range that we were in. we've got the ten-year at 3.68% this morning, two-year, 4.7%, and bitcoin continues to trade above $30,000. had a little delayed response to those blue chip companies getting involved, but it did moved all the way up above $31,000. stay above $30,000 some trip out there, sorkin. beautiful. you're a lucky man >> beautiful i'll see you tomorrow. >> see you tomorrow. make sure you join us. "squawk on the street" is next ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, sara eisen at post nine of the new york stock exchange cramer has the morning off futures, modestly softer here after the revolt in russia over the weekend. lot of questions and debate about the impact on stocks and commodities. busy week for data s&p coming off the first weekly loss since march

our road map begins with a final week of the month, quarter, and the half watching the macro market risks after that failed weekend mutiny and insurrection in russia tesla shares are down ahead of the opening goldman downgrades the stock a tug of war over alphabet, downgraded at ubs, seeing a.i. risks ahead, while a new b of a survey suggests a google search boost. interesting, guys, some things working, arguably, against the bulls to start the week, not a lot of laeearnings data we'll get buyback blackout windows. we've had a run. jpmorgan asks whether we go back 5% to some moving averages, 10%, 20%, they think 5% is more likely >> it's just a garden variety pullback there

positioning and sentiment, positioning was light, sentiment was negative some of the trading note this morning, including from goldman-sachs, a fixed income note saying they're not as much powerful tailwinds as they have been over the past few months of the year no longer the case they also, and just keep an eye on this, it's what happens toward the end of the quarter and the month, some rebalancing, and it's significant this go-around from pepnsions, in other words, money flowing out of stocks into treasurys to try to square up, so we could see some of that action. goldman-sachs estimate $27 billion of u.s. equities to sell for month and quarter end from pensions so that could happen fundamentally, it's kind of a light data week. we have get the pce deflator on friday, that's the biggie, and then the central bankers all speak. >> with you. >> i'm honored to be moderating, yes. >> sorry, who's doing that, sara >> i'm doing it, david did you know >> you >> it's a very big privilege >> it is listen, we can't -- you know, we can kid about it, but it should be promoted endlessly because it's such an important sitdown,

and as you've made the appointment, they're not all fully aligned here in terms of what they're doing >> certainly on the speed. they all kind of lean hawkish, except for boj boj and china are in a league of their own over there, but the other three are focused on fighting inflation, which is coming down too slowly for them, but they're going in different speeds like, bank of england surprisin with a double. ecb being more hawkish than powell, and powell sort of soft promising or at least saying it's a good guess that we're going to have two more rate hikes on the dot a lot of the strategists are writing about it this morning, this conversation and what they're looking for. for some flavor, guys, powell speaks on wednesday with the heads of ecb, boe and boj with a policy that is likely to outline the progress made globally in re-establishing price stability and the need to continue such efforts. that's the whole game. dave lutz writes, "we want to

see how much more they're looking to squeeze borrowers." and the other interesting element to this conversation is going to be russia, because the geopolitics are back on the front burner, and that's what happened over the weekend. we've got our eye on the oil market because russia is still a key exporter, and europe has gotten by with lower natural gas prices, but if this is seriously a threat or at least breaks the sort of air of invulnerability of vladimir putin, what does that mean? i think it raises a lot of questions, and i think it raised a lot of questions for investors and for central bankers too, especially the ones in europe that have to deal with the energy repercussions >> without a doubt we were probably all glued to our -- whatever it was on saturday morning, certainly, as prigozhin was making his way toward moscow, but it did raise an endless stream of questions, many of which we have no answers to in terms of what ultimately

it will mean the war continues, very much so, carl, at this point, in ukraine. but perhaps strengthening their hand as russia does seem to be at least preoccupied, perhaps, in other ways. >> ruble initially dropped 3% on the open, and then it kind of came back. we look at that as the barometer, obviously, for confidence around russia and the markets, although it's hard to get a clean read on that, and then, you know, oil market has behaved, but we'll keep an eye on it. >> the only other market that we'll get to later is the private markets, which have been sort of ascendant today, whether it's the wolfspeed deal and the $2 billion coming from apollo, whether it's blackstone, whether it's an sl green deal, whether it's vista selling a business to ibm. the private markets are actually taking the lead from the public markets, at least when it comes to news this morning all of which we will get to. >> yeah, and some pretty encouraging news for commercial real estate in new york city >> potentially >> part of that story. but we want to get to the fallout from the mercenary armed

revolt from russia over the weekend. we turn to nbc news chief foreign correspondent richard engel who joins us from taipei great to see you your thoughts about the weekend? >> reporter: well, i think this was a massive blow you just said it a couple of minutes ago. this penetrated this air of invincibility around vladimir putin. dictators, all dictators, putin included, survive for one reason they only have one responsibility that is to provide stability for the elite. no dictator operates alone they have an inner circle. and putin's job for the last 23 years has been to enrich himself and enrich his inner circle and make sure that their money is safe, their power is secure, and their privileges remain consistent and if he is unable to continue to guarantee that, and now there are serious doubts if he is going to be able to continue

that role, it raises questions about his ability to maintain the elites' loyalty. in 2020, a referendum was passed, and there's no real referendums in russia like there's no real elections. it was passed because the elites, the people around putin, wanted it to be passed, giving him the ability to stay in power until 2036, and he is supposed to be up for re-election again it's a nominal process in this spring, in the coming march. so, there are now questions, will the elite encourage him to step down, to find some excuse not to continue his mandated path and stay in power effectively for life so, this was a profound moment for russia, because if you look back at putin's history, when he faced challenges in the past, when he faced a challenge from

the leader of ucos, for example, he crushed him immediately, publicly, stripped him of everything he had in order to send a message to the people around him that putin was the only address in town, that he was in charge, and that as long as you stayed loyal to him, everyone and all of their money was safe now, will the elites actually trust that putin can hold things together all that's happening now publicly to a degree is for show we saw -- we heard just a short while ago from the foreign minister, and he said that an saturday, in the midst of all of this, the president of belarus had a phone call and offered to mediate this crisis. we have no idea what the terms of this deal are under the publicly announced terms of the deal, yevgeny prigozhin is supposed to go to belarus and wagner is effectively disbanded,

and given amnesty. we will see if prigozhin just sits quietly on his hands in belarus and goes into retirement no one i have spoken to believes that is the case everyone believes that there are a lot of back room conversations going on right now between the elites in russia trying to assure them that everything is okay, that everything is stable, that putin is still the only address in town, and that their positions are secure as far as ukraine is concerned, this is the greatest opportunity that ukraine has had perhaps since the beginning of the war, certainly since it launched its new offensive a couple of weeks ago. i spoke to a very senior ukrainian official in the midst of this crisis, and he told me that, from ukraine's perspective, it was too good to be true, because now, 25,000 men are off the battlefield. the kremlin is in a degree of

disarray there is questions about putin's leadership there are questions about the leadership of the ministry of defense. moscow went into a degree of lockdown, so for ukraine, this is a -- i don't want to call it a turning point, but it is certainly an opportunity >> and richard, we also wonder what it means for china and the strategic view there and the relationship with russia >> reporter: well, you were talking about semiconductors not long ago that's why i'm here. as you talk about all the time on this show, taiwan has this enormous advantage, this key strategic advantage of having a -- an almost monopoly position on semiconductor production. it produces 93% of the most advanced semiconductors that are required for a.i., produces 60% of all semiconductors, the computer chips that power pretty much everything in our digital

lives. and i was speaking to ceos of semiconductor companies here, and they are worried about china. they are worried about the future stability of this island. they want more deterrents coming from the united states they want more reassurances, because, they say, if the semiconductor industry here is threatened, the global economy is threatened. and china, undoubtedly, is watching what is happening in ukraine, learning that taking over a country even if it is a much smaller adversary is not easy, and that it is easy to start wars, very difficult to end them, and that once you go down that path, unexpected twists and turns arise, like the rise of this mercenary army, the wagner group >> richard, frgreat to check in with you on that longer-term story regarding china and

taiwan, but certainly about russia when we come back, david did mention the private markets. $2 billion deal there as well as some others to talk about. take a look at the premarket as we start off a week going gintoa holiday weekend. we'll talk more about the month-end dynamics in a bit when "squawk on the street" continues.

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welcome back mentioned a number of things going on in the private markets, including real estate deals. did want to focus on two real estate deals that have gotten people's attention this morning, and they obviously have public market implications. in fact, one of them involves a public market company buying an industrial property portfolio from blackstone, so they're both public companies, but in this case, it's industrial, it's not commercial real estate, and that should -- that distinction should be one that people keep in mind, and of course, industrial has been quite strong, and blackstone continues to have, i think, as much as, oh, i don't know, $175 billion or 175 -- yeah -- billion dollars worth of -- in a global portfolio of industrial real estate, but in this case, being opportunistic. being told from analysts who had a quick look, 4% cap rate. that's sort of the yield of the property, in other words, to its buyers, so that gives you a sense they're willing to buy it

at lower yield than is available by buying treasurys right now, but the idea is that these will go up. these don't require nearly as much upkeep, for example, as a big office building or apartment building, and this is a hot part of the market. the properties in question here, atlanta, dallas, south florida, washington, d.c., new york, california as well $3.1 billion is the total price there, and it is obviously an important deal we'll see how prologis shares do today. interesting to know on the commercial property front, again, an area that has been active for some time and certainly one where blackstone owns an enormous amount of real estate the other deal perhaps getting some attention in commercial real estate circles is sl green selling a 49.9% interest in a building between 46th and 47th on new york's park avenue that values the overall building at about $2 billion sl green came in here with a

preferred sometime back. it was originally a building that was bought by china's h&a remember that name it went bankrupt they paid $2.2 billion in 2017, so $2 billion now, wouldn't seem to be that large a discount, given the dislocations that have taken place in the commercial real estate market, particularly when it comes to places like park avenue in the 40s and how many people are actually going to work in these buildings at this point sl green shares, as you saw, going to be up there morning again on that transaction. cap rate said to be in the h3s the buyer is maury trust from tokyo. and they are now obviously partnering with sl green to continue to develop or further develop this property as well, which, again, was acquired by sl green from hna or the bankrupt hna back in september of 2022.

so, carl, you know, to your point, could be a positive as rents, as i know you pointed out this weekend, we saw from, i think, torsen, hit an all-time high in new york city, but as we know, very different parts of real estate, whether it's industrial, which has been quite strong, whether it's multifamily, which has been fine, but when it comes to commercial real estate and off the buildings, not so good in this case, though, it may at least be a bit in the marketplace that we haven't seen in a very long time. >> we keep saying new york city's the place where everybody wants to move and nobody wants to go to the office, but "the journal" with this piece about maybe the four seasons midtown and the plaza reopening, would be great for midtown i know robert frank this morning pointed out, i think, second best june ever for luxury apartment sales, $4 million and up so, the -- it is -- i mean, there was a period during covid where you thought because price collapse in the city would make it more egalitarian, easier for young people to move into, it has not happened >> that lasted for like a minute prices were down for a little

bit. rents have soared, i can tell you, as someone who just signed a new rental office is all doom and gloom sl green is down 50% over the last year. we were talking to a reet analyst from bmo saying, you might want to get into that stock. it's been punished enough. but i know anecdotally, david, people trying to get smaller scale office, commercial real estate deals done aren't getting any financing from regional banks. >> it can be very hard that's another important part of it that we have talked about, of course, the regional and community banks that typically would be the financiers are not willing to -- certainly not at a rate that would make any sense for a potential buyer. >> yeah. >> watch that. obviously, got some earnings coming this week carnival is going to be one of them up sharply for the month we'll break down the company's quarterly results in a bit take a look at the premarket here as we get set for fairly busy week for the middle of the summer "squawk on the street" is back in a moment.

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carnival out with quarterly results, stocks under pressure even though they're putting out some good data points on demand. >> that's right, sara. 31-cent loss, which is a 3-cent beat for carnival in the quarterly earnings, $4.91 billion on sales, which also is better than expected, perhaps not as big of a beat as wall street has anticipated, given the big run-up we've seen in the stock let's talk about guidance as well the third quarter, the company sees occupancy at 107% or higher and for the full year, occupancy of 100%, so the occupancy numbers continue to move higher as we see demand for cruising return, and it follows those comments we received from carnival's direct competitor, royal caribbean, just two weeks

ago when the ceo, jason liberty, told me they're seeing a widening of their customer base, not just millennials and young families but the older demographic, baby boomers are now returning to cruises as well looking at shares of carnival down, though, in premarket trade. i would also point out carnival has been upgraded by a number of wall street analysts in the last two weeks. deutsche gbank, jpmorgan, bank o america. on the conference call, we will be looking for not only more color on the guidance for q3 and q4 but also any plans to consolidate brands analysts have been pointing out that carnival has removed about 22 ships from its fleet. back to you. >> seema, have the cruise lines had as much pricing power as the hotels and airlines and everybody else that's benefitting from the travel wave >> the cruise lines recently have had pricing power, sara, in the last three to four months. you've seen ticket prices and the cost of experiences on board

move higher, but they were the last ones to gain pricing power. what they had to do following the pandemic, they had to cut prices to get people back on board. now that interest is back, they're starting to raise prices >> got it. seema mody on carnival we're going to talk to josh weinstein about what they're seeing with they're putting out numbers like more than 100% occupancy and how much demand they see in the pipeline in a changing macro environment >> and what decisions do they make on capacity in the long-term? the opening bell coming up in about six minutes don't go away. - today, 9 million kids in america are considered food insecure, meaning there may not be a lot of dinner at the dinner table. help change a kid's life. support your local food bank. the more you know.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. tesla shares moving lower in the premarket after being hit with yet another downgrade this time, it's goldman. cuts to neutral, but raises its target they were at 185 they go to 248 goldman says the recent retail better reflects the company's long-term growth potential, also adds it sees a difficult pricing environment for evs, although the target raise is because they're assuming a more moderate

rate of price declines we sort of know what that means as there's a race between pricing coming in and trying to maintain your margin, at least in the auto business >> you know, the question i think, carl, some are asking, certainly in the chinese market, for example, and the "journal" had a story today about nyo. given the weakness in the chinese consumer, you know, are they going to face headwinds as others are in the ev market there? not to mention in the u.s. as well, in terms of more competition. we talked about it a long time the bulls, led by ron baron, will talk about all the other efforts that tesla has under way that don't make it just a pure automobile company >> funny thing about these downgrades, they're so bullish it's like, we think that deliveries are going to be fine and we think this is a great story. the primary reason on this one is because they think that the pricing, you know, the market's giving it credit for a lot of

these strong fundamentals, and now it'skind of in line with other sort of tech companies or even at a premium. the only other risk that is raised is that there could be margin pressure, especially those, you know, automotive nongap growth margins because of the pricing environment, and the analyst posits that some of the strength lately in the stock has been, we haven't seen a lot of action from tesla in the last few weeks, but that the environment is still going to be tough and weighing on profitability. otherwise, it's pretty bullish >> half the note is about how many things have gone right in the last six months. as for china, david mentions it, and s&p did cut their china forecast for the year. they were at 5.5 they go down to 5.2 as we see that recovery slower than people anticipated. on u.s. market share, couple weeks ago, b of a said they see tesla market share of evs going from 62% to 18% in the next three years as a bunch of other

entrants are going to have models for sale. >> this has always been -- the bears always argue the competition is coming, and tesla has always shown it's got a great lead >> and of course, the margins. >> let's get the opening bell and the cnbc realtime exchange the big board today, it is cartoon studios celebrating its name change and transfer to the nyse from the nasdaq at the nasdaq, it's ptc therapeutics, focused on rare disorders, celebrating its tenth listing anniversary. by the way, speaking of research and medical and biotech, moderna gets an upgrade today over ubs they go to -- actually, another interesting call where they upgrade but trim the target. that also comes on the heels of a couple of pieces in "the times," this idea that we're in

the golden age for medical research >> obesity, that's really where the -- and novo and lilly seem to have the lead here on this and more chatter around, pfizer has contenders as well, but the market for that product and the momentum that it's having just, i mean, look at the stock price of eli lilly, and the fact that now they're working on innovations around pills instead of just injections, which would make it even more accessible, and potentially cheaper for patients >> yeah. pfizer continuing to advance, they're saying, their development program for adults with obesity and type 2 diabetes but certainly not being received well today that stock is down, to your point. just looking here. advancing clinical programs, subject to results in the ongoing phase two trial, discontinuing the clinical development of one of its kpo compounds, though, and that is being not well received by the marketplace. to sara's point, lilly, of

course, as we pointed out last week, exceeding its now $440 billion market value. it is the highest -- by the way, it's pure pharma and exceeds j&j, which obviously is not pure pharma anyway, but had been the market cap leader, certainly, broadly speaking in that area all on the strength of and the belief that these drugs could become, what, $50 billion a year drugs at some point. >> how much do you hear ozempic now in the szeitgeist? the note from mizuho, apparently, there was an american diabetes association meeting and it was the most followed probably in history because of all the excitement around these drugs and his conclusion is just that these two are in the lead by a fairly large margin, and that they're well positioned for further innovation on these drugs. >> pretty flat open on the dow, up a couple of points, just down three on the s&p interesting chart out of deutsche today that we're now in

the 85th percentile of market stretches in which we have not had a 3% drawdown. that's 73 trading days, about 3 months >> is that good or bad >> exactly it's been remarkably stable as we've been hovering here in the mid-4,300s, but it's definitely fodder for the bears who argue there's a bunch of stuff coming in the second half, whether it's unknown unknowns or known unknowns >> my favorite second half stat from the bull side is tom lee, of course, of fund strat he went out on a limb and said, we're going to have a 25% up year in the market this year, and everybody laughed, said he's always bullish so far, the market is -- has done well this year. it's up 13% on the s&p where does he say the next 10% is going to come from? well, here's a stat. he says since 1950, 22 instances from the s&p is up more than 10% by mid-year, the median second half return is 8%, and he gets

to 4,700 just looking historically there. he says, inflationary pressures are going to come down faster than you expect. he said there's a lot of cash on the sidelines. he likes tech, likes the qqqs. of course, that's the bull case. there are plenty of bear arguments too, which is, inflation's not coming down fast enough it's sticky, and the fed's going to have to do more hiking and we could go into a hard landing scenario i will just point out that bonds are rallying today, so continuation of last week and there are worries about the economy, and they're global. it's been acting global. we got the german business confidence coming in weaker tha expected, adding to more evidence that that economy is in recession. >> yeah, uk retail sales negative for the second consecutive month. actually, i think it was over the weekend, bmp said, you look at what's happening with tighter credit rates are going higher jobless claims are definitely picking up, so they see real consumer spending down half a

point annualized in q3 and q4. basically, the bell is tolling for a certain contingent of the consumer, although over the weekend, denny looking at boomers' nest eggs, $75 trillion in money markets, in stocks, retirement funds, home equity. >> look at david, not me i always had the boomers are what's helping this economy right now. >> i am not a boomer >> just kidding. you're right >> i missed it by that much. >> here's ed, long-time bull, but he's arguing they haven't even begun to spend a lot of this money >> same with the federal government today, they're talking about president biden is going to announce plans to -- of how he's going to disperse the $40 billion to different states to speed up broadband. this comes out of the infrastructure spending bill, and it just shows there's still a lot of cash coming in for these projects, which will require labor and require, you

know -- >> and there continues to be a labor shortage again, story today in "the journal" about restaurants just desperately trying to train new staff and keep people and how difficult it can be to satisfy customers whose patience has worn out to a certain extent, given we're past the pandemic. >> we'll get a jobs report next week >> got a lot of different news to get to this morning more stock specific. i do want to start with just covering the very important trial taking place in san francisco, though not today. today, they have a day off so, tuesday, wednesday, thursday will conclude the government versus microsoft or more specifically the ftc versus microsoft. right now, those who are listening to, watching, parsing every word in the trial say microsoft seems to be winning, but you never know let's give you a quick highlight, though, from friday xbox ceo testifying in court this, you have to think, was something the judge will include in her opinion, perhaps, right

when she asks. you're testifying under oath this is phil spencer who runs xbox "that you will make future versions of "call of duty" available for the playstation 5? and he said, "that's right." she reminded him, the judge, "you're testifying under oath." and he said, "yes, i'm making the commitment, standing here, that we will not pull "call of duty" from playstation." that's one of the key arguments, and so you do -- that was a moment there's a few of them. government hasn't had any yet, as far as we're aware, but we'll see what the next three days of trial brings we very well could get a decision on the preliminary injunction we expect to prior to the july 18th termination of the merger agreement, and then the question will be, for whom does the bell toll? the question will really be, does microsoft choose to potentially, as some people are now writing, close around the

cma? nobody can explain to me how that would work. the uk regulator that's supposed to deal, but they're now appealing. but it is something people are talking about. we'll watch it closely >> ibm >> want to talk about this ibm deal it's vista selling again, and vista has been the large technology-focused private equity firm has been monetize ago lot. i got numbers for you if you want to listen to them last 18 months, completed 18 monetization events, generated $18 billion in total value, including monetizations of $14.3 billion, sara, and that includes data, ping, c-vent and aptio, which is a cloud-based software solutions provider that was bought by vista. >> 2018. >> for $1.94 billion in january of 2019. >> right they ipo'ed in 2016 and then vista took it private and now ibm wants it, so the reason ibm

wants it is because of what this company does it does software to help companies deal with their technology spend and make them more efficient, which a lot of the analysts and also ibm says has been a strategic focus and a growth business for them, and it fits really well with the macroeconomy right now where companies are trying to -- they're by default spending more on tech, so they have to try to become more efficient with the way they spend that and that's what, apparently, this company does it gives companies the tools to do that so it adds to ibm's sort of services portfolio. we're going to talk to rob thomas, who led this deal at ibm. he's the head of software for that company and the chief commercial officer about why it makes sense for ibm, david, about the price they paid for this, but it's clearly a lever when it comes to financial management and operational i.t., which is on par with ibm and its strategy, where it just raised a bunch of debt and part of the

new strategy post-kindle was to do m&a like this >> for vista, they're in the private equity business. you want to exit there have not been that many exits, but vista has been active in monetizing what have been good investments, it would seem, for that firm. speaking of private equity, want to get to apollo this morning, but not because it's doing private equity in fact, mark rhone made it clear when we sat down at the milken conference a couple months back, he said, listen, private equity is an amazing business, we do it better than anyone, i'm quoting him, but it's not a growth business what is a growth business? private credit $450 billion in private credit at apollo far in excess, of course, of the $75 billion they have in private equity i mention it because this is where the action's at. you can't raise debt in the public markets or perhaps you don't want to do so for any number of reasons or including that you have to pay so much for

it well, wolfspeed, which is -- providing industry-leading solutions for efficient energy consumption and sustainable future, that's at least what they say, chip maker, raises what could be as much as $2 billion over time from apollo for, note, sara, 9.785% mature in 2030. seven-year notes, and they're getting almost a 10% return. they'll hold that. they just sit on that, and they're happy to get their 10% or 9.875 that's what he says, mark rhone, a great business to be in at this point you've got players who are far larger than they are when you look at the blackrocks of the world, but -- >> they're all in it it's booming >> we have been talking about private credit when it comes to financing leveraged buyouts for some period of time, displacing many of the banks that had played prominently in that role, but private credit iseverywher now. >> kkr, aries, hps

>> brookfield. >> everybody is just in it family offices now are getting into it. >> yep, yep. >> tcw you wonder what the risk is at some point, right? i mean, the returns are very good right now >> returns are very strong right now. >> everybody's jumping in. >> the risks are that, yeah, companies like wolfspeed don't make it. >> don't make good >> but you can see right now it's having a positive impact on that company stock price as well finally, on the m&a front, in the public markets, i did want to mention amadesus, terminates a deal it had to be acquired by option care. unh is coming in to do it. that was not unexpected. we told you when we first heard about the unh bid of $101 cash to stock that that was likely. now the question becomes, is option care health potentially for sale as well that's pure speculation on the part of some shareholders who would like it to be the case,

but did want to bring that up to date optum has entered a definitive agreement, terminated their previous agreement, paid the break fee, and they're on their way. >> had a lot of m&a today. >> i really did. unexpected >> action-packed summer monday the only thing i was going to also mention was china, which i think is definitely part of the narrative today, because we're looking still for more data on the consumer, and we've got these tourism numbers on the dragon boat festival, which is always a big deal. when i was living in hong kong, i remember it was like the one time people took off work during the day was to go watch it so, 140.7 million people trips were made in china over the three-day dragon boat festival it was up from last year, but -- and here's what people are focusing on -- 22.8% lower than the pre-covid levels of 2019, just adding to the sort of doom around -- doom and gloom we've seen lately around the chinese consumer recovery and economic recovery the stock market there has been under pressure i'll be really curious, carl, to

see what nike has to say nike reports thursday after the bell, and we know the china story has been a battlreboundine for them and very important to that profitability >> nike is the top-performing down name this morning page one of "the journal" is all about companies siloing off china to cut risk and of course we just had a state dinner with prime minister modi, so you can see some of the shifting winds around the world today dow is up 50 let's get to bob pisani. >> morning, guys sara is mentioning china bouncing today, but weak session overnight in china take a look at the sectors what's happening is encouraging, a little bit of widening out because we saw the sectors moving to the upside there there we go. thank you. banks, energy, laggards, moving up china, which has been a notable laggard for weeks now, a little stronger today, although not in china. semiconductors, had not-great week shanghai had very weak session,

down about 2%, and it is essentially up 1 or 2% for the year that's been on a downward trajectory for weeks now the shenzhen, growthier part, is essentially flat for the year after starting off really with a bang sara is right. the china data has been weaker i think we got pmi for china on thursday night the other thing is the semiconductors a lot of big names were down mid-single digits last week, including intel, amd, st micro, skyworks, broadcom, all bouncing a little bit today let me show you what happened last week, because there were broader concerns about higher interest rate. intel was down almost 9% a lot of people have been calling for some kind of summer correction some of these names have had a big move up and part of it, arguably, started last week. meantime, this whole valuation question on big cap tech, people are still struggling to try to make it clear what is going to be here. we're seeing seasonably lighter volumes coming after the end of the quarter this week.

we're going to get seasonally lighter volumes. sky-high prices in valuation, and new worries about higher rates and that's kind of what put pressure on some of the big cap tech names last week chris harvey over at wells fargo and others have been very colorful, trying to describe how big $3 trillion is that's the market cap of apple dave and i had a discussion about this a few weeks ago and a lot of people were incredulous about these numbers but it's true, and chris harvey adopted this over the weekend, $2.9 trillion apple is about the same as the gdp of france. people find this perhaps not the best way to make apples to apples comparison but it gives you an idea of how big these companies really are microsoft is as big as italy at this point $2.2 trillion for the italian economy. alphabet, as big as mexico, $1.7 trillion roughly apiece for mexico, compared to alphabet and you can see that then you go on and on with this. the whole point is these numbers are absolutely enormous. the bull case is that a.i. is

going to continue to drive valuations higher, and that a.i. is going to do for valuations what the internet did for some companies in the 1990s that's the bull scenario others have different opinions finally, just want to talk about -- david was talking about m&a deals, but we have some big ipos coming this week. the ipo market is starting to open up. we talked about this several weeks ago with cava. this week, fidelis, kodiak gas services, and just this morning, a big mexican commercial real estate firm, vesta, this is mexican real estate, so yes, these are niche players, but no, guys, we don't have the big tech names that are out there, the unicorns, but carl, the market is definitely starting to open up a little bit for up ipos. >> interesting, bob.

thanks as we go to break, let's check bonds. sara mentioned activity in yields today we are going to get some data over the next few days we'll get durables, some gdp revisions, pce, income spending. ten-year did get down to about 3.68% or so, lowest since june 7th, rebounding just a touch here with the dow up 66. hi, i'm todd. i'm a veteran of 23 years. i served three overseas tours. i love to give back to the community. i offer what i can when i can. i started noticing my memory was slipping. i saw a prevagen commercial and i did some research on it. i started taking prevagen about three years ago. i feel clearer in my thoughts, my memory has improved and generally just more on point. prevagen. at stores everywhere without a prescription.

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xfinity rewards creates experiences big and small, and once-in-a-lifetime. china expressing some support for russia following the mercenary armed revolt in that country over the weekend eunice yoon live in beijing with more good morning, eunice. >> hey, carl the foreign ministry today reiterated that, as a, quote, friendly neighbor, and strategic

partner, china supports russia's national stability and said that the rebellion is russia's internal affair. now over the weekend the foreign minister as well as the vice foreign minister hosted russia's deputy foreign minister who flew here to beijing. the russian foreign ministry said that chinese reaffirmed their interest in strengthening the cohesion and further prosperity of russia the chinese side quoted the vice foreign minister saying china-russia ties are in their best period in history none of this is surprising given that president xi jinping has only been deepening his ties with russia as well as his so-called best friend, president putin, throughout the ukraine crisis china has yet to condemn russia's invasion of ukraine the chinese state press has been playing up and praising president putin for his, quote, unwavering determination to maintain unity and also mocking

the western media as well as western mpoliticians for what they called wishful thinking of a weakened putin the official read out, interestingly, did not describe support for putin personally, however, the indications really are that china is going to stick by russia, despite those developments over the weekend. >> eunice appreciate that. it's an important story. guys, as we turn to the markets, energy has been the one area where it got some chatter over the weekend. not a surprise, sara, that energy is the top leading sector right now. >> brent is up a percent we're seeing movement. people are watching the crude in russia, which has been well below the price of brent and has come up a little bit on this news just instability and questions over what happens in russia. leads to second half oil risk.

that's the bottom line, including lima croft on our show earlier. >> sara, that analyst that joined us on friday from what was it, bmo talking about the reits, the ones focused on office properties, looking good today. >> he said buy. >> up 50% on that deal and vornado up 7.7% as well. a bright spot in the marketplace. >> these were shorted, heavily shorted. >> both of them. >> baby steps. baby steps in new york city. the vix did get above 14, although settling back just bro. equit equities -- just below equities are higher. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities,

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management. good monday morning and welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, live for you as always from post nine of the new york stock exchange take a look at stocks. they're going strong here in the early session here last trading day of -- trading week of the quarter and of the month. the s&p up and energy, materials, technology is doing

well the only sector under pressure, health care and consumer staples. a little bit of reversal from what we got last week where we saw more than 1% decline in the s&p. we'll see if it sticks with the nasdaq up 0.5% here are three movers we're watching tesla under pressure, but far off the lows goldman sachs downgrades the name from neutral to buy saying the difficult prying environment for new vehicles will weigh on tesla's gross margin and cite the run-up the stock has had, 25% this month and more than doubled this year. lucid shares soaring, striking a partnership with aston martin. lucid will supply the uk car maker with electric motors and bart batteries and lucid takes a 3.7% stake in aston martin carnival cruise shares under pressure despite a beat on the tom and bottom line. the ceo joins us next hour to break down the results and what they're seeing as far as demand. the broad market we're higher up

0.3% a lot of people were wondering if last week was the beginning of some sort of more pronounced sell-off it's been such a strong year, 13.5%. on the nasdaq up 27% we get into the end of the quarter and the half of the year and try to figure out what's next going through the research this morning mike wilson digs in his heels. he's been bearish all year and wrong, but right last year at morgan stanley and arguing that earnings pressure is what is going to weigh on this market and he's now well below consensus. in our view the headwinds outweigh the tailwinds and believe the risk for a major correction have rarely been higher he's tribl tripling down his base case for s&p earnings is 185 what's consensus 220 >> bear case is 170 and takes pains to say that we've been meeting with dozens of clients and our actual 185 is not bad if

you look at long-term trend. he's trying to say we're not doomsdayers but argue that there is downside risk to earnings in light of what you've been saying the boiling frof frog risk model. >> credit is tightening and that's a headwind for the equity markets and overall economy. we don't know how much he points to metrics showing, you know, the senior loan officer survey it is coming down, demand and access to credit going to weigh on the economy. we've been trying to figure out what's coming out of the bank reserves, if anything, for all this treasury issuance the repo draw down is where it's been coming from and that is actually supportive for the risk environment for stocks and we'll watch that today we'll get a big auction of -- i don't usually mention the bond auction, $42 billion of two-year notes up for sale and interesting to gauge the demand there. that's the one most sensitive to the fed policy rate and it's move ed up and continues to move

up with the 10-year yield under pressure the record was 4.673 on a two-year offering in february. could we break it? that will say something about where traders and where buyers see the fed policy going higher. >> yeah. >> it does also remind us that interest costs as a percent of the budget are going higher when paying 4.6 or 4.7 versus what you were paying a couple years ago as you borrowed as the u.s. government those numbers can add up quickly. >> corporates, their financing costs are going up as well unless you can get private credit. >> treasury is arguably locked in so much fixed they've seen this storm coming for so long. what's the saying, if you haven't done that as a corporate treasurer by now you probably shouldn't have your job. >> exactly the fed warning about higher rates. >> you try not to have needs for capital if you're corporate and figure out ways you don't need to borrow in an environment like

this, where the u.s. government has to borrow endlessly. a little bit different into yeah but the bottom line is, for now, the market is now expecting the federal reserve -- now a 77% chance they raise rates again in july and that they're done the market is not pricing in the september hike yet so the next few reports we get jobs next week, pce on friday, which is their preferred inflation number and then the week after the jobs report we'll get the cpi report and there's a lot of expectation we'll see a 3 number in front of that cpi because of base effects. so if we continue to see progress on the inflation front and perhaps signs of weakness on the jobs front maybe the fed won't have to do as much, maybe just a july hike or take off a july we'll hear from powell later this week on wednesday in discussion for the ecb forum, in discussion with the head of the ecb and head of the bank of england and head of the bank of japan to figure outing how they're thinking about where they are in the fight against

inflation, how much more pain they might need to inflict powell has to be happy he took the cuts out of the market perhaps that was the purpose of the two dots of higher rates they did they took the fact that the market was betting on interest rate cuts out of the market but are they on the same page when it comes to future policy on interest rate hikes. also the russia story adds another layer of uncertainty on geopolitical risk in the economy and energy into this conversation. >> although goldman now saying that impact is likely to be limited on energy. oil disruption probably won't get moved around too much. we'll see. >> we don't know. >> definitely still be the top sector this morning. we are headed into the home stretch of the first half of the year s&p as you know up 15 so far and investors embracing maybe a greater chance of a soft landing. let's bring in mike santoli at post nine with his take. >> hey, carl the story of the first half in a lot of ways is the market kind of consuming a successive series of the big picture concerns from

a hard landing the fed will have to go to 6% to a regional banking crisis to even as sara was saying a liquidity pocket because the debt ceiling was solved the net result is a near 50% total return for the s&p 500 a lot of complaint, the equal weighted s&p up 3% year to date. i have been a little bit less alarmed by this. if you dial it back two years or the beginning of last year, they're neck and neck so there's big out performance by the equal weight last year from the october low. the equal weight up 13%. not really clicking on the bull market cylinders it's showing you a lot of cushion that's been built up underneath the market since the october lows and since we had the stagflationary scare a year ago. the volatility index remains a talking point but i don't think it's behaving in any way out of whack with how the market has been processing all this information. so, yeah, we've got down under 14, down under 13 parts late

last year but look at the actual experience, realize volatility, s&p 500 over the last 20, 30 days, it's more like 11 on an annualized volatility basis. it's doing what market is doing. it looks low on the chart, another way of saying the overall equity market is slightly overbought in the direction of surprise might be higher i view it as a neutral situation as sentiment and positioning of migrated from super bearish to neutral at this point. stocks versus bonds also a dynamic that could come into play, maybe arguably the pullback the rebalancing effect out of equities into fixed income because you have had this huge quarter to date out performance by the total stock market over the total bond market not a huge swing factor but something to keep in mind also for any individual investors who realize the equity market is perhaps left you over allocated to stocks so far this year carl >> i have a question you're not going to like. i don't know if you're going to like it. valuations, the bears also argue that the market is too expensive

relative to where it should be and relative to where interest rates have gone. i know it's reflective of a small number of mega cap tech stocks which make up the index but where are we now >> i love this question, sara, not just because it comes from you you -- >> you can't ask how expensive the market is because you look at equal weight. >> there's nuance either way if your main complaint about the market it's only seven super expensive huge stocks doing everything, you would want to separate it for valuation purposes if you take out the very broadly defined technology sector, the third of the market that you call tech and internet, everything else looks like it's around neutral valuation i've seen work that says it's 16 times forward. i'm not saying that's cheap, but to me it's not the main hurdle for this market. i also will grant you didn't get a massive valuation reset to the downside where things got cheap and you rebuilt forward expected returns to a really stupendous

degree where you say coming out of a bear market we're going to have a great multiyear run rate of returns i doubt you did that i look at my little proxy of cyclical bellwethers like capital one and gm and whirl pool and best buy the ones i bring up down 30% over two years and you're not going to tell me there's a valuation problem. maybe you will tell me there's a recession eventually, but it's a different question. >> mike, i hope you're on apple $3 trillion market cap watch. >> why not. >> we're getting close. >> 2.95. >> we were going to go down this morning. seemed like we were going to have a boring open, and then the quicker early morning money comes into the apples and, you know, the other favorite tech stocks what does $3 trillion mean an abstraction in some level so you tell me what that is worth. it looks expensive, but i don't know, it seems like there are

more questionable fundamental companies with massive capitalizations and price to sales ratios you might be pointing to before you got to apple. >> he yeah i love the spoke stat. the app store now 1.1 trillion in billings and sales on a global basis would make it bigger than many countries thanks, mike santoli. let's continue the conversation where the market goes, joining us at post nine is adam parker, research ceo and cnbc contributor great to see you welcome. >> thanks for having me. >> interesting nice work this morning looking at gross margins and this fissure between cpi and ppi and what sector that benefits. >> yeah. last time i was on, was a while ago and i -- you wanted to talk about the fed and i talked about a.i. that was three months ago. i had no idea it would be 80% of my conversations after that. it took off faster than i thought. i'm trying to figure out how to high jack this conversation away

from what you want it talk about. >> i would assume. you wrote it. >> thanks for the pitch. what makes stocks go up is surpr surprisingly high margins six months from now. do i have a differentiated sfru consensus on profit margins six months from now, and there's wacky stuff going on with, you know, inflation and what you're paying for stuff and charging for stuff and i think it's going to cause a lot of stock volatility i just noticed that margins for staples are at all-time lows and probably have some, you know, potential abatement of headwinds and tailwinds on the cost side that's a sector that looks optically expensive in some cases that i like more than i used to. that is what we wrote about today. the flip side, i think some of the industrial companies probably have more margin headwinds than people think. you know, our probably overly optimistic we like staples more than

industrials as a result of that work definitely people are trying to figure out margins >> do you think positioning is going to be a huge story in the back half as people try to get to at least some credit for a rally they might have missed >> yeah. that's a good question i never know how to totally answer that because the multistrats are so big and run at such huge gross exposure that you're used to thinking, $100 billion account like asset manager that's big and if they have a couple percent cash on the sidelines that matters, but when running $80 billion and takes gross to 1200 and they trade 500% a year, the impact on volume is just 10, 15, 20 fold it depends on whether the multi see an opportunity to spread out in the second half of the year that matters more than the cash on the sidelines when i look at the data, you could get people with bigger net exposures. you could see gross go up and net go up. it's possible you get a bigger

positioning fueled rally. >> are they under exposed to equities right now >> when you look at the hedge fund data it shows bottom on nets versus the last ten years people could take it up more i don't know a lot of people who have pro rat ta participated this rally not a bottom up traditional, you know, stock picking hedge funds up 15 or 20 this year. >> is that a bullish sign then as they start to capitulate? >> you know, i guess if i'm being cynical, i worry that people pile in at the exact time are we at the peak i don't think so i think you get more exposure uup before you get the sell-off. you were chatting earlier, i don't agree earnings can collapse the way the bigger firms are articulating i think that's unlikely. actually, i thought of something on the air with you guys about a year ago, i don't know if 24 earnings are above 2023. remember we talked about that a couple times. >> yep. >> and i'm not sure i changed my

view i think the idea they collapse this year and v shape recovery next year is not the consensus view at all and i don't think investors think earnings are going to be well below $200. if you take what you had in the first quarter you're embedding one of the bigger collapses ever that seems unlikely, weakening dollars for the multinationals, low consumer holding up. >> it gets back to your first question, there's a conventional wisdom as cpi comes down that's going to hurt margins? these companies have done so well because of the pricing power and inflation. >> yeah. i think it's a combination of their input costsand what they can sell it at, right. if your input costs are generally in materials, labor, and depreciation, that's the things that drive your costs to get sold so which one of those things look like they're incre blmentay getting worse? none of them they have work in process they'll ship out at an agreed

upon price it's unlikely earnings collapse this year. v shape recovery next year unless you think there's a stimulus and want to position your portfolio for that. i'm hearing -- i do a lot of things to, we all do, and it's our job, i have a company and for a living i try to do things to get paid for them, i'm not hearing anybody thinking the base case is collapsing that much the market this year is because the probability of the bear case is lower than it was six months ago and the severity of a bear case is if it formed is lower than six months ago. statistical expectation is the reason market is up. >> well said in light of your piece -- >> i like the go america theme we have going on. >> it's fourth of july weekend. >> represent us overseas i don't know if you heard. >> i did not. >> yeah. >> i like it >> you didn't? >> no, i didn't. >> wait. you're kidding >> i would like it - >> sitting down with lagarde, powell, boj head >> weita.

>> wow. >> andrew bailey. >> good panel. >> i look forward to -- i was just giving her a chance to talk about it again come on. don't have to make me feel bad. >> he's mocking me it is the event of - >> i do like the july 4th get up. >> very patriotic. >> it's not a get up. >> sorry. >> thanks for highjacking another interview. >> good to see you as always have a great 4th. >> there's the promo tune in this time on wednesday our road map for the rest of the hour, head live to moscow are for the latest developments. defense secretary william cohen weighing in on the risk on the muni in russia. >> one source of funding gaining allure in the public and private markets. >> the tech trade starting to run out of steam. >> big he show still ahead stay with us

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uncertainty and confusion over putin's authority front and center following this weekend of rebellion in russia. keir simmons joins us with the latest from moscow hey, keir. >> reporter: hey, carl so we do have now new video of president putin released by the kremlin this morning it shows him talking to a group of young engineers, but he doesn't at any moment mention the rebellion, the stunning rebellion, over the weekend. so there are many suggesting it may have been recorded before the weekend's events

we have new video of defense minister shoigu meeting with his commanders, making clear from the video that he is in charge of what russia calls its special military operation, carl, but again, it is mute and no mention of the rebellion there's speculation of that video, while released today by the ministry of defense, whether it was recorded before the weekend. all of this painting a picture of the russian government trying to sustain an image of business as usual when, of course, what happened over the weekend was far from usual absolutely stunning. we saw the leader of the wagner group, mercenary group, try to head towards moscow here, getting a long way down the freeway towards moscow threatening to try to unseat the leaders of russia's military and then turning around with this deal, apparently put together by the leader of belarus, president

lukashenko, to have him go into exile there, a deal that according to the russian government was agreed to by president putin. carl, think about that that is stunning president putin who on many occasions in the past has been known to reach out and try to help auto crates around the world needing the help of a leader from outside russia as russia lunch lurched into crisis we have heard from minister lavrov saying the u.s. ambassador during these events did reach out to reassure russia that u.s. was not in any way playing any role and also looking for reassurance about russia's nuclear stance, its nuclear capability russia has around half the world's nuclear warheads so unexpected events and i think, guys, the reality is, that we do not know what to expect in the days and weeks ahead. russia has stepped back from the brink, if you like, and the

potential for a -- some kind of a civil war. what happens now, i think that is yet to be seen. >> so many questions keir simmons in moscow let's bring in former defense secretary william cohen to discuss more. secretary cohen, good to have you on a day like today, maybe just pick on where keir left off, as what you expect to play out differently in russia after this rebellion, if anything, in the weeks to come? >> we're at a point where we don't have answers it's like a rubik's cube, you keep turning the cube to see if you can line things up that makes some sense the notion that prigozhin was going to march on moscow with his 25,000 mercenaries and take over the government was wishful thinking on his part or foolish on his part. why did putin allow him to go so far? was he telling his military to hold back and not have russians killing russians there are a lot of questions out

there. i think the most important thing is we sit and reflect and not race to any judgment on what is happening inside of russia that is negative and threatens putin. >> in the near term does it give ukraine an edge, do you think? i mean, 25,000 troops from the front lines leaving, i would think, must make some sort of difference on the russian side do you think there's an opening here >> this, obviously, is an opening, but i think the most important thing for the ukrainians is to keep the eye on the prize don't change your plan whatever they were planning to do in their counteroffensive, keep planning on that. almost as if you were in a sport game or football game or something like that. rushing down the field against the opponent over on the sideline some of the players are attacking the coach. you can't stop the game that you had in mind to look to see what's happening on the sideline i think what they've to do, consistent with their plan, carry it out the best they can

they've got a fierce opposition. this is not easy it's not going that well for them so keep their eye on their plan and don't change it. >> mr. secretary, a couple questions. one is, what does it mean for unity going into the nato summit i wonder, we talk about, you know, the elites sniffing out weakness what does it mean for belarus and china sniffing out weakness, aside from what they've written formally. >> belarus has no choice in terms of what they're going to do they're basically under the arm and grip of putin. i think the chinese are not going to abandon putin, certainly not at this point. i think it's too early for anyone to make an assessment as to whether putin is so weak he's no longer reliable russia is still a big, strong country in terms of the military power that it has. we have seen the cracks in the sense that their military is not well trained, peered, supplied or led

okay, nonetheless they still have major nuclear capabilities and others we have to sit back and watch how this plays out, be ready, make sure we are fully ready to address any contingency, but stay out of it as best as possible the biden administration has done just that. >> we're trying to figure out, you know, we follow the markets here on cnbc, if there's more risk say around brent, wondering if there would be a spike this morning on the idea that there is now potential instability and questions around russia, energy policy do you expect anything like that to change? do you think that market that investors should be paying attention to the internal political dynamics now inside russia >> i think investors alway coun russia i think at this point, putin's head is on a 360-degree swivel he has to look over his back and around on both sides to make sure that he is secure with his

team obviously, there's something inside in terms of whether there are people who still support the engagement, the war in ukraine, or those who think he made a mistake by going he's got dissent within his power structure as such, so he doesn't know who is friend or foe. the fact that prigozhin was on the road, i think someone told him -- by the way, whatever coup we're planning it's not working out, putin has taken out your supporters or they're backing out on their own, so right now, i'm thinking that president putin is pretty concerned about who is in his camp and who isn't. obviously, investors are going to have to take that into account, but it's too early to tell don't make any decisions yet see how it unfolds in a couple days. >> finally, we mentioned these comments from lavrov a few moments ago. one of them, though, is the idea that russian special services will investigate whether western powers were behind the events of june 24th.

do you expect them to advance that narrative significantly >> i do. i think putin has to do whatever he can to draw attention away from his own problems, domestic problems, and domestic dissent and point to nato as being the cause of the -- any problems so he'll do whatever he can. he has complete control of the media except for minor outlets as such. he's going to dominate the conversation for the foreseeable future i think he will point to nato, point to the united states, point to anybody but within his own advisors. >> we also wonder, mr. secretary, how china is watching this, how the leadership there, as we try to figure out what they're going to do with taiwan, the relationship with russia, the concerns potentially about secondary sanctions from the u.s. and just the effort here to go forward with the military invasion >> i think the chinese having met with our secretary of state,

the president of china having met with him, that was a good first step i think we're opening the dialog i think that's good. i don't think the chinese want to take any move at this point against taiwan i think that would be a mistake. i think they know it would be a mistake. i think things will settle down as they go forward and then we'll make our strategic calculations in a different context. right now, we have to say, what's going to happen next week, two weeks, month, we'll know whether or not china and other countries like north korea and the african countries, syria and others, who support russia, will back away from it i kind of doubt it, but nonetheless i think putin has his hands full trying to solidify his regime. >> secretary cohen, thank you for joining us today good to got your thoughts. former defense secretary well big tech has seen big gains when it comes to stock prices, but is that trade running out of steam

that's straight ahead.

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as what may be $2 billion in private financing for the public chipmaker wolfeby. leslie picker has more on what could be an important trend. >> what's interesting here is private credit is typically a type of fundraising used by private companies, but increasingly, this type of lending is inching into the public company arena as well the latest example as you mentioned, wolfspeed that raised $1.25 billion with an option to expand by another $750 million from apollo and two other managers wolfspeed plans to use the funds to expand its manufacturing capacity and the deal is emblematic of a trend that sources say will become more popular. public multinationals opting to borrow billions of dollars from firms like apollo rather than traditional way of using banks to send the debt out to other investors. this is happening because so much capital has funneled into the private credit space it slowed recently but still the

strategy has ballooned to $1.5 trillion in assets, triple the level from a decade ago. with so much dry powder check sizes have gotten larger, bringing, well, larger public borrowers into the fold. while champions of private credit tout speed the efficiency the price certainty of getting deals done, they could be more expensive with a premium over a syndicated loan. in wolfspeed's case the loans have mature in 2030 and not subject to the same leverage rules so borrowers can take on more risk. wolfspeed is adding more debt to the $3 billion that's already on its balance sheet with negative free cash flow and negative ebitda and a stock price that's down more than 25% this year so perhaps it's an alternative route for them, more appealing, but sources say this is a trend that we should continue to see, especially as these check sizes could be so much larger. >> yeah. to your point, mark row hen has

made the point, they have $450 billion in private credit versus $75 billion in private equity which we think of apollo in that area they also restructure companies too. i guess that may give them some confidence somehow apollo ends up, even if things go back, not looking as bad. i don't know if that helps gives them confidence in terms of when they make a loan like this which we should point out they don't syndicate, they hold to maturity and take 9.875% a year. >> i think rohan says he expects their credit business to double in the next five years this could be a potential avenue where they see this growth they have been somewhat more active than their peers in lending private credit to public companies. it's still a pretty nascent phenomenon but they have been more active there. to your point, they do kind of sit into all the different areas of the capital structure and you don't want to own a private equity stake in a company that's about to go bankrupt it's probably a little bit better to own secured debt in

that area. >> secured debt is always better than equity. at least when things are going bad. >> that's for sure. >> interesting to see wolfspeed up 5.5% on the deal. it is expensive to your point. >> it's expensive and a lot of debt. >> they got the money. thank you, leslie. speaking of deals, ibm scooping up software company in a more than $4 billion all cash deal this morning. ibm's chief commercial officer in charge of software and did the deal joins us in the next hour to discuss. we're back in two minutes. 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. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

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welcome back to "squawk on the street." i'm sylvan na henao. here's your news update. the supreme court dismissing a louisiana appeal to prevent its congressional map from being redrawn. the case brought over claims that state unlawfully dilutes the influence of black voters. it comes after the high court unexpectedly upheld a lower

court ruling this month that said alabama's congressional map had to be redrawn as well. authorities say a san antonio airport worker died in a gruesome action friday night they say the woman, a mother of three, was sucked into a dell delta airplane engine. this is the second accident of this kind in just the past six months federal safety regulators fined an american airline subsidiary $15,000 over the new year's eve death of a worker in alabama. today, president biden will reveal how the federal government plans to spend $42 billion to expand high-speed internet access. the government's goal is to get everyone connected by 2030 the fcc estimates about 7% of the country doesn't have reliable access. i'll send it back to you thank you very much. we are headed into the final week of the first first half tech is a big winner up about 40%. that's the nasdaq's performance. one of our next guest is calling amazon his top pick forecasting

a.i. gains ahead for the name while the other says we've gone too fast far, too fast and due for a mini stall joining us is a roth capital partners director raising the price target of amazon to 155 from 130 and the jefferies tech research analyst good morning to both of you. rohit why double down on amazon after it's had such a good run >> thank you for having me i think amazon is the under appreciated full stack a.i. play that's how i would call it estimates have bottomed out. i think aws estimates are the key hereand i think they have bottomed out and extend any news would be perceived as good news. then as a.i. and as more full stack a.i. are going to commercialization happens i think the best bet is amazon heading into 24. we like amazon given the three-pronged advertising, commerce and cloud play and each have a.i. applications that can

further kind of the lead versus any of the other companies we like amazon, like it a lot. it is something that we should be heading in buying more of in case tlhere is any perceived softness as well. >> it's up 50% plus this year. you think the a.i. story is still being under appreciated by investors? >> even more so as far as a.i. story, i think the cost cutting that they have been doing, keeps the next year's estimates to an upward buy i think the street is [ inaudible ] the amount they have done in the last 9, 12 months and how much extra levers this company can have, leaving aside a.i. a.i. is like a cherry on top with amazon where each of their segments should benefit from a.i. and the only full stack a.i. play, the chips, the infrastructure, the commerce, the advertising.

i don't think there's any other company that can bolster all segments getting benefits from a.i. in 24. >> brad, any names stand out in your coverage area that you think is under appreciated like that, as we head into the second half and already such strong performance from tech? >> all tech is up massively. everything has been appreciated. there's a lot of a.i. enough in a lot of these names right now let's be clear about that. like this is an undiscovered given that magnitude of these runs up 40 to 60%, meta up 137%. i don't disagree with the long-term call tech goes higher. short term we stall, last week you saw the stall and a lot of a.i. hype where the revenue reality isn't going to hit until late this year into 24 and so that could be the disappointing factor in the short term the long term, we believe in amazon, microsoft is two of the best a.i. plays we have as well

from our side. >> that's interesting. given what a shellshock the nvidia guidance was last quarter, i mean, aren't companies under the gun to quantify the impact in the near term and i guess are you saying you don't hear that or expect that to come out in the coming conference calls >> so remember, you have to buy the picks and shovels from nvidia to get to the gold, and then to create these platforms and create the services, this is still rolling out. all the software companies we cover are still figuring out how do you monetize it you look at microsoft and the majority of the products aren't even priced yet. they can't monetize it yet so until it's on a price list and generally available you can't monetize it. this is the market looking out in the future, not what's going to happen in the short term. this is more of a '24 revenue event than a '23 event that expectation will lift these

names ahead of time, and we're on board with that what we're seeing is given the magnitude of the run, a lot of that is baked in, in terms of some of this good news going forward, given the move we've had. >> all right good to get your thoughts today as we come off of a weaker week but overall, broad rally for the month and year in tech good to see you both carnival cruise lines, one of the top gainers on the s&p this year, shares are under pressure this morning off the back of earnings we'll break down numbers with the ceo josh weinstein in the next hour. we have highlights from carnival's conference call currently under way, which we'll share with you the dow has gone negative. we're down about 64 points s&p dipping into negative territory. we'll be right back. ight past t. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years.

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you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire carnival cruise lines conference call about wrapping up the shares taking quite a hit this morning let's get to seema moody listening in and can fill us in on some of the highlights.

>> carnival's ceo josh weinstein saying demand is accelerating on higher ticket prices but costs are going up tied to advertising. that seems to be what the stock is responding to and the company's near term guidance was a bit conservative versus street expectations and while losses are narrowing quarter over quarter there's questions about the return to long-term profitability. morgan stanley writing given the strong run up in shares ahead of the results well, do not think there is enough here to keep the valuation this elevated. truist analyst patrick shoals noting that of the three cruise lines, carnival is facing the most pressure from new supply and competition from disrupters like italy's msc cruises that have has expanded into the u.s carnival doesn't benefit from the return of the luxury consumer as much as norwegian and royal caribbean. as we see bookings surge on a quarter over quarter basis, the company has begun to deleverage the balance sheet, that's ha

wall street wants to see, $1.4 billion off its peak and has over $30 billion in long-term doesn't and does aim to improve investment grade by 2026 shares down 9%, but it's had a huge run up this year, guys. >> i wonder how you're thinking about capacity additions we talk about how disciplined the hotel business has been, for example, because of the cost to capital and just general caution. does that sort of echo what's happening in new boats >> it's interesting. it depends on cruise line and ceo josh weinstein talking about what they're seeing geographically but the rebounds in europe also quite notable at a time when asia hasn't picked back up. while we see the hotel ceos commenting about the increase in occupancy in countries like china the cruise lines are taking their time returning to the country. ceo weinstein saying that while we're encouraged by the reopening they have no plans to return in the near term. that's affecting where they're

adding cruise ships and where they're taking that supply out. >> seema, what is the problem -- what is the obstacle to profitability here because if times are so good, what is the issue? >> i think while bookings are improving, costs are rising. that's one of the issues here. they do feel like, as bookings return and interes in cruising, they still have to allocate a significant amount of capital towards advertising, brand marketing. this is a time when there is more competition not just from the three major u.s. cruise lines that we cover, but some of the newer players like msc, viking, which tpg is a big backer of, virgin cruises as well it's more of a crowded marketplace and that is pushing these big cruise lines to put more money towards advertising >> pretty remarkable one of the big earnings of the week, seema mody. one sector beating the s&p this year, and no, it is not tech first as we go to break, june is pride month and cnbc is celebrating all month long sharing stories of corporate

leaders. this is bank of america's digital head nicky katz. >> you never know what someone experienced that morning before they showed up to work or what they're dealing with in their personal life. so, when we all show up to work, we should do so with grace and with compassion for one another. even now in 2023, the struggle for our lgbtq plus teammates, family members and friends continues to be very real. it's important to take a moment during pride month, but, frankly, all year-round, to celebrate the victories and show our support for the ongoing struggle

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dom chu's been tracking that action and joins us with a breakdown. >> carl, it's important, really, because we're talking about the fourth biggest sector in the s&p 500. when you can see that kind of outperformance, up about 28% for the overall year-to-date versus 13% for the s&p, you see where that outperformance is coming from with regard to sector weighting. if you break it down into what

parts are actually leading, you take a look at some of the trades we've been talking about with seema, with carnival cruise line, travel names dominate some of the bigger performers on a year-to-date basis booking holdings up 21%, marriott international up 16%. that consumer discretionary is still tilted towards travel and services one place we've been talking about quite a bit, that is still part of that sector that is seeing extraordinary gains is the home builders, new home strukz pulte, dr horton and lennar up 70%. so that home builders trade is still hot. where we've seen the underperformance, it's been in traditional goods retail vf corporation for clothing, down and nike is down, so they've been the big drags we can't talk about this particular sector without bringing up the two biggest stocks in it amazon and tesla of course, tesla is up a

doubling so far year-to-date and amazon is up 55% the reason it's so important is because these two stocks make up north of 40 -- i think it's close to 43% of the overall index, sara. with amazon being a 23% weighting and tesla being a 20% weighting, the rest of the sector follows these two guys. back over to you. >> absolutely. thank you. dom chu. raises a question with the consumer a chart from bank of america economist, they looked at -- it looks complicated but the assets and liabilities of u.s. households, basically the balance sheets if you add all those colors up, they have increased and they're very healthy and household assets rose by $3 trillion in the first quarter. it breaks it down by assets. it's financial assets which is leading and real estate assets it's all helping the u.s. consumer $4.4 trillion higher than in

2019 we're watching these things, credit tightening, which is a headwind for u.s. consumers, but it's coming off a healthy place for the consumer where the balance sheets are in good shape so that does bode well, especially if we're worried about things like student loan repayments starting to resume and other pressures that are coming on the consumer >> yeah. including, i mean, even bank deposits up sharply over a time period when you look back ten years and home equity as well has gone up. all important things to continue to monitor. >> which often doesn't happen leading into recession people get overlevered and indebted so the fallout is deeper that's why economists think it will be shallow. there's another action-packed hour straight ahead of "squawk on the street."