shutdown what this means for results. it is tuesday, july 18th, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market in times square i'm becky quick along with joe kernen and andrew ross sorkin. here we go again the gang is all here >> until tomorrow. >> you will would be back on thursday >> thursday and friday. >> four of five days not bad for july >> 80% reminds me of college. >> barely a b? look at u.s. equities.

the dow is in the green. s&p is flat. nasdaq off nine points this is after a big day for the markets. dow coming off the sixth positive session in a row. you have the s&p and nasdaq closing at the highest level since april of 2022. strong times you look at the chart over the last week and that is impressive let's look at treasury yields. you see that the 10-year treasury is 3.75 the 2-year treasury is 4.76. that one week is 3.5% for the nasdaq for the week to date. >> big week. >> last five days. the "squawk planner. we are hearing from bank of america and morgan stanley and lockheed martin. later, breaking economic data with retail sales out at 8:30

eastern. analysts expecting a .50% increase from may. up from 0.3% meanwhile, microsoft now in talks about extending the deadline to close the $69 billion deal for acti activision-blizzard which is set to expire today. it not kill the deal, but open the window for either party to walk away. reuters is reporting that activision is not wooed by another potential suitor >> that's a good question. >> is there another suitor or an issue if activision would go on its own. >> you know, there is always stuff swirling in the arena. who knows? would it surprise me other people waiting to see if the deal fell apart. i don't know of anything

specific >> it is all good the goggles. >> they have a huge audience activision has a huge audience new disclosures from warren buffett. the company cut its stake in activision to 14.76 million shares that is under 2% from 6% back in march. the deal with microsoft approaches that finish line. buffett first started purchasing the stake in activision in october and november of 2021 it wasn't revealed until may of 2022 at the annual meeting when buffett said it on stage he said it was going to be ago he was looking at as a play. it was more than 9% of the shares outstanding a filing revealed it dropped above 6% and now this. the average cost of that came in at $77 a share they made a profit on all of this. >> this is reflective of how you

do it. you want to get out before it is totally one. especially right now with things -- unless you are supposed to wait and capture the last couple dollars. >> at the meeting, the ceo heard about it because buffett talked about it on stage. we were there. that's why we remember it. he said at the time it sales tricky being an arb because you will not get more than $95 a share. >> that's the call i know what the upside is. oh, boy. "seinfeld" is going to be on now blackrock adding the ceo of aramco it will focus on the middle east as part of the long-term

strategy and give perspective on key issues nasser oversaw the public listing. it is an interesting acceptance of the world the way it is instead of the way he would like it to be, maybe? i don't know >> you have to decide that the business world has moved on from khashoggi and everything else. >> if we're going to really be so cozy with china, you know saudi arabia, i'm not saying it is a one-off it was a horrible situation. compared to what is happening every day. if you look at one thing, you can't look away from the other stuff. >> how does this play out? >> people say larry felt he -- now i think larry should come back i'm with him thank you, larry

finally. we're on the same side of these things we will need oil all of the woke -- i think he has been hammered by esg he got to the point where he won't say those letters. when he says the alphabet. he goes through it and doesn't say those letters. now, to bring the ceo of aramco on your board at blackrock after you have been mr. wind, solar and climate change >> they have had stuff in the middle east. >> now they are actually instead of talking the talk -- you can talk the talk. every rich liberal has a house ho on the ocean every one. >> not true. some are in the mountains. >> they got a house in the mountains after the one on the ocean. >> they can afford to lose the house with no insurance.

that's the difference. i saw your tweet last night. >> about -- that's because i saw something yesterday. the lifestyle of liberal climate activists and total climate deniers are identical. you haven't changed. nobody has changed their lives sglflives. >> andrew is right. >> you can feel afterrible for people in florida who can't get farmers insurance or whatever it is there are people with lots of dough who decide it doesn't apply. >> literally, there are parts of the outer banks in north carolina where it is the sixth house they own the same piece of property it is up on stilts >> the property is great during low tied. >> -- low tide

>> sonnenfeldt he will join us. ladies and gentlemen, jeff sonnenfeldt. go hopefully we'll be out of here by 9:00. >> we are on air sometimes and we feel so comfortable, we say anything we think. >> we're not in break? the ceos of intel and qualcomm meeting with the white house officials to discuss supply chain issues. bloomberg reporting the white house is finalizing plans to restrict foreign investment in china. talk about restricting with a focus on cutting edge technology like a.i. and quantum computing. the new rules won't go into effect until next year >> can i just say this vereally

fun? >> it is living dangerously. >> at 6:08 in the morning. >> you never know what is going off the rails. >> it is not all three of us are on set in summer with conferences and vacations. >> nice to see you all >> there you go. >> three-hour show of i don't want to hit a bunch of rocks. the defense contractors -- who makes the stuff we don't have any more because we sent it all to ukraine we have nothing left who makes the most important stuff that we need to rebuild? >> i'm sure it is not the defense contractors. they are contracting it out to subcon subcontractors >> you know who we will ask? margaret brennan >> is that not a growth area

right now? we can't invest it we are using it up like crazy. it is unfortunate. coming up, investors preparing for big tech earnings, including tesla with results and what it means for the market and cathie wood writing down her stake in twitter you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by ibm. ibm. let's create .. well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across clouds, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. ...to make quick decisions? check. aaaand check. that's the solution ibm and a global bank created. what will you create? ibm. let's create.

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welcome back to "squawk box. cathie wood in the news talking about the ark investment management writing down the stake of the twitter since elon musk took it private last year, but said she thinks meta's threads lit a fire under twitter adding the two can exist adding it will be good for the long-term of the company >> she talked about how she is surprised funds are performer better, but the fund flow is not coming back into them. i don't know if it is indicative of the market or flavor of the month you were running hot there was the article in the journal talking about how she is down to $9 billion from $30

billion. i don't know if those people haven't come inin. she is not seeing fund flowing co coming back. -- flows coming back. and tesla plans to double the size of the berlin factory it could make it the largest auto manufacturing facility in germany. think about germany as the great automobile makers of our time. here is elon muis elon musk bui factory that may be the biggest. >> it is not dire. in italy, it is the greatest place in the world in terms of gdp, they lagged they decided to quit working at 57 and go to some coast somewhere and not drinking -- this is an interesting piece they are poor. they have an aging population.

i didn't realize it. they are in recession at this po point. not drinking as much red wine and cutting back on cheese and sauces i guess i was paying to see that happen i feel good about myself >> this is something where you are happy. the new word on me >> epicaricasy the markets will focus on big tech after the bell tomorrow we got results expected from tesla and netflix. joining us with the expectation is defiant etf co-founder sylvia

gent jablonski. >> it was good last year when everybody was afraid of tech and we were picking it up on lower price levels that is paying off it is good to be defiant >> it was like stocks soared during the pandemic. tech stocks soared during 550-basis point interest rate hike that was the group to get hurt with multiples too rich. as usual, the magnificent seven p has out performed. will that continue >> if we look back, tech was very much in a bear market in 2022 the markets are forward looking. looking forward to the fed raising rates. now markets are looking to the end of the rate hikes and inflation in the right direction. a goldilocks area where it is not too hot or cold.

this earnings season will be telling for tech if we start seeing good rhetoric and feedback on revenue from a.i. and machine learning and corporate spending from other corporations looking to invest in spaces, that takes tech higher regardless of the run-up we have seen >> did you see the meta chart? my machine has a yearly low of 88 that can't be right. i'm kidding. that stock was $88 everybody threw in the towel at $88. meta was at $88. it says $88. you didn't ride that all the way up >> meta wasn't the one i jumped on nvidia was one i jumped on

if you look at the high and low. that was a good ride there with meta, what turned me off with meta was the focus on the meta metaverse. i did not think that would propel the company forward they were losing focus on ad spending and instagram and things that the subscriber base they have. they changed course and gone back to that you see why they got the star shining again and the price move up upward perhaps they start competing with tiktok. now there is a story there >> sylvia, netflix earnings. they have a lot of stuff in the can, obviously that's almost the beauty of it in streaming you can watch whatever you want at anyti time. on the flip side, you may not

pay for new stuff hitting all the time how will this impact netflix is that safe during the strike you can watch something you love that may not have been produced in the last six months or are people going to exit and lose subscribers because there is no reason to keep it? >> i think it depends on how long all of this goes on and how long it takes. for the earnings call, we expect 1.8 million new years. they had new content for the foreseeablesubscribers if the writers strike goes on into the category of a few months and years, all of the subscribers will suffer from that if there is nothing new to watch, i think subscribers will take the time to cut down monthly bills and get rid of

subscriptions. the tenure of the strike will be meaningful >> $188 is the low on that one if you believe people that the october lows would not hold and we are going back down there you have lost. there is a big opportunity on what you missed out on some of the greatest hedge fund managers in the world will go nameless told me there needs to be capitulation. did we see it? are we going back down, sylvia never going back to the october lows >> never going back to the october lowlows fomo is a real thing. >> acronym in the lexicon to stay, i think. i hear it all the time thanks, sylvia i have fomo tomorrow >> fear of missing out >> being here. netflix earnings

all that >> big day we'll miss you >> bye-bye when we come back, congress hearing from the 26-year-old today on what the u.s. needs to h on the forefront of a.i weave that story next. "squawk box" will be right back.

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of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. we stop cyberattacks. we stop breaches. we stop a lot of bad things from happening. crowdstrike. protection that powers you. welcome back to "squawk box. brian armstrong meeting with house democrats tomorrow to discuss crypto he wants lawmakers to create clearer rules as coinbase is facing a lawsuit over regulation on the agency. we will see where all that goes. we will bring it to you

throughout the day. the house services sub committee on a.i. will hold a hearing today and they will be hearing from the 26-year-old billionaire about what congress needs to do to focus to ensure the united states remains on the cutting edge of a.i. emily wilkins is joining us with more emily, good morning. >> good morning, becky top lawmakers dealing with intelligence and national security in china and want to know more on a.i., they are turning to a 26-year-old billionaire alex wang. democrats and republicans say he is an influential voice in d.c. over a.i he will testify today on the use of a.i. in the battle field. his message is if congress doesn't move quickly, the u.s. will be behind other nations >> we don't want to see the critical technology to other

countries around the world it is critical to be leaders and ensure artificial intelligence will adhere to our principles and standards and our values >> wang is urging congress to pass national security bills to further adopt a.i. the bill's future was thrown into jeopardy last week after republicans added an amendment on abortion, but the bill narrowly passed the house an the senate is expected to vote this week. becky. >> emily, what are the odds they get a clean bill to pass or will there be that rider and others attached because a.i. is something you can find common ground with? >> i think we are going to see some stuff with a.i. as far as the controversial amendments this bill offering funding supporting our troops. they will find a way to get this done ultimately. this does speak to the partisan tensions coming out in congress

and how they can stifle things like a.i. that has a lot of bipartisan agreement >> emily, thank you very much. emily wilkins. coming up, a growing number of strikes across multiple sectors and u.p.s. teamsters may be next. what it means for workers and companies. and we expect results from bank of america and morgan stanley and lockheed martin. we will have the numbers when they break. and as we head to break, here is a look at the s&p 500 winners and losers this is american infrastructure, a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends these services for everyone who lives here. ♪ this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep,

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good morning welcome back to "squawk box. we are live from the nasdaq market site in times square. if you look at the futures, the dow is up 13 points right now. s&p is off 2.5 the nasdaq is down by 17 joe. the fda approving astrazeneca and senofi on the

shot approved by the fda to protect infants from rsv regardless of being healthy or have a pre-existing condition. the fda will meet next month to figure out how to administer the shot >> i was trying to figure out the shot >> mononocolonial. the labor movement with gaining momentum with the hotel employees and writers and actors actors worried about a.i u.p.s. workers might go on strike if they don't reach a deal by august 1st talking about the shift in power is dom edwards and mick mu mulvaney good morning to both of you. do we think something is in the water? something is fundamentally

changed. we have seen what happened at amazon and starbucks and the like most of the efforts were quite small in the headlines donna. >> i think there is a growing sensz of the collective power of workers is really important to those workers on ben paper fits and working conditions and those things you have seen a number of organizing drives in the service sector in particular when you look at covid, the work force in the economy has changed tremendously you have a lot of movement going on in the service sector with traditional unions among public employees and private sector, we see it with s.a.g-aftra and the teamsters that workers are beginning to exercise their power within

unions as well as these major organizing drives. i think it is a good thing and the economy is precarious for workers. >> that's the question, mick how strong do you think the effort is and how much of a super strong labor market with power? how does that shift with inflation coming down and maybe the labor and unemployment picture looks different? >> i agree with donena i see the change with the aging of baby boomers and lifestyle changes in covid you may see a fundamental switch that gives labor more authority to demand higher wages that's great i love it when markets are clear and it looks like they will find an equilibrium at a higher wage

rate what does this do for the fed rate are we done seeing the increases in interest rates or will we continue to see it there is a different pressure on price points which we did not have during covid. >> what is your prediction you see what is happening. disinflationary right now with the strike in l.a. with hollywood. there will be industries for the next several months, if this goes on, which i imagine will go on, which will be hurt badly that is disinflationary until a deal is reached and you argue it is inflationary. >> the other deals that just got cut. the folks that didn't strike, but almost did united just signed a deal in the last 48 hours to increase the pilot wages by 40% in the next couple years

that's clearly going to be infla inflationary i hear what you are saying there willbe short-term dips with the policy impacts. long-term pressure tie into the next big tectonic change with management and pay $15 an hour for folks at fast food, how fast can i mechanize and how fast can i adopt a.i. so i don't have to pay all this money >> donna, that is the next question how do we think about technology and what may be a transitionary period in the next five-to-ten years as a.i. develops one thing the writers are fighting for is the idea that there should be guaranteed jobs to some degree and that a.i. can't take that job. >> well, look, i think over the

last 20 years, we have seen the ways technology has had a ripple effect through the economy we are not done yet. the question is the power of what workers will have in terms of looking at the industry in hollywood and the control that people have over the likeness and voices and over those things that can be adopted by a.i. and they lose their ability to earn a living i think we will see some rules put in place whether it is through the unions or legislation that actually helps workers in terms of this new technology the other thing we're seeing is organizing happening in non-traditional sectors throughout the non-profit sector, for example, a number of organizing drives. i presided over a union vote count over at the democratic national committee throughout the economy, we are

seeing workers organize and let's not forget we have a president of the united states who is very, very allied to the labor movement and put in place people who are creating the conditions in which workers can successfully organize and exercise their collective bargaining rights. >> mick, what do you make of the technology transition issue that a lot of workers rightly are worried about? >> yeah. look, the more labor costs, the less technology costs in a relative sense it will promote a quicker adoption of a.i. walter isaacson said it would be ten years before you are rep replaced, but if your salary doubles overnight, that increases the significance of a.i. adoadoption

i hear what donna is saying. i hope the government doesn't come in and does that. the cycle of innovation and creative destruction and people finding new jobs that didn't exist 20 years ago makes the country strong i don't think -- >> also to things that get put in place if we get to a point where people don't need a job or can't get a job because the truth is that a.i. makes us all question who we really are >> i'm fascinating by the conversation of basic universal income every generation that deals with technology change is worried there will be no more jobs when everybody rode horses and automobiles came in, there will be no horse jobs we all think that. i hope we recognize that as we go forward. >> it is not about preventing technology, but creating the rules and structures that allow workers to work and technology

to exist where it makes sense. >> donna and mick, thank you for the conversation thank you. >> thanks, andrew. >> thank you still to come this morning, second quarter results from bank of america are due in the next few minutes. we'll have that report as soon as it hits right now, the stock is up 20 cents to $29.60. and expedia ceo peter kern will talk about summer travel trends and a.i. helping with vacation planning. you can get the best of "squawk pod" on your favorite podcast app and listen any time. we'll be right back.

coming up, netflix reporting tomorrow as investors look to see how the streamer could be impacted by the hollywood shutdown what one analysts is looking fr in the results when "squawk box" comes right back

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well, here it is bank of america reporting quarterly results. god bless you. leslie picker is going to do them leslie >> joe, thank you. bank of america shares higher in pre- pre-market trading up 19% per share came in at 88 cents. beating 4 cents per share. higher interest rates made for more profitable lending as the firm has $600 billion of no-interest checking accounts which kept costs lower the profitability metric was up to $14 billion which is where in analysts expected it to be and up 29% year over year for

global banking and investment banking was within trading and fixed income was up 18%. equities came in light relative to where the street was expecting and also declined year over year. expenses higher for the quarter to $16 billion some of that stemmed from higher fdi fdic insurance costs with the fed stress test. boa reporting the value of $105 billion in unrealized losses as bond prices have fallen. still bank of america reported the most profitable first half of the year except 2021 with the large reserve releases after covid. this quarter with a $1.1 billion provision expense. the card loss to 2.6% up nearly 40 basis points from q1.

still below the pre-pandemic levels from 2019 bank of america said consumers continued to spend although at a slower pace with combined debit and credit card spending i'll speak with brian moynihan on the first on cnbc interview this afternoon guys. >> wow that was phenomenal. >> thank you >> you are hired >> she gets the job. >> can i send you a list for the next three weeks was that not -- >> list of earnings he would like done for him, leslie. >> that's what i'm talking about. >> you got it, joe. >> you blanketed that, leslie. you know what? we talked about bank of america a lot. it's my bank i'm not sure i'm not sure what needs to be done he is earnest. trying to do a great job wow. it has not been a big performer for the last 10 or 15 years.

he had to go through the crisis and everything i have no idea what is needed at bank of america at this point. maybe -- do you? do you have any suggestions? reboot i can't find a teller. >> the brain trust >> if my life depended if my life depended on it, i couldn't find a teller at the place. i've walked out a few times. i'm not sure what the answer is. no one uses a teller i hear, andrew, you can take a check and deposit it >> you can i do it all the time, regularly. i have not deposited a check in a physical bank in years >> i know. i do it. i've done it >> you've heard about it >> i thought were you serious. >> do you still find the slot in the computer where you put the credit card? >> i have not -- i don't buy things online, but i don't shop. as i said, i have everything i have everything except someone as good as leslie to do all these earnings >> i was actually a teller once,

joe, so -- >> no way. >> yeah. it was my job in college summers in college >> talk about -- >> that's where i learned how to cover banks. it was my experience as a teller back in college, local community bank in kansas >> leslie, what was the biggest amount anyone ever asked you for in terms of cash >> oh, gosh, it was no more than a couple thousand dollars. >> did you have one of those -- those things are cool. >> it was kansas a little different maybe out here >> where in kansas >> lee wood kansas. >> you're not in kansas anymore. >> was there a special button under the counter in case there was a heist or something >> no, not that bank no no everything was locked and, you know, there were all these different protocols. no, i had to balance my drawer every day and make sure the money was correct. it was very stressful. >> hell or high water, they were knocking off banks out there somewhere. a great movie. >> yeah. >> oh, you've seen it?

phenomenal jeff bridges >> they make you do that as participate of training. >> i wish, actually. for a summer gig, they didn't give me as much anti-heist training >> was that in "catch me if you can" >> moving on, someone said moving on in my ear, first they told me talk to leslie i talked to leslie then they tell me moving on. >> we have someone else to talk to and leslie did a great job. thank you, leslie. >> thank you netflix is set to report results tomorrow afternoon with actors and writers unions in the u.s. going on strike, investors are kind of fearful about how it will affect the streamer's content pipeline however, some analysts feel netflix has the advantage in the second hatch of the year as the stock hits a 17-month high 452.01 joining us is paul meeks, independent solution's wealth portfolio manager and finance professor at the citadel that's pretty cool

paul, talk us through. how do you come down on this is the strike good for netflix or bad >> i think incrementally it has to be bad for everybody, but on a relative basis when you think about netflix having the ability to produce programming abroad and also having a pretty rich pipeline that is very close to release, so maybe they'll be able to sneak some shows past the goalie before things get too onerous with the strikes, i think relative to other video streamers they should be in pretty good shape. but, of course, overall industry wide it has to be a negative >> what's the concern? we were talking yesterday a little bit about it, the idea that there are other outlets, there are other things that consumers could turn to whether that be tiktok, whether that be self-generated stuff on youtube? >> i definitely think so that's why i made the comment that overall it's pretty chilling in the past we've had strikes

but we haven't had for a long, long time a dual writers strike with an actors strike. i'll tell you a funny story. i live in charleston, south carolina, on the water right off my dock last week netflix is filming the show "outer banks. tons of equipment. tons of people tons of actors and the night that the actors went on strike, they shut it all down overnight so i saw that in my neighborhood in real time >> wow what do you expect to hear or what should we be looking for tomorrow night when netflix actually reports we do have a lot of issues that were pretty important including what they're trying to do with password sharing crackdowns. >> i actually think that the estimates are reasonable, and they'll probably not necessarily blow them out, but i think they pretty easily meet to beat that's revenue, that's earnings per share, and it's also the big one, net new subscribers which

the street is expecting, at least formally, $1.75 million. analysts like myself are expecting much more. i think they will do quite well. but what we need to hear on the call, because it's more of a this quarter phenomenon than last quarter phenomenon, what is the financial impact on the crackdown on password sharing? also, what is the ongoing traction in the move to the $6.99 per month ad-supported >> what would be good color, what would be bad? what would make you think what sort of revelations in terms of subscriber growth or talking about that $6.99 ad supported tier >> the key thing is we know that it's taking hold, but what kind of impact on the p&l does it have you will cannibalize some of your legacy business now i would sigh we've seen traction on that

i don't want to say it's necessarily rearview, but we have some evidence the one thing that we don't really have events on because it's a next quarter phenomenon is this crackdown on password sharing. that will be to come >> how long have you liked this stock? i think you've been with it for quite a while. >> i like it a couple times i've been scared to bejesus as they give up their dvds and go to a full streaming model. and then when they had a bleed of net subscribers several quarters ago, it gives you an opportunity once in a while when they have these changes in their business model, you get a 50% off. when this stock goes down, it goes down a hell of a lot. >> okay, paul, thank you great talking to you paul meeks >> my pleasure coming up, what's moving the markets this morning ahead of the opening bell the futures right now are just barely positive and only in the dow. the nasdaq is down about 23.

plus retail sales data is going to be out in the 8:00 hour what it says about the health of the consumer "squawk box" will be right back.

good morning the first chapter of earnings season is about to conclude. this hour we'll get the last of the big bank's second quarter reports. black rock making an unexpected governance move the asset management giant is adding aramco ceo to its board of directors can the travel industry handle the surge of travelers heading to europe. and how ai is changing the industry the second hour of "squawk box" begins right now good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin along

with becky quick and joe kernen. we have a big two hours ahead. equity futures this hour, the dow up marginally five points. you're looking at the s&p 500 off about three points let's show you treasury yield, since that's what is driving so much of all of this action here. the ten-year note, 3.762 and the two-year note, 4.698 take a look at oil right now if you want to buy it by the barrel, you can buy wti crude at 6 74.62. heading to talk to a committee, bitcoin sitting at $30,000 >> and here are some of the stories investors might be talking about today. asset management giant black rock says the ceo of saudi aramco is joining, emphasis on the middle east but the addition is raising eyebrows.

blackrock ceo larry fink has embraced environmental and social principles and aramco is the world's largest oil company. we'll talk more about this a little bit later goldman sachs cutting its forecast for a u.s. recession in the next 12 months a 20% recession, down from 25% previously goldman's chief economist citing a slew of better than expected data for the revision. and plans from the biden administration to restrict investment in china and focus on the newest technology. proposals for restrictions could come by the end of next month. chip company executives reportedly met yesterday with top biden administration officials to talk about china. meantime, over to dom chu with a look at the premarket movers

shares of bank of america are higher, just about maybe half a percent or so a little over 160,000 shares of premarket volume the second biggest back is the earnings headliner this morning so far it reported both profits and revenues that topped analyst estimates, bofa helped along by relative strength in its global banking and commodities trading franchises that helped offset a slowdown in investment banking as well as stock trading results. bank of america did note from a macroeconomic perspective consumers appeared to keep up with spending albeit at a slower pace shares up roughly 0.5% shares of norwegian down, around 50,000 shares premarket this is due in part to analysts over truist who downgraded the off rater to a hold rating it was a buy before. they're looking at how much of the industry's recovery has been priced into the luxury side of things for norwegian

the target price down to 17 from 23 we're keeping a close eye on pinterest, up around 3%. 65,000 shares of volume. they've upgraded the social media platform to an outperform. it was a prior in line they raised the target price to $41. it was 30. they're looking at things like a stabilization in digital ad spending, better outlook for revenue growth and a more reasonable, becky, valuation for pinterest. those shares up 3.75%. back over to you >> dom, thank you. right now we want to focus on this morning's bank earnings. dom told us about bank of america. morgan stanley due out in just a little bit we're getting ready for a flood of regional results, too joining us to talk more about this is dcla managing partner sarat sethi. what do you think so far banks have been really strong if you looked at jpmorgan last week what do you think of bank of america today? >> i think you're right about

jpmorgan going into this earnings season especially what happened with the regionals in the quarter expectations are pretty low and if you look at bank of america net interest income was up, loan growth was up. those are two things we were all looking for especially where we are in the economy investment banking i think is going to be pretty bad for all of them. really haven't had much capital markets activity looking at that for bank of america i think that was a positive the stocks have been a laggard for the rest of its competitors, down 11% on the year jpmorgan has done better when you look at morgan stanley, they're the leader in wealth management that will be interesting to see where they come across on that side and really what activity they're seeing in investment banking and capital markets as well >> i guess with morgan stanley you have to look pretty closely at the markets, equities we'll see what happens as they kind of roll into that anything you would be looking at particularly closely >> yeah, for them it would be the wealth management. 60% of their business is wealth

management really how do they optimize that business we've had a good wealth management for the first six months, the stock market has done well. how has morgan stanley handled that i think if you look at their balance sheet, it's a very strong balance sheet compared to some of their competitors. a different bank, but that bank has been hurt like the rest of the banks. i think people will be trying to focus on that for different things bank of america so far came out with numbers it will be interesting to see what they say on the call because it's really the future loan growth. how will that get affected >> i heard some rumblings we could be seeing some tougher capital controls required by regulators coming as early as the 27th of july if that's the case, would that change your opinion on any of these banks if they have to set more aside >> not really, becky if you look at their multiples right now, they're trading in single digits. they've already been discounted pretty badly for these things. unless there's something really radical, what's really going to

happen is higher reserves and the stocks reflected it. it will be their operations and their ability to grow earnings that's what we're looking at and at a value like this, we've talked about this for a while, the s&p trading at 17 times, the whole banking sector at high single digits. you have to pick the good companies. we believe jpmorgan, the bank of america, the morgan stanleys are the ones you want to know and interesting what the regionals say. that's where you're going to get more of, hey, how much more capital are you going to need in the future >> sarat, if you look at earnings overall, lastquarter there was a lot of hype around ai, a lot of excitement around it that's kind of what people were paying attention to in the quarterly calls. what about this time does that still exist, or do you really have to put up the numbers this quarter >> i think you really have to put up the numbers this quarter. ai has done great for the stock market multiples have expanded in the tech sector. those companies will have to show that their earnings are much stronger than expectations.

i think given where we are in the cycle, earnings have to catch up to multiples. we've had only the multiple expansion. for companies that have benefited for ai, you really have to perform. some of the other stocks, the sectors like financials, and even when you see health care coming, if they can perform, they're already cheap. that's where we need the market to lead outside of the ai, the big seven leaders. >> does that mean you don't -- you're not a fan of any of these tech stocks right now or at least the seven who have really had their run? >> we own nvidia we own google. but not in the size of the market i think you have to be diversified. you have to understand what you own and take some profits and put it into sectors that haven't done well. high quality companies, look at the balance sheets of companies like a bank of america or jpmorgan so definitely own them but just be careful on the size because the expectations are so high going forward the next couple of quarters >> how have you shifted your

allocation just in terms of what sectors you think are best how are you versus where you'd normally be? >> so we are definitely underweight, what i call the growth area, putting more money into value sectors so maybe that's health care, that's some financials, and really nibbling at commodities i think given where you have the dollar globally and the need for commodities. so i think that's an area, too areas where the market really hasn't focused, stocks haven't done much. they're either down or up very small for the year i think having a diversified portfolio especially now given the growth that you've seen in some of these high stocks, that's a good place to be. >> we haven't talked about commodities outside of oil for quite a while. are you looking at commodities outside of oil and i ask when you saw what happened yesterday with twwheat prices, russia said it would no longer offer safe passage

through the black sea for ukrainian wheat, how does that shake things up. >> yeah, i think that's a really good point we're looking at comer companies, steel companies, aluminum companies one of the things we haven't focused on in the last five years in the decade, there hasn't been a lot of investment in commodity companies so even if you get a little pricing in there which we think you can still have, these companies trading at single digits, much stronger balance sheets that's an area if you look at the market value of apple and microsoft, it's greater than all the energy and basic materials in the market. i think there's opportunity there and investors really haven't focused on it. >> sarat, thank you. >> thank you, becky. >> see you soon. coming up, we are going to speak with citigroup's global head of research about summer oil prices and world food prices after russia withdrew from a critical deal to allow grain shipment and the promise and

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our next guest says the big summer commodities focus is oil and natural gas. he's bullish on oil. ed morris, citigroup global head of commodities it's good to see you this morning, ed. welcome. how about that we led the show yesterday, i said this we have never done before, with wheat, with wheat prices. we're a business network we don't do as much on commodities maybe as in the past on the good old '70s when we weren't around they're back in vogue. you picked the right job >> well, they're back in vogue, but we'll see how long that lasts. we did expect that the russians would stall on renewal of the grain deal they're looking for getting more access to their cash they're looking for some way to get paid through the swift system, and, you know, those negotiations are ongoing

they can't really afford the reputational risk or the market risk that they have with their customers since developing countries largely in north africa including egypt so we think this is going to be a very short-term little battle that the russians are having in the agreement with ukraine >> i guess we do talk obviously -- we talk about oil every day. we put up that board we talk about stock futures, we mention moil that commodity we do watch why are you bullish on oil but not as friendly toward natural gas? >> we know that temperatures are reaching record levels in europe and parts of the united states it's a very hot summer and you'd think that gas demand would be way up if you look at the european numbers, gas demands is lower than last year, lower than the year before even though prices have come down, i don't know, ranging between 1/8 and 1/10 of

where they were. the demand really isn't there and the supply seems adequate including inventories which are relatively high for this time of year and can reach limits of capacity in the u.s. and in europe by the time we get to november but then the oil picture is quite different. inventories are very low they're at the low end of the five-year range both for crude oil and, more importantly, for gasoline and we are seeing a pickup in demand that has been surprising. the pickup is not as great as a normal summer would be, but in the u.s. we've had revisions upward in demand people are driving more. the economy is going well. and with the limited amount of inventories, given the fact we had hurricane season really approaching, we had more named storms than ever in the month of june in the atlantic basin

the risk seems to be on the upside for us even though we're two-thirds of the way, not quite, more than halfway through july, almost two-thirds through it and we haven't hit the $80 mark yet. we think demand is there to pull it up. and the accidents that could happen are on the bullish side rather than the bearish side >> where are we in terms of all-time high production in the united states? we'll get there this year or next >> well, we've had two months for final data already showing that total liquids production out of the u.s. has twice reached its former record which was last november. before that last september so we're seeing still growth on the crude oil side we're seeing growth on natural gas liquids, growth in biofuels. and that number is in the last final numbers that we have gotten in june for the month of

april at 21.3 million barrels a day, a liquids number that has never been seen before oil production, we think, will be hitting the 13 million mark even though productivity is slowing down, even though drilling is slowing down but there's enough momentum going on in that market to see continued growth through the end of the year. >> if we're at 105 barrels a day that we're going to need in, i don't know, five, ten years, are we going to have the supply, or is the price fnaturally -- are you looking at permanent $200 price of oil in two or three years, ed? >> hardly. because we're seeing demand growth slowing down dramatically and, therefore, the amount of supply needed is significantly less than the amount of supply that we've needed in the past. >> so you don't believe the opec secretary said 105 4 million per day more >> when was the last time he was

right? >> so he's talking book maybe? >> i think, unfortunately, the opec numbers have become political numbers. we just have to live with those. >> i don't know what we're going to replace it with if it's still 82% fossil fuels for the world's energy needs, better hope the wind keeps blowing >> the fossil fuels will be there in the market, it will be volatile we have demand really slowing down and we have oil supply that's going to be growing in fits and starts. and mostly out of the opec countries for sure the major ones are looking to monetize their oil look at the uae, the most articulate of all. let's get this monetized and let's get growth going in other areas. the saudis are on -- >> all right >> they're further behind. their economies are not as diversified as the economy of

the uae. >> thanks, ed morris, citigroup. see you later. thanks we have a lot more bank earnings for you this morning. we're waiting for results from morgan stanley we'll bring you them as soon as we get them and they hit the wires, and then later we're going to go inside the summer travel surge and ask the ceo of expedia what might lead to clesble price declines -- dein -- for consumers. will it happen we're coming right back.

we have some breaking news for you that morning on chipotle andrew, good morning chipotle announcing it made its first-ever development deal to expand in the middle east. the franchise agreement is in partnership with a family owned and leading franchise retail operator in the region working with brands like shake shack and starbucks. this is the first time that chipotle has partnered with a local developer as its u.s. and international are company owned and operated brian niccol tells me two restaurant each in dubai and kuwait with the hope for many more in the years to come. in evaluating the market niccol said it felt important to link up to assist in the expansion here from real estate to supply

chain and hiring he said he does believe there's opportunity across the middle east and beyond telling me, quote, we still have a lot of opportunity to grow in the u.s., but it's important to start building some capability outside of the u.s., adding he believes there's both aspiration and the ability to become a global company. andrew, back over to you >> so does this mean that chipotle will be opening franchises in the u.s. and what are niccol's thoughts on that? >> that was my big question because something analysts think about as well. the plan in the u.s., niccol says, is company owned and operated for now they have the balance sheet and investment net they are industry leading returns here, but moving ahead in the future if there's a market where they feel they need a local partner, other international opportunities, they will evaluate and enlist as the company sees fit they have just over 50 locations in europe and canada, and they are all also company owned and operated as well >> okay.

kate, thank you. waking up early on the west coast. appreciate it. for the first time since its 2020 debut nbc universal's peacock is hiking monthly prices effective august 17 for existing users and immediately for new users. the price will go up by $1 to $5.99. the premium plus plan without ads will rise by $2 to $11.99 a month. when we come back, swimming in the venice canals, driving scooters down the spanish steps, and vandalizing the colosseum. why so many of them behave badly. plus, fighting alzheimer's eli lilly filing for a new drug approval which companies are best positioned to fight that disease. stay tuned

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welcome back to "squawk box. the futures right now are barely positive now they're negative the nasdaq down about 19 s&p off 3.25 or so we did have six straight days of dow gains. tom lee last week, that bold call which paid off of 100 s&p points he didn't say where we're going this week, but he did say new highs, all-time highs, in the s&p before the end of the year he's been bullish since a lot of analysts in october were probably not and he was from about under 4,000 to where we are now. the treasuries, not a lot happening in the yield curve we're data dependent obviously and fed dependent 3.76% at this

point. >> okay. i think we have some earnings that are out, and let's get right over to morgan brennan looking through the lockheed numbers. morgan hi, becky, that's right. i'm just going to pull these up right now. it is a beat and a raise for lockheed morgan, gap earnings on revenue of $16.7 billion record $158 billion backlog enabling to raise full-year sales and guidance also coo frank st. john telling me the supply chain is also growing despite some lingering issues with single rocket motors demand, though, especially strong for missiles and air and missile defense thanks to ukraine, the need to replenish stockpiles st. john saying investments to

ramp for systems like javelin and himars are, quote, starting to come through with increased production rates now f-15 fighter jets this is something that allies will send to ukraine, st. john saying it's, quote, early stages with talks happening amongst governments but lockheed would be involved in training, sustainment, transfer, be ready to build more when countries need to back fill based on how all of that goes on defense spending as 2024 policy bills get hashed out in congress malave saying he's content with what's in the framework note that go in coming years as defense budgets jump across the world that international sales could grow faster than the u.s the last thing i would note, the company that lockheed tried unsuccessfully to buy in the past, st. john saying lockheed has told regulators it wants to see certain guarantees of merchant supply and is hopeful that is going to happen.

now taking a look at shares of lockheed martin up 1% right now in the premarket becky? >> all right, morgan, thank you very much. earnings continue on a roll. in fact, morgan stanley out with second quarter results right now, too leslie picker has those numbers. leslie becky, net income coming in at $2.2 billion during the quarter or $1.24 a share here. top line beating analyst estimates with net revenue of 13.5 billion revenue from the firm's institutional securities business, that declined this quarter reflecting a muted activity in sales and trading. fixed income coming in a little bit light here investment banking revenue was little changed from the same quarter last year. wealth management beating analyst expectations, raking in about 6.7 billion, 2 billion higher than where the street -- i'm sorry, 200 million higher than where the street was expecting. investment management adding another billion to revenue pretax margin for this business

was 25%, upwards of 25%, but that reflected higher compensation expenses driven by severance costs. that figure related to about 3,000 plus layoffs that occurred during the quarter that came in at $308 million second quarter two-thirds of that from the institutional securities business the rest in wealth management and investment management. in terms of some color from the release chairman and ceo james gorman saying the firm, quote, delivered solid results in a challenging market environment the quarter started with macroeconomic uncertainties and subdued client activity but ended with a more constructive tone so a little bit of optimism there especially as it pertains to the latter part of the quarter. i will be sitting down with morgan stanley ceo gorman in just about three hours from now in his first tv interview since announcing he was stepping down as ceo >> and, leslie, the big questions that investors are looking for here >> i think the big questions

are, you know, why now why the decision to vacate the ceo role after 13 years at the helm how things are progressing in terms of choosing a successor here they have three candidates that the board is looking into. and then just the future of the business, how he sees things related to regulation. he will remain in that chairman position, so he'll still be associated with the firm for some time moving forward, how he's looking at the additional regulation rules, how he sees the various businesses, the pipeline for investment banking, capital markets returning to a more normalized activity level all of those things investors will be keenly focused on and we plan to ask him in a few hours >> we'll be looking forward to both of those big interviews, bank of america and morgan stanley. eli lilly saying that it has applied for full fda approval of a new drug which significantly slowed the progression of alzheimer's in early stage

patients the fda fully approved biogen's new alzheimer's drug despite safety concerns. joining us for more is jefferies analyst michael ye i know you're an analyst not a doctor let's talk what this class of drugs means for patients and their families amazing to see impressive results, especially for cognitive abilities down the road how is this -- my concern would be you have to take this in early stages how many people get diagnosed in early stages and what happens if you move beyond those stages >> good to be here, and i think the most important thing here we're in the early stages of a journey towards advancements in new therapeutics and, quite frankly, a devastating disease the first two new alzheimer's drugs in over 20 years they stop the progression or slow the progression of a deadly disease. everyone is going to die from

this disease we're at the early stages of making new advancements. i think you'll hear from more convenient versions but more potent versions, combinations, and i think even earlier stages which is good for patients and for families >> because once you move past the early progression, it's much less effective >> i think it's easier to treat earlier before the plaques have destroyed your brain lilly is running a study that will take a few years to finish, which is even earlier stage patients with a blend test but, again, i think these are the signs of advancements and great for patients and great for families >> the push bk has been the cost of these drugs the government doesn't really want to step in and say, yes, we'll be paying for these things the argument this is great hope, and if you don't have to stay on it for an extended -- these are not full life drugs. you go on them for a while and

come off them. and what it costs for trying to care for patients. >> price will always be a controversial topic. it doesn't matter what we're talking about from covid vaccines to new alzheimer's treatments the drugs are about $25,000 a year cms has come out very quickly and supported full reimbursement of the drugs basically looking to reimburse and pay for the p.e.t. scan that is required as well. and the mri scans that are needed for frequent monitoring i think the important thing here is the consideration of, a, the government is in support of reimbursement because of the efficacy of the drug, which is, i think, quite impressive for our viewers. 35% to 40% slowing, i think that's important i think when you look at the economic benefits over many

years, these are saving society money, not just from the cost of taking care of the patient but families, people who have to spend time taking care of the families away from their jobs and certainly the cost, the quality of life and supporting those as well. cms is in support of it and at this time -- >> i want to know whether, as we get better and better treating this, will it be based on these plaques or is there some other underlying mechanism we still don't know >> i think that's the exciting part, joe. when you look at what lilly is doing, running a phase trhree study earlier, based on blood based marker looking at a significant predictor of what eventually will be downstream accumulation of plaque, and i think earlier and earlier. we would all agree once you get to a certain stage you're already forgetting things, you're pretty far gone

it's easier to treat earlier and earlier. that's great obviously for patients and to be able to prevent that >> are you convinced the plaque is the central issue and that's been the fundamental debate? it was in dispute whether that's really the underlying -- >> and today i think both lilly, biogen scientists at the alzheimer's conference that took place, cms, the fda full approval, confirmation in two large randomized studies with similar results confirms the slowing of the memory. the second thing i would say and why we're excited is because lilly and others are looking at combinations with the treatment of the tangles, a marker for the disease, and i would argue earlier and earlier companies like profina, companies like denali looking at more jeagenet

based genes this is a path towards making progress and i think it's going to go beyond just plaque. >> this could be a $15 billion to $20 billion class of drugs over the next decade that's the expectation for it. what does that mean for these stocks what do you tell investors >> that's great. we agree that it could be a $15 billion to $20 billion class of drugs. a lot of that is fairly priced and certainly at jefferies we believe that's fully priced into the lilly stock, which did not move much on this yesterday. on biogen, we are buy rated. i do believe the launch is going to take time, becky. we are below consensus i think once we get past these quarters and the launch takes off we do think this will be a significant driver and significant transformation toward biogen stock and certainly for other younger companies, $4 billion in market cap, has a potent version of it in subcutaneous, making it easier for patients -- >> give yourself the shot? >> either through an auto injector or through a nurse that would be able to do it rather

than sitting in a chair and having to go to an infusion center that will be a big change as well that is a potential take out target or significant upside of that >> michael, thanks for coming in >> great to be here. >> great news. coming up, we're going to talk travel inflation, ai and why so many americans are heading to europe to see the sights this summer we're going to talk about all of those issues with expedia ceo peter kern in just a moment. take a look at futures right now as we head to a break. you're looking at some red arrows the nasdaq open down about 26 points the s&p 500 off about five ints you're watching "squawk box" and this is cnbc

coming up the ceo of expedia joins us on set for travel industry pulse check and some ugly americans acting badly. i didn't realize that was part of the story don't miss that interview. i'm not swimming in any venice canals in california or italy. and a reminder as we head to break, you can always watch or listen to us using the cnbc app.

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welcome back to "squawk box. summer travel surges and high prices hit consumers, expedia rolling out a reward program different brands, multiple ai-powered tools for customers over the past few months here to talk about that, ai and travel, a lot ofhigh demand, prices, peter kern is here, the ceo of expedia good morning tell us what one key is about. >> one key is a culmination of a ton of work we set out a year

ago to bring all our big brands together into one rewards program so that customers could buy anything, a vrbo, a flight, a cruise, anything and use those rewards anywhere in any of our brands >> you pronounce it vrbo >> watch an ad, andrew, come on. >> i do the same >> this is the moment, it's vrbo >> we had to solve this with ralph lauren just saying. >> ralph lauren for 50 years >> joe has vrbo. >> get it across all the programs >> and what do you get for it? >> one key cash. it's super simple. you can use it for anything. you stay with your family, accumulate one key cash, use it on your next flight, hotel booking and vice versa >> that's a good idea. >> you can use it really for

anything and on air, on car, on cruise, you also get points from the supplier >> i still get the points from the airlines, from the hotel, if i get a marriott hotel -- >> just a way to reward travelers and it works for everybody. you don't have to get the 10,000 miles to earn something. you can get five miles or 5 cents or $5 or $500. whatever the you earn you can use, so everybody gets a benefit. >> can i ask a weird vrbo question, how much repeat business do you get? i've use it had and then if i like a place, i reach out and i make friends with them and i don't have to pay your $500 or $600 fee next time >> the vr space does have it where customers will go back to the same place by and large customers go a lot of places, and we are trying to create the best marketplace, the most transparent place, you can get rewards so we think that's really attractive to customers and many times if you're going to different places you need a trusted product that you can go

to or you might go to the beach one year, the mountains another time, you go to europe or something. so we want to be that. occasionally that happens. >> what's the fastest growing segment right now? >> of travel >> no, of your various brands. >> of our various brands >> right you talk about one key, if you will -- >> >> of your various brands. >> vr is still an area where there's lots of growth, but right now, international travel is growing the fastest and cities are coming back this year there's that whole debate about cities coming back cities are back. u.s. cities, international -- >> some cities are not back. >> some cities have not come back in tourism, but the big tourist cities, put san francisco aside, but in europe this summer, packed. >> how's your city of seattle doing? >> pretty good it's not like san francisco. >> let's talk, though, about the broader market in terms of where you're seeing money move you're saying international travel is still hot. >> international travel is very

hot this year. it's basically moving to where people can go. last summer, maybe they couldn't go to europe, now they can go to europe asia's opening up. the chinese are not yet traveling, so there's still a lot of places in asia that are not so packed. but that will open up. it kind of goes in waves >> what are you seeing on pricing. >> so pricing in international travel is sky high, very expensive. hotels, air, very, very high but domestic has eased off a little bit, basically the people throe out to international there aren't as many plane routes, those planes are full. the domestic flights, slightly less full. so prices have moderated >> europe is packed. >> and we're vandalizing place

>> people vandalize everything >> that's a big -- >> when it becomes -- >> the infrastructure spending in italy have you seen that place >> the caves that they're building -- >> the caves that they're building for the match between zuk and muck that's a lot of money. >> help us with the ai piece of all of this. one of the other things you've spent a lot of money and energy and resources on in the past year has been building generative ai and using open ai and api to allow people to interact with this in a completely different interface is that the future of all travel planning >> i think it's part of the future there are people who i'm sure yo you've played with, chatgpt, want to ask questions. it's great for discovery is paris good in the spring? how do i find hotels near the eiffel tower that's a great use for it.

but the personalization comes from our history and the specific data about what's available when and what the prices are when that gets matched up, that gets really powerful >> a lot of folks worry about, they say, chatgpt, great for creative sppursuits, not necessarily for mission critical pursuits because some of these things will spit back out answers that are completely false, it will make up information, it will hallucinate, all of that how do you -- do you get around that and if you do, how >> so when we integrated it, we created our own algorithms to control the responses, so that it wouldn't go up and go into something else it stays on travel or we redirect it. if you go through your flows, if you ask it a question and it's relevant to hotels or something, we'll save those hotels in our planning tools and you can go in and shop around. it's not just a free-form chatgpt product. it's chatgpt within the rails of travel and we write our own

algorithms >> how far away are we from just saying, hey, family of five, plan me a trip internationally to italy for seven days, give me a couple of itineraries, but then literally just go book it figure out the car to the airport, the plane, the car from the airport to the hotel, the hotel to the next place, the thing to -- the thin to the -- i mean, because, you know, a trip can often include hundreds of permutations, if you will, that can take a long time >> sure, i think there's two parts of that. one is, we're not that -- on chatgpt, you can ask that, it will say, go to here on this day, there on that day it can do that -- >> but i want you to book all of the component parts. >> it can't tell you what everything costs the future is that products like chatgpt will become productized to where commercial businesses like ours can use them with our own data right now, we won't give your data to chatgpt. we won't give specific booking

data to chatgpt, prices on a given day. so the future is, you ask that question, it gives you ideas, and then we can actually source the real prices, what's really available, what you can actually do, and you integrate those, you could get to a place where it can give you the trip. whether you would just take it on its word or go and investigate. which consumers love to look around and compare stuff and go to different cities. >> when you start to think out 12 months from now, obviously you're talking about a lot of folks going internationally and what not do you think that this sort of levels back to a meme of sorts are we still on some sort of yolo travel period do you think we get to a point where prices in europe, prices have softened here in the u.s. do they soften on a relative basis in europe next summer, because everybody who couldn't go last summer has now done that, and we get to this new equilibrium? >> i don't think prices in hotels, i don't think we'll see prices come down anytime soon.

in the air, you get pockets where you have supply/demand differences, where you have a little more supply, so prices might ease off a little bit or a shortage of supply we haven't seen the chinese travelers come back really yet, so that's the next big wave. and they're going to go everywhere, as they did before covid. so demand, even if overall demand eases up, we're going to see the chinese come back into the market, so that's going to maintain demand. and i would say, this has been a prolonged view if this is yolo, it's the longest yolo of all time or revenge travel i think we've reached the point it's like you had grandparents that lived through the depression and you saved every little thing now you lived through covid and felt like what it was like to get travel away, and you want to -- >> like this is us forever >> i think generationally, this will be a thing we all remember. and it will be like, i want to go wherever -- the lake, to europe >> you've got your bucket list people will start ticking off the list much more aggressively.

>> i think so. >> peter, great to see you this morning. really appreciate you coming in. >> glad to be here >> coming up, the possible implications, both positive and negative of black rock's decision to add sadie aramco's bod.sion to its ar you're watching "squawk box" on cnbc

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good morning bank of america and morgan stanley both reporting results and their stocks are on the move this morning we're going to have the latest and the power of the consumer, put to the test. the june retail sales report is on its way and black rock adding aramco's ceo to its board. what's behind larry fink's strategy after the money manager's esg push the final hour of "squawk box" begins right now good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernan along with becky quick and andrew ross sorkin this may be the day the dow

doesn't trade higher we'll see by the end of the session. it's been six straight days. we're down this morning. doesn't mean we'll be anywhere close to these levels at 4:00, but it's a possibility nasdaq is down we have earnings, we have bank of america, we have morgan stanley, lockheed martin, and i don't know we've just barely scratched the surface for earnings this time around so they'll be coming in fast and furious for the next two and a half weeks, at least president of yields, as you can see this morning, not much data and not much fed speak to talk about, but still, two years below five, ten-year below four. >> dom chu is here and has the latest on all of this. and fast and furious today, dom. >> we'll try to get you caught up as quick as we can. the big bank earnings, the big headliners so far, bank of america topping profit revenue estimates, helped by better net interest income.

morgan stanley revenues topping estimates, and pnc financials topping profit expectations, but missing on revenues. deposits and net interest income both fell year over year there b of a the only one higher morgan stanley about flat on the session, marginally lower, pnc financials down 2.5% in the last half hour, also earnings results from retail brokage client, charles schwab those shares have been jumping around a little bit, but are higher by about 1%, over 100,000 shares of volume schwab reported both profits and revenues that topped analyst estimates, during the quarter, it brought inassets and bringine total accounts to $34 million, spanning roughly $8.2 trillion in assets. charles schwab up now fractionally and lockheed martin, as joe points out, on the rise by roughly three quarters of a percent. this is america's third biggest aerospace and defense contractor by market value. it reported results, broadly

interrupted as being better than estimates, and lockheed raised its full-year profit and revenue outlook, helped along by strong demand for military equipment, given the preparations for possible conflicts across the groeb. an interesting move. lockheed martin up 1%. a lot more earnings to talk about. >> dom, thank you for. phil lebeau joins us with the latest phil >> andrew, united is expanding its service internationally once again. this time focusing on asian pacific routes remember, last year, they did a big expansion that we're seeing this spring and summer into trans-atlantic routes. now asia pacific routes. here's one of the major ones that united will be adding later this year. san francisco to manila, san francisco to taipei. by the way, that's the second flight into tokyo, they're

already going to the haneda airport right now. all of this together is a 40% increase in capacity, compared to where united was on asia pacific routes if you take a look at shares of united, we'll hear from them on their q2 results after the bell tomorrow, and later in the week from ceo scott kirby there are a lot of people who have been asking me, well, are the delays as bad that we're seeing in airports, especially in the new york area, as we saw last year, given what we saw with united a few weeks ago, we see it with other airlines, as well we asked the folks at flight aware to crunch the data for us. the four major airlines using the new york city airports, the three airports, they have reduced their flights by 10% this year at the request of the federal government and the results show that delays and cancellations are lower. take a look at these numbers from flight aware. we're comparing mid-may through

july 10th. and that's compared to last year and there you see how much delays are down at newark, laguardia, jfk, as well as cancellations. so i hear this and i know you guys have talked about this at some length. a lot of people saying, well, it's just as bad as it was last year the fact of the matter is, in that new york area, the cutback in flights has been affected and it is not as bad as it was last year >> doesn't suck nearly as bad as last year. >> there were fewer people last year >> i like that headline, becky we'll use that >> not quite as sucky. it's the same thing with the recession. if the recession hits you, it's a recession. if it hits you, it's a depression, if it hits you, it's a recession. same thing, if your flight gets canceled -- >> like minor surgery -- >> yeah, on somebody else. >> phil, thank you >> you bet >> might have surgery -- >> i don't like cutting my nails.

i don't like haircuts. for more on the markets and earnings, let's bring in g gabriella santos with jpmorgan we were just talking about how it affects people. so you think that the chance of a soft landing, chances have increased, but not clear sailing. we still don't know. >> i think you have to say that the odds of a soft landing have gone up. you've gotten so much information in the past two weeks on both sides of the fed's mandate, on the jobs side, we have had much more resilience jobs data than we expected it really is normalizing, instead of decelerating, as we had expected and that keeps incomes growing and consumption moving lastly, last week, we got the other side of the mandate with a broadening out and disinflation trends, and that lessens the odd we'll get some sort of fed-induced inflation into next year doesn't mean we're done with

that debate, unfortunately i think all of us are sick and tired of having that conversation but i think later in the fall, perhaps it comes back little bit. we'll continue having a conversation about how much is consumption normalizing versus something more nefarious how much is business hiring normalizing versus businesses battening down the hatches i think in the fall, this conversation comes back. and of course, with regards to the fed, jackson hole, the september meeting will be important markers to see if we're right about this expectation of just one more hike and then we're done >> even though -- you think one more hike, but we don't go to zero on future hikes, we'll still be talking about it. but you say that the -- that we're starting to shift the emphasis to cuts again and that you don't think that it's crazy to think that there could be cuts in the first quarter of next year that doesn't sound like a soft landing. why would you cut if we have a soft landing >> i think the conversation after the cpi report last week

is around this consensus of just one more hike. and now the investor intention is coming back to when we'll start to see rates normalizing when will we see the first cut and how much will we get in 202024 and 2025 the exact timing will depend on the actual data itself, but i think it's reasonable expectations are now for a first cut in march >> why is that >> and the fed thinks normalizing is going up. you're saying normalizing is at lower levels than we are right now? >> i think we have to remember that the fed's own estimate of neutral, right, neither accelerating or breaking the economy is 2.5 we're double that. that's the nominal rate. as inflation comes down, your real rate actually increases so it becomes more restrictive, even if the fed does absolutely nothing. so even if we don't get a hard landing, we have a soft landing, 5, 5.5% rates are just way too

high for this economy. >> you don't think the labor is going to be sticking does the labor component, service component, travel, all of that, that might be sticky. we may not get below 3 or wherever we are right now. >> on inflation. >> it might be harder. >> i think not this year we got the big letdown in june because of the base effect so for chair powell's super core we got that big move down from 5% in may to 3.6% in june. and we'll probably stay in those low-to-mid3s for the rest of the year and the next year, we have confidence that it comes down further to 2% and the fed can feel like forward-looking indicators are moving us in the right direction. and what i think is most important for fixed income, the sale has been extended to capture these 15-year high yields and benefit from future drops in yields or price appreciation so the risk/reward for fixed income is very attractive, starting right now we can be talking about -- >> it can be longer --

>> double-digit returns. >> longer duration fixed income. >> and i don't think you have to go from money markets, where we see a lot of money right now to 30-year bonds, right neutral duration, which would be something in the intermediate part of the curve, five years, six years, is already quite good and if yields fall just 1% from here on the curve, you could be talking about an 11% total return on the u.s. aggregate so the risk/reward is very, very interesting, but you have to capture where the yields where they are now before they normal ides >> we have only had a handful of earnings so far. can you glean anything from what the rest are going to be like? what kind of surprises could we see? would they be good surprises or bad surprises? >> very early on it's been interesting. the first quarter expectations going into the earnings seasons have come down way more than normal the bar was pretty low and we still didn't see beats be

rewarded very much, even though we did have higher beats on earnings and revenues. this quarter, expectations haven't come down as much. actually not as much as is normal, the five-year, ten-year average. expectations are a bit higher. it will be really interesting to see what kind of beats we get, but also, whether they start being rewarded again and especially, within the earnings picture on a more macro level, be focusing on margins, margins, margins, right? how much can companies still increase costs to their end consumer, above and beyond what their input costs are still increasing, when we think about wages and think about interest costs. >> all right very good. gabriella, thanks. how'd you like jpmorgan's earnings >> i'll let them speak for themselves >> it was the time we used to ask the bear stearns guy about their stock price. do you remember that >> i do. he loved that. >> yeah. >> head exploded did jamie mention the asset management group in the call >> we did get a nice mention

>> really? >> no way, jose. >> yeah? >> that's great. see? ask questions, get some interesting answers. >> there was a mention that is all i said thanks, joe. >> do we want the comcast call to be all "squawk box," and it is never quite enough. >> that's the takeaway >> they have some other operations, apparently coming up, on the other side of this break, we've got the report -- the retail sales report that everyone's watching. it comes up at 8:30 eastern time don't go anywhere. first, actor ben mckenzie known for his role in "the oc" and "gotham" now turnecrtod yp critic he's going to join us right after the break. "squawk box" coming right back [shoe squeaks, camera clicks] coach staley be like, “you're blending! you're blending!” that ate my nerves up, but i was like you're right. [dribbling, blocked shots] i'm on this earth to shine. [ camera clicks ] that's when it really just clicked for us. coach is always in my corner no matter what. and that changed me tremendously.

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welcome back to "squawk box," everyone we've been watching the futures this morning right now, you see some modest declines dow futures off by about 25. the nasdaq down by 22. but it has been a pretty strong run for the markets. the dow has been up the last six sessions in a row. >> meantime, actor ben mckenzie is known for his role in "the oc" and "gotham," and has been a

critic of crypto his scrutiny led him to challenge its flaws and shortcomingings and testified in front of the senate banking committee. he has a new book out called "easy money: casino capitalism and the golden age of fraud," co-authored with the journalist jacob silverman, it highlights the inherent risks and practices within the industry. joining us right now is ben mckenzie good morning >> good morning. >> how did you first -- we were talking about it offscreen here, but how did you first get interested in this and decide that you wanted to go -- you started writing articles a couple of years ago about this and taking to twitter with your views of crypto. >> like most americans, i stumbled on to crypto with a friend of mine he told me i should by bitcoin unfortunately, he gave me the worst financial advice of my life >> what was the price of bitcoin right now? >> somewhere between $40 and $50,000, probably. he said i should buy it. i said, okay, what is this

stuff? i was green at economic, and they weren't currency. people were using them as investments. that was odd to me i didn't understand what that meant. so i went down the rabbit hole and i just looked at the market structure, which is very interesting. of course, most of the volume in crypto runs through overseas exchanges. sam bankman-fried's ftc, in the bahamas, binance, where we don't know where that's headquarters, they have no headquarters, or so they claim but there's a lot of shell corporations in the caribbean that they're affiliated with that was interesting to me, you're talking about an unregulated, unlicensed marketplace, run through shell corporations in the caribbean. interesting. >> and you lost how much >> oh, i know, i hate to disappoint the bros, i was a little early, and i did lose initially, and i doubled down, which you should never do, and i actually did okay. >> you doubled down at 15 or 20 or -- they're back now to 30,000 >> i wasn't shorting bitcoin directly, i wouldn't do that

i don't trust the marketplace. the marketplace is pretty bad. >> that's your biggest concern with it -- >> well, my biggest concern is regular people who have lost a lot of money 40 to 50 million americans invested in cryptocurrency, most of them have lost money. cryptocurrency, the market closely resembles a ponzi scheme or multi-level marketing scheme. and studies have shown that an mlms, 99% of people lose and the 1% benefit in crypto, it would be the exchange owners, it would be the vc firms, it would be the people that issue the coins >> would it be fixe ed if the regulatory structure were different, if the ftc or congress laid rules to say which one would be in charge >> that would definitely help. crypto has benefited enormously between the gray area about how they classify securities and commodities. bitcoin was classified as a commodity in 2014 because of a strict reading of the cea, which the futures are being traded,

and therefore you could classify it as a commodity, because it had not been classified. >> how much of your issue is around bitcoin versus the other currencies because i could even make an argument that the other currencies are even more precarious, if you will, than what bitcoin really is >> well, that's certainly true even worse is probably how i would say it at least with bitcoin, theoretically, the number is limited, right there are only 21 million bitcoin numbers that can be mined. bitcoiners usually make a conflation there they confuse limited supply with scarcity those are not the same things, as anyone with a disagree in economics knows. scarcity only occurs when demand exceeds supply if the price is zero something can be limited in supply and scarce, because there's demand for it, or it can be limited in supply, but not scarce >> you should talk to this gentlemen over here. >> because joe is -- joe likes bitcoin. >> i do, but i bought it in, at

4,000, and at the time, it went from 4,000 to 6,200. i had a most experience, sold most of it at 50 i didn't have a lot in it. but -- >> people made money, and i'm not -- >> and we have tom lee on earlier this -- he's a great, smart guy, stock thinks bitcoin is going to 200,000. so we have kathy wood, blackrock wants to have a fidelity, and it didn't take me long to understand how the unbanked could benefit from this. and distributed ledgers and i understand, it was only -- i mean, i didn't -- you say you did a deep dive, it only took me about 20 pages of the bitcoin standard to understand that this was probably something that, you

think all of these firms will be egg on their face? >> so the decentralized future of money is brought to you by black rock i don't know >> maybe if they think it's gold. if they think it's, you know -- >> that's why i was -- >> digital gold. >> exactly and that's why i was explaining the difference between -- >> i heard that. >> -- supply and scarcity. a lot of smart people are fooled by it. >> you think it's going to zero eventually >> no -- >> where do you think it's going? >> yi can't predict the future more than anyone else. >> you think it's going lower? >> yes >> do you think eventually there will be something not called bitcoin? >> it's a story. it will last as long as people believe in it. >> i'm with him in that regard gold is a story, of sorts. >> the six or characteristics that gold have all manifested in bitcoin. >> but the most important part

in what you've laid out, it doesn't matter if you believe in bitcoin or anything, it's the exchanges. if they're run by complete fraudsters and ponzi schemers, you're hosed either way. >> but if you bought any pandemic darling, you lost the same amount that you lost in bitcoin. >> no. >> yeah, you did zoom, netflix, the same percentage losses are krsz the board. the stock market, look at the high and lows on any of the -- meta just was at 80, back to 300. it had already made the round-trip the percentage losses aren't -- even with blue chip companies, you see 50% down >> ftx claimed 1.2 million retail traders in the united states alone those people can't get their money out. celsius claimed a million. >> now you're talking about ftx and not the underlying asset >> but that's what it started -- >> it's traded through the exchange

you don't need to trade bitcoin, you can have your own wallet and keep it. >> but trade it. >> and i think it's fair to be upset about people who got ripped off >> but you don't blame it on bitcoin, you blame it on the exchanges. >> i'm sorry, i'm not trying to be glib here i have spent two years investigating this industry. i have interviewed sam bankman-fried now indicted for fraud. i interviewed alex machinski who was arrested last week for fraud. i've written articles about binance. i have done my homework. if people disagree with me, read my book. >> but that's like talking about a bucket shop that trades stocks and they're all out of business and they're, you know, they all fall by the wayside. even blue chips like bear stearns falls by the wayside it doesn't mean that stocks are scam, that they're inherently

w wo worthless. this opinion is not unique most people think -- i still get ted rock, beanie babies, tulip bulbs. most of the people who do that haven't looked it into as much as you and most zero knowledge of how it actually works you have read the bitcoin standards, you have read those books. >> i've read the white paper let's use the stock analogy. if bitcoin is an investment like a share of stock, what is it an investment in? what is the revenue stream, the good, the service that's being provided >> how does gold work? >> well gold is thought of, traditionally, as a store of value. and people believe in it but andrew was making this point, earlier what is it actually? it's a thought >> and it's not a currency -- by the way, any currency can't have great inflation, because it would constantly be inflated, you would never use it >> why has gold had value for 2,000 years. >> because it's a story. >> people ascribe value to it.

>> which is a pretty good story. >> it is a good story. it's really pretty >> ben and i agree more than we disagree >> i know, you've agreed from a thousand all the way to 64,000 >> and happy to do so. i made a little money betting it was allbaloney >> now it's 30,000 and we'll see if it goes back to 200,000 >> i'll make a wager >> i don't need a wager. i don't need to make a wager with the guy from "the oc. >> who wrote a book about crypto >> what was the greatest revelation in the book i know you don't want to give it away completely, because you want to sell some books, but what was the thing that really surprised you. went in with a thesis and a premise, but -- >> i kept thinking, at some point, someone will be able to explain this to me in a way that i understand and i sat with sam bankman-fried, the board of jpmorgan of crypto, and you probably have had this experience, you interviewed him

right after this has empire was -- there was nothing there the title of that chapter is "the emperor is butt-ass naked." so i'll let people read the book >> and this is cable >> ben, thank you. >> appreciate it >> when we come back, we've got the retail sales report. stick around [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible. cdw makes it powerful.

all right. welcome back to "squawk box," everybody. we are just a few seconds away from the june retail sales report every data point matters, with the fed getting ready to meet once again we'll see if there is a rate hike coming. you can see right now if you've been watching the futures, not a whole lot of activity. dow futures off by about 7 this is six days in a row already leading up to this that the dow has closed higher. and yesterday you had the s&p 500 and the nasdaq closing at their highest levels since april. if you take a look right now, nasdaq is up by about 17, maybe it was april of -- it wasn't this year. april of another year. if you're looking right now at treasuries, you'll see the ten-year yielding 3.76%. the two-year is just below 4.7%. so watching to see what happens again, watching every data point along the way. rick santelli is standing by at the cme in chicago

rick, about 20 seconds before we get those numbers. >> yes, about 20 seconds, and everybody, of course, is continuing to monitor how the economy is performing from the perspective of the consumer, the bulk of the u.s. economy, at a time when the federal reserve keeps snugging up rates, recent pauses look to be temporary as the meeting coming up in july, most assuredly is going to see a quarter-point increase we are a few seconds now away from the release of the june retail sales becky, we're expecting a number up about half of 1% in the rearview mirror is up 0.3, the most recent high water market is up 2.8 in january of '23 and it's taking a little bit of time before i can see anything passing through on the wires maybe the most important aspect of this number is most likely going to be how it responds to the control setting. all right. headline number, looks like it's populating across the wires. up 0.2% on retail sales.

this is the advanced look. definitely not as strong as we were expecting and here's what's interesting. when you strip out autos, it's still up 0.2%. both of these numbers are a little lighter than expectation. and if you look at ex-auto and gas station sales, exactly as expected, up 0.3%. so it improved by 0.1. these numbers are close, but a little disappointing on headline i don't see the control number, and when it ultimately comes out, we'll probably be tickering it, or we can say it on the air, becky. but at this point in time, that's what's out. we can see that interest rates have moved down just a little bit. these numbers really are at expectations the equity markets are moving a bit higher, and that's most like because rates have moved down. and that has been the big move thus far, after the rejection a couple of weeks ago that closed above 507 and a two-year at day

where it had an intra-day high of 511 that across the curve and the pause when you add that in has certainly made a difference in the market the control number is coming out, and i'm a little bit shocked. it's up 0.6% that is double of what we were expecting. and to find a high number, you would have to go to january of '23. that was up 1.7% that's the high-water mark up 0.6% of 1% is pretty good. interest rates moved up pretty much towards unchanged, at 3.75 on the ten-year. back to you, andrew. >> okay. rick, thank you. we're going to go over to steve liesman now, who's been crunching the numbers and has a view on all of this. steve? >> yeah, i mean, the headline is lower than expected, but rick absolutely right to emphasize that control group

i'll tell you why, that control group is a number that feeds into gdp the 0.6 should be generally flatter than the second quarter gdp, reports that are out there last month, when we did our rapid update, we were at 1.3, different from the atlanta fed which is at 2.3 from the second quarter. but i think a bottom line on this is that we are not necessarily at or near the recession that many have predicted to begin in the second quarter of this year, as you know from our prior reporting, what's happened is they've pushed ahead and if you read "the wall street journal" this morning, they are less sure about a recession. they brought it down, the probability from 55 to 64% we'll do our probabilities next week when we do our fed survey but at the moment, there is less concern about a recession, given what's happened. the other number i'm looking for is real earnings that tends to come out with this report. i don't have it right now, but i think the story is that if inflation is down towards the

lower numbers that we had, that means that real earnings are going to look better people have more money in their pocket and now what we're looking for is, how do people spend if, indeed, inflation is not going up, as much as previously? we have had some move into autos. phil's been reporting about that and we'll see what happens with things like food and other -- and discretionary items, because ultimately, if prices are not rising as fast, maybe people gravitate back into some of the places where there's a little less price pressure. change may be afoot, guys, as we try to understand the retail and consumer environment with less inflation as a big part of it. becky? >> change may be afoot, meaning what, steve? meaning that we're seeing consumers get tapped out >> sorry, becky, i'm having a little bit of trouble hearing you. >> steve, we'll let you go on

this thank you, we'll see you later joining me right now for more on these retail sales number is bill simon who served as walmart's president and ceo from 2010 to 2014 he's currently on the boards of darden and hanes brands. bill, good to see you today. >> hey, becky. good morning, how are you? >> good. are you surprised to see lowelo lower-than-expected retaconsumer spending from retail sales >> a little bit. i was expecting them to meet or beat it's a little bit of a head scratcher. and i think maybe what we're missing is the housing numbers, the rent numbers obviously not in retail sales that haven't come down to make things a little bit more affordable that may be offsetting the consumers that they follow, the bank of america institute,

and that's based on their old numbers from all the clients they see across the country, that consumers who are renters are getting pinched a lot more, because they have seen serious rent inflation homeowners who were locked into a lower mortgage rate still have some money that they can do -- disposable income that they can play with a little bit more. your bigger worry, though, bill, is more about inflation than worried about recession. why is that? >> exactly you know, not until we see the labor market start to loosen up a little bit, i think, you know, the risk of a recession is still very, very low we're actually quite good at recovering from recessions we sort of do it every few years and have done it quite a few times in the last 25 or 30 years. it's just this stubborn, difficult, deep inflation we haven't seen for a couple of decades. and we're showing that we're not really that good at shaking it off. and so, my worry is more, let's

get the inflation under control and we can -- if we find ourselves in a mild recession, i have no doubt that the economy will grow its way out of that. >> there's been a lot of people, though, who think that inflation has come down pretty substantially. at least you've seen it tame to a certain extent you don't think that trend continues? you don't think the fed has done enough at this point to break it >> well, there's inflation and inflation is a rate. so if you look at the two-year stack, now three-year stack, of things like food, you're in the mid-20s. 20% increase over a couple of years in food. food inflation things that consumers obviously need and then you sort of look at the counter to that. we've got near full employment and, you know, wage rates continue to rise to offset the growing food costs so we're in this sort of inflationary, potential inflationary spiral that really needs to get under control and while the rate of inflation

has eased, which is what the numbers showed, the absolute price increase over the last 24 months is still quite astounding >> i guess, if you're sitting on the board like darden restaurants, where you're trying to find people to hire, has it gotten harder, or is it still difficult to try to find people? do you still have to pay more money for that >> i think you have to pay a fair wage and take care of your people and i think companies that do that have had less difficulty finding people to work in companies that are trying to, you know, still operate in the low-cost area, particularly in wages, lose people to a better job and better wages and that's really kind of the model. i think it's tough out there in certain markets, and, you know, to fill the roles. and it's really sort of potentially limiting expansion so it's difficult to fill new jobs >> phil, thank you >> thanks, becky coming up, what to watch

ahead of the opening bell on wall street. and more insight into this morning's bank earnings. and will blackrock face fallout from naming the saudi ayunco ceo to its board. st ted you're watching "squawk box" on cnbc

coming up, blackrock, the world's largest money manager at the forefront of the esg investment movement now naming the ceo of the world's largest oil company to its board jeff sonnenfeld has some thoughts on larry fink's strategy, next harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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box. blackrock naming the ceo of aramco to its board. the world's largest has been a proponent. blackrock says the move will give it a unique perspective on key issues joining us now to talk about the decision is jeff sonnenfeld, senior associate dean for leadership studies at yale university school of management, as well as a cnbc contributor. on face value, jeff, it's good to see you, but on face value, blackrock's global they do have a presence in the middle east. i could almost accept that you can't change the world, because you can't change the world in one fell swoop being part of it, being part of the process, maybe you work from within and maybe affect an improvement in things that you see in the world. are you too dismissive out of hand as a smart move for larry fink and blackrock >> i dismiss this out of hand,

but not for the reasoning you said i share your perspective as a globalist, i don't share your perspective on appeasement always being the right way to go or the current term for it is constructive engagement. that often doesn't work. but in particular, the saudis are entitled to a voice on this board. they have $1 trillion investmented in there. i think they're entitled to a voice. but not this guy amin nasser might be a delightful substantively, repreg aramco, that is the wrong player here unless larry fink really wants to pblur their image on th esg front, and that's pretty good but aramco has not been in support of u.s. policies they have been undermining the allies whether or not it's to help putin with these completely unjustified production cuts, they're cutting their nose to spite their face they've cut about 4 billion barrels a day of production in the last ten months, completely

unjustified, unless they either want to help putin or rye to hurt the biden economy or lord knows what they want to do make up for their failed investments elsewhere, they've tried to diversify and it's been a fiasco from them from the vision front has been disastrous so, whatever their motives are, it's not in our interests. and it's because of these misguided motives that we've actually cut the $100 billion -- actually put a pause on an unparalleled $100 billion weapons transfer of highly sensitive systems to the saudis for full control >> jeff, so if -- if it was just a hydrocarbon producer, the biggest in the world, but didn't have all of these -- this history of being anti- -- against our interests, the united states, then would it be okay or is it -- because then i think we get into the whole issue of china and what -- how companies should be negotiating -- or

walking that fine line, and there's a lot of things that -- and it's weird for me, watching you over the months, jeff, in terms of russia, how strident you've been. you don't speak out about china the same way i don't really understand that >> well, the topic today is saudi, i'm not opposed to saudi. i'm opposed to aramco being represented, given the misconduct of aramco and i've shared this with a couple of board members on the aramco board that's a problem china, by the way, has been surprisingly supportive, in some ways, of what we're doing in russia in fact, the largest -- some of the largest petro chemical companies on february 24th of last year, they cut all ties immediately. the largest banks in china, several of them, from bank of china to icbc, larger than virtually any bank we have on

this airwaves, they cut all ties with china right away. and thankfully, so far, they're not supplying any great extent weapons to russia. but, yeah, but the issue here being, saudi arabia and saudi arabia's misconduct. they're not on our side -- frankly, they're not on their own side if larry fink wanted to give them good advice, he would tell them, don't cut the production, because it's cost them hundreds of billions of dollars zblu here is the thing that i can't figure out about this decision this morning, which is, you know, the last five and ten years, you saw larry fink and you saw blackrock very aggressively talk about esg and in particular, climate in fact, i remember doing an interview with him where he talked about climate and carbon as being one of the central issues of his life, of his life! he then gets tortured in the last two years -- torched,

really, by the right gop states that decide, we're not going to do business with you under these conditions it appears to some degree that he's now placating that group and i imagine, may shoot himself in the foot again on the other side what i fear is that people are going to think that this firm has just flip-flopped from one side to the other side -- just whatever the wind is blowing today is the way we're going >> i couldn't agree with you more, andrew he clearly is swinging like a pendulum here. it's got to be confusing a lot of people. absolutely there are excesses and opportunists who hijacked the, quote, esg cause. it got blurred we have 1,600 mutual funds and private equity funds chasing esg-designated investments

1600 and there are only 5,000 public companies it's absurd. a lot of them are ridiculous in this case he's got about a trillion detonated to esg out of the $9 trillion blackrock has. there's plenty of choice, opened up choice to investors how they want to vote on the referenda. blackrock has been great on that front. the saudis are entitled to a saudi voice, a saudi seat. this is the exact wrong company. not just on the fossil fuel issue, just where they are in undermining u.s. policy which is why the united states government -- they were getting thad missiles. we were manufacturing them, 100% manufacturing them in saudi arabia and giving them financial control and the intellectual property control all of our allies combined didn't have a deal like that that we gave them in 2017, the same year that 500 saudis were

imprisoned in the riyadh ritz-carlton and shaken down, some reportedly tortured, no public trials overall this this is who our business partner is, not even getting into the khoshoggi deal which was, of course, the murder one year later. the davos in the desert as a parallel, i happen to like larry fink andrew, you were the first to pull out of the davos deal i'm not pandering but i think you triggered that whole statement of the global business community. when you pulled out, everybody followed, jamie dimon, everybody, except larry fink he was the last. i think there's a concern here. >> it's fascinating to watch i hope we have an opportunity to talk to larry directly about it. >> i want him back on the set. this is like an olive branch i like larry, now that he's

living in the real world again, jeff aramco, the largest hydrocarbon producer -- we're not going to deal with china. we have to do it we need the oil. you have a great life. i know you're an academic -- >> no. are you kidding, joe we're producing 9 billion barrels a day of oil >> i know. all in, jeff we need it all wind and solar, biofuels we need it all we need an all-in energy strategy because we're at 82% of the global energy is still hydrocarbons it's business, honey it's business, nothing personal. >> we've got to go >> wt.ai >> we'll be right back, jeff we're coming right back.

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welcome back to "squawk box. what to watch on the financials and other companies as they continue to report earnings. i want to bring in joanne feeney from advisers capital management good morning to you. first of all, what do you think of these earnings we heard about today in the banking space and what do you think that portends for what we'll hear later this

week >> good morning, andrew. positive results net interest margins holding up pretty well. you need to look for the rest of earnings seasons are what are the earnings telling us about the strength of the economy, the strength of the consumer we're seeing loan volume hold up reasonably well, as expected, demands continuing to shift and away from the regionals. our view here is you want to hold a mixture on these financial institutions, own the big banks and regionals. we know we're in a cyclical low for these guys, but the loan volume is holding up reasonably well what it tells us is that the consumer and firms are still believing in some resilience in the u.s. economy that things are not falling off a cliff, the labor market continues to be strong firms are still hoarding labor so we may end up getting a recession depending on how intractable inflation remains. we didn't like that core came in as high as it did last time

around ultimately the long volume is telling us that things are pretty solid we think owning a smattering of financials across the board, alternatives, regional and the big banks is probably a big way to go from here. >> where do you hear from tech >> obviously the big guys, the super seven as we're calling them are trading at 40 times they're pretty expensive we still think there's a role for them in portfolios we think we're at approaching the bottom in some of the hardware sales like the smart phones, notebook computers, that sort of thing. there's still inventory clearing going on taiwan semis will report this week that will tell a lot about how much they'll be ramping up productions. we do think demand is starting to stabilize and come back in the server space obviously ai is helping that more you want to look at what are enterprise doing for that spending are we going to reach a bottom in the smart phone and mobile sales. we think that's likely to come

here in the second half. investors clearly are looking beyond 2023. they're looking at 2024 and we think that's appropriate. >> when you think about big tech and the big seven, they make up such a large portion of the indexes. for those folks out there that just own the indexes, should they be? >> no, they shouldn't andrew we think that's a real danger zone, to have 30% of your portfolio in a handful of names. it might have been fun it was fun while it lasted we think those exposures should be taken down. you want to own some of the higher quality names like amazon, apple, google, microsoft certainly, but then you want to really diversify away from that. there are so many companies out there so much more attractive in terms of valuation and still offer reasonable growth. in health care which hasn't done well recently, there are some very good growth opportunities and good income opportunities. so for our clients looking for income in their retirement, you

want to mix in some growth names, sure, but fill in with some names that have dividend yeels of 3, 4, 5%. that's not in the tech space typically. >> joanne, we've got to run. appreciate your perspective as always >> you bet. that does it for us today. it's been fun. we'll see you back here tomorrow thanks everybody right now it's time for "squawk on the street. ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber premarket a little soggy as some of the banks underwhelm. a headline of .2 the dow industrials riding a six-session win streak pnc shares are under pressure as revenue misses. >> plus, we'll talk the macroeconomic picture. retail sales notched a third straight month of