. good wednesday morning i'm sara eisen with mike santoli live from the new york stock exchange setting the agenda for us, rbc's head of u.s. equities strategy, lori calvasina plus, wall street's china battle the recent slew of negative data has many saying it's time to bail on the country, while others say it is too cheap to ignore we'll speak with craneshare

jonathan krane and following the debt ceiling battle, will it lead to volatility what could it mean for rates david zervos is with us as well. >> markets kind of a quiet opening, but net positive, certainly on the arch stocks there. we've got 70% of all new york stock exchange stocks to the upside, even as the s&p backs off a little bit you have that small cap outperformance continuing, up a percent and a half, after a strong day yesterday and a 3% gain on friday >> and you're watching the vix >> have been watching the vix, which is somewhat related. it's kind of had all of this volatility drained out of it part of that was because for a while, the hugest stocks in the is next were keeping the s&p 500 relatively calm in this narrow channel. a lot of stocks below it, not participating. but the index was stable and now you're just seeing a lot of the hedging demand go away. broader participation, you've got some comfort with that jobs report i guess everyone expecting the fed to kind of go on hold at

least for a meeting next week. so, you can look at that and say, look, this is the lowest level we've printed since before the pandemic, since february, mid-february >> is that bullish >> well, it's bullish when the market is stable and it can go lower. i think that's worth remembering. in up trends, the high tends to be 20, the low is more closert 10 and i think it mostly reflects the fact that markets have been stable for a while, and we essentially feel as if the macro shocks have been absorbed for the moment and we don't see too many scary catalysts ahead of us >> well, you mentioned that part of it is the bet on the skip, the pause from the fed and then maybe they'll go i'm watching the dollar versus the canadian dollar, because that currency is strengthening a lot. because what happened this morning is bank of canada completely surprised the market, just like australia did, and they raised interest rates, after pausing. >> and a lot of people see that as a precursor for what the fed could do in the wake of what's been strong growth there as

well >> yeah, it's a tricky moment. i mean, obviously, nobody has the faith -- some people have the faith that the fed is done, i guess. but it's hard to really make that call at this point. seems like they want to preserve flexibility and be genuinely data dependent for a while >> but seems like the market's okay, either way, even if we get another hike or two, as long as we're not at like 6% terminal rate that, i think, is more of a scary kind of scenario >> i've been saying for a while, it wasn't that long ago that he were going, three quarters of a percent per meeting. now we're talking about maybe a quarter point every six to seven weeks. >> let's continue the conversation with our next guest, who just upgraded her outlook for 2023, upping her s&p target to 4250 and her earnings forecast for $213. joining us now is rbc capital markets head of u.s. equities strategy, lori calvasina great to see here at post nine why the change >> i've been out talking to investors and we go through the numbers. we're very data driven and we felt like we had started

to see a real turn in the earnings landscape and so we upgraded our earnings estimate once we went through that model, it chapnged some of our target assumptions. the earnings number helped push up some of the numbers in our modeling process it was largely earnings driven we are starting to see a rory in the rate of upward revisions you hit 57% upward provisions on the s&p last week. we've got broad participation by sectors. we think we've turned the corner on that earnings story it's funny, i keep getting accused of being this wild bull, which is uncharted territory for me usually i'm the voice of caution. but we did feel like we wanted to communicate the story that we think the market move has been very rationale some of our models point to 4,400 to 4,600 we wanted to communicate that this has been a rational market. we might overshoot our target a little bit, but we think valuations have gotten kind of close to where they node to be >> there's such a strong case, i think for the bulls and for the bears now. we just had bob doll on in the last hour, very cautious on

earnings risks says it's not priced into the market if you look at leading indicators, for instance, this long streak signaling recession. the inverted yield curve, the liquidity issues, there's -- the lag effects of fed policy. there's bound to be a hit to the economy, which is going to hurt earnings >> i think that what's surprising people a lot is both the resiliency of consumers and the resiliency of corporate america. the resiliency of corporate america, the duke cfo series has a great survey where they ask about the optimism on the economy and the optimism of their own company. and it has far outstripped the optimism on the economy. it's a testament to the fact that management teams are really, really good at navigating crises. and think of everything we've thrown at america since trade war, inflation, russia, ukraine, svb, they've got some confidence and i think they deserve it. and there's a psychological element to a recession that we all forget about it's kind of like the snowball effect consumers get worried and scale

back corporations get worried and they start firing people guess what they've got another lever they can pull right now, which is wage growth. and as we're seeing some of the labor market stats starting to deteriorate, you're seeing companies actually say, hey, the labor backdrop has gotten easier they don't have to go right away to firing people consumers have these great cushions they don't have tot get as scared, either >> there's no doubt the cycle is definitely causing people to adjust, the way it's playing out. you say, though, you think valuations are roughly where they should be, right? your target is essentially where the market is, at least at the s&p level. i think the question really is, did we reset last year in terms of valuations, in terms of pricing in an earnings downturn, to the point where forward returns are usually are? >> this is a pig point of confusion on the street. your average investor will say, we need to be trading at 15 to 16 times and i think that math works if you're looking at a model based on a post-financial crisis

environment and using ten-year treasury yields at the single variable you're looking at i have a model that frankly goes back to 1962 it bakes in inflation, it basic in the fed, bakes in the ten-year, bakes in gdp and that long-term history more angsty rate environment gives me a different number gives me about 21.8 times. i tell people, it's a impasse. it's not a gps it's not a precision tool, but tells me that multiples can be meaningfully higher than where most people have assumed we got down to a 16 to 17 year multiple at the october low. i think that was good enough, and now we're in expansion mode. >> and in terms of the small cap emphasis, that's obviously been the laggard area certainly less valuation risk there. what else is going on that makes it timely? >> i think two things i noticed on friday, because we had that monster move in the small caps and one was the unemployment rate ticked up in the jobs report and typically, if you go back to past cycles, small caps lag

early on and it's right around when the unemployment rate starts to tick up and my kind of joke, i guess, is the by the time the unemployment rate ticks up, we all kind of know whatever pain is happening, it's here. we can stop debating and fighting about it. the other thing we noticed last week, the rate of upward revisions hit 50%. we have more than half of the russell 2000 sectors seeing upward revisions they're joining this upward revision party that until recently was something just the large cap s&p 500 part was participating in >> nobody thinks that we have reached the high point of the unemployment rate on this cycle. everyone expects it to get worse. >> if you look at the consensus stats they're anticipating, last i checked, about 4.7% early next year and 4.3% at the end of this year what's really interesting about this, we've been talking a lot about world war ii over the last month or so. and that's the one time, 1945, that the stock market completely ignored a recession, never

priced it in there are a lot of similarities with the covid economy and the world war ii economy and one of the things they had in common was a very, very messy exit jobs got disrupted in that 1945 recession. the unemployment rate went up to about, with i think, 4.2 to 4.3% in early 1946. and that's where it topped out you've had some dislocation to the job market what's expected to happen this time around is actually very, very similar to what transpired back then. >> it's also interesting, because that period has come to light in that it was a very long-term sideways range in the indexes. right, you didn't really break to new highs, even though you did ignore the recession does that feel right we're at levels we traded at two years ago on the s&p >> it feels right. if you go and look at the data, and the inflation data is really interesting if you look at it in that period. we were in the midst of this kind of bad period for inflation ramping, obviously because of the war and everything that happened after and all the stimulus and it was bad in 1945, bad in 1946, but took a reprieve in

1945 and jumped right back i think there are some similarities we have the big withdrawal of government support you know, what was interesting is when we started looking at 1946 more recently, that was bad year in the market and it was interesting, because the market could handle that initial drawdown in gdp, that initial pullback of government spending, and jobs were actually better in 1946 another down year and the market was like, okay, we'll give you a pass for the first year. this has gone on a little bit longer and a little bit deeper than we initially thought. that's really the risk at the end of this year and heading into this next year. it's not that we're completely out of the woods, it's just the market has a pretty optimistic view that the economic data, the gdp data, the unemployment data is going to turn around by early next year. >> so there's risk on the downside there >> yes >> all right, thank you. good to get your updated thinking head of market equity strategy, thanks all right, wells and jpmorgan playing catch-up on netflix. both hiking their price target we'll break down just how far

they think the stock can run in a moment >> then, td keown telling investors two months ago that it was time to short coin base. what are they saying now after the recent downturn? we'll get to that call, plus we'll arhe from the coin base ceo brian armstrong this morning. his rebuttal to the s.e.c.'s lawsuit right after the break. don't go away. dow is up 27 point s&p 500 negative (dr. aaron king) if you have diabetes, getting on dexcom is the single most important thing you can do, and it's covered by medicare. before using the dexcom g7, i was really frustrated. my a1c was stuck. (female announcer) dexcom g7 sends your glucose numbers to your phone or receiver without painful finger sticks

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we are watching shares of campbell soup this morning shares are near the one-year low, despite reporting better

than expected results. the company reaffirmed full-year guidance, while saying price hikes were able to offset declining volume ceo mark cloud telling me earlier this morning, don't expect to see deflation in soon anytime soon, but moderating food inflation still dealing with higher prices on things like agriculture, tomato prices are a little bit higher the snack business is on fire. one thing the market may be reacting to, mike, is that we've been used to the consumer staples, especially the food stocks look at smucker yesterday, double-digit pricing, flat or a little bit higher volumes. campbell's saw down volumes and rising forecast. they didn't do that. part of it, it's not any kind of weakness in demand demand is very strong. it's that they unlike some of their competitors year ago had this inventory rebuild so it's kind of distorting the numbers a little bit

he thinks that's being a little bit misunderstood in the market. but overall, volumes should improve as pricing stabilizes here >> it's also interesting, and i mean, you're seeing things like kraft, heinz, and general mills also down more than 2% today it seems like the group is just, at this very moment when people are getting comfortable about some more of the cyclicals and less interested in taking shelter in the traditional defensives, it seems like it might be exacerbating that idea, because they didn't raise guidance it seems like an excuse. >> that's right. the staples are popular when it's recession woirries and defense mode and we've been going the other way. >> yeah, and if you look at the valuations, they've reset lower. campbell's is back down to a 15 times forward number, above a 3% dividend yield they were kind of paying up for the safety for a while, and now it seems like they're much more in the more normal zone in terms of valuation >> it will be good to hear from mark tonight he'll be on "mad money" with jim cramer but demand trends, recessionary

behavior, they're not seeing it. the snacks business in particular, the kettle ships, doing really, really well. they brought back the limited edition old bay seasoning g gol goldfish, which if you haven't tried, i recommend but clearly there's a high bar because a lot of these companies have been doing really well. >> still a comforting macro message. >> time for a look at some of the notes grabbing our attention this morning, kicking it off with coinbase td cowen calling on investors to shatter it ceo brian armstrong smoke to "squawk box" earlier this morning about the charges. >> to his point about what's the there there, people are using crypto for all kinds of things, not just trading it's a new technology that can be used to update all kinds of financial services bedon't need the government

picking and choosing our technology winners >> let's bring in our own kristina partsinevelos for more on this. now, kristina, the firm did go to an underperform on the stock two months ago this is a doubling down, reiteration of that call >> at the same time, they have an underperform rating there's three major points coming from this report. the fact that researches are expected to decline in 2023. why is that? point number two, retail trading volume really hasn't upticked. if anything, it's going to continue to go down. and there's only so much you can increase tractnsaction costs off and third is the s.e.c. overhang maybe you can argue, this s.e.c. litigation will take years to pan out. obviously, that's going eat costs quite a bit, eat into margins. however, on the flip side, coinbase has been anticipating this it's been months since they received that wells notice this shouldn't be a major surprise the other argument, because there's both sides, some people

actually like the name, like kathy wood, is that overall, with coin base, you have a lot of crypto capital that already left the market. that kcrypto winter. how much more could it possibly fall and maybe this is already priced in, the drop of crypto prices, we saw more specifically with bitcoin and ether. >> kristina, that point about the declining trading volumes and also the fees they're collecting on the retail trading volumes going down, that's been part of the bear case, even outside of the regulatory story, almost from the beginning. soy wonder if there's any hope that that turns at some point. >> excellent point that's probably why we need to focus on the name and not necessarily the s.e.c. overhang. going forward, yes, coinbase has more exposure to coinbase and ether. that can be seen as positive, since they weren't listed in that lawsuit but to your point, is everybody going to just turn around and take all of this discretionary income and throw it pack into crypto probably not >> what's the worst-case scenario here, as played out by

the analysts can they get an injunction to prevent them from trading tokens >> that was in that cowen note many have said that that would be the worst-case scenario the injunction, which would stop the process. but the other thing, too, is the accord the alabama securities commission as well as nine other states put in a cease and desist yesterday. so pretty much coin base has 28, 27 days now to figure out their staking program, which is really just earning a revenue for holding certain cryptos and so that's something that they may lose a lot of revenues on, just in the next month or so. >> anecdotally, i know people have done the same thing and have had really bad experiences with coinbase relating to it lost money >> did they understand it? i feel like trying to explain it in one sentence on it have is a little bit difficult in itself and getting involved with, you know -- >> but that's on coinbase. it's going to cater to retail investors. >> and retail traders, too >> it also does fit into what the s.e.c. alleges

by you saying, will we make it easier to do that complex thing, that was almost like selling a security >> exactly >> kristina, thank you >> thank you let's turn to netflix. the stock notching a 16-month hike after price target hikes from jpmorgan and wells fargo. jpm calling for an 1% upside to the stock. estimating that of the roughly 100 million borrowers, they can flip 14 million to paying customers this year and 33 million by 2025. wells fargo sees as much as 25% upside, looking closing at ad share gains, predicting as much as 8.7 billion up for grabs. joining us now is our own alex sherman. alex, you know, boiling it down, they're actually charging for their service, more than they have in the past also, there's a sense out there that it's by far the cleanest story in streaming, i guess. given that they're kind of the incumbent. >> yeah, i mean, i would go beyond the word "cleanest. i would say, it's the winning

story in streaming i wrote a piece for cnn -- sorry, cnn's on my mind, cnbc.com earlier, a couple of months ago, basically saying the streaming wars are over in terms of all of the different media companies throwing out all of their resources to try to get as many subscribers as possible and netflix has won. i mean, netflix is a profitable, now positive cash-generating company that's now in some ways once again a growth story. and that's why you're seeing the price increases here from analysts today there's two new growth avenues for this company one is password sharing crackdown. that's happening realtime. those notes have gone out to customers in the united states, saying that account holders either need to pay $7.99 per month to share their account information or break off that relationship and whoever was using their free netflix is going to have to buy their own account. that's one avenue of growth that

could elite to ten lead to tens of new subscribers for netflix and the other is this new advertising tier that's opinion around for less than a year that costs $6.99 a month. and why that's important for netflix is that the company just last quarter said, they actually make more money from an arpu basis on the ad plan than they do on their standard plan. that is potentially a big growth avenue here, because what it means is that netflix could come out with additional advertising plans and really push their less-expensive product, to now all of these millions of people who now want netflix who have been mooching to get netflix, now they have an avenue where they can pay just 7 bucks a month, and netflix is more than happy for those customers to pay $7/month, because they make more money when you add in the advertising revenue than they do if you do the ad-free version. >> it's kind of amazing. some of the estimates in 2025 for earnings getting to $25 a

share for netflix. all right. used car prices tapping the brakes once again. we'll tell you what the new data means for buyers that is next >> also, watching a firm spiking after amazon pay added a firm as a payment option at checkout the stock is up 13.4%. that's familiar. haven't they done this before? affirm and amazon ex >> i think it's a different iteration of it. >> market likes it wehle be right back. 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.

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new data out in the last hour showing used car prices fell for the third straight month in may phil lebeau is with us and has more and it's kind of -- they've kind of become a barometer for overall goods inflation since covid, phil. >> and yeah it's really, you can see moving lower and lower and don't be surprised if we see it move lower throughout the summer this is the latest data from cox automotive who tracks through the manheim used auto index.

pricing in the month of may was down 2.7% compared to april, down 7.6% compared to last year. by the way, it is the lowest average price this year. so we do see that pricing moving lower when it comes to the used market but keep in mind, what we're talking about here is the whole s.e wholesale market that's where dealers are buying used vehicles from each other and they will turn around and sell them to customers dealers are seeing the market soften, if you go to the retail side, which is the price you and i pay if we go out to buy a used vehicle. those prices are unchanged versus last year that probably is going to be changing as we take a look at some of the largest auto dealers. we're talking about auto nation, group one, penske. the reason that it will be changing is because the new vehicle inventory now stands at, what, 41-day supply. 45-day supply, excuse me that's a 48-day sbroincrease -- 48% increase compared to last year this is what impacts used

vehicle pricing and demand it's how many new vehicles that are out there. because it was so depressed for so long, mike, you're now just starting to see more special election out there and saying, going, i don't have to go used if i can do new and like the pricing on it, i will go new >> i have been long awaiting this hopefully, it continues. thanks very much time now for a news update seema mody has that for us >> here's the update at this hour golfer rory mcilroy says he still have confidence in the pga commissioner following yesterday's shocking merger with liv. he says he still hates liv but that a merger will be good for the game of golf >> from where we were a couple of weeks ago to where we are today, i think the future of the pga tour looks brighter, as a whole, as an entity. >> florida governor ron desanta will make his first tip to the u.s. southern border as a

presidential candidate today he will meet law enforcement officials during a visit in arizona and it comes after desantis sent more than 1,100 florida national guard members to texas last month to help the texas governor with a border initiative there and a senior ukrainian official is warning the floodwaters from yesterday's dam collapse could disturb and explode land mines and spread infectious diseases. tens of thousands of people downstream from the dam have been evacuated to higher ground. ukraine is blaming russia for its destruction, but russia claims ukrainian artillery caused the collapse. a wall street china battle, moanayits o eato ignore we'll speak with ukraine's ceo about what's ahead for the country following his meeting with the u.s. disorder to china. that's next.

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welcome back european markets closing just a few moments ago. mixed session boosted by a rise in retail stocks up 3% in today's trade. the world bank shaping part of the narrative, cutting its 2024 global growth forecast as rate hikes temper optimism. board member isabel snabl telling a german newspaper, we have more ground to cover on

interest rates they have their stories straight backing that up is germany's disappointing production numbers for april. a meager rebound weighing on sentiment with the possibility now of an extended recession the story abroad today that we want to focus on is in china exports plunging in may, fallinging from a year ago, far worse than the 0.4% consensus estimate, mike, which makes you wonder, obviously, about the strength of china's rebound. exports and manufacturing are a big part of their economy. but also the rest of the world, too, because it reflects demand coming from abroad we also got some trade data from the u.s. this morning. april trade deficits soaring 74.6 billion in april, which was a big jump from march. exports tumbling obviously, prices came down, though imports, though, also were down sharply from china they were off little bit overall. >> definitely not getting much help from the china growth story. although, it also has kicked up talk, of course, of another

round of stimulus from china >> and whether they can inject enough liquidity to offset a liquidity that we're worried about in the united states >> exactly >> with the t-bill sale. >> sticking with china, morgan stanley and goldman cutting their targets for china's index. all of this as we get ready for the country's flexion inflation report now joining us here at post nine with his outlook, jonathan krane. good to see you. where does that leave us the market has suffered, but then you have others saying, it just looks cheap now >> absolutely. i think the export numbers that came out, i think part of that has to do with global situations and demand out there so it's not just about the china opening up story i just actually was -- i just visited china two weeks ago for the first time in three years. and i was amazed to see how

everything has come back strong. everyone's back to work, a lot of traffic jams, restaurants are full and, you know, the story of china coming back and opening up is real. i think some of the initial numbers might have been aggressive, okay, and that's why everyone is saying, is this really -- is the opening up story as strong as we anticipated? i think what's going to -- i think everyone's going to be positively surprised second half numbers. it takes time to open up a little bit, you know >> yeah. i mean, i guess the question, too, though is, it comes along with this more long-term idea that, you know, there's just kind of a separation underway, in terms of disintegration of the economies, you know, us restoring, things like that. essentially, this idea that it just seems like less accommodating for our capital over there >> yeah, i think al of the focus

is geopolitics right now and i think the opening up story the beginning of this year was very strong. we saw a lot of flows into ckran s kraneshares and you had a geopolitical event, the balloon, and since then, a lot of focus -- the overhang on the china markets from a global perspective has been geopolitical i think that has to get solved i know secretary of state blinken is going to be making a trip in a few weeks, which is definitely a positive movement and so diplomacy is going to have to, you know, take over now. there needs to be a stable, good communication relationship but trade keeps increasing between u.s. and china i think we're, you know, we're co-dependent on each other, okay, first and second largest economy. a lot of the s&p 500 companies, their growth is china. and that continues

so, you know, china's here to stay and, you know, we see a lot of opportunity. >> but it's not going to get solved, right? there might be a little bit of a thaw and a little bit of easing tensions, some sort of diplomacy, great but the overall direction we're moving in is not good. and i wonder as an investment manager if you worry about regulations or restrictions on americans being able to invest in chinese companies and what that would do for your etf >> yeah, i think that, you know, is an issue. i don't think that will ever happen, okay you know, i think from a china perspective, they want to participant in u.s. capitol markets. i think that the pcob issue that people have talked about where the audits -- that's going to get solved and they're already in process the first round. and so i think that can go into a positive direction within but i think, you know, i think

stability around the relationship and communication -- when we say there's communication is a start on the right path. >> and we've been talking about all the ceos from our country that have been -- >> the latest. >> yeah, definitely. and you have al of -- al of ceos from the financial industry are going over there china is the fastest growing asset management, wealth management market in the world today and global banks need to be there >> what do the flows look like now? >> the flows for etfs, you know, we've had some outflows this year, okay we actually had a lot of inflows at the beginning of the year and then there were some geopolitics. so we see these marks in china oversold it's incredible entry point right now, to come into, you know, funds like k-web you know, the consumer is back in china look at the government yesterday

or lowering deposit rates to trigger more spending. you're going to see stimulus there's a lot of dry powder with the chinese government right now. so, they're well positioned with a lot of tools right now to, you know, expand their market. >> it's a familiar play book >> john, good to see you >> thanks for having me. >> thanks very much. ahead, tech ceos all agree there's one piece to winning the ai race. we'll break down twhat that is, next >> plus, june is pride month cnbc is sharing all month long in sharing stories of corporate leaders with you here's jim fitterling. >> showing pride is one way that we can show the dplgbtq+ communy that we all support and respect each other for our differences, whatever those differences may be supporting pride gives hope and reassurance that each of us can be our best, because we are accepted as who we are, our true

and whole selves it comes down to simply treating others how we want to be treated ourselvewi eat, detaing, and compassion.

tech companies stressing that the next lag in the ai race is all about data. that's the focus of today's tech check. deirdre bosa here with that. >> mike, it's something i hear over and over again these days

your model, your large language model or generative ai model is only as good as your data yesterday i was at the bank of america tech conference here in san francisco, talking to a number of ceos and analysts, a lot of that discussion focused on artificial intelligence dynatrace is clean by some analysts as a clear leader in the ai space ceo rick mcconnell told us about the importance of that data. >> generative ai is going to enable all companies to compete more rapidly, develop applications faster, get to market more rapidly. so i think all of that's true. what is interesting, though, is that the digital transformation waves, they are creating an explosion in data, and that data needs to be analyzed and analyzing that data is going to require more and more automation and ai can bring that degree of automation >> yeah, how do you crunch all of that data and collect it all?

to that apppoint, i spoke to microsoft ceo about how cloud developers can accommodate these huge amounts ofdata that generative ai engines require. i asked him also more broadly if capex will increase for them, as part of this shift >> absolutely. and i think you will also find that companies like us, who are looking to deploy ai to be more productive, will add to the capex. we'll make sure to provide us the capabilities to drive to ai requirements that we have, with this open ai through any other mechanism that we want to have so productivity of companies has always drawn investments as we look at it as what kind of and an capex spending on the cloud. >> presents an interesting

dynamic for some of the largest cloud companies and big tech companies that are going to benefit from the shift to generative ai, because of how much data they have. but their costs will go up as they have to accommodate and build the infrastructure, new infrastructure to accommodate the shift. i know you've been talking all morning about that bernstein urging the company to tighten its strategy, if that is the goal in that generative ai shift, it's hard to think of someone who has more of it than amazon, but plays into that dynamic that they have a huge opportunity here, but their costs could go up as well. >> >> i'm sure. i wonder how it does break is it all in favor of the largest scale players that has the capacity to invest what could be invested? but the market wants to say, who's going to be selling all the actual hardware and capacity to these guys? >> yeah, and you know, that's a question that comes up a lot is, who's going to kind of dominate, ultimately, in this shift. is it going to be the big players that are selling the software that have access to all of this data

if you're a new company and you have to start by collecting data, you're at a disadvantage here so, you know, the obvious winners here are the big hyperscalers that have been collecting this or the google searches that have years and years, decades of data but also, yeah, the hardware, mike, because ultimately, and we're not seeing that take place necessarily quite so much this year, it's been flat, capex. but in the years ahead, hardware could benefit as you get the sort of servers in the back end up to speed. >> deirdre bosa, thank you after the break, are we in the calm before the storm? investors are bracing for a flood of more than $1 trillion worth of t-bill sales some could s say could disrupt what's been a low volatility market. david zervos weighs in after the break.

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welcome back while the debt ceiling fight may be over, but there could be some aftershocks that investors are watching u.s. treasury set to reserve $1 trillion in treasury bills to use up its cash reserve. is this going to suck liquidity out of the system? joining us is david zervos a lot of hand wringing over this shall, david is it justified? >> i don't think so, sarah i think we all knew the debt ceiling story was going to be,

you know, a drama that came to a close as it did. it was posturing politics and that's how it ended up and i think the treasury market knew that. the treasury market prepared for that we know there's going to be an onslaught of issuance. the treasury tries to be this is priced into the marketplace so i do not see a huge impact particularly as we move out past the bills in the two-year mark. >> it could also come from money market so that is not necessarily certain either. what do you make around the repositioning here of the fed? we turn to you on monetary policy. what do you think of this idea that they will pause in june, raise in july and then what, pause? what should we ask that?

expect? >> i think the last time we were on i saw you speaking about this concept of a skip versus a pause and i don't really know, but i do think the skip makes a lot of sense when thinking about it through the lens of the federal reserve. they have had a lot of success and we are down from 9.1%, one of the fastest this inflationary periods in postwar history. i think they can rest easy and if they need to, do another 25 in a future meeting. i think they can do that and i think they will retain all the credibility that they have maintained and possibly even enhance his disinflation fight began. >> hi dave you mean in june

assuming they don't move on rates there's no need for them to necessarily heavily hence they are poised to hike again in july. >> i think that would be the easiest thing for them to do. they like that open ended nest. watch the data and see how prickly the various inflation figures are calming down. you look at the ppi and it's coming down really fast. i think they are going to get a breather here and the market is giving them a lot of credibility. money that breaks even is at 1.9%. the market is telling you that the breakeven inflation rate is less than 2% so i think that dad can rest easy with that. it does not mean they are done. they will talk honestly that their job is not done but it gives a --

>> australia went again after a skip and now the odds are arising that they will go even more. >> the world is not as bad as the doomsayers would have us think. there's plenty of people with big, nasty recessionary calls and they have been postponing it area by area, but things come out okay. very robust which i think is helpful. i'm not going to get too hot and bothered about a prognostication bout a succession. i think for the fed's reaction function which is what i spend my time thinking about i think they have a pretty good case for stopping, thinking, being a little bit more prudent and just taking it easier on the economy.

the mistake now is probably to go a little bit too far. they have done a good job of getting inflation under control. i don't see the rush and they can come back and give us another 25 if it's not moving as quickly as they would like. >> reporter: david's arose, thank you very much. >> before we had to break we just want to send our thoughts to the family and friends of ivan menezy. american national. he joined -- after its foundation in 1997 and led the company through multiple accusations as well as a big shift toward sustainability. he was only 63 and set to retire this month. he will be missed as a longtime cnbc guest. w will be missed. weill be right back.

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in place. >> reporter: millionaires are bullish on the rates right now, bearish on rates in the economy but mixed on markets. 30% of millionaire investments said the market will be down which is much better than the 69% read we got back in december and in fact 48% now say the market will be up this year at least five percent. they are still bearish on the economy and inflation. most of the economy will be reacher or much weaker at the end of this year when it comes to their investments they are very much defensive right now. their short term cash equivalents like money markets and cds have nearly doubled from one year ago up to 24%. they have cooled on crip go. not surprising there but they are not worried about any further fallout from the regional banking crisis. more than two thirds they say they are neutral are not concerned about their own to posit after svb and other

failures. you can read more about our survey findings at cnbc.com/millionaire survey. guys? >> robert frank, thank you. speaking of millionaires are bus today is on martha stewart laying in on work from home. the whole debate thing america will go down the drain if people don't return to the office. she was comparing it to france and saying well they take off the month of august and all that stuff and we don't want our country to go down the drain like france. >> we don't want to lose our edge. i guess she figures home is for gardening and cooking. at one point she did run a publicly traded media company so it's just not that she speaking out of nowhere. >> i think a lot of people are amen to that and one of her other points is its impossible

to get all her stuff done from home. as for the market, the dow is hanging in there. s&p is negative but we are marching in place around these numbers. with that we will send it over to scott lochner and the halftime report. >> thank you very much sarah. i'm scott wapner. the s&p 500 flirting with 4300 and nasdaq has its longest winning streak since 2019. we discuss and debate where your money golems -- we are money goes from here. we have with us for the hour several guests. it is now one of the highest on the street as a market. we will discuss in a moment. let's check the markets. the tao is good