it is friday, may 26th, 2023 get ready for the three-day weekend. "squawk box" starts right now. good morning welcome to "squawk box" here on cnbc i was going to say welcome back. this is the show that never ends we are live from thes s nasdaq market site in sometimes square i'm becky quick along with andrew ross sorkin joe is off. >> good to see you i was hanging out and talking about that summit. we have the debt ceiling at the top of the list.

>> the top concern. >> the top concern at a cocktail party and people chatting. the bigger thing was probably the sense or interesting -- it was a sense of uncertainty, which everybody has, but sense of what happens on the other side meaning, if you get out of this, whatever this is with the fed and everything else, are you in some stagnation period for some lengthy time that is something i heard a lot. >> that makes sense. what about the credit crunch >> and a.i. and chatgpt. if you could get out of a conversation that did not include chatgpt, you were lucky. >> that sounds like fun. >> we are glad to have you back. >> i heard you had a big week. heard and watch. >> it was an unusual crowd lots of fun.

we had good conversations here, too. >> good. >> good to have you back >> nice to see you let's see what is happening with the u.s. equities dow futures are indicated off by 47 points. that is actually coming after five days in a row of declines for the dow. that is what we have seen. s&p futures down 7 nasdaq off 2.5 this comes after the s&p was up ..9%. shares of nvidia helped things across the board for nasdaq. it helped the chip stocks and microsoft. you saw the s&p tech sector with the best day since november of 2022 if you are taking a look at what is happening with treasuries, andrew mentioned the talk and sou concern of a deal of the debt ceiling. that put priessure on the yields

the yields have come down slightly 10-year treasury at 3.78 2-year treasury was down slightly still elevated level from where with w we are a week ago. for one-month and beyond, the o one-month bill is above 6% this shows the level of concern. the first time we have seen a one-month bill at 6% the one-month short-term is elevated above levels you see on yields in just about most of the s&p stocks >> wow we will go to d.c. and talk more about this latest on the debt ceiling negotiations kayla tausche working the phones everybody in washington talking about this good morning, kayla tausche. >> reporter: good morning, andrew

negotiators are moving close toercloser t the deal for two years speaker mccarthy suggested it has not been reached with the white house. the challenge is greater to reach a certain level of cuts for non defense spendsiing. now talking about dialing back two officials called it a live issue and preserve social programs which are important to democrats which otherwise would be on the chopping block no deal has been reached yet, it would need to be clinched by later today. the bill would be written, posted by tomorrow speaker mccarthy promised three days to read the bill once it is fully written. the house and senate could vote

and memorial day just before the deadline you can see we are taking this right down to the wire that is even as some of those big issues are still outstanding, including work requirements and permitting reform which have been on the table since the beginning, but not reached the final state. andrew, we will see what we get today and whether we hear from speaker mccarthy and the president on this progress >> from a practical perspective about the negotiations, if you were to handicap it, does happen to -- does it happen today or over the weekend? does it force the market in a way it hasn't happened yet >> reporter: it can get done if there is some movement from the established positions throughout the process. then, if both sides can swallow the very bitter pill of messaging this to the members. one reason you can sense we are

getting close to a deal is anger on both sides. democrats yesterday were up in arms about some of the items that were reportedly cut some of the costs reported to be shaved off the budget. republicans were up in arms about the items they brought to the table and learning those were out of contention and negotiations warning that there would not be enough republican votes for a deal unless more of those things were added back in it is up to the president and the top democrat in the house as well as senator schumer who has been absent the last couple weeks of talks as well as speaker mccarthy to message what is in this and describe to their members why it is a win and why they should vote for it. once you get a deal in principle, it is a tough sell. >> kayla, that was my question how convinced are we they can get this passed? usually as you mentioned with

anger on both sides of the aisle and both parties, that signal there is is something in the middle people can rally around does anybody have -- is there an absolute confidence whatever they determine and if the president and the speaker can actually come up with a deal, it is something that will be swallowed by the caucus? >> reporter: that is the belief, becky. the question is to what extent can you get, you know, as many as 100 democrats to vote for this can you get as many republicans you need while losing the entire free mdom caucus in the effort the whip count has been going alongside the negotiations obviously as they change, the votes have been changing one of the issues they are dealing with is take one item off the table and you lose votes. they are having to contend with that as well as a score from the

cbo. i mentioned the discussion over the irs funding. that is something that previously the cbo said would pay for itself $80 billion in spending. roughly $120 billion in revenue. there would be a situation if you take $20 billion of that spending off the table, that means you get less revenue can you message the fact that is not helpful to the deficit when you remove that spending with the cbo, it will be instructive in how they message it >> kayla tausche on the story. unfortunately, others are going on vacation this weekend, but i imagine you are not. good luck. we with will wil we with will l talk to you a lo. thanks let's check out shares of retailer gap sharply higher after the company reported earnings of 1 penny a share. that beat the 16 cents loss.

big improvement over expectation. the gross margins improved by 5.6% as the company held the line on discounts and benefitted from reduced air freight expense. gap did keep the outlook unchanged. stock up more than 11% there are shares of ulta beauty down after the company barely beat expectations and stuck with the same-store sales outlook. inflation concerns are leading consumers to spend more selectively. it is a category growth which is healthy, but two years of unprecedented growth the stock down 8%. shares of marvell technologies is higher the stock up 17% first quarter revenue beating estimates after nvidia's guidance beat. it expects a.i. revenue to double for the year as it ramps

up a.i it said it plans to benefit from the shift to a.i. systems with higher bandwidth and data connections and lower lag time good news for them cathie wood missed out ark etf closed out on the nvidia stake. wood told cnbc nvidia was a good stock that would check the box a.i. company the valuation at the time, she thought, was very high i wonder what she thinks now >> probably wishes she did not sell. >> maybe maybe it is too high and this is a hyped cycle a.i. bubble? >> she would not be the only person to think that with a jump

like that in one day not something you almost ever see. jpmorgan chase is developing a chatgpt like software service that leans on a.i. to select infi - investment for customers in the filing, jpmorgan chase said the product would tap cloud software with a.i. for analyzing and selecting securities other big banks have been internally testing a.i. software for uses like customer service and creating code. jpmorgan chase may be the first financial company aiming to tailor the product to customers. a trademark lawyer tells cnbc that jpmorgan chase must launch the product within three years of approval to secure the trademark. jpmorgan chase declined to comment. andrew, you can't get away from chatgpt and a.i. >> a lot of smaller folks trying to build this already.

>> big tech. >> and others that i would imagine wealth front and services i imagine everybody will have a service. the question is if it is ready current chatgpt is great at creative thinking, but not in the large language model in truly mission critical stuff it doesn't always know what. >> it is not always right of the michelle cabrera sent me something last night she did who is becky quick you know, it came up i am the daughter-in-law of dan quayle. that is obviously not true check it out see what they mess up. >> it goes to the data pool you are pulling from six months or a year from now, a

different place. when we come back, we are with watching short-term treasury yields. we talk strategy after this break. check it out the one-month t-bill yielding over 6%. the impact on the sky high prices on the travel industry. how many people are trading down for cheaper vacations? you are watching "squawk box" and this is cnbc back when i had a working circulatory system, you had to give your right arm to find great talent. but with upwork, there's highly skilled talent from all over the globe. right at your fingertips. ♪ this is how we work now ♪ ordinary problems are for ordinary companies. we're here to fight the big, intimidating, impossible-to-change problems. [beeping] from developing treatments at unprecedented speed to addressing threats to global health. we're leading the way with a revolutionary mrna platform

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welcome back we have been watching short-terms treasury yields elevated for over a mononth at this point one-month t-bills yielding 6%. the first time above 6%. it has held. two-month at 5.7 two-month at 5.75% i want to bring in mark. mark, have you seen anything like the yields we have seen in the t-bill market recently >> no. extremely dislocated at the front end. it reflects investors adverse to earning anything from the delayed payment associated with it >> how do you play this as an investor would you bet a deal gets done and once the deal does get done or what happens? what is the fallout?

>> the risks are high. the news flow from d.c. is encourage anning at the moment so, i think it is fair to have a modest degree of optimism something will get done. if you have an investor and trying to put money to work at the front end, you want to make sure the investment is safe and get money back on time that is the concern on the front end. that is why investors are proven to be adverse and not wanting to own any of the potentially impacted treasury securities in many ways, they are hot potatoes if you are an institutional investor, you want to tell your clients i don't have exposure to have a delayed payment or technical default. on the institutional investor side, most investors don't want to have any exposure and want to tell clients they are safe because they don't own

potentially impacted dates. >> okay. your guess is all of the people get paid, but there is the potential for a slight delay and getting the payment and that's why you see elevated rates again, how do you play this? what do you tell your clients to get into is there anything in short-term treasuries that looks like a good deal? >> what we have been tell our clients is two things. number one, if you want to put money to work, there are certain dates we believe are relatively safe these are dates that are right after an expected large inflow into the u.s. government or right after the u.s. treasury gets so-called accounting maneuvers or measures to allow additional head room when are those dates on june 15th, corporate tax payment date any security matured after that is reasonable. the additional headroom measures the treasury receives after june

30th the first half of july is reasonably safe and trusting you can invest there and get your money back the other thing we have been flagging for investors is also note that really once a deal gets done, there is a very, very sharp surge in u.s. treasury supply that supply surge is stemming from the fact that the government has been holding back the amount of debt it can issue. once the deal gets done, the flood gates open >> which means what? >> $1 trillion of treasury bill supply and roughly three months from june to august. what you will see is the supply hits and rates go up prices go down if you are an investor and you have liquidity you can put to use, you might want to hold back and wait for that supply to hit because you are probably see ler

than today >> mark, thank you a lot to look for and we appreciate your guidance. >> thanks for the time when we come back, we dig through trends in travel as americans juggle post-covid pent-up demand with pressure of inflation and sky high prices. we get new data after this. as we head to break, look at the biggest pre-market winners and losers in the s&p 500. you have paramount global up 4.8% right now what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns...

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as we head to memorial day weekend, travelers are not letting higher prices keep them home, but some consumers are trading down opting to drive inn ststead of y we bring in mike who leads the transportation unit. mike, thanks for joining us today. >> thank you for having me, becky. >> we're headed into the official kickoff to the summer travel season. i know personally some people in my family are driving next weekend instead of flying because the flying got too expensive. $1,100 from new jersey to chicago. what's going on? >> that's right. what we're seeing in our study which we poll consumers every year on the travel intentions are more people traveling. it is a bright summer for the

travel industry. about 50% of americans to take some tip of trip between memorial day and labor day this year many are choosing to drive, but, becky, we are seeing in our data that more will fly this summer they will go further than they did last summer. we'll expect to see a bit of demand to europe for example we are seeing them trade down. there is about 25% of responses to the survey and seeing the financial situation become more challenged so, a lot of the stories we heard about last year which was, you know, strong demand for first class tickets, for example, and luxury hotels will tamp down this summer. >> what does that mean in terms of margins for all of these things i guess it is a different hotel which is a winner? if you are trading down from

first class seat, that impacting the margins of the airlines, too. >> i think demand overall is going to be up there will be demand for tickets. however, i think we have to put it in context from last summer just coming out of the pandemic. people had a lot of savings built up they were willing to spend a little extra for the bucket list trip they were dreaming about on the sofa during the pandemic that will tamp down a bit. demand overall will be very strong this summer with very congested airports and roads for the holiday season it will, i think, bring some of the margins which will be overall quite good for the travel industry. the mix of consumers traveling this year will be stronger it will be up from two years ago about 40% of americans traveled

during the holiday season and this year is up 50%. it will be a busy summer. >> how much is the flexible work schedule still account for some of the elevated travel levels? >> you know, we coined the term laptop luggers people who take a leisure trip and choose to work one or two days on their leisure trip about 25% of our respondents consider themselves laptop luggers. that provides flexibility on picking better air fares leaving wednesday and working thursday and friday and starting have vacation on saturday we have seen that pronounced in the holiday season as well >> mike, looks like a strong summer season for travel if they are not willing to spend as much >> thank you for having me.

coming up, more potential for travel chaos we talk to sara nelson, the flight attendants international president. and we have more on the x date for the debt ceiling talks. that's next. a live look at the capitol we do that as we look at yesterday's s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.

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good morning welcome back to "squawk box. we are live from the nasdaq market site in times square. this morning, the futures are flat weakness for the dow off 5.5 points s&p down fractionally. nasdaq indicated up 20 points because it has been a strong week and strong year for

tech technology. house speaker mccarthy will try to get a debt deal done before the deadline. looking at the markets which are hanging in there, we bring in courtney rosenberger good morning we have been asking the same question basically every morning now for the last several weeks we are closer. what is the handicap for a deal getting done before everybody actually does get back from the three-day weekend? >> good morning. thank you for having me. we are optimistic to get a deal. we think we can get a deal done today with a handshake agreement. we have to go through the process. we anticipate that conservative republicans will demand the 72-hour review period. not getting a vote until tuesday or wednesday in the house at least. >> what is the chance that goes haywire?

will the markets respond i don't want to say people have been cool as a cucumber, but almost the expectation of one minute to midnight and everybody reaches a deal do we have to get to the point where the markets are saying something to washington for them to do what needs to get done >> i think some of the fitch and credit ratings putting the u.s. on credit watch is the motivating factor to get people to the table and get a deal. default is in no party interest. there was a deal to get something done before treasury count hit zero i think there will be some negative headlines because there will be headlines the deal struck is not enough for conservative republicans for too much for some of the democrats i think it is really important to emphasize this is a coalition of the willing this is the moderates and both chambers getting this done

mccarthy doesn't need 222 house votes. he needs majority of his majority in 2011, republicans lost 66 votes in the house in their party. they still got it passed they lost democratic votes and got it passed. >> courtney, the headline is if we get to the other side a lot of other subheadlines in the story of what was compromised on is there anything in there that those in the market need to pay attention? >> i think one of the big p compromises we are seeing in the early deal is the defense spending it is looking like defense spending will have a 3% increase next year. that is in line with president bide biden's budget you have the defense with the speakership debate with the freedom caucus members wanting cuts you had defense under performing it is continuing to under

perform. that could be a positive for the stocks. >> if you are lockheed or boeing and after the "60 minutes" piece of them fleecing everybody, you are happy? >> there is a point that geopolitics is the fact that washington is hawkish on china and emphasizing national security over economic efficiency and it is tough to not be bullish there >> courtney, i know they don't need the entire caucus to vote yes. speaker mccarthy has to be concerned about cutting a deal that alienates too much of his caucus for an extented period of time he has one member who can say they want to vote to decide whether to throw him out there has been talk that democrats are coming up with a way to say if that happens, we'll support you of

they will not support him forever. they will support him for the immediate term and still deal with the caucus. does that make this different? john boehner had a tighter grip on his caucus. >> what makes this different from 2011 is the majority that mccarthy is dealing with he has a narrow majority there is a risk, as you said, with one member needed to bring up the motion. i think mccarthy is able to as moderate as the deal is relative to republicans opening negotiation point is and he will point to a win here. one is work requirements which is the last sticking factor. he could end up get working requirements and getting desk fe -- defense increased. he is getting budget cuts. he is getting democrats negotiating. he has most of the caucus to take it as a win

again, you know, d.c. is about negotiations avoiding default is the most important thing. >> courtney, thank you i'm taking the defense headline away that's an interesting one. headline beyond the headline thanks so much when we come back this morning, a big announcement last night. ford and tesla reaching a deal to open up tesla's charging network to ford vehicles it is a big deal because infrastructure is a big deal for all of the evs we will talk about that when we return. and mitch green is talking about the momentum for the second half of the year. that's still ahead. you can get best of "squawk box" with your "squawk pod" and listen anytime on your favorite. we'll be right back.

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is it possible to survey foot traffic constant contact. across all our locations? or to help stop a cyber attack before it starts? or help provide secure health care virtually anywhere? with global secure networking from comcast business. it's not just possible. it's happening. welcome back ford will partner with tesla on charging initiatives for the current and future electric vehicles jim farley and elon musk made the announcement they will be granted to 12,000 chargers early next year the ford generation of evs is including the that's charging plug making ford the first

automaker to tie into the tesla network. shares of ford are up 1.1% shares of tesla up .30%. this is a really key thing idea of finding standards be an m and making sure you tie into the infrastructure this is key. >> huge for ford and the country and massive thing for tesla. >> you get to be the standard. >> to be the standard and think about the infrastructure i know people have been critical of twitter and this and that with elon musk i marvel not what he has just done with the cars, but the infrastructure piece on the ground and in space it is amazing. the margin on what will happen here is going to be amazing for them, too. that is -- >> charging itself >> yeah. we'll talk to jim about it every time a ford driver or a

tesla driver uses one of the super chargers, over time, that unto itself is a great business. >> entirely different business if you spin that off >> this is sort of key we talk about it and have different analysts come on and we say is the value of tesla right? it doesn't look right if you put it up against an automobile maker. that is probably right it doesn't look right against an automobile maker if you think about the charging stations and some of the other things some of the other things are more in the future and you have to suspend disbelief or just believe. this is part of the story. >> i have never been interested in ev because i don't want the hassle of trying to find a place to charge it i don't know this deal pushes me over the hump, but it offers the incentive and idea that some day

it is not so hard and have to worry about some of the places i go can i get there and not have a problem trying to recharge up to maine or some place else this, to me, is the beginning of yes. create a national infrastructure so it doesn't matter where i go. >> interestingly, a number of testla owners are unhappy. >> they don't want more people using their charging stations. >> they feel there is a line. >> you need a longer term vision if you think of how it works it needs to be easy like going to a gas station and filling up. >> it is interesting to talk to jim. >> we are speaking with jim farley at 8:00 a.m this is the first on cnbc interview. we are looking forward to it >> he was on twitter spaces last night to talk about elon musk's synergy happening yesterday. that site did not crash. with the car metaphor, you don't

want it to crash in musk news, you can't -- we talk about chatgpt. you cannot do a day without musk news >> right. >> it is part of business. elon musk's brain implant company, this is cool, talk about cool news. neuralink has received the green light for the first clinical trial. it could soon implant devices in pat patients' heads. it was approved by the fda to begin u.s. trials in 2021 of the -- 2021 it will announce more information soon the future is here it's coming. >> it is when with we come back, mo "squawk box. sensitive data posted on the

internal chat forum which was seen by internal tiktok employees. we will do that next. and listen or watch us live any time look at that beautiful shot of the capitol in washington this morning. you can watch that on the cnbc app. we're ckft ts.ba aerhi

welcome back to "squawk box. tiktok ceo downplaying the user data and congressional testimony in march testifying the u.s. data is used by engineers in china for business purposes and they have rigorous data proptocolsprotoco. the new investigation appears to

contradict that testimony. the times reporting the sensitive user data and driver's license and addresses and illegal material was posted on lark, which is similar to slack between 2019 and 2022. according to the times, of empld access to chat rooms and the data was stored on chinese storers late last year one of the reporters behind that investigation joining us now from "the new york times." good morning. >> good morning. >> so, what's going on here? who is telling the truth >> well, from what we have learned, we received a trove of documents and talked to former and current employees. and we're told that there's a lot of concerns around house this user data was being shared on this messaging system internally. >> the messaging system was an interesting element to it. because i think a lot of people think, okay, is the data safe on the system itself, tiktok itself and they're building this thing

called project texas, right? >> right. >> that will be on their own servers. but then i started -- when i realized there's other elements of how information gets shared, even internal messaging service might change that dynamic. >> right what that reflects is what a sprawling enterprise this is and this effort to separate tiktok and all of its u.s. data from the bytedance and chinese organization so it almost seemed like a loophole to some of these employees or sometimes they described it as lazy or sloppy where you have this user information being shared the way i would perhaps message you at work, but in these groups of more than 1,000 people with quite sensitive stuff. >> right how much better do we think other social media companies are about this side of it, which is to say, it may be safe insofar as it's sitting on some server somewhere at facebook, but then

are there people inside facebook or other or twitter or other places that have access to things and people share it back and forth for other reasons? >> i think this is probably something of an issue across social media companies but from the people we talked to, they said that tiktok, of course is maybe a little less mature in these areas. don't have quite as much experience operating here and of course the element that they're storing this information from what we understand in servers in china. >> so the other -- >> they keep saying they're not. are they or are they not >> we know as of late last year they were storing the lark data in china we asked tiktok repeatedly to answer where it is stored now? is it specifically in china and they ignored the question. >> we should say cnbc reached out to tiktok. a spokesperson responded to the "times" story. if i could read that statement i think we have that can you put it on the screen saying that the data -- they call them data documents. >> uh-huh. >> from the times story neither

accurately depicts how we handle protected u.s. data nor the progress we've made under project texas. when project texas is complete, all communication involving protected u.s. user data will occur on a separate platform that is controlled, mon tord or accessible by u.s. data is well under way and expected to be completed this year. the large lark groups were shut down last year after reviewing internal concerns. we evaluated those concerns and since implemented several mitigating controls. you reported a lot of those comments what were they doing with driver's license how did they get driver's licenses >> a lot of this was through troubleshooting, through accounts having issues and in the process of that, these users would upload their passports, driver's licenses and make other -- >> this is people uploading -- i was thinking to myself, you don't have to upload your driver's license or anything of those things to get on to tiktok. >> yes. >> i'm shut out of my account.

i get in touch with customer service and i -- to prove who i am, i send you a shot of my driver's license and that driver's license is now sitting on somebody's email server. >> that's the only way to get back in if you get shut snout. >> that seems to be what was happening in this case >> so the idea is that that driver's license -- because it was sent to some customer service person is now living on some server in this case the lark server which happens to be in china. >> with the chinese government overlooking that. >> it wasn't submitted as a ticket somewhere when you think of a customer service process here, it seems in the documents we saw that the driver's license was shared. it made its way on to a lark group. this kind of internal slack chat with thousands of people with employees in china interacting with it. then it was simply stored there. because it seems the people we talked to who accessed it were able to access it as of last year. >> we had a guest earlier this

week who was defending tiktok and other social media companies, but particularly tiktok, against the montana law, just pointing out you can't decide you hate a company. that's probably true i think montana lawmakers know this is a weak law and still had the legislature in session they probably would have amended this law to make it not just tiktok specific, but they could say any company that is basically overseen by the chinese communist party would have a follow separate rules or be allowed here you don't have to say tiktok any company that's owned by the chinese communist party could have to go along with some of these rules. is that what you think we'll see as a result of what you've uncovered? >> potentially i think this is just playing out in really unexpected ways. and so it's really hard to tell what's going to happen next. >> do you believe ultimately you could separate it? that's always been the question. you can separate the stuff could literally live on u.s. servers in audited fashion and people

feel good about that >> that's the challenge, right, for tiktok and bytedance convincing the u.s. they can creditably do that. >> now that you know what you know, do you have a view >> our story reflects how complicated and challenging this is and the many ways they have to prove the credibility here. >> sapna, nice to see you. have a great three day weekend you can as everyone -- >> the debt ceiling going to ruin everyone's weekend? >> i don't think you want to be a member of congress who is traveling internationally this week back to your district may be a separate issue hey, i just asoon they stay there until they get this wrapped up and finalized. when we come back, this morning's biggest movers, including an a.i.-related pop for shares in marvel technology. details right after the break. that stock is up by 18%. the latest in the string of technology stocks that have taken off this week. "squawk box" will be right back. ♪ ade

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bill ackman firing a warning shot across the bow of icon enterprises. why he claims the hedge fund could be another arcagos what memorial day travel will look like at the airports we'll talk about all of it as the second hour of "squawk box" begins right now ♪ good morning welcome back to "squawk box" right here on cnbc, live in times square andrew ross sorkin along with becky quick. joe is off we have a lot of news. u.s. equity futures at this hour looking up, maybe on the back of some positive signs around the debt ceiling we'll talk about that in just a moment dow up 60 points nasdaq up 43 points. s&p 500 up 7.5 points. look at treasuries, though, of course that's been perhaps our

greater indicator of where things really stand. the ten year note 3.78 is. 2-year 4.487 and short-term yields, one-month t-bill, 5.975% is the yield you can get on it. >> the weird thing, even if you go back to the 2-year ten-year, that's bager inversion again because you're talking about the 2-year at 4.5% i don't know if that's reflection of signaling recession is more than likely. it's been signaling for a while. or if that's a reflection of, okay, they do a two-year deal, then you will have this debt ceiling hit again two years from now. >> would you -- at a two-year yield, would you like that or would you take the one-month? take your chances. >> one-month on annualized bases at 6%. >> it's exciting if you think it can hold. >> right if you're looking at a yield -- >> but if it holds, that's bad

for the world. >> looking what the you get for putting money in a checking account. nowhere near 6%. and that's crazy when you're talking about u.s. government issued debt. let's get a little deeper into this washington story, what's happening with the u.s. debt ceiling negotiations. at this point there are just six days to go until the treasury's projected x date multiple reports this morning that the biden administration and house speaker kevin mccarthy's office are closing in on a deal and drafting legislation that would raise the government's debt ceiling for at least two years. kayla tausche joining us with more this is something that has to be moving by the moment, i would guess. >> reporter: yes it is a very active target, becky. we learned that from our sources as well that negotiators are moving closer to a deal to cap federal spending for two years in exchange for lifting the debt ceiling. house speaker kevin mccarthy last night noted that no deal has been reached and some republican aides suggested that big items like

that top line spending number are still outstanding. but the budget cuts would spare the pentagon and veterans according to a person briefed on the talks. that's making the challenge that much greater to reach a certain level of desired cuts overall. and that would mean that you have to cut nondefense spending even more. now to get more savings, negotiators are currently discussing dialing back a portion of the $80 billion allocated to the irs under the inflation reduction act, one of president biden's signature pieces of legislation. that funding was meant to ramp up tax enforcement two officials called it a live issue. one that would help preserve social programs important to democrats and help win some of their support. no deal has yet been reached, it would need to be clinched by later today. the bill would then need to be written into legislative text. speaker mccarthy then promised his members three days to fully read it and the house and senate would vote after that, likely after the memorial day holiday

just before the june 1st deadline clearly a lot that still has to happen before june 1st today will be a critical day for negotiators. we'll see whether overnight some of those details have fallen into place for an announcement today. guys >> kayla, what do we watch aside from the extremes in both parties? getting angry about what's happening here i guess that signals that talks are getting closer as you told us in the last hour. what else are you watching >> well, i think the overall spending levels and what they have identified for appropriators to cut during the budget process because one of the dynamics of the 2011 debt ceiling debate, yes, they got a grand bargain in the end. the two years of us a tearty that followed are worse than either party expected. and that kept a cloud over the economy for some time. i think andrew was mentioning that ceos are talking about not just the debt ceiling itself and how this specific issue gets resolved, but what does it mean

for government spending going forward and what impact does that have on the economy we had a big influx of government spending for the last several years, and clearly taking that away would impact growth in the country as well. >> excellent point kayla, thank you we'll check in with you a little later. >> sure. kayla mentioned that x date from the debt ceiling as the deadline looms investors might expect markets to breathe a sigh of relief once that deal is reached. our next guest says the important message is the market is likely to drop for a lot of reasons, specifically the treasury increasing issuance and cause another extreme liquidity event. joining us to explain is barry nap, director research at iron side macro economics lay this out for us, barry the idea they have been holding back issuance as they await this deal >> right really since the qe era the fed created liquidity climate change these series of storms that have

resulted from the end of asset purchase programs. with the pandemic, the treasury has gotten heavily involved in this as well, these various liquidity surges and reversals so if you just think back through 2021 when janet yellen got her spot at the treasury, there was $1.7 trillion in their checking account at the fed, called the treasury general account. the fed through the course of 2021 injected 1.5 trillion into the system through their purchases of treasuries and mortgages, but the treasury actually injected more than that in shorter period of time from february through september, they cut issuance, drained that balance in the account all the way down to $50 billion from $1.7 trillion. that injected more money into the economy than the fed did and of course, we know what happened in 2021, speculative areas of the markets took off

and bond -- yields got pushed way below where they should have even as inflation was picking up well, in early 2022, the treasury rebuilt that balance from $50 billion to $900 billion in the first four months of the year that's really what kicked off the 2022 correction. so here we are again with the treasury balance down to $49 billion as of last night and they're going to increase issuance once the deal is done the real big debate in the market is who buys all the treasury bills you know, you were talking about the yield curve a little bit earlier. if those -- that money comes out of the banking system, which has been the case thus far, since that liquidity drained from the treasury began and the fed ended qe and began qt, bank reserves have dropped from $4.3 trillion down to 3.2. the lowest comfortable level

that i hear most insider experts think is about 2.7 at that point, which we could easily reach this fall whether money market funds buy this treasury issuance or the banking system winds up buying it in essence, the fed could have to stop qt. the fed were to stop qt with rates -- with them determined to keep rates where they are, that 70 bases point inverted curve you discussed earlier will stay deeply inverted and that will put measure pressure on the banking system so, all these storms that have been created by large-scale asset purchases and all the reserves that were created and now the treasury just with this volatility and their checking account at the fed created this instability in th think is over. >> just to put on very simple terms for people, if you have a lot of issuance that comes out,

that's a huge amount of supply you're going to probably see prices come down as a result you will see yields go up especially on the short term is what you're seeing. >> correct i think we have seen that if you compare the equity market to the bond market thus far the bond market has been bare flattening rates have been moving up but primarily in the front end some is the premium you talked about in t-bills looks like a lot on an annualized basis isn't really that big of a premium when you think about the dollar risk you're getting paid to buy a short-term bill. but you had this move forward or move higher in rates in an an s tis pags of all this supply. we have seen mortgage spreads, mortgage rates are back through 7. part of that is the spread is widening the treasury in again absorb all this supply i would expect to secret spreads move out when this happens as

well this will probably wind up locking in the fed pause because if we do get the move that i expect, which would be probably the s&p going to 3850 or so which was the december low, bank stocks will be under pressure again, that would probably convince the fed that, all right, we have definitely reached the financial stability equilibrium level i was convinced the last rate hike was a mistake because of what it meant for the banking system and the fact that the curve was so inverted and banks are under such pressure. but this is really what i'm looking for. if we get a deal and there's a relief rally, i think that's a selling opportunity. i would be very cautious at this point. but again, i think that once we absorb this issuance if the fed does become convinced that we have done enough, then we could be able to be in a better spot in about two months time. >> okay.

so let's just add to that, though, what kayla just mentioned. the idea that the last time we had a deal like this that was done, it was followed by two years of austerity, lower government spending. you can look and say, yeah, the government is spending too much. we need to cut spending. but the expected result of that is that you are going to see a slow down in gdp because the government is not spending so it's not putting that in. layer that into it as well. >> sure. so, when kayla was saying that, i was thinking the intractable part of inflation, the part that the fed is concerned about is fiscally driven, it's not monetary and that was true in the '60s and '70s the real intractable inflation story was driven by much higher transfer payments to individuals. they doubled from when lbj started his great society in 1965 to nixon's resignation in '74. they're at much higher levels than that today. been driven up by all the spending and so, the bigger problem with

the government spending, the cbo projections of 6 to 7% deficits for the next ten years, government spending at 25% gdp, it will create '60s and '70s-like inflation. cutting spending is a much bigger deal. that's really -- we had the treasury and congress still spending money willy nilly while the fed is tightening policies so in essence you're taking money out of the private sector and giving it to the public sector that's inflationary. so i would mitigate -- i would be less worried about the growth piece than the inflation piece and cutting spending is a net positive for inflation >> barry, one last point, couldn't they just spread the issuance, couldn't treasury spread the issuance over time? >> yeah. they could except they're down to $50 billion in that account. and they need the dough, right they have to pay the social

security checks on the 2nd and have bills coming in all the time as we know, they spend more than they take in >> okay. barry, thank you always good to see you >> all right thanks coming up, it has been a mixed bag of results so far for retailers this week. courtney reagan will join us to break down what companies are saying about guidance. and shrinkage. that is next is oafr box" rollsn te th

welcome back to "squawk box. a number of retail companies updating guidance and talking shrinkage. that's the topic of the morning. can we get the george -- >> i was going to say. it's so hard -- >> video or is that a fair use thing. >> i was in the water. retail results and mixed shopping bag to start the year with lots of uncertainty for the rest of 2023 many retailers like gap and kohl's had margins holding up thanks to lower freight costs and largely avoiding heavy discounting. the lowest level we have seen in years for discounting. inventory positions improved retailers controlled cost pretty well stores continue to see resurgence with more retailers reporting stronger in-store performance than digital sales best buy an example. lvmh strong sales in asia and u.s. was weaker.

shoppers are still buying household essentials, food and cosmetics but holding off on discretionary purchases, apparel, home goods, electronics and toys increasing shrink in many cases from organized retail crime is becoming a bigger issue. target, dollar tree, foot locker and alta going into detail on the conference calls about how these losses are becoming more significant. even with many reporting stronger first quarter earnings, retailers largely reluctant to increase full-year guidance instead reaffirming prior forecast words and prices like inflationary pressure. inflation was measured 117 or 18 times and uncertainty and cautious are frequently repeated on this quarter's conference calls. now the debt ceiling deadline approaching just adds another possible shake to consumer confidence something doesn't get done there, i can't imagine it makes people feel good about where they are financially >> goes exactly to what we heard at the ceo summit.

the anxiety about what happens next >> right exactly. nobody knows there's so many different factors at play. i think we were surprised pleasantly in some ways by the retail resurgence during the pandemic and shortly after coming out that to see people going back and buying the goods they were buying and the volume which they were doing it the fact that discounting is really low i think is very interesting, too, because we were so addicted to discounts and coupons. >> they have gotten better with inventory management so many got stuck with lots of inventory after we came back out of the pandemic and people stopped buying stuff and started doing things and spending money on services. they have gotten much better on the inventory and will help with that. >> rh talked how they may have to increase some discounting to move some of their goods and obviously -- >> they're an expensive brand. >> very, very. and with the softness that we have seen in discretionary goods, i imagine we will see some of that tick up right around now i would imagine may not have been captured, of course. >> can i ask a shrinkage

question, stolen goods it's almost become this bizarrely political issue. >> that's so true. when i talk about it on tv -- >> when you talk about it on tv, people go crazy. >> there's a reason for the politicalization the underlying causes. >> one side saying that there's absolutely terrible shrinkage. stolen goods you go online, you see these videos on tiktok and twitter of robbers literally brazenly doing things that are just -- >> ripping everything off. >> so you see that that's on one side and then on the other side you have a political class that says that somehow either this isn't happening and they're seeing with their own eyes or saying the data is not really there and the retailers aren't really -- they're sort of saying this but is it really real. >> the retailers i talked to will tell you absolutely it is real >> i know that i'm trying to -- >> weakened -- >> but then i'm trying to understand the data piece of it because you do have -- i think

we had somebody on our air this week you had somebody on the air this week saying unfortunately there isn't -- i don't know if it was on "squawk" or later in the day talking how unfortunately there isn't actual data across the board that shows it. >> right. >> what do you think is really happening? >> i mean, i think it's situation dependent whether it's a category or retailer or geography. it is true that in areas where the felony thresholds have been increased that you see people steal more or steal right up to the point of that threshold because they're very well aware of it. and the enforcement is lower for whatever reason. maybe that's because they have bigger things to worry about i don't know that's part of that political discussion but then you have a best buy yesterday and i asked the ceo cory barry about shrinkage there because it's electronics during sort of coming out of the pandemic, i want to say it was 2021, they were having these brazen robberies and thefts and getting very dangerous and very aggressive but she actually said yesterday it's really more historical, something they didn't need to

call out now it's not higher than it was but also as electronics retailer -- they have always had to be a little more cognizant. i think again it's categories. >> maybe they lock up the smaller stuff. nobody is walking out with a big -- >> right they have one entrance one exit they have the security personnel right there. although in a lot of cases the retailers are telling the security, don't get involved there was a home depot employee unfortunately killed in april in california for trying to get involved with a shoplifting incident so i think the threat is really real i totally understand what you're saying and it's become a political issue. i don't know the full answer. >> we had that new york democratic state representative who came on and argued with us that, no, there aren't people leaving new york and wealthy people aren't leaving new york you look at the figures, the people coming in make a lot less than the people moving out you'll have a tax revenue issue. >> is it gaslighting -- you have

people now using this argument there isn't enough data that's specific to it what i have been surprised about is why the retail federation and others haven't actually -- if this is as big an issue -- by the way, seems to me it is >> they have made this one of their policy points. >> it's a survey and little -- >> they need more data if this is going to be a -- because it's not just -- it's a point they need for the retail industry but also there's a political side to this. >> policymakers. >> for the policymakers. for some reason they haven't i don't know why that is. >> target in my knowledge the first retailer that has ever quantified it truly. the others talk about it dollar tree spent time talking about it they didn't give a dollar figure they bring it up if it's material. >> i think at this point for target one of the analysts we spoke to said it's probably 3% based on the numbers he would running and expecting. walmart, 2%. a little north of that different at different places but also an explanation of what

the mix is walmarts may not be quite as high, because they have a higher mix of groceries nobody walks in and walks out with groceries it's too heavy. >> resell your milk quickly. when we come back, stocks to watch ahead of the final day of trading before a long holiday weekend. then the battle of the billionaires bill aikman warning in a treat that icon enterprises could prove to be on ar cay goes moment the future of carl icahn's hedge fund "squawk box" will be right back. time now for today's affleck trivia question. which nursery rhyme was the first recording to be played by thomas edison on the phonograph? the answer when cnbc continues the story of my life. no coach, there is a goat here! whaaa! what's this? a thousand dollar hospital bill?

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somebody very well known to our audience on "squawk box. peter orzak now named the next ceo of lazard. he'll succeed long-time ceo ken jacobs now confirmed by the company, orzag will take over on the 1st. we congratulate peter. he's been coming on this show for so very, very long and now the ceo of a big wall street firm congratulations. meantime, get over to dom chu with a look at this morning's pre-market movers. dom? >> we have an interesting call on this friday before memorial day weekend with regard to one of the more bearish global asset allocation teams on wall street becoming little less bearish right now. this is coming from citi group the global asset allocation team has taken underweight rating on u.s. stocks, u.s. equities to a neutral rating they have also downgraded the european equity side of things to an underweight.

now, if you take a look at the way things played out, spider s&p etf up 9%, underperforming the 13% gain from the i-shares eurozone etf, ticker ezu, that gap has been there pretty much all year it's a reversal. see the u.s. equity start to outperform a little more they think because of the fed tightening cycle coming to an end perhaps in the coming months as well as the artificial intelligence boom we could see those u.s. equities in technology specifically start to outperform keep an eye on that share. at least the shares of the u.s. stocks compared to europe. also watching what's happening pre-market with regard to tesla versus ford. both stocks are up in the pre-market trade ford up 1.5% tesla up .5% ford has become the first major traditional automaker to partner with tesla with regard to adopting tesla standard in technology for electric vehicle

charging in the future, ford models will come with a compatible charger that can access the 12,000 tesla super charging stations in north america for the time being current ford ev owners can buy an adapter to fit the charging stations as well so tesla and ford partnering on that technology deal those shares on the move pre-market one more thing to take a close eye on is nvidia a 24% gain yesterday which led to $184 billion rise in market cap. in terms of nvidia shares up one half of 1% in the pre-market trade so far staggering to think that $184 billion in one day is like adding an entire adobe to a company like nvidia. we'll keep an eye on the shares. highest volume day in the years for nvidia. >> adding 1.5 intels big competitor, too. >> it's mind boggling to think a megacap company like that can add a quarter to its value in one day. >> right

continue to watch. dom, thank you we'll see you in a little bit. still to come this morning, no deal in washington on the debt limit yet, but our next guest is hopeful an agreement will be reached. we'll have the latest from the hill right after this. and later, don't miss our interview with ford ceo jim farley to talk about that company's new charging partnership with tesla stay tuned you're watching "squawk box. and this is cnbc are asking. is it possible? with comcast business...it is. is it possible to help keep our online platform safe from cyberthreats? so we can better protect our customer data? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with global secure networking from comcast business. it's not just possible. it's happening.

debt negotiations remain fluid on capitol hill. our next guest says, though, that he is optimistic that a deal will be reached and that it should be bullish for the equity markets. joining us right now is the senior u.s. policy and politic strategist for ever core isi tobin, i think the market agrees with you that a deal will be reached because you don't see much panic anywhere on these things what makes you think that the deal is going to be good news for the markets longer term? >> right absolutely thank, becky good to be here. yeah, certainly markets are treating it as if we're out of the woods. i don't think we're quite out of the woods yet, but sure looks like we're on track there. you know, we never saw, of course, the big panic selloffs

that a lot of people worried we might get towards the end of this process i don't know that we're going to unlock a massive rally by getting this out of the way, certainly yet another cloud over a market that's kind of had trouble breaking out upwards so, i do tend to think that eliminating the uncertainty here is going to help you know, from my conversations with institutional investors, there's been a lot of attention to this that kind of predicted attention did come as this heated up and attention around the likelihood of getting a deal rose over the past few weeks even though that never translated into massive selling or kind of huge amounts of change to folks' portfolio positioning. but it is obviously not lost on people that this has been a risk and clearing it up i think has to help. >> you know, i would almost argue the counterfactual just because we haven't seen the selloff, we haven't seen the pressure that you normally would in a scenario like this. the market is looking through this, which almost makes me think there's more downside risk

than upside potential. >> certainly it's asymmetrical if we see another major setback in negotiations, we are obviously set up for quite significant selloff given that people are pricing in an assumption that this is going to get resolved i don't think that's very likely it sure looks like they're going to get to a deal i think the parameters are largely in place in terms of risks to worry about at this point, are they going to line up the votes in the house both speaker mccarthy and minority leader jeffries have never really been in a position of having to round up votes for an unpleasant compromise like this before. mccarthy obviously has overperformed expectations throughout the year in his ability to keep the caucus unified on kind of feel-good, party-line bills but this is a different endeavor we're seeing the dissatisfaction from the freedom caucus side the past couple days it is not going to end up cutting spending substantially

turning out to bh a fairly good deal for democrats on the other side of the aisle, there is, you know, certainly some sticking points for democrats depending on what ends up happening with work requirements on the snap in the final bill i think probably they will be able to get that done. i have always thought that anything that mccarthy and biden walk out of the room with they'll be able to get through congress it could be a close-run thing and you know, if we do see unexpected problems emerge there, early next week, you know markets are very well set up to react to that quite negatively. >> tobin, another thing we have been talking about this morning is just the idea that if both sides get something out of this, you are going to be looking at spending cuts. and that inevitably will have an impact on gdp. you're not going to have the same government spending, even those who wanted to pull back, haven't thought what that means for the economy. is there the potential for downside kayla tausche pointed out after the last year we did have two

years of us a tearty and that did eat into gdp. >> two important things. one, there's going to be a lot less fiscal consolidation coming out than the top line numbers might imply. a lot of the work in the recent negotiations has gone into -- democrats coming up with kind of clever budgetary maneuvers to minimize the extent of the bonefied negative impact to discretionary spending and defense and va spending will go up. so, on net, i think we're going to be pretty close to flat of course, that represents real erosion given the inflationary environment. but we're talking about one, two, three tenths of a percentage point of gdp, so not a lot. the other huge difference from 2011 is the macro economic environment. that was in a period of persistently depressed labor markets, zero interest rates right now obviously we're dealing with, if anything, overheating. i think at the margins small contractions in government spending look a lot more likely

to translate into less crowding out and an ability to absorb that sort of freed up resources in the private sector now compared to where we were in 2011 >> tobin, thank you. have a good weekend. >> thank you coming up, billionaire fund manager bill ackman sending a warning rival carl icahn we're going to discuss that warning. it's a fascinating one right after the break. take a look at futures this morning on a friday morning ahead of a three-day weekend, but also potential debt default that we're hoping to avoid dow jones up about 55 points nasdaq up 55 points. the s&p 500 looking to open 8.5 higher get the best of "squawk box" on our daily podcast, follow squawk pod and listen any time. stay tuned we're coming right back.

millions of americans will be taking off for the memorial day weekend, setting up a true test for the u.s. air traffic system phil lebeau joins us with more in another airport, phil >> reporter: at o'hare it's my perch. every memorial day or holiday in the wintertime and this morning, the good news is that we have great weather for the most part around the country.

while the airports are packed, as you can see here, generally speaking it's expected to be a relatively smooth holiday travel weekend. how many people will be flying this memorial day weekend? well, it's measured from yesterday all the way through next tuesday 16.5 million passengers will be flying up almost 6% compared to last year but the busiest since before the pandemic, since 2019. airline staffing has increased for this summer. that's the good news you have more pilots, flight attendants, grounds crews, it gives more slack in the system, if you will. flight schedules at some of the busiest airports, like new york city, they have been reduced that should add a little buffer to the system, if you will if you are somebody who is traveling, as you take a look at the airline index, you might be saying to yourself, yikes it's expensive to fly right now that's because it is air fares up 40% compared to aaa compared to last time last year.

inflation adjusted if you go back years and years and years ago it's actually still lower now than it was let's say 15, 20, 30 years ago to buy an airplane ticket. looking at the major airlines, keep in mind that they are not only going to see a test this weekend but next week as they begin the busy summer travel season, for the first time since before the pandemic, we will have more than 3 million people flying on one day. that's the first time that we will see that since before the pandemic so, this is the beginning of the busy summer travel season. lots to discuss later this morning with the secretary of transportation pete buttigieg. we'll be talking with him here at o'hare about the system, whether it's ready, whether the airlines, the faa, all of that coming up a little bit later on this morning guys, back to you. >> phil, i know we always talk about air traffic control being part of the problem, they can't handle it all. how much do the airlines blame themselves for their stupid hub and spoke systems where you funnel everybody through these

major airports, make them go there to get anywhere else can't get there from here unless you go through one of the major hub. it's their own stupid fault. >> reporter: bekesy, six in one, half dozen of another. the point to point system has its own flaws. look, that's just the way the system was set up in this country decades ago. >> yeah, but if you have new york as a hub you can't handle, why are you putting people through there? >> becky, bottom line what we need in this country and i know nobody is going to hear about this, more spending on airports, more spending on air traffic control technology, hiring more air traffic controllers, all of that is going to cost money. i know there are going to be people out there saying, look, they should be more efficient about the system you physically do not -- >> i think we should spend more on air traffic control i have advocated for that over a decade but at the same time -- >> becky, you need new airports. and you need new airports. look, they're building a new

terminal here at o'hare. it's not going to be done for many, many, many years down the road but all airports, especially your older ones like here in chicago, they need to be completely updated expanded and in some cases you need to build a new airport. i was just out in denver earlier this week. i was there when it was being built in the early '90s becky. it's out the middle of nowhere it's a pain in the neck. you know what, it's now the largest hub for united and one of the largest and busiest airports in the country. that's what the airline industry -- >> we're out of time for the next interview but i want a longer conversation you. bring this back. >> why don't we get sara nelson to weigh in on all this. thank you, phil. more to expect from the busy travel weekend ahead, sara nelson, international president of the association of flight attendants did you hear what phil was talking about, becky quizzing him, we could quiz you on the same topic. >> i heard it. phil is fired up this morning. i love that phil lebeau. so, i agree with him you know, if you actually

understand and know what's been going on in the airline industry, the problem is that the infrastructure is not there. and we have an opportunity actually to do better this year with the faa reauthorization bill we have a chair to get this bill done this year it's really, really important because you can't encourage to have people come and do these jobs if you're not paying them properly, if you don't have the proper technology in place and if they think there is so much uncertainty in the airline industry that it's a bad industry to get into so, i agree completely with phil >> sara, how should u.s. customers feel about the price of an airline ticket right now >> well, phil was also right that if adjusted for inflation in 201, air travel was lower and it is actually down 4% from 2019 if also adjusted for inflation since that time. so, you know, air travel costs what it costs. and take american airlines, for

example, the biggest carrier if you only took the passenger revenue, it would not cover their costs. there would be no profit margin there at all it's only the additional things, cargo and other fees that allow them to actually make a profit >> so the perception -- the perception among the american public right now is it is too expensive frankly to travel by air the way at least the perception was that they could only two, three, four years ago -- obviously take the pandemic out of it why do you think there's -- in your mind, it sounds like a misperception? >> well, what's interesting here is that it's not changing passenger behaviors. so demand is stronger than it's ever been. the consumer is apparently willing to pay what the ticket prices are going for so, it doesn't -- the complaints don't really match up with the behavior >> and then finally, i was going to ask you about wages for your

fellow union attendants. given where the pricing is -- and by the way, the fact that actually some airlines aren't actually making an extraordinary amount of money anymore, which is the other unique element of this, whether you think your folks are being fairly paid, underpaid, overpaid. >> well, look, we're in contract negotiations almost across the entire industry. and it is going to require updating those contracts and getting more in line with what people need to be able to provide for their families flight attendants are dealing with inflation just like everyone else along with all other airline employees. and you see a lot of these -- a lot of talk in these negotiation tables that this is -- workers are going to call questions on the company with strike votes and other pressures to get these contract negotiations done and it's good for the industry i think the airline industry has admitted that they need to pay people to be able to attract them. >> what's the median wage these days for a flight attendant on american airlines? >> oh, on american airlines

you're going to make me do some really quick math and i don't have the fundamentals right here, i believe the last time i checked it was right around -- be $60,000 a year. >> fair enough sara, thank you. hope to talk to you soon hope you make it wherever you need to get to thanks >> thank you, andrew. when we come back, the battle of the billionaires and at the top of the hour, ford ceo jim farley will join us to talk about the company's surprise partnership with its rival, tesla. getting access to their charging network. we'll dig deep into the story. "squawk box" will be right back. ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

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>> we'lllcome back hedge fund manager is coming after carl icahn on twitter this week he is writing, eit reminds me of where the swamp county ter parties had smaller exposures. all it takes for one lender to break ranks and liquidate shares or attempt to hedge before the house comes falling down the tweet caused shares of the hedge fund to drop below $19 at one point. joining us now, liz hoffman. i thought this was over after he herbalife, but maybe there is something under that battle that never went away. >> yeah, very 2013 vibe to it,

doesn't it you i think a little more civil this time. he has become a pretty frequent -- weighs in on twitter on a bunch of controversial things so not surprised to see him pop up >> with a do you think the reality is though of the troubles at icahn? >> it is clear that iep has been playing out diffevidends unsupported at cash flows and trades at a massive premium. they usually trade at a discount or slight premium to book. i think book value is around $15 or $16 a share, but still trading for more than the sum of its parts. if the stock continues to fall,

he could have a real problem which is that he has pledged about 60% of his shares in the company to loans >> and that is what i was going to ask, do we have any sense of where the demarcations are in terms of as things fall what has been pledged at one number >> not at all which is raising governance issues. most companies have really strict limits on what their ceos can pledge at what levels. and even if they do, they just close it say what you like about elon musk, we had a lot of information about how much he pledged and where. we knew exactly how far tesla -- >> is that governance issue or a failure of disclosure requirements i don't believe that we have requirements that requires disclosure, but maybe we do. what i'm asking, are there rules being flouted or is this an issue where maybe rules should be put in place?

>> there is a gray area here and i'm not a lawyer but icahn enterprises is a limited partnership which has slightly different rules around disclosure it may be that there is some i go withal room there that carl is squeezing through but as a shareholder watching the book value, i'd absolutely want to know there are filings in delaware that we've seen that looks like most of it is with morgan stanley, but we really don't know and i think that is the big question looming over the stock right now. >> how much of this is it a dent in the armor or reputation of carl icahn and how does it change if it changes anything at all in terms of his ability and dynamic with which he has been able to be an activist in so many different companies to oftentimes attack them and whether this now changes that dynamic in terms of the defense being, hey, you know what, look at your governance behavior over

here >> it is low hanging ammo to the mexico he goes after and he just came out of a fight where he won one out of three seats, appatient victory, but not a great look for alumin either didn't grab on to that the way i thought that they would. certainly a chink in the armor but also just puts him on his back foot financially. a lot of his net worth is tied up in this company he does have some other assets you have a big stake in xerox that you could see maybe something happen with. but you nervyou never want to sl assets to meet margin calls any day. and by the way hes has also said that he is under federal investigation about some of this stuff which makes any maneuvering doubly hard. >> i'm sure we'll be talking

more about this. have a great weekend >> you too when we come back, this is a big one. ford announcing it will be partnering with tesla on charging in addition tips for current and future electric vehicles we'll talk to jim farley next about that news. and later, we're expecting economic data at 8:30 that could set the tone for the markets futures had of those numbers are higher dow aut6 inupbo 6pots hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it.

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good morning time running short now for congress to get a debt ceiling deal coundone in washington, ane inflation data just 30 minutes away we'll get a look at the fed's preferred fwgauge and what it could mean for rate hikes. and ford striking a deal with tesla to use its super charger network. in moments we'll speak with the ford ceo about it all. final hour of "squawk box" begins right now.

good morning welcome back to "squawk box. we're live from the nasdaq market site. joe is off today it is last day of the week ahead of a three day holiday weekend and you are looking at equity futures and they have picked up as people wake up and realize it is friday. dow futures indicated up by about 75 points, s&p up by 10, nasdaq up by about 60. of course this is also comes as you get more signals that a debt deal could be more likely in washington treasury yields is the other place we've seen some of this play out ten year looks like 3.791% two years has moved above 4.5%

and shares of ai tar lynn in-video is showing small gains in the pre-market even after yesterday's 24% surge. but future focus fund manager kathy wood missing out on some of the big games her etf closed out its in-video stake in early january and said that nvidia would be a good stuck that would be the check the box ai company because its valuation at the time was very high. and cnbc has learned that jpmorgan chase is developing a chatgpt-like software service to choose investments for customers. according to a filing, the service will tap cloud computing software using ampt ii to selec securities and fda has approved first clinical trial in humans for a neuralink. they are not yet recruiting for the trial.

and negotiations appear to be making some progress towards a debt ceiling deal in washington kayla tausche has been working the phones any new news >> it is an around the clock effort and we know negotiators are moving closer to a deal to cap federal spending to two years in exchange for lifting the debt ceiling for one to two years. but kevin mccarthy notes that no deal has been reached and some republican aides have suggested that big items like that overall top line number for spending are still outstanding. that is a key issue. the budget cuts would spare the pentagon and veterans from these cuts according to a person briefed on the talks and that is making the challenge that much greater to reach a certain level of desired cuts for nondwefense discretionary spending they are discussing dialing back the $80 billion allocated to the

irs. and two officials called had a live issue and one that would help preserve social programs important to democrats while no deal reached yet, it would need to be clinched by later today. the bill would then be written, posted and speaker mccarthy has promised that once that happens, his members would have three full days to read it the house and senate would vote of a mateafter memorial day and would be just before the june 1 deadline so a lot condensed into the next few days and it all rests to getting a deal done today. >> take us through some of the deal points. somebody earlier in the broadcast talked about how the deal itself may help the defense industry with their budgets. there had been some expectation that those budgets could get cut. are there other sort of headlines within headlines that we should be focused on that maybe we're not? >> on the defense piece, it is

important to note that the proposal that republicans had first put on the table was an increase to defense spending and steep cuts to all the other discretionary spending and the white house had countered that proposal by keeping all spending including defense flat so this is certainly a change. while it appears to be at least on the face of it a win for the biden administration because it is reportedly defense spending at the level that the white house proposed for the 2024 fiscal year, it is one of the republican's proposals so that is something that i think will definitely benefit the pentagon and defense contractors and i think republicans have said just given the state of the world, that is something that needs to happen i think elsewhere we need to look at the energy industry, permitting reform is also still under active discussion and what exactly that would look like democrats have been pushing for permitting reform to clean up energy projects. and republicans are wanting to

dr green light oil and gas projects more easily. so that is still under discussion >> kayla, thank you. starting early next year ford owners will be granted access to thousands of tesla super chargers across the united states and canada. it is part of a new partnership announced by elon musk and fordford ceo jim farley jim farley is joining us this is surprising news. >> it was a big week for us and this announcement we think will really help our ev customers have a much better experience. >> it was surprising just from the perspective that you all are rivals, i don't know if you want to call take respectful rival, frenemies. how did the deal come about? >> we've been working on it for a couple years

we know we're number two in ev sales behind tesla and we know charging is a really big deal for our customers and adoption and we're scaling, basically doubling our ev capacity this year and we'll get to 2 million in a couple years. so this is a big deal for the company and for our customers. and we have about 10,000 fast chargers now and this will double that. so 22,000 fast chargers. it will be the best network in the country for my brand and that is why we were interested in it and we like their locations and charging technology, it works really well. so in '25, we'll put their plug on our vehicle >> and i have to say as a consumer, i think it is great. i love the idea of some sort of standardization or moving toward standardization in the industry.

nobody wants to get stuck with a charging unit that they can't use. what i think is interesting about this, if you went back to the vhs, beta max comparison on all these things, vhs eventually won out. and you are can choosing to go with tesla which is riding with the nacs standard versus the ccs standard that the biden administration and most of the u.s. automakers have been pushing. why tesla, why this standard and do you think by teaming up together you kind of can change what will be the standard? >> that is a great question. we believe that customers should have as you said the option of using either standard and with adapters in software, we could do that. but we really like the tesla standard from a customer standpoint when you look at how easy it is to plug in, if you drop the cord, the tesla system is more

robust the other standard is great and we'll have had dapfursed a adapr for that but i was can my kids and they were like can we stop there, that is a tesla. and i said no, we'll go over here behind this building. and so it is a bet for our customers and we want our customers to be able to use both systems actually with adapters >> lock term when you think about the frenemy situation, if tesla becomes that standard, is that good or bad for you i mean, as you try to evaluate and think through what it means over time. >> we think that it is good for us because we're going to have the ford pass software so people don't have to leave the software that they use for charging at their home or to

unlock the vehicle or use the phone as a key when they use the tesla super charger, they are still using ford we were very concerned if they had to switch over to use the tesla software, but that was part of the deal and it was a deal breaker for us for the reason you mentioned >> and how seamless therefore will payment and the like being using those super chargers >> early next year on the ford pass app, we'll have a bunch of different payment options like we do today. so customers can use their e pay system, whatever they choose and there will be no issues. it will be super simple, we'll ship an adapter to everyone who bought ford ev they will go on ford pass, they pick the payment option they want, all the billing is the same as it is today.

so super easy. >> and what do you think long term gm and others will follow suit and that effectively the tesla super chargers will become the standard >> i think there is a chance you know, the ccs is a great standard, but it was pretty much done by a committee. i think gm and others will have a big choice to make do they want to have fast charging for a lot of customers or stick to their standard and have less charging so i don't know, but i think we're number two, last year they were number one. i think that this will be a tough choice for those companies. >> reason i ask, to some extent if tesla becomes the standard effectively, it means that every other automobile maker will be sending money, almost su subsidizing tesla apover time

tesla should be able to make cars and potentially even sell them at cheaper prices relative to their competitors how you sort of think through that there is a bit of three or four d chess game going on there. >> and i agree with you, but i have to say we really believe in a free market. there are a lot of independent charging companies whose business is to compete with the super charger network. and we'll have hadadapters to wk on both. all the customers will compete for that customer experience and over time i think the standard is going to be who takes care of customers the best i know there are strategic impacts over time, but we believe that charging will be uh ubiquitous it has to be just like all the railroads had to get with a standard

this can't be the reason why somebody doesn't buy an ev and with adapters and software, we really don't have to make a choice right now what the standard is. but i think that it will play out in free market >> jim, on that point just the idea of building up the infrastructure and making sure that you can go anywhere that you would with a gasoline powered vehicle, how long do you think it takes before those problems are resolved and you don't run into snags along the way especially as there is more ev adoption and you will need more charging stations to handle more people, more customers. >> i'd say we just need to look at norway. auth norway has been 50% electric they have a lot of rural and urban customers. it is in the north so it is really cold where battery performance isn't as great and if you look at norway, net much have solved the charging

problem. i think until retailers start to put fast chargers in front of their stories so as people do grocery shopping, they can fast charge, we're now making our fast charge that can get 150 miles in like ten minutes with our second gen products. so i think that it will take a number of years. what we see on the commercial side is most people do depot charging they have a route every day. plumbers, electricians, ambulance. and that is kind of pretty easy to solve but retail side, it will take building standards and that can take five to ten years >> and norway is something like 150,000 square miles versus 3.8 million square miles in the united states. but i hear your argument on it but we have a lot more space to fill up. >> that is for sure. no doubt about it. most americans have three cars in their household so early days like we're in now,

second inning in a nine inning game, they can pretty much charge at home or work but for this to really work for americans, we have a long, long road ahead of us on infrastructure and that is why we're investing in super duty, we announced a new super duty this week because we believe in a future where there is a lot of exciting combustion and hybrid vehicles that weren't go electric anytime soon >> jim, thank you. >> thank you so much fascinating. huge implications. and coming up when we come back, breaking economic data, and next how much wealth did the ceo of nvidia accumulate yesterday with its best day in more than six years. we'll tell you the answer. and as we head to the break,

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welcome back nvidia stock surging yesterday on the back of first quarter results and guidance and it was more than the market value of individual s&p 500 companies. robert frank is joining us banner day not just for old investors but for the company's ceo who made outlets just say at least on paper for one day >> he certainly made out he added 6.5 bui$6.5 billion to wealth in just one day he is now worth $33 billion, that moves him up to number 37 on the global billionaire list he's also cash rich. he sold over $600 million of nvidia stock the past two years. his last sale was in march of 2022, that was right before the

stock fell by more than half maybe regretting that sale a little bit now because this ai gold rush creating a huge amount of wealth for the big tech billionaires top ten adding more than $250 billion to their wealth this year the biggest winner in dollar terms, mark zuckerberg who has doubled his wealth to $91 billion. he's still down from his all-time peak of 142 back in 2021, but he is back in the top ten now. elon musk up almost as much adding $41 billion jeff bezos adding $33 billion along with that new yacht and his new fiance bernard arnault still up $27 billion for the year and larry page and sergei brin both adding about $25 billion. sergei gifting $600 million of

his shares probably to charity >> robert frank, okay -- well, we could talk taxes. we but thank you. and when we come back, more on nvidia and the treat's biggest tech socks with mitchell green. but next, the magic number movie earsth theaters are hoping to see this summer at t-mobile, your business will save over $1000 bucks. what are you going to do with it? i could use a new sign. with t-mobile for business, save more than $1000 bucks versus verizon. and get the new samsung galaxy s23 plus free with no trade-in required. ♪ opportunity is using data to create

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memorial day is always a big weekend at the box office and now there are big questions about whether it can return to pre-pandemic levels. julia boorstin is joining us with more. good morning >> good morning. the whole movie industry is hoping that families will turn out this weekend to the box office we're watching did sney's live action remake of little mermaid. but the big number hollywood is watching is 4 billion. if the domestic box office tops that number for the summer, we're back to pre-pandemic levels it topped that number 12 of the prior 13 years in the summers leading up to the pandemic looking at the movie theater stocks, cinemark is up 94% year to date, imax up 19%

and amc up about 15% year to date and all of the movie studios also have something on the line this summer. disney with an upcoming independindiana jones sequel and little mermaid, it could be the biggest winner this summer according to a note that says warner brothers discovery has the most potential variance with the flash and barbie and meanwhile sony has its spiderman sequel, paramount has its mission impossible and then universal fast x launched last week and there are 20 more wide release notes set for release this summer than last summer so paul is bullish on the potential for the box office to top that key $4 billion number but he says it is unclear if the writer's strike will impact

ability to promote their films remember movie pass so it just launched a new version for between $10 and $30 a month. so we'll see if that can draw users and boost movie going turnout. >> new version i thought there were a lot of problems with the old version. >> there were a lot of problems with the old version it had to shut down. it was a business model that really did not work. so the question is whether this new version can be financially viable they are saying this is a sustainable business model and that it will work for theaters and consumers. >> julia, thank you. have a great weekend up next, some breaking inflation data, we'll bring you that number as soon as "squawk box" returns

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welcome back to "squawk box. just seconds from the personal al income and spending numbers and durable goods orders futures are in the green pup

nasdaq up about 50 points. and s&p up about 7 1/2 take a look quick at the ten year note because i want to get to rick santelli, but 3.783, between year at 4.89 rick is in chicago at the cm eflt the numbers, sir >> yeah, we're expecting a litany, long list of numbers so viewers listeners on the radio, you want to be very patient here and income numbers can be market moving april preliminary, up 1.1% we're expecting down 1% and last month revised up to 2.8. take out transportation. now it drops out 0.2 if you look at capital good orders, a proxy for capital spending, it is up a whooping 1.4% much stronger than we are looking for and in the rear-view

mirror, we have minutes 1.1. the 1.4 is significant it's the best level since the end of '21 if we look at shipments versus orders, shipments were up a strong half a 1% personal income and spending for april, expected up 0.4 on income, it delivered the goods, up 0.4 exactly as expected spending better than expected, up 0.8 we were expecting up 0.5 that's the best number since it was up 0.2 at the beginning of the year in january. if we look at real spending accounting for inflation, it's up a half a percent. month over month, up 0.4 of 1% not good that's a tenth hotter than expected it's much hotter than the 0.1 in the rear-view mirror it's the hottest level since it was 10.6 in january. the high watermark there was up

1% in june of '22. if we look at year over year deflator, up 4.4%, you can see yields moving up on that, can't you? yes, up 4.4%, following up 4.2 a significant drop from its high watermark in june which was up 7% if we look at the month over month core deflator, it is up 0.4 of 1%. also hotter than the 0.3 expected and we have to go back to january where it was up 0.6, rounded up to 0.6. if we look at the deflator year over year, it is up 4.7. another hot one. we're expecting it up 4.6 and the rear-view mirror is up 4.6 quickly, wholesale inventories dropped 2.1%

retail inventories were up by 0.2 and we're starting to see that build a bit and last but certainly not least, the deficit, worse than expected minus 96 billion we were expecting minus 85 we have made some progress last month now stands at minus 82 but we're backtracking once again, getting close to triple digits you can clearly see we're up at 381. we were at 377 in the two-year note yield but i do caution that 10s, 20s and 30s are lower in yield and higher in price than yesterday and there could be a lot of curve implications when we restock all of the money that we've been trying to conserve. if the debt ceiling issue gets resolved, there's going to be issuance many think a trillion dollars more of t-bills are going to happen rather quickly. others say we have to build up

the treasury coffers look for the yield curve to be packed up. my feeling is, watch for the bills to show up very quickly. let's see how that figures in to all the action that we have seen as we have seen bill yields rise up to historic highs will that reverse? will it drop these are big questions. back to you and i hope you have a good holiday weekend. >> the same to you thank you for bringing us all of those numbers. let's get over to steve liesman now with his analysis and reaction he's got his glasses on. he's looking down. what's top of mind, sir? >> yeah, yeah, this is -- okay i'm going to start with the good news here as far as i can -- have been able to discern the last four minutes. applause -- standing "o" to rick for delivering all that data as accurately and intelligently as he does. i'll try not to screw that up. so the first thing is, let's look at real consumer spending,

it is better that 0.8 we did, that's going to add into gdp it's likely to boost forecasts for second quarter gdp so this idea of the slowing economy in the second quarter which is so central to so many forecasts, looks like it's eroding away once you reach a certain level for the first month of the quarter, all you got to do is zeros for the rest of the quarter at that same rate or that same level and you have a good consumer spending that's the good news i think the bad news is in the inflation numbers. if you remember, this concept from several fed offt in recente progress on inflation is too slow guess what we didn't make any proess on inflation. when i look at the core pce number and i look at the headline number, we went the wrong way and i want to just get this -- i don't have it yet. maybe they have it in the back there. this supercore number that we've

had before i don't know if it's updated yet. i don't have it updated in front of me. there it is. well, no i don't have the april number. but i do have the core number, food and energy is up 4.7. it hasn't updated in our system yet. my guess is it probably ticked up so we have this problem. and then i don't know if rick is still there, but we have this distortion out there on the one level. the market is probably correct to think of a federal reserve doing more, maybe june and july, back on the table. on the other hand, the numbers that we look at, the mobilities we look at, have been distorted by the debt ceiling debate and the move away from the short end of the bills curve in the last several weeks. and as rick pointed out, there could be a flood of issuance i would say this, if the market is thinking more fed this

morning in reaction to this data, i think it's a correct way to think about it. with the exception being what happens with the tightening of banking credit standards and how much that ends up. but you have a stronger consumer this morning, a stronger gdp number and you have more inflation than the fed wants that's three strikes and you're out. one more thing, guys, which is the idea that there's two more pieces of data, the jobs number next week and the inflation number on the first day of the meeting in june. guys >> quickly, steve, real quickly, this is what i've been bringing up for years and years and years when we always talk about fed fund futures and this magic instrument that gives us these percentages. it's a trading instrument. it moves it. it's influenced by other short-term instruments because it is a fancy short-term instrument. >> absolutely. >> and it doesn't mean it isn't accurate it doesn't mean we should say things like ignore it because it is moving along with a variety of other financial instruments

that is sending a message. the reality is what i think we're really trying to say is, that message may be a little overblown now, but for the moment in time, that's what's pricing. we expect the huge influences are going to moderate as quickly as they came when we see a debt ceiling resolved and i think you'll see how the market forces influence fed fund trading, but it isn't necessarily a bad thing. that's just what it is and we should remember that it moves up and down and it always has a little bit of volatility in it like any other financial instrument >> okay. steve and rick, i want to thank you both appreciate it. i want to talk more about the new slate of economic data we just got and what it means and could mean from what we get from the fed joining us right now isjulia coronado casey mulligan also joining us,

an economics professor at the university of chicago. good morning to both of you. so curious, though, what you make of these numbers and also can we throw into the mix -- i think a lot of people are trying to figure out this idea that there may be a massive issuance of more treasuries and what that could mean to the marketplace after we get through all of this, julia? >> yeah, i think steve hit the nail on the head this is data that shows the economy is still pretty resilient, the consumer, that feedback loop between hiring and spending remains intact and unfortunately that's coming along with inflation that's proving a bit sticky, even though it's come down from the highs and we're sort of stabilizing in terms of the run rate but the run rate is too high for the fed, this leaves the open question for weather they need to do more or not again, you never want to overread one month of data we had two months of weak consumer spending will ever

april. they bounce around from month to month. the economy is slowing we saw that confirmed yesterday with weak gross domestic income. and i think rick is right to your question on the treasuries. yeah, the market is pretty distorted. we've got another hike fully priced by july a lot of fed speakers have said they're not in a hurry with all the debt ceiling disturbance, why not take a break in june. and then hike in july. if the data hasn't confirmed the moderation that you need to see. so the percentages are absolutely distorted and we're going to get a lot of volatility at the short end as the debt ceiling hopefully gets resolved and the treasury restores its ambu balances and cash coffers. i don't think the fed is going to make decisions based on

distorted readings. >> fair enough casey, where do you land becky you had a great interview earlier this week who said interesting things about what julia just said, we're hiking. these numbers change that view, casey? >> no. i don't think we have a lot of news here. we're in a weak economy, a slow growth economy the thing we don't know, is it negative or not? it's weak. we have big human capital problems throughout the economy. the good news that's happening -- this quarter has been that there's actually a chance we'll stop this very high level of government spending it was about a war on covid. but the covid, the enemy has receded and the spending hasn't. now it seems like a real serious chance that we'll go back to normal spending. i think that's going to be good for inflation and in particular make it easier for the fed to

focus on inflation and not worry about all of these government securities floating around out there. >> and, casey, speak to that the idea of treasuries floating around out there do you think that we should be as concerned about it as i think a number of people are >> the securities come from when the government spends more than it makes there are some interesting timing issues. i'm not a bond trade ner terms of the week-to-week changes. are we going to continue to rack up trillions of debt this is the first time in years we've seen a serious chance of saying, no, we're going to go back to so-called peacetime spending. >> are there any arguments that we've made that basically what the fed has been doing isn't working and, therefore, as a tool, is the wrong tool, and therefore, they shouldn't be using it insofar as you just said and i think we all agree, inflation is not coming down as

fast as i think we had expected or people had wanted >> yeah, there's some notion -- there's a discussion around whether the economy is less interest rate sensitive than it has been in the past one argument for that is that everybody is refinanced to a 2.5% mortgage. they're going to hold on to the mortgages as long as they can, making that big piece of consumer and residential investment spending less interest rate sensitive. that's a fair point. on the other hand, there's a discussion around lags in monetary policy, whether they're shorter now because markets are sensitive to fed-forward guidance, or whether they're the same as they were in the past. i land on the side -- there's still lags coming through. and i think the banking turbulence is a perfect illustration of that it takes the economy, this giant ocean liner of an economy some time to adjust to what is likely a reality of higher interest rates than last cycle.

and we see that sort of feed through different channels, investment, housing, and also financing, private equity, the kinds of financing structures that were born in the era of zero interest rates and reach for yield. those may come under stress over time so i do think we still have lags coming through so that's going to take time to feed from, you know, the higher interest rate environment through the financing cycle into the real economy but that's a difficult balance for the fed to strike. are we cooling enough in the real economy to keep progress on inflation going? or do they -- do they need to do more i think that is the question and there's the dimension of, do you need to go higher or do you just need to stay higher for longer right now the market is getting the -- the feds are going to pivot quickly. >> thank you appreciate it. >> pleasure. when we come back, we're

going to ask lead edge capital mitchell green what nvidia's first quarter means for the future of ai investing and wrapping up a busy earning season for the retail sector and a look ahead to what's next. stay tuned you're watching "squawk box" and this is cnbc well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across multiple systems globally, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. . ..to make quick decisions? check. aaaand check. that's the hybrid cloud solution ibm and a global bank created. what will you create? ibm. let's create.

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this is ge vernova, helping generate and move the energy that our world needs. ♪ welcome to a new era of energy. we got a pretty good read on the state of the consumer this week, thanks to reports from retailers, lowe's, kohl's, best buy, gap

we have many more. margins are holding up and driving earnings beats in a lot of cases despite some lackluster sales trends joining us right now on the week that was is brian nagel. brian, we always talk to you just as we're getting some of the big box retailers, the home improvement guys we look for your instant reaction on these. what do you think the larger message is about the consumers and the health of the retailers are right now? >> good morning, becky thanks for having me back on look, as i reflect upon the -- several, actually, a number of retail reports in the past couple weeks or so, i just think there's this unprecedented set of cross currents right now impacting consumer spending. across the board you talked about home depot and l lowe's which we discussed on your show. every one of these companies is

talking about something funny going on in some cases it's big in some cases it's small it's something funny going on. it just reflects this really very uncertain consumer backdrop at this point. >> i mean, i guess it's not just you thinking the backdrop for consumers is uncertain a lot of these retailers, even when they beat for the current quarter, they did not raise their guidance for the full year because they don't have a good read on what's happening either. >> no, that's exactly right. let's be clear, we're talking about some of the biggest retailers in the world extraordinary companies. i followed this group for a long time and i've watched the evolution of consumer and retail these companies today are much more digitally driven, smarter, have better analytics. and they still don't know what to expect -- what they're seeing at the moment. and then more importantly, what to expect over the balance of 2023 one consistent theme as we're talking to companies and getting their insights is across the board, the view is that 2024,

2025 will look better and more normal we're in this period reset right now which is not a disaster, which you're seeing this kind of mix of cross guards. >> and that mix being the consumer overall doesn't have the same demand and maybe not the same amount of cash that they had before. >> before. >> look, i mean, that's probably the core what's interesting here, as i step back, one, we're still in, despite all the noise, we're still in an extraordinarily solid, if not strong, employment backdrop in the united states. historically low unemployment. so, that's a big driver of spending but then, as we've been talking about on your show a lot, we have higher rates, inflation is moderating but still persistent. those kind of factors take a while to catch up with consumer spending, so maybe we're seeing that i think one of the biggest factors out there, and we have been talking about this for literally three years, is we're past the pandemic, thankfully, and we're finally seeing that post-pandemic shift in spending away from goods and towards

services if anyone's traveled lately, it's packed out there. hotels, airports, airplanes, everything what you're seeing is the consumer making that choice to spend more on services than goods. >> okay. having said all of that, you are looking at retailers that have done a really good job of keeping their inventories in line and in a lot of cases improv improving their margins too. so, wh so, which of these stocks do you actually like the most >> yeah, so, just quickly on shipping, i think this would be a bigger and bigger positive as '23 progresses shipping costs, which were a huge issue last year, have come down dramatically. most of my companies are telling me in realtime they're paying less for shipping today than they did pre-pandemic. you will see that work their way through the numbers. the stocks here, look, my view,

i told our client a lot, i think the consumer is holding quite well i think there's a lot of noise right now. i think while this may be a recessionary environment, it's going to be short and shallow, and with these valuations, and that's the big equalizing factor here, lowe's, home depot, other names trading at historically low valuations as we look to '24, these stocks start to work. i like the home improvement space, athleisure space, sporting goods retail space, smaller cap, academy, i think those all set up really well as we get through this noise and towards a more normalized environment over the next several quarters >> brian, thank you for being with us this week. have a great weekend >> thank you you too. coming up on the other side of this, tech investor mitchell green is going to join us live we'll talk to him about everything, nvidia and erhi ee.evytngls stay tuned you're watching "squawk box" on cnbc

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welcome back to "squawk box," everybody. the futures this morning looking a little bit higher at this point. we started the show in the red three hours ago. the nasdaq up by 37 and the s&p up by about 4.

okay, by now, you probably know about nvidia's $180 billion market cap gain. let me say that again. gain yesterday it's not like the market cap of the company. it's the gain in one day what's less clear is how valuable a.i. is going to be to other tech giants like apple, microsoft, alphabet, and amazon. joining us right now for his take is investor mitchell green, lead edge capital partner and founder. what do you think? >> it's a bubble something's going on thanks, andrew, for having me. i think that a.i. is going to be very real. obviously, you know, without being an expert in nvidia, they obviously make the chips that drive the computers that then power all the models like all these hype cycles, things tend to get overexuberant, but i think over the next five years, this stuff is going to -- if you are an entry level, remedial,

white-collar job, i think there are a lot of those jobs are going to be going away >> where's the investment -- >> not in six months, but five years. >> where is the investment win there's two pieces to this i get the, you know, we worry about the white-collar job and that's a fair thing to worry about. that's, though, in the category of a dollar saved is a dollar made, if you will, and potentially higher margins for companies that effectively cut staff long-term. let's just be honest that's what that is. i guess the flip side of that is, there are going to be companies that are going to win because they're going to generate much higher revenue, much higher revenue, and that's what you're seeing in the expectation for nvidia over time, and so who do you put in that category, and what do you put in the dollar saves is a dollar made category >> i think, look, nvidia, for sure, companies like microsoft that will embed a lot of these tools into the office suite, i

think, will definitely benefit i think microsoft's acquisition -- so, flipping back, you might argue that the model has become commoditized, whether it's open.ai, google's model, alibaba and baidu all have models. it's tbd whether the six-month advantages will be that much better the question is the data you put into the model think about microsoft. they bought github a few years ago so they have all this massive developer data i think a company like that will massively benefit. microsoft is definitely one. i think there are other companies like snowflake, obviously, was down yesterday after earnings guidance was a little slower than expected, but i'm sure a lot of that data is being put into models as well. >> mitchell, i want to push back on that. i could make the argument, and maybe you're thinking i'm just provoking, that the data actually -- the data piece, which for years we thought data was the most valuable thing,

like oil, that data actually becomes less valuable in this context, that once one model can capture one piece of data and replicate that data over and over again, and doesn't even necessarily need to have all of the data to be able to almost extrapolate new data, that maybe the data actually isn't as powerful >> but you got to be able to -- the flip side is you got to be able to train the model. let me give you a good example right now, you and i call into a delta airlines call center, and we speak to -- we wait on hold for 40 minutes, we speak to a customer service rep that rep can probably answer 70% of our questions well, imagine if an a.i. computer could do it they've got to be able to train it they've got to listen to huge amounts of customer service call history. they probably don't even have it, so they have to build all that but i think having that call center -- having all that historical data, you need in order to train the models

better now, there's probably some -- >> but what i -- mitchell, we got to run all i'm arguing is, if delta puts in that information, then all of a sudden the data that american airlines had and thought was valuable is worthless. so -- because you can use one piece of data to do more mitchell, it's a much longer conversation we got a big weekend ahead three days for a lot of folks, but a lot of folks in washington working this weekend to figure out this debt ceiling. we will see you on tuesday have a great weekend, everybody. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with sara eisen and mike santoli david and jim have the morning off. holiday weekend, but not before we chop a little more wood debt ceiling deal reportedly gets a bit closer. citi, upping u.s. equities, and april eco-data runs hot, including core pce highest sinc