ten-year is sitting at 4.25%. the ten-year just below 5% at 4.99%. oil prices, they've been around $90. if you check it right now, wti, $89.92. >> neither number was the worst case scenario yesterday or today, and even with the ecb surprise rate hike, they still said maybe that's it. so, it's like -- >> we'll see. not this month. steve was saying 42% fed funds futures for a november hike. anyway, we'll be back here tomorrow. right now it's time for "squawk on the street." ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, who's back, david faber, at post nine of the new york stock exchange. what a morning we have on tap. the arm ipo, china cuts reserve requirements, ecb hikes, uaw strike deadline, and the ecodata runs hot from retail sales to ppi. we've got oil above $90 for the first time this year.

we're going to begin with this year's biggest ipo, arm pricing its offer at $51. that's the high end of the projected range and valuing the softbank-owned chip designer at $54.5 billion, fully diluted. arm, whose customers include apple and nvidia, looking to ride this a.i. wave, listing on the nasdaq today under arm, and david has this exclusive with renee haas and masa son. >> my understanding is that they could have gone $52. that's what i have been told by any number of people, but masa said, let's do $51 with the prospect that that will position it better for some sort of positive open, and that's important here, given the importance of arm to the overall ipo market given the size of the offering, the focus on it, and the fact that we are expecting more to follow. if it doesn't perform well, that might leave not a particularly good taste in investors' mouths. the hedge fund's been pared

back, long only. sovereign funds and stepped up and converted from what was interest to actual buying power. we'll see how it pfrerforms, ji. on the fundamentals, it's highly valued. when you look at the last 12 months, it's about the future. >> it's interesting you talk about the long only and obviously these anchor tenants. the anchor tenants themselves are not going to be held to, i paid too high for something. i paid a hundred times versus, say, cadence, and you need that, because remember, if you get it $51, you got to be able to sell it at $58. there's got to be some upside, and david, even at $51, it's expensive. >> yeah, it's not cheap. but it may very well be the way it trades today is much more about supply-demand than it is about underlying fundamentals, which we'll sort out over time. >> well, you -- when you speak to rene, i don't think -- i think rene wants a good deal, the ceo. he does not want a high

valuation. he wants people to be rewarded, and i think one of the problems, david, is that the very small float might pop big, and we don't want that. >> yeah, you know, you want to sort of leave everybody feeling good but leave something on the table. >> they just said that. there's got to be some happy medium. carl, the bad deals are the ones that open up huge and then retail people get picked off these market orders. >> what are the key examples that you think of when you look at that scenario? >> well, i mean, we didn't know -- well, first, there's facebook, which, who the heck knew what that was going to be? we had uber, where you had people who really wanted out that we didn't know, and we had individuals who wanted in, and it left a bad taste with everybody. you want to grab that? >> i'm going to grab that. >> david mentions the underlying fundamentals. the other story is the migration from smart phones to datacenter, and then royalty rates. >> royalties are tough, because they tend to go down. i was struggling with whether qualcomm shouldn't be the comp,

and that's very low value because there's so much that's cell phone. david, you know this thing has really -- really has to have a lot of nvidia-like business in order to be able to get the higher valuation. >> without a doubt. a.i. is the future that they've discussed in terms of adding that layer of growth that i think is going to justify not just a price of $51 but perhaps growth from here. as the guys said, of course, we have had a chance to sit down and speak with rene haas and masa son, and i want to play it for you and talk about -- >> this is very exciting. >> -- the opportunities that mr. haas sees for this company. again, priced at $51. won't begin trading, by the way, most likely, for a few hours from now. >> i'm come back. >> all right. you come back. >> okay, thank you. >> take a listen. >> arm of 2023, returning to the public markets, we're a very different company than we were in 2016, when we were largely associated, as you said, with mobile. and the important thing to think

about arm or remember is that we were born from building a device that was going to run off a battery. so, that sensibility about power efficiency is in the dna of our engineers. so, fast forward to 2023, when you look at the diversification of our markets, cloud datacenter, automotive, everything with ev in automotive, these require extremely power efficient processors or cpus, which is what we do. so, whether it's datacenter, obviously around sustainability, you want as low power as possible. back on these cars running off batteries, it's a great place for arm to really grow our business, and that's what we did in the years being private between 2016 and now. we diversified our business. we've got significant growth in the cloud datacenter and in automotive, and then with a.i., a.i. runs on arm. it's hard to find an a.i. device today that isn't arm-based. google -- amazon alexa, for

example, that device, which does voice remem voice recognition, et cetera, that's a.i. you might need more cpus to run more complex a.i. so, we see just huge growth opportunities there. >> what is running generative a.i., though, is more gpu, and it's obviously all produced by nvidia. there is a relationship there. obviously, you once worked for the company as well. but investors aye spoken to would like to see a lot deeper relationship. is it your expectation that you're going to sell more to nvidia? they're not that large a customer. >> nvidia today is doing obviously a lot around a.i., generative a.i. and training. their latest product that they announced, the gracehopper super chip, which is their accelerated gpu for a.i. training, now uses 72 arm cpus as the core cpu in that. remember, no type of accelerated training for a.i. can run without a cpu, so now the combination of the arm cpus with nvidia gpus, we think, will be even more growth opportunity for

us going forward. >> when investors looked at your s-1, for example, or your recent numbers, they didn't see a great deal of growth year over year, and yet you're pointing to much more significant growth next year over this year and even after that. why? >> the year on year growth was not that great, as you said, but if you look backwards for the last three years as we've pivoted our strategy, we're about 15% year over year growth going forward, excuse me, for the last three years, but going forward, again, when you look at these mega trends of efficiency, software, complex a.i., all having to run off batteries or low-power devices, this is a huge growth for us. and again, david, grace hopper is a great example of the kind of devices that can only be built on arm. >> masa, it wasn't that many years ago that you were selling this company to nvidia. or at least had plans to sell this company to nvidia. that obviously did not happen. the price tag then was $40 billion. a lot of it was made up of

nvidia stock. what has changed between then and now? >> we did not want to really sell. it was the covid that made me really go into the protective mode. so, i had to go protective mode, and i had to choose the more conservative, careful operation of softbank. so, we were selling to nvidia, but the deal was actually one-third cash, two-thirds was exchange of nvidia shares, a combined company of nvidia and arm. i believed in the future of nvidia back then, and it was right, and i believed in the combinations of the power of the two companies would be enormous. i believed in the future of a.i., and it's really now

getting proved. and this is the beginning of big a.i. time, and arm is going to have a big role in that. >> we're going to share a lot more from that interview. obviously, including masa's belief in a.i. and talk about some of the missteps that have taken place as well. you know, jim, as you know, if that nvidia deal had gone through, they would have benefitted enormously, given the two-thirds that would have been the stock. >> oh. >> that said, he bought the stock, if you guys remember, back in '17 and then sold it not that long after. again, a real opportunity. i would point out one other thing, which is i believe when they bought arm in 2016 for $32 billion, they could have bought all of nvidia for $27 billion. well, that was the market cap of nvidia at that time. so, when it comes to a.i. and masa and i discussed this, and we'll share it with everybody. he was talking about it ad nauseam four years ago, five years ago, and yet they haven't benefitted from it as much as

you might have thought given he certainly had the right viewpoint. it just took a while to get there. >> do you think, david, one of the reasons why he may not have benefitted is that they're so dominant in cell phone that you end up saying, you know what? they're doing okay in a.i., but they're a cell phone cpu company. and, now, there's some grace hopper performance -- i know that sounds like a strange name, but this is jensen. >> you have been talking about grace hopper and so was rene haas. >> i don't know if you -- an outfit called ml pert that does these absolute testings, and the grace hopper is by far the fastest. also, it's not hot. but the big win here was when they dislodged intel and dislodged amd, and yet there's intel as an anchor tenant. interesting, huh? >> yeah. >> why? >> why not get as many anchor tenants as you can? >> intel got aced out. they still do a lot. >> they do. >> but i just come back and say,

look, if we want to make this into an a.i. company, there's a hundred other companies that we can make into a.i. companies. when i was out there at salesforce, carl, everyone wants to present themselves as an a.i. company, and you know, when you get into the nitty-gritty, bank of america is an a.i. company, and that could be real, because they're graded on efficiency. in other words, the real win is on gross margin, not on growth. and that's a really important consideration. we all want growth. we don't care as much about gross margin, but so far, a.i. is about gross margin. >> making it cheaper. >> find out who's efficient and frankly, attrition on people who are coders. >> it's interesting. some of the reaction to certainly oracle's quarter and dreamforce today is that the promise is there. the execution part is really cloudy. >> very cloudy. >> that's one of the reasons jpmorgan's take on oracle yesterday, for example. >> well, look, i thought -- we

have oracle world next week, so let's see what larry ellison says. i had laura albert on last night, williams sonoma. i know it sounds like, wait a second, this is not the retailer. but they're a digital first retailer, so they are actually -- they have the data. they have data worth mining. most companies don't know what the data is, but the real data use is trying to figure out realtime insurance pricing. and/or also, you know, what's it -- how do you price a beach house? well, let's just look at all the beach house properties in america and find out how to price it, because we don't want an outlier who then wipes out all of our -- all the, you know, all the savings we have, and that's the kind of prosaic -- i have to tell you. a.i. is incredibly boring. >> incredibly boring? >> what's the use case? i'm going to talk to frank slootman, because you know what it is? it's auto finance. it's plastics. that's the use case. plastics. >> there's a lot of use cases.

>> no, but -- >> you want an a.i. company, we can talk about microsoft, how about that? >> all right, but it's not exciting. >> copilot. >> i was going to say, everybody tells me, jim, it could be your copilot. my wife's the copilot. she doesn't cost me anything. >> they had a developers conference yesterday in new york. >> my wife? >> no, microsoft, talking about copilot. could be available very soon. >> oh, really? >> this is why you said so much is riding on adobe. >> oh, my god, tonight is so big. because oracle was a miss. adobe has to be a hit. >> there's a ton of news to get to as we said earlier. the clock is ticking for the uaw and the d-3 as this potential midnight strike looms tonight. plus in the next hour, sara is going to sit down exclusive with citadel's ken griffin, talk about everything from markets to the fed to education. futures have been holding in er en with some of the swirling around on the hot data today. retail sales, up 0.6%, looking for 0.1%. more "squawk on the street" when we come back. but our network connects global businesses across nearly 160 markets.

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you really went all out didn't you? um, it's called commitment. could you turn down the volume? here, you can try. get way more into what your into when you stream on the xfinity 10g network. tension until the auto business today, the uaw and detroit's big three remain far apart in negotiations. union is preparing to strike at midnight. this is what the president of the uaw, shawn fain, said last night about the talks. >> we're making progress at each of the three negotiating tables. but as you just heard, we're still very far apart on our key priorities. from job security to ending tiers, from cost of living

allowance to wage increases, we do not yet have offers on the table that reflect a sacrifice and contributions our members have made to these companies. to win, we're likely going to have to take action. and just as we have approached our negotiations differently than we have in the past, we are preparing to strike these companies in a way they've never seen before. >> oh. >> jim, you said ford does have the best offer, i think, at 20. >> well, i want to posit something. the man you saw just now, i think, is a paper tiger. he's coming in and saying, well, they've never seen anything like it. i think there's a nuclear option on the table if he's not careful. that nuclear option is a country called mexico. you don't hear about it much. but if you say, we're in intransigent and we're going to stay at 40%, there's no give, well, you know what? monterrey, puebla --

>> there's the capacity to have that happen. not overnight, certainly. >> mercedes did it in two years. >> two years would be a long time. >> they don't have that much demand. you put that out there, and you say, listen, all the -- you want to know where the new ones are going to be made? we're going to make the old ones, but puebla has a 55,000-person factory for vw, a good educational workforce, $5 an hour, no real push on control rules, that's not to be mentioned. free health care. you want to play ball? you want to keep doing this? mexico. >> glad to see you're standing up for the american worker here, jim. thanks for that. >> i was a union member twice. one was completely corrupt and i led a wild card strike and was fired. that was not good. >> you seem to think the automakers have the upper hand. >> the union -- you could say they're way behind, the wages aren't the same as -- >> his point would be that they have -- they haven't kept up with even base inflation since 2007. >> so you go to 25%.

is he not satisfied with 25% increase in i think most of america -- ford's the most unionized company in america. it is. >> what about the way that they say they're going to strike, which would be not cross the board but -- >> stellantis -- oh, you mean targeted factors? you target the f-150 because it makes a lot of money. they can build a hybrid very easily in monterrey. >> b of a took a crack at that, what they're calling a standing strike, where you go after individual facilities. their argument is it would be very difficult and inefficient for any of the operators to coexist with that, so they see likely if it goes that way, makes sense to shut down, lay off the workers, and restart if and when you get a deal. >> look, i think this man -- i would not say that shawn fain is a paper tiger had they -- >> you just said he was a paper targ. >> i wouldn't say if they had raised a lot of money in the strike fund. their strike fund is five weeks. $600 a week, and then you're out

of money. people like to get paid. you can't hold out. i mean, these guys are not, like, running backs. they're not like a running back who's going to hold out and get a big deal. there's no big deal if you hold out. and you've got to put food on the table. i'm saying that shawn fain, he sound like he's the president of the united states. no. president of something higher than the united states. he's not. and he won by a very slim amount, and i have a factory in mexico, let me tell you something. it's fantastic. well, my wife does. >> we are going to hear from the president later today on economic policy. >> that will be interesting. >> i imagine this might get discussed. when we come back, a lot more of david's exclusive with arm's chief rene haas and masa son. to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic

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welcome back to "squawk on the street." time for our "mad dash." of course, we have an opening bell about seven minutes from now. let's talk a little amazon. >> this morgan stanley note basically says, david, we're at day one of gap profitability, $5 of earnings per share. this is a note which is basically saying that management has figured out how to make a lot of money again, kind of 2019, on retail. david, you know, this is -- this thing had a tie yesterday. jassy is in his prime. jassy's back. now, jassy got his head beat in by the cowboys, but that's okay. i'm an eagles fan. i think he's struggling to deal with that. but he's not struggling to deal with workforce. he's not struggling to deal with the thing that i most challenged him on, which is, how do you make money with so many hundreds of thousands of people? they're doing it.

return to 2019 north american retail margins, ex-ads, would at $12 billion of ebit. this is a remarkable set of numbers of what amazon can do, but it -- all it really does is explain how this happened. >> yeah. you're talking about a significant move up. >> right. it's a justification for the move more than it is, i think, another reason to buy it, because it's been up a huge amount. but they do say 20 to 60% upside. that's a wide range. >> that is a wide range. and no mention of aws, which is still the profit engine of the company. >> this is not an aws piece, to be honest. it's about a lower shipping and fulfillment. it's much more boring, david, and not a lot -- it's all about efficiency, and david, no matter what i do, i can't shoot more a.i. into this. i'd love to. >> oh, i can. what a.i. is going to be able to do for robotics in the distribution centers is going to be enormous over time. you talk about those hundreds of thousands of employees at

amazon? my guess would be over time, to the extent -- they're always ruthless. they can replace them, they will. >> that's -- i'm not saying they did not use a.i. in this, but yeah, that's about replacement. >> yeah, yeah. all right, we got an opening bell a few minutes from now. >> are we going to have more of the interview with rene haas? >> thank you for asking, because, in fact, yes, we got all your bases covered with that ipo. we have more of that exclusive with rene haas as you see him getting ready to ring the 'ltaing bell at the nasdaq, and wel lk to masa son, of course. softbank will still own 90% of arm once it begins trading. 10% has been sold. we're back right after this.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. it's going to be a busy open at the nasdaq where arm is getting ready to ring the bell in celebration of its ipo. biggest of the year. we have talked a bit about the deal -- the offer this morning, jim, but impact on the broader markets as well. >> look, if we get a deal that's done right, as david said, i

think that there's a bunch of ipos in the queue. we know instacart, that's a no brainer, and birkenstock. but ifwe got a good deal. i had discord on. this is a disrupter. look at the cnbc disrupter -- what the heck is that? >> look at all those people. >> that's england. that's the uk. >> that's in the uk? holy cow. other than what -- the royal wedding, i've never seen anything like that. >> i know, i know. >> is wilf there? >> rene has one key shareholder, that being masa son. softbank, selling these shares, remember, but still will control the company. they tell me they talk ten times a day. >> ten times a day? about what? >> that was the end of our interview. >> a lot of times about -- >> masa's calling rene a lot. short conversations.

>> i don't know what to say. i haven't talked to anyone ten times a day other than my set producer for "mad money." what'd he have to say, like the eighth call, what do you say? how's it going? what's happening? >> yeah, i don't know. >> let's do this. the opening bell. at the nasdaq, as we said, it is arm. largest ipo of the year. uk-based chip design company. at the big board, lap corp. celebrating its investor day as well. >> that's the area where i expect most of the deals. we need biotech. there's been very few biotech deals. we did the horizon. they did okay. we need some ipos, biotech, badly. that's where the queue is supposed to be longest, lots of companies needing money. david, i think that you ought to put this deal in perspective, about how really big this arm deal is in terms of the history of ipos in the last few years.

>> listen, at $4.5 billion plus, $5 billion, it's a big offering. we will see how it trades, and again, it's not going to trade for some time. it's not going to be open, but they broke in syndicate, and it is well placed is what i understand. hedge funds, getting cut back, that's usually a good thing because they like to get out of it very quickly, so if you get it into more hands of the sovereign funds, family offices, long onlies, you tend to see it trade less or at least sell less, and maybe there's some buying power behind it. that's the hope of the underwriters. you see the $54.5 billion valuation. we've talked a lot about that. of course, when you look at this number at the bottom there, $549 million, i mean, that's, you know, last 12 months. that is one hefty multiple. >> that's too much. >> a hundred times. >> it's too expensive. >> that said, they are talking about mid-teens growth now. >> but synopsis and cadence have faster growth, and they're nowhere near a hundred times. >> right, but that's -- they say that was depressed to a certain

extent as well. >> it was bad year. >> customers that overordered during the course of the year because they thought it was going to be owned by nvidia, and so they were worried that nvidia would start competing with them. and that didn't happen, obviously. there are some of the key investors here. they're very happy with that, as you might imagine. >> but every one of those companies is willing to pay 150 times earnings. it doesn't hurt their performance. >> no. >> if you're a long-only fund, you have to have some upside. you can't just pay the price and then have it sit there. the idea is that $51 opens at $58 and then immediately, you say, we're up. >> or $52 or $53 and then up over time. you want stability. >> they sopped up a lot of the -- there's not a lot of -- all right, let me tell you what i'm scared of. that people at home see, wow, arm, that's really great. it's a.i. i'm willing to pay anything and then next thing you know, you have $60, which i think that's ultimately where you could get for just way too expensive. >> we'll have to wait and see how it performs, and, again,

it's going to be a few hours, most likely. but these things on the nasdaq tend to wait some time, carl, before they let them start trading. goldman likes to wait. >> we'll watch it. obviously, a lot to chap in the meantime. including the fact that every sector is green in the face of another hike, ten in a row from the ecb. >> i have to tell you that the big outlier day was -- i think that we saw some really crazy trading on tuesday, some bad tech. we will be up tomorrow on tech if adobe blows it away, because that is actual eps a.i., because -- by the way, when i ask, who's ahead, what really understands it besides like the insurance company, who's actually making money on it? it's adobe. they interfaced with a lot of companies that need to know what

interests customers, and a.i. allows you to figure out whether customers like blue or red. i mean, that's what -- you know, you have to have have a background, you can change it, and adobe offers -- this firefly is one of the most -- you know, i asked my daughter because she's a designer. this thing is incredible. it's miraculous. that's the miraculous a.i. is adobe, and i think they can blow it away, but remember, the stock was up $20 in the afterhours and was down the next day. the stock is up $50 in a straight line. >> the bulls are looking past the warning out of delta today. what is this, the third one in the last two days? >> looking past to get to the southwest warning? >> vaughn to spirit and aal yesterday, jim, although, itsy, doing extremely well on this catch-up from wolf. >> people have been saying, i guess etsy has lost its way. i don't think it has. this is just a company that did

not rebound post-covid the way others did and everyone's tired of buying airbnb, so now they're buying etsy. it's one of these rotations. i don't think that -- you saw it in industrials, by the way. everyone was buying eton because it had so much involved with energy save. come out of the laguna conference, a morgan stanley conference, and suddenly, they like honey well and not eton. it's almost as if there's a vicious rotation within sectors about what's hot and what's not. >> guys, netflix is down again. it was down late session yesterday. >> margins, david. >> you had the cfo, spencer newman, appearing at the b of a media communications and entertainment conference. again, this was yesterday, and the stockdid end yesterday down. >> it's bad. >> you know, some concern about, as you say, margins, about the advertising tier, perhaps, and/or their password sharing crackdown. >> that too. >> i don't know, jim.

i'm curious to get your take. >> my breath was taken away. you took away my 2025 upside. it was a reset. >> you think it was that significant. >> i do. here's why. the cfo is a total hitter. i mean, he's very much involved with every aspect of netflix. and this was a sense for someone who's a really bull on netflix, i said, geez, i got to back down a little. >> i'm reading a summary of some of his other points, though, and a lot of it seems to be quite positive. 90% plus of member growth is outside the u.s. international mix likely to be slightly dilutive overall, but highlights asia pacific, largest growth region. very bullish on the long-term opportunity of advertising. big commercial incremental revenue. profit contributor to the business. you know, don't think it's prudent for the company to keep growing at three percentage points of margin per year, given that would constrain the business too much on growth opportunity. that gets to your concern. >> i'm looking at the truist

piece. average revenue per member, company reiterated arm is unlikely to be a driver of growth in 2023. might be there in 2024. how about this? this is most important. where there could be downside to our model, 2025 operating margins. they don't think they're good. it's like, wow. netflix has been such a strong performer. >> elsewhere in media, you had charter saying that cancellations weren't as bad as they had anticipated going into the dispute with disney. and then you got, like, bill maher and drew barrymore now restarting their shows, some splintering amongst solidarity on the writers' side. >> did you find it quizzical that very few people seemed to care that monday night football was -- monday night football has been on since 1968 or something. there's an actual number there. i'm sorry, meredith, with cosell, but i was just blown away by the numbers. maybe it really was down to the

wire, and both sides knew, we got to have that monday night game on. there was a lot of excitement to it. but what i was blown away -- i mean, nfl continues to be the thing that people want to see. let's see the numbers tonight for -- this is an amazon game? eagles-vikings? thursday night games are so awful. >> i think al is on the half today, is he not? >> oh, is he? al michaels? >> i think so. >> pretty cool, al. >> all right, our focus, of course, continues to be as well on this enormous ipo that's taking place. important for softbank, important for arm, but also important, broadly speaking, for the ipo market, which, of course, is coming off a year ago, a year that was just dreadful. i mean, virtually no real public offerings of note. that's changing a bit right now as we get ready as well for instacart very soon. i did have an opportunity to sit down with rene haas, arm's ceo, and softbank's masa, who will continue to control 90% of the

shares. and by the way, bought back some of those shares from the vision fund at a value of $64 billion. one of the concerns amongst investors is the company's reliance on china. it's about 25% of revenues, and it was a subject of some of our conversation. take a listen. >> our china business reflects the growth we see in the rest of the world. we're seeing huge growth in the datacenter around cloud computing, also with a.i., and then evs. huge growth in china in terms of evs. and china wants a lot of what the rest of the world needs. power efficiency, software ecosystem, a lot of the same software that's used across the world is used in china. so, what we're seeing, david, in terms of our china market growing, is largely around those two areas, datacenter and a automotive. in terms of the broader issues, i think i share the same headaches that just about every tech ceo does these days. we comply, of course, with all

the regulations that come down relative to export control if there's something that we need to adhere to, of course, but it's really a tricky market to figure out just in general because of all the things that are going to be geopolitically. but broadly speaking, our china business has been doing very well. >> i want to get back to the business itself, but masa, softbank owns a significant stake in the joint venture that i'm describing in china. you've obviously done business there. you were a very large holder of alibaba for many years. what is your sense in terms of the risk that china poses given the percentage of revenue it comprises for your company, for arm, is quite high. >> u.s.-china is having a very complicated situation now. china has significant impact to the economy of the rest of the world, so i think -- i hope the situation gets better, but who

knows? i just am one of the citizens who is wondering, and you know, concerned about the future of china-u.s. and the rest of the world. >> yeah. what do you hear? i mean, you have had relationships, deep relationships with many people in the business community there. how deep are your concerns? not just in terms of the back and forth between the u.s. and china, but also in terms of the regime itself and its crackdown, so to speak, on entrepreneurship, if i could call it that? >> well, it's difficult to comment. whatever i comment, it goes into all kinds of headlines here and there. so, i have to be careful what i say. but our exposure in china, softbank as a group has reduced significantly, because now, you know, most of the shares in

alibaba from softbank is already sold. >> just, again, to make the point clear, it's really an independent entity that operates in china. it's in the risk factors in the s-1 and it's obviously a significant one, jim, that investors are certainly, at least, focused on. there's opportunity there, but as you see, there's a lot to navigate from rene haas's perspective in terms of u.s.-china, making sure you don't run afoul of any of what continue to be sort of changing rules. >> yeah, i know that when you speak with nvidia, they have so much business that right now, it's not a problem. but i think, long-term, all these companies are going to go lower multiple if we don't do more business with china. because china's been a giant consumer of everything, and i don't -- i always hear -- they'll bring it up before you even ask. look, we are doing great. but if the government decides that we are not supposed to love this in china, we won't, and that will hurt.

very matter of fact. >> 25% of revenues, roughly speaking, for arm out of china. >> not out of line for what, say, tesla gets. >> no, no, but you can't control it. softbank does own a significant equity stake in the joint venture that we're talking about here, but it operates independently. >> as we await the opening trade, as david said, it's going to take a while. let's talk with leslie picker at the nasdaq. lp, what are you watching for this morning? >> waiting for those first indications to come through. obviously, the choice to price at $51 is not something at least in terms of the color that i'm hearing, not something that was taken lightly for the better part of a week. they were kind of deciding between high end of the range, above the range. ultimately, that oversubscription, that demand was really centered in the range that they were marketing. so, ultimately, that $51 a share is where they landed, and as you guys have been discussing all morning, it's pretty expensive on a relative basis, more than a hundred times last year's earnings, which is about double

its peers, so that's something investors were, you know, a little concerned about. if you push it and become too aggressive from there, do you still -- are you still able to orchestrate that decent first day of trading performance? >> well, leslie, are you hearing a lot of people who are retail investors really want to be in an a.i. play, and they feel nvidia has moved so therefore they're going to this one? >> yeah. it's an interesting question, jim, and i think that's the big wild card today, and kind of that goes back to the color on where to price it, because the wild card was where would retail fit in here? because could you price it above the range and then have retail really come in, in a big way, and push it higher from there, especially if investors were balking more at that more aggressive pricing? that's the question that they're not so sure about, and since we haven't seen too many ipos lately, we don't really know what the retail demand is for ipos at this stage in the cycle. so, that will be really

interesting to see how active of a participant retail is in this deal in particular. >> leslie, i don't know if you're getting -- what color you're getting. i heard that hedge funds have been pared back to a certain extent, which would be seen as a positive. >> yep. >> get more long-onlies and more sovereign funds, perhaps their longer term holders. just curious as to what's going to represent success here, do you think, from the underwriters' perspective? >> it's always about the quality of the book. the quality usually indicates those long-onlies, the -- as particularly the long-onlies that tend to hold for a long period of time. they don't get in at the ipo, flip it. it's that long standing relationship, so that's really critical. also, interesting in this deal, and we've talked about it a few times, is this $735 million worth of float that's been purchased by customers. that's amd, apple, google, intel, and others that have agreed or expressed indications of interest to purchase at, you know, collectively a

$735 million worth of the float. so, all of that is really good as you try and figure out the supply-demand dynamics of these types of deals. it's only about a 9% float for this one, including those strategic investors, so pretty small relative to the overall size of the company on a fully diluted basis, so we'll see when this starts trading. but there are a lot of risks, as you pointed out, with china, with valuation, with just the future prospects of the income statement and the ability to grow revenue and grow earnings from here as they have been shrinking the first six months of the year. >> leslie, thanks. leslie picker, we'll be chatting all morning long. jim, we will be following through on this on monday when we get cart's pricing and there's a piece in the "times" today about how it's no longer about delivery as much as it is about software and advertising. >> that made me feel like, please don't go into that deal unless they really price it in the hole. >> they did take instacart value

down dramatically from where it was. >> but david, keep it in perspective. the last big deal we had was rivian. that was an $11.93 billion and retail went nuts for that, and they got really hurt. >> they did. you remember when rivian had over $100 billion market value. >> yeah, that was ill advised. >> that was a different time. you can imagine how that would appeal to people in a way that perhaps this is a little -- >> you sound wistful about that time. it was a different time. >> it was -- i mean, listen, we can sit here and say, that's not probably a good thing. you can see what we're talking about there before '21. wow. since then, it has -- >> people have too much enthusiasm there. >> now it's a $22.4 billion market value, not facing a uaw strike, though. >> no, that's a very good point. it's really -- we don't even talk about it enough, the battery factories are on the firing line too. president biden, the battery factories --

>> interesting piece about tesla today in this apparent breakthrough they have made in pressing molds together or the front to the rear mold that would allow you to create entire underbodies in evs for very little money compared to the legacies. >> it's just -- the battleground for costs between tesla and the other guys, david, it is just -- you saw musk. >> i did. i saw the plant. >> it's an unfair advantage. >> there's a lot more margin at tesla. i think that's fair to say, a lot more margin to play with, too, conceivably. >> very much so. >> we'll take a break here. dow is up 150. just a few points shy of 4,500. we'll continue to watch arm. stay on top of the markets as we continue to juggle some of the ecodata. central banks, labor disputes that we're getting today. take a look at treasurys today. actually, some relatively tame behavior with the ten-year still below 4.25%, and the two-year, just south of 5%.

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it's time for jim and stop trading. >> good news for the business roundtable and for cisco. chuck robbins named the chair of the business roundtable. >> wow. >> mary barra. it's not about friends, it's always about money. chuck has done amazing things. i think is well known as being maybe the most gracious charitable company led by a guy who is doing its himself. this is the way business should be. he's a terrific person to run this. just came out actually no one has it, and i'm excited for chuck and the business roundtable. great choice. >> interesting to see who is speaking for corporates going

into an election year. >> i don't know if he's democrat or republican. he's a falcon fan. good luck. the falcons have a good team this year, good running back, good coach. >> we need a team to surprise on the upside. >> it will be the falcons and chuck deserves that. >> how about tonight? >> okay. so i got to go on a cruise with no driver and kyle and i just had a great time. kyle runs cruise. th this is a piece that's one of the most fun pieces since i've started. >> you were impressed? >> five cities now, ten more cities coming. >> it's finally happening. >> i would like to put together a consortium and buy a bunch and use them as ride share. there is going to be an -- >> a guy named musk has a similar idea for his automobiles. >> it's the first time i've been

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good thursday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with david faber at post nine of the new york stock exchange. along with sara eisen, joining us from one of new york city's success academy charter schools where in a few moments she's going to talk to citadel's chief

ken griffin. sara? >> good morning, carl and david. i'm here at success academy in midtown manhattan, a high school that has 900 kids. it is new york's largest charter school, we're here because ken griffin, hedge fund titan of citadel, has been a major philanthropist and donated $35 million to this project, part of his bigger education philanthropy. something we'll talk about. he's here with me. we'll talk about citadel. citadel has become the top earning hedge fund of all time, surpassing bridgewater after a record year last year for a lot of these strategies and the funds there. we'll talk to him about the markets, the economy, what he expects from the fed, guys. there's no shortage of topics with a hotter ppi number we got today and, of course, the arm ipo happening this hour. in just a few minutes you'll hear from ken at success academy. >> looking forward to that. something else we're keeping a

close eye on is the initial public offering of arm. it's being sold, 10% roughly of the company being sold by its owner softbank. $51 a share. 95.5 million shares. the proceeds going to softbank, and i did have an opportunity to sit down with ceo rene haas of arm and founder and ceo of softbank masa son. it wasn't very long ago sthat softbank bought back some of arm and paid a higher price. massa explains. >> we, softbank, owns 75% of arm, and to just a few weeks ago, just a few weeks ago we bought back from 75% to 100% from vision fund. we paid even higher price. i'm more confident about the fe future.

i think the value is going to have a good upside, really long term, and that's why i bought back with the higher price than $51. and i just want to have all the investors have a good time going forward. >> he wants them to have a good time. we're going to have a lot more from that interview later in this hour as well. some important news from masa involving his view of the 90%. that 51, about $54.5 billion overall value, masa referred to having bought back from the vision fund at a $64 billion value. he is in it for the long term, and the expectation in his mind is that at this price it is going to set up for what is going to be growth in the stock price from here. of course, we have to wait and see how the stock opens. >> yeah. while we wait let's check in with leslie picker and our bob pisani to talk about the ipo and others to come, perhaps. we haven't gotten your thoughts this morning.

>> this is really important. the biggest tech ipo the a couple years. the tech enthusiasts are out there, the ipo enthusiasts are chomping at the bit. this needs to be successful. the problem i see there's a natural buyer out there that may have problems, the etf community. they have very strict rules for inclusion in their indexes and a couple things i see that's a problem. number one the biggest index provider is s&p 500. they require a company to be domiciled in the united states generally, and, of course, arm is not. it's a british company. that's a problem for inclusion in any of the s&p indexes. the second is the free flow. most of these etfs require free floats of at least 10%, and as we've been talking about it's 9.3 to 9.5, depends on how you do it, and that may be a problem for inclusion in a lot of big etfs. the semiconductor etf, smh, the biggest out there, that requires a 10% float. you can't do that right now. one way around this is to get the green chute exercise, 15%

over allotment, maybe you can get to 10% on that. one other one the qqq, the nasdaq 100, there is no market capitalization or minimal number here for that one and that may well go into the nasdaq 100 some time this year. it's reconstituted in tedecembe >> potential offsets to that? >> not necessarily offsets but i was thinking aboutthe fact that softbank has about 180-day lockup before they continue to sell down more of their stake, and in talking with some investors, that is actually is something they're looking at, is what happens to this stock at softbank for probably years continues to sell, sell, sell. that adds more supply. you know, if, obviously, if the ipo goes well and they continue to perform after that, that could bode well. the risk there, of course, is that as we introduce more supply into the market, and there is this common trade that hedge

funds short the lockup periods because of that additional supply, that could put pressure on the stock and be just that outstanding concern each time they do pair back their holdings in this company now that it's about to be public. >> leslie, i did ask masa that question, of course, and we will have the answer for our viewers later. i don't think we have it set to go at this moment, but i will say, basically, he did indicate his expectation of holding on to it almost in its entirety. we'll see. but to your point, it didn't sound to me, i'll let our viewers judge for themselves, that he has any intention of selling even after the lockup expires. >> he's in a unique position to do that now that it's opened by softbank as opposed to the vision fund. it's a private backed ipo you have a mandate from your lps where you need to return that capital to shareholders. you need to get that exit in liquidity. ipo is the first step, but then over time, you do have to kind

of fully sell down that company into the public markets. softbank, obviously, is in a different category there. his decision to do that, i think, is note worthy and important for investors today. >> this low float is a problem for a lot of the retail investors because it keeps the volatility high and that's an issue down the road. we want this to be a success, retail investors. most ipos start trading down in the days after the ipo. the big pops are on the first day. this has to be a success because it's a big leader for the ipo market this year. low float means much higher volatility and so we got to wait a few weeks to see if this thing stabilizes. >> we'll check in with you all morning long. leslie picker and bob pisani. back to sara eisen with citadel's ken griffin. sara? >> hi, thank you. i am here with ken griffin, founder of citadel. good to see you here at success academy which you want to talk about. >> it's great to be here today. >> we're going to talk about education and why success in a

moment, but first, big markets day for us, big ipo day. the folks were talking about arm. do you look at arm, which is the biggest debut in a couple years, as a sentiment barometer? how do you look at ipos and what they signal about where we are in the market? >> clearly the arm transaction is a sentiment barometer. the very fact that the deal is coming to market today, tells you there's a perception that our capital markets are reopening for ipos. and i really hope this is a deal that goes off very well today. we need to see all of the vc-backed companies over the last decade have the opportunity go to our public markets to raise capital, so that the founders have an opportunity to continue to grow their businesses and grow our economy. >> the markets and the economy, reflect. what comes next? >> i would agree. it's been a really good year for

the market, particularly with the backdrop of higher real interest rates. when look at the yield on the 10-year bond, the real yield, for example, in the 5-year tips bonds we've a seen be, again, an increase in real rates and nominal rates and yet the stock market has been resilient. that's a really interesting year to see the resillsy of our stock market against this backdrop that would be very challenging for equities. >> think it can continue? >> i'm a bit anxious this rally can continue. obviously, one of the big drivers of the rally has been the just frenzy over generative a.i. which has powered many of the big tech stocks. i like to believe that this rally has legs. i'm a bit anxious for we're sort of the in the seventh or eighth i think in the rally. >> part has been the soft landing story. are you a buyer of that? the fact that we haven't gone into recession despite 525 basis

points of tightening? >> it takes about a year to two years for an interest rate hike to work its way through the economy. it's not instantaneous. we're now at the point where we're going to see the impact of these hikes really start to play out. we're seeing the job market starting to weaken. there's been a number of news stories in recent weeks about how companies are willing to pull back what they're paying for starting roles. we're seeing signs consumers have had enough in trms of price increases that they're starting to walk away from products, trying to push through price increases. there's signs here that we're heading quickly into hopefully the soft landing, potentially a more difficult scenario moving into mid to late last year in terms of a recession. >> sounds like that's what you're expecting, recession? >> look, my personal view is

that the united states economy is enjoying a tremendous amount of unanticipated stimulus from washington still. the federal deficit this year will totally almost 6% of gdp. it is completely unsustainable, but it has been another shot of adrenaline to the economy that our fiscal continues to push the economy forward, leaving it an ever bigger bill for future generations? >> also complicates the fed's job a little bit. still getting nithese numbers, t inflation has come down a lot looks to be sticky. >> it's he's in a no-win situat. monetary policy can only do so much to offset fiscal stimulus. he's showing up at a fight with both hands tied behind its back because d.c. is on a different agenda than he is. he is trying to prudently slow the economy, bring inflation back down, and really engineer

the hopeful soft landing and whether it's the inflation reduction act or other programs that are spending, we stimulate the economy out of d.c. >> do you think those pieces of legislation are a mistake, inflation reduction act, chips act? aren't those helpful for our future? >> so there are absolutely elements of this legislation that are important. so, for example, if we can successfully bring chip manufacturing back to the united states, that helps us maintain national security both from a matter of national defense and economically against shifting geopolitical tides. that's an important piece of legislation. but if you look at the amount of spending that goes towards that part of the overall legislative agenda, it's like a drop in the bucket. there's been a tremendous amount of spending on a slew of different things that don't have

the same element, best being in the interest of national security, economically, and defense. >> so you're worried about all the fiscal spending. do you think that market is starting to worry about that? >> absolutely. let's just take a step back. at the start of the year, people thought that deficit was going to be roughly 3% of gdp. and of note -- >> it's double that. >> it's 6. almost 6. where we have full employment, full employment in this country and things don't get much better, and we still can't keep our fiscal house in order. and now, the cbo has put out the projections for the next several years we're going to run deficits of roughly 5%. the fixed income markets are getting nervous. it's an unsustainable path. >> do you think there's going to be an issue for demand with all the issuance? >> is the rise in real yields

we've seen over the last few months to the fed tightening or -- >> fiscal? >> or the markets fearful about the mageny tied of supply and, to be clear, the possibility of credit risk. we have u.s. government downgraded by fitch a few months ago. >> you think that was the right call? >> if it wakes up our politicians in washington, absolutely the right call. >> i'm not sure it's doing that. >> you have to start somewhere. at some point -- we're talking about it today, right. in fact, you're curious about this. this is the start of how we actually make policy happen in america. we start to talk about the issues. this issue is now coming back front and center. we haven't talked about deficits in mark in a very long time. now to gdp about 120%, near historic highs, with deficit spending that we haven't seen

before in recent history outside the pandemic, this topic is becoming front and center again in the minds of wall street. >> do you think we're looking at sort of persistently higher level of yields because of this? >> there's no doubt that this will cause us to have higher real yields all else being equal for years to come. no doubt about it. what does that mean? that means less investment in companies. that means that consumers will be hesitant to buy goods and services. higher real yields crowd out needed investment that we have in our economy. >> what does it mean for the overall investing landscape for the equity market? >> for the equity market it's a headwind and we spoke about earlier -- >> why you're anxious. >> are we in the seventh or eighth i think because we have a headwind of higher real yields starting to come through the economy. >> even if the federal reserve stops raising rates and even starts to cut into next year?

>> i think that, you know, there's a small chance of one more increase later this year. they're going to look at data like today and think about this long and hard. we have to raise one more time. let's say we're pretty close to the end of this rate cycle. how fast they can cut rates comes down to how fast inflation breaks. now, the good news is, is basic facts mean inflation probably comes down over the months ahead. negative to the story, again, we're seeing higher prices at the gasoline pump. unfortunately, gasoline is one of those things that you buy every week for most american families. when you see higher gasoline prices, inflation becomes better anchored in your mind and that's a problem for the economy. >> you don't see it coming down to fed's target? >> 2%. >> no. i -- we'll be at 2 if we're in a real recession.

>> which it sounds like you don't expect -- >> i'm hoping not, but if we get to 2 it's a bad state of the world right now. >> you think the fed will have to stay at these levels or even higher into next year? >> look, here's the conundrum. the fed's publicly said we're aiming for 2. it's probably not worth the cost of getting to 2. the fed should stay on its talking points. it's the central bank. it wants to inspire confidence that they are protecting the value of our currency and the purchasing power of the american consumer. but at the same time, you don't want to take the economy off a cliff for the difference between an interest rate or inflation rate of 2.3% and 2. it's not worth the cost. so they're going to have to walk that fine line. i think we'll see them talk about a long-term target of 2 more and more, as we head into

the mid 2s. in other words they're going to make it clear they're going to get to 2, but they're not going to do it immediately. they're going to make that tradeoff, full employment versus hitting their target. >> they don't want to burn it down. do you have confidence in powell. >> i think powell has done a pretty dam good job. he's had a horrible hand to play, right. we've had the pandemic, supply chain shocks, massive fiscal stimulus, and he's supposed to try to achieve price stakts. th stability. there was no course of action he was going to walk out of this looking like they had nailed their job. it wasn't going to happen. history should judge him through the lens of the predicament he was put in, and i think they're doing a reasonable job in trying to get us to where they need to get to. if i could say one thing to powell, it's stay on message.

we're going to break the back of inflation. don't talk about how we might ease. don't talk about how we're data dependent. stay focused on message. we're going to bring inflation. >> there is a lot of talk of data dependence. you mentioned a.i. as something that has captivated investors so far this year. i'm wondering how you're thinking about how transformative it's going to be? >> i believe that generative a.i., what people think about today when they say a.i., is going to have an uneven impact across the economy. in certain areas, for example, call centers, generative a.i. is going to be transformative. you'll dial a phone number and get a human sounding voice on the other side that can respond to your questions and handle your matters. all done intfrom a data center. no people. >> no people. >> no people. we're going to see repetitive

activity fully automated by what generative a.i. will bring to the table. we're going to see real changes in productivity in certain sectors of the economy. in fact, right now, the strike in hollywood revolves around the impact of generative a.i. has on the number of people that you need to produce a movie. you see it in the same way for software engineers. we already use generative a.i. in coding at citadel. it's improved the productivity of our software engineers by 5 to 10%. that means we need 5 to 10% fewer software engineers. we're growing fast enough and we'll take that a gain and not have to change head count, but other firms will reduce the size of their software engineering team. we're seeing impacts start to ripple through the economy. big picture, though, most of the economy, this is another productivity tool that simply makes us better at our job.

much like microsoft excel did 20-some years ago. there's no doubt we're a more efficient because of e-mail. in fact, it's just part of life. and generative a.i. will have the same part of life aspect for most of us and how we do our work day in and day out. >> is it a big investment theme for you? >> it's a theme for us, but more importantly for us, we're thinking of how to use this toolkit to make our firm more productive and more successful. there's very few public opportunities to invest in generative a.i. in fact, this is one of the challenges that we have today in our public capital markets, is there are fewer companies that are publicly traded today than 20 years ago. there's roughly 1200 unicorns according to cnbc. those are companies that would usually then become public companies, they're not today. some of this has been the backdrop, harder environment to go public, but some of this is the backdrop that we've made it less attractive to be public.

>> what do you mean? >> the sec has over the last 20-some years put in place an ever-increasing number of burdens and costs on public companies. it's making our public markets less attractive as a home in which companies live and where their shares are owned. i think this is a tragic mistake that we're making on behalf of american investors because for the average family they don't have a chance to invest in the startups or mid-sized companies that become the apples of today. i mean, people forget, apple went public at a modest valuation. people have had their entire retirements defined by being an early investor in apple or amazon or microsoft. by making our public markets less attractive for issuance, we're taking those stories away from the american investor. >> i know you have strong views, especially on chair gensler's regulatory agenda.

he was in front of senate banking to talk about it. 22 rule changes that he's passed and more than double that in terms of proposal changes. what's your take? >> too busy. >> too many rules. >> too busy. too many rules. too much change, too much haste. chairman gensler may be coming from a good place on many of these rules, but if you don't do the homework about what are the real problems and how do you effectively solve those problems, you can create an onslaught of legislation that destroys value for the american public, for american corporations, and american investors. and i think, unfortunately, i think we're well over that tipping point. the sec needs to slow down its haste and take a step back and say what are the real problems we want to address in our capital markets. taking a huge step back, the united states has both the most

vibrant capital market in the world. think very carefully before you change the rules in the great success story of the world. >> which ones are you talking climate disclosure? >> take climate disclose sure. for a public company how are they ever supposed to compile this information? if you compile the information, it turns out you don't have it right, which is often the case with the new rule, how many billions of dollars are they going to spend defending themselves from plaintiff lawyers who will have a field day on the back of this issue? i mean, chairman gensler, i appreciate you have an interest in climate, but advocate for a carbon tax, something that's easy, simple, straightforward, and effective to implement. don't burden public companies with a task that's beyond their reach, beyond their core competency and create a field day for plaintiff lawyers. >> have you talked to him about

this? >> i haven't talked about climate change on that issue, but we've been very actively involved in the regulatory process. we comment on virtually all the rule that impact our capital markets and we believe that by running one of the world's largest hedge funds and largest market makers, we have a unique vantage point of appreciating how liquidity is created and liquidity is so important because with drivers of our public companies, sorry, of our capital markets, is capital formation. right. that's how we create these incredible stories like nvidia that can raise capital in our public markets and they create exits for venture capital backed firms which encourages more vc in america. we have a powerful vantage point to comment on these rules -- >> they allow public comment. he would say they take that into account. >> that's what they say.

and unfortunately we haven't seen that yet. >> does that mean you're an nvidia fan since you mentioned it? >> i have huge admiration for what they've done at nvidia. what an unbelievable story. the stock is pretty frothy right now. we'll see if they're able to maintain their dominance within the sector of the market. boy have they exkultsed. that's an a-plus management team. >> stay with us. we want to talk to you more and about why we're here today at success academy with the woman in charge and the founder of this place. we'll talk with ken griffin to talk about his philanthropic efforts. i'll send it back to you on arm watch. >> okay. sara, speaking of raising capital, we are awaiting arm's open. returning to the public markets on the nasdaq. indicated around 60 would be about a 17, 18% bounce from the 51 price. as sara says, a lot more with

citadel's ken griffin in a moment. .

welcome back to "squawk on the street." let's bring back in ken griffin and eva, our host today,ed founder and ceo of charter school success academy and author of the book "a-plus parenting" i need to read. first of all, thank you for having us today. ken is a big believer and fan of your work and what you've built

here. for those that aren't familiar with success academy, tell us about what it is. >> sure. we averaged five weeks ago with 21,500 students, kindergarten through 12th grade. 94% of our students are black and brown. 16% are special needs. 82% live below the poverty line. yet, we are educating them up to a very, very high standard. in fact, our kids outperform kids in the affluent suburbs, on state tests, ap exams. we have a six-year record of 100% of our graduates goiof four-year colleges. >> how did you get involved with success? >> i've been involved with robinhood in new york for years. robinhood has been a big fan of charter schools in new york city and of success in particular. then dan loeb who runs third

point, is certainly part of the eva fan club, and he made a real point to make sure that i came to learn more about just literally the miracle that happens here at success academy. >> what are the takeaways more broadly about what you're doing here and how to scale that and broaden that across america where, i mean, you've seen some of these new statistics, it's not good, especially post-covid, eighth grade reading at a two decade low, math at a three decade low. what do we take from this? >> we have to take a step back and fundamentally rethink the service of education. we are not getting the basics right in america, even though we spend more money on education than any country around the globe. take something like reading for 20 years we canceled phonics. any educator worth their salt knows an evidence-based program

is essential. we're not teaching kids to count in kindergarten anymore. that's a very, very basic. the problem is really one of political will. it's not one of we don't know how to educate children. we do know how to educate children. we're just not giving them what they are entitled to and deserve. i think it has major implications for america's global competitiveness. it is a tremendous drag on our system when we have poorly educated kids, and we don't want a society, i hope not, where we have educational haves and have notes. >> you said it's political will. you spend time fighting the teachers union, for instance, and some of these bigger cities with changing policies, is that what the biggest obstacle is to expanding what you're doing? >> i think the unions are one important obstacle. they influence all educational

policy, and there isn't really another side. imagine if the kids had a union, things might be a little different. kids and families don't really have the level of political influence that the unions have. i think it would be unfair to sort of say that is the whole problem. we have public policies in this country that make no sense. we have something called cat ta gorcle funding. one of the most important jobs i do as ceo is resource allocation. you can't do that if you're a principal or superintendent. the state determines the can categories of funding and you have no ability to meet the needs of your children in front of you. >> enter ken griffin. you've funded harvard, miami-dade, success academy. education is one of your key priorities why? >> let's take a huge step back. you and i will spend our days talking about microsoft and nvidia. that's not the future of

america. the future of america is our children. it's our kids. and if we can't education the next generation to be successful, our country is over. we talked earlier about the size of the federal deficit. if we can't profoundly change productivity in america, we can't make the promises that we've made to the baby boomers, our retirees and those who have a hardship in life. we need to radically improve education k through 12 and high school. we spoke about political will. let's be clear, we need the voter to make this an issue. >> it's not. >> it's not. and they're going to pay the price. when you have 53 schools in the state of illinois and not one student can test at grade level, you don't have a future in a global economy as a nation. >> is that awhy you left chicag?

>> it's part of the reason i left chicago. we lost the basics on the government. governments should educate our children, keep our streets safe, create an environment in which businesses can flourish, and which a civic community can come together to make for better cities, better towns and better environments. we lost that. we lost the big picture. i'm so pleased to support what eva does here at success academy because she shows us a different way. she takes kids who come from the sob story that unions use trying to justify their poor results in public schools and proves them wrong. not just a little wrong, enormously wrong. and the kids here, they're remarkable. >> and we don't know with start out excellent.

we use data to figure out how to improve every day, how to improving the teaching and learning. we think about educational productivity. what is the fastest way to get a kid to read? and those are the kinds of practices that are really missing. in fact, the education establishment is kind of anti-data and anti-productivity, anti-efficiency, and those are some of the things that allow us to be great. >> a.i.? is a.i. going to be harmful or hurtful for education? >> in the long run it will be helpful for the same reasons, ken, you mentioned, more the back office. i don't know exactly how helpful it will be on learning per se, but there are so many things in education that humans are doing that are unnecessary, and i'm really, cited about making our operations even more efficient so that we can put more resources in chess and debate and art and music. >> well, it's a great test case. >> thank you.

i do think, though, i cannot emphasize enough, how you hold the children here to extraordinarily high standards. and they rise to the occasion. when you believe in these kids, and you believe in their potential, they step up. i'll share a little story that dan is going to be upset. dan loeb and i were here a few months ago and we were in the ap classes and dan and i are art collectors and they put up a painting -- >> famously. >> and who painted this and what sort of is the story behind this moment of art history. dan and i are looking at each other. >> no idea? >> i don't know. >> and then this second painting. the third painting, i know that era. i can't tell you who painted it. to see these kids with that domain expertise, is humbling. then you walk into the macro economics ap course and they're going through all the

mathematics of macro economics i haven't studied since college and it's like, they're serious here. these kids are having a world-class education here in the heart of new york city. >> sounds like their future $19,000 a month interns at citadel. >> they might be. >> thank you for talking us through that. success academy. ken griffin, we'll have a lot more with ken, 8:00 p.m. special on cnbc on monday evening and we're going to hear much more from ken on the political landscape, whether he's still backing ron desantis, i know a lot of people want to know that, ken, we'll talk more about the growth of the firm as well at citadel which is booming in miami and also here in new york city. for now back to you, david. >> sara, great stuff. very much look forward to the continued conversation. i should add, by the way, i did see a lot of those young kids in their uniforms with sa weeks ago. they must have started way before public schools. >> they started, what, a month

ago? >> five weeks ago. >> yep. they're serious here. >> i did note them. they're all so cute in their uniforms. thank you. sara eisen. more to come from here with ken griffin. a lot more to come as well right here from our exclusive or my exclusive with the ceo of arm and the founder of softbank. they rang the opening bell earlier today at the nasdaq. we talked about the future of a.i. we also talked about that man rene haas' relationship with his biggest shareholder masa son. take a listen. >> rene has, you know, a great chemistry with me. we share the vision completely together. we're talking almost every day. we're chatting with whatsapp and calling all the time. every day, multiple times, three

times, five times, sometimes ten times a day.

♪"please don't go" by harry casey, richard raymond finch♪ (sfx: ping) (♪♪) ♪ please don't go ♪ ♪ please don't go.. ♪ ♪ please don't go ♪ ♪ please don't go ♪ ♪ don't goooooo! ♪ (♪♪) ♪ don't go away ♪

(♪♪) ♪ please don't go ♪ welcome back. we're keeping a close eye on the opening price for that ipo of

arm. some 95.5 a million shares. take a look at the nasdaq. they're getting close. 95.5 million shares. priced at 51. that's from softbank. that money goes to them. but it will create a public company of arm, a company they bought in 2016 for $32 billion. almost had it sold to nvidia a number of years later for about $40 billion, but the ftc and antitrust regulators and a number of countries got in the way of that and now softbank, run by masa son, hitting the public markets. we're a hearing 58 is the indication. had been as high as 60. we'll keep you apprised. it may change and we may be a ways away from an open. that said, i did have an opportunity to sit down with arm's ceo rene haas and, of course, softbank's founder and ceo masa son talking about the company as it stands now and what their hopes are for the future. >> whether it's data center,

obviously, around sustainability you want as much power as possible, back on the cars running off batteries, it's a great place for arm to grow our business. that's what we did in the years being private between 2016 and now. we diversified our business. we've got significant growth in the cloud data center and automotive. >> okay. that wasn't what you were supposed to listen to. although it was very interesting. carl, we're hoping to actually get a much larger chunk of time about the future for chip design for arm, talk to masa about a.i. as well. sometimes things get a little bit mixed up. >> yeah. i mean, managing tape is a skill and an art in many ways. >> managing the logistics of this shoot was also as you might imagine as well. >> the time difference. >> masa in san francisco. okay. let's take a listen to the conversation we had around a.i.

of course a very important part of the focus of the company in terms of what it says will be the growth ahead, whether helping nvidia in terms of its great chip or other areas. as our viewers may know, masa has been focused on a.i. for quite some period of time, and he continues to be a believer. take a listen. >> i'm a big believer of a.i. since i started softbank, i was a big believer of, you know, the micro processors enabling all kinds of technology evolution, starting with pc and then mobile and internet and then now going t into a.i. it is the front end of all the innovation of our industry. it's the core is the micro

processor. so arm is now going to become the core of the a.i. revolution. my belief of the front end of the i.t. industries revolution is really shifting to a.i. so my focus, my belief, is all centered in a.i. and arm is going to become a core of that. many of the vision fund portfolio companies that we have about 500 companies, they're going to be, you know, having a lot of great applications of a.i. and they're going to be beneficiary of this arm an many other a.i. technology players. >> yeah. i mean, you recently said not that long ago arm is positioned to benefit from a.i. becoming

the, quote, basis for a new society. what does that mean? >> well, i think this is the first time that mankind experienced something smarter than mankind itself. right. mankind was the smartest animal on the earth. the a.i. is going to surpass and surpass big time. i think the agi stage is coming. very soon. once it comes, it goes so far away, and it's a new stage of society that we all have to ask ourselves what is mankind? what is job? what is life? what is the intelligence? it's a new experience completely new society that we are going to face. >> masa, if you had been in the meeting with a lot of the leaders in a.i., which just took place with senator schumer and

other members of congress, what would you have shared? you said it's going to exceed our own intelligence. there are those frightened by that prospect and worried about the dangers of a.i. do you share that? >> well, if we mishandle it it has a danger. like automobile society. it has a danger of the car accident. if you don't regulate. the automobile society is regulated with a traffic light and speed limit and don't drive with alcohol drinking, so a.i. society should regulate to protect the human kind. however, it has more merits than the demerits. so i think i am a believer, i'm optimistic that a.i. is going to solve the issues that mankind couldn't solve in the past like

difficult disease, natural disasters, the car accidents, all kinds of other issues that humankind has in the past will be helped by the advancement of a.i. and technology. >> rene, you're going to be in the middle of this. you know, you're going to be to provide designs that will help nvidia use -- create chips powering generative a.i. do you feel similarly or are you perhaps more concerned? >> i agree with masa from the standpoint that we are going to see some very profound advancements around a.i. going forward. the chatgpt moment, if you will, i think was a tipping point relative to what the capability of these large language models can do. so on one level, as a ceo of a company that builds a lot of devices basesed on a.i. and an engineer at heart, phenomenal opportunity. i think for us going forward,

back to the cpu being of center of everything and you can't run a.i. without a cpu, it's a huge growth opportunity for arm. there are a lot of social and ethical type of things to consider, which i think as a society, we have to figure out and we're in early days on that. >> all right. want to now get back to what we originally planned to show you prior to listening to that conversation about a.i. obviously, you heard massa, very positive on the prospects for a.i. he does feel artificial general intelligence will be here and exceed human intelligence. there are plenty who have, perhaps, more profound concerns than he did. here now it's about arm and how it's going to perform now and in the future. take a listen talk about that. >> the core product is the cpu. what is the superpower of the cpu? it's the broad ecosystem around it. we have a ecosystem probably

like no architecture probably every invented. every operating system, ios, android, windows, android linxs, not only do they operate on arm, but they've been optimized for years, sometimes decades. risk 5 is a new emerging entity. what we see is they just don't have much traction in the area around software ecosystems. it's not that we don't watch our competition seriously. we obviously do. there's warroom discussions about how to address that. broadly speaking the hurdle they have to cross is around the software ecosystem. that is not an easy moat to cross. >> why not? >> the sheer amount of development time that goes into it. i'll give you an example. windows running on arm pcs, i worked on them previously in my previous life back 2009. here it is 2023, 14 years later, and we're just now starting to see growth of arm on windows

pcs. it just takes time. there's a lot of software work that needs to be done, development time and optimizations. that's just for pcs. when you think about phones, when you think about the cloud, when you think about automotive, the software gets more and more complex. so, i think over time that is something we'll continue to invest in and i think it's a big path for risk 5 to cross. >> speaking of over time, you know, again, you at softbank own 90% of arm, the now public company. are you going to sell any of that? is it your expectation you'll be a holder from here on of that 90% stake or is it something you do see as potentially monetizable over time? >> well, i want to keep it as much as possible, as long as possible. i'm a long-term believer and so on. of course, you know, if the next

covid comes, who knows. but our intent is to hold as much as possible, as long as possible. i wanted to keep 100% of arm. only reason we are having ipo and selling is because arm is such an important company for the industry. i wanted to have investors opportunity to participate in the upside opportunity of arm. and wanted to become a public -- it used to be a public company, so back into public company positions so people will have more transparency of the operation of the companies and so on. and also give the engineers and employees the stock options to realize. >> right. you're now a public company ceo.

you do have one very large shareholder, but does it change how you do your job? >> as masa said, he's a long-term believer in arm. so, making sure i keep my number one shareholder happy is very important. but at the same time, he and i are very aligned on the long-term vision and view for the company. i believe we are one of the most foundational companies inside our industry. the world runs on arm. it's hard to find an end device that doesn't run on arm. and at the same time, i think when we looked at the percentage of the population that uses arm, it's probably north of 70%. so, while we're thrilled to be public today and i'm thrilled for all the employees, as i said, and our partners and developers, i really think the best is ahead. i'm super excited about the next five to ten years for the company. >> is there any scenario in which you would start to not just design chips but design your own chips? >> i don't want to foreshadow what our product plans might be, but the company's foundational

to the electronics industry and we have a lot of opportunity for growth. >> that's where you're going to leave it, just that, a lot of opportunity for growth? we'll get to do interviews in the future, so i'll ask you that again. let me come back to something, rene, a number of investors did mention to me as a potential concern, which is this lawsuit against qualcomm. never great to be suing somebody that you do business with. can you give us an update in terms of your expectations and why, perhaps, people should not be concerned? >> qualcomm is a great partner. back to the foundational aspect of what we do, jus there.

we got meta, tencent, taking a chance with risk 5. >> isn't this the danger of pressing too hard on royalty rates, the idea that they would opt to do something more open source? >> yeah, exactly. they seem to think they have a value opportunity to increase price. price becomes an important component for overall growth for the company. there is that question if tht p price competitor in some way that might drive some customers to it. >> fascinating to listen to masa and griffin together talking about the opportd line.

>> yeah. as he's been for a very long time, very positive on the prospects of what a.i. will mean for society, i can remember our interview from march of 2019 when he talks similarly about, remember, we'll all be sitting back getting fanned. getting fed grapes. you know, we'll see if that's the case. fortunately for investors in vision fund, of course, in part, he did not take vaadntage of that viewpoint. the entire interview will be available online. we'll let you know. "squawk on the street" continues right after this.

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good thursday morning. i'm carl quintanilla with mike santoli at the new york stock exchange. we are waiting the highly anticipated open of arm. an update from the nasdaq and exclusive sound from masa son. the united autoworkers and detroit's big three remain far apart. the implications of what would be an unprecedented strike. at the bottom of the hour, one of the largest pe firms jo