cuba blinken meeting with xi and a wall street firm is cutting the growth for the world's second largest economy. and the search continues for the missing submersible on the dive to view the "titanic. it is tuesday, june 20th "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 andrew is off today. the markets were closed yesterday for the juneteenth

holiday. this week is a tame week with the data you had the fed decision last week and cpi and ppi well, this week, we are getting housing starts this morning for may. that is coming at 8:30 a.m. eastern. if you want to see what is happening with the u.s. equities ahead of that, you will see red arrows dow futures indicated off and the nasdaq is down 84. as joe mentioned, we are coming off a strong week for the markets. despite slipping on friday, s&p added 2.6% last week i think 4,409 is where it closed the index had the fifth positive week in a row. if you talk about the nasdaq, it was up more last week. it was up 3% the eighth week of consecutive gains. that hasn't happened since 2019. treasury yields after the fed action last week 10-year treasury is below 3.8%

>> good bull market starter in the fed. you are throwing the stock market which does not believe it >> they think they are done or almost done. >> or despite the best efforts to cause a slowdown or higher unemployment it is not working. that would be a good thing for most stock markets, a good economy is a good thing. >> or two stories. the stock market listening to the fed. that is 493 of the s&p 500 more stocks down than up you have some boosted by a.i. in particular the fed versus a.i >> under the surface of 4,409. no doubt 4,409 is still where it is today. we will see if people ratchet it up there is one thing talking about revisiting the october lows. there is another thing of a 10%

correction that doesn't bring us near the october lows you have to ratchet it up. katie stockton ratchets up the support levels. >> as the trend goes >> you know, we don't want to disparage technical analysis we said this before. you know, maybe we will change to more bullish and the market has another 5% we missed 20%. the trend will finally recognize the trend and say we're in now you get 5% of the 25 that doesn't help anyone >> look at melting up. the one-year chart >> maybe amy wu silverman is looking at a melt-up. a rare call. as usual, people are holding out for the lows it is tough to be bullish and you are wrong and the market sells off. when you are bearish and the

market keeps going, it is like a fever. they keep coming on the show no, i still say it and finally it is horrible to throw in the towel >> or the market reverts. >> yeah. goldman sachs is the latest firm to cut growth in china. now expects 5.4% for 2023 versus the expectation of 6%. the world's smallest violin. goldman sachs is joining the list of banks cutting expectation. china adding to a recent wave of easing from the central bank cutting lending rates for the first time since august of 2022 to help boost its economic recovery this all comes as secretary of state blinken wraps up two days of meetings with chinese officials, including president xi

uni eunice, if i hadn't changed my view a little on it and we talked last week -- i'm uncomfortable with the total de-coupling because it is different for everyone the chinese are different from the ccp. it looks like the biden administration has the viewpoint. unsettling things are happening in cuba. the president made strange comments about the balloon it was more of a mistake i don't think -- it looks like there is thawing of it looks like a beautiful thing. it looks like we're getting along. >> reporter: it looks like it. temporarily. secretary blinken's trip pave aan -- paves the way for more officials to come here in the coming weeks he had two days of meetings with chinese officials. you suggested the highlight being the meeting with the

one-on-one 35-minute meeting with xi jinping. both sides have said they recognized that there was a need for some stability to be injected into the relationship secretary blinken described it as a point of instability that the relationship had fallen to the foreign ministry has been quoting president xi saying some progress has been made on issues there were not a lot of details on the issues. the foreign minister said today that china is willing to work with the u.s. on increasing flights. something that would obviously benefit their business environment as well as the economy. in terms of the visits, secretary blinken did not elaborate on who might be coming china welcomed and open to treasury secretary yellen or commerce secretary raimondo to

come here and help on the economy. in terms of the military exchanges, secretary blinken repeatedly brought this up during the trip as he has in the past the military-to-military exchanges are important and they should be able to speak face-to-face he said china wasn't interested in that level of discussion. in fact, afterwards, the foreign ministry told reporters that it is really the u.s. fault that this situation on the military front has fallen so far. that the u.s. sanctions are the stumbling block between the talks with the pentagon and defense minister here. >> cuba must be an attractive place for missiles and back in the cold war it is too close to us.

why aren't we talking about this >> reporter: i don't know what you're talking about >> the white house -- blinken comes back and this is happening and the white house declines to comment? this is not relevant >> reporter: maybe from bleng inken's perspective, did not speak about that the spy balloon, it is done and dusted in terms of the chinese perspective, there was not a lot of coverage of that. the p otential for the article in the past, they commented on the china -- >> whoops. >> you know, the only thing good about cuba for joint military training is it is 500 miles from

florida. a lot of places in the world for the joint training facility. that's unsettling, is it not >> yes >> you can take a remodelled '56 ford and sail it from cuba to florida and people have tried. >> yes. >> it doesn't hold a lot of people it is not very far. >> 90 miles of >> not even 100 miles. berkshire holdings in h mitsubishi and mistui and three our companies are above 5% holdings warren buffett traveled to japan in april to meet with the executives of each firm and said

he was boosting stakes in each of the companies at that time. it will invest in each of the firms as much as 9.9%. a lot of people did not think the returns would come quickly you see all of the trading houses higher on this news. when we come back, the market cis coming off the strong meeting. muhamed el-erian will join us. muhamed el-erian will join us. you are watching " dad,"squawk this.n cnbc >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most. we got this. we got this. we got this. yay! we got this.

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and we'd have a better view. do you need mulch? what, we have a ton of mulch. welcome back to "squawk box. futures are weaker this morning. dow futures off 112 points s&p down 16. nasdaq down 67 stronger than 15 minutes ago the markets will focus on jay powell this week he is heading to the hill to talk about the monetary policy the bank of england is set to hold its policy meeting as well. our next guest says it sis a tricky decision. we bring in mohamed el-erian

specifically, your problem with powell's testimony, not testimony last week, but what he had to say to the markets last week what did you not like? >> i called it confused and confusing. confused because they said three things that are internally inconsistent on the one hand, they increased the inflation forecast they increased the amount of hikes, but they did not hike that was inconsistent set of outcomes confusing. look at the reactions in the marketplace. you have those who believe this was a committee outcome. it is what a committee would come out when the chair is trying to please everybody and you end up in the middle those who think they are signaling a high inflation target those who think they are making a mistake. you saw the difference with the

bond market and equity markets it it is confusing and confused we wait and see what happens next. >> if you look at the forward looking stuff, it looks different than the backward looking stuff and we're confused where things stand >> that is the critical usissue. if you are data dependent, which they are, you have serious outcomes the data is fluid. data never gives you month to month a clear direction on the consistent basis of you heard me say over and over that it is not clear the answer of the fed we know the framework is outdated, but they have not replaced it. that is how you end up the key issue, the equity market does not believe they will deliver two hikes.

the equity market interpreted last week a pause, not a skip, but a pause. when push comes to shove, they believe this fed will be less hawkish than the bond market believes that is the difference in the marketplace. >> mohamed, goldman sachs had a note over the weekend suggesting the inflation in the united states will be more stubborn than the markets are pricing in. they believe it is too optimistic do you believe that? >> remember the transition, becky. it starts with a few items it gets embedded in the goods sector and then jumps to services there, inflation becomes less sensitive to interest rate increases and more embedded. the good news is we also got, like you said, the cpi print and service inflation moderated. i think there is a general

recognition that inflation will be higher for longer there was no discussion yet is will it be stable higher or variable higher. that is something that a lot of people will pay attention to, including me, because that has different implications for what happens to the real economy. >> what happens if it is variable higher? >> if it is higher and more stable, then we can continue and the markets can do well. the economy can navigate through that if it is higher and variable, that will confuse signals and cause headwinds for the markets and economy. i know there is not much willingness to discuss the central banking world is 2% inflation target is too low. we are living in the world of supply constraints if we were to formulate a new

inflation target, it would be higher than 2% it would be 3%. >> at 3% so let me ask you, are you worried about the financial sector are you worried if they continue to raise rates that it will put an undue amount of strain and we will have more issues in the banking sector is that not a concern or are you worried about the inflation? >> we are in the midst of the trilema. you have to take into account financial stability. i think the banking system issue, that is why i don't like the word crisis. it was localized it is not a banking issue as a whole. you covered commercial real estate the system opt mimized a world with very low rates and no

inflation. also contracts were made on that basis and when they have to be refinanced, you have a reality check. i live in the uk right now where, as you know, interest rates have gone up a lot the bank of england is expected to do more we have a major mortgage squeeze because people are on short-dated mortgages and you have to refinance. we had a pension issue six months ago there are different segments of the economy that you have to get used to the new paradigm of higher for longer. >> it is concerning, but we appreciate your time we will talk to you soon thank you. >> thank you, becky. coming up, the results of the survey showing progress in diversifying the number of black executives and board members "squawk box" is coming right back

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corporate america is making progress survey from cnbc that executive leadership council find 75% say blackboard blackboard members increased after the death of george floyd. joining us for more is the executive of the leadership council. good to see you both. >> thank you >> we were talking about that with my friend, chris. the actual ceo is not representation in the 500 is not

any where near >> no, it is significantly less. 1.6% there are opportunities. >> you have to start at the board. >> absolutely. >> how have you made the progress what do companies -- i saw the results of the polling and at least 55% of companies say they are trying to do this with the board. slow progress? >> there has been progress in terms of board representation among companies of it is increment at nd slow, but progressing. the membership was 7%. in 2022, it is at 11.9%. relatively speaking, it is more,

but slow in terms of opportunity. >> how do you do it? what is the game plan for increasing it? how did you get this far >> it all begins with intentionality it requires all of the parties paying attention to it i think there has been a significant focus on increasing it and as a result, we have seen the progress as michael said, it is incremental improvement. if you think about it since the murder of george floyd, it has been a little bit on an ex accelerated pace >> would you expect the c-suite to follow if the board goes and then it follows with the c-suite? >> we absolutely believe the board helps drive what happens in organizations that is why it is critical to diversity representation at the board level. >> six years ago, there were four black ceos of fortune 500

today, there are eight again, it's progress chris, as you know >> georgia power for years >> in terms of parity, as she refe referenced, the opportunity for growth is significant. i think 14% of the population is black and black ceo population should be closer to 37 >> do you remember all of the money pledged? >> we do >> how much has happened >> you know, i think it is spotty at best what is missing is we have no one who is actually measuring what actually happens to those km commitments? >> why it doesn't seem that hard. the money can be used for this. >> again, it is our hope

i know the eeoc they will honor the commitments and we are asking questions of the organizations to say what is happening with that money and commitment again, it has been three years and we are hoping they will honor the commitment >> michael, the progress three years ago is good progress or anticipated or behind? >> i say progress is good progress because it is forward as opposed to -- over the years, if you look at the 12-year period of time, it was flat for a long period of time now the uptick has happened. it has been slower than we like. i will honor progress when we were moving in the right direction. >> what we heard in the past is companies say we could not find

qualified candidates that is code for we're not looking. what is your situation >> i think the issue relative to eligible candidates. with the eeoc and the members we have with 115 of our members are on 169 board seats that is growing because of the corporate board initiative to give the members the opportunity to develop the skills set there are plenty of eligible people it is connecting with need >> i think a lot of other things you can do with the money. capital for black entrepreneurs. we talk about it all the time. use some of that for that.

you need to go back and say he said this. let's get started. >> we agree with you i can tell you the eeoc is doing that we have some wonderful corporate partners you know, we will be partnering with them to ensure they are honoring what they committed we have powerful members who are doing really amazing things in corporations we will partner with them. we made significant progress and committed to the journey >> good to have you in studio after the last couple years. >> thank you. >> it is always much better of the. >> yeah. we are excited to be here. especially after the positive news on the number of fortunate 500 black ceos tremendous he prprogress we look forward to come back when we doubled that number.

>> gale king, thank you. we have a number of issues ahead with the ceo of raytheon at the paris air show. we will also speak with chris christie who is now making a run for the white house. "squawk box" will be right back. ! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com how can you sleep on such a firm setting? gab, mine is almost the same as yours. (we did it) almost is just another word for not as good as mine. the queen sleep number 360 c2 smart bed is now only $899. plus, 48-month financing on all smart beds. shop now only at sleep number only at vanguard you're more than just an investor you're an owner. that means that your priorities are ours too. our interactive tools and advice can help you build a future for the ones you love.

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well come back to "squawk box. world's aerospace leaders at the paris air show phil lebeau is there and joins us with a special guest. hey, phil. >> reporter: joe, ceo joining us today. you have a lot to talk about on the commercial side with pratt & wit whitney. i want to talk about secretary blinken meeting with president xi you said we can de-risk, but not de-couple? >> what is important for the american people to understand is the relationship with china means we have to find a way to get along.

rare earth metals. $500 billion of trade comes to the u.s. every year. we talk about p pulling supply chain out of china and res resourcing out of china we have been de-risking for years. unlike russia, where we pulled out two weeks after the invasion and shutdown factories and pulled people out and completely cut off contact with the russian customers, we can't do that with china. too big. too important. too necessary to the u.s. economy. >> reporter: do you think the biden administration has a game plan for de-risking and not de-coupling? >> it was interesting to see secretary bleinken go to china and have the discussions we have to find a way to partner with people and have cons constructive discussions wrought

conflict i think the -- discussions with people without conflict. i think the fact that bleinken made the trip and spoke with xi, that is progress we're not done at least it starts us back on the path of civility >> reporter: what about defense spending we're in the time with ukraine and what is happening there and the ramp-up in military budgets. how far off? is it five or six years >> it is a decade issue. we are going through the w warcraft we are going through the mun any - munitions at a rate none of us expected to date, we have seen $2 billion of orders related to ukraine rest restocking wit we expect another $3 billion we will see more over the three

or four years. it is not a this year and next year, but next decade. >> reporter: orders are coming in like gang busters this year and here more than once we heard from executives who said it is like kids in a candy shop eyes are bigger than their stomach can handle are we getting overextended? >> you have to know when the planes will be delivered if you want a new a-320, he will have one in 2031 indigo placed an order for 500 aircraft boeing and airbus are essentially sold out people are putting in orders to fill spots the commercial air space continues to grow. we had a pause for the pan

dem -- pandemic we are seeing 4% to 5% annual growth for the next decade airbus said it 44,000 new airplanes in the next 20 years 20,000 aircraft flying today they will be retired you are doubling the fleet >> reporter: that raises a question the system is at capacity when does the conversation take place in the united states about more airports or greater capacity and air space and air traffic control? >> those are different problems. they all need to be solved air traffic control is something we can solve today with a modern upgrade to the faa air traffic system we have been talking about that. that requires two things political will and money >> reporter: which are in short

supply >> if you think about airport infrastructure, china has done a remarkable job of infrastructure to handle growth for the next 20 years. they added a number of airports. highways and all of the logistics that we have not done. we are talking about not adding a new runway at o'hare in 50 years. you need more pilots and you need more airplanes and you need them in different places >> reporter: greg hayes, thank you. on a day they reiterated guidance and cash flow for profits for the year back to you. >> thank you, phil lebeau. best to mr. hayes. meanwhile, coast guard is searching for the submersible submarine. sub meacustomers able --

submersible. the sub lost contact with the canadian research vessel an hour and 45 minutes into the dive the submersible is named "titan." it charters private trips to view the wreckage of the "titanic." one of the missing is the owner and shachairman of action aviat. they talk about how many meters they were down i don't know how far down you get in an hour and 45 minutes. 13,000 feet deep it was designed for 96 hours of air. >> they are still within the timeframe. a prominent pakistani family as

well the family put on tut a note sag they are praying of the. >> they are working quickly. they have 96 hours of air. it is, obviously, deep water james cameron. there have been people that have gone down to try to explore the wreckage of the "titanic." 3,800 meters below the surface >> i guess you can see it there. wishing for the best hoping that something is successful this these rescue attempts >> as i said, we were talking off camera i have been on a submarine pin the cayman islands maybe 150 feet maybe. you don't have to be an actual

claustraphobic it is like an egg carton back-to-back no additional room it looks -- i can tell you what it looks like. i don't need to do it. not great. sand and a couple of fish. >> thoughts go out to the families waiting word on this. when we come back, carlos ghosn back in thhahe d aeadlihe. now suing his former employer nissan for $1 billion. "squawk box" will be right back.

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masi son says softbank is in position to win the a.i. race. the founder of softbank making the appearance at the annual shareholder meeting. it will not be deterred by losses and it will rule the world in the end alibaba says it is replacing the long-time ceo daniel zhang with eddie wu who serves as chairman of the company's ecommerce divisions.

zhang will leave the chairman of the board. the unexpected departure comes after alibaba announced the six-way restructuring to boost growth at the individual divisions and people who watch closely say this signals that jack ma is the spiritual leader since joe tsai is being brought in. and carlos ghosn is suing the former employer, nissan, over the alleged miss conduct a arrest in 2018 ghosn fled to lebanon in 2019 after being arrested in japan for financial crimes he continues to deny the charges. >> where does he sue them? in a japanese court? he is not allowed to go back

into the country he cannot leave lebanon bought being extradited. >> he would sue. >> slander is stuff you say. libel is thing you print >> i would do both to cover. he did both. it was written and spoken. >> so he says. >> remember how he got out >> in a music case >> a bass. >> right snuck out. >> we talked about claustrophobia already when we come back, secretary of state blinken's mission to thaw u.s. and chinese relations work we will talk about what it means for u.s. companies doing business in china. you can watch or listen to us live any time on the cnbc app.

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secretary of state, blinken, went to china for a meeting. for more on his trip and the u.s./china relations we are joined by the global managing director and a cnbc contributor. what do you say about this i guess the success, if

anything, came out of this, xi agreed to the meeting. >> good morning, becky i think this trip was a good trip let's try and measure what it did and didn't do. it tried to set up the possibility that the china and the u.s. can set up high level communication channels that is used to try and manage this relationship so it doesn't tip into a conflict. i think this trip helped to do that but it's too soon to tell what is clear here, becky, is the fundamentals of the relationship has not changed and that's the key for businesses and investors here all of the drivers that leads to long-term strategic competition are still there. this meeting was not designed to

get rid of those and can't get rid of >> does that mean we don't have military to military communication channels at this point? >> that is an excellent point, becky. in my view you cannot really establish the bali agenda without nil to nil relations there was no indication that has been turned back on, but to your point that's the major problem where we start to think about what conflict can happen, the south china sea and the encounters we have seen there. >> we don't know at this point but we suspect that's the case >> we don't know for sure, but we suspect that is the case. again, you know, secretary austin has been reaching out

quite frequently to try and re-establish that contact. there's some contact at some levels between u.s. military and the pla, but what we need is the high level contact to take place, and it has not happened since the balloon incident >> what message should business leaders take away from this in terms of the relationship between the two companies, particularly businesses that have operations there as well? >> i am of the view, becky, that businesses should still re-evaluate their base case for being in china, and they should still re-evaluate their assumptions. this relationship is not good, and we think it could be stabilized over time, but there are reasons outside of the national security, becky, for businesses to be secure outside of china, a long-term dem

photo demographic, and there's lots of businesses for them to continue and i would not give them a reason to stay deeper into china. that's my view >> how does the political establishment view this trip how does this play out in washington >> this is another scene that is opening up i think republicans, particularly in the house, are not very happy with this trip. we heard mike gallagher, who is the chair of the select committee on china, and michael mccall, they have called this the old playbook, zombie engagement and dead on arrival and they are not happy i assume the biden administration and chinese for that matter, would have a limited window to show the

progress >> we appreciate your time talk to you soon >> thank you coming up, the stocks unmoved this morning, and plus, snap ceo, evan spiegel, and chris christie will talk about the state of the economy and china. "squawk box" is coming right back what if we live to 100. i don't want to outlive our money. i keep eating all these chia seeds. i could live to be 100. we work with empower, even if we do live to 100 we don't have to worry. eh, not worried. take control of your financial future to empower what's next. good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star.

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good morning investors coming up to a strong week, and we have testimony from jay powell to congress about the central bank's economic outlook, and futures this morning at this point, at least, pointing to a slower open. the state of aviation and more at the paris air show. we will bring you the highlights of that interview. and then snap's ceo, evan spiegel, joins us live from the south of france. the second hour of "squawk box"

begins right now. good morning and welcome back to "squawk box," live from the nasdaq market site in times square i am joe kernen along with becky quick. andrew is off this morning the good news is that it's tuesday, i guess, but the futures -- the futures are down. that's my preferable way -- >> to start the week >> no, of where the holiday should be. >> instead of friday >> instead of friday yeah, because thursdays are great anyway >> yeah, you get the three-day weekend, and -- although i love this job a lot i cherish it you can see the dow is down 104,

and the s&p down 15. let's take a quick look at rates. as we said, rates, they don't really believe necessarily that we are going 5 1/2 or 6, and maybe the stock market doesn't believe it either. we will get a lot of data between now and the next time -- there are very divided opinions, and some say the fed is already done and should not have gone the last time, and others think they have a way to go, and in the journal today, inflation worldwide has lasted longer and been more stubborn around the globe, and it will be higher for longer >> and then maybe 2% is an outdated way of looking at things, and maybe it should be adjusted to 3% because of the supply chain issue

>> if we are going to continue to try and bring stuff back onshore stuff, it's going to be more expensive >> globalization yes. china also easing, trying to boost its uneven economic recovery, and this comes as wall street cuts its economic out look for china here in america, fed chair, jay powell, heads to the hill for two days of testimony where one area of focus will be the fed's economic outlook and steve liesman joins us with when forecasters say that recession will finally arrive, the recession we have been talking about and waiting for for a very long time, steve. >> and talking about and waiting for and talking about and waiting for. this is interesting, becky,

because a consensus is developing among forecasters for a soft landing in the economy, and that's where growth flat lines but doesn't necessarily go negative i want you to see what happens here first quarter, it came in weaker than expected, and that's the blue line below the yellow line, and that's compared to the march forecast it's still above 1%. and for the second quarter, the outlook is shaping up to be a percentage point higher and instead of going negative in the second half of the year, gdp is seen as flat lining, and bank of america writing, quote, we refies in favor of a later and softer downturn. our forecast is as much as a growth recession as it is a mild recession. and the second half growth averaging minus 1.5%, and now sees the second half of a quarter of a percentage point. labor supply and demand coming

more into balance now and that would allow the fed to sit the 2% target with less consequences, and there's current strength now but one writes, the u.s. economy is holding up at the half-year mark and inflation expected to fall more slowly and ending at 4%, and then closer to 3% before inching down to the fed's inflation target in 2025 the rapid gdp forecast, it's whether the fed tfulfills that

forecast >> i think you take the journal story, and we basically have been talking about that because there were banks of reversed course, and australia and canada thought they could hold, and ecb was kind of on the hawkish side this week. i think powell has to remain resolute with the idea that he will hike if it's needed i think he will also remain resolute with the 2% inflation target mohammad may be right that they eventually change it, and i do not see them changing it before coming close to hitting it, and then they may change it. if you think about bringing down inflation, how does it help you if the central bank changes the target doesn't that make it less likely to think the fed is less serious about it, and i don't see how

the fed helped in the inflation fight my changing the target >> steve, is the stock market and nasdaq been going up because it believes they are finished, the fed, or because the economy is so resilient? >> i think the economy gives them the kind of license or green light to invest in things. but, joe, you know, i did a lot of reporting on whether or not the a.i. thing was real and i was very skeptical about it and i talked to a bunch of guys that were very serious about the positive impact it could have on the economy, and i think that's a big part of the trade of what is happening, especially in the nasdaq people see real change that will have a broader macro economic affect here. i think that's a big thing, obviously. something like this blows up into the bubble and gets divorced from the reality of the under turns here

the consumer keeps on keeping on i don't know that you want to be out there, joe, taking a big bet against the consumer right here. there was a story, i think i saw, about how much the shorts got kit on betting against the stock market and that's the same thing as betting against the consumer and the economy >> the a.i. thing is probably real and probably has legs it doesn't necessarily mean that everybody who has picked what winners in the stock market will be the winners that last over that time. this internet may be here to stay if you look at the stocks that took off, 2000, 2001, and no doubt a.i. is here and will change things, but the question is whether it's valuing that in the right places >> it still scares me that so many people are not going to be needed anymore to do so many things >> that's something -- i talked

to mark cuban about this, and he said there are going to be companies that win when it comes to a.i., but he says everybody else will be left in the dust if they don't have a strategy to use and employ this. i am far from an expect. i just know i have been using it and it has helped my reporting in an enormous amount, and i don't want to give an advertisement but i use bing, because bing is foot noted and i hit that and then i can confirm that it's right. >> on that topic, the journal has a whole special report that a.i. has madison avenue excited and worried at the same time anyway, steve, thank you we will talk to you a little later. >> pleasure. >> bye, steve. joining us is anastasia who is the chief strategist at ai

capitol. let's talk this threw. you think there could be a little more room to run through the markets but you are worried it's getting stretched at the current moment explain what worries you and what you think the long-term affects are? >> yeah, we have had a torrid run over the last six weeks or so you look at the s&p and it's up 8% in less than a month. the nasdaq is up 7%, if you look at the nasdaq 100. a lot of people caught themselves not positioned long enough in stocks, and if you look at hedge funds for example, they were not net long enough in april, and then they ratcheted that up to the longest runs we have seen in a year. if you look at the volatility, for example, it's really low levels so that tells you investors have been chasing it upside, and that's what has driven this rally. i think we are getting exhausted

here and we are running out of steam, especially if you look at the technical indicators that's why i wouldn't be surprise to see some sort of a pullback by the way, the fed is back, and the fed officials are back talking about their policy, and that may make for some of the pullback, and we are head into the earnings window. i think that's a setup that is ripe for a near-term pull back having said that, you take a step back and you look at the fed that is pausing, and you look at the inflation that is clearly slowing, and if you look at the economy, as steve pointed out, that maybe is a little below potential, you take that altogether and that sets up still more room for the stock market to move higher. if we get a dip and i suspect we will, that's a dip that is buyable. >> you don't necessarily believe the fed is going to continue to raise rates either you don't think it's necessary

>> i think the fed may continue to raise rates another one or two rate hikes i think the markets are actually pricing that in. i think that's likely to be the case, but what i don't think it does, i don't think it derails the upside scenario for stocks let's face it. the fed is done or close to done we went from hiking at every single meeting by outsized rate hike amounts to say it's 20 points a quarter, and that's something the stocks can staomac and have historically, especially if economic data continues to surprise to the upside that's key if you have a fed hiking incrementally and the consumer is supporting the economy, stocks could move higher case in point last week, you look at the move in the two-year treasury or ten-year treasury, the yields went up a lot andet you have software and

semiconductor and tech and the s&p that all managed to rally. that tells me rate hike or not, another two rate hikes or not, stocks can move ahead still. >> you are not worried about persistent inflation or do you change the goal post of where we look for that is what has been surprising >> well, it's a two-part answer. i think it's the second part of the conversation fuel prices are lower, and food prices are lower, and fed chair powell talked about, you know, the disinflation trend starting to take hold in services in ex-housing as well as housing, and then you look at surveys and we think wage inflation is

likely to start moderating as well that likely gets us to 3%, 3.5%. i agree with the points in the conversations you had with steve and mohammad, and you look at all the stimulation put into the economy, and for the next five years you will still have some of that working its way through the system you look at the construction industry, and that's the epicenter of the beneficiary, and that has put pressure on the wagers as well, and the mismatch between the number of job openings and unemployed people, and there's reason for inflation to be higher, and that's the second part of the answer, and for the first part, to become back to the beginning, the first three to six months, we are lower. >> thank you as you know, the paris air

show caught up with ge ceo, gary colt later, an exclusive interview with snap ceo and co founder, anev spiegel "squawk box" will be right back.

the paris air show is in

full swing cnbc's phil is there you are comfortable there. you are like the favorite son. >> yeah, every time i tell somebody lebeau means something, they roll their eyes an order for 500 airbus 320s what you are looking at right now, take a look at the shares of ge and airbus, and if you order a new aircraft right now you are not getting it until well after 2030. so when we caught up with larry, the ceo of ge, and we asked in this environment you have ever

seen something like this, and this is what he had to say >> in terms of demand whether err talking to our airline customers about what they need today or tomorrow, i don't think demand could be any stronger we would not have imagined this two years ago, you are spot on, but it could not be more bullish at the moment. >> that's one reason why shares of ge more than doubled in the last year, but it's more than that greater efficiency this is a far more efficient target, and they have improved that by 30%. they are on pace for that this year yet the supply chain remains a challenge. >> i think things are getting marginally better but they are still challenging, right you think about our leap engine on the both 737 max with boeing

and the airbus, and we are going to be up 50% in terms of units this year, and you can't do that year over year but it's still an improvement, but i am encouraged by the progress we are making and what we see in the marketplace. >> what we heard from larry culp we heard from other ceos as well the supply chain needs improving, and it doesn't take much as to whether it's servicing an engine or supplying the components to boeing or airbus, and they are not going to be meeting these demands in the foreseeable future they have plans to upgrade and improve production but the question becomes can they hit those targets. >> phil the beautiful? >> it is what it means in

french, brother. i don't make it up google it. or ask eastman, because i am sure he's using chatgpt to look that up. >> philis beautiful. >> phil the beautiful. it sounds like the 11th century or something, you know -- >> like the great. >> yeah, like -- i think you are fine, but beautiful -- well, coming up, former new jersey governor and presidential hopeful chris christie will be on set i love that man. i do always loved him haven't you? >> yeah, known him for a very long time. >> before we head to break, a check on crypto this morning "squawk box" will be right back. what do you see on the horizon? uncertainty? or opportunity.

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about. >> little do they know >> should i get through the business first >> let's not even do it. people look forward to it, and let's leave them wanting for more and not even do it. >> we will deprive them for this time and it's the long game. we will leave the golf aside, and we will kick off over the chinese ecom service currency ceo is out, and the vice chairman right now, daniel woo will become the ceo.

now, zhang steps down. they are getting help from morgan stanley's jonas who upgraded that stock from overweight to equal weight now, they like avis's budget, and so they are up 3.5%. we will cap things off with our own e services side of things with amazon. it's the top pick over at bank of america, and the analyst has

added it to its u.s. one list. we know the rest of tech is feeling pressure right now, but amazon may be feeling that less by the bank of america one call. >> and so -- >> it was a compelling u.s. open to watch for me. down the stretch, you know, three or four or five people were all in contention i was pulling for ricky because -- >> yeah, so was i. >> it could have been a playoff -- it was not roy's fault, they just did not go. >> it reminded me of the open championship at st. andrews, where he was always there. >> nine years since he won a major. >> like, 280-yard par 3s how many par 4s were over 500

yards? like six of them or something. >> the crazy part was watching these professional golfers, they are all good, and watching them hit 280-yard par 3s, and -- >> yeah, it was for his mom, i think. his mom was very young >> yeah, i think everybody was and now -- >> dom, they said let's go, but it was not too bad >> all right i will say good-bye. reds are in first place, by the way. you saw that >> yes, i did. meanwhile, the mets and the yankees are struggling -- >> so long, farewell -- >> yankees >> without aaron judge, they are

horrible pathetic moving on -- oh, i mention the yankees -- >> so long, farewell when we come back, snap ceo evan spiegel will join us. former new jersey governor and presidential hopeful, chris christie, on the state of the economy and his bid for the republican nomination. "squawk box" will be right back. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989!

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the marketing festival and cannes festival in full swing. >> i am here with evan spiegel, the ceo of snap. my question is, what is the growth of a.i. on the snap platform mean for your subscription business and for advertising? >> thank you for having me i am thrilled to be here

we are so excited about my a.i., and it's a snapchat bot. my a.i. is used my over 150 million people since the launch with over 10 million messages sent one of the reasons why it's so useful for our business is because people ask for things they want or get recommendations, and that informs our content business or augmented reality business, and now we have over 3 million snapchat plus users, and you can send a.i. a snap and it will respond with a unique snap >> snap has been struggling with the decelerating growth, and there could be a 6% decline in

revenue, and is a.i. going to be a driver of revenue and profits and if so how much so? >> we are dependant on the user experience, and we have to make sure what a.i. is provide something valuable and adding features like bringing a.i. into a conversation with friends, and we have the intense signal we get from a privacy setting, for example, if you are trying to get advice on which phone to buy, my a.i. could help offer a suggestion and maybe a sponsored link and we could pipe that into an advertisement platform to make sure those advertisers can show the right phone >> could a.i. end up boosting profitability down the road? >> it's too early to tell, but we use a.i. in so many parts of the business to drive growth we are focusing on the

advertising business and that's something advertisers are focusing on where cost pressure has forced them to focus on that ad efficiency, and we are running bigger models and reiterating faster and that's been helping to drive growth for the performance advertisers. >> and the stock really plummeted on a miss for the first quarter and there's concern about the second quarter. what are you seeing now in terms of what is going on with snap advertising in particular and then as a whole? >> well, we are not out of the woods yet but our focus has been for the last 18 months in the wake of the changes from apple and the macro economic pressures as well, and as businesses experience higher costs, whether it's labor cost or other costs, we have to find ways to reduce

the costs with less spending on advertising or advertising that is efficient and that's a focus for us, and this year has been full of changes. we started out by unifying ad interactions on our platform, and so we unified those ad interactions, and then, of course, we focused on the click performance of our advertising and that is helping our advertisers get more conversions, and we are helping advertisers find customers they are looking for. >> looking ahead for the rest of this year and next year, what are you going to do to re-enter the growth mode we have seen in the past >> ties something a cyclical business and we are focused on the input, and we have a growing number of active users, and that's more than 75% to 13 to 74 years old that are finding value

in our content and so as we continue to focus on building that engagement and the advertising market recovers, i think we are well positioned to benefit from the recovery especially as we drive those performance tools. >> augmented reality, you have been focusing on that and here you have a partnership of disney brands coming to life through augmented reality, and what is the stintroduction of apple's n goggles, and is that a threat or could it boost things? >> it's too early to tell. i have not had achance to play with it. their approach to augmented reality is through past augmented reality, meaning you wear a device and it shows you what the world looks around you, and our focus is see through

augmented reality, and you can see the world around you, and people want to be grounded in the real world with friends and family when using computing, and so some of the products could be an early steppingstone and it's exciting more people are investing in these products but we are excited about the roadmap we are working on and will continue to have fun announcements ahead. >> a big company getting a lot of attention here is tiktok, and they are growing quickly and there's a growing threat of the potential shutdown of the business, and how big of a threat is tiktok, and what would a shutdown of the app mean for snap >> the products are fundamentally different with what they provide to their users, and snap is focused on the visual communication without likes and comments, and that's why we see growth, where people can seek out places they can

express themselves with friends and family, and tiktok do have ad dollars >> presumably a shutdown would be a good thing for snap >> i think one of the things that we're concerned about is there's a lack of a framework for approaching these torsorts f challenges with businesses, and that is leading to volatility that is unnecessary, and developing guardrails and a framework so we can protect the economic relationship between u.s. and china and safeguard national security for both countries. >> thank you for joining us. i will be back in the next hour of "squawk box" with an exclusive interview with former ceo of tiktok.

>> sounds good thanks coming up, a.i. sparking a boom in wealth creation, and we will tell you how it's making the already tech-rich even richer the dow is down 110. a good week last week, though. s&p down about 16. stay tuned this is real time insights i'm here with lee henderson. we are talking about the fundraising landscapes for mid

size companies what does it looks like? >> it's getting done, and there's a lot more focus on profitability so when you screw the formula to profitability versus growth at all costs, you will have a lot more conservative approaches than what we are seeing >> how should mid size companies ata adapt? >> well, do you have a strong customer base? do you have revenue momentum and strong cash flows, and can you show you can be capital efficient and at the same time be profitable. >> how can companies be more capital efficient? >> first of all, i would implement stronger cash management practices including good spending policies to make sure everybody around the business is cash conscious and as a leader, think cash. cash, cash are you focused and do you have control and visibility over cash

flow as well as the forecasting. you want to avoid surprises. >> thank you for sharing your expertise. >> thank you for having me one of the promises of a.i. is that it will spark a massive boom in wealth creation, but so far it's making the already tech-rich even richer. robert joins us on this. >> if you look at the stock gains from a.i. that added $150 billion to the wealth of the top tech so far, and passing bill gates for the first time ever to claim the number four spot, and

he has gained $27 billion on the oracle stock rise. gates also up on microsoft shares, gained $24 billion this year and steve balmer also adds a lot of microsoft and then jensen yang tripled mark zuckerberg leads billionaires by the dollar amount, and he's up $57 billion, and only $47 billion from his all-time peak. and sam ultman, he has not t

technically made a lot of money from this, but meanwhile the world's youngest self-made billionaire is now alexander wong, the 26-year-old founder of a company called scale a.i., and he will be the one to watch. >> is he the richest nonfounder, balmer >> he has more shares of microsoft. >> well, balmer by far the richest nonfounder it values hyperscale and data. unlike mark zuckerberg and jeff bezos who started their businesses in a dorm room or garage, you need a larger scale, and in the early stage a.i. is rewarding the existing large tech companies that already have

these massive data sets and massive commuting power like amazon as opposed to startups, and it could get to the point where the little guys can disrupt, but right now it's about the barrier of entry being really high because of the scale, so it's kind of different from any other wealth creation wave we have had in the past >> can we celebrate these guys i say celebrate. the rest of the world is feeling good, because they don't have anything like that -- well, russia does. china does >> if we really have players, that would be really nice. >> you either get it -- they are either here doing what they are doing or they are not. >> that's right. >> i'm saying i'm glad >> and wealth is created because products are popular and people use them and want them >> we could get a little more taxes out of some of these --

you know, just -- thanks >> thank you up next, former new jersey governor and presidential hopeful, chris christie up next. "squawk box" will be right back.

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us now is chris christie i am a jersey person and love you and have known you a long time, and i wish you would get traction and not saying maybe you get the nomination, but i think you would be amazing at this point you are set up like the hockey guy that can't score a goal but he's like checking people and he's the enforcer -- >> watch me score. don't worry about it there's plenty of time we're sitting here in june in june of '07, barack obama was 37 points behind hillary clinton. eight years ago when i was in the race against donald trump, there was nothing to say about him, and he was the star of the "apprentice" and a billionaire and a beautiful wife, and what are you going to say eight years later there's a lot to say and differentiate, and that's what i am going to do

everybody else is afraid to do it >> why is that >> over time, trump has cowered a lot of people, and people get upset about being called names in public, and i am from new jersey, i'm used to it most of the people in politics have known him for eight, nine, ten years, and i have known him for 22 years and i am not afraid of him he's a paper tiger >> what was it when you said i am not going to work with you anymore? >> election night of 2020, and i know he could not have known the election was stolen because all the votes had not been counted yet, and we had seen what has happened in the 2 1/2 years since, and i said george

stephanopoulos, come to me after the speech, i have got something to say you can't do that stuff to our democracy when you have been privileged to be the president of the united states you see some of the crazy stuff he said last privileged to be the president of the united states now you see some of the crazy stuff he said last night on tv, i didn't respond to a grand jury subpoena, because, you know, i'm very busy. well, how many rounds of golf has he played in the two and a half years since he left office? he's too busy to go through the boxes to do what, to move classified information from his golf shirt to his golf pants that's seemingly what he was saying last night. the voters of the united states are going to listen to this, joe, and they're going to say, no, not this time. we've seen this show we're not going to rerun >> it hasn't happened. >> of course, it hasn't happened yet. it just started. >> a 30-point lead over like --

when he said desantis, it comes out desanctimonius i was like, what did he say? >> it's into the name calling and all of that. it was new and different eight years ago and it's old now >> look at those numbers, chris. >> i see them. you know what, look, i see them, and i will tell you what, this election is not decided today. and those numbers are national numbers. no one's run a campaign against him yet. people will start to do it >> remember when he said, i could shoot someone on fifth avenue -- >> yeah. >> that's still true for -- and i would never, ever, ever channel hillary clinton, but there are -- what are those 30% that just no matter what are they deplorable? >> no, what has happened is, he has tapped into anxiety and anger, a lot based off of the economy, guys. >> we should talk about that

>> you've got to have your own ideas. if you want to do it inflation is bad what caused the inflation. and what do we do about it >> excessive government spending you know what caused the inflation. it was out-of-control, ridiculous, around the world -- >> it's not just him >> listen, if something like that happens in the united states, it spreads everywhere. and by the way, china was doing similar things so when the united states and china are doing similar things, the rest of the economy is going to get sick. we've got to bring spending under control, we've got to reform our entitlement program >> half of your platform will probably be trump's platform, right? >> look, i would be able to do it this is a guy who said he would build the wall on the southern border, mexico was going to pay for it we have a quarter of a wall and not the first peso in the door >> what do you do with immigration? >> you can do two things well, three things, i would say. first at the border, right away, send the national guard to the border to interdict fentanyl

110,000 overdose deaths in this country last year. it's now the leading killer dm men 18 to 34 in this country that's job one job two is to finish building the wall we started it, let's just finish it and get that done and third is to bring both parties together, like i did in new jersey, on things like pension reform and health benefit reform and police reform, where people said, none of these things can be done. we do that on immigration. everyone will have to give something on this that they don't like but in the end, we need to do things like all of these graduate students who come from all over the world to come to school here, they should stay here and work here we need that system on immigration where the people who can contribute to our economy and our society get to stay here but to get that, we'll have to make compromises with the other side, and be able to get that done i did that in a police state for eight years. it's a skill you have to know how to do it and not be afraid of doing it. you do those three things, we'll have immigration under control and our economy will grow.

>> what would you do with the dra dreamers >> i did this in new jersey. we gave them in-state tuition rates. i'm paying as a new jersey taxpayer to educate them, k-12 don't we want them to be afford to be able to college, we've already made that investment once they've come here but they're going to be part of an overall deal. everybody's got to be able to get something out of this. otherwise, we'll be sitting here with the same problem 20 years from now that's not going to be good for the safety of our country or our economy. >> the 31 trillion -- i don't know who's counting, you know, but 33 trillion in social security, medicare, medicaid we've got no -- rates are going up, so after we service our debt, we have no money for anything the only thing that will solve any of this is probably growth other people would argue we need more revenue, higher taxes like we didn't have enough how much did we have last year

to spend and still didn't have enough >> it's not higher taxes, joe. >> that's what you're going to hear >> of course that's what you're going to hear. that's what you always hear from the other side you have to revitalize the economy to bring more growth and secondly, you have to reduce spending you just have to >> where debt service >> well, you obviously can't reduce that, joe but we have spent trillions on other things over the last five years, trillions donald trump said when he ran in 2016, i will balance the budget in four years. he left us the largest deficit of any president in modern history. >> after covid >> re >> before covid, he had that, joe. he was running huge deficits we need to deal with social security 2024, 24% benefit cut. there are millions of people in this country -- >> you won't talk about that if you're the nominee >> of course i will. i'm talking about it right now we have to look like things like the very wealthy who don't need to get social security and for people in their 30s and

40s, we need to consider raising the retirement age they'll have plenty of time to plan for that. not for people like me, who are 60, but in your 30s and 40s, plan for your 401(k) and i.r.a., we need to give them the time to do that. and that will bring the costs down >> who are your backers at this point, financially because we might like to think that anybody can get elected without financial backing, but you need it. >> you can't and i wouldn't have got sten ino the race unless i had some very significant people we'll put out a report, but i think what you'll find are a lot of people who were with donald trump before are now with us some folks who were with other candidates in 2016, like jeb bush, like marco rubio are now with us. and i think folk who is want someone who's going to take us on directly. we were talking about this before we came on. how do you win this race it's fantasy to believe you can win this race by not taking on donald trump he's in front!

how do you beat someone and not talk about them? i look at the other candidates in this race -- >> they're trying to keep the 30%. >> they're never getting the 30, joe. if you like coke and new coke comes out, why you buying new coke you say, i like coke, it's right over here, i've been drinking it forever. i'm going to keep drinking it z >> for a second i thought you were talking about hunter. >> here's the thing, you have to be able to differentiate yourself 70% of the republican primary electorate say either i will never vote for trump or i'm considering voting for someone else how about we focus on the 70 instead of the 30. >> you had lightning in a bottle at that one point, and i hope you recapture it, governor >> i'm going to recapture it watch it i'm going to capture it right here >> and you'll come back on and andrew's not here this morning, what a gift this is like my summer gift that an andrew's not here. >> we will >> thank you, becky. thanks, joe.

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good morning major averages are multi-week winning streak futures lower, though, ahead of the opening bell d down 100 on the dow. some hope for warmer ties between the u.s. and china not warmer in terms of cuba. the american secretary of state meeting with china's president and saying the two countries agreed to stabilize their relationship and how does walmart let amazon become the fierce challenger that it is? we'll talk all about the retail's biggest battle with the author of a new book as the final hour of "squawk box" begins right now.

good morning, again, and welcome back to "squawk box. we are right here on cnbc, live from the nasdaq market site in times square i'm becky quick along with joe kernan andrew is off today. he'll be back later this week. let's take a look at the u.s. equity futures at this hour. you'll see right now that things are down, not the lowest we've seen of the session, but the dow off by about 100 looks like the s&p futures down by 14. the nasdaq off by 45 if you've been watching treasury yields, we've been sitting right at around 37 yeah, 37.5 for the ten-year. the two-year just below 4.7% let's kick off this hour by getting over to mike santoli so many people asking, how long can this rally run >> for sure, becky we have significant gains to be digested and the market seems like it's getting a start on that digestion process look at the s&p 500, having pretty comfortably gone to a new one-year high. really like a 14-month high, above that august peak from last

year now, we got the little pullback on friday. this is the s&p etf showing the pre-market moves a lot of things lined up suggesting that there could be a little bit of giveback this current week we're in, the one that follows the june options expiration, when the quarter has been up, it's opinion down this week like 80% of the time over the last number of years it seems like this is a seasonal period where you often do get a little bit of a reset lower. but i would say that the momentum in general in terms of the trend has been strong. and anything that depose right back to that 4200 level, which acted as a barrier for a while would be pretty much a routine pullback while a lot of people are pointing to the narrowness of the market, that has broadened out to some degree others saying ai hype is driving the market-weighted hype not a lot of ai stocks in the emerging market. take a look. it's been a global move. this is the emerging market,

excluding china. obviously, we know about china's difficulties on the economic and policy front and why those markets have underperformed outside of china, it looks like really the same trajectory as the u.s. if the fed is in fact in a pause that might be prolonged, helping emerging markets. also, europe and japan likewise near highs take a look at the credit story here high-yield bonds have tightened up their spreads to treasuries that's been a positive factor. not quite down to the lows of earlier this year. here you see the high-yield etf departing and outperforming comparable treasuries. if you looked at it on a spread basis, the yield over treasuries wi , it's about four permg points that's showing a relatively sturdy credit picture right now, becky. and one that frankly along with a lot of other markets are pricing in a greater probability of that soft landing one final note a lot of people came into this year saying it's going to be weak in the first half, and

strong in the second we've gotten strong in the first half, we'll see if that means we've inverted the year or not >> we haven't seen people pulling back on their second half expectations. >> earnings forecasts have firmed up as well. they're no longer declining, and iz seems as if a lot of the things we felt were going to be the major headwinds, we've seen relatively decisive help on inflation. and the fed gives us a little bit of leeway to try to vaesz. you're right about that. when the market is up 15% in the first half of the year, which is basically when we're at in the s&p, it typically has followed through with further upside in the second half. i'm not suggesting it's going to be a round trip, but worth keeping in mind how people were offsized coming into this year >> mike, thank you we'll see you soon >> let's talk more about the markets, prominent morgan stanley bear mike wilson out with a new note this morning in it, he says sentiment and positioning has turned outright bullish, as both retail and institutional investor sentiment has reached its highest level in

over two years however, given our fundamental view on growth, we find it hard to get onboard with the current excitement it remains far from supporterive of higher prices for us right now. cameron dawson is chief investment officer at new edge wealth we haven't seen mike wilson for a while. his worst-case scenario is 3,000 on the s&p >> it doesn't sound like he's changing his mind. >> it's almost a 50% move from where he was talking about so he's obviously -- >> i want to read the rest of it >> scrambling and on the wrong side of things but let's talk to cameron about it you are probably not now saying buy with both hands. your probably not saying that, but have you moved up the -- where you think that if we do, that this is a relief rally and

not a permanent new bull market, are you above the october lows now for -- how far down do you think the market needs to go to catch support? >> i think that's a really good point that as we push out the recession timing, meaning that it's not definitely a first half '23 thing, could be more about a 2024 scenario, meaning we're starting from a higher base, meaning we may not recapture those october lows from 2022, but it doesn't me dpat fact that we have a market that's very extended in the short-term you could see a pullback in the nasdaq it means that we've moved very far, very fast so we might have some digestion. >> so as excited as we've gotten about pushing through 4200, which is the high end of the range. we're well above that now, i could envision something where we don't hit new all-time highs on the s&p for a year, could be

18 months. i have no idea we're not necessarily just headed to new highs near-term. we could be, though. >> i think that the reality is that we're bumping up against a very real valuation resistance we're now at about 19 1/2 times forward earnings you have about a mid-teens recovery in earnings, forecasted in already for the next four quarters you're bumping up against that resistance in valuation. you would have to assume you would go into a new valuation paradigm for us to hit new all-time highs in the next six months >> if they are finished or have one or two left, you're not worried as much about multiple contraction at that point, so you could stay at 19 i thinkit's interesting that, you know, 2023 was going to be the year of no earnings growth and then we were going to get earnings growth in '24 everything has pushed back, because we haven't had a

rece recession. is '24 going to be flat? if it's going to be flat, all of those estimates need to come down >> i think the point just because you're not seeing a recession in 2023 doesn't mean we do not have one in 2024 maybe it makes one more likely that we've been too early in this game. the thing that has surprised us the most is how little the market has actually cared about the fed and about interest rates. if you look at the pricing for fed policy rates at the end of december of this year, they're up about 150 basis points from the march low. but valuations for tech stocks are up 30% since that point. tech stocks, growth stocks have not cared one single bit about the fed policy path. if the fed policy path becomes easy, how much of that is already priced in. >> do you think that the rest of the market catches up with the ai or the seven horseman, however many horsepeople -- i don't know what you call them

now. the leadership has been very narrow does that broaden out? is it an ai bubble >> that has been our bet for new capital. when we need to put new equity money to work, we're focusing more on the equal weight index, value, as well as cheaper growth stocks instead of trading and chasing the most expensive parts of the market. the problem is those areas don't have the strongest trends as those ai darlings, so we think this is more of a one to three-year trade, where we're buying cheaper names and we're not chasing instead of something that might work immediately in the next few months. >> so the leadership that finally results from this, it's always going to be tech, isn't it or could it be cyclicals your father's stock market or is it always going to be, you know, the most glamorous names that we've come to know and love >> i think the scenario following the tech bubble back in 2000 is a really good one to keep in mind that these companies continue to

grow earnings. tech companies had fantastic earnings growth, but traded at such high valuations, that they had to grow into those valuations that's the scenario where you have other leadership. but that is typically fleeting these are great companies. tech companies that have the best earnings growth they defend earnings in the downside you just have to remain valuation disciplined, so you're not paying too much for those earnings because 2022 is a very harsh example of what happens when you do pay too much. >> you now recommend bethlehem steel. is that even trade i remember, i bought -- i thought i was smart. i bought convertible preferred >> paid to wait while it went to zero but cameron, thank you cameron dawson awesome dawson not chip or the creek. does that get old? it gets old. >> i like it every time. ye yeah >> thanks, cameron we'll see you. after break, we'll head back

to the center of the media world this week for another exclusive interview. julia boorstin is on the southern french coast and julia, what do you have coming up for us >> well, again, that's right i'm here, becky at the cannes line advertising festival and i'll be joined by kevin mayer, the ceo of candle media, the former ceo of tiktok, and disney's former streaming chief. the future of tiktok and so much more that's coming up after the break.

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welcome back to "squawk box. right now, we want to get back to our very own julia boorstin, who is standing by in cannes, france she is joined by another special guest. julia, good to see you again what do you have for us this time around? >> thanks so much, becky german i'm joined by kevin mayer, former head of streaming for disney and tiktok. just today, just moments ago, you announced that candle media, your company which owns hello sunshine, moonbug, and some other entertainment assets is doing a partnership with tiktok. you left tiktok. why not partner with instagram

or youtube >> well, tiktok is an amazing platform over a billion monthly users and a lot of our partnership is based on a book talk and recently as the founder of hello sunshine, she has a recent book club and that's how she connects with her female audience, most fully. and reese's book club, coupled with book talk, coupled with our lit up program, which is about finding underpublished authors, maybe making shows about what they've written about have been great. two other facets of the partnership. we're here with cannes lions get to talk about ad sales we're talking to blake chancely tomorrow, for instance he runs that group to do branded content with tiktok and brands and last, we're working with our post premiere program, where advertisers can continue to put their advertisements next to chosen selected premiere content, and we'll take that revenue. >> thanks for teasing our interview tomorrow we are talking to tiktok

tomorrow we are here in cannes. the to become is advertising obviously, you have a lot of exposure moon bug has a big audience on youtube, which is ad supported what is your outlook on the ad market there has been a lot of concern about economic contraction >> it has been sluggish. youtube saw a couple of quarters for the first time in its history for the ad revenue actually declined slightly we're seeing some green shoots, actually our main advertising-supported business is moonbug with our premiere franchise being cocoa melon. and we're seeing monetization rates start to come back up and start to normalize i'm not -- i can't predict the future it's hard to say what the macro economic turbulence that we're seeing almost a recession, not quite a recession, hard to say, but i think we're seeing green shoots and it looks like it's coming back >> another big topic is ad-supported streaming services. you ran disney when it was launching disney plus, that started without ads. it has since added ads we've seen netflix here promoting its nascent ad

business so this is really a new focus of the industry, is this rise of ad-supported streaming what do you think the impact of that is going to be? is traditional tv going to suffer will we see more cord cutting? where does this lead us? >> i think this is a huge tailwind over the top advertising. and they get to target their ads, because ott services like netflix, like disney plus, like hulu, which also ran for a bit, they have -- they run an interactive platform and there is the opportunity to target those ads. so it's the best of both worlds for advertisers. as linear advertisers decline, those audiences shrink, advertisers still need a place to get their brand messages across, and in a targeted environment with high-quality premium video, i think it's great news for consumers and advertisers alike. >> what does that mean for the media giants, like the one like disney do you think we'll see more consolidation, will we see more

of these streaming services combine, or megam&a deals like the likes of a warner discovery, or nbc universal there's been a lot of speculation out there, or paramount. >> when the streaming business in the u.s. is starting to mature a little bit. when industries mature, you start to look at cross consolidation, maximizing efficiency and the rest. does that mean that we're seat for a very near-term consolidation between some of the bigger players like a paramount plus and max and a peacock, quite possibly. hard to predict when or if it will happen. but certainly, there is industrial logic behind that >> and i have to ask you about the movie industry there have been some recent concern that the domestic box office, despite the big lineup of films for this summer is not going to be able to rebound to pre-pandemic levels. has streaming killed the movie business >> it hasn't killed it i think that people always love to go to the theaters. i think it's raised the bar. for a movie to now succeed theatrically, it has to have elements about it that really kind of make consumers really want to take the effort to go to

a theater and experience it, with a huge screen, a big sound. i think the bar has been raised. i think smaller movies that are story driven, probably better by streaming. big event movies that have spectacular sound and video effects still have to go to the theater. >> final question on ai. we talked about it yesterday and a panel, it's what everyone is talking about here how is ai going to change your business and what part of this entertainment business or advertising business is going to be destroyed by ai >> well, i'm not sure anything will be destroyed by ai, but again, hard to predict the future there's multiple kinds of ai when i was attic toiktok, ai rus it i think what you're talking about more is the generative ai. ai that can create i think human beings are much more creative than ai can ever be ai looks back at what has been done and they can use those things that have been done in the past to recreate a new

story, but they can't innovate by its nature, ai has very much trouble innovating that's the realm of human being and we're in good hands. >> kevin may wer, thank you so much for joining us. joe, back to you >> thanks, julia back here, gannett says it's filing a civil action against google and its parent company, alphabet, seeking damages for what it says are anti-competitive practices related to advertising the complaint was filed in the southern district of new york. coming up after a break, a walmart and azamon in the battle for retail supremacy inside the years-long rivalry with the author of a new book. stay tuned you're watching "squawk box" on cnbc ♪ or maybe it's petco, keeping me healthy for less money. wait, what's money? better quality pet care for less human money. [tweet] oh, a bird.

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the last market, it was called a hawkish pause >> we will see that disinflation, and that's what's going to allow the fed to ultimately end this hiking cycle around this race >> recession, there's a 50% probability that we're going to have one i think it's going to be mild. and i don't think it's going to cause profits to go down more than maybe 5 or 10%. less than a month away, a month away from our 2023 exclusive report on america's top state of business. this year, the states are competing in an uncertain economy that has everyone adjusting their expectations and it's making the battle a lot tougher. scott cohn, cnbc's scott cohn. i don't know what he did for the other 11 months. i guess enjoys life. here he is, you've got to figure

out how to get a new state on the list, too. virginia, virginia, have they won -- it's won before, hasn't it scott >> virginia has won -- virginia is actually our most decorated state. they've won five times we'll see if they can make it a sixth this year. we're here, joe, because behind me is amazon hq 2. you remember that, how 200 states, municipalities across north america fought for this just a few years ago they finally cut the ribbon here in arlington with virginia governor glenn youngkin on hand. it really is impressive. not just the two office tours, but they've created a whole neighborhood here out of what used to be just vacant warehouse and office space, but in this economy, that does not tell the full story as big as this project is, it was supposed to be bigger.

$5 billion and 50,000 jobs then, reality set in like community backlash, and finding all of those workers in one place. holly sullivan, amazon's worldwide head of economic development, has been in the thick of it from the start >> i think when you're looking at delivering this much square feet of space over multiple years, that there's a great understanding that there's always times of flex >> reporter: now, the 2.5 billion hq is just hold. they still hope to get to 25,000 jobs eventually. >> timing to be determined ultimately, this is going to be a neighborhood that continues to grow and evolve. >> amazon is facing some of the toughest headwinds in its history and its biggest layoffs ever tom stringer says that amazon

isn't alone. >> the inflationary effects, the rising interest rates have given folks a lot of reason to hit the pause button a little bit. >> reporter: local officials say they're not worried, yet >> they have given us every indication that they will follow through with their original vision and plan. it just may take a little bit longer >> reporter: it's not just the economy. the changing nature of work has left nearly a quarter of arlington's office space empty some for good. >> so now they're actually talking about some of the vacant office space into housing or hotels and of course, this isn't just happening in virginia. it is across the country and all of this economic uncertainty is one of the reasons that our economy category in america's top states for business looms very large this year. we look at things like economic growth, job growth, the health of state finances, the health of the housing market, and new this year, we're looking at the entrepreneurial economy, so new business formations in the states you can read all about our study, all about competitiveness

at popstates.cnbc.com. and three weeks from today, almost like right now, almost three weeks from today, we will we reveal america's top state for business that is where i will be. you don't want to miss that. >> we have talked about in the past about kind of with -- not really a cynical view of things, but the states that are right around washington, d.c., seem to do pretty well and i'm surprised about the office space in virginia and when you were on, sitting here, i think it was last week, we've talked about the i.r.a., and we talked about a lot of things that government was involved with the infrastructure bill. the government could be more important than ever forever in terms of the private sector with partnerships or whatever you want to call it. i think virginia once again is in a pretty good spot, just in terms of being right next door and for all the projects

>> virginia does well and it tends to do better when the defense industry, for example, is doing really well when government is -- when there's a lot going on with government, as you've pointed out, there is a lot going on with government, a lot of money floating around. but remember, our study looks primarily at workforce as the biggest category this area always does very well for that but cost is also an important factor life, health, and inclusion, things like that and of course, the economy so there really is a lot that you have to do any year, but particularly in 2023, to put everything together and be the top state for business >> interesting i think of it as a pretty blue state, but we can't really think of it that anymore and you have youngkin somehow had the right mix of whatever it was. of course, it was against terry mcauliffe, that helped >> reporter: well, i won't get into that, but you're right. >> i will!

>> reporter: it's certainly blue in northern virginia it's not so much in the rest of the state. so there's a lot -- there's a lot of that going on and really a lot of issues again with the sort of inclusiveness issues that will also loom large this year. and we'll see how it goes. >> all right, scott cohn, it means nothing that you're in virginia, but i'm writing that down see you later. tha thanks >> we are just a few seconds away from some new housing starts data. steve liesman is standing by with those numbers steve, what do you have for us >> it looks like they're up a big way here i've got housing starts up 21.7% in the month of may. april had been -- is down 2.9% i'm just double checking these numbers, because we're looking for 1.4 and change it looks like it's 1.6 for the month of may let me just see if they revised

april to 1.34, it looks like -- so they did revise down april. but there's a huge beat on this. i'll figure out how it happened here single-family starts up 18.5% to 997. multi-family up 27%. i've got to make sure i'm reading the numbers right here these are big pop in these numbers. permits up 5.2%. there's been a lot of talk -- i'll stop reading the numbers and tell you the context is that maybe housing in this cycle has bottomed i don't know if i want to make too much of these, but this doesn't seem like a housing sector that's weakening as a result of at least new housing, as a result of these high interest rates that are out there. and maybe it's a result of that. in the sense that existing homes are getting harder and harder to buy. and so people seem to be turning

to new homes as a way to satisfy the real deficit of housing in this country i don't have it by region. i'll get you that maybe after diana talks, but this is a big beat on hougsing, becky. >> right now i want to bring in diana, get more on that report what can you ad? >> steve is reading the numbers right. this is a huge beat. let me give you a couple of other numbers. we were not there yesterday, so home builder sentiment actually jumped five points into positive territory for the first time in a year in june and we saw mortgage applications to purchase a home up 17% year over year in may that just goes along with these housing starts numbers builders are seeing incredible demand and it's because there's so little supply on the existing side when you talk about prices, lennar reported earnings last week, and chairman stewart miller said that while prices were a little lower, they were not doing quite as many of neves

as they had been even in the builder isn'sentime report, they are seeing buyers come in, buyers, stewart miller said, are getting used to the new normal of mortgage rates, even between 6 and close 2to 7%. you look at mortgage rates in may, they started over 7%, this is not an easy month for mortgage rates, but builders clearly saw the demand coming in the door they saw people signing on the line and they just decided, okay, now we need to really boost the starts, because they had been holding back a lot. one last thing i'll say is that in the report yesterday on builder sentiment, they said they were starting to see an ease up in those supply chain issues and that's huge for builders, because they immediate to ramp up production, they need to put the money into land, labor, materials, but getting that supply chain moving is very key. so steve, you read the numbers right. >> diana, just to put that in a little context, how much of that do you think is because it feels like maybe mortgage rates are

stabilizing, maybe the fed is getting to the end of things how much of this is just seasonal stuff that happens, because it's the end of the school year and people need to get settled before the next school year? >> all of these numbers are seasonally adjusted. so seasonal doesn't really play into it that much. and in fact, we are getting -- you know, spring is always the strongest season for housing, but if you're seasonally adjusting, you take that out are people getting used to that new normal with mortgage rates absolutely they're looking at what they can spend. do we need more affordable housing? yes. do we need builders to put up more homes on the lower end of the market yes. and they can start to pencil that, all the better for the ho housing market right now, people are doing the math and saying, maybe i can't afford as big of a house as i might have wanted, but i still can afford a house, so i'm going in >> do you see anymore in terms of the regional numbers that you want to throw in on that >> a big decline in the northeast. i'm not really sure what to make of that. let me take a look another look at it. and it looked like --

>> the northeast was the smallest number of homes built the northeast is the most volatile, because it's such a small number >> so you had a big jump in the midwest, a big jump in the south, and a big jump in the west, places where there's land to build becky, this dpgets at something that we talked about, as soon as the fed started hiking rates, which is how is the fed going to get the kind of reaction it needs in the two most sensitive interest rate sectors, autos and housing, when there is a huge demand in both of those sectors. sk and just to put a little context of what diana was talking about, people staying in their homes because they don't want to give up their 2% and 3% mortgages, that takes the existing homes off the market and keeps people from moving. you're right in the sense that you get to the spring time here, and people need to move, need to do things. you do get some seasonal adjustment i guess there's a question as to whether or not the seasonals coming off of the weird years of covid are accurately depicting what's going on. she's light, diana's absolutely

right in the sense that the seasonals should pick it all up. >> diana, steve, thank you both. when we come back, berkshire hathaway increasing its stakes in some key overseas companies we'll tell you which ones right after this break stay tuned, you're watching "squawk box" and this is cnbc. g! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at aflac.com ♪♪ at morgan stanley, old school hard work meets bold new thinking. ♪♪ at 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities

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the ceo of hyundai said the south korean automaker will consider making its cars more compatible with tesla's charging standard, but wants to make sure it's in the best interest of his customers. he says one issue is hyundai vehicles can power up faster on chargers other than teslas and he's hoping tesla can make changes to its infrastructure. in recent weeks, tesla has made deals with ford and gm for those company's cars to use up those tesla fast chargers. warren buffett's berkshire hathaway raising its beds on five japanese trading firms. they averaging 8.5% in each of the companies. berkshire says it plans to hold the japanese investments for the long-term. buffet saying that berkshire could buy up to 9.9% in each company. those stocks have done very well this year.

remember, buffet and greg able both traveled to japan in april to meet with the heads of those five companies mitsubishi has been the best performer this year. it's up more than 50%, but each of the companies up by at least 30% for the year when we come back, how amazon got the jump on walmart in ecommerce we will speak with the author of a new book on the war in retail. plus, how the companies are dealing with theft and the retail of stolen goods also their push into health care a reminder for you, as we head to a break you can get the best of "squawk box" in our daily podcast. follow squawk pod on your favorite podcast app and you can listen anytime we'll be right back.

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one of the biggest issues facing retailers shrink. that's industry speak for theft. also other factors like vendor fraud. it's been hitting retailers large and small and joining us right now is to talk about the state of the sector is business journalist jason delray. he is the author of a new book that's out today, "winner sells all," amazon, walmart, and the battle for our wallets jason, we always like to talk about david versus goliath story, but this is really a goliath versus goliath story these kind of giants beating each other up constantly >> it is and i was struck in the last few years by all sorts of constituents, some in d.c., some competitors asking me, you know, when is walmart going to step up

and really challenge amazon in the online retail space? and like you said, it is, in many ways, a goliath versus goliath. but it's also just maybe the greatest case study in modern history with innovators and walmart trying to combat that. >> meaning that they have to kind of rip up their playbook. >> yeah, meaning that there were a lot of -- there's a dna at walmart for a long time that was built on strong in-store sales and profits. and in the online space, to close the market share gap with amazon, they really, some felt, had to focus on growth and so -- >> they've done that to a pretty large extent >> in the most recent years, i think, he has -- he has had a lot of success in that they've now merged the teams, the online and the storms teams. previously, there was a whole bunch of incentive disparities, where leaders on brick and

mortar would have profit-driven, you know, bonuses and entrepreneurs like mark lori, who was at walmart for many years, would have growth incentives and so, for a few years, that was really bumpy but right now, they, you know, the last couple of years with the help of the pandemic, they've been figuring out this omnichannel strategy >> let's talk a little bit about what we have been hearing recently and that is this idea that shrinkage, theft, has gotten way worse, just in terms of the numbers that are being put up. and if you talk to a lot of these retail ceos, they will tell you that it is organized crime rings that are coming in and doing this not just people walking out the door with things, but organized crime rings where they come in, steal a lot of big-ticket items, and they're able to sell it places like amazon, like marketplace, and potentially even some places like what walmart and others are doing >> so amazon,d you know, they created this incredible marketplace for consumers where the selection is infinite. but there are all of these

ripple effects and this is a big one, where they have a really tough time -- they're trying -- but they have a tough time tracking who's selling what and when a and, you know, they'll put out some press releases when they partner with law enforcement and wanting credit for, you know, putting some of it -- stopping some of it >> we want credit for stopping some of the fencing operation that's taking place on our site. i know it's tough, but okay, you're profiting off of this not only you not stopping this, you're making a profit off of every stolen piece of goods that's sold on the site. >> they made a bet years ago that they were going to pursue growth of the marketplace and selection above just about all else and this is what happens now, walmart had a chance to really choose a different path with their marketplace approach online i thought they might, and they've largely followed in amazon's footsteps, looking for selection above all else my ride here was talking to a

driver and he was talking about this great deal he got on a weed whacker on amazon. same thing on home depot was $70 more i told him -- guess what, you might be deal with -- >> what you almost are certainly dealing with because the home depot stuff is exclusive to home depot. if you are finding it somewhere else, you are buying stolen merchandise. >> that's correct. >> so what happens this has to be one of many things that you're concerned about. >> i've thought for a long time that the growth of the marketplace at amazon would someday lead to real trouble for them that they pursued it, the ambition behind just immense selection, again, feels great for consumers. and consumers are voting with their wallets that that's what they want. but does it blow up in some big way? and, you know, my fear was recall of, you know, or the lack of a recall of a problematic product, for example but this is a big issue and i

think, you know, i think retailers are going to keep applying pressure. i just don't know what happens >> is this any different than what you hear from most of silicon valley, which is move fast and break things, let them catch up with us later >> i mean, amazon likes to view themselves differently they're up in seattle. no free lunches and, you know, free laundry on site but they made this bet back in the early 2010s, when they really went aggressive pursuing sellers from all across the world. and they're now trying to fill in the gaps and fill in the protections. and again, they will say they're spending whatever the big number amount is, but it hasn't been enough to date >> what do you think, just in terms of both of these companies moving into the health care arena? we've seen some big plays from each of them >> i have. i have a whole chapter in my book about their ambition there. a lot of missteps so far amazon had an amazon care

service before they acquired one medical. and i talked to nurses ws who worked in that and they were thinking like a technology company, like we need to rebuild everything from scratch, but we had some stuff that worked. we had employee medical records, software, that was pretty good and so, they're trying to figure out the right balance there. at walmart, they're very serious about these health clinics the problem is, the turnover at the top of that leadership team in health care has been crazy. i think one executive i spoke to cited something like nine or ten executives have rolled through that health care org in the last decade is it a side product or a big focus? and that's something they either need to make a decision on or move on. >> jake, i want to thank you for coming in today. jason delray the book is called "winner sells all: amazon, walmart, and the battle for our wallet. thanks for coming in >> thanks, becky, for having me.

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breaking news. the judge currently overseeing the government's case against former president trump for his retention of white house documents setting a trial date for august 14th. that order coming from judge aileen cannon in the u.s. district court for the southern district of florida. in some of the other stories on investors' radars today, u.s. secretary of state antony blinken wrapping up a high-profile trip to china

he spoke with china's president xi jinping and said china isn't ready for its military to resume contact with america's that. had been a u.s. priority for the trip vans says the former logitech ceo bracken darrell will become the new ceo next month. his name really is bracken darrell. backwards. alibaba is replacing long-time ceo daniel zang with eddy woo who currently serves at dou bow?

zhang will also leave his position as chairman of the board. a little more than a half hour from the opening well on wall street. joining us sylvia jablonski, etf co-founder and ceo last week would have been good to be long do you feel like you're invested enough at this point have you missed some of this or do you feel you have the right asset mix? >> good morning, joe i don't have fomo, i've been buying electric vehicle stocks from most of last year i continued to build up my position the first half of the year because i did think that we had enough of a market recession at least in certain parts of the market where this year that would have played out, and some of the innovation would have come to fruition i have been actually net long. >> do we need to look at 2024 estimates at this point?

when do you think -- or do you think there's a recession coming at some point? obviously there's always a recession coming but will it be in the next six months, 12 months, 18 months, even longer? >> i think at this point what we've seen is that the majority of investors and market experts have predicted that we would have been in this recession now. we did have a pullback in 2022 it didn't fit the classic definitions of a recession we saw a lot of softening, we saw pmi come down, services come down we saw jobs weaken a little bit. they're still a little too hot we came down quite a little bit. you've seen this kind of sector rotation recession with some parts of the market suffering a little bit to answer your question, i think this is probably it. maybe we get a little bit of a mild recession and that looks like a 5% pullback, something along those lines. it's hard to argue with jobs as

strong as they are, earnings as good as they are, the fed coming to the end of something, inflation coming down. we're going to have this revisit of the october lows. at this point that would seem like a drastic geopolitical issue in order for that to come to fruition in my opinion. >> at this point are you a value -- which way are you leaning? value or growth? >> i think diversification is the key. if i wanted to pick up stocks on the near term to capitalize on the next six months or so, i would look at travel stocks. cruise ships are crushing it it's that time of year, people are out there on the airplanes, in the hotels, on the cruise ship s there's so much growth and potential coming out in the next five to ten years. if ai is the future of tech,

electric vehicles are the future of driving you look at the growth of some of the chinese ev automakers out there, that's a basket that can capitalize and build your wealth over the next 3-5 years as well. i still like some of the innovation growth types of names. >> what is your inflation forecast i think it matters >> yeah. it matters i think we have to look at the data and listen to the fed if you look at the data, inflation is coming down i was looking this up the other day. food inflation is down to the point that eggs are 14% less than they were a year ago. all of this is positive. i think time will tell how keeping rates higher for longer will impact inflation and how fast it will bring it down my sense is that inflation is coming down. we haven't seen the full impacts of that in the numbers yet if you look over the last 12 months, it's starting to look

linear i think that's promising i don't think inflation is poised to go a lot higher. if it stakes around longer, i still don't think the fed has all that much more to do even if we get another hike or two which is promising for growth stocks and tech stocks. >> very good, sylvia, time will tell i guess you figure rates at this point are either at as high as they're going to go or maybe a little higher. what about commercial real estate that won't hurt the stock market if that blows up >> that could be a looming headache we'll have to see how that pans out. i was thinking about it this morning in terms of what we've seen with the regional banks recently and how much that felt like a crisis a couple months ago. we're not talking about it all that much right now. i think the economy can withstand a lot. i do think it would soften i think it would impact banks obviously in the financial sector do i think it's going to crash us into recession? no

however, it's another wildcard that could bring volatility into the market it goes back to the old adage of stay diversified >> all right, sylvia, thank you. >> thank you not a lot of time left ten seconds. markets at this point, they're okay we'll see by the end -- kind of a three-day weekend hangover i think we're seeing not me, the markets. maybe me make sure you join us tomorrow "squawk on the street" is next ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla at the new york stock exchange. cramer is live from the performance review center at ford test track in dearborn, michigan a lot more from jim in just a moment in the meantime, futures are red as investors absorb recent gains. busy week on tap although shortened with powell on the hill tomorrow and tuesday. futures point to a