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tv   Squawk on the Street  CNBC  May 2, 2022 9:00am-11:00am EDT

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the work force, so these are all, you know, potential suppressants on inflation, but you know, to your point, it doesn't sound great. we've got a higher probability of a recession, we've got a fed in potential taper mode. this is not the setup where you want to be long equity. >> thanks, we're out of time thank you, savita. >> thank you so much we will see becky back in new york make sure you all join us tomorrow "squawk on the street" begins right now. good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is in los angeles at the milken institute global conference. he'll have interviews. futures indicate little bounce from friday's brutal selloff ahead of a big week, with the fed's meeting and a jobs number and a third of s&p earnings. we are going to begin with that new trading month.
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the nasdaq taking the biggest beating down more than 13% for its worst drop since october of 2008, jim. a month that historically is strong for markets, not this time. >> look, i just think that there was a big give up last week, and i was hoping that maybe warren buffett would be able to give you a little bit of a sense of calm, obviously no i think that the calm is gone. i think people feel that this is the beginning of a major repeal. i want to know what happens if bonds stabilize. what happens if the fed makes a move and whether you shouldn't be thinking about buying a little we've held off, got a nice cash position for travel trust. time to start to buy why? because friday was so hideous, carl, that i cannot believe that that wasn't an event that smelled of capitulation. >> well, speaking of cash, buffett's cash position has rarely been higher than it is right now, at least as a
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percentage of the investment portfolio. >> look, i found -- there was a little bit of disconcerting, the attack on robinhood, i mean, that's kind of worn thin. >> saying that god was being just in unraveling. >> i just think that these are -- it's too harsh a judgment crypto made a lot of people money. david, you know that when you blast something that has made a lot of people money, and that's not robinhood, but it's crypto, it leaves you thinking, well, maybe you're just not part of the current firmament. >> yeah, i hear you jim, i've refrained from discussing crypto a lot, in part because i'm stig still struggling to it whatever your opinion may be, and obviously we know when it comes to bitcoins and the currencies, the underlying architecture is here to stay blockchain is a significant part and only going to grow in terms
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of what it means for the ability to do so many different things in terms of transactions and so many other things. nfts and tokenizing or whatever the verb you want to use here, that's here to stay here, and this is being institutionalized, so the underlying infrastructure that is being created for crypto, that may be way more important than whether the currencies are valid or not. >> yeah, look, david, i am sure when you speak to people, you've got the best people out there, and if you were to ask them about crypto, what they'd be thinking is our customers want it, our clients want it, our investors want it. they're not going to say so therefore all those constituencies are wrong, hay ca they can't do that. >> you are absolutely right. at dinner, there was a presentation, a panel discussion on crypto, and there was a large institutional money manager there talking about that very fact this is here to stay, you know, perhaps it is generational in
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nature to a certain extent, but it's here, and it's not going anywhere, and it's only going to grow again, separate conversation perhaps from what bitcoin is worth. as for that underlying architecture, as for nfts, as for blockchain, that's only gone one way, jim. >> yeah, carl, i think that they're out of touch o out of touch on this you may think it's worth nothing, but they would tell you it's worth what -- if it was nothing, it's worth what people are paying for it. and do i like it it doesn't matter whether you like it. it's not about liking. it's -- i mean, do i like the fact that a dacuni can sell for 100 million? i don't know i don't want a dacuni. to i -- there's a market for sa
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san. >> buffett would counter by saying assets need to have some intrinsic value, which gets to the crux of the whole argument. >> but their inflation comments were brilliant inflation's toxic. that's part of what we're dealing with it's why we're all struggling. >> which is why it's interesting that goldman suggests that we believe the peak for core inflation is now behind us as the surge in goods inflation has likely peaked. dallas fed trimmed mean pce, one of the things we like to look at and certainly jay powell does as well you think we're over the hill? >> there are a lot of things that are coming down i was talking with my commodity expert this morning, just been a lot going on people looking to hedge inflation or play the war using etfs, which pools money to buy futures. that has now peaked. we saw the copper down dramatically, soy, which is a good substitute for a lot of
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things that cost too much in the food chain, down the amazon event where amazon has too many drivers we are seeing, carl, some events that tell me don't bet on inflation going higher >> but you think 50's baked in this week? >> yeah. i wish they'd do 75, if only just because you've got to get mortgage rates the homebuilders are still raising prices dramatically. there's a very interesting note about pulte saying don't buy pulte, but at the same time take a look at pulte. they just raised prices 25% year-over-year david, you know, as long as housing they're able to command those price increases, then you still have core inflation too high because housing is such a big part of what people are doing. >> but the question continues to be when will it really stifle demand i mean, are you starting to see it in housing? is it starting to play through >> yes because i think that a lot of people, david, bought- locked in
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april rates, and now they're using that money to buy homes. may is a different story and i think that you're going to see a big dropoff in may when you would normally think that spring selling season is good because i think that the april lock-in was brilliant, but there can be no may lock-in, david, it's just not a good rate. >> jim, meanwhile, i mean, i'm looking at names i was gone last week as you guys know i mean, what happened? our parent company, whoa, disney, we were just looking at. i mean, you duogo down the list and obviously we know what happened with earnings in terms of great growth stories. just a way, not even a way i was working, but away from the markets for a week, and you know, i will come back to you. what do you do here when growth is obviously no longer in any way in fashion, and by the way, things are not growing that
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were. >> no. well, there was a great piece by david kostin last night talking about how the buybacks have been out of the market. i know that buybacks, you can say that they're artificial, kostin's piece show they play a big role. >> i still think if you buy companies that make things, do things, return capital, like we saw kimberly-clark, they do all those things i just say to myself, stick with those. you cannot buy the companies that are burning cash like mad i mean, i've been looking that the carvana bond deal last week. carvana had to pay 10% what's really interesting is there was a make good clause when have you seen that during this year and carvana had it they upsized the deal, but apollo was in there. i hope we can find out more about why apollo -- did apollo go in there because they know they were made good if the
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company files bankruptcy >> well, it's a great question as it so happens, mark rowen is going to join me only minutes from now, and we can ask him we can ask him about that deal i mean, the paper itself has got quite a yield on it, but of course private credit has become an enormous business for so many of these firms we've talked about it a lot, including apollo, which is 70% credit you're right, jim, that was fascinating as that stock is now down 75% you brought up the word. there's plenty of market cap there still at carvana. >> right carl, i'm looking at a market, d david's right, you can step back amazon and netflix just seem gone amazon was a bad quarter there's no two ways about it it was a bad quarter netflix has hit the wall faang is done and i've been trying -- it's done. i went over that quarter again kashlgs. >> which one >> amazon.
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>> amazon. >> it was stunningly bad >> definitely had a jekyll and hyde element aws still in the high 30s, but the operating loss in north american retail certainly the guidance we talked about the prospect of layoffs, which you think could actually move macro numbers later this year. >> yes, yes, i think that you have a company that -- you know, david, amazon glommed onto a lot of the work force, and they don't need as many people in the work force did you see that story that president biden is having the unions in? david, the unions are ascendant right now in this country, and that's another story we don't talk enough about. when was the last time, 1992 when gm tried to break the union? i know the president said he was a union guy. >> i wouldn't think, you know, so yeah like five starbucks and a distribution center for amazon or r are unionizing and they're ascendant? i don't know, it's not exactly
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an army. >> newscast a cause -- the president, one of his causes. >> today wedbush removes amazon -- >> other than the fact, look, just read the first six paragraphs in the amazon report, we sold a lot. why am i in this what's the point >> given what's happened to s&p earnings yields which we'll talk about after the break, a lot of people may be asking that same question when we come back as we said, david is at milken today with the ceos of apollo global and carlisle and goldman, that's all coming up this hour next take a look at the premarket april just a brutal month, and we'll see what we can get may started with with the dow futures turning a little bit more green we're back in a moment >> of course bonds can swindle the equity investor, do everything, inflation, i should say swindles the bond investor too, and it swindles the person who keeps their cash you should
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their mattress it swindles almost everybody, and t and the problem, if you have a business that doesn't take any capital, and let's just say the dollar deappreciates, you can charge ten times as much, and u' kt ur relative position, but most businesses take some capital.
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with half a trillion dollars of assets under management, our next guest has plenty of insight into fixed income and equity markets, joining me is marc rowan, great to have you. >> i'm doing okay. markets aren't for those who are long equities and or own a bond fund, something along those lines. let's start off with where you think things stand in terms of the markets, and you said on the lags earnings call, we've been in a decade long period where taking risks has been rewarded and i wonder whether you still think that's the case. >> i think the misstatement was the word decade. since 2008 the printing press has been running, and that printing press means stocks up, rates down sk, and particularly people who took long dated growth in tech risk were rewarded guess what, that's changed first quarter equities down 14,
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credit down 17, and i think this still has a long way to go. >> why >> you just look back, if you believe in mean reversion. let's start by saying technology is going to change the world that doesn't mean it's not over overvalued you look at average s&p p/e, that's 30% to go you look at where the s&p is today versus where it was at the end of '19, we have a long way to go. it is unclear to me that we've seen the end of this certainly the fed seems deadly serious about getting expectations of inflation under control, which means liquidity is going to come out of the system, and you can see that's going to happen already with our announcement this morning on reducing their balance sheet and rates are going up. >> now, you have not been a firm that has chased growth unlike some others. i think that's fair to say you benefit from that in this environment therefore? >> absolutely. i mean, for us purchase price has always mattered and purchase
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price matters everywhere in the market, so in the equity market, it's the kinds of companies you buy and the prices you pay we want growth, we're just not prepared to pay for it i sometimes joke we trade perspiration for purchase price. in the credit market, we originate. it's generally shorter dated, generally more yieldy and therefore gives us some shelter from rates no. perfect shelters. >> tell me about no perfect shelters in this environment i do wonder with yields moving up appreciably, quality is not really in doubt as of yet. what kind of a cycle are we in >> it feels like we're in a cost of capital cycle the fed is zgoing to raise the cost of capital. they're going to reduce market activity, reduce liquidity, and ultimately that's going to reduce growth and reduce demand. so far demand seems to be pretty strong it looks like we're going to squeak through '22 without a recession, but there's no doubt conditions are weakening
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i'm not sure that's a bad thing in terms of a reset. we were running very hot, and it was unclear how much longer it could continue >> i want to talk about the credit business that you have, but let me get to the old p/e business you do have some insight into what corporations are seeing given how many companies are in your portfolio, so to speak. so what about that idea of a recession? what are you seeing in terms of wage inflation, in terms of so many of the other pressures we're talking about, supply chain and on and on. >> i don't think there are any surprises. so whether it is airline demand, room demand, hospitality demand, industrial orders, it's all in the right direction meaning demand is still really strong. having said that, staffing is really challenged, inflation is there across the portfolio long-term investments are being made technological shift and modernization is happening, but it does feel like we're going to end up with a weakening toward the end of the year rolling into '23. >> i mean, when you talk about
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the p/e business, you've kind of said it's not a growth vehicle for aum at this point anymore. i have a quote here somewhere that i'm trying to find. how important does it remain then at apollo particularly given this current environment where it's not clear exactly what opportunities may show themselves in terms of what you want to buy. >> for us this is actually our kind of market it feels like certainly i've been out talking with our investors. remember, oh, you're from apollo you're the guys where purchase price matters. it hasn't mattered for a decade, but it matters now this feels like a really good market for what we do. i expect we'll be very active in this market. p/e for us is still the intellectual foundation of the firm as i've often said, we run it for rate of return, not to grow it >> right >> and i think that is how it has to be run. >> a number of people have said to me, listen, marc rowan is the most important guy in the lbo world, not just because of what you're talking about in terms of your actual investments, it's
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because of the credit side you agree with that statement, by the way >> certainly not. >> why not why not? i mean, you guys are not just equity people may still think of apollo in that way, but in fact you're a huge provider of credit. you see that as the growth opportunity for the business. >> i do. >> particularly this hybrid area. >> what i say is the following, since 2008 an awful lot of credit creation, not just lbo credit but normal everyday credit, the financing of companies takes place outside of the banking system we have been the biggest beneficiary of that, but most of what we do i call fixed income replacement. most of what we do is investment grade. it's very poorly understood, but you are right, the traditional role of banks, the traditional role of market participants such as ourselves and some others is changing as i sometimes joke, we have no permanent friends or permanent enemies. we are just as likely to team up as compete i think you will see large transactions financed outside
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the banking system you will see large transaction financed exclusively in the banking system. >> were you surprised by the way that that was the case for them? >> not so much elon musk offers a lot of collateral. >> at least there was some -- i tried to make it clear if you dpies had participated in any way t would have been on the credit side. people seem to be misinterpreting. was that an interest to you as a potential credit >> absolutely. >> why >> for the same reason twitter and elon's holdings in tesla are infinitely bankable. the question is whether it will be a good investment, and that will be what elon and the entrepreneurial team does with it from the equity side. >> we're all wondering what exactly that's going to be you know, you mentioned permanent -- well, permanent capital is a key part of your business as well what you're bringing in there, so how do you deploy that capital? >> so atheen like almost
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everyone else in the retirement services business is 95% fixed income and 5% equity, so atheen wa wakes up every day and need to generate safe yield. safe yield is what financial institution in this country needs, what insurance companies need, banks need, it's what pension funds endowments and others need. what we're seeing take place, you are looking at the way you traditionally manage fixed income as beta for the public market overlaid with alpha we used to think that created additional risk, but i think what we and others have shown people is the distinction between public and private is no longer about risk. the distinction between public and private is just about liquidity, and if you can get paid for doing something less liquid, more creative, more structured, that feels like a good place to be in this market versus taking credit risk or duration risk. >> the banks are just not capable of doing, is that why you're able to disintermediate them
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>> they do it. you have to remember, we've built a $360 billion business, which sounds really large in a market where we are like that. i assure you, jamie dimon and ch charlie scharf do not wake up wondering what the apollo is doing. >> you can't completely dismiss it now when you look at the group it's apollo and ayres and blue owl, and blackstone. >> absolutely. but if you dig into the relationship, all of us, we actually don't want what the bank wants so what does the bank want the bank wants the client because we can't sell them equity, and we can't sell them m&a, we can't sell them advice we can't sell them treasury. we don't sell them foreign exchange and everything else the bank still gets that in some ways having us finance something is almost noncompetitive to them last year we financed a massive position for softbank for their vision fund two, for banks who are interest instead doing business with softbank, their
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arm ipo or some other form of business, they know that apollo is not a competitor for that business ironically for the banking system it's better if something goes to us than one of their competitors. >> a couple of quick final questions here we've got to ask jim cramer about the carvana deal why did you guys step up and agree to purchase almost half of 3.72 of bonds that they were issuing. >> i always say the thing. we didn't because we think we can earn excess return for risk. carvana we've been invest instead for a long time. equity been very volatile. i believe the credit of carvana will be very good. carvana like many others is still remaking their business, and our size as a market participant allows us to just think differently. here it was cooperative with carvana. >> they have to spend a lot of capital to keep that business being, don't they? >> that's okay >> you're not worried. >> you're getting paid a pretty good number there to -- >> i'll call jim cramer
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afterwards and i'll -- >> will you? >> all right and finally i noted, you mentioned masa, you talked about masa on one side and buffett on another. we just heard from buffett yesterday. i assume you listened to some of his comments any thoughts at all in terms of what you heard from him? >> warren buffett and hmmunger, there's no doubt change and growth and technological shift are real i think they say it with some hype hyperbole. it backs up their story in their book, but we have to at the same time be cautious change can be real and the purchase price can be e louis ri. >> marc, always a pleasure. >> don't miss david solomon and q lee from carlisle. after the break, take a look at the premarket one last time before this opening bill of the month of may "squawk on the street" continues in just a moment
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less than a minute to the opening bell we're going to squeeze in a quick mad dash. >> i like the fact that warren buffett came in $21.4 billion worth of chevron that's a lot there's a big debate between chevron and exxon, which one to own. i say own them both. index funds, 413 million shares. you're starting to talk about a very big base that's not going to trade and i continue to think
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that oil, even though china -- even though china's not use ago lot, russia's a cheap rate and it hangs in, and i think that's part of what buffett's looking at. >> interesting, huge questions, of course, as we keep our eye on the shanghai lockdown, and a potential ban of russian energy out of the eu. some reports say may be imminent, maybe some proposals tomorrow. >> we have to see how much is oil, how much is natural gas india's buying that stuff, other markets are buying it at a considerable discount, but it does matter to me that i would have thought that oil would be down, the lockdown is so severe, that it makes me file like, carl, that oil should be at 90. >> yeah. >> and the fact that it's not going down encourages me to continue to buy them for my travel trust. >> interesting, got close to 100 this morning. >> yes, it did not quite that low this morning. tortoise north american pipeline fund and the nasdaq a to z smart
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technology specializing in self-checkout technology celebrating its recent listing you continue to be aggressive on energy i thought you liked chevron a bit more than exxon. >> i'll tell you why i like chevron. mike worth, by wait, is one of the people who makes himself very available he really is the dean of the group. mike's got this mix of permian, which is accelerating, and he's got big offshore projects which have long lives, and he has a view of exactly -- he has a pipe coming from kazakhstan, he says listen, don't worry about this most importantly, he says he can buy back 25% of the company. he has that kind of cash flow. that kind of conviction, you never see that among most executives i'm very surprised to see that stock down after the endorsement of warren buffett. >> don't you think the prospect of recession ratifies the long-term curve on oil, though
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>> yes, but david, i think that when i listen to what people are doing out there, and i know that, i mean, powell is so good, but you've got a situation, david, where if there's inflation and inflation is not going to turn down, you know buying oil versus buying the grain is a pretty good deal. >> yeah, that sounds like a plan do you want to stay -- you know, i mean, back to buffett, the one he chose to buy a lot of also don't forget is oxy, not just chevron. >> it works. there is something to be said, david, about what works and what doesn't, and i bring this up because what a great buy apple was for them i think chevron's going to be a great buy. oxi was okay think about here they are talking about inflation being toxic and they're buying a
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company that is a great hedge to inflation, and they have a big position in oxy. i think they're going exactly what they should be doing to be true to their word, and they have a lot of cash, and i love that the only thing -- the two things i find discouraging are the con continuing attach -- and the crypto i find that discouraging it's interesting, robinhood, a lot of what the individuals own is crypto. you've got this generation that we want to own stocks and index funds and they're not playing ball, david. they're just not playing ball. >> yeah, well, listen, munger is 98 and buffett's 91. it can be generational to a certain extent but you have to listen to everything they say for obvious reasons. i'm looking at my screen here, obviously so many of the great growth stocks we've been talking about are down and down sharply. at&t is up this year and t-m t-mobile again, back to names that you want to own in this environment, do they continue to be sort of
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something that you'd want to be looking at >> t-mobile had an amazing sign up broadband's in their cross hairs. we're going after broadband. the fact that at&t had good numbers up was very good david verizon's quarter was a big disappointment, and quite frankly, a surprise. i thought that they had more growth they didn't, david they are losing share, and it's kind of shocking >> yeah. it is interesting. it's something that obviously we'll continue to watch closely in addition to what has been significant efforts by the cable companies to develop wireless businesses, certainly charter and comcast. but again, those stocks have just been absolutely crushed nothing quite like altice worth $4 billion jim, i want to come back to you on growth and what people were talking about on friday, which would have to include cathie wood's arc funds, that teledoc
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move and what that meant give me your take at this point. >> teledoc is losing a lot of share to doctors on demand, which is private there's also a couple of other outlets that do this the money keeps coming in investors still haven't given up on cathie wood's ark the destruction of capital here is something you and i both have to be very upset about people are losing so much money with her that you have to start thinking when will they stop >> i don't know the answer, jim. it's a good question carl, you know -- >> i know. you know, i mean, i can remember, we've talked about them those great mo mo funds from the late '90s, all those guys out in denver, remember there is a benefit to having
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lived for a while, i guess, right? >> amarindo. >> if you put brk up against ark, we're getting back to flat going back to 2014, berkshire versus ark, eight years. >> well, i mean, the teledoc, i was speaking with someone at doctors on demand over the weekend. teledoc had a giant write off, the actual verbiage of the write off, they did make an acquisition. we don't know what that's really doing. that's got to be one of the most crowded areas there is, and i don't -- as much as i absolutely think it's a great resolution, there's a lot of companies that are keeping their part of the revolution i don't want to own any of them. carl, we're in this era where what she seems to pick which is cathie wood, seems cursed, and you know, i don't know what to make of it.
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>> jim, for the time being right now, the more pressing concern is the s&p back to 41.13 our prior low for the year, 41.14. ten-year is knocking on the door at three, amid reports of the japanese selling treasuries en masse. one of our biggest holders, obviously. >> i had thought that there might be a peak this week because i see copper down, g grains are down. what really does concern me is that -- is ukraine, coming back to ukraine it's such a huge part of our food complex, inflation is eroding the everyday person who goes to the supermarket and has to pull back they've not pulled back yet, but carl, the inflation situation has to get under control i would speculate that the speculators have driven up a lot of food and this was -- this has been historically the peak this
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week in grains, and we've got rain coming in our country, but we still are lacking the 13% that ukraine's putting out there, and i don't know. we're seeing nancy pelosi there. i don't understand why they're saying let's send the airplanes. i mean, what is going on to keep one hand tied behind the u.s.'s back if the most important person in congress goes over there and says woe've got to support these people, i don't get it. >> your point about supply is leading the discussion about potential recession. former vice chair roger ferguson on "squawk" saying in his view the likelihood of recession in part because of supply is very high take a listen. >> i think a recession is at this stage almost inevitable because they don't control supply, and we've seen how volatile supply can be with the shutdown in china, which is brutal and the probability of a
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recession is, i think, unfortunately very, very high. >> so do you think it's about that, do you think it's about the fed or as said on friday, the market pricing in the force of tactical nukes? >> there's an oligarch who spoke out on instagram, immediately they were stripped i just think that the united states is not going to let this happen i think the united states will not allow putin to stay in because he's not important belgium has more exports italy has a bigger economy it's going to stop, and it's going to stop right here the moment that we give them the planes, and if we don't give them the planes, maybe we give them more drones they can use every single drone, they've got the switchblade 600, which can take out a tank. you send them a thousand, they'll send out a thousand tanks. it's just a joy stick, you look
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at the tank and the joy stick, and you blow the tank up this has to happen our president does not seem keep pace with what every other leader's saying. i still think that factored in, i do think that a recession is being priced in. carl, i don't think there will be a recession because the consumer is too strong i also think that we once again are -- nothing he can do, i'm not buying that either we got to take mortgage rates. he has to take mortgage rates to 6.5, and then it's over. we get the rains coming for the grain, grain stops going up. i have warehouser on friday, got a downgrade today, lumber peaking. i want to see what home depot says there's a lot of things, we're depending on drivers we still don't have containers and we have china offline. >> for now what role do earnings play at this point
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z >> the ones that have done well are companies that have big dividends that are able to raise prices and, that's a handful of companies, not a lot not a lot. that's a big worry for me. the speculative stuff is just breathtaking how much -- breathtaking and the losses, we have -- david we did some -- ben did some rundown of the losses talking about the ipos since 2019, you were talking about the -- you know, the amount from the highs, destruction. >> yep >> it's just monumental how much money has been lost. >> it is it is. >> monumental. >> listen, it is but at the same time i do remember sitting here looking at rivian being $100 billion company saying that seems kind of crazy. that doesn't seem to make sense in a lot of ways now that it's a $26 billion company and we've obviously seen the markdowns, right, when amazon reported when ford reported, i don't know, i don't know what rivian's worth
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29.72. >> there's a lot of rivian coming to the market, david. >> look, you were dead, right? look at these things i just look at affirm, rivian, roblox, asana, and then you get to ewe wee path. good rx, oh, my god, they're in the -- david, you and i should set up a teledoc thing we'll be doctors of, youi don't know the market. >> let's take a break, we've got pmi final coming up in a few moments. take a look at treasuries. we mentioned the ten-year getting close to three as for equities we hit 41.10, new intraday low for the year as the s&p 500 year-to-date losses approaching 15%.
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welcome back to "squawk on the street," rick santelli here live on the cme hq with breaking news our april final read on the s&p global manufacturing pmi, formerly known as the market pmis, not to be confused with ism pmis coming out at the top of the hour. expecting 59.7 the final read moves down from 59.7 to 59.2 it is still a decent read and the highest read since 60.7 in september of last year we see all interest rates, 2s, 3s, 5s, 10s, 20s and 30s those yields would be new cycle highs across the entire yield curve. "squawk on the street" will return in o nus.twmite wow, we're crunching tons of polygons here!
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because the fed has been so accommodative, we've had to readjust the price level to a higher level we're never going to take that back we are now permanently at a higher price level so trying to fi that we're going to somehow reverse all of this
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and go back to where we were, it is not going to happen i'm afraid if the fed sees the economy begin to stall, that they'll reverse course, just like they did in 2018, and then all of a sudden, they will lose all credibility as an inflation fighter. >> that's gugenheim's scott miner talking about the fed potentially pivoting the market's counting on 50, 75, 50 >> i think that's fine where i disagree with this -- the grain complex, it's a heart of what americans have been experiencing and it's peaking and that's going to help and it's peaking because the speculators are getting out. typically, we don't plan speculatives they pile in there if they pull out and we see grains come down, we will be able to go to supermarket and not be blown away. >> can you say the same thing about equities prices coming down >> i think what's happened is the etfs are too big than the actual grains.
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the s&p isn't too big. it happens to be imbalanced. >> i know you are watching apple. they did file some of the metrix from the quarter katie huberty looked at it this morning. >> i was saying how preposterous it is. gross par begins are up. i didn't matter because of the 8.4 billion number i got to tell you, is anyone shocked if you lock down 15 million people in very well off cities it's not going to hurt business >> no, they should not have been shocked. the lockdowns continue in shanghai, i believe, despite what has been a much lower case rate i think beijing, of course, still on edge in terms of whether that's going to happen or not but, yeah, when you lock down an entire city. those pictures are stunning when you see empty roads in a place like shanghai with tense of millions of people, you'd expect it will have an impact tesla got the factory up and running, right
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>> charmed he's a charmed man somebody mentioned twitter,r >> some of the deliveries in china obviously taking a hit from that lockdown >> the stockmarket is enough to get out. he didn't fool around. >> we did bounce off the interday lows of the year. let's go to bob. good morning. >> mixed open, the high print was right at the open and we have been bouncing around either side of positive or negative territory ever since consumer discretionary is the weak one, amazon is down a little bit right now so that's the big problem here tech, energy, utilities, you see either side of positive or negative right now so indeterminate open here n. terms of the big caps, amazon is sitting at a new low, that has been a major problem for the consumer discretionary group as i mentioned, tesla was all over the place. it was 1,000 bucks pfizer down, visa down a little bit today. keep an eye on the other big cap
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names, interestingly, airlines are starting to weaken remember united or american, rather, was $20. just about seven, eight trading session ago. it's below 19 right now. all of them off of their highs still holding up reasonably well jim was mentioning the loyal fans of cathie wood and arc. a two-year chart, take a look. we're down 60% from where we were a year ago. but in terms of loyalty. i discussed with with her at the etf conference, what's amazing the shares outstanding with a 60% drop in the arkk, the shares are the same compared to a year ago. this is what we mean when we talk about her fiercely loyal following. she had 180 shares in the arkk that was in march of 2021 and today she has 186 million. you would think with a 60% drop, people would be selling like crazy and have to share shares
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about redemption it's about the same as a year ago. that's when they say kathy woods has a loyal following. in terms of the markets, the bears, obviously, are in control of the narrative there is hope for stability over the weekend. the bulls had various straus that were grasping at. they were talking about the buyback period, they can't buy back shares ending essentially some pinning homes on the april cpi next week which might show we are at an inflation peak. obviously, the fed isn't going to move because of that. that won't help people out the bottom line is the bears are in control of the narrative. as for earnings, the estimates for the quarter, is second quarter and third quarter and the full year, very little change, really, 6, 7, 8% gains expected for the year. the problem is we have very poor visibility nobody has faith in the forward estimates right now. we know the multiple has been
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compressing from 21 to 18. earnings estimates, themselves, are not coming down dramatically obviously, the market believes that will happen as for what's going on for the market correction, i turned to my friend sam stoval, who points out we've had 23 corrections since 1945 of 10-to-20%. that itself the rate they looked at 23 of them the average drop has been 14%. that is precisely where we are right now. so we're an average correction right now. peak to trough, interestingly. sam always has something to say about this is usually four months believe it or not we are in our second month of that correction. we'll see if that lasts only two months more. that is a historic average carl, back to you. >> bob pisani. let's get to jim in stock trading this morning. >> there is a very interesting piece out at this point.
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literally about car max perhaps of used cars, which we know is very important for the indices, the competition in the used car market is going to bring prices down we have the used car prices go down and you take a look at some of the auto companies, they're just unbelievable. you are beginning to get copper going down you are beginning to get a little break here. and i think that those who think that the fed is beefing aren't looking for numbers. >> interesting certainly used car auction prices down 1 in early april something we'll see later. >> we have to understand there are components of cpi. it's not just cpi. when you start looking at these things and you get gasoline down, which is really what's needed i think what you will say is, wow, we're on course, 50, 75, 50, brings us to where we have to be. obviously, the spec last-minutors take a ten year to beyond where i thought it could go right now the monumental nature on a
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percentage basis of what's going on is freaking people out. but i like it, i like it, it's getting all the of the wes can and if someone comes in and buys all the chevron they want and objection oxy, they get that good year. rate of return i say, stop panicking. >> what's tonight? >> now, best buy, which has been an interesting story we will talk more about what they are doing to help people. he had a terrific quarter, 5.9 then you talk about the switch blade, the 300 and 600 ukraine needs, they're all his he's from afghanistan. he knows what has to happen. >> it's a show to watch. see you at 6:00 on "mad money" 6:00 p.m. eastern time when we come back. david sceo of goldman sachs david sceo of goldman sachs and
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what's it like having xfinity internet? it's beyond gig-speed fast. and it can connect hundreds of devices at once. that's powerful. unbeatable internet from xfinity. made to do anything so you can do anything. . good monday morning. welcome to another hour of
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"squawk in the street." david faber is in l.a. at the milken institute global conference this hour interviews with the ceo's of carlisle and gold medal man sax. morgan brennan has the day off we hit a new interday low as we kick off the month of may. 30 minutes into the trading sessions, starting with spirit, the big movers, rejecting jet blue's takeover offer citing anti-trust concerns. activision blizzard has its stake of the video game and has 9.5% moody's missed estimates it cut the outlook due to expectation of continued volatility moody's is the continuing lag guard of the s&p moving on, as you know coming off a brutal april, nasdaq suffered the worst month of '08 worst year ever on the comp. the s&p not faring much better
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since march 2020 joining us this morning, j.p. morgan asset management and citi's scott cronin. scott, let me begin with you a lot of discussion about the degree to which the earnings yield is more negative now since the '50s what if investors start to compute that and sell off even further towards a sub4k print, let's say, is that likely? >> well, i think we have to be wary that as it's higher you do switch the math in terms of your asset allocation it's had favored assets for years now. we have been talking about it that as you give investors more current income, the short ter red the curve, you do begin to put risk into the flowback on supported equities for thepast couple years so we're at that fringe point where this needs to come into the conversation a bit more. >> what are your expectations, scott, for the feds this week.
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not just the rate move, but the degree to which it gets pressed into the news conference >> well, the house view here is we will get 50 consecutive moves over the next 50 months. that's what we're factoring into our change perspective no change on the targeted 4700 for the s&p, which is essentially the fed getting back to neutral we begin to see some rolling over in economic activity and the metrix that gives you reason to follow earnings cap higher as we go into the end of the year >> mira, how about you this discussion of peak inflation continues to get a little more fuel you look at inventory, labor supplies, order backlogs and dallas trimmed pce is there a sense we are going into this meeting with the worst behind us? >> to some extent, we certainly see the things that you have enumerated that there are signs of peak inflation. i think the challenge is the fed is well aware of what it can
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control and what it can't. some of the elements of inflation it can't control, things like china lockdown because of covid-19 and how that stresses the supply chain, the continuing conflict between russia and ukraine, how those claims to inflation will be a big challenge. the feds can't control those elements, those have been new particularly in an environment where the backdrop for inflation coming in january 1 was already high so the fed will be walking a bit of a tight rope this year considering some of the new inflationary pressures that have come about then at the same time you are seeing that there are different measures, especially when it comes to autos as mentioned before, there could be evidence that some of these pressures are issuing. the fed are lessening. so you are walking a tight rope this year when it comes to monetary policy. >> how do you process a giant potential binary outcomes, the shutdown in shanghai, what if they were to turn tail and all
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of a sudden vaccinate with mrna or open the cities again, versus the potential for let's say germany and theeu to back a russian oil embargo by the end of the year? two things that wore massive implications well beyond equitys? >> absolutely. there are uncertainties and realities we are dealing with in a broader equity market. one of the key uncertainties is how does this situation in china play out i think some of the key questions are how much more of gdp goes into lockdown currently it's a quarter, do they effectively rope off different areas of supply chain to enable them to continue to produce and export how long will things last? how severe will things get when it comes to supply chain you know, some of the lockdowns at least have provided a bit of reprieve when it comes to some of the energy prices because of china's lesser demand. but of course that we know covid waves come and go, so, the question is, how long does it last how much impact does it have on
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economic growth? unfortunately, it's a situation where, fiscal policy can't do a whole lot when people are locked down from a monetary perspective, there is only so much they can do in an environment where the fed is aggressively tightening. it's something we watch carefully because it is a swift moving headwind we are seeing. >> i think i heard you say 474700 remains your target. is the corporate sentiments in this period bolstered your faith in that number >> i mean the earnings inertia is incredible if you think about it starting q4, we thought it would run q1 this year they are running with a decent positive supply ratio. it's actually stronger than it was for q4 so far we are seeing the under pinnings of a deep laze in terms of looking at our year end earnings forecast for the s&p 500, we're still in pretty good
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shape for a plus 8% or so range. now we completely expect as the year unfolds and we see fed rate actions behind us, that there should be some pressure on second half expectations, more importantly, the 23 outlook is what we are more carefully keeping an eye on at this point. for now the earnings picture looks pretty solid >> we'll see if that continues this will be another busy week before things lighten up next week mira, scott, thank you guys appreciate it very much, have a good week. meanwhile, berkshire's annual shareholder meeting, buffet taking the stage to talk about market volatility, bitcoin, a lot more. becky quick is in omaha, man, they brought us a lot else >> they did. you know, carl, a lot of the shareholders went into this weekend looking for more details on what was a very busy month for march for berkshire, buffet takes the cash flow to $106
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billion at the end of the first quarter. down from $144 billion at the end of the fourth quarter. we knew that berkshire bought 121 million shares of hp and increased they're stake in occidental by $7 billion this weekend we learned about new investments made during that period he revealed that berkshire increased its is thatic in apple during the first quarter i ran into him yesterday after the meeting. he told me when apple shares fem for about three days in a row earlier in the first quarter, he bought about $600 million of the stock. that will be revealed when berkshire makes its 13 filing quarter public he added, unfortunately, the stack went back up, so i stopped. otherwise, who knows how much we would have bought? it's just a reminder that buffet likes the stocks he owns to go down if he really likes them, he will buy more he filed a 10q showing they bought big into chevron, adding an existing stake of the energy giant to $26 billion that's up from just 4.5 billion
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at the end of the year chevron is now one of berkshire's top four holdings. it joins apple which sits at the top of the list along with bank of america and american express. buffet said saturday he wanted to make some news, so he did telling shareholders berkshire has been increasing its stake in activision blizzard. buffet said he got interested after the deal with microsoft had been announced he said it's an arbitrage play because the stock had been trading well below microsoft's steal price of $95 per share. >> one of the things i bought, bought for a different purpose by a different manager months earlier, he bought roughly 15 million shares of activision and i never -- i knew about the company. we see it as a monthly report. but then on january i don't know 17th or 18th, something like
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that, microsoft announced they were going to buy activision for $95 per share. when they announced that, at that point activision becomes a different kind of security >> and, in fact, you mentioned this at the top, carl tafd, we have been walk u watching the shares of activision blizzard. it had been below that 95 price target this morning it was the biggest gainer that we had seen in bring-market activity. the first month, the market has been down again. we don't know what he has been doing since then the only things he was revealing were done through the end of the first quarter. david. >> yeah, well, are you right, activision shares up 2.5%. buffet made it clear, it's a merger arms play he is getting what he believes is a rate of return based on their expectation, of course,
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the deal will close. but there are still plenty of people who believe this deal may have some serious regulatory issues ahead, buffet is in the camp that says i guess they think they will get passed >> i think it's a bet he thinks the deal gets passed either that or he doesn't mind 10% if the deal doesn't go through. if he bought at the lowest levels it's the biggest of the game makers out there again the shares have been down because of all the news that's been around this if you look back at the foursome event, stocks are trading quite a bit higher, too. >> yeah. it's interesting not too often, obviously, are you the expert you heard buffet talk about a merger r play, in addition to some of the other obviously investments. >> he's a former red hat are you right, this is something he doesn't do that often it has to be something that interested him obviously, it's something he has done earlier in his career he has done it recently with red
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hat. it has to bea big spread on a big company in order to catch their attention at this point. >> sure, right they got to deploy a decent amount of exam becky, always a pleasure to watch everything you do down there. >> thank you coming up this hour, i will try to equal becky in some ways. we will have good interviews, carlisle, goldman sachs david solomon, we got a lot more "squawk in the street" for you straight ahead don't go anywhere. >> imagine having to use the wrong tool at your job. (upbeat music)
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>> well, our next guest leads private equity firm carlisle asset management here to give us his read on the public and private markets, kewsong lee. it's good to have you. >> it's great to be here >> we talked in october. they bunched them together to get them on schedule let's talk about these markets as you look at the particular growth is getting just hammered day after day. how does that make you feel? particularly about your private equity portfolio, where obviously you have been investing in goat for some time? >> look, there is clearly a correction going on. i think corrections are helping. over the past decade and it accelerated over the past few years.
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liquidity and momentum drove valuations, particularly certain sectors and times of companies i think there will be a focus back to fundamentals, which is great companies, but profitable growth there has got to be a way to get to profitability and cash postal workers something that carlos can focus on all the time. for the most part, we are seeing our portfolio is holding up very well, the first quarter, we're seeing resilience in our portfolio. our platform continues to pivot and look for opportunities so i view this as a healthy correction clearly, it will take time to play out they create opportunities as well. >> real concerns listen, it's not as though we haven't seen headwinds this is a somewhat unique moment with the fed, the balance sheet of 9 trillion coming down, ready to raise rates dramatically for what may be an extended period of time. inflation at all time highs. supply chain problems, war in ukraine. >> right >> china lockdown.
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i don't know, there is a lot to cover. >> we have to be mindful of all those issues, clearly mindful from navigating this environment. let me give you a snapshot of that at least what we are seeing in our portfolio companies. it might be helpful. as of the first quarter, our companies by and large growth was still pretty strong and margins were still expanding so there is more resilience in this economy than perhaps people get credit for clearly, all these issues are going on clearly, we have to work with the companies through. but these types of conditions are also creating opportunity because of the trend set up for the future things like energy transition. the heightened state of volatility clearly the decoupling and the regionalization that's going on in the world so i take a step back with my leadership team, continually think how do we position
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carlisle where are we going to find opportunities that play into those opportunities? >> i want to talk to you repositioning because of credit. to stay on pe for a missouri does an environment like this prevent exits that otherwise might have happened? do funds basically stay there for longer is that something your investor base has got to get accustomed to >> i think mna when corrections happen, both buyers and sellers, they take a pause. you saw that in the first quarter, six-to-eight week period of time when buyers and sellers took a pause to recalibrate and we see confidence come back and that activity emerge. i think the key thing is while exits could be delayed, you go to keep working your portfolio companies. if they can keep growing, keep driving earnings, profitability. the value is there it's just a matter of when you can capture that value >> so far again, are you not seeing any diminution in demand in the customer bases of these companies? >> correct so far to our first quarter, we
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are seeing resilience throughout our portfolios >> you know something else you talked ability in the earnings call was just in terms of raising funds for your private equity it's a crowd pe fund raising marketplace. >> yes >> does a market like this impact at all? i think you raised 9 billion you talked about it being crowded. a lot of pe funds coming to market to raise? >> yes, it's almost the success of the pe segment of the market is coming back to hurtle, in the sense na sthat so many funds are coming back. the lp market can't digest it all. so there is a bit of change in dynamic phenomena in the pe segment of the market. we are seeing healthy growth in private credit, in healthy demand for solutions and our strong brand, 35-year reasons that are lps positions us really well in these types of environments >> you mentioned credit.
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it seems to be a conversation with everybody in the asset management business. they don't want to talk about private equity everybody wants to talk about private credit, media, the banks, all the different things you can do there apollo has led them. they have been focused so many times. so many other firms, kew, why is this something everybody wants to do and obviously tell you about? or tell me about >> i'm really glad carlisle has set up for a diversified platform with a very great credit business. pro form sinema acquisitions we made $140 am in this strategy. but the two things that are happening, david, volatility, rising rates, it plays right into private credit markets. the volatility because financing source want certainty and the private credit market can afford to do that we can take advantage with certain situations and credit opportunistic strategies volatility in general brings more sourcing flow
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>> what do you mean? >> it's a strategy where if a traditional source of funding from the bank market or the exam markets, execution is more uncertain, they'll turn to the private markets then ask for help on expedia time line in order to get a transaction on it we are perfectly transitioned for that most of our credit strategies are a floating rate so yields are going up in our private credit strategy. in general, if you take a step back what is happening is more interest and demand. it's why it's one of the fastest growing segment at carlisle. >> it's why a lot of these asset managers, do you expect that to continue as rates continue to rise should that in anyway mitigate it or not? >> yeah, i do expect it to continue the other big picture thing happening, asset management are rotating on a traditional fixed income into private credit because that's where they can find more yields simple as that
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>> simple as that. >> what concerns you the most right now? would it be if you start to see a dropoff in demand at some of the portfolio companies? is this a sign of how things are not getting better any longer? >> yeah, i think the key for us is appreciating and look financial conditions are what they are you heard me, i think corrections are healthy. this could take a longer period of time to play out. but you know we have a long-term lens i feel good about our positioning. there is a lot of things happening that can cause for a policy error >> the feds in this kind of -- i don't know, i have been doing this a long time it's been a long time since we saw the feds raise rates dramatically are we ready for what is coming? >> i think the fed is raising rates. i am constructive, getting them time to put their policy moves into action. but we also have to understand the world, the markets, it's a very dynamic place we're already seeing china extenua extenuating.
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it's more accommodating. we will get the world's second largest economy. if it starts growing, it will be additive you are seeing demand destruction already occurring. what the fed starts to realize is make them reassess what their future is. it's action, reaction. everyone is seeing and acting in a dynamic system and i have a lot of confidence that our policy leaders will help us navigate through this. >> kew, i appreciate you taking time, thank you. >> kewsong lee carl, back to you. >> as we go to break, shares of amazon lower today again of the worst week since 2016. it had its biggest monthly decline, consumer discretionary is down, with that drop, stocks trading as low in two years. overall they get stumbled by this ten year still near 3 we are back in a moment. your shipping manager left to “find themself.”
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etf dropping more than 28% in april. its worth month since inception. all the dpoentscomponents were e in april some of the group's top holdings tried to turn the tide as we begin a new month, zoom and shopify are some of the early traders. the dow is now up 206. after the break, we hear from goldman cedao vid solomon live from the conference in los angeles. >> this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.
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. all right. here's your cnbc news update at this hour. ukraine's military chief claims two russian boats were destroyed in a drone strike this comes as russia's attacks intensify and hundreds evacuate the city of
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mariupol house speaker nancy pelosi and her congressional delegation met with polish president duda in warsaw pelosi also met with president zelenskyy over the weekend during her surprise trip to europe a man hunt is under way as local state and federal authorities search for an alabama inmate who escaped from custody with a female correction officer over the weekend 38-year-old casey wright is charged with capital murder. marshals are offering a $10,000 reward kansas residents are beginning to sift through the wreckage caused by the series of tornadoes that tore through the area over the weekend. more than 1,000 buildings were damaged as winds reached speeds up to 165 miles per hour david, back over to you. >> oh. thank you, julia close by, i assume we are continuing our coverage
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from the milken institute in los angeles. joining me is the chairman and ceo ofgoldman sachs. i am glad we can get back on schedule ours, the may conference again we did an interview here annually for a while thank you for being here. >> i am delighted to be with you. it's great to be with you in person we like to be back here. i put on a tie for you you are always so dapper so i put on a tie. >> i expect that from my guests. so, thank you, david. >> >> it's the first time to talk to you since the earnings, i believe. and you said something interesting in your comments you've talked about an accelerated trend towards deglobalization. in recent decades, you said low rates, free flow people in goods. i believe we are entering a period where that won't be the case and the consequences for financial marks will be meaningful, that caught my eye, david, give me more of a take on
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what you meant when you said that. >> we bend from capital flows over a long period of time when i think about the last significant bout we had with inflation back in the 1970s, there is no question the fed and paul voelker had a big impact in laundering that trend. one of the big macrotrends that have a big impact is the fall of the wall and really ushering in a period of decades of globalization that really brought prices down all over the world. and a variety of things are going on in the macro that are reversing those trends i'm not certain that this trend will continue over the next couple decades but at the moment, we're certainly seeing more nationalism, to think about our energy independence, commodity independence, food supply chains and all of that has an impact to some degree on prices and so, we're in the early stages of
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seeing veteran adjust behavior and supply chains and all that has an impact on us. >> what about the quote capital? goldman sachs benefitted as well, does that change at all? it shifts a little bit in a world where there is more geopolitical uncertainty, the risk premiums that people demand capital around the world change and adjust a bit i think those changes are sus him. whether they're long data, they're profound is yet to be seen part of it will depend on the journey from here. how deeply rooted is inflation what goes on geopolitically, how does the conflictin ukraine continue to unfold what happens in the bilateral relationship between the u.s. and china. i'd say there is much more macrouncertainty, that can affect capital flows >> as the fed is aggressively raising rates and reducing its balance sheet. it's not something we've seen for a very long time you never seen a fed with a 90
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billion sheet to begin with. is it worrisome to you and if there is a concern, what would it be? >> well, i wouldn't say that it's worrisome i think the fed is appropriately focused on the fact we got real inflation in the economy and their monetary policy actions are a part of the toolkit to try to paint that and find a path to a soft landing and that path i unclear. i think there is no question how the fed will be in 2022 has changed over the last few months certainly, the perspective the beginning of january is different than today rates are definitely going higher when rates go higher, it tends to have an effect on the dollar and asset prices so we have to watch that closely. but the path of all that and whether or not it can be navigated in a way where we kind of land softly, we don't have a serious recession is hard to predict. >> it is you want to take any guesses >> no. >> how do they do it
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can they handle a soft land something. >> our research team thinks the chance of recession is approximately 30% over the course of the next 4 months. but that's an economic forecast looking at a bunch of inputs and tools. i think that when you look at kind of the demand side of the equation, it will be balanced a little bit more efficiently over the course of the next 12-to-4 months personally, i worry about labor, labor is very, very tight a. lot of labor imbalances, certainly, that's something we have to watch closely. >> when you talk about labor, even your own, right, in your annual report, the key to our success has been -- well, actually, you raised compensation and benefits, up 33%. now the top ratio actually was fine it went down a bit >> comp ratio went down. >> you are having to pay a lot more money >> there is no question that across all organizations in any business right now, there is inflation and wages.
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the market is extremely competitive for talent we have always been a pay for performance culture, so our people benefitted the fact last year we performed, we grew our book value over 20%. north of 20% that's not something i said in the january earnings call that is likely to be competed, not in the this year. >> can you put a lid on? in other words, this year may not be as strong as last year. will comp go up at that rate or will you compete perhaps as you haven't in the past so that comp ratio always goes up. >> i would sigh with the highly paid people, we have complex performance. but we have 50,000 people around the world. most of those people do not make the high wages that are written about and there is pressure there. we are always going to pay our people competitively we will do what is right for the long term and our people we will always make the life-long decisions. >> you mentioned clients, that
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was something else i saw in your annual letter. you said the key to our success has been a renewed focus on clients. is that implied in a way you haven't been focused on? >> i think we have been focused on clients, one of the things this leadership has been trying to do is to really think about how our clients experience their interaction. if you think about the business of wall street, it grew up as a product silence business people sell products if we think about the big institutions that we deal with, the big corporations, most of them touch goldman sachs in multiple ways. we have tried tothink of a one goldman sachs approach to make sure we are thinking about all t individual touch points. try to figure out their experience, for clients, it's been fantastic it's helped their market share and our client's desire to work with us. that's how with we focus on their experience
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>> it will be four years already? >> it will be four years in september. >> four years in september. >> time flies when you are having fun. >> producer predecessors sometimes called them counterparts we won't get into that specific to people, are they coming into building, you waged a public campaign we seen to have people show up five days a week it feels like you lost what are you seeing in terms of attendance >> well, our attendance across the united states is pretty good it's between 50 and 60% i'd say. pre-covid it was probably 80%. when you look in europe and london it's higher when you look at asia, it's 100% when of thes are opened. think about our business, it's a big global business it's different in different parts of the world. we're focused on the experience our people have. we are focused on the fact that our people want to come together, our work force is very young. so 50% of our work force is in
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its twev20s i read a record that 50% gen z workers were unhappy at work one of the things they pointed to was a lack of mentorship, lack of relationships, the fact that the separation of working remotely wasn't giving them the same experience. >> why aren't they coming back to the office five days a week >> i think what was important, it was never as binary as people portray that we talked about it. we want people to generally come together to work in teams, we're a collaborative culture. i think we're at a moment in time lit take some time behavior shifts take time, generally. i think over the course of the next couple of years, our organization will generally come together there will be certain flexibility probably for certain roles and certain things but there always has been, there was been covid we didn't talk about that thing. we did what was right for our people what we needed to do to make our office environment super competitive. >> have you changed your own view in a sense because your
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employees forced you there >> i have always had a view that's been rooted in flexibility and taking care of our employees. its been portrayed sometimes as much more dogmatic than it is. >> okay. >> i don't need to deba it that. but we've always tried to give our employees the latitude to work very, very hard, to be with clients. take care of their personal lives and family we will continue to do that. >> a guy from our generation, we expect people in the office. it's the only way you learn, you get cultural -- >> it's where 50% of the people in their 20s generally speaking will come to get we will work together. by the way, that's what's going on at goldman sachs today. so we will keep at that. i read a lot about how all this affects people i think you got to look at it as more than just this moment you know this mackenzie study i referenced, it's interesting the effects of veteran feel about this will tame some time for all to understand. people will make decisions based
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on that over at some reasonable period of time. >> speaking of employees, we're not in new york. we're in los angeles, but we are both new york-based. but i wonder, is goldman sachs more and more a national company in the sense of where your employees work miami seems to be growing, dallas seems to be growing is new york no longer a focus four in terms of grow something. >> new york is a big focus we have 10,000 people in new york i think what's changed as our organization has gotten much larger, much more dispersed around the world is an openness to have lots of sense of excellence, lots of hubs lots of places where people can work and want to work and the big reason for that is attracting talent. so if you think about i joined the firm, david, in 1999, 94, 95% of our work force in the united states was in new york. today we have 26,000 employees in the united states, 50,000 are employees around the world but in the united states, 10,000 of the 26,000 are in new york.
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we have 3500 in salt lake. 3300, five or 6,000 in dallas. >> are you doubling the size in dallas >> part of this is to attract people part of this is to have a much broader footprint that allows us to be closer to clients. we are growing in toronto. there is grit tech talent that grows up in the educational ecosystem in that part of the world that wants to stay in canada but it's super attractive engineering talent so we are doing what we need to do to make sure we are close to our clients and florida, everybody talks about florida the reality is we have 200 people in florida. we were sitting here, i'd tell you we had five or 600 in florida. but it's not the same down there. for people that want to live down there we have critical mass down there. we can accommodate that. when we think about flexibility in terms of being really attractive to talent, it's more having hubs in centers of
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excellence with a culture of the firm and the ability to mentor and apprenticeship can thrive and give people lots of choices. therefore, we have very attractive work environment. we are doing that all over the world, in the uk, a development up in birmingham we're finding very, very good talent so you've always got to be taking over the next ten years in the context of this stuff. >> finally, i want to come back to right now and a conversation you and i typically would have here let's end on the capital markets. ipos do not happen much anymore this volatility doesn't bode particularly well for mna. these are still franchises of yours. i know alternative assets are a big part of what you are doing now. ipos mnas what are your expectations given the sect half of the year? >> any word is a big word. when you say ipos are not happening. a lot of ipos right now. >> it's not a great time to become public right now.
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>> it's not a great time, in particular >> if you are a growth company however, you and i have been students of the capital markets for a long time. you know with everything the world has thrown at us, it's been very rare we have gone more than a few quarters with the ipo market you know really very, very tight and so you know, this is a moment in time there certainly are businesses that can and will go public. i think the wave of the value expectation for young growth companies has to be reset and i think in that period of time so, definitely capital markets activity will be more constrained for a period we are still reaping the benefit of a lot of mna activity, you know, last year, at the same point, certainly in the first quarter and this wouldn't be surprising, because when things are volatile, confidence decreases, that affects mna activity we are seeing a lot of engagement as people are trying to think how to engage
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themselves in a world with inflation above trend and higher rates. we're starting to see more private conversations, so the ecosystem is pretty powerful i don't think what's going on now stops all that but we are probably not going to see robust levels of activity that we saw last year. i said that in january before this road map was written out. >> meanwhile, microsoft bought activision and elon musk decided to take twitter private. who knows. >> lots of ceos are thinking about what this all means for their competitive position and you know that leads to dialogue. dialogue ultimately leads to activity and a higher interest rate tournenvironment. people have to think of that differently that will create activities so i think when the volatility starts, the activity constrains. people deal with reality there are plenty to do and our
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clients are looking for advice >> it's some of the best periods? >> yes >> thank you >> thank you for having me i look forward to sealing you soon >> back to you, carl >> all right david, thanks so much. as we go to break, check out the biggest laggards on the s&p. quite a handful of them. moody's among them we're above 45 points. nasdaq up better than a full%. although the vix is still above 33 back in a moment this is the new world of work. each day looks different than the last. but whatever work becomes, the servicenow platform will make it just, flow. whether it's finding new ways to help you serve your customers, orchestrating a safe return to the office... wait. an office? what's an office? ...or solving a workplace challenge that's yet to come. wherever the new world of work takes your business, the world works with servicenow.
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try it for free at all right. thanks, "squawk on the street" "squawk box" are higher. we have a bit of a choppy session. some of the worst performing stocks are among the leaders this morning that includes the communication services sector up 1.5%. within that group, names like paramount global, activision global
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at&t netflix is in positive territory after falling almost 50% in april. met is that platform is up 4%. it's the only stock in the sector higher. up over 10% in that time, now let's send it over to carl >> thanks so much. as frank said, as to, this morning trying to joining us this morning is ubs director of floor operations, art, it's a pleasure to have you back good morning. >> it's a great pleasure to be here, thank you. >> you've written a lot today about the importance of the 4200 level, apple and amazon, the vix, what's the headline this morning? >> the whipsaw action was two pronged, as it were, as you alluded to, the yield on the ten-year moved up to 298 #, and that spooked them a little bit
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this morning it has now paused, and that's given them a sense of relief secondarily, we're looking at two stocks in particular, amazon to see if it resumes that selloff, and number two, apple, which if it gets down to about the 154, or even worse, to 150, it will be a problem we retested the lows, the february 24th low and the s&p was 4114, we came awfully close this morning the dow is something like 32272. we didn't get quite that close in the dow, and, of course, nasdaq the other day broke through. cocktail napkin technicals work. on the other side on behalf of the bulls, it's new money for a new month. so you've got that
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and secondarily, you're moving into a fed decision on wednesday, and there is the so-called fed drift, which is the bias of the market to trade slightly higher in the 36 hours before the fed decision. so the bulls have those two things working on them the bears are -- got the nervousness over the yields and the fact that we've got to stay above the february lows. >> right, yeah, which we did notice that this morning you do say this morning, we may need a washout, in essence, an 8 or 9 to 1 down day, with a vix spiking 38 or maybe 40 did friday not qualify onsome of those ideas >> it came close, but it missed on the several levels. we didn't get the vix quite high enough, and the -- actually, the selling kind of started a little bit late you know, the bleeding and pain
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felt real, but, you know, amazon went down, and then it broke below its chart level, the previous low and that brought out sellers i know a lot of people think that's hok -- charting is simply, i brought it here, maybe i made money maybe i'll bid in and buy again. or i held it here, and it failed on me, so i don't want to overstay my welcome. it's really psychological. it's not magical of pencil lines on paper but the technical chart action is very important to traders. >> meanwhile, art, we're moving into may, and every year at this point we're reminded of the axiom sell in may. it's statistically the worst six months of the year
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do you think seasonality is going to be as pronounced this year >> yes, i do, although a caution, the first five trading days of may are not necessarily difficult on a seasonal basis. often, and this is usually when april is a decent month, that the seasonality of an upmoving end of april carries over for the first week of may. so we may not have quick pressure the other thing i would remind you is, this is a midterm election, midterm elections tend to bottom at the end of summer, at around august so i think this choppiness is going to remain with us. i think we've got a little bit more work to do on the downside. i know the viewers don't want to hear that. but it is what it looks to be to me. >> right anything that powell can say in the presser that would continue to give him optionality down road but would lighten up the sentiment that's been trounced last couple of weeks
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>> i think what the market is going to begin to focus on is the balance sheet. you know, as i've said before, on your program, powell has a bit of a problem he kept dismissing inflation as being transitory it has not proven to be that transitory, and therefore out of guilt or embarrassment, or whatever, powell has therefore committed -- he's putting on his locker hat now he's going to be tough on the rates. what i'm going to be listening for, is, are we moving to qualitative tightening yes, they're not going to be buying -- how much are they not going to buy are we going to see a drop in background liquidity of $60 billion a month? there are some who estimate $95 billion a month. that will be very, very difficult for the market to handle. >> art, as always, our thanks, we'll talk soon, i hope. art cashin of ubs. coming up on "techcheck"
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this morning, a lot more on the tech turbulence, the nasdaq coming off the worth month of october of '08 netflix, nvidia,man wn azodo 25 since april 1. top of the hour. don't go away. you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.
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at the moment we're seeing more nationalism, we're certainly seeing because of the pandemic a sense to think our energy independence, our commodity up dependent we're thinking about food supply chains, we're thinking about those things, and all of that has an impact to some degree on prices and so we're in the early stages of seeing how people adjust behavior, how they change supply chains and all that will have an impact on us. >> david solomon, chairman of ceo goldman sachs. talk about the impact of deglobalization is something he mentioned on the conference call for the earnings a couple weeks ago when the company reported earnings, saying he believed we're end entering a period where we may not see we become so accustomed to lowflation, low interest rates and globalization.
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talking about that reversal. a lot of other things we talked about this morning with our guests and negatives and positives. the key would still be, when you talk to mark rowan for portfolio companies, still seeing strong demand, which does at least give us something to build on with the s&p up, up .9% that will do it for us on "squawk on the street. send it over to "techcheck.." good morning i'm carl quintanilla with deirdre bosa and jon fortt how much further can checks slide. nasdaq worst start to the year ever, worst session since the early pandemic smt streets and valleys biggest investors now weighing in, bill girly teasing more pain ahead on those looking to capitalize on tech valuations. nevada bezos co-signing the tweet. markets teach, the lessons can be painful apollo's mark rowan warning of the


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