tv Squawk Box CNBC May 26, 2022 6:00am-9:00am EDT
it is thursday, may 26th, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick with kelly evans with mike santoli today. yesterday was a good day for the markets. you saw gains. the dow has been building those gains. this morning, you see the dow indicated up by 100 points s&p futures up 10. nasdaq off by 4. the indexes this week have been impressive for the s&p and dow. the dow up for four sessions in a row and on track to break the eight-week losing streak
the longest in almost 100 years. the dow has been up 2% s&p up 2%. the nas nasdaq is up .70%. we are clawing our way back. maybe creating a ledge don't know if we will folall of the edge >> the s&pwas off last week's lows this is the second 4% to 5% bounce we have gotten in the last few weeks the previous one did not hold. interesting feature this week is the treasury yields coming in and the fed expectation moderating you have a bit of relief for equities because they under performed bonds. people can get in and this was supposed to be a strong week interesting, too, markets differing more it is not sell everything or buy everything on a given day. >> that's on a day by day call
>> contingent in the next minute snap, awful report stock gets slammed it doesn't take the overall market down. >> it did two days ago >> yesterday, dick's sporting goods. looked like itdeeper lower. you got a better call. >> and nordstrom's as well >> williams-sonoma. >> every retail report i love retail. you have to listen to every report and call. >> it is so different. the dick's report where they were conservative. the next morning, current business is okay all right. maybe that is good enough. the bar's lower. >> the retailers making an important distinction. >> it doesn't hurt that almost every one of the chain retailers has been cut in half it shows if you can say it is
not a traffic problem or the consumer tapped out, but other costs. >> and having the wrong stuff. you have all of the things we were buying last year. not necessarily this year. to mike's point, let's look at treasury yields. 10-year note is at 2.733%. below the 2.78% where it closed yesterday. that is a steady decline down. we were talking about 3.1% days ago. the 30-year is at 2.976% >> the 2-year under 2.5% it is down by a full implied quarter point rate hike. that shows you the change. shares of nvidia are falling. the company plans to slow the pace of hiring and control expenses in response to what it calls a challenging macroeconomics environment earnings for the first quarter did beat estimates, but guidance
is lighter than expected the war in ukraine and china lockdowns hurt revenue to the tune of $55$500 million it is down 10% snowflake? similarly. reporting a smaller first quarter loss as revenue beat forecast s snowflake said macro issues were impacting customers. down 14% on snowflake. >> this is where all of the tech companies and important to hear from cisco same with the retailers. there is cap x spending taking place, but slowing a little? >> slowing a little. every startup or unicorn saying we put on the brakes
with snowflake, the valuation it was given at the outset. >> 1$100 billion. >> it is stating it say huge winner and how fast it is growing. it is where the stock got to and hasn't had the full reckoning. it it is down 2/3. >> the mixed messages you were talking about. people in the tech world who say this is a terrible recession people in the consumer world, yeah, it feels like it is holding up okay. >> mirror image of 2020 in a way. >> yeah. shares of nutanix posting better than expected results it gave a weaker fourth quarter outlook. citing supply chain delays and an cont attrition among sales
representatives. shares of twitter increasing after elon musk increased the bid to $33.5 billion he is not relying on the tesla shares backing he is relying on jack dorsey to rollover the shares to complete the deal he said earlier he would put the deal on hold over the fake and spam accounts on the platform. shares trading below the $54.20 offering price, mike we are talking about it getting done >> a legal obligation for the deal at $54.20 the hurdle is high to get out of that in any way in the documents that he signed if he wants to get an opening to renegotiate, that's one thing. this news is interesting in the sense he would apparently sell stock whether in tesla or spacex
to put up more cash rather than encumber the tesla stake with the margin loan. he wants to get other equity investors. in theory, it would make it a less risky transaction if it gets done. >> it is smart >> he doesn't need to worry about the margin call. by the way, margin calls add interest he will be literally out of pocket twitter is not an interest to service a huge amount of debt. >> the loan from morgan stanley, after three months, they have t significant interest rates that kick in. >> they would try to refinance with bonds >> right >> this is good deal >> tesla shares appear to be higher this morning. at some point if he is going to tap for further equity, is that putting near term down
659. below the start. >> almost cut in half. they would love detail on the plan what he really did is allowed the margin loan commitment to expire there was a period of time when that margin loan commitment was active did he affirmatively decide i'll not do the margin loan or look for other options? in other twitter news, we heard that silver lake ceo egon durban did not receive enough shares to be elected to the board. he tendered his regularsignatiom the board. durban is a long-time associate of elon musk twitter reaching $150 million settlement with the s.e.c. over the misre misrepresentation of
data claims. the twitter shares up 6% pre-market >> that was iss that recommended voting against durban. what is the issue? they said it was being overboarded with the time commitment to be an effective board member it has increased in recent years. they didn't think he would have the time commitment. it is unusual you see adirectors >> especially wihen the ceo is about to be overcommitted. when we come back, we have insight over the plans from the fed to hike rates. coming up in the 8:00 hour don't miss the interview with former house speaker paul ryan you are watching "ua b" sqwkox and this is cnbc posh vir rece nist.
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minutes. rallied modestly after the release. morale i thie privatrally this g then moving to neutral c commentators sees seized on the pause. expediting the removal would leave the committee later this year to assess the policy firming. that is fed speak maybe we will chill for a bit. and agreement to go beyond neutral which is put in the range of 2.25% to 2.5% to slow the economy. res restrictive stance may become appropriate with the risk to the outlook. the minutes did not provide anything over the policy, but over the upside risk to
inflation from the ukraine war and china lockdown and rising wages. the outlook eased back in futures markets. highest curve is may of 2023 it is now at 2.86. the august contract traded 50 basis points from the outlook for the fed. hard to square all of this except the fed may pause the progress this fall or ease back to 25 basis points hikes it is likely it keeps marching rates well into 2023 becky. >> steve, you understand the fed very well. you are very well connected in terms of your sources and deeply you follow this stuff. when you are telling me the market might have gotten it wrong, i'm interpreting that to think that maybe fed officials were surprised to see the market move in the direction it has so quickly when it comes to yields
and the 10-year yield back to 2.7% maybe they are thinking the market is not hearing it correctly or interpreting it wrong or the the pull back in yields is temporary? >> you know, i'm in the middle on that, becky what we can dial in are the 50s coming in june and july. that is clear. you have bostic talking about the possibility of the pause or other support on the committee for that people like meste rr and bullar and the chairman saying that is possible the fear is the market reads the minutes as an all-clear. it is maybe that terminal rate in there -- if you put the chart up again -- that 2.86 which is baked in for may of 2023
that may be too low. i think that is a concern. 2.86 for may of 2023 it is interesting how that evolved. that number -- that high point on the chart was august at 3.40. that was earlier this month. becky, you talked about the 10-year which moved this week. it may be the market should have been right at the 3.40 level if you get more cooperation on inflation, the bostic idea of the pause could be correct >> basically, they are data dependent. they are seeing what we're seeing and it's probably too tricky to say where we will be two or three months from now >> can i just add to what you are saying -- they are data dependent. they have to become forecast dependent. what they don't want to do is even if the data doesn't show enough progress, there is a lot of tightening in the system.
they want to be a little bit more careful there are some fed folks out there for officials saying we want to be careful not to overhike right now because all of what they do has impact down the road right now, the impact we're seeing in the corporate earnings you are talking about every morning may be coming from the tightening here for the last six months it was november when the fed pivoted. you have 200 and change of tightening the two-year over time has a lot of tightening in the system. financial conditions eased back. talk from the staff of historic tightening there is a lot of tightening out there and fed wants to be careful not to overtighten. >> thanks, steve see you later. >> sure. speaking of inflation. natural gas prices at the
highest level over the last decade aidi adding to the pipeline pressure. joining us to talk about the financial markets, we have the founder at energy aspects. amrita, good morning what is the significance of natural gas? has it doubled this year it has to be close >> it is pretty close and given what we see in the broader energy markets and it started with europe and banning russian coal and europe raising the switching price for gas in the u.s you have seen storage levels come down. we will enter winter with low stock and that is causing a lot of panic in the market as you said, prices sky rocketed >> have we seen the show up? there is business exposure you get into the winter and we're talking schools and factories and that kind of
thing. obviously, the summer with air conditioning with a lot of u.s. households the impact varies by state it is not as visible how much consumer hit and business hit and economy hit are we talking >> right now, u.s. gas prices despite going up, are the cheapest in the world. in europe, for instance, you see aluminum smelting cutting back because of the high european gas prices the margin will have an impact u.s. gas prices will have to rise further to your point, air conditioning coming up and industrial activity is still very strong. in a few months, you could absolutely see the impact if prices continue to rise and impact it has back on industry you will see that in the u.s. as well right now, it is more european story. >> do you think the administration, especially if we get into the crucial months
before midterms, and this keeps happening for natural gas and oil, could they institute or reinstitute export bans? >> there's talk in the market right now and particularly in the white house with a lot of concern around diesel and jet fuel prices are. there are options. they are considering potentially limiting diesel exports. there has been rumors about reducing the spec for the summer the gasoline spec for the summer which we don't think would happen it is too difficult to do on a technical level. the green lobby is going to be extremely tritcritical of that . some form of the product export limitation which limits diesel exports could happen i don't think it will necessarily have the impact on the market thewhite house woul be hoping for. to your point ahead of the mid
deter terms, it needs to be doing something. those are the things they are considering right now. much more on the product side. >> why don't you think it would push prices down that much >> because part of the problem is the colonial pipeline from the gulf coast to the east coast in most cases is quite full already. the problem in the u.s. is that it is structurally long in the gulf coast and it needs to import to the east the way it would work if the white house limits exports, it needs to waive the jones act that is political. that would allow ships otherwise non-american flagships to carry from the gulf coast to the east coast. if that doesn't happen, the export limitation on its own will not get the desired effect the u.s. would hope for. >> great point thank you, amrita.
coming up, more on elon musk's deal to buy twitter and the s.e.c. filing yesterday. a big day for retail earnings we hear from macy's and gap and american eagle more on retail earnings throughout the mniorng "squawk box" will be right back. >> announcer: what 's working i sponsored by comcast business. bounce forward at comcastbusiness.com. indeed mat . visit indeed.com/hire and get started today.
deal maker he saw the tie up with abc in 1 1985 and then the architect with walt disney company. he was serving on the board of save the children and medical center and the madison square boys and girls club. murphy retired from the berkshire hathaway board warren buffett reflecting tom murphy taught me more about business for all that time, i watched him inspire imperfect humans, myself included some became better parents and others more generous and others encouraged to lead in a kinder way. tom led by example and it was very effective whether you are a pauper or prince former disney ceo bob iger
saying he was unrifvalled in th industry his kindness and boundless generosity he was passionate about the company and people whom he cared about so much. bob iger worked with him as coo at capacities before the deal with disney was done then eventually, became the head of disney. anyone and everyone who knew tom murphy knew how kind he was and straight forward he was and a stand-up guy cared about everyone and everything never had a bad word to say about anybody. >> i was going to say in terms of the coaching tree the people woho worked under hi. not many people have a better one in terms of how people have given him credit
>> yeah. it's a testament to his leadership style he started from the very basic rungs taking over a bankrupt station in hudson valley and turned that into the incredible media giant. always understanding of how things worked and the businesses worked and how people worked and finances worked. anyone who knew him spoke very highly of him. the business world remembering the life and legacy of tom murphy today passing away at the age of 96. 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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good morning welcome back to "squawk box. we are live from the nasdaq market site this times square. we are sktill in positive territory from a half hour ago dow up triple digits now up 60 points s&p up 5 the nasdaq down by 21. this high as been a strong week the averages compared to the last eight weeks dow is on track for a winning week after losing eight weeks in a row. we are up 2.75% for the week
>> worst losing streak since 1928 >> '23 let's talk about will williams-sonoma shares revenue also beat comp sales at pottery barn and west elm stores mike, this is not what we heard. is that 9% gains williams-sonoma still trading below levels from last week. it carried out from target and walmart. >> all right rh bigger ticket. >> do they have the consumer patchiness as williams-sonoma resets a little bit? >> i think that and rh management plowed over the doubters everyone thought they had the
magic. >> it feels to me this should have legs to it. when we bought our house almost five years ago, there was years worth of spending to get it where it needed to be. the idea that post-pandemic and rh and home depot will sputter i don't understand it. >> it's harder to buy a home right now. >> yes, for sure >> some of the issues. i think people felt they spent on their home during the pandemic >> much higher base. >> the retailers having the right stuff, but it is trickier to anticipate what the consumer wants. the consumer trends are changing quickly. target and walmart getting caught they will deal with the merchandise. they will get it cleared and figure it out. i think it is a lot harder to anticipate what is coming next this is two and a half years of retailers running flat out trying to figure things out and trying to figure out the supply
chain issues and consumer wants and where they head next if you talk to any of them in the industry, if they where giwere giving you an honest answer, they are excited chasing the consumer consumer >> it is not just stocking s socks. so many things are on back order. you should expect strong performance. nine-month lead times. does that not matter the way it used to? >> it is a weird time and consumer has been fickle and moved quickly because of the experience we have all gone through together >> right >> covid >> you have seen the charts of good spending and what it did the past two years way above long-term trends that has to correct. that is part of what we are seeing. twitter shares are higher after elon musk said he would increase commitment to the deal to $33.5 billion
his own cash commitment. twitter's annual meeting, the ceo barely mentioned the deal. joining us is sara fisher and doug cowen i would like to start out with $39 a share. the market is implying the probability of the deal. you have to have the probability of weighted estimate on varivarious outc outcomes what's your read >> if you bake in conservative assumptions for the likelihood of closing at 54.20 or price cut to $42 or likelihood of a break, you get to a weighted average somewhere in the low to mid-30s. >> okay. weighted average of all of the
probabilities in the low to mid-30s. >> sorry mid to high 30s. >> okay. you are kind of there of you have to have assumption of the twitter break of where it will trade down? >> for illustrative purposes, we have the value and if the deal were to break today, being conservative, you have 50% odds of the deal breaking to the levels and 25% chance of getting to $54.25. you will get to $38 on weighted ave average. >> got it. sara, this was clear in the shareholder meeting. they have to try to work toward the deal that is required as well as run the company and try to figure out if they have to answer to the allegations that
the bot problem is a bigger deal than they led on as elon musk says how do you feel if that is being navigated right now and i guess also it seems as the free speech line of attack from elon musk has cooled off in the last couple weeks >> i think the twitter board needs to focus on the deal done at $54 a share the mid 30 range is a good deal. snap falling down because of the ad market is that bad. there are no signs it will get better in terms of bots, one challenge musk has is he waived his rights it will be hard to argue if it goats to court or further negotiation that he should have
known more he could argue twitter misled the s.e.c. the thing elon musk will try to do is delay the deal that is where he has the leverage twitter's board wants this done as fast as it can. it still needs to lead and manage the company before close. i think that elon musk will try to push this further down the line and quickly address the comments on free speech. elon musk is distracted. we see him tweeted about birth rates. he is moving on in part because he sees it as a distraction toward getting the deal over the finish line. he just needs to focus on the fair market value of twitter versus what he contractually is obligated to pay at the $54 share price. >> aaron, the way it works right now, i just wonder whether
arbitrators are in a class it is a cash deal. you are not sure it is a bet on if it happens or doesn't happen is there a precedent for negotiating down the price without the material adverse change to trigger? 12k3 >> the price in twitter is reflective of the risk of some type of litigation a lot of times investors want to wait for that to hit we are in limbo until or unless that happens i would also say more broadly, we are in a period of de-risking across deals across markets, of course, but the arbitrage space. that has nothing to do with this transaction. >> less risk capital out there willing to go out into the market than before aaron and sara, thank you very much appreciate it.
coming up, we will look for bright spots in the real estate sector dom chu joins us next. we will talk to kyle bass about fed and recession risk and much more. "squawk box" will be back right after this >> announcer: currency check is sponsored by interactive brokers. the professional gateway to the world's markets.
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welcome back real estate has been one of the hardest hit groups in the s&p this year. are there bright spots in the sea of red we have dom chu with sectornomics >> kelly, you have under performance and ones out perform. we know real estate is a sector that kind of gets into the conversation a lot more when there's interest rates involved. whether on the decline or on the rise like they are right now generally peaking. if you look at the picture of real estate versus s&p, the s&p for the better part of the young year so far has been the out per former and we had out performance in the last couple
months and now roughly the same with regard to the overall performance. real estate is the smallest sector in the s&p. worth less than 3% of the overall index. it gets lost in the mix. if you look at the out performers in the group, you look toward some of the health care oriented reits and some toward travel and leisure. three in particular. ventas is the best performing stock in the sector. host hotels and resorts. real estate investment geared toward owning the properties that hotels are on is up 11% welltower. health care oriented trust up 4% that contrast to the down side we are seeing with the more industrial oriented real estate.
prologis is down and simon property on the real estate investment for retail lost one-third of the value. kelly, you look at the dynamics playing out in real estate interest rates will continue to be part of the discussion. it seems as health care is the real out performer with the regards to the properties. >> dom, what is the strategy you try to sneak in a nap? >> by the time i get to your show in the 1:00 hour, i will be just about perfectly caffeinated to get through the hour. >> i wasn't sure what you were going to say just about out of gas? >> i'm good for right now. i'll hit a lull at 10:00 a.m. and pick it up at 1:00 >> dom, no doubt see you later. when we come back, real-time data from security screening company c.l.e.a.r. on the
millions of americans traveling for the memorial day weekend and we are celebrating asian american pacific islander heritage month we are profiling our contributors here is former white house policy director kavita pa ipate. >> growing up, i tried to fit in that meant not acknowledging my own brown skin raising my 5-year-old daughter she brought home a self portrait she had to do in class she filled in all the skin in dark brown color my own portrait and trying to fit in with the children around me i was proud of what made her different. she celebrates that as a ollf her drawing include little brown girls.
of business travel in may. people combining work and business so we are expecting an incredibly strong summer and see absolutely no slow down. >> 100% almost, how much is that because of more travelers and how much of that is because you have more clear members at this point. what is your membership? >> so our membership has increased up 100% year-over-year we topped 12 million members in april. so it is absolutely growing. we're adding more airports, more products but it is also a real reflection of the travel industry people have spent the last two summers at home. you only get so many summers in your life time, and you're not going to miss a third. i think it's because of clear offering the experiences, but it's also american travelers want to get back out and travel. >> if your members are up 100% and travel up 90%, that sounds
like less than travel than a year ago. >> we've added in multiple verticals, helping people trourn of return to office so there are some places people are using clear. >> i used clear for the berkshire annual meeting it made it a lot easier to get in in and out because were you required to be vaccinated. how born important is that for e who want to use it to go toa s stadium versus an airport. >> you have to show that you're a stockholder. perhaps next year we can connect stock certificate to people. identify identity is all the things that make you you
we talked about broad-based strength across multiple industries as businesses reopen and want to stay open and as people want to travel and expect the experiences in travel that they've had while staying home ordering tacos to their couch. so we've launched products to help ensure that >> i have to say that the number of members that you'ved added, that's greatness m news. what are you doing if terms of ramping up and adding staffing >> we are fully staffed across the country. we have over 3,000 team members. we are obsessed with the member experience and we've added staffing, pods,
lanes. we're in partnership with the airports, the tsa to ensure a frictionless experience. so if it's ever not perfect you text us immediately and we are on it. >> the people who have down lo loaded it for events, do they pay? how many people are using it or, i have to admit i was a freebie. >> we call it the b 2 b or the enterprise our partners pay us to bring it to their customers for free. that's important that there are two parts to the business. so we're thrilled to have partnered with berkshire and to have provided that service for their, you know, visitors, guests, shareholder, media, and what we're really recognize something that people are expecting frictionless experiences, no matter where
they are and it's a great way to introduce clear. now you can tueuse it at yankee stadium. with the raiders for biometric beer this is the new customer expectation and clear is here to ensure it, and we continue to work with incredible partners like united, delta, tsa. there is so much we are doing to work on behalf of american travelers to make this summer the best summer that they've had. >> let's cross our fingers thanks for your time today it's good to see you >> thanks, becky retailer macy's stock surging right now. and later, don't miss an exclusive interview with former
good morning welcome to "squawk box." we're live from the nasdaq market site in times square. andrew and joe are off this morning. we're going to take a look at the futures and check things out. it's been a pretty strong week for the markets, at least relative to what we've seen recently and this morning you're seeing more green arrows. s&p up by 12 the nasdaq flat but was up earlier. let's get over to courtney reagan she's got some of the highlights, and this is a stock on the move. >> plamacy's better than the 82 cent estimate on slightly-stronger revenues they are raising their full-year guidance, reaffirmingi its
full-year sales. expectations, believe it or not, were for an increase of 13.3%. it's a little light there. i spoke briefly to the ceo, jeff ganet, and he say the they have the highest customer count at 44 million. and he has not seen signs of consumers pulling back yet, from all the macro pressures that exist. he did say there is a stress on the lower income consumer. he said i do think those headwinds are mounting so we're taking a more conservative view with the back end of the year. he said casual actives, soft home, those were popular during the pandemic and have softened dress-up, special occasion and travel are the categories that are really trending. inventory is up 17% year-over-year, but ganet said i look at that inventory level and
still see opportunities for us to get better. you know, becky, i'll speaking exclusively with gennette. and the numbers just came out, but so far, it seems like investors are liking it. the shares are up more than 11% in the free market >> that is a big jump. what he said about the back half of the quyear, does that mean they'll bring in less inventory for holiday time >> so i didn't ask him specifically about the inventory plan for holiday, but when you talked about inventory generally, he did sort of say look, our inventory level is elevated as you see, but i still see areas of opportunity where we could bring in more i could only imagine it's part of the plan to try to see where they can fill in some of those categories that are a little lighter on the inventory side.
and to your point about the cost, we talked a little bit about the inflationary pressures that macy's is feeling and how that's flowing through to customers in terms of pricing. there are some areas where we're able to pass on the pricing that we're feeling on to the customer and certain areas where we aren't previously he talked about in furniture n a sofa, for example, if it's a low-end sofa, they have a hard time lifting the price. if it's a sectional and something that's already a little bit more expensive to begin with they can take pr priceincreapr price increases and the customer isn't too upset about that they are able to flex up and flex down for what the consumer is wanting to buy.
right now it seems about all us wanting to get back out into the world. >> before you frun to this just special occasion, dollar general is up 7.5% a lot of people watching dollar general, dollar tree for signs of further impact on the lower-income consumer. in some ways this could be a more reassuring signal >> yeah, absolutely. i think whenever you're larking looking at time the of inflationary pressure, you will find value at some of these dollar stores. it's hard to paint retail even in sub sectors with the same brush. you may see an off retailer like tjx with positive results whereas ross stores was considerably more conservative you would think they more or
less serve that same consumer. the same is true when you're looking at staples and within the store itself, some categories are doing well while others are weaker to a stronger degree to what we've normally seen i think to your point, kelly, we have to be so careful wohen we'r looking at retail. within the store there are c categories that are stronger than others. maybe it's balancing out that the consumers are able to pay when they faind goods that they need or want to pay more they're being more discerning. we thought things would flormlfl normalize for outdoor apparel but goods, how many bikes does a person need, how many kayaks does a person need so now we're shifting to other categories >> we want to hear about the conference calls on this
let us know. thank you. just getting word that broadcom has agreed to acquire vmware it equates about $16 billion cash and stock deal. broadcom has agreed to pay 142.50 in cash a little higher than the anticipated range around 140 a share, but roughly in that zone, so that is the now an official deal you know, the cash and stock, that whole mix is going to be determined later they have voted in favor of the deal >> there were reports earlier, faber was reporting at that it
could happen as early as today vmware was up 25% on monday when the reports were first out >> the premium has been built in and even broadcom, shares have held up okay people are buying into this strategy, because they're rolling into a lot of tech businesses, software, hardware, storage. they expect to maintain the current dividend strategy. so i guess that's something. >> does this approach make sense to you we asked stephanie link about it earlier this week and kind of raised the concern about them being serial acquirers and wanting assurance. >> it makes sense to the degree the market allows them the question around broadcom is what are you buying next as opposed to this being a rill bit
little bit of a detour. they know how to find these high cash flow businesses it's not laike oh, this perfecty links up when they bought an i.t.-type services company, by their own admission, there was no real connection i was joking the other day it's like, it's not that novel ibm used to do this. they used to make chips and do all the other stuff, too i guess right now. >> the big key is michael dell has faith in this. that's all that matters, with 40% of the stock >> without a doubt buy-in across the board. for a look at what else is moving in the premarket, dom chu joins us, a lot of movers already. >> a lot of them let's talk about nvidia. we're going to talk about the most valuable chip maker
earn being earning earnings and revenues better russia will cost it about $500,000 for the quarter next up you've got shares of snowflake, smaller first quarter loss, shares right now are tumbling they're down 12% as outlook is below estimates. macro issues are impacting things like customer activity, although the first couple weeks of may were off to a slow start. snowflake down and then we're going to end on williams sonoma. also west elm and pottery barn, geared very much toward the
consumer spending on the home. first quarter, higher sales at pottery barn and west elm. same store rising. pottery barn 14. now it is the latest sign that some shoppers are not pulling back on buying home goods, even in the face of higher inflation, that stuff up 8% to 9% there's a lot of different looks here, what's happening now but a lot of it sgeereis gearedd the epicenter stocks >> a yn upbeat tone from macy's and dollar general boeing star liner spacecraft has successfully returned from the space station, having tried to complete the mission for more than two years
sony is planning to ramp up production of the playstation 5 video game console althou although supply issues haven't gone away completely, they project they will sell 18 million units. and justin timberlake is the latest musician to sell his music catalog. terms were not disclosed, but the deal was valued at just over $100 million >> seriously >> my first thought is, he's a kid! life's body of work? >> he's like 41 years old. >> yeah, but you've seen bob dylan or somebody else sell out, that's like after 50 year. >> a lot of the pop songs are, you get a song, multiple writers. >> i'm bringing sexy back.
that's $100 million? >> he's lucky he was born before the era of fragmentation at least he was a widely-known pop star >> he started out on the mickey mouse club >> how many people are going to go up to him and say $100 million is not cool. a billion dollars is cool. >> you know who's going to be next on social network. >> averril levine, britney speas coming up, stocks getting a boost on the back of fresh commitments from the feds to raising rates, that momentum looking to carry over to today's session. we will hear from j.p. morgan asset management and yelon musk is moving forwar.
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it's beyond gig-speed fast. so gaming with your niece, has never felt more intense. hey what does this button do? no, don't! we're talking supersonic wi-fi. three times the bandwidth and the power to connect hundreds of devices at once. that's powerful. couldn't said it better myself. you just did. unbeatable internet from xfinity. made to do anything so you can do anything. whoa. futures right now holding onto some modest gains building on yesterday s&p 500 up by about a half a percent. dow up 182 oh, fou4% or 5% from friday let's talk with gabriele santos.
good morning >> good morning. good to be here. >> gdood to see you this market over the last four, five months has done a lot of what people said it had to do. s&p 20% high to low. the average s&p stock down 30. valuations cut down toward 16. big question is, is that enough to improve the risk reward looking out from here for equity >> i think it certainly has, if you have a longer term horizon so on january 3rd, which, by the way, the s&p never fails to do over time. that would be a return of 22% over a year. it takes us a couple of years, that would be an annualized return of 11%. so certainly, a lot better returns from here on the equity side as well as on the bond side, now that we have had nearly a doubling in the ten-year yield,
and we and weigh have much better starg yield. because valuations were so high to begin with, the multiple contractions on the equity side only brings valuations to average levels the big concern is perhaps there's more of an overshoot that we could see on the down side before eventually we get those better returns that we're expecting. so at the moment, when weigh spe we spea to a lot of our customers, there's a bit of a wait-and-see mode over the next couple months while we get a little more clarity on inflation, rates, growth and valuation >> yeah, it's a good point the market has spent very little time historically, rate at the long-term average. it reverts beyond the mien and
overshoots there is this perception out here that risk assets might be capped, almost no matter what happens. the fed is going to raise rates by the end of july by a full percentage point, maybe more from there some inklings that they're softening up after the outlaook of july, then earnings estimates are the next shoe to drop. how does that praylay out for y. >> i think it's a wait and see mode until we can have more conviction come the fall we need to see whether inflation convincingly comes down. for that we need a string of reports to fail like we've really hit a peak in the march inflation levels the fed seems to be on cruise control over the summer before they reassess the pace and direction over august and come the september meeting. for the economy, where he' in a bit of a nuanced, confusing mode
at the moment where we're having a hard tame distinguishing we need a few more strains of economic data. and on the earning side as you mentioned, weigh need a littler conviction customers, analysts seem optimistic where investors feel like some of those estimates need to come down over the next few months that's why it does feel hike a llike a lack of conviction >> do you think yields have peaked for a while or let's say investment grade kweeldyields pg 5%, that could you at least earn that >> no, i think wit will depend o the outlook for rates next year.
weig we hope the fed pauses maybe they move a little haighe over the next couple months. but if you look further out, this is a much, much better starting point you have high yields, yielding nearly 7%, versus the extremely row low yields at the start of the year it actually maneseans bonds hav more of a role to play so just to fall to previous lows for yields, you could actually get a return of 19% total return so important to have as a diversifier for that concern > >> there is an alternative,
thanks, gabriella. >> thank you so much >> did you see that? the 30 year just ticked below 3% 2.99%, sway weis a weird weird g check this out also we've shifted away from inflation being front and center, everyone's afraid of one thing. >> recession right. when we come back, a wild week for the retailers supply chain woes and a consumer feeling the inflation pinch. we will run through some of the names making big moves this week we'll find out what it all manes ab means about the broader economy. the meta verse has been hit with fraud, halleaving investor out of thousands of dollars. who founded the world economicor fum
the answer when cnbc "squawk box" continues aflac! ohh, mark is about to become a living piñata. luckily, aflac will help cover his unexpected medical bills. aflac? - (whimpers) i don't think he has any candy in there. am i at least going to get hit hard enough to forget this? nobody is going to forget this, ever. (bat hitting) - ohhhh i'mma call his momma. aflac! aflac!
now the answer to today's aflac trivia question. who founded the world economic forum? the answer clause schwab. >> the meta verse, a virtual world where can you go shopping or socialize, it's become ing a real-world investment opportunity. as investors around the country have learned, virtual reality can leave your funds virtually wiped out. >> it seemed like the possibilities could be endless and ever changing. >> i thought wow, what an awesome opportunity. >> it was prime real estate. >> reporter: welcome to the meta verse. a new digital world where use kearse attend private parties,
concerts, game beinging events they have names like the sand box and super world. but fraud has hit this new digital frontier in rural maine, a theft onlane >> i remember you coming into the room, it was really late, saying all our land not stolen >> reporter: they pioneered the digital frontier until their land got snatched away >> i was so sad. >> were you up all night >> reporter: as a nurse casha wanted to have an educational game for medical students. countless hours and $12,000 of savings for this plot of land in the sand box with one property secured, she
ventured out to secure other virtual worlds >> i thought what de-central land >> reporter: she mistakenly clicked on a pfishing link that took her to an imposter's site because it looked legit, she connected her digital wallet within a matter of minutes >> no warning. everything just gone >> reporter: the couple is not the only one to have digital dream dashed. >> in my mind it almost sounds like buying a brown stone in manhattan in 1910. >> reporter: tracy karlinsky, purchased land near the icon, sn snoop dogg >> holding concerts. it aligned with what i was looking for. >> reporter: she lost her nearly $20,000 property to a pfishing
site, posing as the real deal. >> normally, when you log-in to your account, you can see your little piece of land, and it literally just said you have no land i was confused, upset. i was having a panic attack. >> reporter: but she's not ready to log off the meta verse just yet. >> i don't want to say i'm done forever. >> reporter: near is carrie lee miller >> it is happening to the most sophisticated investors. >> reporter: this venture capitalist owned a slice for a grand total of 24 hours. >> this little box is the properties i had something stolen from me >> reporter: she's gathered a group of investors to build a meta verse campus in near the sand pox
animoka brands owns the sandbox. celebrities lake mark cuban and ashton kutcher have invested, and there's a huge, illegitimate business as well we found pfishing pages for sale on the darkweb where just $400 lands lands you a meta mask license. >> what we want the outcome to be is if you lose your funds, there's a path forward where you can recover those funds. >> reporter: she says that's why metamask has teamed up to investigate scams for consumers. but ultimately the losses are not metamask's responsibility. >> so metamask as the wallet provider has not reimbursed
anyone for this funds. metamask is not the only one in the space being hit by these any big product is >> we reached tout to the sandbx to determine how secure their properties are sandbox and de-central land say they're working to remove imposter sites and have educa educational tools for investors. mark kucuban says it's not uniqe to meta verse. when you talk to investors, they're people who have read about the huge uptick in crypto despite the recent
unpleasantness they're looking at where can i find that next opportunity, that next 10x investment. it's brand-new, it might be risky, and i'll take a chance on it and they're investing tens of thousands of dollars as you saw in the piece that's a big chunk of change for people to lose and there's really no recourse for them once this happens >> all right thank you so much. >> you bet still to come this morning, retail retailers seeing wild swings what does it say.hea about the health of the consumer plus, elon musk movinge forr with twitter
self-driving cars. our power grid. water treatment plants. hospital systems. they're all connected to the internet... and vladimir putin or a terrorist could cause them all to self-destruct... a cyber 9-11 that would destroy our country. i'm dan o'dowd and i wrote the software that keeps our air defenses secure. i approved this message because i need your vote for u.s. senate to send a message... congress needs to fix this. welcome pback, everybody. dollar tree out with earnings and reporting better than expected comp store sales. they're raising their full-year view on sales to 28.14 billion
that stock up right now by about 11.9%. it has been a wild week for the retailers. macy's surging this morning after a top and bottom line beat a bit of a different story for abercrombie & fitch after the retailer reported an unexpected first quarter loss macy's is up by almost 15% joining us is the ceo of j. rogers nippen, wwe what's your take away from what we're hearing from the consumer this morning >> the consumer's healthy, right is this the consumer's 3.5% unemployment, it's sitting on $3 trillion worth of cash versus $1 trillion two years ago they're looking at tax refunds that are bigger than what they
expected to see. ako across the board the consumer is healthy and they're spending now they want to spend on experiences. and they want to spend on clothe the clothes, accessories, shoes, jewelry to go to those experiences, and they're slowing down on home items they're roaring on with their lives like we knew they would if they ever got out of covid >> that makes sense from an overall perspective, but you do have some of these outstanding, stand outs that don't quite fill into it. what about williams sonoma, why are they doing so well >> why is home depot home depot's one of the greatest retailers in the world i've been bullish on williams sonoma for years now because they execute so well, and they
were the first seller to get to 50% of sales online and making just as much online as in-store sales. but remember, they're not so much pbig ticket home as they ar hom home day core. it's nordstrom's, ralph lauren, tapestry, they're all indications of where the consumer is going. they're having tough time with supply chain but the consumer's gone to where they are some of these other guys like home depot are just really good at what they do, and the processpr fegsal has stayed with them.
m >> hey, jan , it's kelly here. we know how bad the consumer staple space has opinion walmart, target pointed to that. but the company has pulled back significantly on promotions, competes in categories with greater trade down risk. why would this be such an acute problem right now if the consumer is in as good shape as you described. >> it's the place the consumers decided to economyize. grocery inflation has opinion re been really hot they may love their brand, but they know they can buy something just as good you'll buy kirkland at costco
all day long it's the difference in the way the consumer perceives what they're getting. on the other hand, things that they see is still scarce, scarcity in the apparel they want, they are paying for that in the grocery sector, that is not happening. >> from the perspective of how fickle the consumer's gotten okay, we have these winners right now in the place, they have the stuff the consumers want raight now how quickly could that change? we are hearing the forecasts for the second half of the year. >> i think experience is going to be even more important, and all the stuff that goes with them, like apparel, shoes, jauja jewelry, cosmetics are going to be even important. i think we'll have a good holiday season i think we'll continue seeing slowing in big ticket home i don't think that's as
important to the consumer right now. i think it's just going to continue, probably at least intointo the first quarter of 2023. it's psychology. i want to ifgo do things, and i need stuff to wear >> there's scarcity in the clothes that people seem to want but isn't there a more general, perhaps mismatched with inventories at some of these chains with apparel, and i'm just wondering what it's going to mean, even on a macro basis, for maybe a round of mark downs and taking some of the edge off of the inflationary pressure on clothing >> it's going to be interesting to see, because from louis vuitton to gucci and macy's. that includes neiman and nordstrom's, they're going to continue to be there
the lower-end customer is getting pinched by inflation, and you're seeing them trade down in some categories where they can but i don't think you're iffing to see any of that with the higher-end consumer. there's just not enough on order for it to be true. true, rich people are doing better in inflation than poor people are going to do in inflation. and inflation is probably coming toward a peak, but it's a couple year process we're not going to see that change put upper end goods are going to sell well. >> thank you very much appreciate it. coming up, tracking how credit cards, loons and buy now-pay later products are being used we'll have details after the break. and the latest twist in e-ron musk's takeover bid.
on americans' budget is a concern. we look at how buy now-pay later is being used. sharon epperson joins us from washington with more sharon >> well, kelly, the mission is to protect consumers from deceptive commercial practices at the top of the watch list right now, housing and mortgages. >> we are seeing some increases as expected in distress and foreclosure, but it's certainly not at a panic level but we are keeping a close eye on that, to make sure that those servicers are serving borrowers well >> he's also seeing consumers taking on more debt, inkressing credit card balances and going to buy now-pay later
it is clouding the overall outlook for consumer credit. >> one challenge is that creditors and other buy now-pay later services don't know how many others you've taken on. we've seen it enter the brick and mortar space some people have reported you can buy food and groceries with it >> the cfpb has ordered the major buy now-pay later companies to provide more information p theirabout this b plans and practices. >> the key piece is to ensure that we're not creating a system that, you know, sends people into a spiral of debt that they ultimately cannot repay. under typical credit card regular regulations and raws,laws there way in which credit card companies have to go through
basic procedures to make sure you can repay the loan >> what do they think about the likelihood of recession? >> he's pretty upbeat about the economy, labor market and wage growth and is seeing that as a way to counter the debt issues that americans are facing. >> sharon, thank you so much sharon epperson. still to come, mark mahaney is going to talk twitter, y e-ron's new commitment we have a sexclusive interview h paul ryan. we'll talk to him about a lot of things he's seeing in the markets right now. also kyle bass and mitchell green. mitch green's going to talk to aut tusboech companies and much more we'll be right back.
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twitter shares are up little less than 6% does this indicate a new seriousness to you or a clearer path of how he hype threat kri would get there? >> good important, kelly i think the parkt's got it right. h you would assume that he's going to get the financing for this the question is were hether he potentially going to walk away from the deal or try to get a better deal for this but showing at that he's willing to take the time into getting the equity financing, which is just a matter of if, not with. but having put that matter of when, not if the probability's much greater than 24 hours ago. >> are you surprised in the wake
of the disastrous results of snap last week and the way at that twitter traded down on at that, at that he's not doing more to try to renegotiate t price? >> he's come in with the idea at that advertising models should be changed he may wealthy this is exactly why. the read-through from fan to ot,the fact that it's proving to be more volatile >> so you think what happened at snap actually empowers him >> maybe
it just justifies his argument that he wants the business to be less reliant on advertising. and i think the read-through from snap was negative you've seen two areas. brand advertising is almost the first to get cut and especially smaller-tier platforms, versuses the googles and facebooks. the open question is just how big can a subscription model be for an asset like twitter. that's an open question, but i think musk wants to tray to fi try to figure that out. >> how important is tesla? the funding has to come from somewhere. how important is the share price of tesla, which is holding on to a 2% gain premarket. >> it's very important for him to put together the equity
financing for something like this i think he's shown already that he's got a rolot of source. friends with large pockets or other sources, a very large bank consortium that will help put together the deal. i think the financing isn't that much of an issue for the world's richest pe richest person it would help him if tesla stock sustain the or went higher, but i think he can do it without tesla stock. >> want to pay attention to amazon before the pandemic, it was 21.34 and change what's in your read behind the huge down. is it people giving up on the story in general >> amazon got hit by cost f
inflation concerns they were asked about a falloff in consumer demand, and they said no. if there is a recession and there's fallout from consumer demand, numbers have already been cut for cost, for the inflation inflationary spikes. whether it's trucking services or fuel or maybe costs if that's what's coming, they're betting that amazon's going to see softness, so numbers need to get cut again. ther there there's enormous amount of upside they can instill an incredibly good long. >> do you think the advertising business with amazon which had been a good growth story that
really came into its own is suffering from the general worry about that after snap and all the rest >> i think a couple of assets are going to be most insulated from the issues snap is seeing by the way, i think some of these issues are snap specific but the advertising issues that are most insulate rd d are thos performance driven, that's google and amazon. so amazon's ad revenue, if the rae tail retail business continues to slow, amazon's ad business will slow the last thing they're going to cut back is ad revenues that directly lead to revenue sales which is exactly what the sponsored listings on amazon do for advertisers. you know if you spend that dollar you're going to get an immediate return at that's one of the safest ports in the recession storm >> it would seem so. mark, praappreciate it.
good morning, everybody. welcome back to "squawk box" here on cnbc we're ri we're live from the nasdaq market site. the markets have been picking up through the course of the morning. as we're hearing from retailers. a lot of them with better than anticipated results, raising their outlook for the year we'll talk more about that in just a moment. dow futures up by 191 points
it's been a really good week for the dow, up by 2.75% from yesterday. up for four sessions in a row and potential ly on track to break a losing streak. the nasdaq up by about 27. if you want to take a look at the treasury market, the yields have been coming under pressure. the ten-year has picked up but still well below 2.8%. 30-year also a little bit higher but below 3% 2.993. f ferg energy prices have been the other issue. wti is up again. a gain of about 82%. and natural gas hittingi its highest level in 13 years, up
another 1.5% we'll speak with the former speaker of the house, paul ryan and kyle bass and mitch green. chip maker broad come is buying vmware if a deal valued at $61 billion. this is a huge deal. we've known about it for a few days, which is why you see vm shares up slightly on this news. on monday, david faber was talking about how this deal could come as early as today, and here it is dell's purchase in 2016 serve as large acquisitions, but this one's right up there at $61 billion. also more signs of the tight labor market apple says it will raise pay for corporate and retail workers later this year.
starting wages will increase to $22 an hour from $20 apple has warned supply issue will take a bite out of earnings this is significant, watching high are pay, limiting the number that they're going to be able to get out. that's going to reelead to questions. twitter shares are up 5.6% >> tech is going one way on earnings let's get to dom chu >> so kelly, that big focus on the consumer, like you pointed out, continues for though latter
hthis latter half of earning season macy's, over 1.3 million shares premarket. it also reiterated its full-year sales forecast and upped its forecast a shift in spending back towards things like special occasion clothing for men and women and whatnot. so those shares are a big focus. we're going to stick with the shopper, because shares of dollar general and dollar tree are making similar gains up 10% to 16%, both beat estimates for profits and revenues dollar general sales at established store locations fell by less than expected but it raised its full-year forecast for that same-store sales growth
metric dollar tree, same store sales grew twice as good as what the estimates were both clans hains seeing more as consumers turn to discount stores and then we're going to end on chinese tech shares of alibaba is up. roughly 1.3 million shares of volume better than expected profits, better than expected revenues, benefitting from the zero-covid lockdowns. shoppers are spending more time online, shopping kind of like amazon. in a way, you kind of understand why some folks out there like an alibaba to the amazon of china that conversation happens a lot these days >> yeah, but again those standout results from the dollar stores, people could easily run
with the narrative that it's just the high end or certain targeted areas of the consumer that are hanging in there, but they're proving there is more resilience than we would have thought after walmart and target >> obviously, many of these stores have customers across the spectrum, demographic, and income wise and otherwise. but you have core customers. and what you might see right now, at least anecdotally at some of these stores around where i live, you see their customer base expand ago bit some of the core customers are obviously there, but they're expanding into other parts of the spectrum as well so you may find new customers who have neff sever set foot in dollar tree or dollar general. >> to your point, if it's trade down, it's not nearly as bullish. good to parse through the
results to get more color on that dominick, thank you. let's talk about the fed minutes giving investors more clarity on the likely path of rate hikes into the summer steve liesman joins us i guess more clarity is somewhat in the eye of the beholder, steve. >> yeah, equity marks liked what they heard they rallied modestly. the rally continued this among but there could be wishful hearing going on the minutes showed widespread committee support for 50 basis point rate hikes at the next two meetings, bringing us to july and moving and they see maybe a pause in the fall after they get to
neutral. they think it will leave the committee well-positioned. and then there's the possibility of them going beyond neutral to show the economy a restrictive stance of policy may well become appropriate, depending upon the evolving economic outlook and risk to the outlook. so got to deal with both of those. the minutes didn't provide any hint of how restrictive policy could become only that upside risk to inflation comes from the ukraine war, the china lockdown and rising wages. >> the outlook for the funds rate, eased back somewhat in futures markets with the highest point on the cufrve. call it may 2023 we had 340 in august for the high point that was back earlier this month. hard to square all of this except to say the fed may well pause to assess progress this fall, but it's also likely to keep going higher until it gets
inflation under control, mike. >> clearly nothing is going to h hib rate us anytime any soon the amount that the markets have tightened financial conditions is pretty stark, right the investment, from 2% to 5%. mortgage rates tup to 5.25% from 3. the question is how much do they have to deliver on the promise, and what's it going to mean to the economy. >> yeah, i mean, i think they have to deliver probably what the market's priced m. apriced in. you've got people like larry summers who said 3.5 by year
end. i guess i wouldn't sit back, fold my arms and put my feet up and say oh, we're cool through the fall i don't think that's likely to be the case. >> right, yeah so we'll, next couple months especially we're going to have to be on pins and needles. steve, thanks very much. >> pleasure. coming up, former speaker of the house paul ryan joins us for a saclufsive conversation on inflation. and we'll talk to kyle bass. is an economic soft handing possible as we head to break, morgan stanley upgrading lululemon saying it's better positioned than some of its peers to weather a murky-hlooking environment. you're watching "squawk box" on cnbc
couldn't said it better myself. you just did. unbeatable internet from xfinity. made to do anything so you can do anything. whoa. when it comes to cybersecurity, the biggest threats don't always strike the biggest targets. so help safeguard your small business with comcast business securityedge™ it's advanced security that continuously scans for threats and helps protect every connected device. the choice is clear. get unbeatable business solutions from the most innovative company. so you can be ready for what's next. get started with a great deal on internet and voice for just $49.99 a month for 24 months with a 2 -year price guarantee. call today. welcome back, everybody. we have a special newsmaker joining us this morning. paul ryan knows washington and wall strei wall street very well. you'll probably know he was
speaker of the house until he left in january 2019 it's great to see you. it has been a long time. >> it has opinion, nice to see you. this is your first interview since speaker of the house >> i wanted to go build the family life that i neff had when i was in government. when you are speaker of the house and you have three kids at home, in or entering high school, it's not a very good family life. i got to make cross country meets and track meets, and the things you do when you're raising kids so that's been great, and i've t done a lot of other things >> you picked the rate time to g to get out washington. >> timing is everything. we got a lot of good things ton,
b done, but i was there for 20 year growing businesses, i practice free market economics. i wanted to practice it in real life to be able to go back into the real economy, practice what you preached, that to me is absolutely awesome and i've done a lot of other cool things. >> what have you lanedearned >> scaling businesses, that is something that policymakers think of theoretically, but practicing it, sweating it out with businesses is exciting. this is a firm that mitt romney founded 15 years ago the other thing i told myself is in government you don't get to pick your partners the voters pick them for you
and, you know, some of them are really honest and hardworking and ethical and trance parent, and then there are the other people you work with i wanted to pick good partners i am a fellow at aei, a charitable foundation that i run out of my wisconsin office and adviser. i do a lot of cool things. but all of it is built around a freight family life. >> i was going to save this to the end. what do you think when you rook at what's happening right now. even with the issue with gun control, gun safety, it seems that there are common sense solutions that you cannot get the two sides to agree on. >> that's not new. but i think what is new in this
sort of 21st century digital age, polarization is rampant in america, but it comes to congress we are a proxy congress congress is a proxy of the american people. in the old days, like ten years a if you wanted to succeed, you climbed ameri-tokcracy you persuade your constituents, this is the right way to go. here's the slaugs. that's not necessaryily what motivates anymore. we have entertainers the old meritocracy, you can leap frog the whole process. be a really good entertainer, have an incredible presence digital and forget about policy-making and curate a brand for yourself so you have entertainers in
congress when i became speaker, which wasn't my goal, i knew i was capping myself politically, but that was fine. i knew the job requires consensus, deal making i was going to have to do deals with chuck and nancy and mitch to prevent shutdowns and defaults and get half a loaf but that is bad for a brand. that is bad if you are going to entertain. if you're going to try to show that you're better than everybody else within your own ecosystem, meaning what happens today in america is people get interes their device, canque get our politics back to our unifying politics what are common things at that we can all agree on and move forward, that's going to be even more challenging today than it ever was before. >> is twitter almost part of the problem from your pensrspective? >> sure. twitter's great for other things
i watch the green bay packers. i look at our draft picks, who's doing well in training camp. it's awesome for things like that but it's a polarize machine. and politicians who want to pro pro procure an entertainment brand, they don't have to go through the traditional ways you can be an entertainer. it's unfortunate >> the people i think of being furthest left and furthest right do have these huge followings. >> you are managing a coalition if you are speaker of the house. vo you have a big diaspora >> what do you say to people who say they may have that, but they're representing a population are they doing justice to the people they're speaking for? >> if you just fix
redistricting, you'll fix this people are moving themselves into cul-de-sacs, into like-minded communities. so the challenge is, so yes, that's true, that does happen. the challenge is, can people get elected and, and be willing, i always tell people, if you want to be really good at these jobs you have to be willing to lose them if you had to worry mostly about getting through a primary, it makes it really hard to be a good legislator. and more and more and more of both sides of the aisle worry more about a primary >> it makes it hard to get anything done in any direction let's talk about what you're seeing with the markets. i would say the fed is front and center now tas it has been for oh, maybe the last 20 times i've seen you people are wondering how fa
far they're going to raise rates. >> i wish jay was nominated earlier. >> jay powell. >> he did too little, too late too much easy money for too long and here we are. i think he understauns that. i think they know that but it's generally a dovish fed. and i don't think he wants to leave that job with a legacy of inflation. but my fear is they're not going to do enough my worry is we're going to have negative rates for two years running. we're going to have a hard time getting out of this without a recession. i know a lot of people are predicting, because the consumer is more flush than before, that we might not have a recession. i just heard brian moynihan talk about it i just have a hard time buying that >> you think this is because he
wasn't renominated earlier >> jay's a good man, but he's operating consensus-driven, and i think he had to hold his firepower, and i think the doves on the fed probably wanted to go longer than they should have they now realize, this is not transitory there was confusing data in those days they did a good job in covid the fed and frankly congress should be commended for what they did to prevent a deflationary spiral and get us out of covid the problem is they deployed so much on the balance sheet with rates that they needed to mop it up faster and they didn't do this it would be nice to return to sound money policies and get back on track, but it's going to take them a long time i think. >> is this based on what you see in the businesses in your firm >> yes, micro and macro. that's what's fun about what i do i do macro economic, applied
economics, and yes i think it's a good time to have dry powder right now and watch the economy and see what's going to happen. i think valuations and multiple's going to compress and there are going to be a lot of good values >> you don't think prices are going to come down >> that's right, that's right. >> why is that, we've priced in the higher rates but not the recession? >> mm-hm and we still, inflation, we don't, we haven't nipped it in the bud yet. we haven't gotten it under control yet. look at the balance sheet. so i don't think we have the end of inflation in sight yet. so there's a lot of concern there. you still have supply chain issues >> the fed can't fix that. >> there's monetary inflation
and non-monetary inflation. >> what types of businesses? are these very early on? >> cash flow businesses. we buy cash-generating businesses and do it with founders we want to work along side them. so it's basically light str industrials. and we have a really awesome group of lps who themselves are founders and ceos who enjoy working with these businesses, scaling these businesses, and that's sort of our niche >> one of the things we've been trying to figure out in the ma markets is what ceos are doing >> spent a lot of time on that >> are you committing more capex? >> it's a business, sector by sector decision. sometimes the answer's yes and in some cases no
i think it's time to store up a lot of dry powder. get a little more certainty in the economy. and can you find great investments, and by the way, businesses are going to be starving for capital look at the ipo market i think people are waiting to see a little more clarity about what the foyuture's going to ho. >> what's your favorite thing about not being inle po partiin politics? >> scheduling your own time. i didn't want to monday morning quarterback between mitch and mccarthy i've just really enjoyed scaling new learning curves. i love teaching at notre dame, working onn a retirement progra.
a lot of cool things that i get to do that i really enjoy. our poverty foundation, there's some really interesting poverty-fighting center-right ideas that are evidence based that are really going to move the needle on poverty. i get to do the things i really wanted to do when you're speaker, you're playing politics i don't have to play politics. i can do policy. >> what do you think about the state of things and the job they are doing? >> i think, look, joe biden and i have been friends for years. i think people thought they were going to get a centrist in office, a common ground guy, that's not what he was he gave the keys to the left, the progressives they tried to go so far left in so many issues, and they didn't have the majorities to do that
that's what always confounded me they acted as if they had this massive majority >> that's what the republican does the last time, too. we've seen this play out >> tax reform, it works. these policies work. we actually put a lot of good policies in place that have proven to work who expected the global pandemic >> people say the same thing with obamacare they didn't have the votes from the other side of the aisle, but think thiit worked. >> i think we're going to win the midterms, but i think we're going to go back to divide government, and frankly, that would be nice to have. people won't be scare d at that we'll go so far left or whichever way you want to go >> do you think you'll get back to the point where people work across the aisle or not? because a lot of people who were doing that are leaving. >> i know. i think democracy worldwide is having a food good moment, as a
for the reason, which is ukraine. democracy is having a good moment authoritarians thought we were self-absorbed and polarized, but at the end of the day we pull together, that's what's happening with ukraine i think we are pull it together. i really believe we as a country will pull it together, because there really isn't an al tentative, and there are adults. you have to be willing to take the hits for compromising, and there will be men and women in congress that are do that. >> i certainly hope that it is a pleasure to see you. >> you, too. >> and to get you back in the loop we have a lot we want to talk to you about in the next few months >> good to see you. when we come back, break being economic data. gdp numbers and jobless claims are next when "squawk box" comes right back
if we roolook at the consumptio numbers, they rose the pricing index rose as well and the personal consumption expenditure quarter over quarter moderated one tenth. is that enough to 5.1 versus 5.2. on initial claims, 210,000 that's 8,000 less than last week, which still hasn't been revised. and it's a move in the right direction, but we did not get seven lower continuing claims in a row. it actually moved a bit higher 1 1,3 1,3,046,000. we have the last of supply this week in the form of seven-year notes. and after all that tough talk
and minutes in the last meeting, all i can say is it teaseems as the two pillars of the fed are colliding with each other when you consider what the journal printed today. $22 an hour, apple starting pay, it's up almost 50% since 2018. that speaks volumes. kelly, back to you >> a somewhat reassuring set of data all together. thank you. steve liesman is standing by >> we're down, i think, below 3% i have to wrap it up there but we were still above two, i think it was 2.7 they have come down a bit. among them, j.p. morgan marked it down. look at what happened this time
around looked like less inventory imports rose even more home investment didn't rise as much as expected equipment spending was down. a bit of a tweaking across the board of the general idea that the consumer did well, businesses did well during the quarter, but we had a big trade bump that was probably a result of stuff being clogged and then coming flooding in, in the first quarter. we're still hoolooking positive a lot of retail this morning seems to buttress the general idea that the consumer is doing well, despite the high inflation and all the challenges out there. >> you've been talking about ann shepherdson called it inflation's going to moderate. and even he, with his more
dovish view thinks the consumer is pretty strong and doesn't foresee a recession. i think the last 24 hours have been more assuring, at reileast with these retailers >> you can start your long weekend with that optimistic thought. but you get to the problem, if the consuminger er doesn't weak we get enough of the easing. >> exactly >> there is this notion, some fed official brought it up earlier this week, i think it was cash karri it's really a tricky situation right now. but hey, everybody says the fed is in a box. i think the fed is paid to be in a box.
>> paid to get out of it, i guess. >> thank you very much we appreciate it this morning. coming up, is chinese tech a better place to hide mitch green will join us usedund manager kyle bass joins us, next when "squawk box" returns you're a one-man stitchwork master. but your staffing plan needs to go up a size. 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 cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional.
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welcome back to "squawk box. let's talk about the fed, the latest minutes from the central bank show it's likely to hike points by half a point, and policymakers have indicated they may have to go past that to get rising prices under control. did the fed drop the ball on inflation? joining us now is kyle bass. kyle, it's good to have you here this among i suspect we kind of know the answer to that paul ryan told becky a moment ago he thought powell may have been held off from tackling it sooner because he hadn't been reappointed yesterday. >> i don't floknow if that's the case. there 18 people who essentially set policy for the world. while their knee jerk reaction
to the covid outbreak was, let's say, necessary, but in the end, clearly printing 40% more money than was in sicklacirculation ie first place was a little too much and now they're struggling with how to take that back and take it off the balance sheet at the time in which there are two things they can't change, the global supply change, hydrocarbons, based upon a decade of bad policy, and they can't change the price of food so we're going to see energy and food prices march higher over the next year, and the economy cool off you're seeing thatthey're saying they're going to have to cut rates. >> why bother raising rates just to cut them again. do you think they should back off now? or is the risk that the market's so quick to change narratives
that this that they'll signal to the fed that they need to be more dovish we're way below neutral. nominal gdp is so huge there's going to be this food and energy yes,imbalance for soe time >> in fed speak, when you look at what the minutes said yesterday, the fed staff still believes we're going to have a 2.8% growth per year in 2022 i just don't see that happening. you have q1 at minus you'll have to have 4% growth to hit the target that's just not going to happen. i think we're in a scenario where we have a stagflation environment. i think the economy's going to cool off, and i think we'll have
a recession bit endy the end of year or beginning of next year and still have rising fuel and food price the monetary policy just can't change that. i believe the amount they can raise rates is indicative or anchored in the delta from the base, and not necessarily equalizing it with, quote, the neutral rate so i don't think they're going to get much over 200 basis points in hikes before they have to pause and head the other way. >> now the market base indicators have been coming in we know they're im perperfect. presumably, longer-term treasury yields would register this persistent inflation if that was likely to stay in the system for a long team esime when the fed's letting things mature. why is that not the right call
>> yeah, so i mean, look at let's say germany for example. germany was printing double digit inflation numbers in 2021, while their ten-year was still trading at negative 50 basis points so you didn't say that the retardation of the market's operating metrics that's been caused by central banks, you can't say that that's been fixed. i think that will continue into the future it so far, we've had seven disinflationary periods since the fed was first formed in the early 1940s, and all seven have been associated with inflation when you talk about inflation expectations coming down and you think about recessions we are going to have a recession, all be it, i think it's going to be shallow at the end of this year, beginning of next year, and i think the year
over year numbers, let's just assume that we printed 40% more money and got 40% more inflation over the last two years, then th the year over year clumping numbers, i think that's why you see the fed use words like transitory than we're going to see softening. i think that's likely. i think their intense rhetoric about aggressively raising rates concurrently with taking 100 billion off the balance sheet avenu avenu av every month has wiped $20 million. their mission is already on the way to being accomplished. and that's going to change the spend spending proclivities of many people around the world. they're not going to see
relaxation of energy or food prices for a while, and that's because we need to change policy first, and we haven't done so yet. >> to that point, kyle we have the uk coming out with additional tax, a special one-time levy. where will this lead >> if you look at your history, whether you're talking about price controls or wind fall profits, taxes, all they're say somethin saying is we want much higher prices because that's what's going to happen if you diskuj future investment in hydrocarbons i believe theiis is a 30-40-year transition and everybody else run by ngos and teenagers briefs we can flip a switch and move to
alternative energy we need adulting in the room to map out the plan i'm 100% but we have to encourage investment wind fall profits and price controls are only going to generate much higher prices in the future >> do you think it's spreading political risk it's the best sector of the market, practically, holding things in there, and we have the midterms coming up so what would happen if the u.s. pursued similar measures >> i mean, we're going to get much higher prices, and, as we know in the political realm, the current administration owns the inflation, whether it's rightfully owned or wrongfully owned, they own it and if you look at the polling, i've n i've neff seen the polling as strong as it is for the
republicans in my lifetime so you're going to see a massive red wave here. so whether it's now or whether it's before november, what we need to do as a country is we need to green light that keystone pipeline. we have friends on our border to the north in canada, and they have heavy crude our refineries can only refine heavy crude from places like venezuela, vorussia and saudi arabia it's got to be canada and not our enemies or those countries committing genocide or crimes against humanity there are smart policy choices that need to be made we need to green light lng exports. there are things that have to be done, and we have to start making these choice whs, whether
it's the biden administration or the next administration. what if we run out of jet fuel diesel you're going to see things that you haven't seen before that are -- >> but do you think their response, if we run out of december this will summer, do you think the biden administration is going to green light keystone there's a lot of opposition to it it's more likely they'll try to ban exports. our energy expert said, the political environment would never allow for that >> look, it's really hard to handicap politicians that don't understand what's happening. so if we run out of jet fuel, or we run out of diesel on the east coast or diesel on the west coast, then we'll have, i mean, who knows what the political answer's going to be should we temporarily suspend the jones act with an executive
order? absolutely we should should we figure out how to get heavy crude into the market place? absolutely, we should. we're starting to release our, our sanctions on venezuela, just think about what we're doing it's crazy out there what we're doing. we're releasing sanctions on some of the world's worse actors, because we're so desperate to get heavy crude let's make smart decisions and do things right. we need someone to start making the right decisions. >> kyle bass, thanks for your time this morning. appreciate it. >> thank you still to come this morning, what to watch ahead of the opening bell on wall trstreet, including big moves. and don't miss a special tonight at 6:00 p.m. eastern time, "inflation usa." brian sullivan reports from the mid west on skyrocketing prices and what they mean for you stay tuned, you're watching "squawk box," and this is cnbc
coming up, mitch green sounds off on the sector's recent slump as we head to break, check out the retailers largely headed the cyher way, positive news with ma's up 13%, dollar tree up 15%. we're back in a moment i love it when work actually works! i just booked this parking spot... this desk... and this conference room! i am filing status reports on an app that i made!
alibaba out with earnings this morning beating expectations on the top and bottom lines online demand jumping thanks to covid-19 lockdowns in china. and shares jumping almost 5% with american megacaps taking it on the chin so far this year are chinese names a good option for investors to consider? mitchell green, founding partner of lead edge capital, joins us
i guess u.s. kind of valuation crush that's happened in the nasdaq here than dramatic enough all the software stuff people wanted a year ago has really been kind of obliterated the chinese stocks got caught in that wave but then of course also the regulatory flux and everything else. how would you characterize the relative opportunity here? >> it's better than the you know what show the last year or so. stuff got, like, way too expensive, like, in november last year, end of november, sass companies were trading at average, like 14 1/2 times for revenues on average, which would have meant some companies are trading at multiples of that that number is 6 1/2 times now stuff is starting to -- stuff is definitely starting to get more attractive fintech has gotten whacked, software has gotten whacked, large-cap internet gotten
whacked. across software you'll start to see interesting things you can look at a company like elastic search, for instance, that grows 40% a year and trades at five times next year's revenues, or a company like transfer wise, now called wise, that we were early investors in privately, gross 30d%-plus a year, next generation western union business, trades at 13 times next year's ebitda that's value i'd still be careful with some of these social media companies. i don't think snapchat's got a macro problem. i think they've got a tiktok problem. full disclosure, we're investors in bytedance it doesn't mean it won't to go a lot lower. >> are we at a point of saying if you're looking at the smaller software stocks, i mean, how are they trading relative to their cash, what's their maybe floor takeout value? because i remember that's the way it got to in 2001 and 2002
>> yeah. now you have a gigantic amount of cash sitting on the sidelines. i'll give you examples jai january tick amounts of cash sitting on the sidelines in two areas, one, strategics, some of them will be harder than others, harder for amazon to buy a consumer business or facebook. two, you have hundreds of billions of dollars with buyout funds. i'll give you an example full disclosure, we own a company called yext, a software business, grows high single digits, roughly a $650 million in market cap, a couple hundred million dollars of cash, $400 million of annually recurring revenues we brought it recently at 1, 1 1/2 times arr. that's crazy a firm like vista could buy that thing and they'd effectively be
paying three times ebitda. that shouldn't exist there will be more things like that it's like in a liquidity issue where everybody is trying to take down everything and sell things, stuff will get thrown out the window a lot of this spax stuff, there are real companies that will get kind of caught up in this stuff. >> you said you own bytedance. anything like alibaba of appeal at these positions >> we do not own that right now. look, china -- i just for the life of me cannot figure out what china is doing with the zero covid policy. maybe after it's confirmed for the third term -- i've rumblings they'll start to relax regulations on the internet companies. the problem is they do that, who says in a year from now they'll not just ramp them back up again? which means these companies are just for a while going to trade
at lower multiples than they otherwise should it's fine. stock is only down 60% for the year i hoped it was up. >> appreciate it, man. thank you. >> thanks again. mike and kelly, thanks for being here today kelly, see you at 1:00 p.m. today. mike, see you at 3:00 p.m. in the afternoon. >> thanks for having us. >> thank you we'll see everybody else back here tomorrow too. right now it's time for "squawk on the street. >> good thursday morning welcome to the treat street. i'm carl quintanilla with david faber and leslie picker. cramer has the morning off stocks remain on track finally for a winning week retail puts a few more gainers on the board, snowflake and nvidia raising questions about growth in tech broadcom vmware one of the biggest m&a deals of the year. inflation, supply chain, and the state of the consumer. macy is leading the way. >> and
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