been happening with oil, it had been below 70 for quite a while. wti still at 68.57 ice brent sitting at 73.38. >> we learned a lot today, didn't we? >> we did. a lot of different guests from all different walks. >> i know i have to work on my at posity. >> learned that one today. >> my fatness. >> andrew thank you. we'll see you back here tomorrow right now it's time for "squawk on the street. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with david faber, mike santoli at the new york stock exchange. cramer has the morning off the s&p still on pace for the best month since january a lot of corporate news out of delta, snowflake, walgreens, microsoft. durable goods impressed with a beat the market rally detour, whether or not it's a sign of things to come also ahead, a rough start

for shares of walgreens. the company slashes its outlook, posting quarterly earnings below most analysts' estimates that's the first time in three years it's done that, although the stocks has been going down for a while. a different story for delta, raising second quarter guidance. we'll have the latest from the company's investor day. dow coming off its sixth straight day of losses, the longest streak since september of last year a lot of discussion this morning, mike, even though the indices were lower, brett was positive >> actually quite positive been on case i would say on balance for the last week-plus and even really for the full month of june at this point. the average stock has actually gained ground on the big mega cap names. a lot of it i think falls in the category, the overall indexes pausing, got overbought, got too hot. the big nasdaq stocks did

probably all they could do in the short term it's made gestures in that direction. the s&p outperforming the nasdaq it has had a comeback. everything falls into the category of rebalancing. i don't mean out of equities into bonds but out of leaders into laggards and sort of looking for what hasn't participated. kind of non-committal. feels very neutral in the sense that everyone felt under underinvested. they chased, raised equity exposure youd ear no longer seeing this massive net short. now it's sort of a what's next moment we've gotten pretty good gains to date, we're treene catalysts a little bit, between the jobs report and fed decisions so it feels like we have to sort of consolidate a little bit here that's what we've been doing >> there was some -- quite a bit of discussion yesterday about call activity tied to the s&p or

semis, that there is this underlying sort of bed of fomo. >> without a doubt >> even though the overall indiceys are a bit in irons. >> it hasn't gone away in fact, it came back really strong yesterday's rally attempt in the morning in tesla was really interesting, because it was like, oh, there was a downgrade? let's buy into it. then it didn't hold. nvidia and tesla down pretty significantly yesterday. we'll see how it shakes out from there. i'm not suggesting everyone is wait and see and neutral and letting the market do what it does it's more about these offsetting currents of profit taking in the stuff that's run and really sorting out where we are in terms of this potential soft landing that's really gotten embraced as a scenario at this point. if it's a soft landing, you've still got to kind of land. things are going to slow around the edges. the question is what have we priced in already. >> credit suisse looking at

treasury futures, suggesting an uninversion of the curve, david, may not come until 2026 which would basically put a recession three years from now >> yeah. well, we're going to stay higher for longer continues to be the question. >> he's essentially looking at what the treasury futures curve right now shows in terms of when you uninvert i'm a little hesitant to assign a tremendous amount of for sight to every moment of what the treasury market thinks is going to happen. two years ago, the two-year treasury yield was a tiny fraction, near zero. i don't think you necessarily want to say we know where this is headed. it is i think still a pretty live debate as to whether the market and the economy can ride the services strength for a while. you still have credit conditions that are pretty and dative housing, it seems like it's coming back. >> 52-week high yesterday.

>> activity and the stock. it's kind of this funny phase where we've got stuff running pretty hot or coming off the lows the rest of it, we have this on going vigil of when is it going to break down. >> mike, you and i remarked this morning when we were up on the platform about seth collar man being on "squawk box." not a name you typically see on tv both of us have had limited exposure with him in the years i remember one conversation. it was a rarity to see mr. collar man, been out there for quite some time. does a lot of different things remember how much lehman debt they own, for example, in the bankruptcy becky did ask just to put a number on how much opportunity he sees in this market right now, here is what he had to say. >> this environment feels like a 4 in terms of opportunity.

>> with a 10 being the best? >> 10 being the best it's nowhere near 9 or 10, but it's better than it was. you had such extended valuations, such little downside volatility really for the last decade or more, and 2021 was sort of a blowoff. 2022 began the correction. now you're starting to recover from the correction. i'm not sure whether that's going to continue or not the nature of opportunity we see on a bottom-up basis is better than it was, but still not at peak on the other hand, that means you should be wading in. >> mike, what's your take? >> he's first of all very much deep value focus he really wants things to seem cheap and deeply out of favor for him. he has big growth stock holdings like alphabet, things like that. 4 out of 10 to me doesn't sound like in his spectrum to be that bearish. i love that he said it's been

like a decade that you've had very elevated valuations and such little downside volatility. when we had 35% crash three years ago and 20, 25% downside last year, it just shows you the threshold he has for when things really seem like they're washed out. i don't think that's an indefensible view because i do actually believe it's tough to find statistically really cheap stuff that people hate that looks like it can survive this next cycle that we're in. >> carl, interesting to hear from mr. klarman, given how rare it is to see him make an appearance, let alone just talk to him on the phones as becky said. >> that's entering to see. in terms of corporate, we mentioned a few names including

walgreens. down in the premarket. earnings coming down below estimates due to a lower consumer spend, drop in demand for covid vaccines and testing slashed their full-year earnings guidance, i think bertha said, first time in several years they've missed on eps. >> pretty sloppy all around. obviously the post covid effects running through there. it's been interesting to me because walgreens as well as cvs, their approach in health care services is not exactly the same in both cases you have pbms versus the delivery of actual medical service at wall zbleens cvs owns aetna. they diverge to a certain extent. >> both really screen out very cheap in terms of free cash flow yields i think it's just because the market doesn't have great confidence about the persistence of the profitability in the health care delivery segments.

they're both integrating big acquisitions you know, the retail side of things has been in this hangover mode walgreens mentioned it wasn't a great cold and flu season for us that's good news for us. bad news for the retail side of the shop. >> it's not as though the stock has been some great performer for any period of tiechlt they may not have missed guidance for a number of years, but nobody seems to be particularly excited by the performance of the company. pa cena is not the ceo any longer, you do wonder -- not sure what the future holds for wba. i would point out -- you remember when me put this thing together, along with kkr some time back and stepped in for a period of time as ceo. it hasn't been the easiest road. >> not at all.

very low-priced stock at this point. >> yes in contrast we have delta. investor day today they raise their q2 guidance phil lebeau caught up with ed bastian this morning and joins us live from atlanta. >> good morning, carl. in the building next door they're doing analyst day presentations, incredibly bullish comments from ceo ed bastian. the company did raise guidance for the second quarter both in terms of earnings per share as well as revenue, basically by 10 to 12% for the full year they expect $3 billion in free cash flow. previous was $2 billion. they're still talking about in the analyst meeting about incredibly strong demand beyond 2023 which raises the question, when does delta get back to prepandemic highs in terms of the stock price and valuation. here is what ed bastian had to say this morning on "squawk

box." >> our stock was $6.00 in 2009 we got to $60 a share in 2019 right before the pandemic hit, a tenfold increase we've done it before we'll do it even better this time because of the strength of the balance sheet we're focused on the quality of the brand, the investments we're making digital. that's going to make sure we have a more durable outcome for the future. >> by the way n the second quarter, delta expects its total revenue per seat, which is the revenue people look at for the airlines, previously expected flag to negative 1%. now expected flat to positive% they expect the q2 earnings to be the best in the companies history. still down about 25, 26% relative to its high prepandemic. as for the rest of the airline stocks, they're also moving higher, not only in conjunction with what we're hearing from delta, but this is what we're going to be hearing from other airlines as well

bullish outlooks over the next several weeks leading into their q2 earnings reports. we typically look at the third quarter as the slow one for the airlines i'm not sure that's going to be the case this year. >> going into the holiday weekend, phil. a lot of people traveling, gasoline is down double digits year on year i was struck by the qualitative tone of bastian's comments i've never seen a more constructive backdrop in this industry the number they put on the amount of travel that could not be satisfied during covid, measuring in the hundreds of billions >> correct they believe that -- they've heard the term and they've used it in the past, pent-up demand people want to get outpost pandemic ed bastian now believes it's beyond that. it is a structural demographic, if you will, with older travelers, whether they're baby boomers or people who are just under the baby boomer generation who have so much money and so much desire to travel, that this

is now part of their plan permanently, that they will be doing more travel. that's what delta is expecting when you listen to the presentations, i was just in there to the cfo talking about how much they're expecting in terms of people saying we are going to continue traveling beyond '23, beyond '24 yes, i know we've heard this in the past from airline executives, that it's different this time around you do get a sense that they believe there's a structural shift in terms of how people look at air travel right now >> phil, coming back to something we talked about endlessly during the pandemic, business travel. anything there to share in terms of their continued view of whether it will ever come back to what we saw in 2019 >> david, i'm not sure they expect it to ever get back to prepandemic, what we saw from traditional corporate travel but they continue to see corporate travel budgetis increasing it continues to improve, but

whether or not it gets back to the exact level we saw before the pandemic, i'm not sure that delta or anybody else expects that >> phil, remarkable, especially given the crosscurrents we're getting on consumer spend overall. we'll talk to you soon phil lebeau covering delta today in atlanta. ev players tesla and lucid are rallying in the premarket. we'll tell you wiechlt it might come at the expense of another player take a look at the premarket as we get -

sleepovers just aren't what they used to be. a house full of screens? basically no hiccups? you guys have no idea how good you've got it. how old are you? like, 80? back in my day, it was scary stories and flashlights. we don't get scared. oh, really? mom can see your search history. that's what i thought. introducing the next generation 10g network. only from xfinity.

tesla received a few down grades lately, barclays and goldman. another ev name to watch is lucid, rallying on the news that the saudi public investment fund boosted its stake in the company, david all kinds of news flow regarding at least evs a lot of those came public during the spac craze. >> lucid was one lordstown came public during that period, as much as a $5 billion market at that point the move was really yesterday when they announced that sort of battery systems and power train partnership with aston martin. that definitely helped the stock significantly. of course, it's almost half of what it is when it became public

as a spac. remember it was ccib 4, churchill 4 and then bake lucid. lordstown, the gm plant didn't work as well as they hoped they had that partnership that has gone bad. >> it's gotten contentious. >> when all of this was happening, the new issues and the new startups in this area, almost everybody harkened back to, well, you know, in the 1920s, there were 100 automakers and they failed and consolidated up into what we had today. it is sort of amazing when you're now looking at tesla and an $800 billion market cap everything else is almost a rounding error around that obviously there's a lot more inside of tesla in terms of hope and expectation, imagination for what it might be.

>> you're right. there's baird on why they think tesla is a good pick in terms of gross margins. musk has made the point that there's a period of time where you -- literally an auto plant is like a furnace in terms of burning money. right now we're also looking at rivian which has had a rough -- the question becomes both on the demand side and just how much money you're going to have to burn before you can hope to get free cash flow. >> and get the price down to where you can have scale in terms of demand. that arguably is where tesla has the big head start people are worried about price competition, but tesla vehicles are pretty competitive on a cost basis. i think that's why the market reflects it -- also so hard for a gm, ford, legacy anything to get full credit for what they're doing in the big secular growth area from the market in other words, you can't put a

tesla-ish valuation on what ford and gm are doing in evs. now, for five minutes it did it for disney plus and disney that's a different story. >> as if these players didn't have legacy business to keep alive. for the chatter of china losing shares, mary barra did talk about the competitive threat that they are posing to the world. take a listen. >> china, we do have a strong business we've seen some share loss as there's more than 100 domestic chinese ev competitors the industry is at 50% capacity utilization. something is going to have to sort i think there's less than a handful that are profitable right now. i think there's a lot of change happens in the chinese market. we do have strong brands and we're launching evs that are right for the market. >> nbc news group is the media partner of the aspen ideas

festival to what degree can they make inroads in other markets, norway has gotten attention. >> exactly markets where there's a huge pred lex to buy evs, domestic or european competition already and see how it can fly u.s. automakers, for many years you make a car, push it through the dealer channel, finance the heck out of it people will buy as much car as they can finance it seems like a different equation right now in terms of getting the actual price point down, using the subsidies and the rest of it. >> getting control of that norwegian market would be key. what have they got 6 million people. >> what's the share of evs 60%. >> maybe if you count the electric bicycles. >> their enormous fund has come from the north sea and the oil and then that amazing ability to f field the winter olympics team,

it's amazing. >> two down grades in two days for alphabet today bernstein will break down what they're saying about alphabet shares. take a look at the premarket as we await mordae ta later this morning. "squawk on the street" back after a break. powering sustainable growth in a changing world. powering financial solutions that transform industries. powering innovation with access to capital. powering critical decisions with precise data and insights. powering seamless execution in evolving markets. we deliver our entire global bank to power new possibilities for you. barclays corporate and investment bank. powering possible.

take a look at s&p gainers to start the day kellogg's on top goldman says growth is about to become scarce in the industry as prices fade. they argue kellogg is the one who might be able to sustain those the longest. we've got the enoping bell in about 5 1/2 minutes.

don't go anywhere.

ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term

policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. busy week for the ipo

market six companies set to make debuts, four of which expected to raise more than $100 million. i was thinking back to goldman a couple weeks ago, mike, this issuance barometer went to 200 during the craze, back to 7, now back to 93. >> it's back up to where you should start to see deals be cranked out. just based on how long you've got without having an active pipeline sort of one-off deals. not many themes to what's happening. it's been stacked up on the runway so to speak for anybody who thinks this is an ai bubble already or in the making, it's weird to have a bubble without a lot of deals. eventually, if it's going to be worry of the label, you're probably going to get some ai-geared names good and bad we'll see if the market holds together long enough for that to happen. >> that could be a little while still. >> you would think

>> or you'll have software companies that have been, you know, growing for a few years and they're going to rebrand as ai. >> they pivot to some extent. >> exactly >> meanwhile, are we relying on the success of the cava ipo as laying the groundwork -- >> i don't know if i would extrapolate. >> i don't want to i got in an argument with cramer about it he's going to claim he was right because the ip ofrmts window has opened a little bit. >> i do think in that sense you've got clients willing to take the next one because the prior one worked just in terms of that business, there's always a consumer concept that's reached its point. >> casual mediterranean, you wouldn't think would open up the market for deep software technology -- ipos. >> in the early '90s you talked about boston chicken as the best

ethiopia, and then netscape was a few years later. >> another one that mcdonald's whiffed on. >> i did a standup for this network on the boston chicken ethiopia 1993 or '94. >> the opening bell on the cnbc realtime exchange. agility company sem that cognizant also celebrating 25 years. mike mentions ai this snowflake partnership with nvidia getting attention announced at snowflake's summit on monday. >> 4% premarket. >> yeah. hard to know if it says more -- there's this obvious land grab for data, to train the ai systems. don't pretend to know what goes into this type of partnership except you just say there's a partnership and they have something with microsoft and

individual at the same time and just opening up. it feels like we're at that time of kind of undisciplined exploration and investment in this area just to get up to a point where you can say you have very active projects and you're going to run full speed to try to make it a product that's where we are. snowflake, a very up-and-down story. people love the product. the stock is often not necessarily valued all that attractively it's had a decent year already nvidia is the ever-present player in all this as i said yesterday, i think we were down 6% in the stock. so bouncing off that high perch. >> here is the quote from jensen, basically talking about the difference between the old days and how you manage data and the size of the data flow is so large. in his words, you have to move to compute to the data >> the size is so large. i guess the way they would

portray it, it's actually the raw material for what you're building next. that's where the value has migrated again, not going to pretend to know exactly all about this stuff, but it does seem as if that's the front line of what's r real. >> ai is seen as an accelerant to those core data platforms snow is more neutral in terms of what it does, but it is one of the largest data warehouses on amazon, fastest growing on microsoft, relying on some help from some friends who looked at this much more closely than i have, mike as we try to understand the use cases for generative ai and how these businesses will deploy beyond the ones we're aware of and are sfarly easy to understand, namely microsoft or alphabet or amazon or obviously nvidia >> the way the market has treated it to this point is really we don't know to what

degree all these investments are going to provide great returns longer term. we don't know who is going to win or lose. what we know right now is everyone is spending more money than they otherwise would have in this area, and there are people selling it to them. >> you've gotten an enormous amount of data generated from your customer/client base. you want to understand and interact in an immediate way if you can do it in a chatgpt format, you can get answers quickly and obviously enhance productivity. >> and train the next iteration of it. >> and it gets better and better. >> meantime, there's the question of, you move too slow, too fast that's the thesis behind bernstein's downgrade of alphabet where stock is up 40% from the november lows they say from too slow to too fast in ai, and that aggressive push in bernstein's view could create what they're calling a near-term airport in search ad

pricing. >> bernstein concerned about the idea that there will be this kind of slippage in ad pricing, and also they'll sacrifice margins in the short term because they'll show they're investing so heavily in that area, admitting they could be a little bit off base if there's more flexibility on the cost line than they're anticipating right now. they point out things like youtube is pressured to some degree by the massive inventory of ad-supported video. other parts of the market that seem like they're getting squeezed amazon and all the rest that are hollowing out the core surge business >> meanwhile, speaking of advertising, meta today, citi, new street high, target of 360 they project 24 advertising revenue growth of 14 they specifically point out the monetization trend in reels.

i know particular henne was 350. here is citi besting him by ten bucks. >> 320 to 350 area is where the stock completely fell off a cliff. everyone is kind of i think steering their valuation models and targets toward that area of course, the all-time high was a bit higher than that, toward 400. it's no longer the case that you can say, well, it's cheap, more about the fundamental momentum, the clarity on margins and discipline on capx that story has been working for a while. it is a good reminder with meta and netflix, they're still coming back from deep holes in terms of stock performance it's not like nvidia where they're carving out new highs. it's a funny mode in nasdaq where you have some stock that's gone off to the races and others still in repair mode from what happened in 2022. >> well, meta is getting close, mike. >> it is it's right up to that bump

you're looking at 52-week high. >> no, looking right there man, i'm sorry i didn't look 100 points away. >> at that angle, it's going to get there before too long. >> listen, let's not forget the monster that tiktok is we don't talk as much about it being banned in the u.s. i'm not quite sure what's happened that effort is still out there as a possibility again, it's part of bytedance. tiktok, a billion users. it's monster if it had a market value, it would probably be above any of the major media companies. >> almost certainty. >> disney or netflix. >> probably so. >> it's certainly possible you'd have to see the actual profitability broken out, and you'd also want to understand -- still have to be discounting the possibility of a ban which is

why you're not going to see it -- well, you may see it have to go public or be separated in some fashion. >> there isn't a $200 billion media company. >> no, you're right. >> not pure media. >> comcast is 170. >> by the way, bofa reiterating disney by 135. we remain confident they have the proper mix of ip, content, brand value, park expansion opportunities. we believe bob iger's deep industry relationships will steer the company in the right direction. >> tripled numbers as well, tripled estimates a little bit on top and bottom line ahead of the report. >> the strategic pivot and focus for the company is going to be key. we know obviously parks has fueled the cash flow and earnings of the company for some time again, the question becomes linear cable networks, sports

rights, espn, how do you position it in terms of its future, and then direct-to-consumer, disney plus, how do you sponsor the losses there and get to free cash flow positive as well a lot of questions for disney, not to mention they'll have to find a new ceo the clock is ticking if you want somebody to be anointed for some period of time prior to eiger's departure next year. >> shorter term, box office is limping to the finish in the words of roth in q2 after the flash andelemental disappointe there's something going on in box office a lot is on the line with "mission impossible" in the next week or two. >> and "barbie." we'll see what that does even talks about the box office handicapping how the fill nls will perform, especially with

the superhero franchises they keep underperforming the estimates of how they're going to open. i think that because those things are just measuring awareness. yep, i know there's another one coming, and doesn't really measure intent to go we'll see if that's a longer-lasting thing it seems like they've got at least enough releases coming that it's again a viable part of the business i think i saw amc. not it should trade on week-to-week box office. i think down to four bucks, that stock. >> i've got a few on my list got to see wes anderson, my favorite see the oppenheimer movie. >> that's ours. >> got to see tom cruise in the movie theater, come on he does all his own stunts, even at 78. >> yeah, 78 now. did you know that? >> does he get insured can he insure the productions? >> i'm sure you do it's a matter of what the cost is. >> a stunt for me is getting out

of bed without pulling something. how does he do that? >> something beyond stretching. >> love tom cruise. >> i'm going to hit microsoft activision, not much to update on trial begins again yesterday was a day off. we are back, just to tell you exactly the venue, united states district court for the northern district of california in san francisco. we'll see who shows up today obviously we're still expecting to hear from nadella at microsoft, bobby co-dick at activision the key is how much time the ftc has to present their case. you'll have oral arguments on one day. the question becomes ftc making that case and how they go about doing it with three days left in the trial. you can see activision, again, 95 bucks a share in cash july 18th is when the merger

agreement would have to be extended the cma in the uk remains a key stumbling block in microsoft's ability to overcome their objection through the appeals process and whether that will work still remains a stubborn fact, so to speak, even if they do prevail against the ftc as we said many times, the ftc trial is important not just for the success of microsoft's efforts to complete this deal, but even more so, mike, in some way because if the ftc does fail and fails to get a preliminary injunction, it may chill their ability perhaps to file further lawsuits they have had a significant chilling effect on the deal market in terms of opposition to deals that were not anticipated. >> yeah. their willingness to some degree roll the dice in court whereas before it seemed like there was a little more reluctance to do that yeah, very interesting also, did we talk about -- >> the court filing? >> i was talking about nadella

talking about $500 billion in revenue. >> that's it 10% plus revenue growth through 2030would double their size in the next seven years. >> half a trillion in sales by 2030 10%, growing on that base is pretty impressive. it wouldn't be too different from what you've seen recently, especially when there's tuck-in acquisitions along the way walmart is above $600 billion in revenues apple is almost 400, and exxon got to 400 last year that's just to scale things as to where that would place microsoft in several years. >> guys, real quick. on the antitrust front, i forgot to mention as well, the other key thing i'm tracking is amgen horizon, one of the larger deals of the year. the ftc also opposing it, both in federal court but through an alj process. when they filed their alj, they failed to lock it.

in other words, they redact things, but they failed to lock the document, mike so people were able to download it, put it back in adobe somehow and see all the redactions not a good move on the ftc's part that's just housekeeping i guess they got a lot going on and somebody failed to do something. what it allowed for was for people following this closely, what was redacted and was there a smoking gun that the ftc had apparently not apparently not, because everybody has looked through it now, looked at various -- there was also estimates from amgen in terms of the horizon drugs that may be higher than anticipated the main thing, was there a smoking gun? no perhaps it points to, again, what we were talking about, an overworked ftc staff failing to do something they should have done one other time apparently this has occurred where a document was not locked and you were able to unredact everything. >> the same thing as we got the

depositors for svb, that was a document released unintentionally. >> that's true. the airlines are moving. ed bastian, as phil was telling us, delta up 1.5%. transports have basically caught up, even with the s&p 500. in comparing to prepandemic, yeah, the stock price is still lower. but if you look at the debt and issuance of equity, the enterprise value of delta is just about to prepandemic highs. the cash flow by the new guidance is not there yet. to me it doesn't seem like the market is out of whack with what they're saying fundamentally and how big the company is in terms of capitalization after raising all that debt and equity after the pandemic. >> durables came in above. most sectors are green with the exception of, say, energy and health care. let's get to bob pisani. >> very impressive start to the day. 3-1 advancing the declining

stocks, tech is rebounding take a look at the sector gainers, laggards here tech sold off pretty hard going into the close most of the big names are bouncing back this morning tech is up some of the cyclical sectors are doing a little better. consumer discretionary is a bit stronger metals and mining which i watch closely, a very good indicator of global demand overall that's also doing better reits are bouncing back. we had a mini rally yesterday in reits as sl green announced the sale of a big property on park avenue that gave a bounce particularly to the commercial real estate side of things in terms of laggards, not a lot of energy from health care as well as consumer staples walgreens is weighing, at a new low in consumer staples. maybe that's not a big surprise. not a lot of energy from the banks. very mixed overall remember the s&p is up about 3%

for the month. in terms of the markets, what's going on it's pretty simple, all about rates. you see big cap tech stocks bouncing back after most were to the downside yesterday the good news is, overall there's still no signs of recession. the bad news is central banks are still tightening now we're back to the idea, well, they didn't cause a recession yet. if they keep going, they're going to cause a recession you can see this playing out in europe, for example. christine lagarde saying higher for longer, we'll keep rates higher for longer to combat inflation. there's the stock 600 which is the s&p 500 of europe. you see europe was outperforming the u.s. until about a month ago. the s&p started rising on better growth prospects here. less chance of the fed hiking rates. europe has been underperforming for the last three months. that's a real disappointment a lot of people thought this was the year for europe to out perform. it has president turned out that way. same in china as well.

the government there had to step in -- the poem's bank of china had to step in to support the wah anymore by the orange line is china you can see we have diverged again. china prospects, a lot lower, the growth prospects want to know what's going on for the month as we close things out. slow growth for metals, mining, consumer discretionary, industrials, that's good weakness in other sectors as well including discretionary groups like health care and technology notably underperforming here yet overall, guys, still up about 3% mentioning the equal weight rsp is outperforming barely on the month. back to you. >> bp this morning before we go to break, let's check bonds. we'll get data new homes are coming, conference board. interesting discussion around

the ed if. morgan stanley a couple weeks ago thought the fed was done now they're saying the market is lower in july than previously expected another one is coming. ten-year 3.7 be right back.

from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward.

pnc bank.

. got some green arrows to start tuesday. the dow up 68. south of 435 on the s&p with news still to come today in lighofhe et tcb comments over the past 12 hours. don't go anywhere. 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. ♪♪ ah, these bills are crazy. she has no idea she's sitting on a

goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

tech has been on a tear to start this year. nasdaq on pace for its fourth positive month in a row. our dom chu is taking a closer look this morning. >> carl, it has been the technology sector that's been driving the gains in the overall market, not just for the nasdaq as you point out, but the s&p 500 as well. technology, the best performing sector on a year-to-date basis in the s&p 500 among all 11 of them and the most important sector because it's 28% of the broader s&p. now the technology sector spider is one of etfs investors and traders use to take a view on the sector, a momentum juggernaut i put the 200-day moving average in the orange line down here year-to-date basis up 35%. but this gap between the 200-day moving average longer term trend

and where it is right now it's about 20% higher than where it is and has been over the course of the last 200 days on a rolling basis. the s&p 500 itself is closer to 10% of over its 200 day moving average. what's been powering it? it's been semiconductors two of the stocks in particular leading the tech sector higher in terms of momentum are nvidia, no surprise there, artificial intelligence, a big part of that story. 181% year to date gain but the gap above the 200 day moving average is 80 some percent above its 200-day trend line and then broadcom the other one check those shares out a huge move higher but the gap between where it is right now and the longer term trend line is over 40% at this stage. one more to kind of get you sorted out for the rest of the tech sector. apple, that stock in particular, the biggest part of the weighting is 20%, carl, above its 200 day moving average

those stocks have been powering the gains. that's a sector perspective on what's happening with tech i'll send things back over. >> thanks very much, dom. some discussion, mike, about whether or not there's apprehension as meta gets to 300, apple gets to $3 trillion what do you think? >> i don't know if there's, you know, a real reluctance to push the valuations that much higher. apple was in its own category toward that $3 trillion mark if you break down the numbers, yep, it's expensive based on its history, but it's been more expensive, you know, in three years ago or so in the summer of 2020 4% free cash flow yield is not s insane we've talking about a company that has the best balance sheet, buys back its stock every day and has that valuation i think in general people are uncomfortable with how far these things have run. they're uncomfortable with the idea that everyone in the bear market was saying last cycle's leaders never lead you out and here we have these companies

actually leading us, at least to this phase, getting back 60% of what was lost in the downturn last year. >> mike, thanks for joining us mike santoli a lot more from him all day long some breaking economic data at the top of the hour and charles schwab's chief strategist liz ann sanders will join us when we're back in two.

somebody would ask her something and she would just walk right past them. 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. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today.

good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with david faber, leslie picker, live at post nine. sara is off on assignment ahead of this panel she has tomorrow in portugal where she will get the latest read on the global economy from the fed chair, ecb president lagarde and more tune in for those highlights as they happen here tomorrow. for markets trying to get some green arrows once again. the s&p off of five negative days and quite a bit of data in the next few minutes. >> lots to get to today. we're 30 minutes into the trading session. three movers we're watching.

shares of walgreens plunging the company slashing its full-year guidance and reporting its first earnings miss since 2020 more on that name in just a moment big calls on big tech, citi raising its price target on meta to a new street high as bernstein downgrades google parent company alphabet down 1%. finally, kellogg moving higher the cereal maker upgraded to a buy at goldman sachs the stock is mispriced for the growth potential it offers investors, arguing the stock is on sale at these levels. investors seem to agree up 2.4% right now. new homes and consumer confidence on deck let's get to rick santelli. >> yes we have bin data here, carl. new home sales for the month of may, 763,000

leaping over 775,000 that was our estimate. last month slightly revised 680,000. this is the best month over month number going back to february of '22 at a time where bank rate 30-year fixed is slightly over 7% last week's mba survey, was 6.3. kay schiller dropped down their pricing index to a seven-year low. good news in housing to consumer confidence, shall we 109.7 is our june read 109.7. that's the best read going all the way back to january of '22 present situation, 155.3 that's the best since july of '21 if we look at expectations, at 79.3, that is the best level of the year going back to december of last year now for some not so good news. fed manufacturing index minus is

the sixth consecutive negative month over month change and on the service side for richmond fed the 16th negative consecutive month in a row at minus 12 now, for more on new home sales, big leap, let's go to diana olick. diana? >> this is a huge number as you said the street was looking for a slight drop in may one thing i want to note, these are signed contracts that's how these new home sales are counted. people out shopping for a home in may if you take a look at mortgage rates during may they were 6.5% for the first half and then shot markedly higher to over 7% by the end of the month buyers are still in the game we heard this from lennar and kb home last week in earnings reports that were much better than expected. a couple notes on this the median price of a newly built home sold in may was 416,300, down 7.6% the builders have been lowering prices slightly, offering

incentives, but offering fewer lately than they have last fall. we're seeing the supply of new homes for sale dropping to a 6.7 month supply from a 7.6 month supply in april. the builders have to start putting more holes in the ground and housing sdartsz increase so that's a good sign one more thing i want to note is the number of homes that were sold but haven't been started yet, has jumped really sharply which gives the long runway for the builders ahead and seeing the stock up as high as they are because given the demand in the market now, the incredibly low supply of existing homes for sale, this is why the builders are reaping the benefits of it and see it right here despite the higher mortgage rates buyers are still in the game. >> market has confounded a lot of investors who thought those rate was have more impact. diana olick this morning. stocks rebounding reacting to some of the data a bit, despite some arguing there are still risks to the rally earlier this morning seth

klarman told squawk he sees a downturn coming. take a listen. >> i think we will probably have a downturn the economy is slowing many sides of the inflation equation are coming under better control. the goal of the fed is to reduce the heat in the economy and one way is to trigger some kind of recession. it's been slow developing. some people think that the excess cash in people's pockets will start to run out around year end so maybe it's an early 2024 event. >> joining us this morning charles schwab chief investment strategist stra strategist liz ann sondsers. on the data are you expecting recession calls getting pushed back >> well, carl, we've talked about this on your program before we think what we've been in really for a couple of years now is some version of a rolling recession and when you look at areas like housing and maybe to a broader degree manufacturing,

they went into their recession-like downturns and clearly in the case of housing coming out and one of our thesis around this rolling recession is that best case scenario is not really soft landing in a traditional sense, but a continuation of the roll through, such that at some point that services might start to get hit you're seeing some cracks there and/or the labor market gets hit that you've got offsetting stability or strength in other areas, potentially like housing. i just wrote about housing this week and posted it on my twitter feed so you can look into more detail but that's right now a positive support or at least an offset to some of where -- some of the pockets of now new weakness or ongoing weakness. >> right that's what klarman was referring to the list is sort of familiar by now, with student loans, the draw down of savings, tighter credit, maybe some rising

jobless claims i wonder, i mean, how you're thinking of that in the second half which offset is dominant >> so i think claims are really important to watch, not just because they're a key leading indicator, but it generally is the first tell of further cracks that start to appear i think there is some labor hoarding that maybe changing the backdrop in this current very unique pandemic environment, and that helps to explain resilience that's also why i think metrics like ours work and need to be watched carefully. those have come down consistently if you sort of apply the methodology and math around that to payrolls, payrolls wouldn't be as strong as they have been were it not for companies cutting hours work particularly in the next jobs report, i think you have to peel the onion back a bit and look at some of those other metrics. another metric that has rolled over is what's generically

called the job finding rate that looks at the percentage of people in the prior month that were unemployed that are then employed in the current month. i think that's a better read on the tightness or looseness in the labor market versus something like job openings, which arguably overstate actual openings relative to number of people unemployed which i think understates potential job applicants because there are job switchers percentages employed looking to do something else that job finding rate i think is going to start to gain traction as maybe a real-time indicator of looseness or tightness in the labor market. >> interesting i'm curious how you think all of that filters into stocks we're about halfway through the year goldman in a new note calling this year's gains essentially late cycle optimism and believe stock returns will remain mostly flat over the next year due to higher for longer rates, frothy valuations do you agree with this, and if so, where do you think investors should be putting their capital to work right now?

>> i agree with higher for longer on the rate side. i think that's absolutely a factor we already talked about the potential for deterioration in the labor market i think valuations are rich. you know, if you think about the market and the context of what started last october, last october what was interesting about that moment was the indexes s&p, nasdaq, took out their prior june lows. purely at the index level it looked pretty ugly but under the surface you had seen much improved combine that with the fact that the market was not over bought, in fact it was over sold and sentiment quite dour that's the setup wave had now we have the concentration issue, the significant underperformance of the remaining names. we started to see an improvement in breath which is good news but

came in conjunction with a market overbought and sentiment conditions moving into frothy territory. not the ideal setup like in october. i think there's more digestion to come. i would like to see improving bred but it probably will come with a convergence the average stock performing better in relative terms while you still see some profit taking pressure on that small handful of names that have been driving performance, so i think convergence in both directions is what i would expect in the near term. >> finally, liz ann, i wonder how you're thinking about global allocation some discussion about europe disappointing, both on employment and certainly the inflation fight. china rebound hasn't really come i see yellen is going to go in early july and meet with her counterpart. what is the competition to u.s., ex-japan, right now? >> interestingly the competition outside the united states is actually more on the equal weight side of things, not the cap weight side of things, where

you're seeing better equal weight performance our view is not so much that international is going to persistently out perform u.s., but what we've been emphasizing over the past year or so is this, we may be in an environment now where having international diversification is to your benefit. it's not sort of u.s. is the only game in town environment anymore and i think that differentiation between equal weight and cap weight, which my colleague talks about all the time, i think is key to watch within non-u.s. equity markets you know, japan is suffered from a bit of profit taking and our bias is still a bit more on the developed international side than on riskier emerging markets. >> that's interesting. that is a cool framework to think about. liz ann, thanks. a lot to get to today. good to see you. >> thank you. >> quick reminder, tune in for more from sara's sit down with the fed chair, ecb president and

governors from bank of japan and bank of england tomorrow we're going to bring you those highlights as they happen. >> the gang is tlaul. all there. walgreens the biggest loser in the dow you can see that at the top of the screen and the s&p 500 it slashed its outlook bertha coombs is tracking that company and has more. >> hitting a new low today lower covid vaccine and testing demand hit walgreens bottom line at its pharmacy and in the health unit. $35.4 billion in revenues was a beat, 107 per share marked the first miss in three years. the biggest factor, an 80% drop in covid vaccine sales and a sharp drop in test demand with no spike in the virus and tests no longer free after the end of the public emergency low virus activity also hitting demand at clinics, part of village md and contributed to lower profits and bigger losses in the health division

they're eyeing cost cuts even as they try to expand services like clinical trial recruiting at those clinics. the other big headwind prompting walgreens to cut fiscal 2023 guidance is the shift in consumers cutting back on discretionary spending, looking for discounts which the ceo says will remain a drag. >> there are some factors impacting us today that are likely to extend into next year, namely, the macro economic driven consumer pressure and covid headwinds. we are closely watching emerging challenges to consumer spending and sentiment, such as the end of fiscal stimulus and resumption of student loan payments >> that should hit all retailers. walgreens' outlook which is in the process of integrating home care deals of its own. >> thanks, bertha coombs, watching walgreens today as we go to break our road map for the hour, delta trading

at fresh highs as the company kicks off its investor day forecasting more gains ahead we're going to get the street's take on the stock and airlines from here. >> plus the ipo pipeline beginning to fill up what investors need to know about the latest names going public this week. and the home builders continue to hit new highs, despite what are higher rates on the horizon and fears, of course, of a recession so how much higher can the stocks go from here? we'll discuss that loofhoahd r u.a t sw eafoyo stay with us but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire a third kid.

what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry about planning for a third kid. you can still play golf... sometimes. take control of your financial future to empower what's next. so, you've got the power of xfinity at home.

now take it outside with xfinity mobile. take control of your financial future like speed? it's the fastest mobile service around. with the best price for two lines of unlimited. only $30 bucks a line per month. that's hundreds in savings a year when you wave bye to the other guys. save hundreds a year on your wireless bill over t-mobile, at&t and verizon. and right now, get up to $1000 off select samsung phones. switch today.

delta meeting investors today. the ceo spoke with phil lebeau about his bullish outlook for the company. >> our people are doing a great job and the demand, as you know, as anyone that's traveling knows, is off the chains doesn't matter whether it's in the u.s., europe, asia, people are wanting to travel. as a result the demand we're seeing today is stronger and the value is greater than we're seeing we're raising not only the full year, but raising the second quarter. i think the second quarter is going to be our highest q2 earnings in our history, coming just three years after the start of the pandemic which is pretty incredible >> joining us to discuss, jefferies analyst, raising her price target $50 a share now and has a buy rating on the stock. good to have you here. >> thank you so much. >> what stood out from the investor meeting >> delta is reiterating its

targets for 2023 and 2024, but putting out there that pricing is sticking, up 15% over 2019 levels we assume pricing is flat next year in 2024 but delta is saying that's sticking. having just come back from the paris air show where aircraft delivery delays are happening, capacity is constrained, we think we're becoming much more bullish on pricing being maintained and airlines being a great way to play this. >> you do believe that they will be successful in holding price the way he seemed to indicate? >> certainly 15% pricing above 2019 levels this year and next year seems easy to do given delta's premium customer base growing faster than its main line business. >> at what point do you see a real shift, though, in consumer demand you said they believe prices can be sticky, but traveling is still difficult with the labor shortages, you mentioned the capacity constraints at what point do consumers say i'm going to drive or i'm going

to sit this summer out in terms of travel? you still have a backdrop of consumer that is deteriorating. >> i wish i had a driver's license so i'm getting on a plane myself, but in terms of -- you know, i think there is definitely a shift to services that's sticking for now, and there simply is little capacity out there going to the caribbean or the atlantic, which, obviously, international is opening up in '23 and further in '24, there's only one way to get there. there's probably a bigger pricing opportunity out there, and airlines are trading at, you know, 10% plus free cash flow yield double what the market is at it's a great value opportunity people didn't believe we're now becoming more comfortable with the economic outlook and capacity remains even more constrained and reaffirming that thesis. >> what about the argument that what's happening right now in fuel really favors those with the lowest cost structures, right? is the leverage stronger on some of the discount? say the spirits of the world >> we're more in favor of the premium carriers at the moment

because of two things. first, we think the u.s. domestic recovery is complete so we're playing for an international recovery and delta's international margins are half its domestic margins. as capacity becomes more efficient the margins will improve further. playing for that and we think corporate is stagnant here so the u.s. corporate, so that's why we're playing the more premium carriers offering that high-end travel. >> you think outbound from china or get more transpacific, is that coming? >> outbound from china you would play united if you want that want exposure to the atlantic, which we're most bullish about, delta is karat yer to play. >> they're -- the carrier to play. >> they're kargtsing $4 billion in free cash flow by next year and beyond do you think that's achievable what kind of multiple do you put on that number >> that $4 billion for 2025 plus, is a new target they put out there. one question we have why is free cash flow flat in 24 and 25? you should see an acceleration if you value delta on its 2025

free cash flow target it's trading at a 13% free cash flow yield. the market is up 5.5 we could see upside $100 to delta shares if they could hit their targets and rerating but you see half of that rerating happen. >> if. there are still -- i mean they may have that out there, but i guess -- >> delta also offers safety. it's not only an airline it has a business with amex the sky miles program we value at $40 billion, and its mro business which does repairs for engines we value at $10 billion. so whether you think about the enterprise value of delta itself it's $41 billion those two businesses alone are pretty compelling. >> why don't you have a higher target than 50 >> that's where we have to go. >> thank you. >> thank you. >> after the break, 2023 was supposed to be a gloomy cheer for activist fights but has it been a bust std?inea what new data is revealing don't go away.

'm 12 hours short. - have a fun weekend. - ♪ unnecessary action hero! unnecessary. ♪ - was that necessary? - no. neither is a blown weekend. with paycom, employees do their own payroll so you can fix problems before they become problems. - hmm! get paycom and make the unnecessary, unnecessary. - see you down the line. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. (man) what if my type 2 diabetes takes over?

(woman) what if all i do isn't enough? whose resumes on indeed match your job criteria. or what if i can do diabetes differently? (avo) now you can with once-weekly mounjaro. mounjaro helps your body regulate blood sugar, and mounjaro can help decrease how much food you eat. 3 out of 4 people reached an a1c of less than 7%. plus people taking mounjaro lost up to 25 pounds. mounjaro is not for people with type 1 diabetes or children. don't take mounjaro, if you're allergic to it, you or your family have medullary thyroid cancer, or multiple endocrine neoplasia syndrome type 2. stop mounjaro, and call your doctor right away, if you have an allergic reaction, a lump or swelling in your neck, severe stomach pain, vision changes, or diabetic retinopathy. serious side effects may include pancreatitis and gallbladder problems. taking mounjaro with sulfonylurea or insulin raises low blood sugar risk. tell your doctor if you're nursing, pregnant, or plan to be. side effects include nausea, vomiting, and diarrhea

which can cause dehydration and may worsen kidney problems. (woman) i can do diabetes differently with mounjaro. (avo) ask your doctor about once-weekly mounjaro. welcome back to "squawk on the street." remember all the fanfare surrounding universal proxy cards. the s.e.c. changed the rules

last fall allowing shareholders to vote for a combination of director nominees from competing slates instead of management nominees or dissident nominees this sounds technical in nature but there was an expectation that universal proxy would unleash a wave of activist fights that doesn't appear to have actually happened. kirkland and ellis is out with a new report detailing what did happen during the first full proxy season under the new rules. they found that activists initiated almost the exact same number of so-called high-impact campaigns that they did in 2022. the number of campaigns that escalated into a proxy fight declined by nearly 20%, while those that settled rose by nearly 20% however, kirkland notes that one year of data is a pretty small sample size. the macro environment ripe with uncertainty right now that may have skewed activists towards the settlement camp but note worthy because this is something we talk about quite a bit and a

lot of experts were under the impression it would unleash this whole big activist fight season that didn't really transpire. >> yeah. i'm glad that you did this because i actually kind of lost sight of it. >> we talked about it. >> we talked a lot about it, and we did have those that defend activism, for example, talking it up as a real threat given to your point cheaper, easier, didn't happen. >> no. >> any idea exactly why? >> well, the macro environment is one reason to blame here. i think also i've heard this idea that a lot of activists just wanted to see how it went for a year they didn't want to put a lot of money behind big fights where the universal proxy contest or universal proxy card was nascent. they wanted to see how it goes and if it was successful then maybe next year would put more money behind it. but also another kind of speaking of the costs associated with these fights another hypothesis it would drive down the costs associated with proxy fights

those fights that did happen at the smaller company level, you know, basically a wash in terms of the cost according to kirkland and ellis. >> right. >> we haven't heard that many high-profile fights. >> disney, but that -- >> we've had a high-profile settlement. >> it's over. >> we had aluminum with icahn. >> every activist known to man. >> that may have been it as well as everybody piled on there was a group think but no one took it all the way to the point of a vote leading to a decision by shareholders. >> yeah. very cool. >> still ahead, dr horton, pulte, toll, around all-time highs today as these new home sales come in at the fastest pace in more than a year how much higher can they go? we'll talk about it when we're back in two minutes.

welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. a new report from justice department's watchdog blames jail guard negligence and misconduct for jeffrey epstein's suicide at a federal jail. among the issues, the federal bureau of prisons did not assign epstein a cellmate while he was jailed the report says there were issues with the surveillance cameras and his cell was left with too many bed linens which were used in his suicide russian president vladimir putin claimed today that russian military leaders avoided an all-out civil war by convincing mercenary leader yevgeny prigozhin to call off his march to moscow last weekend putin claimed the wagner group was supported by the russian state and revealed and received $1 billion from moscow over the last year.

state media in belarus reported this morning that prigozhin has arrived there. the supreme court is once again ruling against republican lawmakers in a dispute over state congressional maps the high court issuing a 6 to 3 ruling today saying the north carolina supreme court did not violate the u.s. constitution when it invalidated the state's 2022 congressional map carl, back over to you. >> thank you very much bertha coombs. about an hour into the trading day. the dow continues to hover about 100 points above last night's close. let's get bob pisani and see what's moving. >> interesting that they're trying to continue to rally tech stocks today tech is generally under performed and china is doing a little bit better. china had an awful month the growth prospects have been disappointing. the people's bank of china had to step in to prop up, so that's helping chinese stocks a little bit today. overall it's been a tough week here we have seen also ark doing better as well a little bit of rally here for tech stocks going into the end

of june. consumer discretionary also strong as we've had an incredible month for home builders today on great housing numbers overall. banks have been a bit of a disappointment lagging mixed month overall with the s&p going in open -- up about 3% leaders today, delta has had a great report, so some of the airlines are doing well. some of the material names like nucor are up and pulte not far from a new high. most of the home builders had an amazing month on incredible numbers overall. i want to talk about ipos, waiting for a small deal, waiting for days for this to happen the korean barbecue company gen restaurant group it will price this week. a tiny deal $33 million or so. the big story will happen later this week when we will have four notable ipos coming to market beginning with fidelis insurance a reinsurance company in bermuda, operate all over the world, very well known

kodak gas services, natural gas compression services and savers value, this is the largest for profit thrift operator in the united states. you think this is a business it's a big business. investor real estate will price friday the first three thursday i will be down here on the floor talking with some of the people who will be taking that public on thursday. the important thing, numbers see everything 300 to $400 million. we have not had four $200 million ipo deals in a week since november of 2021 this is what i mean when i say the market is starting to open up the cynics, when i call them, say these are niche company players. where's the big unicorns and reddit and everybody else out there waiting, and they haven't appeared yet this is how it starts this kind of deal we're seeing people are talking about cava, priced at 22, opened at 42 look at that that is an unusual occurrence. well above its initial price

usually the sell-off comes the following day in the mid-30s would be typical david was talking about this earlier, not because cava makes amazing avocado bowls or the world has underpriced the cava ipo. it's because of underlying demand for a new stock out there. speaking of new stock, we need more companies the ipo etf, these are 50 or 60 companies, one to two years. there are companies like snowflake that have been in this three years already. the whole business needs to be refreshed. we need new ipos to come in to help these kind of indexes out otherwise you're dealing with companies that are three or four years old. they're not recent ipos at all it's a big thing i'm fairly excited about these small niche players, yes, small niche players, but that's how the game kind of goes on. >> not too small one thing i think that's interesting with all four of those businesses is they do have

more predictable cash flow for an investor who may be a bit more uncertain, not ready to buy an issue of a company that doesn't have profit yet, you have a business that i don't want to say a boring business per se, thrift stores, i was also interested in that as being an ipo. >> steady revenue streams. >> steady predictable revenue streams could be more enticing for investors to dip their toes back in. >> kenview held up very well that's sort of the one that everybody goes against that's an outlier in a way the size was so large and unusual. so we'll see remember, the main determinant, strong market, stable interest rates are a big issue and that's the only thing you see the market wobbling as we've got christine lagarde talking about longer, higher for longer, keep hiking, putting pressure on europe that's a little bit of an issue for the ipo market that's why i'm not full-out all excited because i see this rate

hike problem sitting out there. >> bob, not to take issue with our friends at renaissance, but how do you have an etf at this point? these are not ipos >> i brought that up that's a problem what -- there's nothing they can do they - >> they're sitting on stuff that's been in there for three years? like - >> the ipos -- there hasn't been ipos. >> isn't there a point to get exposure, the after performance of ipos. >> oh, yes. >> for years - >> that's well studied you have to have a certain number to make it valid so it's typically 50 or 60 stocks sitting there. i watched the duration of these things, you're right, it's a problem. it's why we need to have more ipos we need to make it easier to go public in this country we need it faster, more efficient methodology. every time i bring that up - >> it's not about going public, it's about being public, all of the different things that come at you when you are a public company. the regulations. not about the process as much as about the reality. >> the complaint that it's

easier to stay private is the problem. >> yeah. >> we had direct listings, the -- >> we made it easier. >> but, you know, the idea of being public and being subject to this daily swings of your stock price -- >> look now what we have look what we have. reddit is a middle-aged company already. there's dozens of these names, fogo chow filed -- >> you can fund yourself without having to go public. >> that's a problem. that deprives the everyday investor, our viewers -- >> get exposure through the alternative asset managers sure to make -- >> do we need that in the world? do we need a fancy way to get a backdoor bay - >> it would be fun - >> but also a lot of private investors are under water because of all the - >> yeah. >> because of the draw downs in valuation -- >> higher rates -- >> good the public avoided some of those thank you, bob vibrant discussion there new home sales surging past

system rising at the fastest -- past estimates. rising fastest is there more room to run? our next guest says yes. joe from deutsche bank analyst joins us with top picks including dr horton and pulte group. thank you so much, joe i just wanted to first get your take on the new numbers out this morning with new home sales? much better than expected. >> absolutely. and i'll go so far as to say i was more excited to see the home price data i think the new home sales data was predictably strong given what we've heard from the builders over the last several weeks and there's other measures of new home sales that came out last week including the zanda index which gives a bottom up look at community in the country so this number was not that surprising we think that home price appreciation that we saw in the case-shiller core logic index as well as the fhsa index tells us more about the strength that we could see in margins coming from

the builders over the next several quarters. >> how much of these gains do you really attribute to the housing supply shortage? and how long do you see that lasting? i'm asking in the context of your belief that home builder stocks will go higher from here. >> certainly a big part of our belief that builders go higher from here is on valuation on price to book valuation, traditionally what a lot of investors use, because the value of the balance sheet is very correlated to the value of the inventory that these home builders are building homes on, those valuations are not at all time highs they were higher in late 2020 and throughout 2021 and really that's what keeps us bullish on where they can go from here because in reality, the book valuations are tied to the returns. they're tied to the earnings so right now, you see very high returns on inventory from the builders those are going to need to come down as you see home prices stabilize, but we still think those returns on inventory will be higher than prepandemic for many of these builders and that

their price to book values will rise as a result. >> where do you think the fed funds rate needs to be to see this supply normalize? you have this trend, obviously, of people who got mortgage rates so low, they're not going to go anywhere any time soon and that has restricted supply. where do you think fed funds needs to go from here for the dynamic to shift >> it's great question and i think the answer is slightly different than the question. i think it's not necessarily a destination rate, not an absolute level it's stability in the rate i heard bob pisani talk about stability in rates i think that's what's really important here for home builders you see it in the demand that's coming through the sales centers for them it's really about last year home buyers came into the market with a certain budget in mind that incorporated a 2.5, 3% mortgage rate and they were looking at payments significantly higher because of the rise in interest rates. you're not seeing that this year people that came into the market are seeing the same interest

rate they saw at the beginning of the year and builders are working with buyers, even if it's still only on a selective basis now, to buy down rates, make sure they can get into the payment, and so that's what is really more important is the stability in the rates not so much the absolute level. that's why you're seeing really strong data here at 7% mortgage rates, nearly 7% mortgage rates. >> the other thing that got attention was the level of completions, meaning homes that have actually made it to the finish line, as some argue that's just a reflection of supplies and labor getting easier to get. is that true >> carl, thank you so much for bringing up completions. this has been something i've been talking about since august that actually throughout 2023, you would see earnings for building products companies more stable because they're selling into a job site, so as long as construction continued on completions which were bottlenecked because of supply chain constraints you would see more resilient earnings in the building product that has played out. from here it's actually my next worry with respect to the home

builders i don't want to make it sound like everything is rosy for them if we have strong demand, limited supply in the exists home market and limited supply of building materials, labor and land, we could end up right back where we started in 2021, where we're bottle necked on completions and you could see volume growth become a little bit more constrained for the builders again, goy back to the data from the home prices today. that's what's going to be important for earnings in a flatish volume environment because land price is fixed, home prices can rise and that's when margins improve and returns can be higher. >> interesting i'm glad you brought that up thank you so much. and by the way, the ceo of taylor morrison will join "squawk on the street" next hour with her pulse on the housing market. >> still to come, the great rebundling paramount turning up the heat in the streaming wars meanwhile, disney shares they have been cut in half since 2021 but what about now

we're back after the break stay with us

it's been tough to be a gay woman, obviously, because of our world, but things have changed for better and i feel much more comfortable in my own skin windchill. >> paramount is merging two streaming apps paramount plus and showtime into a premium ad-free service to compete with the likes of netflix and disney and so many other streamers. speaking of disney our next guest believes the bundle can save direct to consumer and there is more opportunity that meets the eye. moffett nayson founding partner has an outperform on disney, price target 120 let's start with the paramount percen merging. is it enough to bring newfound energy, so to speak, to the streaming platform >> good morning, david we remain in the doubt camp

here it's probably not enough showtime has great content, but it's been around forever people know what it is i don't really see it changes. paramount's issue is they still have so many linear networks doing very badly, and they can't escape that, right i think they're doing the right thing combing services and taking out costs, but i don't see a change in the game for them i really don't, unfortunately. >> when it comes to linear networks and trying to outrun what are typically not great performs, warner brothers discovery our our company nbc universal, can anybody outrun their poorly performing linear network? >> the only people that have a chance are people like sports and news networks like yours and espn, just because the audiences are staying with live content, right. so you have to do what fox has done, slim down the portfolio to sports and news, and nbc, focus on cnbc and msnbc, and sports,

but i think if you don't have enough of those types of networks you're in real trouble. and i've known you a long time and we've done this together a long time, the trends we're looking at now are the worst we've seen in terms of ratings and cord cutting there's no way around that people don't have live content that's a huge problem. >> yeah. which gets the core sports rights and nba which has begun the long what may be a long renegotiation and how important that is. i guess let me ask the question, how important will that be and again, we bring up the idea of the apples and amazons perhaps playing with seemingly unlimited resources. >> yeah. i think that's true. you know, i think if i'm the nba i'm thinking i need a couple bets in linear just to maintain reach and vibrancy of the brand, but i think going forward you will see apple, amazon, netflix, bid for sports rights an the challenge is for the network that can't afford the nba what do they do do they write a check that's going to hurt their pnl but keep

them viable or do they walk away from the nba which will save them money in the short run, but to your first question, put them in a bad position. so to me, that's the next big challenge ahead is the nba negotiations that's going to start very soon, and i think you're going to see the streamers really get involved here because as we wrote in our piece about disney, sports will work in the streaming world. it won't work the way it did in the linear world but it will drive people into streaming apps and that's going to have to be the next phase of development here, more sports and streaming. >> you were talking when talking about making that decision, it sounded like you were describing warner brothers discovery, but i don't want to put words in your mouth. >> david, they have a tough decision here, right keeps talking about how he likes cash flow and this is not a very positive development for cash flow given the nba but the longer term risk is vifb individual -- vivid and

increase we're going to watch how he dances here. i think he has to do the nba pands more i think he has to. no choice around it. >> tnt, tbs. you put out a long piece last week on disney and you said one hard disney bundle that includes content from hulu, disney plus and espn wil as to why you think it would be a success? >> let me do why first because when we look at what's happening to disney, their growth in new subscribers have slowed and churn among their individual product, disney plus, hulu and disney plus is very high the way they fight churn is by creating one product churn across the disney bundle exists today, that's the soft bundle, i would say, is much, much lower so, the math says you need more content, you need more compelling content, it's going to reduce churn.

the first question is, i'm not sure, david, because i think disney has created a very linear kind of logical view of, hey, espn is an app disney plus and disney content's an app and they created a separate silo. on the last earnings call, bob iger hinted perhaps he's thinking of reforming that individual thought of three separate products. we are hoping they revisit even how sports works within disney and should be a broader bajdz and not stand alone with espn. >> our long conversation continues. ends for now but continues always appreciate it thank you. >> thank you, dad.vi be well. "squawk on the street" right back after this.

i was told my small business wouldn't qualify for an erc tax refund. you should get a second opinion from innovation refunds at no upfront cost. sometimes you need a second opinion. [coughs] good to go. yeah, i think i'll get a second opinion. all these walls gotta go! ah ah ah! i'd love a second opinion. no.

i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc. is it possible to protect my business from cyber threats? take the first step to see if your small business it is, with comcast business. helping every connected device stay protected. yours. your employees'. even... susan? hers, too. safe. secure. and powered by the next generation 10g network. with comcast business, advanced security isn't just possible. it's happening. get started wih fast spees and advanced security for $49.99a month for 12 monts plus ask how to get up to a $750 prepaid card with qualifying internet.

i think there are hunting grounds one would want to look, we think, real estate is an area that is full of so many fundamental challenges, but the fundamental challenges have caused urgent selling. you can see it pull back in lending. you can see vacancies in office, troubles in retail for years and years. and so that doesn't automatically make it interesting, but it may mean that as other people abandon it,

as other people face urgent pressure, there may be opportunities to buy, to inject capital, to make some rescue loans, and we hover around looking for opportunity trying to meet counterparties that are eager to transact. >> that is the typically media-shy long-time investor from baupost that firm, as you know, has, for example, was the largest single of lehman credit after the bankruptcy >> that's right. >> they are willing to sort of go places and stay there for quite some time and pursue the value. interesting how he brought up real estate as at least an opportunity. whether it's a restructuring opportunity, though, i guess becomes part of the question. >> it's definitely been an area that a lot of alternative managers have shunned. private equity and venture capital in commercial real estate saw 60% decline worldwide in 2022. that was before some of the issues that really came to the

forefront in 2023. but for a contrarian that would be more appealing because they tend to go where others are running away from. >> think about the last two days, sl green, vornado, i mean, the industry wants blood flow, transaction count is what matters no matter you're long or short. we're getting some of that. >> we are. again, as we made the point many times, it's not a broad brush. there's industrial, the key part of the deal yesterday in which they bought that portfolio from blackstone and the sl green, that was office, 245 park avenue they got -- basically they valued it the same price they paid for it from the bankrupt hna in 2022, but the market has loved that deal. it sent shares of sl green up, vornado, all the reits with a share of office space. >> they're getting liquidity,

it's just a matter of how long it takes things to get done. you see the higher quality things go first and then it works through. >> 85% occupied and, again, it was a japanese company that's come in here we'll keep an eye on it. first sign of life if there's a market of some kind where you can do something in terms of at least monetizing to some extent. we'll keep an eye on those stocks not to mention the broader market when "squawk on the re" meba rhtfter this and now she has myplan, the game-changing new plan that lets her get exactly what she wants and save on every perk. sadie is moving to the big city and making moves on her plan, too. apple one, on. now she's got plenty of entertainment for the whole ride. finally there! hot spot, on. and she's fully connected before her internet is even installed. (sadie) hi, mom! (mom) how's the apartment? (vo) introducing myplan. get exactly what you want, only pay for what you need. act now and get it for $25 when you bring your phones. it's your verizon.

welcome to "squawk on the street." i'm carl quintanilla along with morgan brennan on the aagain da, jp mother again's portfolio manager phil camporeale is here >> sheryl palmer, the housing data shows stronger than -- a stronger market than many had expected, she said just today new home sales jumping 12%. >> the stock may be up 300% this year, but it