle. >> tom, even if we seem to be on firmer footing and obviously maybe the earnings threat of a big decline is not really materializing, how do you think we're set up from this level in terms of forward returns there is a line of thinking we really didn't see a full retrenchment in valuations, you know, any kind of real flush through the economy in terms of whatever earnings excesses or -- that we needed to get rid of, we did. here we have valuations are what they are maybe they can be sustained. i just wonder if we should expect the kind of bull market returns we got used to after

previous big downturns >> yeah, i am kind of debating that internally as well. there's a two-step assessment we have to make going forward one of is, was the recession -- consensus view if we don't have a recession, we don't have a further drawdown. we know all this cash on the sidelines and bearish position has to change. that doesn't necessarily mean it's a bull market i think the second dynamic, though, is companies have proven themselves battle-tested they survived covid and the global shutdown. we survived effect on the supply chain. and yet investors are saying, these companies didn't go bankrupt in any of these three cycles -- to me i i think we should rewrite the companies higher because there are severaler governments than countries.

>> finally, tom, i mean, what do you argue -- the bears really lean on the liquidity argument where they look at m2, loan growth being a little sluggish, obviously qt, higher for longer. how much does that weigh on your thesis overall >> those are real effects. m2 is declining. that should really pull inflation first, which is risk on surveys, they were tight into january so the regional banks didn't add that much tightness again, that's something to worry about, i agree now with tga possibly affecting liquidity, i do think that's another short-term thing to watch out for. but i think the one thing i want to be careful of, these might be reasons for markets to consolidate but not necessarily for resumption of a bear trend and i think that's the difference that we see >> yeah.

getting to that bear point has been difficult for the bears tom, nice work over the weekend. nice to check in with you as well that's tom lee from fundstrat. tom will be part of cnbc's virtual financial adviser summit on the 15th of june. you can scan this qr code on your screen to register or just visit cnbcevents.com/financial-advisor after the break, the ceo of luxury hospitality giant loews and owner of the giants, jonathan tisch watching crude today coming off the first negative week in three. higher today on the back of this production cut from the saudis the question is whether that rally can hold we did hit 75 this morning more "squawk on the street" is after this

this is dr. arnold t. petsworth, he's the owner of petsworth vetworld. business was steady, but then an influx of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem? more appointments meant he needed more space. that's when dr. petsworth turned to his american express business card, which offers flexible spending limits that adapt with his business. he used his card to furnish a new exam room, and everyone was happy. built for dr. petsworth business. built for your business. amex business.

continuing to watch tesla this morning the stock up 2.25% it's up for the seventh straight session. it is now up more than 75% this year it is also crossed above its 200-day average. pretty much the highest level since october when that twitter acquisition by musk closed even with that move, the stock is still about 30% from its 52-week high and 215 to 220 area on the chart meantime, consumer demand, business travel, real estate development, just a few of the big themes of the year and they're all converging at the nyu international hospitality

conference our own sara eisen joins us with a special guest from the event hi, sara >> hi, carl, good morning again. joining me is jonathan tisch, executive director of loews and the host of this great event, the nyu hospitality conference thank you for having us here. >> sara, thank you your viewers should know you moderated a panel this morning with six ceos from every major hotel company. you asked all the right questions and got some really insightful answers. >> well, thank you the one thing i learned is that despite the fact -- we talk about it on cnbc all the time, there are macro xik concerns, the fed is raising rates, banks are failing, this business seems to be booming. is that what you're seeing >> business is good. we have a very different business model than some of the companies on your panel this morning. the biggest names in lodging, acore, hilton, hyatt, marriott we have 26 hotels. we're an owner/operator.

th they're asset light. they don't really have real estate investments but we like owning the real estate, we like being a developer, we like using our balance sheets to find interesting deals to grow our portfolio. so, as i said, we have 26 existing we have a few under construction and we are seeing a lot of the trends, the macro trends, the biggest names in lodging are experiencing as well strong leisure travel, business travel picking up, groups, a lot of interest in group travel. we don't do that much international, but obviously it's starting to pick up, as chris said moments ago there are trends that are very positive and we're seeing it also at loews hotels. >> and then on the flip side you have the real estate part of the business that's what's suffering from rising interest rates. >> there was a lot of conversation about low supply coming into -- new supply coming into the industry. it's very hard to get a loan the regional banks were big lenders in terms of construction loans.

obviously they're under tremendous pressure right now. it's very hard to put a deal together interest rates are high. and then all your other costs are increasing, insurance and taxes and then once you get a hotel open, yes, business at the top line is good, but there's a lot of pressure on the bottom line and running hotels, remaining profitable is not so easy. once again, these guys are asset-light, but we own a lot of real estate. we're continuing to do well because of the markets we're in. big in florida, big in texas, more coming in texas and and yet there's a lot of pressure on the bottom line. >> i was going to say, how does it affect your development plans? you said you're still building and you're expanding in this environment. >> there was a moment, as you were moderating a couple hours ago, talking about no big convention center hotels under construction in arlington, texas, loews hotels is the owner/operator/developer of an 888-room hotel with 250,000 square feet of meeting space

the arlington convention center is moving into the building we have under construction. so, we believe in these big boxes. we just opened an 800-room hotel in kansas city that's attached to the convention center we pick our development opportunities very carefully and we have the advantage at loews hotels of having loews corp as our sponsor. and that makes is more paltable to go into the markets and get a construction loan. >> does it say anything on your view about where business travel goes and group travel and big conventions, which people thought would never come back after covid. >> i think it speaks to our understanding of the group traveler in general. my father and uncle started this company some 60 years ago. that was the focus then and it's still the focus for us now we have to do unique hotels. we have a join venture with the parent company of cnbc, comcast, universal. we own eight hotels with

comcast, 9,000 rooms in orlando. we love the fact there are multiple demand generators there are many reasons people want to be at universal, an amazing theme park, great food and beverage opportunities, and eight great hotels, three different price points we love those kinds of markets same thing in arlington, texas, where we have an existing 300-room hotel the texas rangers have our partner. they built a globalized stadium. we're next to the stadium. the new hotel we have under construction is right across the street and then you've got at&t stadium, home of the dallas cowboys, which hosts 250 events a year so, we like these markets where they're not coming for one reason, they're coming for many reasons. >> where are you not that you want to be where are the opportunities? >> we would look to continue to grow in florida and texas. we find the states - >> because of migration? >> it's migration, they're business-friendly states we could do more resorts

big cities are tough right now we have the loews regency here a few blocks from times square where we're sitting. business there is pretty good, but the big cities are slower in terms of their recovery. you've heard a lot about san francisco. i was in chicago two weeks ago where we have a hotel downtown we're getting there. but that's based on business travel there is some stay indications t go on, and so that combination of business and leisure, but the big cities are -- their recovery is a little slower than the resorts. >> do you blame the politics in some of those big cities, chicago, san francisco, even new york >> i'm not sure it's politics. i'm sure that part of it is the perception of crime. people leave the safety and security of their home and they entrust in us as the hotel that we will continue to ensure that they're going to be okay and in these cities, where unfortunately crime is on the rise, they think to themselves,

am i going to be okay making a trip to some of these larger central business districts so, i'm not sure it's a political issue. it's a crime issue, which, sadly, is impacting us in many areas of this country. >> so, what is your outlook on the real estate piece of these as developers and buyers when do you think it market comes back and how tough is it beyond just your portfolio >> it's going to come back in terms of new construction when interest rates go down we'll see what the fed does to keep inflation low, how long they'll continue this policy of higher interest rates. lending is very important, especially when you're trying to build from scratch so, that's going to take maybe a year or two for the fed to accomplish what their goals are. and then you'll start to see more construction. but the demand is there, as we heard this morning supply is low. that gives us in the industry the ability to keep raising rates. >> jonathan tisch, thanks for spending the time for us congrats. >> thanks for hosting. always good to see you. >> you, too.

jonathan tisch, executive chairman of loews with a window into the commercial real estate as well as the hotel demand side of the business. back over to you guys. >> fantastic, sara thank you. our sara eisen. meantime, apple hitting an all-time high this morning that follows three price target hikes on apple since friday. including morgan stanley, which says the stock can run up to $190 evercore goes to $210. we'll talk to morgan stanley later this hour. the s&p 500 doing some house keeping. palo alto networks replacing dish network on june 20th in a reshuffling of the index you see palo alto up 5% this morning. ♪ ♪ 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.

energy's in the green, but giving back some portion of its gains after the saudis pledged more voluntary production cuts we turn to brian sullivan who has made his way to post 9. >> i burned some oil on the way

here, going through staten island because of the turnpike listen, oil's not moving that much we know, mike, you've reported on this, massive short positions in oil so, traders have been bearish net oil. and i think this move by the saudis is kind of a message to them kind much warned us, the crown prince saying they could be ouching, that was his term, to go after heavy short positions with the july cut. and noting, we're going to cut in july 1 million barrels but that cut could be extended past july so kind of a wake-up call to the net shorts. and russia has a lot to do with it because opec, clear from the language, they tried to have this united front. there was a lot of questions about how much oil russia is selling. are they selling more than their allotted funding and, of course, at discounted prices. >> it's absolutely true that's the message to the market. you know, don't be too comfortable being short. i would argue that trend

following is kind of a thing in the short position builds up once you've been weak in price for a while. is there a clear case, though, that today's price is really disconnected from current supply/demand fundamentals >> it depends on what we get out of china i could answer that both ways. the two-handed economists. on one hand but on the other hand u.s., 12.7 million barrels a day, almost approaching a pre-pandemic of 13 million china is up. india is up. is it enough it's clearly not the market will set the price. if we're in the low to mid-70s, there clearly is enough oil to meet demand. opec is projecting a demand increase the death of oil has been greatly exaggerated. russia's quota, carl, is 9.8 million barrels a day. if they're selling 10.5 because they need the money, then saudi is probably -- there you go. saudi, that's for next year, saudi may be cutting in july to

try to counter any oversale by russia. >> what do you say to all the -- i always think of curry at goldman, these bulls who have been - >> everybody's -- all the bulls have been mostly wrong. >> have they been more wrong on demand or inventory supply side? >> that's a great question jpmorgan had the $800 -- that was the worst case scenario. most of the bulls have been wrong. i think citigroup ed morris has been more right than most. i think he's been a little more like, well, there's plenty of oil, right there's plenty of oil. india has been buying up all they can probably then reselling it to other countries that can do it iran is out there doing these ship-to-ship transfers the real question comes back to russia what is russia doing the uae oil minister at the meeting, i obviously was not there, our colleagues were you can watch part of it saying, there's some discrepancies in the russian data, which says underlying,

we're not sure we believe maybe what russia is telling us because i don't think -- russia would never fib about their oil, would they who, me? what no, never. putin? >> on the other hand, the prices bounced a few times -- >> jon fortt, don't steal that that's trademark if you want to know where oil is going, watch natural gas natural gas has crashed because that's a by-product of oil saudis did raise to asia watch what happens in july saudis have proven they're not afraid and willing to go on their own. >> got ya. brian, good to see you we've got a news alert on binance. kristina partsinevelos has the details. >> the s.e.c. filed charges against binance and ceo cz, which he's known for

there are 13 charges but boil down to three points the first point is they're claiming binance's functioning as a securities market when -- or unlawfully functioning as a securities market. the second charge is offering unregistered crypto assets the third point is misleading investors, making investors believe it is an adequately protected database keep in mind, this is the largest crypto exchange out there around the globe right now. the s.e.c. is saying binance mishandled funds did not protect consumers. that's having a negative effect, not only on binance but the entire crypto space at the moment, including coinbase that stock is down 6%. bitcoin dropping about 2.5%. again, the s.e.c. is suing the largest crypto exchange in the world as well as its founders, cz, this would be binance, over violations, 13 charges again, the violations just have to do with, you know, functioning as a securities market when they were not

properly doing so, offering unregistered products and, third, misrepresenting how protected the entire database or platform is for investors. that's having a ripple effect across the space right now carl >> remarkable. yet another chapter in the crypto story kp, thank you, kristina partsinevelos. let's get a news update as well with our bertha coombs. >> hey, carl california's attorney general is investigating whether migrants flown by private plane to sacramento without prior arrangements were sent from florida. he says there could be criminal or civil action against whomever sent them. the migrants apparently had documentation claiming to be from florida governor ron desantis has not commented on that flight last year desantis flew 50 immigrants from texas to massachusetts without notice. prince harry did not appear in a london court today for his highly anticipated showdown with the british press. his attorney says he will testify tomorrow he is one of more than 100

high-profile figures suing mirror group newspapers for unlawfully gathering information for tabloid stories. the supreme court will take up a trademark dispute on whether a california lawyer can trademark the phrase, trump too small. the phrase originates from a comment mark rubio made during the presidential debates the case will pit first amendment rights against federal trademark law. fascinating case, indeed mike >> bertha, thank you. after the break, a moving target on target the resumption of student loan payments has keybank downgrading the retailer the analyst will join us to make his case just ahead. plus, june is pride month. cnbc is celebrating all month long and sharing stories of corporate leaders with you here's host's chief technology officer. ♪ you know, the definition of

the word pride is consciousness of one's own dignity and i think this annual event designates a time to recognize the lgbtq community and celebrate out loud and proud creates great awareness for ourselves and others that we're deserving of love, honor and celebration. and of dignity and i think everyone deserves dignity. re than just a building. it's an ai-powered investment firm with billion-dollar views. a cutting-edge data-security enterprise. yes, with a slide. a perfect location for the world's first one-hour delivery. an inspiration for the next workout cult. and enough space for a pecan-based nutrition bar empire. it could happen. because there's space for any dream on loopnet. the most popular place to find a space.

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

a couple hours into trading, just riding south of 4300 s&p. let's get post to post with bob pisani. >> carl, we're only 12 points from a 52-week high in the s&p 500. apple is one of them it doesn't feel like a new 52-week high butter we're there. two things, i've been away for a couple of weebs in italy, but two things striking. banks had a great run towards the end of last week but they're fading today there's a lot of talk about new rules and higher requirements for banks here, capital requirements might increase by 20% on average none of this is confirmed but this is the story. all of these regional banks are down 2% to 3%. here's the bigger story, though. a lot of the big cap tech stocks are looking very toppy apple and microsoft are still up but take a look at some of the other big names. semis are looking very, very toppy. so, here's taiwan semiconductor

here the important thing here is that these all -- all of these semis topped out at the end of may here this was $104 on may 30th and $100 so we're talking about a drop of 6% in four, five trading days the smh is down 4% in the last four or five days. there's other tech names besides the semiconductors that are also looking weak here's salesforce, the big cap trek that trades down here at the nyse this was $222 on may 31st, a couple of days ago now it's $207. it's been dropping all day this is a pretty significant drop for a company of this size. my point is, we all know how the big tech names, a small group of them have been holding up the s&p 500 and pushing it forward that's starting to look a little toppy right now. i'm very encouraged by the fact that's looking toppy and yet the

s&p 500 up eight points, only 12, 13 points from a new high. carl, back to you. >> yeah, bob, absolutely we await the passing of that baton maybe to the rest of the market one aspect of last week's debt ceiling deal has our next guest worried about target with the student loan payment pause ending in august he sees consumer spending, downgrading the stock to neutral. joining us, the analyst behind that call, keybank managing director brad thomas brad, it's good to catch up with you on this this morning make the case that the student loan repayment resumption is, in particular, bad for target, and also why it's not already in the stock. it's been going down in a straight line for two weeks, seemingly on these concerns or boycotts surrounding the pride merchandise. >> great question. thank you for having me. first of all, as we rolled up our sleeves and did the work on the student loan, it's going to

be a big deal. just to put some numbers into perspective for you, we've come off a retail earnings season where we've heard just about every retailer complain about lower tax refunds. that was, we estimate, a $30 billion headwind for the consumer we estimate the student loans on an annual basis is probably going to be at least $100 billion headwind as we look at target specifically, there are a couple of factors for one, they were one of the retailers that decided to reiterate full-year guidance rather than lowering guidance. as we looked at where other analysts settled out, we feel like they're too bullish and they have not factored in the student loan headwind. finally, we would just highlight that this is still a tough back drop overall target is still sort of getting used to what it is as a retailer with much bigger size. it picked up $30 billion in revenue since the pandemic there's a lot of operational efficiencies to be had on the horizon. it just looks like a much upper environment to the balance of

2023 than we think many people are expecting. >> and just to that point about -- you know, you point out that traffic has declined in the last month or so spending trends look like they're suffering a little bit at target. are you thinking that that's just going to be exacerbated by the student loan think or is it a hickupcup on the social media attacks? >> the student loan has a chance to ruin this holiday season for the middle class we see target as really right in the crosshairs of that potential headwind you know, we much prefer other names that are more value-oriented like walmart or bargain outlet as it relates to other factors that target's dealing with right now, look, they're still struggling a little bit with digital here they did very well during the pandemic

digital comps negative the last couple of quarters in contrast to walmart up 27% last quarter there are other factors here at play for target. >> brad, i wonder, as someone who covers retail how you are incorporating this new era we're in in which boycotts can catch a lot of steam and have real impact because of the way in which they catch fire online i've seen some work lately that, for example, looks at google searches for target corporation and breaks that down by state. is that new? i mean, if it's not new, are you paying more attention to it than you have in the past >> it's something we watch very closely. at keybanc we're fortunate to have weekly credit card data we share with our institutional client we have seen softness at target in contrast to acceleration we picked up in the last week at walmart and all retail it's something we're going to keep watching closely. we're hopeful some of the items

we're reading about and -- >> brad, we did lose your audio there. certainly get the point. certainly negative effect at least temporarily. downside to earnings >> our thanks to brad. meantime, morgan stanley hiking its apple price target ahead of the worldwide developer conference today and putting a big number on how much ar and vr could be worth to them as a category apple analyst eric woodring is with us in a moment. we want to take a look at coinbase shares are at session lows, off 9% as the s.e.c. sues binance, charging the company with operating unregistered exchanges, broker/dealers and ri agencies. coinbase down more than 9% 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? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

when we come back, we're live at apple park in cupertino. deirdre bosa has more on what to expect from the developer conference with the stock at an all-time high, dee. >> reporter: that's right. you saw the stock hitting fresh record highs can a new protect of mixed reality headset keep the rally going? what about ai, what are we going to hear there? we will be tracking it all i've got steve kovacne th xto me when when he come back, we'll tell you what to expect next

your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

apple, as you know by now, set to reveal its first major product in a decade at its annual developers conference this afternoon deirdre bosa and steve kovach live on the scene. dee, let's start with you. broadly, what's at stake for the company today? >> you said it before the break, carl, this is a stock that's trading at all-time highs. beyond that, this has really been the market leadership when we talk about the games, tech has come roaring back and it's been a handful of meg ka caps we call the magnificent

seven. what apple has to do is really deliver. there is such high expectations. there's going to be a lot that's announced but it's all about that mixed reality headset apple has to do something different than anyone has been able to do so far, which is bring a device into the mainstream at a time when apple's iphone sales are slowing, this is a new product launch, the first one since 2015, the apple watch. apple has a lot at stake here. it has to deliver and tim cook is going to have to get on the stage and tell us why we need this and why it's mixed reality. explain for an audience, for a group of consumers what that means. and maybe killer apps, some killer apps so it can bring it to reality why we need these devices, why we're going to want to use them. >> steve, just to that point, why do you think now apple is getting into this space having come after we've already seen a whole hype cycle from meta on things surrounding the metaverse? >> yeah, well, mike, what's going on here is they actually

laid the groundwork for what we're going to see today several years ago at this very same conference they made it possible to give developers these tools to make augmented reality with the phone. that hasn't had a runaway success on the phone there aren't too many apps that use it in a unique way pokomon go might be the one exception. the vision apple had for the last five or six years is augmented reality is going to allow more creativity, more app development. it's this kind of device that can unlock what they really have been wanting to do, that you simply can't do on a phone as far as the financial opportunity, look, we keep talking about how this thing is expected to cost thousands of dollars, while the ones from meta cost $1,000 or a couple hundred bucks. but you also got to keep in mind that it's still going to be tiny compared to the iphone the iphone is still the heart and center of the company. that's where most of the revenue comes from and this is just going to be a sliver of that for the time being, mike. >> meantime, dee, the added question on whether or not they

say anything about ai as the market's obviously in love with that story and wonders if apple has a strategy or if they're just being patient, as they can afford to be >> yeah, the market in love with that story maybe even an understatement they've been obsessed with the story all year we haven't heard a lot from ane not heard a lot from apple some investors hope we will get a little more on that front. in the long-term one of the key success factors to such a device is whether it can integrate highly with artificial intelligence and he says investors have recently been more interested in the generative a.i. push than it has been a head set. we will see if today apple can combine the two or give investors anything on the front of how users will be able to use a chatgpt type of service. >> let's continue this

conversation with our next guest, and he said ar and vr do have the potential to become the company's next $20 billion plus platform and eric, good to have you back. can you help viewers understand how you are telling clients to think about today and what we are going to hear? >> sure. i think your prior guests were totally correct in that ar/vr mixed reality will be the focal point of the developer conference today, not just the hardware but the tools apple will provide those that apple work with. so there are a number of apis out there that will help developers what we want to know today i what does the device look like what are the tools and the

killer apps that we can get excited about. at the end of the day, early on this will not be a mass consumption device, and over time we want to know where apple is building the blocks today because the goal is eventually for this to be a mass consumer device >> you used the word consumer intentionally as opposed to entire prize >> i did there are use cases that exist today in ar and vr and that will exist in the future with ar/vr in the enterprise, and think of apple largely a consumer brand getting into the enterprise. the consumer is the primary customer today, and the enterprise will be a customer tomorrow but the opportunity is bigger for the consumer. >> eric, discuss a little bit

your thoughts about the stock, what is already built in you lifted the price target to 190, and we're just about there. are we pushed against a vacuum ceiling? >> well, call it 5 to 10 turns higher, and that was temporary and we were in a different interest rate regime at that point. we are getting close to what i would call valuation highs, but for me, as i look forward, what really needs to happen for apple is they need to prove that apple is not trading at 27 or 28 times p.e. today, but 24 and 25. apple has to show the upside consensus in the plus numbers, and if there's an earnings upside i think it's hard to make an argument that multiple expansion will be the only

driver that takes us from here to outperformance in the next 12 months you need to see numbers move higher, and the three biggest factors is the iphone 15 cycle, and services accelerating and gross margin >> one of the persistent bear narratives on apple and a bunch of other names is their supply chain is centered in a world that looks increasingly dangerous and moving it can be complex and take a long time how nimble would you say they are being on that front? >> i think apple is moving on the margin, and notice i said margin take the apple iphone, and today about 7% of iphones are manufactured in india, and they are just starting to manufacture new models in india. the goal is to have india to

call it 25% of builds. so there will be a continued doubling of production in india over time, but we are still talking about 75% of iphones being built and produced in china. i don't think that the entire lift and shift out of china is in the cards today, but at least it has to be something that we all consider and understand the risks behind there are other large electronic manufacturers, and samsung, for example, were once big in china and produce in countries like vietnam. apple has not communicated that's their efforts today, and i think on the margin we will continue to see a shift from china to other southeast asian nations. >> important day, important stock, important story we are grateful to you thank you for the time

>> thank you for having me on. after the break, wall street is buzzing about possible new rules for the nation's largest banks. the details when squawk on the "squawk on the street" returns what do you see on the horizon? uncertainty? or opportunity. 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. my name is shannon knight, and i own little knights daycare. carolina sports incorporated.

a paradise for parents. lomita feed, current caretaker and owner. we did not know anything about the employee retention credit. that is a legitimate tax credit. so innovation refunds has really helped guide me through the process. just had to get a few of my records together, submit that, and they made it as painless as possible. i can't thank innovation refunds enough for what they did. your record label is taking off. but so is your sound engineer.

you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire this is cynthia suarez, cfo of go-go foodco., an online food delivery service. business was steady, until... gogo-foodco. go check it out. whaatt?! overnight, users tripled. which meant hiring 20 new employees — and buying 20 new laptops. so she used her american express business card, which gives her more membership rewards points on her business purchases. somebody ordered some laptops? cynthia suarez. cfo. mvp. built for cynthia's business. built for your business. amex business.

wall street is buzzing about the banks today, big banks may face a 20% hike in some of the capital requirements according to a report today with the exact increase depending on the business activities. it would be the latest step to strengthen the financial failure of svp and it's put together a couple winning weeks. >> yeah, and berkshire hathaway is the biggest holding, and the core banks have been working under the assumption that capital requirements are probably going to go up and regulations will probably increase, and defined large as 100 million assets and above on the other happened, regional banks is a group that traded maybe 80% of book value and maybe a lot of that has been priced from the acute stage of

the crisis to chronic -- >> yeah. we're kind of frozen this morning just south of 4300 not a lot of data per se this week, although we will get -- >> no fed speak. >> that's going to make things difficult and interesting. west coast wapner today. we will get a number of major announcements today, many expecting the company to take a big leap into virtual and augmented reality, and rumors of a head set are widespread, and could be new mac books all of this happening as