ten-year has been sitting at least lately if you've been watching this, it's been sitting around that same threshold of 3.684% two-year is left almost at 4.3%i want to thank melissa lee and robert frank for being here today. that does it for us today. make sure you join us tomorrow right now, it's time for "squawk on the street. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber, live at cnbc's inaugural ceo council summit in santa barbara, california take a look at futures this morning. still in debt ceiling limbo, although talks resume today. uk inflation runs a little bit hot. decent batch of some specialty retail earnings. our road map is going to begin with that d.c. debt deal no signs of progress, but

negotiators are set to meet again today with wall street on watch. retail bounce. shares of kohl's, urban outfitters and abercrombie rallying sharply on quarterly results. palo alto's ceo says a.i. will transform the software industry he joined jim last night on "mad money. palo alto shares, by the way, also are up ahead of the open. let's begin with the markets. nasdaq coming off its worst daily performance in about a month. dow hoping to avoid four straight days of losses as we did get good commentary on the markets and the economy here at our ceo council summit, jim. david solomon talking about sort of a view that you share, which is that inflation is going to be hard to tamp down. >> we can't seem to get anything going in terms of wage -- just even stabilization, not increase yesterday, there was a conference call. toll brothers. the toll brothers, the release was incredible doug yearley million dollar humps the average price of a toll brothers house is now a million

dollars. i remember when it was $600,000. sold out it doesn't matter what rates are doing. the wealth, if you read that, if you read what doug yearley said, and he's a straight-shooting ceo, you would say, okay, we got to stop this juggernaut. pmi, strong yesterday. there are so many wealthy people i'm not saying we need great redistribution or anything i'm just saying that it's unaffected by mortgage rates >> in the face of steady rising mortgage rates look at that chart what does that -- why? >> because there's just tremendous inflation in the system people just keep making more money, and these guys can charge whatever they want and i think that that's kind of what our problem is. that's -- when you talk about sticky, it's not necessarily the generic food at a walmart. they can't stop this >> mortgage, 30-year fixed back to 7%, first time since march 9th, and jim uses the term sticky, which is getting used a lot around here anyway this is what david solomon told

us yesterday at our council summit >> more on the camp that we're probably going to have a recession because i think inflation is going to be stubborn i don't necessarily see rates really, you know, easing at the end of the year based on what i see now, so i think it's stickier and harder. but you know, also uncertain, and there are a lot of factors that are going to have to be balanced and it's just not clear. >> you changing your mind on june what's going on? >> no, i think you can still take a pause on june because we got to see what damage is being done look, we're also in this -- every day we come in, market's bad. this is starting to get very reminiscent if you go back to that period in 2011 where you realize every day, the -- i'm looking at the s&p and dow every day, they were down as we went closer and closer >> 1,345 >> and then 12 every single day, it was down. so, you start getting a sense of, we got to pull back. we got to see what is going to

happen david, you know this the people who are on social security, so-called might miss a payment, are not toll brothers people but i don't think the fed cares. i think the fed says, listen, we just can't have major home builders raising prices 10, 15, 20% every year we can't it's not sustainable for our nation rents going higher not sustainable. but that's people who have enough money to be able to move up now, remember, doug yearley will tell you, this whole problem stems to some degree from the low mortgage that people got and they don't want to give up their mortgage >> solomon's been saying that for some time in terms of his recession prediction yesterday, you were talking to the other side in terms of inflation. we were talking about the consumer being weak in terms of discretionary. remember i mean, only travel, other than that, everything seems weak, and so i don't know. >> it's tough. lowe's was -- lowe's was, i thought, a good quarter, but only because it had been guided

down after home depot. but you know, lowe's -- look, marvin ellisen is a really straight-shooting guy, and he didn't have a lot of good things to say about how things are going. he said, things are okay he does have this moment that everybody has to listen to he talks about how much money you can make in a philadelphia, mississippi, store, versus a philadelphia, pennsylvania, store, and how the money is to be made in philadelphia, mississippi, in a small-scale store. he's pure joy. marvin ellison is one of these ceos, he's got limitless talk about the consumer and where the consumer's doing well, and overall, he's saying, things are fine not great. not bad. and i think that if you're like a kohl's where it's been bad, and it's suddenly good, it seems great to you i'm just painting a picture where people are nervous, not doing a lot of stuff >> you mentioned kohl's, up 12 this morning is this about beating a low bar? >> i think so.

i mean, this is the revenge of companies that people felt missed the mark. urban is very hit or miss. but tom kingsbury is running kohl's, and i'm going to do this just because it's fun. david, in your checks of burlington >> yes, yes. >> which i know you got that -- that's like the price of a burlington store kingsbury is a genius, and he's turning around kohl's. i'm not kidding. kohl's is turning. now, i know sometimes the rebranding, it's like sephora, and underneath it is kohl's. i'm going to kohl's. i'm going back to kohl's >> to get slacks >> i got some $14 slacks at tj the other day. >> are you really saying that kohl's is coming back? >> i'm saying that tom kingsbury is pulling off a miracle >> why what are they doing that's suddenly different >> they're being smart that's quite a change. he's emphasizing value, but he's got the inventories down this place has been the most promotional place.

i've always felt it's one of those places where you go in, and if you bought something the week before, you'll say, oh, darn it. >> should have waited. >> half price. but he has got that thing going. that is the beginning of a major move, and i didn't want to believe it because i felt that -- i had dinner with kingsbury when he was retiring from burlington. i thought he was done. this is the second act >> we got an upgrade of sherwin today on the housing trough. >> very positive nobody's saying that painting has been bad home depot, lowe's, diy, okay. what was interesting was lowe's talked about the professional being strong, but they're three-quarters diy but i thought the -- this is a very contrary call, but it's contrary because if you're looking at what we do every day in the stock market, you're not thinking your house has gone up in value, but your house is going up in value. that's what's so strange and that's because of the shortage he's got all these home builders

just talk endlessly about millions of homes. we need millions more homes, not hundreds of thousands more homes. >> you're just really positive on the home builders >> i shouldn't be. >> and by the way -- >> you're supposed to hate them. >> we've been talking about that for the last eight months, and all they do is go up in terms of the stock. >> they raise price. we love to value companies on how their gross margins are, because that indicates how much competition there is the gross margins far exceeded what toll brothers thought they should be. they should be getting crushed they're crushing it. strongest group in the s&p >> i got to tell you, leaves me confused in terms of whether this pause is really a pause for any length of time i mean, you know, yesterday, again, we're talking about the consumer not being great but then we're coming back to the idea, well, wages are still fairly strong, and today, then, you're talking about housing continuing to be on fire i don't know, what do i look at? >> layoffs and we don't have them >> other than -- >> how many can zuckerberg give

us he's been the gift of layoffs. he gives them to us every day. nothing today. >> well, musk did a pretty good job there for a while too, but that was very quick. >> no, i mean, people losing jobs, it's not a nice thing, but we have not seen -- i don't know there's a weird moment i should have told our keys to cue it up. palo alto was the first to say, i now know where to save i can let go of a lot of people and make a lot more money. >> because of a.i. and machine learning >> yeah. >> i'm starting to hear it it seems almost hard to imagine that companies have adjusted that quickly, but i'm starting to hear it it's a little worrisome in a way for, i don't know, just generally speaking, that it's moving that quickly. >> it is it is. and i thought what was interesting, and you mentioned it he then went on to some other talk, and i said, nikesh, we got to go back are you telling me you're now able to identify places where

you just don't need people, and you can make a lot more money? and he said, yeah. yeah >> by the way, this is not always the lower-rung jobs this is oftentimes higher-up >> right >> you know, what you would consider fairly significant, skilled jobs >> not cold call centers >> we're not talking about that. >> people with 20-year seniority. >> exactly >> yes >> because this machine can basically ingest that experience overnight. >> yes >> and replicate what you do >> and i think he's talking about gross margins going up in part because you just don't need a lot of people. it's not deadwood, okay? i know that concept -- i once used that concept out loud you can never use the term, deadwood, because that's insulting. we got to get rid of the deadwood that was goldman-sachs, by the way. goldman, recession sticky. but i do think what's happened is when you get a guy like nikesh, who's got a great company to begin with, and he's using a lot of a.i. to stop the bad guys, and then he starts to

go, hold up, a.i., this is pretty intelligent stuff, let's figure out which division we don't -- maybe we can cut back on, and then suddenly, it's happening now. >> morgan stanley today on palo alto sees $100 million market cap in two years, 60% upside >> he's got all these other companies reporting bad numbers, and it's so funny. you check in with nikesh, and he says, they're reporting bad numbers because we're reporting good numbers on wall street, a competitor of so and so had bad numbers. no he's destroying everybody's numbers, with the exception of zscaler. he is head-to-head with crowdstrike. sometimes i say something good about crowdstrike, and then i'm hacked >> you'd give them the a.i. premium, the a.i. halo >> yes, they have it justifiable. >> you think he'll be there in two years, jim to enjoy that hundred billion dollar market value that goldman -- >> his fifth week -- fifth year, and by the way, in terms of s&p

versus him, he's crushing it almost triple. >> yeah, no, he's had great outperformance >> is he going to stay i don't know great players stay at great teams. >> i just wonder if he's got bigger things. >> aaron rodgers maybe -- other than aaron rodgers, nikesh -- aaron rodgers was at green bay for a while >> i'm aware of where he's playing football now this is a big night coming up for those of us who have been waiting since 1969 >> i thought it might have been out of his strike zone >> brutal. is there a statute of limitations on this thing? >> it's never going to end he's just going to keep piling on >> i did "the princess bride" for four days. >> we're going to get back to that don't you worry. still to come this morning, florida governor ron desantis set to launch his presidential bid today. got details on that. take a look at premarket we got a ton of news to get to we'll work our way through some tseetl numbers and palo alto, what they told jim last night. don't go away.

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♪ little aerial footage of where we are here in santa barbara at our cnbc ceo council summit look at that little drone right above us. >> wow >> finally got some good weather out here this morning as well. >> i love it out here. it's been seasonal >> apparently may is not the greatest month for sun >> june gloom.

>> i don't know. every time i come to california, it's raining i can't explain it but at least it's not. >> let me know when you're coming i won't go >> meantime, florida governor ron desantis is expected to formally launch his bid for the white house later today, and he'll do so alongside twitter's ceo, elon musk the two have a plan on a discussion on twitter spaces moderated by tech entrepreneur david sachs. in his interview with faber last week, musk did hypothint at whas looking for in a candidate >> don't we all just want a normal human being to be president? >> whatever that means i'm not even sure anymore what normal means >> just -- i don't know. just -- >> you want somebody who's competent. that's helpful >> yes, definitely someone whose executive ability is underrated since the president is effectively chief executive officer of the country, it actually matters it's not simply a matter of, do they share your beliefs? but are they good at getting

things done? there's a lot of decisions that need to be made every day. many of them, unrelated to moral beliefs, you know? and you just want a good executive. because they're ceo of america >> by the way, if you did miss the interview last week, you can always catch david's full interview with elon tomorrow night as well, 8:00 p.m. eastern time we know desantis, guys, has a lot of cash. but the discussion today is largely about what it means for twitter as well. >> i think elon will not endorse a candidate specifically you can imagine, though, certainly giving a lot of the focus that he has on the woke mind virus, as he likes to put it, that he would be aligned in some ways with desantis. and to your point, i think he's trying to make twitter a platform -- if the democrats were having a primary, my guess is he would be happy to entertain as many candidates

th that wanted to join him. >> i spoke to someone at twitter talking about how there was a lot of people that weren't necessary, but that you've got to start making it so that video is a factor, and now, i mean, i don't know, david. video was. remember, people would go to spaces and have -- duke it out then it just went away >> he's trying -- he's certainly trying to create and make spaces more robust. we did our interview on spaces it's funny, because when elon came in, he had to be the host, so we sat there for a while as he arranged it himself, because he has no people >> this is new >> and now he's doing this on spaces >> you didn't give us the b behind-the-scenes. >> a little behind-the-scenes, and then there's desantis and disney we've been talking about disney for any number of other reasons of late. yesterday, i had former u.s. attorney general bill barr twice, actually, remember, he was under george h.w. bush and of course under trump as well. and i did ask him, given he spent a lot of time in the corporate sector, did bill barr,

remember, he was general counsel at gt and verizon, part of the telecommunications consolidation wave in the '90s there and a key part of it, really but i asked him, how would he come down? how would he feel via -- or in terms of disney versus desantis? take a listen. >> you know, generally speaking, i don't like the idea of using sovereign power to punish a company, treat it any worse than a similarly situated company because of their political positions. on this one, though, i actually support desantis i thought, for me, what is important here is that disney was getting special privileges, and this is a question of having those special privileges removed and being treated like everybody else and second, i felt that disney's intervention here was very unfair, because it -- it unfairly characterized what

desantis was doing as a matter of policy and really pandered to and played to a narrative by his political opponents. >> still going to be an issue, and particularly in terms of how the republican party, i think, views business, and this -- this will be something that desantis, i'm sure, well, he's used it oftentimes and effectively to sort of promote his views on a lot of things, but it will come up, one would expect, quite often. >> you give special privileges to a company that creates lots of jobs. there's nothing in the constitution about how companies that do really well and create a lot of jobs shouldn't get special privileges where's that he's a constitutional scholar. where is it? >> by the way, they're also suing on their free speech rights to say, hey, we're allowed to say what we want, and we shouldn't be punished for it. this is something that existed, the special district, for 50-plus years, and to the point, this is a company that has created an enormous amount of economic value in the state of

florida, would bob iger argue, which he has, not to mention the decision not to house employees there or move them there >> let's say you wanted to put a new disney where would you put it >> new mexico. >> theoretically -- >> i think they did away with the idea of smaller mini-parks this week. >> i came up with new mexico because it's inconceivable that you would ever put one in texas because of politics. i just don't think the disney team would stand for the right-wing orientation of texas. if you want to go down that way, it's not that florida's going t lose disneyworld i'm just saying, i don't know why you court a negative attitude toward these giant employers who still have something that people want to go to, which is theme parks i mean, i think they're fungible they're fungible where you put a theme park so, shut up and let iger make some money for you there you go >> that said, a lot of states, including the one we're in, don't make it easy to do business in certain areas. >> true. when we come back, we'll get

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♪ lots of different pots boiling today. the debt ceiling negotiations. we'll talk more about these inflation prints in europe and some hikes to the forecast there, at least for bank of england's terminal rate, and then we'll dive into pretty decent batch of earnings today don't forget, the opening bell is in a few moments, and you can always catch us any time, anywhere just listen and follow the "squawk on the street: opening bell" podcast.

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welcome back time for a "mad dash." analog devices not having too good a go of it. >> this is befuddling, because we have had this kind of rolling selloff of semiconductors. we had the ones that did pcs, the ones that did servers, then the ones that did datacenters, but the ones that have been immune were the internet of things automotive industrial that's been where there's been strength the whole time. david, that's over analog devices reported a weaker number than -- and this is a great company that does -- let's call manufacturing semis, and it kind of took people's breath away because this had been the safety zone. now, we have nvidia tonight and that's obviously -- >> that's very different, though >> exactly that one's very ethereal this one is nuts and bolts, and i don't know -- >> is this a pure play on the broader economy or economic health >> pure play on industrial >> i mean, internet of things, for example, putting chips on everything so you can track the data >> i didn't see it coming.

cisco had a decent quarter, but this was very surprising, and it's going to -- i know it's one of those that's kind of a yesteryear, but it really isn't. it's a very good company, and it's done really amazing things. it's also financially really well run, and it kind of took a lot of people by surprise. took me by surprise. i would have expected at least -- >> this is almost a hundred billion dollar market value company. this is not an insignificant company. we don't talk about it that often. >> we should and it was put together by a couple companies, and what they've done is really like nxp, all right, gotten to where people -- where they are, they'll have, like, $200 per content of a car and then $250 and they're just so well run they never miss. i like them so much more than texas instruments, which never gives you -- they have a never complain, never explain attitude these guys are so well run that it's going to cause a shudder, and people are going to say, there's been a nice rally in the semis, maybe i'm overstaying my

welcome. >> you mentioned nvidia. these comments by jensen about what -- about a china derisk and what it means for american tech, kind of concerning >> yes jensen huang, ceo of nvidia, had said to me, earlier, look, we just -- well, we comply by the laws the laws, we are going to -- to the letter but he never really characterized his view on it that's why that ft -- he's very strident in that report. we'll see whether he addresses it tonight in the quarter. very strident about how we're going in the wrong direction that's a theme out here, isn't it >> yeah. i would argue out here yeah >> right don't you think, david >> there's some bearishness on all things china >> some people feel we've gone off the rails, china we don't hear as much about taiwan as much as the more commerce would be better that's what i keep hearing >> there's the opening bell, by the way. nokia celebrating its reb rebranding at the nasdaq, solar energy company taigo.

reimondo having dinner tonight with her counterpart is being framed as, let's try to keep this from going off the rails. >> that would be terrific. i'm now in the camp, which just says, i'm a hardliner on this. the people are separate from the government we haven't talked about covid, another wave of covid, 50 million a week i just don't think -- >> what? >> there's a new wave of covid in china 50 million a week the last four weeks. >> there was a story on the tape about events getting canceled over the weekend in china as suspicious -- >> travel is cut back. quick ten bucks after a great quarter. estee lauder, down that's a travel stock. bad quarter last time. but i think that jensen is saying that, as you mentioned, we're hurting ourselves. she's saying, look, we're trying to make it so if taiwan -- the unthinkable happens, we're still strong, which is both republican and democrat position, which is one of the reasons why she's been, david, so successful

>> yeah. >> she speaks to republicans i mean, actually, like, hi >> she does, yes not the premier in china >> no. that's -- >> that's also xi. >> i have her on speed dial. >> listen, a thawing would be a very positive unexpected thing if there was one to occur. >> you think it would be positive >> for the markets and business, of course it would this is a number one concern of, as we say, of ceos we've said it many times we heard it here along with now, generative a.i. and how that's going to change your business and what you need to do. but the relationship with china, between this country and the -- well, the relationship and/or the potential decoupling is paramount. of paramount concern >> i know. in the meantime, we're in that period where's my book? look at this we're back in that period where it's just every day, you're down a little bit every day, to the point where people -- now, if you go back to

7/26, 7/27, july, 2011, the papers were dominated with the -- we're going to get downgraded, our debt, because it was so surreal we couldn't do an auction. an auction was going to be put off. we don't talk enough about the s&p, i think, because the s&p was then slapped down by the government when they downgraded us, but every day, it was about, will they downgrade our paper? we don't hear that but you know what? just because we don't hear it, doesn't mean it couldn't happen again. >> no, and we're getting closer and closer to the potential day. i mean, a week from today, and then maybe we've got another week or so >> see what you just said? that's what's started getting people -- the republicans ran with that. hey, listen, we maybe not able to raise money, but we have eight days in the kitty. and that then made it so it was even more -- >> the treasury general account may have money left in it, and there's ways they can -- when yellen said by the 15th, that's the -- it does give you two

weeks of leeway, but do you really want to go right up to the edge >> do you want to? no but do they? >> i can't speak for them. >> they played with fire in 2011, and it really backfired. >> and you think questioning treasuries date is also doing the same >> yeah, because what happens, republicans started saying, you know what? what they're not including is the money that's just in the eight days -- suddenly, there was eight days worth of money, which then made the democrats seem like they were chicken little, and everything just coalesced in the stock market getting hit. and it didn't matter, by the way, tech got hit every day, there were good quarters that were reported that didn't matter, and i don't want that to happen >> i don't know that anybody believed the june 1st date was a hard date. i think they knew. >> even the first time yellen said it was, like, oh, she's trying to build urgency. >> i don't think -- people i've spoken to have said, it's not a real date. but it's got to be close >> the one thing that's so different about 2011, every day that the market went down, it

was also viewed as, we're going into a really severe recession, and the economy was slowing down here, we've got lots of people coming on air, saying, we're about to be in recession the numbers are extraordinarily strong, but we're about to be in recession. what do you got? >> you know, i'm just looking. just looking >> just scrolling twitter. >> i'm not scrolling on twitter. >> what do you got there >> no. >> oh, i got an -- >> actually, our executive producer, i couldn't understand him, so he texted me what he wanted me to talk about. >> okay. >> yeah. so, i'll follow through. >> is that the whole time? >> look. all it says. see that can you read that? >> we got to talk about citi >> there you go. >> that's how it works here. >> we do because i got to tell you, i got a rap on this citi thing citi's version, no buyers. when they see they're going to be an ipo, what that says is, they shot this thing -- david,

this shopped this to everybody no one believes the numbers. >> yeah. >> this is a big deal. >> this is back from the sandy wild days when they did the deal but it's been, again, the big news was, we're moving on from it this is just, well, we haven't been able to potentially find a buyer. >> i know, but there was a time when vikram was there, we were talking about having the annual meeting in mexico city >> meanwhile, you've talked about this name quite a bit, and not necessarily with a great positive feeling, because of the book value being at least on paper so much higher than the stock price. >> i've only seen it with glen fed and cal fed in the '80s and those were bankrupt. citi's not in danger of going bankrupt citi has a lot of different great cash management businesses but the disparity between the book value and their actual is the highest of any bank.

>> and it persists >> they had some issues, some public issues with valuations, some chicanery, but mexico's very strong right now, and no. not working. we have a lot of things that are not working today, though. >> although, on mega cap tech today, mizuho takes amazon to $160, jim. they're talking about a re-acceleration in aws growth. there's that and then, of course, you, and eddie q here at our ceo council yesterday. take a listen to what eddie told jim. >> it's hard to do one great thing, and so we've been very, i think, very good about deciding, when we're going into sports, we didn't want to just put our toe in the water we didn't want to put one game on or -- we wanted to do something that, you know, i'll use the gretzky quote, even though we did soccer, like, we wanted to go where the puck was going, not where the puck was. that's what he does. he skates to where the puck was

going, to the to where the puck is and that's the same thing we wanted to do with sports so, i'm a sports fan you can see that by what i just -- what i have said i wanted to create something that, if you're an mls fan, you're going to love and if you're not an mls fan, the first time you see it, you're going to be like, wow, this is really good. >> well, if he can get people worldwide to like mls, he's got the best presentation. i watched a game, the philadelphia union is a good team we were in the playoffs last year and if you watch the presentation, it's really rather extraordinary. it is just much better than most of what you see on tv for soccer, for football it's an international sport. >> it is, but i mean, don't you have a lot of fans here for something called the premier league, for example, which you can watch already? >> the question i had -- >> what can you watch it on? >> nbc cnbc >> no, peacock >> oh, that's essential, and i'm always on it

what mattered to me was that -- can you get people from overseas to watch american soccer mls. and the answer to that is, "ted lasso. >> okay. "ted lasso." >> it's an internationally loved show so, maybe things are more fungible >> and ryan reynolds buying that team >> or not. oh, they didn't buy the senators >> right, but they own wrexham >> mls is a pretty good production >> i thought the better part of your conversation was about apple's foray into financial services the watch. in fact, today, bernstein's tony takes a look at does the watch become an fda compliant device >> i don't think they're going that way they never overpromised, and that's very hard to get blood pressure right, but i would say, look, their franchises are doing

incredibly well. we didn't talk about numbers directly, but i was wondering -- i said, look, all these other streaming services, we can talk about netflix, are strapped. i mean, they have unlimited firepower, and they're developing movies that cost a lot of money, but they don't care, they're saying, look, we're putting out quality stuff still, and we're not thinking about how to conserve money. we're thinking about how to do great product, and i think they're doing it right >> they may be doing it right, but your point is they have unlimited money, and amazon, by the way, is in that similar camp you've got everybody trying to work out their balance sheets and figure out how much capital they need, except for these two g guys >> getting amazon web services is really going to accelerate. >> the mizuho. >> i went out and said i thought it could hold the line at ten, and i'm not saying anyone from amazon would call me, but i did get the feeling that i'm too bullish by thinking they can grow at 10%. down mid-single-digit growth for

aws would be something week would not like >> well, it slowed in the last quarter rather dramatically. >> you don't see that at microsoft. >> no. azure has not slowed to that extent is it just a market share game at this point? >> i don't know. i had frank absoluteman on tonight, i'll ask him. the advertising business that you singled out as being something that could be watched, that's the big earner. >> mizuho says they see it rebounding in the second half of the year, aws,which is the profit engine of amazon. >> i went with that rap, and i think people felt that i was premature. prematurely positive and i said, i'm sorry, but i'm stillin still sticking with my positive rap out of amazon. i think that amazon web services is going to be a function of, yes, i said today, we're not going to call it a.i i told david, today is machine

learning day i got tired of a.i generative a.i we're using machine learning >> we have to mix it up a little >> all the public is sick of us using these terms. >> they are. we can't say generative a.i. anymore? >> someone said degenerative, and i said, no, it's generative. >> the machines, they be learning >> when we hear jensen tonight, i bet we get some new terms. he hates the same-old, same-old. >> that -- it's important. i mean, anything he says at this point is of importance >> anything. >> nvidia is, you could argue, the key to the market, right, jim? let's call it not today but for the last couple of months. >> i was speaking to cadence yesterday, they do a lot of work with nvidia, and yeah, nvidia's the way intel was with anti-growth. kind of like, what's andy thinking now, it's, what is jensen thinking >> he was very paranoid. we know that >> that book was great >> only the paranoid survive

andy grove >> we mentioned palo alto earlier. that's going to be a fresh 52-week high, up to $205 almost a 9% gain, of course. billing's up 26% wedbush goes to $225, and this is what nikesh told jim last night on "mad money. >> generative a.i. has this amazing ability, writes poems for you, audio, video, all these creative things that it does, which has huge applicability both in how we do customer support, how we build products that become easier for customers to use i think there's going to be efficiency and customer happines happiness driven from that >> look, this is a guy who is so underestimated palo alto is an amazing company, because there are no platforms it used to be these, well, you can handle the firewall, and you'll handle the keys to the kingdom. no, he's got a platform, and it works. and everybody comes to him, whether it's on premise or whether it's in the cloud, and

he has been talking to me about a.i., other than jensen, no one ever mentioned to me, a.i. never mentioned. he would say, listen, there's artificial intelligence, i'm figuring out how to make money with it internally he has been a visionary, but because he's in the cybersecurity world, no one thinks that's where great genius lies, and yet they ought to, because the bad guys have got great genius russia, not a factor right now >> fortunately >> i guess i'm wondering if you think a.i. checks a lot of boxes, meaning, it will cool off the labor force by putting people out of work does it explain what's happening in corporate margins do earnings need to be brought up i mean, things that you're worried about, does this solve them >> i thought that carmine said some very interesting things yesterday here about the notion of how many people you should hire, try to figure out whether you need all those people. i think that this is going to be that college group of people who are faced with maybe the machine, you know -- you'll be a

recruiter, and your boss will come in and say, look, anybody who you think a job that a machine could do better, let's just not fill it >> like ibm was starting to talk about a couple weeks ago >> i don't want to lay off people that i hired and it turns out that a terrific fellow like nikesh comes in and says, you know what? you hired those people for cybersecurity. you don't need them. we have a bot that handles that and alerts us and then we go to work >> yeah. >> that's what can happen. he can save you money. he'll save money and it will never be, like, you know, we can take a chainsaw it's not going to be one of those. it's not a home depot festival chainsaws everywhere >> guys, to come back to a name that we haven't mentioned often and may never mention again, nikola remember that company? i mention it -- >> you loved that thing at $45 >> i did not love it at any price ever >> that's when you told me that they had the truck rolling >> the rolling down the hill truck, trevor milton awaiting sentencing, the old ceo.

i mention nikola today because it is a 76-cent stock. three years ago, it got memefied in a sense it was staggering where the company's value was. we can go back let's take a look at a three-year or five-year. they need approval to increase their authorized number of common shares, and if they don't get it, they basically say their ability to continue ongoing operations and objectives, including their need for capital, will be out of reach. so, shareholders have until -- when is it -- june 6th to vote to allow them to -- by the way, then you can look at wheels-up you can look at wework, any number this was a spac, of course, set in part, was one of the reasons -- kind of the early part of the spac craze, which led to so many companies going public via spac in the 2021 time period >> 600 came public reminiscent of the 330 in 2000

600 came public of the dubious spac kind of ipo, and i mean, i look at wheels up, and i think, how much money people must have paid them. you had to pay them up front wow. >> i know. >> wow >> it reminded me just now of that line tafrom "jaws" where robert shaw says, 700 men went into the water, 70 came out, sharks got the rest. >> "indianapolis." people don't realize, that had the atomic bomb on it. >> i didn't think we'd go there. but to your point, it's about 1 in 10, maybel less. >> you put a basket together of the 72-cent -- let's get a basket >> we put our indexes together, and if you were able to -- i don't know that you could short those indexes, but if you had, you would have been very happy >> a lot of people lost a lot of money. >> really quick, jim, disney below $89. >> that's so painful >> a day we're getting word that netflix will roll out their password crackdown in the united states >> eddy cue, when talking about,

you know, apple plus versus a disney plus, i mean, he didn't directly compare, but i just feel like if they wanted to do a giant movie that they would put on, disney, they couldn't afford it >> what? >> a $300 million movie. >> they could afford it. >> what, disney? i'm saying they -- look at it. would they green light a $300 million what am i -- >> mr. hollywood now >> irving thalberg or something. >> they have to think very carefully about their allocation of capital, but they always do that >> i know that it -- at espn, they've been told, hey, guys, cancel the big projects. >> we pointed this out after the last earnings. linear tv is in a decline that is quickening. >> but you were talking about -- you guys were talking about some show you were watching >> "abbott elementary. >> yeah. >> you should watch it it's supposed to be very good. >> do you think "killers of the flower moon" would be green

lighted at disney? >> i do not know what did that cost >> i don't know. 250, maybe $300 million. >> what? >> it looks good >> didn't read the book. >> i ordered the book. >> darn right it better be good. meanwhile, they green lit the will smith movie that was not a hit >> the osage indians, they were the richest people in the world, and then just, our country, not -- sometimes our country's not on our side. >> october can't come soon enough can't wait >> let's get a look at the bond universe today interesting day. we'll get waller at 1,210, but more importantly, fomc minutes at 2:00 will give us a sense as to what the discussion is right now regarding the pace of rate hikes. dollar, by the way, highest today since march '20. don't go away.

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santa barbara at the ceo inaugural summit this is a view from above our set. a lot more to come, stock a lot more to come, stock adg thims nt.

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let's get to jim in stop trading. >> letter a, they do testing measurement, another company that's consistent and test and measur measu measurement, they do a lot of orders with biotech and when you don't have biotech i.p.o.s, y you're finding companies that cater to that industry are getting hurt agilent has been a horse but you need to stay away from companies that need biotech for their sales. >> is nvidia the most important of the month >> yes it's important and there's also a talk next week in taiwan i think he has -- look, if there was a mount rushmore, all of them would be -- all four in vary y

various phases of his life. >> what else do you have >> i have snowflake, a great peculiar renting model of crowd. and cadence, they are the software you need when you want to make a semiconductor. no one talks about them and we'll unveil why they're the best performer in the last five years of any company. >> we have a lot of companies that design their own chips, apple or tesla -- >> right tesla is a huge client of his. how did you know that? >> occasionally i actually -- >> you come to play every day, don't you? >> i try i can't keep up with you but i try. >> we'll see you tonight, jim, "mad money" 6:00 p.m. and trying to hold 4120 here and the vix back to 20

good wednesday morning and welcome back to "squawk on the street" i'm sara eisen with carl

quintanilla and david faber. we have live from the ceo summit in santa barbara, california looking at stocks under pressure again today after a selloff yesterday that left the s&p and news down 1% lower every sector getting hit except energy -- energy just flipped into the red as well, faring the best along with utilities. financials, industrials and materials at the bottom of the market three big movers, citi group planning to spin off the mexico business in an i.p.o thing. bank plans to resume share buybacks this quarter. stocks under pressure. intuit shares dropping as well missing revenue estimates and disappointing the street with its outlook. and then pack west shares lower, the regional bank selling the real estate lending unit at the second asset sale this week in an effort to boost the balance sheet, the stock price a third

of what it was prior to the regional bank selloff but for the week a lot of regional banks are higher we begin from the inaugural ceo summit in california trying to navigate uncertainty over the debt ceiling, the vix hitting 20 for the first time in three weeks. that's a level to note as volatility increases we have the fed minutes from may meeting later today, which i think are stale as far as reaction to the economy because we've had an unemployment report and inflation report since then and another one before the fed meeting but what will be interesting to ch watch for in the minutes, the notes from the last fed meeting, any discussion around the regional bank stress and how fearful the fed members are kmewhen it comes to the tightening after the stresses, tighter lending standards and that's going to hurt the economy. that's what changed the trajectory of rate expectations

starting in march really where the market is pricing in these two cuts and everyone is scratching their head because inflation is high. but if they're worried and cautious about the bank issues i think the market will take comfort in that. >> we were talking about housing earlier with jim, the fact the average price of a home has gone up so much and doesn't seem to be dampening demand. >> the numbers were encouraging, that was a big beat on profits if you look at the yearly quote, there were a few you could go to, but one that i picked out as mortgage rates have stabilized and buyer confidence improved, has continued through the second fiscal quarter and into the start of the third quarter, which is good except mortgage rates are back on the rise, back to 7% for the first time since march. >> we haven't mentioned uk inflation, which came in above you have citi today raising their forecast for a terminal

rate there to 5.25 they can't catch a break at least we've been able to come in with a couple of cool prints. >> it's food food is the culprit the food and nonalcoholic beverages eased from 19.2% to 19.1%. remember in march the number was like 10% now it's down to 8.7, higher than expected. that's because of energy prices moderating they still are dealing with some parts of the inflation picture that are high and that has implications for us too. it's been a global phenomenon. that's why you've seen, the dollar is having a good month up for the first month in a few, up 2% so far this month and reflection of higher yield, maybe the fed can't be done. we're still factoring in a pause for june and july but the odds have risen, in the 20s to 30%

having a 25 basis points hike. and jamie dimon and david solomon saying inflation is going to be sticky i think we have that sound. >> no question that peak inflation has come off you know, i've talked publically about this in the last couple of months i sense that it's going to be stickier it's come off its peak but it's stickier and more resilient, which is why we're kind of managing and expecting that while the fed may pause and it will be data dependent, you might need to see higher rates to ultimately control it some more >> everyone is warning about higher rates and the bond market not willing to fully go there yet. we're seeing signs, strong dollar, rise in treasury yield but as far as the equity market so far it's hung in okay home builders got hit yesterday on the back of the rising

mortgage rates some of the consumer stocks have started to weaken, visa and master card, for instance. we'll get to kayla in a moment for where things are. but yesterday we had jack liu on, i think you asked him a question, i don't think he got it, you and i have not discussed this the idea if we get to a debt ceiling deal, treasury is going to have to issue a lot of debt -- >> right refill the coffers. >> refill the treasury general account which they've been drawing down not to mention the general replenisreplenishment. a flood that could drown out other liquidity. >> that is what people are est estimating, 600 billion to estimates of a trillion in new issuance, that deluge which could drain liquidity. there's sort of mixed reports on this but the market is focused on it.

i talked to people on the credit desk today saying that is a focus and for the first time in a while there's starting to be skitty -- skitinish around the debt ceiling. >> it would lead to the issuance that the treasury would need to do. >> take out liquidity that hurts the economy, that hurts the markets. that's been the story around liquidity. so that is certainly a risk. and there are estimates as much as a trillion dollars. >> speaking of which, let's get an update where things stand we got comments from the speaker. kayla tausche is at the white house. >> reporter: negotiators did speak late last night, expected to talk again today, although nothing is formally scheduled yet. a democratic official characterizes the talks as

having hit a speed bump as both sides are holding firm to the initial proposals they put forward. kevin mccarthy, who on monday praised the meeting with the president as the best meeting so far of these negotiations, positive tone, productive meeting, here's how the speaker described things just a few hours ago. >> i don't understand why democrats think they can't find one thing. it took them this time to say we're willing to freeze. no, you have to find ways, just as every household would do, we have to spend less than we spent last year. >> seeing frustration there. the democrats have proposed to freezan spending and not cut spending as republicans would like unclear whether they'll budge from that position we're seven days away from the june 1st date that the treasury has identified is the earliest the u.s. could default and we're waiting to see a skitishness in the market. so far we haven't seen anything

akin to 2011 or 2008 back in 2011, in the week leading up to the deadline then, the market fell 17%. the rating for u.s. credit was downgraded even days after the deadline passed and a deal was thought to have been reached and that caused the market to skid further back in 2008, the day that lawmakers failed to pass the bank rescue program, the dow fell 7% in one day, continued to fall as the global financial crisis took greater hold over the economy. but we're not seeing anything like that right now. and it's unclear whether lawmakers really feel the urgency of that june 1st deadline to reach a deal with recess looming, memorial day weekend events planned and so far there's not a formal plan to work through the weekend, although there has been suggestions in both the senate and house there may be a need to come back to washington if a

deal is reached. but we're now at wednesday and so far nothing is clear on that, guys >> kayla, as for treasury, yellen is expected to appear before house general services june 7th that comes a day after some gop members appeared to cast doubt on their forecast of the x-date. how much talk did that get >> i think there have been more conservative members of the house who have suggested that perhaps the administration is trying to use the june 1st date as a stick instead of a carrot in these negotiations to draw them to the negotiating table. but then you have people like patrick mchenry, the gop congressman leading these talks in part for speaker mccarthy he said janet yellen has experience if she says june 1st, i trust it's june 1st. and she acknowledged there are many members of congress who are skeptical who believe that maybe

the deadline is some point between june 1st and june 15th but even behind closed doors she doub doubled down on the date saying it is june 1st, that's when we have to pay our bills and face hard choices. >> all right keep us posted as we head to break, here's the road map for the rest of the hour including jim breyer joining us live plus it is the biggest winner on the s&p so far year-to-date what to expect from nvidia earnings. and joining us on cnbc, the ceo of intuit. big show still ahead live from santa barbara, don't go away.

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we combined btd and msd and really have created an amazing firm the reception activity has been far greater than any of us expected and we continue to advance all the areas where we're active, certainly, you know, helping founder-led companies and family-owned companies in private equity and helping them plan out their futures

>> that was michael dell talking about the investment firm born out of his family office now combined with byron trots firm, together invested more than $50 billion, in the last decade. joining us to discuss that effort, the markets, credit, is greg lemkow. so you've been out of goldman for a couple of years. i'm curious, what are you doing now that is similar and/or different from what you did for many years as a banker and senior executive at goldman sachs. >> i think michael captured the enthusiasm for what we're trying to do. came out of capitalist, and combined it with bdt partners, which is trying to be a merchant bank for closely held businesses, families and

founders as we put the businesses together it's unique trying to serve the needs of family owners and founders, one is advisory, strategic advisory similar to what i did at goldman. trust and and skate, family dispute mediation, anything a family business owner could want that's one part. the second part is capital partners often with the family businesses they'll need a capital partner at some point. we have capital partner if you want a long dated partner to invest alongside you, and the third is now investment solutions. think about the family and founders wanting to diversify like we can invest alongside them in their companies, they can invest alongside us in private capital, real estate it's a set of solutions for family and founder-led businesses. >> you were in the public markets. we cover those closely here. i feel sometimes, though, greg and i'd love to get your sense of this.

the growth in the private markets has been enormous over the last five, ten years give our viewers a sense of how things have changed and how big a player firms like yours is now in private credit and things of that nature. >> i think there's a lot of foc fo focus on private equity which has grown meaningfully we've seen that trend for a long time what hasn't been appreciated is the size and scale of private credit market, which is multiples of the private equity market that's where we see meaningful opportunity today as the banks have left the field in the private direct lending there's an opportunity as a lender to dictate terms for the first time in almost 20 years. >> are the banks coming back to this market? they would claim we're still there, but obviously not there in the way they had been is there an expectation they haven't given up the fight. >> the balance with the banks is trying to manage the regulatory constraints they have. and there's a lot of constraints. the private markets you have

more ability to lend directly. so i think the banks have not gone away and there's liquid elements the banks will be active but in the private lending market you see the private lenders coming in filling the space. >> everyone is in private credit now. family officers like yours we talked to tcw yesterday, blackstone said it's a golden era. can everyone get double digit returns? >> private credit everyone is talking about it the beauty of our business, at msd we had a private credit business for 20 years, the same team in place for 17 years michael dell called it his stay rich business. >> most are post financial crisis. >> 96% started post financial crisis as we look at private credit right now, it's really the direct lending market in the lone market right now. you want a handful of things making a loan. you want to have a recession resilient business, low loan to

value, meaningful deter ration in the value you want good documentation so money can't leak out of the system, double digit yields. i'd say the past 20 years you had to pick two of five things right now you can pick all five. the private market is great. if you looked at the secondary market, the values look good but the documentation from the past five years is weak we're staying away from the secondary market and even in the high yield market i don't think you're getting paid for the risk in the high yield market there's still the adjustments that i'm not sure are real >> the high yield market right now -- >> not for the risk. >> why >> i think there's still high stated leverage in the markets and then the underlying lev raj on what the adjustments are to eb ebitda so i think we're staying away from that business and going to where we can lend directly and

set and dictate the terms. >> a view if the recession is coming it's the most telegraphed recession in a long time and large cap corporates have had plenty of time to prepare. i wonder if family and founders are in a similar entrenchment preparation mode or itching to chase opportunity? >> i'd say it's more the latter. the fascinating part is the family business owners, multigenerational business owners this is the time to invest everyone is retrenching, it's time to double down. they're not as focused on any given quarter. if values are down, and you have someone who's desperate, the family business owners tend to double down in times like this it's a great opportunity for us to invest alongside them >> are you adding stocks to the portfolio in this environment? >> we are -- our business is more in the private markets. from time to time if there's a great founder led business in the public markets we think

there's value we have to carve out a mandate to do that you'll see us do it from time to time but it's a more private investing business >> you will do a takeout of a business overall. >> absolutely. >> how is that market looking right now in terms of the financing side, have values adjusted for the cost of capital going up >> they're adjusting there's a lot of capital out there and businesses with yesterday's balance sheet but portable capital structure that won't last for a long time. and there's still lots of capital chasing this if you go through investment committees across the world, the big private equity firms, not sure people have adjusted their returns and that needs to happen. >> what about the capital markets overall? go back to your old job. virtually no i.p.o.s, some level

of m&a >> we have to get through this, at the end of the year, get through it or into it so you can see your way through it and you'll see the markets open back up. >> some of the bull cases are that corporate cash balances are high and a lot of fixed debt and that by year end you can see some migration from high yield into investment great is that too pollyanna? >> i think it takes a longer time to do it. depending where rates go, corporate cash balances are high, in this kind of environment, i think you're more likely to see the corporates keep that dry powder for m&a or stock buybacks they're more likely to buy back their own stocks >> so private credit what's the other opportunity in the private markets right now? >> i would say, you know, partnering with the right companies to bayou inuy unique .

>> do you think deregulation is adding more friction or less, in terms of m&a. >> i think it's adding more friction there's a lot of anxiety around the big high profile deals slowed down and p in some cases blocked. if you're a big company right now, you have enough on your plate to run the risk of picking a fight with your regulator on a big deal so it should be strategic. >> do you guys keep rolling up smaller firms in a way >> we're happy with our footprint. we have a lot to execute on our game plan we have great capabilities across the board. this was a combination of two businesses so culturally similar. so it's not an m&a strategy, it's a one off opportunity. >> next time you join us you'll have a new name? >> i hope so. >> greg, thank you >> thanks, david a lot more still to come from cnbc's ceo council summit as we go to break, do not miss david's full interview with elon

musk if you have not seen it already. it's going to re-air tomorrow night at 8:00 p.m. eastern time. be right back. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

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welcome back to "squawk on the street" on dominic chu as we look at nearly every sector in the s&p 500 in negative territory, the debt ceiling talks continue and we await, of course, the fed minutes later this afternoon but there are some bright spots out there. if you look at home builders, they're out performing with names like poulty group, trying to hold onto some gains in the s&p 500, they're all green for the time being following an earnings beat from toll brothers. demand has been on the rise throughout the year and tight supply will agaibenefit the industry sarah, back to you folks not downtown across the country. >> not downtown. this is not downtown yes, we are in santa barbara for

cnbc ceo summit. after the break, jim wryer will join us here on set to discuss what he's looking at in the market right now quick note look at shares of abercrombie and fitch rallying more than 20% this morning surprise profit from the retailer very much in a turn around reinvention mode. in the release saying cautiously optimistic on consumer demand, sales rising 3%. we'll talk to her in the next hour on "squawk on the street. back in two minutes.

welcome back to "squawk on the street." i'm contessa brewer with your update supertyphoon mawar brought hurricane force wind and heavy rain and knocked out power to thousands in guam.

meteorologists are telling residents to take cover until conditions improve, likely around thursday morning. the house ethics committee ended an investigation into california representative eric swalwell, the committee sent a letter saying it'll take in further reaction the probe began in april 2021 because of allegations he had ties to a suspected chinese spy. and lawyers for former president trump asked merrick garland for a meeting as the special counsel investigation into handling documents shows close to winding down. the attorney general is looking into whether trump illegally brought hundreds of classified documents to his home in florida after the end of his presidency and whether he obstructed the government's efforts to get them back this is a story to be continued. >> okay. con contessa, thank you.

nasdaq coming off the worst day since april 25th the tech landscape betting big on a.i. while navigating a challenging macro environment. our next guest said earlier this year it would take 18 months for the froth to settle. joining us is jim breyer >> i'm pleased to be back. >> pleased to talk to you. what i like about you you name names and tell us what you're buying in january you said you were pounding the table on nvidia this is an under appreciated a.i. story, turns out that was a good call. up more than 100% since then, going into earnings today. would you still be a buyer, even at these levels? in. >> i'd like to see what the earning look like. but from a three-year time frame, nvidia is unstoppable it has a year and a half lead over all of the chip companies

in gpus. perhaps google's chip set is closest so i'm quite bullish on alphabet these chip sets serve as the basis for this next generation of applications, which will be a.i. driven. >> alphabet for its chip set >> they developed proprietary chip sets. >> but you like that a.i. play more than what they're doing say to rival chatgpt and microsoft you liked microsoft too. >> how does one bet against larry page and sergei brim and everything i hear is they're working 80 hours a week on alphabet a.i so part of it is, never bet against so and so, and i would never bet against larry sergei, tim cook, satya, mark zuckerberg, reed hastings, go through the list so on weakness for these companies -- >> really? on alphabet, the ceo, it feels

to me like they have the greatest monopoly ever maybe in history and now it's threatened by microsoft so there are plenty of people who view it in a different way and say how can you possibly even open up an opportunity for a competitor to come in and search and create real value as microsoft may be doing with chatgpt/bing >> to contrast it, i was in seattle a couple months ago, talking to satya and some of the other executives they said to me, this is wartime. what should we be doing around a.i. i think google got off to a slow start. they had high level, we're an a.i. company, it's an a.i. year. they just didn't double and triple down in the most important areas of a.i and the urgency is, when larry and sergei come back, everything changes and i expect them to deeply accelerate.

>> do you feel the level of urgency is already reflected in what they're doing or you're expecting it to come >> they're working on a series of technologies, i'm lucky enough to know what many are that a year from now or in davos, we'll talk how successful those google a.i. technologies are. >> you said don't bet gagainst mark zuckerberg. >> correct. >> but you were bearish on facebook a few months ago when i talked to you. but ypeople are excited about i right now? is that justified or are you still nervous about the path forward there? >> i like the path forward now since we spoke, sara, the big concern for me was the business model and they had hired, like google and others, in a crazy fashion. when i first met mark, he was

20 not yet 21 and in that first week of discussions, i asked him, what do you really care about he said connecting the world one day -- mind you the 20-year-old mark zuckerberg, i want to have billions of users on my platforms. and so, i think the cost cutting has been great i feel for a lot of the people who are being exited from all the tech companies, but again, when it come back to a three-year time frame, what would i be investing in, nvidia all day and i'll pound the table again, partly because they are the leader technically in the most important next generation of technologies. i thought david your interview with elon musk was brilliant and i would also be very bullish on many of the tesla, spacex

opportunities. >> you would >> i would. >> spacex a private company but what do you mean when you say "opportunities?" >> what elon has not articulated often -- he is a genius, no doubt about it when you buy a tesla, if indeed they deliver the self-driving -- >> full autonomy. >> they're going to charge for it and they can charge for it on a software model no other car company has that. the other reason i'm bullish long term on tesla, i visited the gig factory several times last year -- >> to your neighbor in austin? >> my neighbor in austin, texas. and the giga factory -- >> it's breathtaking. >> it is and then a senior official asked me to come to ohio at the plant and get ideas. tesla has a five-year lead on

this major car manufacturer -- >> five years you think? >> absolutely. the robots are building the robots and i just can't tell you how distinct it is -- i was on the walmart board for many years part of the mission was walk the stores so when i look at u.s. manufacturing, i walk the manufacturing floors and there's no company in the world like tesla from that side of the business. >> so you think the legacy oems have a place to turn or just continue to chase this guy for years at a huge cost disadvantage >> carl, they are in real trouble. i think -- i like mary barra, a great deal, as a ceo they have to treat this as wartime. i talked about satya three, six months ago saying -- pounding the table, this is wartime, we have to get our arms around gbt

at that point, three and now four, i don't have the sense our big u.s. car manufacturers truly understand the sense of urgency. they won't go away but i wouldn't be buying their stock. >> when you -- when i hear you talk about a.i., i heard you over the years, you were trying to talk to me about it before anyone was talking about it for you it was health care is that where you see the most opportunity? any way to express that in the public market or still private you're backing >> there's the classic barbell effect this is how i think it plays out. this is the netscape mid '90s moment netscape as a company didn't succeed but there were 20 or so internet companies around the netscape ecosystem that succeeded wildly today in a.i., there will be some large language models and i

have no doubt, microsoft, alphabet, perhaps meta, but those three are on the cutting edge of large language modules as those get adopted, the singular vertical market to be making investments in is where computation and health care intersect. to date, i've spun 12 companies out of hospital systems such as msk, md anderson, ucsf i'm talking to a couple as we speak about similar spinoffs and the breyer capital model is clear, start with best and brightest in world, prostrate cancer, breast cancer, does the hospital have deeply proprietary data in these areas? when i do the walk around, i spun out one of these companies from memorial sloan kettering i

was at mass brigham after and said who's best in cancer they said we are and md anderson. back to msk, who's the best in cancer and nextgen diagnosis we are and md anderson so no surprise i flew to houston and spending time with md anderson. >> are the private market valuations, though, to your liking or things not marked down appropriately? >> 99% of the private companies have not been marked down properly so this idea, this theory of well, we'll wait for the next financing to finance and then reset the valuation is ludicrous. i can go through the list and say, this company, as good as it is, airbnb, did have to take a markdown and there are others and i think we're in the early innings of those markdowns

happening. >> you do? >> i do. it's going to take 12 months. >> it's going to be a lot of pain then. >> 12 months you said? >> 12 months the private markets typically on my experience, based on pattern recognition take that long what's interesting is we are at the top of a hype sickle right now for a.i. that disappointments me. because fundamentally, i think, as a golfer we're on the 2nd hole that's how much room to grow a.i. has and will. it's the largest set of underlying technologies in terms of wealth creation that i've ever seen. whether it's social media, internet circa 1995, and the medical applications, life sciences, a lot comes together where the great hospitals can't hire the great machine learning developers out of google they just can't.

sometimes they tell me they can and i say good luck. so this hybrid model in a certain area from a great hospital with a chief medical officer coming from that hospital teams with ten or 12 great a.i. developers and they're coming, no surprise, from meta, amazon, it's an incredible small group, one other piece of advice, i speak a lot of campuses, have our children, grandchildren, cousins, study linear algebra. don't have to major in linear al al algebra but we as a nation have a shortage of mathematics talent that's the next battlefield. when i visit universities or

look at nobel laureates at math we sit down and they say you're the first venture capitalist that ever called me. so i met with mathematicians and linear algebra for the beginning of quantum and when quantum begins something it sits at the heart. so it buys our children, grandchildren, whether they're three and five -- >> i'm going to use that i'm speaking at a high school graduation next week i'm going to tell them to study linear algebra. >> double major. >> study your linear algebra because then jim breyer can invest in your company. >> mark was only 20. >> he knew his way around linear algebra, though. >> thank you for the time. appreciate it. don't miss the ceo of intuit that stock is under pressure as you can see down almost 7%

after the company reported earnings quick note as we head to break as well. tomorrow night you're not going to want to miss it if you did the first time we'll air the entire full down that took place a week ago between a gentleman named elon musk and myself reairing tomorrow at 8:00 p.m we're back in three. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

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got some broad based weakness here, dow is down 200 most s&p sectors red except energy and utilities mccarthy now on the tape looking for a press conference in about an hour hour watching that on a busy wednesday. don't go anywhere.

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you might wanna buckle up. only from xfinity. the future starts now. intuit shares falling lower this morning revenue fell a bit short of expectations the tax software maker also issuing some weaker guidance, but that depends on the business

unit let's check into it with intuit's ceo to discuss today. it's great to have you back. a little bit of different tone between small business, hassan, and consumer i'm wondering if you can sort of explain where you're taking guidance and why >> sure, carl. good morning thank you for having me. i see you're in a different scen scenery. looks nice behind you. first of all, we did raise guidance for the year, now growing 12 to 13% on the topline. and our operating income and earnings growing more than 20% it's really several elements one element is small business and credit karmah actually delivered better than expectations and tax was below our expectation. and it really was driven by a lower number of filers this year than we anticipated, than the irs anticipated. and really the primary reason that there were lower filers is many folks came in during the pandemic era to get access to

the stimulus dollars and the tax credits that the government made available. these are folks that don't actually have to file taxes, but in order to get access to those moneys from the government, they had to file taxes to get access. many of those that came in for all of those credits have now left the category. and that's why the total filings was lower, and hence, why turbotax didn't deliver at the rate that we assumed, but i'm bullish about the future this is more about the number of filers versus our execution. >> yeah, we're definitely used to the idea of kcovid pull-forwards. one big story has been this notion that the irs itself will have an e-filing product in at least pilot mode and i wonder, is that a competitive thread or not? >> you know, we don't view it that way, carl first of all, this has been the topic for the 18 years that i've been at intuit and i'll start first with free software is available for all

consumers in the united states, and the awareness is actually quite high and so therefore, this would yet be another free software which we don't believe it's a good way to spend taxpayer dollars, but nonetheless, it would be another free software. so we don't really see any material impact. we've had several very large entrants into the tax category in the last several years, providing free software. and the reality is, it's not really made an impact. our strategic focus is the $30 billion that's spent for those that go to somebody else to have their taxes done for them. whether it's a consumer or a small business trying to get their business taxes done. that's really where we are focused, particularly with data and ai, that we've been investing in we believe we can be very disruptive in assistance is all done digitally, and that's really where the future is >> i mean, ai, if generative ai can do taxes, that's great news.

my question is about the consumer environment all we keep hearing is that tax returns came in light. that's why we're bumping up against the debt ceiling if june and not september. why is that? is it capital gains or a signal of consumer economic weakness? >> i would say -- well, a couple of things, one is unemployment is still very low, which means that most people have to still file their taxes really, the majority of what happened is because of all of the stimulus and tax credits in general, refunds were a lot lower this year compared to last year the balance due is roughly higher, but is not offset by the amounts that refunds had dropped. and so when you look at all of that, you look at all of the pandemic-era filers that came in and have now left the category, you know, we believe that's had an impact on some of the ceiling debt that we're talking about. >> so we'll watch it

shares year-to-date at least keeping pace with the s&p. a fascg and look forward to next time thank you. >> thanks for having me. carl coming up, good to see you next hour, live from the ceo of council summit in santa barbara, we have the t-mobile ceo and former yahoo! ceo marissa mayer. that's coming up next. as we continue to watch this market under a little pressure here nvidia, tesla, microsoft, alphabet all kind of weighing on the nasdaq as far as the s&p 500. energy is the only sector that's green. financials, industrials, and materials are lower with the s&p down almost a percent right now. 'lbeig bk. 2% now on the week. wel rhtac

good wednesday morning i'm carl quintanilla with sara eisen. we are live at cnbc's inaugural ceo council summit in santa barbara today. setting the agenda, wilmington trust cia, meghan shue, warning the market may be underpricing some risk and that a recession is, in fact, coming in the second half. >> two chief executives joining us this hour

abercrombie's fran horowitz and mike seifert with a read on the state of the consumer. >> later on, marissa mayer live with us on set we'll talk some ai hype, regulation, regrets on hulu and a lot more take a look at stocks, though, under pressure again today. down almost a percent on the s&p and the nasdaq is down a percent right now. some pressure on big tech, really pressure across the board, every sector lower, except for energy and oil prices have been confirm on some supply issues but nvidia is under pressure after a 100% run-up this year. tesla, microsoft, apple, carl, it feels like the market is grappling with, first of all, the debt ceiling risk, the deal is still elusive after talks broke down last night. we don't know exactly where they stand with time running out to that june 1st deadline, which secretary yellen yirts we've also got concerns that inflation is going t