Squawk on the Street : CNBC : May 29, 2024 9:00am-11:00am EDT : Free Borrow & Streaming : Internet Archive (2024)

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include this data from twitter, real-time social data, potentially some of the other data from elon's other companies about the real world. it could be a very competitive model versus the other players. >> i want to thank you for joining us. it's a fascinating topic. i'm sure we'll talk more about it and you're clearly in the middle of it all. that does it for us. make sure you join us tomorrow. "squawk on the street" begins right now. good wednesday morning. i'm carl quintanilla with jim cramer and we've got some risk off today, yields are higher around the world, germany, japan, u.s. ten-year. we've got some decent guides higher in specialty retail. the roadmap begins with nvidia, apple. the chipmaker looking to rally, closing the market cap with apple. >> conocophillips buying

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marathon oil. it bolsters the share assets. we have adick's and cava raisin guidance. >> let's begin with the markets after the nasdaq did close above 17k for the first time. it took more than 900 days to get past that 1,000 point threshold. >> and it wasn't done right. it's one giant stock and a couple of others, and then after that, everything is in the balance, not great. other than friday, it continues this period where we're seeing serious rollovers and they're getting particularly to enterprise software, cybersecurity. you talked about enterprise software after workday reported a not great quarter that

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yesterday you mentioned the possibility of what could be a dog fight with hub shot versus salesforce. i have salesforce on tonight. all i'm saying is that enterprise software is the weak part of the economy. >> of the economy or the market? >> it reflects badly. the economy. because i don't hear many other people say, listen, we're getting a lot of pushback from our clients. look, dick's, chewy, these were all much better than expected. and i don't know if you guys are focused on bank of ozark. >> they don't typically come up in my daily research. >> a move today, right? >> i think that you should change your focus. >> i have you guys, and i know carl is singular focused. >> bank of ozark, ozk, it's been

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instrumental in developing high dollar commercial real estate projects throughout the u.s., including the largest individual loan, a multi-use project in atlanta, echo street west, people in atlanta are probably well familiar with that. they also have a life science construction lending in general. they did one a couple of -- >> what's the point? >> i didn't have it on my scorecard that we would get to bank of the ozarks in the first few minutes of the show. why? >> it's a sell and it raises the concern that this is ground zero for office development. my partner ben said this morning, bank of ozark with the big tower in new york, big office in atlanta, bank of ozark. i mean, huh? >> how does that connect to

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enterprise software? >> i'm saying the only other weak area that i find. >> oh, it was an addition of weak areas. >> now enterprise software. >> yesterday we had the upgrade of huntington on sort of similar stories being around cities like columbus, ohio, that are growing fast. >> i love that. i've had the company on many times, and i've tried to reach with that story, too. i've said, listen, and they said, don't forget, we also have an interest, conservative bankers. >> i want to get back to enterprise software. a much bigger theme. this idea really, that you think that there are starting to be cutbacks by corporate america in terms of spending worries? >> elongated cycles, not enough land to expand. people believing that they've come at each other. i think workday is a good

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company, they do hr, haven't been able to jump over as much into finance. i think the stock is wildly exaggerated in terms of its decline. but salesforce has been a nightmare. and then i said nothing. it was business. >> i get it. i think i even understand the reference. >> when i look at the stocks that are surprisingly weak, i come up with the golden boy era of enterprise software, and that seems to be -- >> let's talk salesforce specifically, because that's obviously a company you know well. marc benioff will join you this evening. you mentioned hub spot. i know the stock was up yesterday, just our very brief conversation about google's interest there and the potential for a deal and what the transaction might look like. but there is a belief that it

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could be a threat to salesforce that is owned by alphabet. and take me to the corner tonight. what are your expectations, especially given what you're saying about weakness? >> what is he going to guide? i think that it's -- all right, let's just go right to something that is very front and center. last night i had a really good com company, cloud. he guided down, shaded down each quarter. why? because of macro concerns. macro concerns, david, for cybersecurity, content delivery. the answer is, yes, there's people worried everywhere. take a look at what's happened to z scale. look at the tock. this is the weakest part of the

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economy. i'm used to it being the strongest part. >> well, it's been where a lot of the growth has happened. >> of course. when you're in private equity -- >> obviously during thepandemic and the run after, the '21, '22 period. >> when you're private equity, you come in and they say, what area do you want to be in? if you immediately say enterprise software, go do the fast food franchises. >> vista, obviously, that's what they do. >> carl, that's the area i'm worried about, enterprise software. and we need marc benioff to say, we see no weakness, customers need us more than ever and data is the new gold. they have to say all of that. otherwise, what happens is now there's nothing left in the enterprise software category to keep the market up higher. this has been a market leader group since 2014. >> and it cannot be replaced by consumer? >> i think there's just a belief

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that -- no one believes these consumer numbers. they think that dick's is an outlier. there are three price target cuts of lulu today. well, lulu was the golden child. so i'm just saying that right now we're in a funk. to counter the funk -- if i mention it then i can't buy it. >> i thought you said a name. >> we can't buy itif we mention it. that's the rules. >> okay. so you're buying something. >> when you say funk, s&p has double digit gains for the year. we just set an all-time high last week. >> the all-time high is concentrated on a couple of stocks. and yesterday was the most narrow rally i have ever seen. it was based on nvidia, dell, amd and a player to be named later. that was the whole rally.

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and i think we have to start recognizing, as great as nvidia is, it's just one player. it's just one player. >> it's ohtani, man. you've got him on your team, and you're going. >> you've got a good point. aaron rodgers? >> no, ohtani. he's not even pitching right now. he's nvidia. >> hold it. there's one other guy who can pitch, turned out to be a high fastball. do we have jensen wong's high fastball? take a look at this. un-hittable. >> there's some mustard on that. >> you know why it's 93? >> i don't know. >> company was founded in '93. >> that's interesting. how about -- >> want to talk about the marathon deal? >> i was hoping you would do a little marathon because i think

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it's in your wheelhouse. >> oil and gas has not always been in my wheelhouse, but i have reported on my share of transactions through the last forever, yes. >> you've talked a lot about chevron and exxon. is it too small for you? >> no, we're going to talk about this and i will continue to talk about chevron and exxon as well because that's a fascinating situation, obviously the dispute over the joint operating agreement. let's give you the details on this large deal this morning. $17 billion in stock is what we're talking about. it's got a $22.5 billion enterprise value when we include the net debt. terms, 0.2550 shares of conoco. there's going to be a return of capital. in fact, they say independent of the transaction they're going to increase the ordinary base dividend by 34% to 78 cents a

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share. that will be starting in the fourth quarter of 2024. they also have a plan to re-purchase as much as $7 billion in shares in the first full year once the deal is done, up from $5 billion standalone and $20 billion over the next three years. jim, the premium is roughly 15% of the closing price on may 28th. what we want to check here, given an all-stock transaction is now conocophillips is reacting. not badly. we can look at the map in terms of the delaware basin and mexico where i've actually spent some time. they're putting it altogether. i don't know what you think of that map. >> i like the map. i've got to tell you what i really like is what conoco is doing. they're down $3.5 an hour and a half ago. conoco is a better buy than marathon. >> could be.

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>> conference call starts at 10:00 eastern, so we may get even more details. >> complimentary acreage. david, you didn't know this was coming? you were so busy killing paramount, you didn't see this? >> i didn't see it, no. i do hear -- it has not been a great year for m&a, we all know that. better than last year, which was one of the worst, but not great. but i continue to at least hear that there's some big things out there. whether they come to fruition, of course, continues to be the key question. this is a fairly large deal. they haven't changed and the issue is antitrust. you think about this year, you've got exxon completing its deal to acquire pioneer, chevron hoping to complete its deal for hess. the only thing now standing in the way -- i mean the main thing is that arbitration that they're dealing with with exxon over the joint operating agreement, and

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you've got this deal. oil and gas has been on fire. >> oil and gas has been amazing. i've got to tell you, i don't think it's over. i think that the companies all see this opportunity to buy contiguous. david, there's a belief -- a lot of people feel, the last one to happen, do you know how many private equity deals are down there? there could be another ten. conoco is barely down. >> did you see this come out yesterday, the ftc action which kind of slammed him and a lot of it seemed to be based, according to him, on completely erroneous interpretations by the ftc. >> he talked to everybody about keeping the price higher. what was the matter with that? >> probably nothing. >> do you think the guys who sell wheat and corn -- >> this is separate, related to pioneer, which has been acquired

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by exxon now. mr. sheffield was supposed to be on the company's board of directors. >> what a slap in the face. >> the ftc said you engaged in collusion. he forcefully comes out yesterday in court papers, basically, and says nonsense. >> gary sheffield is one of those guys, he's portrayed as being kind of a fixer, a fixer. that's ridiculous. >> he's not a fixer. and i think that was outrageous. look, i've worked with him for a long time. in 2012 he sat down and explained to me the oil business and the idea was to have stable pricing, stable. >> what's wrong with stable? when we come back,we'll get some guidance tahat's taking a toll on shares of american.

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switch to comcast business and get started for $49.99 a month. plus, ask how to get up to an $800 prepaid card. call today! >> jamie dimon is speaking at the strategic decisions conference and that conversation is ongoing. wanted to give you some headlines because he was asked to clarify his comments that he made last week at the firm's investor day, where he said his timeline to step down as ceo is not five years anymore. today he said, quote, it is totally up to the board, so you can ask me all you want, but the timetable is less than five

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years. he said that could be four, that could be three, three and a half, it could be two and a half. it's up to the board. but it does sound like it is less than five years. he did say, though, that there may be a term where he serves as chairman for a while, but that is totally up to the board. he talked about how the board has studied multiple successful and failed successions and he says there's no magic formula, but the quality and character and content of the people is probably the one thing that matters the most, and so he believes that it's important that people do the right thing when the time comes, and he doesn't have to hang on to the ceo and chairman role forever. he mentions the bench that they have, he calls it the 82nd airborne or 102st airborne and this idea they've been building this bench for a while, and he believes the candidates that are in place will be there and will be evaluated when the time comes. i'll send it back to you guys.

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>> thank you very much. >> i think that jamie is trying to make it -- that was a very rocky day for the stock. now, i do notice, i believe in the same conference, that charlie sharp says we've bought back 5,000 this quarter. good quarter for office real estate. >> bank of ozark. >> credit quality continues to remain -- it's important. credit quality remains very, very good. and the consumer is generally strong. there's a nice solid resumé, wells fargo. >> it is. continues to be a name you like, right? >> very much so. it's interesting you mentioned it because it happens to be one of my good ones. you tend to focus on -- >> that is not true. i focus on what i focus on.

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we can't talk about nvidia -- we talk about it more or less every ten minutes. >> biggest call of all time. >> thank you very much. part of it i would say is jensen's doing. remember when i used to say, and then i saw me talking and david was saying, yeah. >> i'm just trying to understand what the world in the you were actually talking about when you were explaining these things. >> i was talking about the greatest stock in history. i saw him play in high school, he was the bryce harper when he was 16. he had ten home runs in one game. >> as for jamie dimon, he could retire in three years or two months or it could be four years and three months. >> the level of information i get from this show is unparalleled. how about lulu? >> might be chairman, but he might not. >> thank you for that. >> you're welcome. >> the jury is literally still out, jim. time will tell.

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>> that's two juries. >> we've got another jury that will be out soon. >> we'll get cramer's mad dash and countdown to the opening bell. futures are weak as the ten-year cracks back above 4.5. stay with us. >> at university of maryland global campus, getting a bachelor's degree doesn't have to mean starting from scratch. here you can earn up to 90 undergraduate credits for relevant experience. what will your next success be? when you need to prepare for unpredictable adventures... (gasp) you need weathertech. [hot dog splat.] laser measured floorliners front and rear. [drink slurp and splat.] (scream) seat protector to save the seats. [honk!]

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take a look at some s&p laggards this morning. you'll see american at the top after they cut their q2 eps guide by about 18%. their chief commercial officer also departing. ual did a firm q2. we'll talk about the news as well on nclh and viking. don't forget, you can catch us any time, anywhere, stlien to and follow the "squawk on the street" opening bell podcast.

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the opening bell is brought to you by nuveen. a leader in income alternatives and responsible investing. let's get to it. a mad dash for this wednesday, as we wait for opening bell two minutes from now. you want to talk a little more lulu, which you mentioned briefly. >> i'm perturbed about lulu. not interested in buying it yet. i do think it's a great company, but three pieces cut price target. morgan stanley, and then citi. the problem is that the stock is

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at $295. so the value added here is not that great. but citi does say the sentiment has gotten too negative. the others talk about price competition. there's a bunch of private guys. i just can't get my arms around it. i will tell you when you have a stock down like this in this market, they tend not to bottom. so it doesn't report until the first week of june. as you can see, this was another darling that turned out to -- >> worries about price competition, generally speaking. >> yes, price competition. also, back to work has hurt them. >> because people don't buy anything for back to work. >> people are going back to work. >> they are? so that's hurt them because -- >> people have to dress up. you can't wear their stuff. >> you can wear their pants. i wear those lulu pants.

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>> at jpmorgan you can't wear lulu. i got the memo. >> another 600 on friday. difficult to do remote when you've got regulators. >> anyone who doesn't acknowledge it is really looking at the -- they're not in the weeds. in the weeds, everyone is saying, i can't mentor you. mentor is the key word. >> let's get the opening bell here, the big board, recognizing national cancer research month, indycar driver josef newgarden, winner of the indy 500 this past weekend. it looks like we're in for a 9/1

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open. >> you've just got to find something to buy. that's what we're doing. i can't mention it, obviously. we do have a club meeting tomorrow. are you going to attend? >> what time would that be? >> noon. >> gotit. let's put that down. >> you're about as enthused about it as my wife. >> don't get down, man. there's a lot of people who care about that club meeting. >> what are you going to talk about at the club meeting? >> it's informative. i'm going to talk about how the sell-off is presenting buying opportunities for stocks that are so low that you just -- i do talk about the starbucks issue. there's some stocks that are still not there yet. i don't know if you guys caught any of the starbucks -- >> i know it was on your radar, chatter about understaffing? >> yeah, and the bloomberg article about the waiting times. it's suboptimal.

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it's a suboptimal situation. but the stock is not going down that much. people waiting 40 minutes for starbucks coffee. you could say that coffee is so darn good. >> has the stock bottomed at this point? >> it's trying to bottom. >> i mean, look, it's had a bit of an uptick. you see that. >> the yield is three. that has been the level where a lot of stocks begin to find some footing. i think, david, you broke a story yesterday which seems to have zero impact whatsoever. >> it had no impact whatsoever on the stock. and the company, i should sadd,i did hear from texas instruments. >> you spoke with them? >> no, they had a statement. they say they received a letter from elliot this morning, they're reviewing it. as always, their focus is on

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continuing to make decisions that are in the best interest of ti and all of our shareholders. the stock has not moved at all. it's probably lower than when we first reported the news of the $2.5 million investment that is focused really on trying to get the company to improve its free cash flow in a significant way, getting more dynamic on capital spending. >> there's an example of what you should buy, right here, right now, being pulled down by the futures. anybody thinks any semi that is not directly incorporated with nvidia is not real. buy texas instruments. there's a good example. >> people are not doing a lot of buying this morning. the nasdaq, obviously, coming off recent highs, down three-quarters of a percent in the first three minutes of trade. we talked a lot of salesforce. let's talk a little dell, because that will report

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tomorrow after the bell. there seem to be a lot of enthusiasm. you mentioned dell, of course, because it's one of the names, along with amd and nvidia that seemed to support the market yesterday. dell has that lock on buying a lot of those nvidia chips and putting them together in servers that go into the data centers that everybody needs. >> right. and if you want to connect with nvidia, you use dell. well, i had like to get set up, and they have an ai pc. he was the only executive featured in the front row of the conference, the only one. >> important, it would seem. >> i would say so. >> because you need to have that ability to actually get the chips from nvidia. you've got a price target upgrade on dell, they go to $180. >> very reasonable. >> maybe they've been behind a little on that one, given that $130 is 35 bucks below where the stock is. >> nobody is perfect.

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>> i think it's time to do a little -- a couple of nibbles? >> you've been all over the pc ref refresh cycle. and now an ai-powered telephone. >> that was gutsy. i have to tell you i think the stand that apple made yesterday, which then was eroded, another good place to be would be apple. because the numbers are good there. >> they got a victory in china over the app store fees. >> it's interesting you mentioned the app store fees. they do take a lot of service fees out of china. service data is what has made a lot of people say, you know what, that let us ride through the desert, the shadow of the 16, right? >> well, now we're getting close to the developers conference in terms of when we may hear a lot

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more about the plan when it comes to generative ai and the iphone. >> and i'm hearing something involving writing for the vision pro. i have my fingers crossed. >> he won't give it up. >> no, because i know what he could do. >> i don't know if you heard, the enterprise is the key for the vision pro. >> enterprise bad, enterprise good? >> enterprise software. >> the enterprise for the vision pro is where the action is at. and if you believe that, he's got a lot of land to sell you in new mexico for a theme park. >> by the way, we did get some numbers, disney and netflix out of morgan stanley. >> i happen to think that you buy disney here. that was one of the things i'm going to talk about tomorrow in my club meeting. >> tell me why. >> i sold it at $122. i want to buy some of it back.

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i sold it on the blip. were you there for the blip? >> i was there all the way. >> you were too busy killing warner bros. >> i haven't killed warner bros. >> no? i thought you did. >> no. they killed themselves. >> morgan stanley, amcx, times remain difficult. did you see what george lucas said about studios? he said the creatives now aren't there to tell stories, they're there to service their debt. they're staffed with creatives, we've got to pay back our debt. >> that's like the u.s. government. >> well, these are highly levered companies. warner bros. we've talked about a lot. paramount has a fair amount of debt as well. >> maybe some of the ceos should take a pay cut. >> the only pay cut, yeah. i'm sure that many of them will consider it and then decide not to. >> it's up to the board. do you know how many times --

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right now, let's just say it. when you hear up to the board, it means it's up to you, okay? up to the board. hey, by the way, it's up to the board. you go to the meeting and the board says, hey, what do you want to do? when you say up to the board, they look to the ceo. they don't say, you know what, i'm so glad you brought this up because i think you need to take a vacation. >> when you talk to the board members part of the compensation committee, they will tell you how rigorous they are. they bring in consultants. and then, of course, they decide to pay their ceo a fortune. >> this is the most cynical, but unfortunately correct show on business. >> jim, i know we mentioned cava and starbucks. this journal piece about private label food, now almost 22 cents for each dollar, highest on record. they specifically point out walmart and -- >> costco, kirkland.

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what's the one from overseas, they're opening 700 stores? aldi. >> they're in the hamptons, i'll take you there. we'll go sight-seeing. cisco is fighting the rising prices by doing prepared, which then if they do prepared, you don't have to have a prep kitchen chef. you save a little money and use their food. remember, walmart did that under $5 business, which is terrific. i think walmart -- cissis sysco coming back. i think walmart is terrific. >> david, walmart probably has the biggest lead over others right now that i've ever seen, except for costco. >> who do they have the lead over when you say the biggest lead? it's not over amazon.

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>> brick and mortar like kroger and albertson's. >> still waiting. >> whole foods. >> whole foods is owned by amazon. >> they have high prices. when you go to walmart, they have such great prices and that's been a place for the stretched lower and middle class. it's not where you'll see the 100 bankers who are in palm beach. you throw a stone there, you hit a banker. >> bankers these days, they're not as well compensated as they used to be. it's more private equity. some of the hedge fund guys are hanging around. bankers, who wants to be a banker? i mean chatgpt is going to take their job, anyway. >> and the lawyers, as you pointed out yesterday. >> they're dead. it's just like what shwe said.

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i've got cadence on tonight and i want to know the relationship between cadence and nvidia, and i put it in chatgpt and it was just excellent. and then i felt like, wow. >> did you see that pwc, for example, the big consulting firm, u.s. and uk firms have signed an agreement with openai making it the first re-seller for chatgpt enterprise and the largest user of the product? >> wow. >> so you've got that going for you. we're developing custom gpts to help our workforce with reviewing tax returns, proposal response generation, software life cycle assistance, dashboard and report generation and more. >> yeah. >> accounting consultant. >> i mean, i don't know.

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i looked up cava last night, massive revenue shortfall, completely untrue. >> traffic down was a concern. we're going to talk to the ceo. >> you have to ask about how he can be so bullish about the second half of the year. to me, it did not sync up with what i thought. his outlook is just way too high. i have chipotle on tonight, and the world is their oyster. >> and then did we mention the american guide down, a lot of that is due to pricing pressure. they lowered the guide. united came out and said, not us. jeffries does cut american and they upped united today. >> i thought that was a terrific call because we are getting true bifurcation here between united and delta. and american air and jetblue,

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where it's just like katey bar the door. >> upgraded nclh. i don't know if you saw this, the top five travel days in history have all happened in the last two weeks. >> wow. so out of sync. a lot of it, i'm told, is the strong dollar that's causing people to go overseas. you told me that yesterday. >> i was in japan and it looked like venice. the yen right now, as we know, extremely weak. and not to mention the euro is also quite weak against the dollar. tourists are going everywhere, american tourists. >> look, i still think that's a trade that works, but you have to look at american express, running out of ways to be able to do it with any surety. >> how about anf? >> anf and dick's are

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incredible. >> both raising guidance. >> short positions must be humongous. dick's is such a great operative, they're killing it. really taking over the whole sporting goods. up $30? >> i immediately chatgpt'd and it confirmed it. did you see dick's? i brought it with me. >> what do you got? >> it's almost as if every other sporting good store went under. delivers net sales of $3.02 billion. double digit ebitda, i know that's what you focus on. they raised the full year up from $1285. the analysts were not expecting this. the stock had been selling off since the last time it reported. dick's is supreme. they're fabulous.

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>> i'm looking at another research report, dick's does it again. >> i don't know if you've been in their stores. >> i have, actually. they're enormous. >> it's an incredible amount of fun. >> you can get your steps in for the day just walking around dick's. but overall, guys, a negative tone to the market. we have the s&p down about 0.8%. nvidia giving up some gains from yesterday, down 2.5%. amd down 4.3%. i can't help but also look at the ten-year because it does feel as though when yields move up, the algorithms go in and machines take over. let's not forget how much volume is basically either -- are those kinds of platforms. >> interest rate ticked up slightly. >> 4.6% now, hello.

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>> we were reading about the adjusted mortgages, how they're now up huge. the fed wants this to happen. the fed needs things to cool off. that's what they need. >> okay, i hear you. >> if it's happening in fast food, jim and at walgreens and walmart and target and the airlines, are we getting somewhere on that front? >> i think we are. we do have two economies. we've got the rich, the f. scott fitzgerald market, which is unrelenting. then there's the lower to middle class, which 80% in the restaurant business, 80% of them believe that fast food is luxury. what has happened in this country? >> the sentiment stuff, jim -- >> that's a little weird.

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>> not richard iii. >> my kingdom for a chat. >> for a big mac. >> david is right, ten-year 4.6% is taking wind out of equity sales. all sectors are red. dow jones industrial average year-to-date gain back to 2%. as for bonds, we'll watch it closely. stay with us.

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wow. this morning, s&p 5,268, obviously highly negative. vix back above 14. and the dow down 370. we'll see what develops as the bears clearly have the ball this morning. "squawk on the street" continues in a moment.

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time for jim to stop trading. >> i earlier mentioned enterprise software and the problems with it. there's one company that seems to be immune because it's now

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the king of cyber which is crowdstrike. they report june 4th, this company has yet to miss a quarter since it came public. george kurtz and they have a terrific business. that's the last remaining domino, and i don't think it's going to fall. >> i think on software, keeps getting worse. all types of software prints are sold, both good and bad. feels like no way to win. always darkest before the dawn. >> that's -- i moonlight. that's the piece i wrote under the -- pseudonym. >> yeah. okay. i have showed -- i've got the three cs. i have salesforce, i've got cadence, and i have chipotle. wow. >> what a show. >> i'm going to gemini those guys. what a show. >> going to gemini. >> not chatgpt? >> anyway, look, i think i'm going to reiterate that i'd be a buyer here, that i think things are overdone.

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i think there's an end to the month program, and i like what i see. i gave you a preview of my conference call. >> we didn't mention chewy's buyback or robin hood's buyback. double and -- double that. >> good example of what david was talking about. individual stocks cease to matter. here we have chewy, and dick's met the whole year on that one. i find people are, you know, robin hood is a $17 billion company. and they're buying back $1 billion worth of stock. what is that, nothing? i mean, these are just -- yes, okay, american airlines was not good. >> well, you did start the show by talking about enterprise software being weak. this is like the most positive tone -- >> you heard my piece that i wrote. no, and the piece is really -- >> you know what is working? godaddy. jpmorgan goes to 175. there's a good-looking chart if you're talking small business creation. >> there you go. there you go. i bet you jpmorgan's up on the

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news that jp may or -- what were the periods? >> town three years and four months, four years and seven months, could be three years and nine months. could even be two years and eight months. >> this is why people pay their cable bill because of what you just heard right there. >> or could pay for another five years. >> that's -- >> entirely. >> and be chairman for another five after that. we'll see what they say. >> people are trying to reattach the cord because of that. and -- >> inside america really and the world really needs. thank you. thank you. tomorrow, club noon. don't miss it. or tonight. looks like a show, jim. see you at 6:00. >> why did he make fun of me? >> never. >> because you love him. "mad money," 6:00 p.m. eastern time. obviously in the red off the opening lows. stay with us. hould be called wiffle tennis. pickle! yeah, aw! whoo! ♪♪ these guys are intense. we got nothing to worry about. with e*trade from morgan stanley,

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good wednesday morning. welcome to another hour of "squawk on the street." i'm sara with carl and david live as always from the new york stock exchange. stocks are selling off this morning pretty broad selloff, in fact, for the s&p, down now almost .7% with every sector lower. what's doing the worst? energy, down 1.4%. real estate, utilities, health care at the bottom of the pack today. communication services and consumer discretionary are holding up the best. but it is negative. the nasdaq's given back half a percent off strong gains. now flat for the week again, just trading yesterday and today. the focus has been on treasury yields which are inching higher yet again. we're now looking at three, four-week highs on some of these yields. ten-year yield above 4.5, the two-year 5%. watching carefully. elevated yields. 30 minutes into the trading session, here are movers we're watching -- shares of dick's sporting goods rallying. beating earnings estimates and raising guidance saying shoppers are spending more on sneakers and athletic gear.

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american airlines shares are plunging. the carrier slashing its sales outlook, now expecting unit revenues to fall as much as 6% in the second quarter from a year ago. more on the fallout in that sector ahead on the show. and it's official, conocophillips is buying marathon oil in a $17 billion all-stock deal that would strengthen the company's shale assets. more on that deal and what it means for the oil patch, as well, coming up. carl? got some eco data. let's get to rick for that. hey, rick. >> indeed, we have our main read on manufacturing index and the service side under the business conditions monitor. if we look at manufacturing, expecting the number down seven, but it is unchanged, it is zero. now zero actually is the best number since october when it was positive three. everything since then has been negative. this breaks that streak, at least technically it does, zero really not a positive or negative integer. if we look at richmond fed on

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the service side, minus nine, minus nine. minus nine is also an october comp, but unlike the manufacturing which was the best since october, this is the worst since october, and it means that every month so far this year has been negative. as a matter of fact, last positive number there was all the way back in august. we had zero at the end of last year in december. we see interest rates as sara pointed out have been going up, why? think about the two and five-year auctions yesterday. they definitely triggered a selloff pushing rates up, very little doubt about it. and what makes it even more aggressive, look across the pond, look at the european rates. boon yields on pace for a 6.5-month high-yield close and, of course, we have $44 billion of seven years to be optioned at 1:00 eastern. given the moves post auctions, you don't want to miss the results there. sara, back to you. >> i'll throw jgbs in there,

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too. a big move overnight over hawkish territory. global trade there. thank you, rick. lot to talk about today. yesterday we had that stronger consumer confidence which got me thinking about how the consumer is feeling right now. obviously we're going into an election here. katy huberty put out a great chart february morgan stanley. they surveyed 2,000 consumers at the end of april as the -- asking what the top concerns are. that top one is coping with inflation. that's the orange line. it really hasn't moved that much even though inflation rates have come down in this country. which we all know people are dealing with high inflation, and they're still worried about it. and it's still a problem. you can see it's reversed with the virus spread which is where we were 2020, 2021. obviously in terms of top concerns. number two is the political environment. the geopolitical environment also concern for consumers, as well, at the bottom of the list.

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the virus spread. also at the bottom of the list is concern about falling salaries, which i thought was interesting given we're looking for signs of cooling in the job market. >> the chart that goes with this one and n katy's report is the number of companies mentioning inflation -- >> down. >> which has collapsed. >> it is. and yet consumers still feel it. i think that it shows inflation rates are falling, companies are maybe passing it on less, but that cumulative impact and the sticker shock is still very much there at a time where the excess savings have run down and the higher rates are biting, and consumers are still seeing prices that are 20%, 30% higher than where they were a few years ago. >> wages have outpaced inflation for 12 straight months. >> that's true, but -- agree, and they have jobs and they're spending, that's why you're getting quarters like we saw with dick's or cava, a lot of winners, abercrombie. the only other chart that i thought was interesting besides consumer confidence surprising

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the upside, the wolf research which has been wrongly bearish on the market for a while, the notes that the economic surprises are coming down actually pretty sharply. so this is basically when an economic report is -- comes out relative to expectations. and usually shows that things are moving in a downturn kind of way. that's obviously not what bond traders are focused on, as rick said, with the elevated yields. it is something to watch. >> i'm sure you saw rosenberg's chart about revisions, economic data getting revised lower which david argues is indicative of a period of recession or weak growths. the magnitude of the revisions lower is kind of like what we saw in '08/'09. >> i'll be interested in what the second look at gdp is tomorrow and where the strength of the consumer lies on that. all worth watching in the context of what has been a decently strong consumer. we had a lot of earnings winners in the consumer space overnight and this morning.

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listen to what the cava ceo is saying -- cfo. >> we're seeing strength across all categories. and in fact, when we look at the top restaurants we have representation from every income strata in that group of restaurants. seeing strong performance across the board, no real change over time in the strength and power of that loan or income strata. >> no real decline there. did the dick's ceo, the good comps on dick's, as well, echoing similar bullish demand saying we saw growth, we didn't see sluggish trends across our categories, across the different areas of our business, apparel, total hard-line, all grew. then i also wanted to bring commentary to share from ralph lauren, they reported on thursday -- i was off, i'll tell you what he told me then, now -- which is no real shift in spending at the high end. the high-income consumer he says is resilient, being more choiceful looking into staples

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like linen shirts and cableknick sweaters. he -- cable knit sweaters. he says the most is the in full-price stores. if you're in high income, if you're a consumer brand like abercrombie is killing it now and resonating well with consumers. clearly that's been a pattern. it's not lifting all boats, but there's plenty of strength out there. and there are plenty of companies saying we're not seeing a slowdown. >> no, but those that do service the mid to lower end consumer seem to more often cite certain pockets of weakness, correct? >> yes. they complain. definitely on the lower income consumer. the word choiceful, prioritizing, that's all definitely been a big theme this earnings season. but there are winners, as well, that i just wanted to highlight. and then we heard from jamie dimon at the bernstein conference, jpmorgan, commenting on the overall economic and rate environment in the last hour. listen to what he says -- >> if we have a soft landing and

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rates stay where they are, come down a little bit which is what the world expects, everyone's fine. if you have a harder landing, with stagflation, you're going to see stress and strain in the system from banks to leverage companies to real estate to a whole bunch of stuff. that's what it is. if things get worse, it's going to filter right through all those things. and my view, the world's not ready for that. a lot of you in this audience have never seen rates at 6% of a ten-year bond. i don't know why you think it's not possible. it is possible. >> he sets up the sort of predicament well which is why we were trying to read the tea leaves about whether things are getting worse, whether we are in a stagflationary environment, and what's happening with rates, which are a little elevated as we price out september for the rate cut and look ahead to december. >> yeah. let's talk about that with our next guest. he along with many others does not see the fed cutting rates in the first half of the year or what's left.

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thinking cuts in the second half will be minor, and says markets have caught up to reality. let's bring in former barclay's ceo bob diamond, with atlas capital. joins us here. we're only 140 basis points from 6% on the ten year. i don't know if you think we're going that high. we hit 4.6 again. does seem to have had an impact. what's behinds your sort of lack of belief that we're going to see significant cuts? >> david, when we came into this year, if you look at the second half of 2023, and all of us saw an economy that was somewhat stronger than we expected. we saw inflation somewhat lower than we expected. then we saw it continued real strength in the job market, in the labor market. so coming into this year, it just didn't seem logical at all that the fed would take the risk of cutting rates and, therefore, stoking inflation. when the economy was strong. so i think the fed is going to only cut in the second half of

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the year if they see some combination of economic weakness or inflation coming down. and you know, if we look at the first half of this year so far, the economy's been, what, a little bit lower than we thought in terms of growth. inflation a little bit higher than we expected. and for the first time we're seeing a little bit of dislocation, little bit, in the labor market. so you know, i don't think there's going to be a rate increase for sure. i think there could be one small cut this half, but i think it's very dependent on what the fed sees with the economic numbers and the inflation numbers as they come out in the second half. >> what do you think when you hear someone like jamie dimon warn an audience that are probably younger than we are, you've never seen 6% on a ten year, but believe me, it could happen. do you think it could happen? is it a real possibility? >> you're aging me, man. >> you're not alone. don't worry. >> i started trading when volker was chairman of the fed. i remember the 13 7/8 -- the 13s

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of 11, the 15 of 7/8, the 20 -- we had rates very high and inflation going out of control. and i think you hit the real nub of it. if you are the fomc, whether the the chairman or member of the fomc, and you're not seeing economic weakness, then cutting rates has a risk of stoking inflation. and if they cut rates before the economy weakens or when the economy's still strong, they run a risk of having to reverse course. i think whether it's for what's right for the economy or what's right for their legacy, they're not going to take that risk. >> so your view is it's bad to be early, the fed can never be early. they have to be late. >> i mean, if you put it in context, carl, the biggest mistake they made in a period when they've played a blinder in many, many ways, if the world looks at the u.s., is they waited too long to raise rates. and i think getting themselves in that position, i think

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they're going to be cautious. so they're going to want to see economic weakness before they cut rates. >> there's also -- >> 25 basis points doesn't matter in the scheme of things. so you know, maybe there's a 25 there for signaling reasons. but i don't see -- i don't see the fed, the fomc, taking the risk of stoking inflation rights here. >> there's also some chatter today about as long as they say that the next move is likely a cut, that conditions will remain easy as opposed to if they said we're truly agnostic or maybe a hike, then you'd start to see the plant come down on the economy. >> yeah. i think there's a little bit of managing the message there for sure. yeah. >> on the flip side, bob, rates are high, they're higher than they've been in more than 20 years. and other central banks are going to start cutting interest rates. and if they look at it as an adjustment to try to preserve the strength in the job market and in the economy, what's the harm? i mean, where's the inflation coming from? housing?

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which is short supply. insurance rates, which the fed can't do much about. auto insurance, i mean, these are -- they're not cyclical. >> yeah. i think two things. i think we agree. what i'm saying is they're going to want to see some evidence of inflation is moving toward the 2% target, and i think in the first half of the year it moved a little off that. or to some economic weakness before they're going to take the risk of cutting rates too early. on the other hand, i do think the ecb the cut next -- will cut next week. i think the bank of england is later this month, around the 20th. i think they'll probably cut. so you know, if you go back to what we said last year, in the second half, then europe had a little bit weaker economy than they thought, a little bit higher inflation than they thought. in the first half of this year it's been the opposite. i think europe and the uk will be ahead of the u.s. in terms of cuts. >> does that make the banks in better shape right now in europe and the uk? barclay's, your old bank, has

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had a great run so far this year. >> yeah, but you look at 2008 until today, the u.s. banks have clearly outperformed the european and the uk banks. and i think a lot of that outperformance is done. so i think we're beginning to see the very, very early stages of a reversal of that. but to be fair, i think that's true in the economy. you know, the economic growth in the u.s. has been so much stronger than europe. and i think that divergence is probably close to its end. >> why? why do you think that? why is the u.s. out-performance coming to an end? >> i think it's been a long time, david. you know, if you take from 2008 until today, you have a long period of out-performance of the u.s. banks. it's been stunning. we go back to 2008, citi and wells fargo -- sorry, citi and bank of america were insolvent as was deutsch, as was royal bank of scotland. you look at the performance versus their european peers, it's extraordinary and 14, 15

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years. so i think a lot of the balance sheet issues have finally been addressed in the european banks. i think the economy is beginning to outperform the u.s. slightly after a long period of underperformance. i also think that the european and uk banks capture more of that interest rate differential from deposits. you'll see a net income, a net interest margin differential between the european banks and the u.s. but i don't want to overstate it. i think the u.s. banks are in very good shape. >> you do? >> yeah. >> yeah. the european regulators team to figure out a way to screw this up. >> they have for 15 years. let's see if they can correct that now. >> okay. bob. thank you. bob diamond. as we head to the break, here's our roadmap for the hour. nvidia trying to carve out more gains here. trading around record ighs. how to play the stock from here as its market cap gets closer and closer to apple. and speaking of apple, a bullish note on the street calling the next iphone upgrade

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cycle to be once this a decade. at least that type of event. we'll speak with the analyst who made the call about what it means for the stock. and a $17 million deal in the oil patch. what investors neetonod kw. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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misused company funds. chanoss sued in new york state court by conlin holdings, a chicago-based firm. the lawsuit alleging that he used his firm formerly known as kinaco's associates, as a, quote, piggy bank. the lawsuit centers around $10 million in loans that chanos borrowed from the firm for more than a decade. conlin contends he never would pay back the money. he sold his luxury apartment own bide chanos and company without notifying partners. and his girlfriend acted on the deal and was paid a commission. former cfo brian nichols said in a affidavit filed along soipd the lawsuit that mr. chanos it acknowledged the lawsuit was outstanding as part of his 2002 tax return. mr. chanos disputes that and told me in a statement a short time ago, quote, these allegations are false, baseless,

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and defamatory. as mr. conlin knows, the loan was paid off in 2021. since 2019 i have been more than $30 million into my company. t mr. nichols' employment was terminated and he and mr. conlon are no longer partners. indeed, all of my fellow management partners have lost money over the past few years, none more than me. mr. conlon is trying to mitigate his losses by this crude shakedown attempt, end quote there. mr. chanos had no further comment. you may recall last november he returned outside capital. he's been transitioning from short selling to more of a family office as so many people as we know have done over the last few years. we'll follow -- continue to follow the story. >> obviously a tough market for one to be shorting typically. >> yeah. no doubt. >> over the last couple of years. >> yeah. no doubt. no doubt. >> so what's at stake for him here? i mean -- how bad could it get?

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>> unclear. it's unclear. we'll have to follow the developments in new york state court on where this lawsuit heads next. i don't have any more information on, you know, remedy or anything like that. what we may be looking at. and mr. chanos had no further comment on anything regarding this lawsuit other than the statement he provided to us. >> thanks, scott. >> all right. >> scott wapner. let's move to the deal of the day this morning. it is in the oil patch. conoco buying marathon oil corporation, not to be confused with marathon petroleum, by the way. we've got the right one up there. we have, i'm not saying we haven't. mro is the name. up almost 9%. the premium above that, in fact, over the stock price yesterday. it's an all-stock transaction. .255 for each share of marathon. worth roughly $17 billion, at least time of the announcement. you add in over $5 billion in debt, getting close to a $22 billion enterprise value overall. conoco saying it's accretive

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immediately to our cash flow and our earnings. they also have a plan to return some capital. they increased their dividend, and then they also have a plan in place to buy back more stock, $7 billion in shares, in fact, after the first full year of the deal. that would be up from $5 billion on a stand-alone basis. targeting as much as a $20 billion repurchase in the first three years following the completion of the transaction. as about two billion barrels according to the u.s. portfolio. and you can look, i think we may have a map, as well, give you a sense in terms of the eagleford, the balkan, and our country's own saudi arabia as we call it, the permian, in this case the delaware basin of the permian basin. overall the delaware area which trends toward and into new mexico and obviously part of texas, as well. but the properties, as you see, are fairly closely aligned. that can be quite helpful, and

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that creates -- at least it created a reason as to why sara and carl, there was interest from conoco in getting this transaction completed. you can see shares of conocophillips are down. you would typically short the acquire if you're setting this up. so in this case it would be one reason for a bit of weakness in the stock price overall at this point. >> it was cool to look at their onshore portfolio and forward cost of supply less than $30 a barrel of west texas. >> not bad. >> yeah, gives you a sense of what's going on in the energy business. >> yeah. and they do have at least also some l&g capacity in equatorial guinea. don't want to forget about that. >> as crude oil pushes $80. kind of busy day in energy mma with -- saw the hess shareholders approved -- >> approved yesterday, 2:00. not unexpected. there was a period when we thought there might be opposition to what was an at-market deal from chevron. to your point, sara, we have

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seen a lot of consolidation obviously this year. we saw exxon with pdd, with pioneer. >> yep. >> that deal has been completed. the hess-chevron transaction still on hold pending that arbitration over that argument. big dispute about the joint operating agreement in guyana between exxon and its partner hess. and that will be resolved at some point perhaps later this year or early next year in terms of the arbitration taking place in europe. >> is this a final wave of consolidation in energy, or is there more to come? >> it's hard to see anything that much larger. there are certainly other names out there, you know, devon has come up in the conversation around this current deal this morning, as well, given their acreage is also -- abuts the acreage in question from -- from marathon. >> yeah, they're down the most along with conocophillips and the energy sector now. marathon's the only one higher.

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meantime, market is taking a breather. we'll talk nvidia and tech trade. the dow's losses, about half of that is unh. down 4% on some cautious conference commentary about ayitus revenue growth. st wh .

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nvidia's valuation has nearly tripled over the last year. now about a billion away from apple's market cap. the closest to the two companies have gotten since 2009. nvidia at 30% just this month. joining us is alger portfolio manager anchor crawford. it's good to have you back. welcome. >> good to be here. >> so nvidia's second biggest weight in your capital appreciation fund behind microsoft after -- after even just a week like this. what do you do? do you leave that alone? do you trim some? >> i think when you're so early on in a paradigm shift, in a compute cycle, and you own the company that's the dominant compete platform, you leave it alone for now. may it pause and rest for a few months, sure. it's been known do that, done it before.

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as long as the numbers keep going up the multiple will keep going on. >> you say we're early on. how do you determine where we are? >> it's really hard, but one can -- look, the tan and the truant for ai -- opportunity for ai, for genai, for a -- a time of parallel compute is -- it's just starting. and the opportunity -- i mean, jensen described it as a trillion dollar installed base plus another trillion dollar of additional tam in the market. so it's a very large tam. i think it's hard for us to even imagine how big the tam is. but it is very large. >> one of the things that stood out in the print last week is their adjusted operating margin close to 70%. and a lot of conjecture about how that can stand, right, how long that can exist before another company tries to come in with product, maybe almost as good, and chip away at it. >> yeah. so i think one of the things that is under appreciated is

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that a semiconductor -- semiconductors have spent almost 1.5 decades consolidaticonsolid. they've consolidated because it's really hard to do what they do. they have very, very deep moats. secondly, if you look at nvidia and the pace at which they're innovating, it is unprecedented. we used to be o a two to four-year cycle, intel had a tick tock cycle, every year a new chip, new architecture every four. it's accelerated to one. that is incredible. if they can stay on this innovation curve, it's going to be very hard for the rest of the market to catch them. >> looks like -- i'm looking at at least numbers here in terms of the weighting of sort of the biggest companies. microsoft, nvidia, amazon, meta, and apple and alphabet is -- comes close to 50% of your fund. you're comfortable with that? and if so, why? >> yeah, so we are in a paradigm

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right now where the large are actually going to take more mind share of the market. in part because the investment that needs to be made needs to be made either by the government or it needs to be made by, you know, companies that have huge amounts of free cash flow. they can afford to actually invest in all -- look at what microsoft's going to spend in capex, $50 billion. google, $30 billion, $40 billion. meta, $40 billion. these are big numbers. >> the numbers are extraordinary. you're in the view that essentially the biggest will continue to get bigger in part because of the advance of generative a.m., -- generative ai, they're the only ones who can fwund it. >> they are the platform on which it is built. >> how do you see the fwhmt? >> we have shreds on the roi. if you talk to providers like llama, what they're saying is effectively for every dollar you

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spend on a gpu, your return can be from $4 to $7. that's something jensen and his team said on the earnings call. we're seeing paybacks of 12 to 18 months for a genai data center. the payback is there. the roi, i believe the roi is expressed in a different way than the market expects. the market is often focused on the productivity increases or the cost savings, and i think there's a really different way to look at it. look at pinterest, right. so pinterest started deploying ai into their ad models and were able to inflect their revenue growths and their naus from single digit to 12%. the stock went from 30 to 40 on that report. the roi on that is almost infinite because they didn't spend that much in order to get those kinds of results. >> right. in a world where the hyperscalers control the compute, what about the software

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side? and who -- you know, when chatgpt can code everything, i don't know, i'm trying to understand what your view is of software and how that's going to -- going to play out over let's call it the next three to five years. >> yeah. so i think -- we wrote a paper on how the cost to create is declining and what that means for software. we've been underweight software. except for microsoft which is an overweight position for us. as the cost to create declines, the cost to create businesses decline. so if you think about the moats that software have, they're starting to crack a little bit. the cost to implement, the cost to code, all starting to crack a little bit. on the other hand, you know, semis have deepening moats as there's not that many semiconductor companies, and not that many companies that have scale. so you know, it becomes a very -- very much a bifurcated

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software market for those that can cross the chasm. i wore a lot for point -- worry a lot for point solutions because i feel like those can basically be kind of eaten up by some of the largest players like a microsoft. i mean, look at what's happening in communication services. so the ring centers or zooms of the world. that technology was very easily replicated by microsoft and put into teams. there were no moats. so the disruptive effect of genai i think really hasn't yet been understood in software world. software has underperformed, but the historical valuation frameworks that the market is using i think need to just get thrown out the window because we're in a brand-new paradigm. >> maybe that's why their metrics keep changing every couple of years in the software business. >> yeah. >> all right. thank you very much for joining with us some of your latest

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views. from alger capital. getting breaking news on the fed this morning. let's turn to steve on that. good morning, steve. >> reporter: >> yeah, carl, interesting story here. cleveland federal reserve announcing that goldman sachs' beth hammock will be the new president of the cleveland fed. she's the co-head of the global finance group. she's to replace loretta mester who has reached retirement age or mandatory retirement age. the head of global financial group, chair of the treasury borrowing advisory committee, and a member of the treasury market pack, a group, she has a lot of experience with policymakers, with goldman since 1993. this is a linkedin post. she says a crisis comes around once every five years. in the heat of the moment keep a cool head and focus on facts. act swiftly and decisively. communicate, communicate, communicate. i bow beth from having communicated with her during the financial crisis where she steered goldman sachs as the treasurer.

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she takes office august 21st. first meeting will be september. she will be a voter. she replaces mester. leaving at the end of june after reaching the mandatory retirement age. carl? >> all right. i'll take it, steve. interesting move. still to come, a once in a decade event for apple. we'll speak with the analyst who is making that call. find out why he thinks the stock could rally double digits from here. rhtack. ♪ ♪ welcome to the roots of our legacy. where excellence, comfort, and electricity... are forever in bloom. welcome to beyond. the mercedes-maybach eqs suv. >> no application fee if you apply by may 31 at university of maryland global campus, offering online and hybrid courses and

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lifetime career services. learn about our more than 125 degrees and certificates at umgc.edu.

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welcome back to "squawk on the street." the judge this donald trump's criminal hush-money trial is preparing the jury to begin deliberations this morning. giving them instructions now on the laws to consider as the 12-member panel decide the case. those instructions expected to last about an hour, so the jury could have the case before lunch. the former president has pleaded not guilty to all charges. an investigation into last week's singapore airlines flight that hit severe turbulence shows the plane dropped 178 feet in

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less than five second. singapore's transport ministry says the sharp drop likely caused passengers who were not buckled up to go airborne. a 73-year-old moon died of a suspected heart attack on the flight and dozens more were injured. and a volcano in southwestern iceland is erupting now for the fourth time since december. the latest eruption triggered the evacuation of the nearby fishing village once again as well as the evacuation of the popular blue lagoon spa. iceland's main airport remains open. carl, back to you. >> all right. kate, thank you so much. opened with a weak start, dow down 300-plus. nibbling going on at the moment. dow now down 299. all sectors still red. the vix has returned to a 13 handle, the clearly higher bond yields all around the world are taking a bit of a bite. let's get to dom chu. >> if you look at the overall feel of what's happening, a big down day overall. check out the outperformance that we are seeing in those key sectors of the market.

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and i do mean communications services, consumer discretionary, and technology, those sectors house many of those so-called magnificent seven mega cap technology-type stocks. they're outperforming as opposed to real estate down over a percent, same with the energy complex. an interesting move in the same direction but to varying degrees. if you take a look at that mega cap technology trade, we've been talking a lot about nvidia maybe just a stone's throw from overtaking apple in terms of market cap. right now microsoft, apple, nvidia, alphabet, and amazon are all at least moving marginally to the upside except for apple which is up north of 1% here. the nvidia market cap by the way with apple, just about $140 billion in terms of separation between the two. to put that in perspective, that's like roughly the size of a nike or blackstone. so keep it on that market cap dynamic. then one other place to watch is in the semiconductors. nvidia's been a driving force behind that trade, but we are

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still in some measures in so-called overbought or momentum-positive territory for that semiconductor trade and still, by the way, even down 1.5% today. 67% over the last year. solidly now above both the 50-day average price on a moving basis, the blue line here, and the 2 00 longer term trade. a lot of traders look toward that chip trade as a possible leading indicators for the rest of tech. back to you. >> now just it's been some -- subsumed by ai and the hottest trade in the market. thanks, dom. dom chu. high flying consumer names. the ceo of abercrombie and fitch, that name up now 100% year to date. it'sorising more than -- it's soaring more than 17.5%. and the ceo of cava, surging more than 80% in 2024. giving more off earnings. we'll talk about it at the top of the hour.

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the tech rally rolls on in a relatively tough tape. apple shares up 1%. our guest says the upcoming ai-enabled in telephones will drive a multiyear upgrade cycle which one a once in a decade-type event. joining us is b of a securities equity analyst with a buy rating 2.30 target. reiterate top pick. we've talked over the years about how you've gone from neutral at times to buy and not too long ago. what is the intelephone, and do you think we're going to get real clues at wwdc? >> yeah, good morning, carl. thanks for having me. what i think really is we're entering an era where the current smartphones are going to start to look dumb. we went from feature phones to smartphones. we're going to go from smartphones to ai-enabled phones which we're calling

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inteliphones. the difference is there is context which means you can have a conversation, you can deploy agents in the background to go do tasks for you. so much more level of sophistication compared to anything that we have. and with your last guest you were talking about large tams. think about a billion iphones at $1,000, talking trillion-dollar tam off an install base, which is we think this is a once-in-a-decade opportunity where you have a significant upgrade cycle because the productivity enhancements that you're going to get are going to be so significant. talking about wwdc,i think we're going to start to see some of the tea leaves around ai. we've certainly expect some of the standard, basic features around photo and video manipulation andbeing able to transcribe and doing real-time translation. but i think the holy grail here is really conversational assistant that you can interface with, provide the hooks to developers to build into apps so that you can build these ai agents that we're talking about.

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>> two questions. what would happen to asps if this really got into consumers' hands at scale? and can you explain to a lay person how it differs from, say, asking siri a question? >> yeah, absolutely. so maybe to talk about sort of what siri does today, right, when you ask siri something, a lot of that voice processing happens on device. but then it's sent to the cloud for a response. and siri for, you know, the amount of time it's been around is not genai high based, it's really much more of a lookup table of sorts where you're saying, well, if this is the question, this is the answer. this is the question, this is the answer. but it has had the same question before. with genai you might expose something to completely new piece of information or data, and the inference region of the llm comes back to you with a relevant answer. so it's not sort of a look up

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prescriptive answer you get or in many cases you basically get i searched the web, here's what i found. it should be much more sophisticated than that in a genai world where you're actually getting relevant information that is condensed in a very manageable way. and then articulated back to you in whichever format you would like. it's a very, very different kind of experience we hope that conversational ai is going to bring revenue to the basic commands like set a timer, wake me up at this time that you operated with siri, this can be multimodal, as you've seen with the ai discussion, it can include photo, video, context around geolocation, around what your plans are, what your calendar looks like. >> okay. >> a bunch of stuff. >> wamsi, what about -- to the extent it's providing you a service, say replacing a travel agent or even your need to access expedia and things like that. we have to think about what's being dislocated, by the way. is apple going to charge

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additionally? is this going to be part of what we see in the app store and/or service revenues for the company? >> yeah, so we think there's two main modes of monetization around genai. one is the traditional app store approach. if you're building ai agents that reside on the app store -- by the way, i'm sure you've seee vision pro apps. the asps on these will be materially higher. both for the device, by the way, which we think with increased memory capacity, and their ability for repricing power. you can easily raise $50 to $100 incrementally on the devices itself. but the apps also are going to be more powerful and people will be willing to pay for that. that's one way of monetization. the second way of monetization is really the distribution. this is really important. like, apple's not investing the $50 billion that many of these other companies are to build their own llms, but they provide the distribution, very similar to the google search deal, for example, where they provide the ultimate distribution connecting these llms to the consumers.

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>> can samsung not do this, or android phones, the competitors, the huawei phones in china. i know they're all adding interesting ai features, already. >> oh, yeah, absolutely. the ai market in general, as we move to these in telephones, that's not just an apple thing. that's going to be broadly across the entire market. >> does apple have an edge? >> we absolutely think so. and the reason why we say that is because, "a," it's got the most lucrative install base. so secondly, it's on the distribution side that really helps. the second thing is, because they are so vertically integrated across hardware, software, and services, it is just going to be a much better experience that you can get from an apple device, compared to an android device. the fragmentation really doesn't help, from an android perspective. you've got someone who's controlling the os with a bunch of features. the chips are being controlled somewhere else. the software and the services on top are being built by third parties.

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and we've seen how that fragmentation leads to a poor user experience. we think apple has the edge, because, "a," they can integrate using their own chips, which are customized, to running local llms up to 7, 10 billion parameters locally, and the rest of it in the cloud. >> we'll see what we get on the 10th. it's going to be interesting. appreciate the help on this one. >> likewise. thank you. as we head to break, check out the biggest laggards on the s&p 500 this morning. led lower by american airlines. we'll take a closer look at that name and that sector. you've also got southwest down there as well, and some of the health care names like moderna selling off. don't go anywhere. ♪ (alarm soun♪ amelia, turn off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. ♪ (suspenseful music) ♪ why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia. bye jen. nasdaq-100 innovators. one etf.

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well, you saw american airlines leading the laggard board this morning. you see it there, down14.5%. it slashed its outlook and announced some leadership changes. it sent the stock lower as a result. phil lebeau has a lot more for us on what's behind all of this. phil? >> the biggest reason is because of poor execution. they shot themselves in the foot to a certain extent, david. let's talk about the new warning regarding q2 earnings. they're going to be smaller than expected or lower than expected, now expect to earn a buck to a buck 15, down from 1.15 to 1.45,

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with research dropping as much as 6% compared to last year. previous guidance was research being down about 3%. we mentioned poor execution. yeah, there's some softness in the market, that's part of the pressure on the stock. but in terms of this warning, they talked about it this morning during the bernstein conference. he said, near-term bookings have hurt, and a big part of this is because they have lost corporate sales with a new approach that they instituted earlier this year. here's isem during the bernstein conference. >> we have to make sure our product is available for sale in all channels. and we're going to be making some changes very quickly. i think that is something that is immediately reversible. i believe that in terms to have pre-building relationships, i think our intermediaries, and these are the tmcs and our corporate customers, as well, i think we're going to have to get out there and really get on the road and make sure that we move quickly. that's going to take a little bit of time. >> you mentioned the management

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shake up, david. the chief commercial officer leaving the company. he was the architect of the new sales program that they instituted. also, the stock is being cut today by jeffrey's down to a hold. meanwhile, jeffrey's upgraded united to a buy. united affirming its q2 guidance. it's going to be a rough day for the airline stocks, david, especially if you look at what american is doing right now and the pressure that it's under. >> we can see that. and phil, thank you for helping us understand exactly what's behind it. phil lebeau. as for our overall market this morning, we're off the lows, an hour and a half or so into trading. the s&p down about half a percent right now. a lot more of our coverage continues right after th.is

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(office chatter) is it me...or is work not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? can ai help your people work... without all the workarounds? feel better. make customer service work the way customers expect? that one. make your old tech work with your new tech? thank you. and todd here is wondering, can ai do all that... now? no pressure. it can. on the servicenow platform, ai transforms your entire business. your people work better, your customers are happier, and todd... well... he's practically euphoric. practically. because when your people work better, everything works better.

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so what are you waiting for? let's get to work. idris elba works here? mm-hmm. ya, he's super nice. good wednesday morning. welcome to money movers. today, the most compelling trade he's ever seen, carlyle's jeff curry on why the run in copper is nowhere close to being finished. >> then, abercrombie posting its strongest fren est first quarte. the ceo joins us on the back of a

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