Transcripts For CNBC Squawk 20240704

Higher than expected. Plus tesla shares, well, they continue to have a very rocky ride this year. In fact, they are the worstperforming stocks so far on the s p for 2024. Another firm cuts their price target on that stock. And former treasury secretary Steven Mnuchin telling cnbc just last hour that he is putting together an Investor Group to try to buy tiktok or the u. S. Business of tiktok. Lets begin with the Market Reaction to ppi and retail sales as well. Last months decline, a little bit tight. As you mentioned, the market trying to look past it, struggling to do so, maybe. Cpi this week, you had these big treasury auctions that maybe we thought it would knock the market potentially off course. Now, there was a hiccup lower in the indexes, and bonds definitely are registering this hotterthanexpected inflation number. Tenyear up to 4. 22 . If this were an acutely feddependent stock market, it might matter more on a daytoday basis to equities. Its not been the case. If you dial back to december, when we first got that fed pivot and everybody got excited about how soon the fed might cut because inflation was going to be friendlier and all the rest, to me, the argument was, at the time, good news on the economy can now be good news. It kind of doesnt matter when the fed cuts if they kind of are looking for an excuse to do so and the next move is lower. Then you have the criticism that this is a way concentrated market that only six stocks were driving, and none of those things have been true. Good news is good news on the economy, but in terms of, we need the fed and those six or seven stocks, thats been dispd disproven. You know, we have this kind of soft upside bias this year in the in this week in the indexes, but its been dependent daytoday on what nvidia decides to do and what the excitable, you know, public call option flow is directed toward on a given day, and today, nvidias going to back off a little bit. I still think everyone can look at these numbers and say, its an its kind of an overbought market, kind of an expensive market, kind of looking frothy in areas, but on the other hand, these strong uptrends to start the year, like i said, 2013, 2017, a market that basically looks through the challenges, you cant really declare that this is the moment when its going to matter. And i think thats where you are. Im very mindful. Peter lynch, whatd he say more money is lost anticipating corrections than in corrections themselves. Im not sure thats the case right now, but i look at really elevated sentiment numbers and stuff like that. It kind of doesnt matter because broadly speaking, the economy is hanging together, earnings moving the right way. Credit markets couldnt be more flush, and and its nvidias market and were just living in it. Were going to be down today, and the indexes are hanging in there. Even when nvidia takes a break, so far, the last week or so, youve managed to kind of martial the other troops and say were going to hang in there. I dont know how long it can continue. Maybe well talk about robinhoods numbers and how theyre seeing massive volumes and it seems like theres excitement around certain things, whether its crypto and obviously a. I. On the other hand, commodities are starting to roll. Yeah, your general point, then, is that the market doesnt need the fed as much when earnings expectations are inflecting. Earlier in the week, b of a went to 250. Today, they have another note looking at what they call regime recoveries, which is where the equal weight s p outperforms the cap weight. Its not even halfway through the month. I mean, obviously, if it became a trend of progressively higher inflation readings where the fed has to really rethink the easing posture, sure, we might have a gut check. If the tenyear yield blasts out of this range, above 4. 30 , toward 4. 5 , maybe then you have to have a rethink of the whole thing. But for now, i think theres an ability to pick and choose what we Pay Attention to in the inflation numbers. I know insurance was a big upside contributor to the ppi. Thats been a big one for cpi as well. You were talking about Transportation Services being, like well, thats car insurance. Right, right. And to a degree, airfares. Thats right. And so, its not as if it doesnt matter. Its just, if you want to make the bet that thats not going to continue. So, well see. Markets in a forgiving mood for now. I guess the other piece i would just more or less bring up is, you do have earnings revisions higher, so you mentioned savita doing that, but even on a companybycompany basis, its managing to kind of alleviate a little bit of the immediate concerns about, hey, this is a really expensive market. Meantime, were watching the biggest loser year to date on the s p, which is tesla. Gets another note to the downside today. Ubs cuts from 225 to 165. Its the third price target cut weve seen in about a week after deutsche and of course wells yesterday, which went to 125, one of the lowest on the street. Market cap, david, now below jpm, and its a worse performer on the s p year to date than boeing, than warner brothers, than paramount, than charter, than humana. Man, thats some bad company. Yeah. Weve talked about it, obviously, often, as you might expect, and there it is. Yeah, jpmorgans worth about 551 billion. Tesla is not. Sort of about 10 billion or o below that, at least as we begin trading this morning. It was down yesterday on that downgrade from wells fargo that we discussed. They really do question sort of the ability of the company to significantly grow. And there you can see boeing, obviously, also along with tesla in terms of its very poor performance. Mike, people are going to start, so, how much is he levered on . I kind of hear that on musk. Thats, you know its not part of this issue at this point, i dont believe, and the theyll look at x, the old twitter, and wonder, well but he sold all the stock to pay for that. The debt related to x is not related to his ownership. Thats Morgan Stanley and a lot of other banks issue in terms of what theyre doing and where theyve got that marked. But its got to hurt, obviously. His stake in tesla is now worth around 65 billion. Okay. Hes got everything else, got spacex, you know, which were on watch for another launch today. Exactly. Its not as if thats somehow cutting close to the bone, 65 billion, but its way down. I could work with it. I could find a way to work with it. Exactly. If youre careful on spending. Exactly. I do think that what youre really seeing is just this massive premium bleedout of tesla. Everyones acknowledged that it was obviously valued as a lot more than an auto company, and now, just the willingness to kind of give the Company Credit for being that much more, just because of the potential, whether its full selfdriving, whether its a. I. And robotics or whatever else. Yeah, although part of the ubs call is not just china risk and unit growth risk, but the notion that, what if he does take robotics and a. I. And develop that outside tesla . Would take away some of that some of the parts valuation. Theres no doubt in my mind that the Investor Base that otherwise was excited about all those things is the reason that nvidias at 2 trillion. For years, they kind of moved in tandem, and then tesla has given away, and nvidia, bless them. Its obviously not in the same product areas, but in terms of the place in the investor constellation, thats where it is. And so, if theres less of a reason, theres no price momentum, theres not a lot of kind of next hot thing thats about to come out, its really about getting a more affordable car. Its tough for business. A car that you can compete on. Full selfdriving still seems to be around the corner, so to speak, and that, you know, conceivably, that will be a major moment for them. I think ubs even said they made the cut price on full selfdriving and that package just to stoke a little more demand. So, it is is there any pullback that this is reminiscent of, though . There do seem to have been times where theres been a bit of a loss of faith, only to watch them fall right back in, and this thing surge back to a trillion dollar market value. Oh, definitely. It was just straight down into, like, late 2022. Right. Now, you had this crazy run into, you know, through the pandemic and then 2021, in december the high was 4 it was put into the s p. Yeah, yeah. 2021, the high was 414. Were down 60 as a drawdown since then. Right. Anyway, its still under water, by the way, for the s p 500 index funds or now under water. And so, for anybody thinking that thats a reason longterm why the stock has to go up, its not the case, and now its out of the top ten of the s p. Then we had the incredible run after our interview on may 16th last year when the stock started to move substantially higher. Of course, that, as weve just been saying, has reversed significantly since then. Lets move on to tiktok this morning, a story weve been following over the last few days. Only a brief time ago, former treasury secretary Steven Mnuchin telling cnbc that hes putting together an Investor Group to try and acquire that social media app here in the u. S. This comes one day after the house passed legislation that would ban tiktok in the United States if its chinese owner, bytedance, does not sell the actual operations here in the u. S. The bill now awaits a senate vote. Biden has said he would sign it if it does come out of the senate, and heres what mnuchin had to say last hour on squawk box. When i was treasury secretary, i chaired sifias, and i had President Trump sign an order that tiktok had to be sold, and i continue to believe that. I think the legislation should pass, and i think it should be sold. I understand the technology. Its a great business, and im going to put together a group to buy tiktok. Youre trying to buy tiktok . I am, because it should be owned by u. S. Businesses. Theres no way that the chinese would ever let a u. S. Company own Something Like this in china. As weve been discussing in recent days, there is no expectation, nor on the part of mr. Mnuchin, that that would include, in buying tiktok in the u. S. , the source code and the algorithm. Those would stay with bytedance, so youd get a user base, youd get the data as it currently exists here in the u. S. , and then youve got to build the underlying infrastructure. No easy task. What do you pay for this business without the source code and the algorithm . The algorithm having been the key, really, to its success in terms of how it drives people to spend so much time on the app itself. That is a key question. What does anything look like . Do bytedance investors that include the likes of General Atlantic or co2, do they try to restructure their investments and roll in in some way . Its still far from clear that the app is going to be banned by legislation here in the u. S. Anyway. The senate vote is much tougher than things went in the house yesterday. So, a lot of questions here, including, by the way, whether the chinese would say, no, bytedance, you just shut it down. Theyre going to do this, you just shut it down, and we know the chinese have some say over what the companies in that country are able to do and not do. And some demonstrated willingness to essentially, if not shut things down, then just suppress one of their own companies. Without a doubt. Make it irrelevant. The simple point is there are plenty of hurdles here in terms of seeing this come to fruition in some way, and its highly complex to actually get there. That said, mnuchin, perhaps, maybe rightly so, sees himself positioned as someone who, having understood the previous battles three and a half years ago, when he ran sifias, as he just said, can intermediate in some way between the u. S. Government and china to try to meet both of their needs here, meanwhile taking control of what is, without a doubt, an incredibly valuable property with 170 million users spending a lot of time on the platform and many businesses that rely on it as well, and so you know, well see. Tiktoks ceo also starting to try to get involved here, putting out a statement, carl, talking about the legislation and what it would mean if it was signed into law. Those numbers you just mentioned were a big part of his not just statement but his response on tiktok as he which he put out last night. Take a listen. This legislation, if signed into law, will lead to a ban of tiktok in the United States. Even the bills sponsors admit thats their goal. This bill gives more power to a handful of other social media companies. It will also take billions of dollars out of the pockets of creators and small businesses. It would put more than 300,000 american jobs at risk, and it will take away your tiktok. We know how important tiktok is to all of you. Meantime, you mentioned schumer relatively noncommittal on the senate side, not to mention the fact that hes got some other things going on regarding israel and senator menendez and politico points out today that schumer still uses a flip phone. So, who knows what the radar looks like on that side of the hill . Yeah, i mean, even if the legislation does not pass, there is still a hope, i think, on the part of mnuchin and other potential investors that over time, given the focus on tiktok and its National Security risks, that there is some sort of negotiated solution here which would end up with it being in u. S. Hands. Which they would obviously see as very beneficial. No sense on price either, given its just very much unclear what its worth without the source code and the algorithm. But clearly, worth a lot, given all those users. Meantime, everything old is new again over at under armour. Kevin plank coming back as ceo of the company that he founded. Were going to talk about that after a short break. Well get to lennar and dks and Dollar General and this upgrade of citi over at goldman. Take a look at futures, hanging in there postppi. In a moment. At pgim, finding opportunity in fixed income today, helps secure tomorrow. 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Hes been very involved, even as he stepped out of the ceo role about four years ago when patrik frisk came over. He was the nonexecutive chairman then. What is surprising about this announcement is that its abrupt, and the timing. Stephanie was just put in place as ceo about a year ago, february 2023. Shes barely into what she laid out in her threeyear plan. So, that raises questions about why now . Company isnt saying. Dont have answers as to exactly what happened here, just that it was a board decision. But you can imagine investors are asking, why wasnt she given the time to implement her changes . Did she clash with kevin plank both in personality or in terms of the strategy on the growth plan . We know that plank is aggressive. Hes hungry. Hes been hes potentially impatient about the growth story. And that really gets to the problem at under armour right now. Its been this turnaround story, and the previous two ceos have been really working on righting the ship, both in profitability and inventory levels, but it has not seen growth, and that is the problem. The rand, the growth profile, its a fraction of what it was. Back in the heyday, this stock peaked around 2015. Kevin plank presided over a tremendous growth period for under armour, but in the eyes of investors, sort of considered lowquality growth, ultimately, as to how he left. It came at the expense of p profitability, and the growth hit a wall. I think wall street has a love hate relationship with him. The stock surged on the news last night. Growth days are back again. And then gave up all the gains and then some on these questions of what now and what is kevin going to do . Yeah, sara, and just to talk about the broader competitiveness of the space, we had on yesterday talking about the sneaker market. Adidas with its first annual loss in three decades. I know thats a very specific story, but even today, citi cuts nike to 125. Its a competitive space. And i think under armour had a case of brand relevance in this space several years ago, but since then, its lost a lot of that, and you have had new brands. You mentioned on in the apparel space where under armour is more dominant. Aloe yoga, these brands have come in and taken share, and of course, when youre dealing with competitors like nike, specifically, its always going to be tough. And i think that is what kevin plank has been and has always focused on is the brand strength and how theyre going to get that sort of buzz and heat back into the brand after the last few years where it just hasnt been. It hasnt been as relevant. They have had key partnerships with athletes, jordan spieth, for instance, im at a business event on the side of the players championship, hes a big athlete for them, but they havent had the kind of momentum in fact, havent really grown since before covid in terms of the top line. In the latest quarter, north american revenues were still down double digits. Part of thats the competition, and part of it is just finding the right mix of designers and folks to bring this brand back to life. They overextended during the prior playing period, right . They were sales across the board, and i think thats what ultimately hurt them. Theyve been doing a lot of work to try to correct that in the recent years. But this growth part of it has been missing. Meantime, sara, congratulations on lighting up the tape this week with griffin and then palantir yesterday. Look forward to having you back onset tomorrow. I will be back onset, and ill share some of the greatest picks. Short sellers on cocaine and all. Sara eisen talking under armour. Thanks. When we come back, nvidia pulling back since hitting that record high last week. Well talk to one analyst who has raised his price target on the stock. Take another look at the premarket. Busy session ahead, not to mention adobe tonight as we continue to watch this tenyear around the 4. 2 ngdot gonyrae. N awhere. You always got your mind on the green. Not you. You your Business Bank account with quickbooks money now earns 5 apy. thats how you business differently. Intuit quickbooks. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart take a look at some premarket gainers. Got some retail in there. Dollar general with a nice beat. Guides above, surprise gain in comps. Well talk about that in conjunction with what dks said as well, up 5 premarket. Get to hood as mike mentioned, up almost 12 before the bell. Dont forget, you can catch us any time, anywhere, just listen to and follow the squawk on the street opening llpoas be dct. christina wanna know the secret ingredient to running my business . tina her. christina . Being all over, all at once. tina all the time. christina but my old network wasnt cutting it. So we switched to verizon, the Network Businesses rely on. With Verizon Business unlimited, i get 5g, truly unlimited data and unlimited hotspot data. So no matter what. Im running this kitchen. vo Verizon Business red hot deals are happening now. Act fast for free devices and more. Only on verizon. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. Keep your eye on the Home Builders today. Lennar was an interesting story last night, mike, not just for the earnings but for asps down eight in a time where year on year shelter is almost up almost 6 . It seemed like to close some deals in the last quarter, they did have to ease back a little bit, so it is such a strong stock, its basically at the highs of 64 on a oneyear basis. Still got the 5 billion buyback. Its a huge percentage of the market cap. But there is a little bit of margin hesitation, i think, because of that pricing in terms of the value. The market continues to wait and see if relief is going to creep into the macro data. Lets get to the opening bell here at the cnbc realtime exchange. At the big board, the market quality etf and at the nasdaq, its jamf, providing security for apple devices as we once again, mike, in this range of 51. 70 after a narrow spread in the last couple days. Has been. And each day, were switching off between, you know, narrow mega cap led and more broad. Today, some software in the lead, like, oracle, servicenow, microsoft, and this has been a little bit of the pattern of, okay, yields are higher, maybe theres a little bit of concern building about just the perfection of the macro backdrop, and you go to stuff that doesnt seem too dependent on it. That has been, you know, this pattern. I mentioned all these elevated sentiment readings and things like that. Its just one of those atmospheric conditions that says, were not really set up for an adverse urprise, and yet the market keeps absorbing these potential downside blips without too much trouble at this point. Yeah, i would say, you know, you kind of sideways on the average stock for the past week, but that was after a great run. Well keep our eye on financials today. This goldman upgrade of citi has gotten some attention, essentially looking at topline growth, simplifying the business model, freeing up some cash on the noncore international business. Yesterday was b of as sutton meyer who said technically theyre strong. The goldman call, the plan seems like it will probably work. The strategy as laid out, essentially freeing up some capital, just simplifying the structure. Its been such a long haul. I know theres a general sense out there if we get some easing of the basl end game requirements that these banks will be ahead of the game. Up 1. 5 , still super cheap, of course, on book value. But so, not really as much of a macro call as it is that, you know, basically some fundamental companyspecific improvement that we can look toward. David, are you going to touch on jerry levin . We will, i think, towards the end of the show, carl. Jerry, the ceo of time warner, passing away. Were going to spend a little time on that. What i have been spending time on this morning, as you guys know, is tiktok, trying to understand and figure out exactly, as i listened to mnuchin this morning, discuss there his plans to potentially or to try to put together an Investor Group to buy the app in the u. S. As we said earlier, a lot of things come along with that that make it highly complex. Plenty of hurdles, but certainly interesting. And then, keeping an eye on shares of u. S. Steel, guys. This stock reversed dramatically yesterday when an ft story came out, essentially indicating that the Biden Administration seemingly in part to stay on the right side of unions in pennsylvania, a swing state, would not look favorably on an acquisition of the company as is currently under contract to be purchased by japans nippon steel for 55 a share in cash. You can do some simple math there and say, 38. 90 is a long way from 55. Thats a reflection of the risk, and that risk has gone up dramatically. Reports today have the president making a Campaign Stop in the midwest in which the a. P. Is reporting that he will say things that indicate that hes not in favor of said transaction. I dont have the quotes in front of me right now. To paraphrase, again, he sort of thinks that it should remain a domestic company. This is odd to say the least, in many ways. Theres virtually no one would argue that japan represents a National Security risk. In fact, the Technology Transfer in this case is going from japan to the u. S. Where there would be significant potential upgrades of it. But heres the quote obtained by the Associated Press that biden is expected to share later today. U. S. Steel has been an iconic American Steel company for more than a century, inviting to remain an American Steel company that is domestically owned and operated. That has sent shivers through many investors who thought this deal would close. That said, its still not clear it wont, and in part, this does seem to really rely largely on getting the unions on board. Theyre not. Thats a big mistake, it would seem, that nippon made in terms of negotiating the deal, having not already received the ascent of the unions, very different from clevelandcliffs, the arch rival that has been working nonstop to try to dislodge this deal. But it doesnt mean they cant get them on board at some point in the near future. And maybe they will do that. If not, theres a lot of different rumors going around, clevelandcliffs, would they be able to buy the things nippon steel doesnt want . Seems very difficult, not to mention the taxes related to a potential sale of that type. We rarely see that kind of a deal where one company buys and then theres a bunch of asset sales that take place. So, mike, well have to wait and see on this one, whether nippon is successful. Theyre starting to fight back. Theres a joint statement from them and u. S. Steel saying the partnership between nippon and u. S. Reflects a close alliance between japan and the u. S. , and theyre confident the partnership will create success for american jobs, supply chains and competitiveness in the u. S. Economy. Theres not much of an argument to be made here. This does seem to be pure politics and an unfortunate case of it. For sure. You know, i guess that messagingwise, if youre able to say, were going to keep the production that is now domestic domestic in other words, theres not any anticipation theyre not moving steel plants. Theyre not picking up a steel plant and moving it to japan. Its the other way. Japans steelmaking, in certain areas, is ahead of our own. The plan is to invest here and increase the technological capacity of the steel plants here. And japan is a National Security risk . Well, no, certainly not. On that basis, its hard to make the case. On market concentration, its probably hard to make the case. It is for nippon. Clevelandcliffs deal in contrast raised significant antitrust questions, particularly in terms of Domestic Production for steel for the automobile industry. By the way, theres a question of uaw unions opposing that potential deal were that to somehow come back. So, well continue to monitor this. I know we dont have a lot of hard and fast things to tell you at this point. But you know, there are those who are going to wander in here at 39 and say, im going to take a shot at getting 55 because nippon is going to get the unions on board, and bidens going to change his mind. Yeah. President still trying to lock down the team ssters endorseme. The Prime Minister of japan is coming for a state visit. Thats going to be a little bit awkward. President is in saginaw today making his way through the midwest. One big buyer of steel is boeing. This fascinating letter from the ntsb to a couple senators saying, we still dont know who did the work on this door panel, and boeings now telling us they cant find the records. Story continues to get a lot more interesting. The other wrinkle on that one was the reuters piece that the European Aerospace regulators says it would pull boeings approval if needed down the road. Certainly unclear if this is just boeings procedure to not necessarily have very specific records of who did what in the maintenance, but its been under such a, you know, such a cloud about whether theyre just going to now be so constrained in terms of everybody watching every move and how they every effort to increase production, which they absolutely have to do to meet any financial targets. I dont know. There have been times over the last four or five years when it seemed like, you know, boeing was sort of washed out and lost all sponsorship. I would say, on the sellside, its not the case. Theres still a sort of loyalty to the longterm story here on the services and the Free Cash Flow and everything else. So, well see if that changes. But stock is better than flat today. Real quick, guys, just a quick mention. I think Courtney Reagan in the next hour will have more, but weve been focused in part on this potential deal to try to acquire macys. Macys has given them the stiff arm. But not now. Allowing ark house and its partner as well, brigade, to do Due Diligence. Thats the latest on the proxy there. March 13th, they provided a Due Diligence request list to the company. Thats ark house and brigade through their advisors. They want customary diligence items that will help them confirm or increase the current 24 a share allcash offer they have for the company, and theyre in negotiations, respect to a confidentiality agreement. So that is, at least potentially, on a bit of a different tack here than previously in which macys said, were not going to engage with you. Theres also a proxy fight. The ark house side is pursuing, potentially, as part of it, not brigade. I know it gets a bit complicated. Brigade doesnt want a part of that, but ark house does. They have different advisors on the law front, for example, on the m a law front, but again, may be moving forward. Speaking of retail, dks, the chart kind of looks like Williams Sonoma yesterday. Yep. The comps beat. Gross margin beats. 10 div hike. Great stats on the tape looking at the operating margin since 2019, meaning, just before covid, has gone from 3. 8 to 9. 7, and sales overall are up 48 versus retail sales, up 37. Their guidance implies theyre going to be able to maintain that. Like Williams Sonoma, kind of leader in a secularly strong part of retail. I guess you would say, in terms of specialty, where theres still room to grow. You dont have saturation. Obviously, theyve kept the majority of pricing. That flowed through during the pandemic. And look, i mean, i guess were not backing away from outdoor leisure, you know, everybody wears sneakers every day kind of life. So, you know, its still not all that expensive. You see some growth retailers that kind of this isnt chipotle here. Its still, you know, 17 times earnings. Its cheaper than the market. It does show you theres a little bit of room for it to go, kind of mid cap range. We mentioned Dollar General earlier with the surprise jump in comp, not by much, but street was looking for down 1 , and they do guide above on fullyear comps, a bit below on fullyear eps, but i dont know. Does it strike you that were spending more time talking about this stuff than nvidia . Well, for today. For this morning, i think so. And it does show you that we are at this moment where youre getting somewhat mixed signals from the companies themselves about the consumer. Not a lot of panic about it or alarm, but you know, mcdonalds saying things seem soft, and people are perceiving the other Dollar Stores yesterday was a different story. Yeah, dollar tree. Along with Family Dollar, which they own. Very different story yesterday. It was. Closing as many as a thousand stores. Its an enormous number of Dollar Stores in this country. Lost a lot of share to walmart. Yeah. So retail sales, the official retail sales number today kind of soft, although we were somewhat braced for it. Little mixed. But you know, overall market hanging in there. Think about nvidia, down 1 today. Tesla, also down. And it is the more, you know, kind of software, you know, slow and steady stuff that is working, but again, on a day when yields are up, you do see the russell 2000 backing off, underperforming the s p, kind of the pattern here. Mike, i dont know if theres any reason in particular, i would note amongst the mega cap names, microsoft, the outperformer, up 2 . Yeah. Is it this oracle deal . It could be that. The oracle deal plus its been kind of asleep for a little while, i mean, at its highs, but its kind of gone sideways and has not really participated. It has more of that defensive type character as well. Meantime, you had this q a with rene haas calling it outside of nvidia the best growth story in tech. Exactly. Thats the whole thing. And its size, the fact that it still has that status and you have this huge kicker with the openai relationship. Yeah. Microsoft, obviously, far ahead in terms of a 3. 1 trillion market value. Well ahead of apple, which held that crown for quite some time. Lets take a break here. Watch bonds as well. As we said, now above 4. 25 on the tenyear as were not quite done with data for the week. Well get empire tomorrow, industrial production, and umich should be interesting. Oh, its cold outside. Time to protect your vehicle from winters wrath. Of course, the hot sun can be tough on vehicles too. You need weathertech. Laser measured floorliners and cargo liner will shield the carpeting from sand and snow. For your interior, theres seat protector and sunshade. Plus, mud flaps and bumpstep for the exterior. While the new impactliner, with shock absorbing rings, safeguards your truck bed from costly damage. Order American Made products at wt. Com surfs up theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com as carl mentioned earlier, gerald levin passed away, 84 years of age. Some of our viewers may remember him from the 1990s when he ran time warner. Culminating, to a certain extent, with what was the fated decision to merge with aol. It didnt go well, as we know, as we documented in our first documentary here at cnbc some 23 years ago, the failure of that deal. Levin did not participate with me at that point in that documentary as you take a look at steve kasen, jerry levin shaking hands on that fateful day when they decided the biggest deal of all time, by the way, and one of the great failures. Time warner, hbo, time warner cable, so many different assets along the way. Studio. Take a look at dick parsons and everybody. Ted turner. Man, takes you back. Levin, i had interviewed many times during the course of his stewardship of time warner, didnt participate then, but then we were able to sit down a number of years later when he was living out west at something called the moonlight sanctuary, a Healing Center that was run by his wife, and we did talk about the deal. Take a listen. Im upset that i couldnt have foreseen then what i see now. Both in myself and in the internet. Now, i would also criticize myself for believing strongly in the power of an idea, that a t transforming transaction, which is what we viewed aoltime warner as, would in fact change the landscape not only of our own company but across an industry. Important to remember levin also helped create hbo, along with charles dolan, of course, of cablevision at the time, and then ran hbo when it was owned by time, not warner, but time. Some people dont realize that hbo was actually a time, inc. , property. I have fond memories of mr. Levin and our many sitdowns through the years. Gerry levin, 84 years of age. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. When i was your age, we never had anything like this. What . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. Shares of nvidia are pulling back in early trading. You can see some 3. 5 . Still, though, up 11 this morning this month. Our next guest boosted his price target from 950 to 1100. Joining us analyst vievec aura. Give me the reason why the higher price target and why you continue to be positive on the stock . Obviously, that has already had a historic run. So we are affectionately calling next week the woodstock for ai, for all the semiconductor and neuroscience nerds out there and people in finance, of course. We expect nvidia to put up a strong event after their gtu conference focusing on three things. Number one, how rapidly the market ai is expanding. If youre able through accelerated infrastructure lower the cost of computing, how it can enable a lot of new applications and enable them in a very Energy Efficient way. Thats number one. A march larger market size between 250 to 500 billion a year in terms of infrastructure. Number two, nvidias Competitive Position because of their pipeline its strong and it is getting stronger because of their ability to innovate across a silicon, across system, across software and no one else in semis can touch that. Number three, their ability to take all that sales growth and then really drop it through the bottom line. I think this cannot be over emphasized. The company is not just growing, its able to translate every dollar of sales into nearly 50 cents of Free Cash Flow. By the end of next year their cash flow on the Balance Sheet could be over 100 billion and three years 200 billion. That provides them with a lot of optionality. Is there any concern, vivek, that nvidia will not be able to persuade enough people with the stock at thecurrent valuation that there are these multiple years of, you know, break neck growth ahead of it . It seems like thats the way in a way, you say the multiple has come down, right, because growth has been good in terms of forecast, is that at some point not the markets way of expressing doubt that this can last for that much longer, that many snooils. For sure. I think thats an important point, maybe the market is saying that, you know, many investors are not yet convinced about the sustainability of the growth, but remember that the generative ai market is not just what nvidia is talking about. Its what the customers are talking about. If you look at the growth plans for microsoft or oracle or meta or all the new countries and regions, india, europe, japan, each wanting their own ai infrastructure, so its not just nvidia making the claim that this market is getting bigger. Customers are actually driving growth in the market. But i think its actually healthy to have this periodic check because its a start of a new market right, and we are seeing the same thing in other markets. Whats important to understand, generally these trends take place over a decade, but over the first three or four years you lay down the initial infrastructure and we are only midway through that. We think there are two plus years before customers spread out this infrastructure. Just to prove it out you need to have a certain amount of infrastructure in place. Thats why we think there are a lot more legs. And so the total adjustable market, how much has it increased as a result, for example, of the demand from so sovereigns . Jeps jensen has been in countries that seem to have ambitions that have their own generative ai. Sure. Think about it, just to participate, just the price of entry in terms of ai is a gpu plus server that needs 10,000 of their gpus and each product can be between 20 to 30,000. You need tens of millions of dollars. If you take countries in the world and say even a fraction of them wants to have that infrastructure thats multiple billion per country. You know, we think the market for software ai and infrastructure can be tens of billions of dollars. More important than that, it could be an important market for on premise ai. Data that Financial Institutions and other places dont want to send it to the cloud for regulatory or other privacy reasons, so as they start to build out that infrastructure thats what gives other legs of growth. Got it. Thank you for joins. Pleasure. Thank you. Lost the opening gains. Dow is down 100 points. S p has gone red. The 10year 4. 27 which is going to be the high of the month in the wake of that ppi number this morning. Well talk more about it as squawk on the street continues. Dont go anywhere. Tailormade. Go deeper with thinkorswim our awardwining Trading Platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. You know when you have those moments . That time to reflect. To be like wow what did i do to get here . tense music right. Work. You worked hard and its time for a bank thatll work hard for you. Everbank performance savings is built to put your money to work with some of the highest rates in the country. Going, got you where you want to be. Were the partners for your next move. Everbank. Advantage, you. Good thursday morning. Welcome to another hour of ske. Im Carl Quintanilla with david faber and Courtney Reagan at post nine of the new york stock exchange. Sara eisen is on assignment. The s p falls south of 5150 as the 10year climbs to 427 in the wake of the hot ppi number. Odds for a june cut have fallen to 60 . Weve got the yield on the 10year about 4. 25. Here are three movers were watching outside of big tech and retail. Shares of lennar in the red. Its margins in focus tumbling amid significant pricing pressure for the company with the average sales price for deliveries coming in below what analysts expected. Robinhood shares popping after the Company Reported a surge of activity in february. Trading volume up 41 . Todays gains helping the stock officially double over the last year up more than 6 . Watch citi today. The bank getting upgraded to buy. Goldman sachs saying shares look compelling at this level right here. The stock up 13 this year. Less than 1 from its 52week highs under the slightest bit of pressure this morning along with the Broader Market down about 0. 5 . Januarys number was unchanged. We also didnt mention jobless claims earlier this morning, 209k with a revision down in continuing claims, but its that ppi number thats the headliner today. Yeah. Another headliner is shares of tesla which continue their decline down 2. 5 . Thats about a tenmonth low and the biggest laggard in the s p 500, at least so far this year and overtakes boeing for that slot. Its lost nearly 250 billion in market so far, falling out of the list of top ten stocks in the s p. Keep going here, jpmorgan is now bigger than tesla in value. Shares also down about 45 from the highs. Okay. Now that weve got that out of the way talk about where the stock might go from here. Rbc capital has a buy rating and joins us at post nine. Not going your way today, tom. Why do you feel like things are going to turn for this company . Look, this company is in between two waves is what elon calls it, right. The model 3 and model y, largely saturated. The next big catalyst will be the affordable car which comes in 2025. He doesnt think about things on a day to day or month to month period. Hes looking at things from a years if not decades perspective. Were in between the period two of lulls. Well get this catalyst with this vehicle that will come out and theres some longterm tectonic things that people arent talking about which folks like me will start writing reports about and get folks interested eventually. Such as . Energy storage. Nobody is talking about this. This is trillions of dollars of opportunity. Problem is its like decades away potentially. These guys have 15 market share in this business, and the profitability is higher than the profitability of cars. Then, of course, autonomy, right. Theres a lot of negativity in autonomy today. Ever used fsd. I think thats an amazing product, the most amazing product since the iphone. Were finally going to get this version 12 this year which could get the attach rate up. The problem is not enough have tested this thing. Once you have people test it and the pricing needs to come down that can change things dramatically. People look at it as a Software Stock not just an auto company. You can talk about whats to come but 25 is a long way for this cheaper model and i wonder what happens in the intervene years at this point to at least keep the stock where it is, if not battle those who say ev sales growth is slowing down. Used car prices for teslas are a key indicator this is not going the way they want it to. Youre right. Things could get worse before they get better. No doubt about it. My job is to say where the stock will be a year from now, not next week. Youre right. The other issue is, while i think theyll hit the volume target that sell side has, i dont think its that aggressive from 24. I think that will come from price cutting which impacts profitability. Youre right, near term, definitely challenging. Elon says it all the time, right. Again, you got to have a broader view of it and i dont know about you, i can never time this thing. Right. So it pops when it pops, right. Somebody like me writes a report and everybody gets excited and thats the narrative that changes thing. I dont know what the near term catalyst is from a data point perspective that rerates the stock. What percentage of your valuation model is the core auto business . 10 . 10 . Yes. The rest is energy. Autonomy and energy. What about ai robotics . I dont include robotics at all. Because of the risk he might do it elsewhere or Something Else . We dont have any evidence of a product thats out there in the Market Making money. Energy storage is already making a bunch of money for them, and autonomy they have an fsd product which is compelling and theyre charging 200 a month for this product. How about china risk, if, in fact, things tiktok is one example of tariffs, what may happen a year or two from now . No doubt. A risk right now. We saw the q1 numbers. Those have to come down on deliveries. A lot is china new year. Its 40 of their volumes but at the end of the day, the product they sell, they have better profitability than any other car company besides byd. They should do well long term. Again, auto business, 10 of my valuation, right. Its really an autonomy business and an Energy Storage business. What about the idea of ev winter and how does tesla stand up . Yeah. You were talking about the ev slowdown. Its challenging right now, right. I do want to note something, right. Like, its not that growth is like evs are in decline. Its a Second Derivative issue really. Okay. Still growing double digits. People want evs. We dont have compelling models throughout. Theres a psychological issue of range anxiety. Seems hybrid would be more valuable to overcome that than going pure ev. Stellantis and toyota, how well, theyre doing. I was the european auto analyst four years ago. The same thing happened in 2019 in europe. Everyone is freaking out about evs and now nobody wants them. 2020 came around and always government stimulus came in and subsidized them. Today theres little range anxiety in europe and they built up the charging infrastructure. That needs to happen. It is happening. Charging infrastructure is building with break neck speed. We dont have as many evs on the road in the u. S. People are fearful of it. Absolutely. I was asked if i want an ev in a rental car location it was a place i was renting a car, not a place where i live, as much as i wanted to try it, i dont know. No. Ill go with the regular. Its a psychological thing. Once your neighbor has it youll be more interested. We havent gotten past that hump yet. Fair enough. All right. Tom, thank you. That was an interesting conversation. Appreciate it. One other mag seven name under pressure nvidia the stock closer to correction territory. Down 10 from its recent highs. Dom chu is tracking this stock. Courtney, the reason why you can conceive it and cant at the same time is because of the chartthat weve seen opponent last year for nvidia shares. 8 to 9 pull back is what were seeing from the record highs. That was just over the course of the last couple weeks here. To put it in context after a 267 run over the last year, that 10 pullback is right here. Thats what it looks like in the context of what a socalled correction might be in terms of nvidia stock. By the way, it is still you can see, roughly 30 above its 50day moving average and close to around 75 or 76 above its longer term 200day moving average. All this momentum happening since the beginning of the year by which point most of these momentum based technical indicators have read for the most part overbought or high compared to its averages. The other thing to look at, just how much influence some of the things around it. We know that nvidia is about a 5 weight in the broader s p 500. Slightly more in the nasdaq 100. The nvidia share of the qqqs is roughly about a 6 weighting there. If you look at the semiconductor etf up 80 , riding some of that nvidia wave, that smh is roughly 27 weighted towards nvidia shares. As nvidia goes up or down, these are some of the etfs that have a little bit more range in terms of the ripple effects there. Keep an eye on that. As for where the analysts are on this stock, weve spoken to folks who talk about the technical aspect. From the fundamental side it is 90 buy rated. 10 hold. Right now the average price is just a little bit above where the stock is trading right now, so from a fundamental aspect unless people really start wholesale upping target prices is the stock fairly valued. By the way, one other part of that story, cnbc pro subscribers can head to cnbc pro. Com and check out this particular story. Jeff degraaf at Renaissance Macro thinks we could be stalled and stuck in a trading range for some time. As this bull bear debate plays out it is still very much a momentum story, courtney, but theres a little bit of debate about whether the stock has any more fuel in the near to medium term upside. Go to cnbc. Com pro and check out the full story. I have a feeling were going to talk about this really soon. Thank you very much. As we head to break our road map for the hour. A read on retail from earnings to activists and more. Well break it down. Steven mnuchin on cnbc earlier this morning saying hes putting together an Investor Group to buy tiktok. Details ahead on the show. Also an inside look at the fallout facing the rent stabilized economy and the regional banks exposed to it. Big show still ahead with the dow down 111. Dont go anywhere. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart this is our future, ma. Godaddy airo. Creates a logo, website, even social posts. In minutes how . A. I. impressed ay i like it who wants to come see the future . get your Business Online in minutes with godaddy airo Investment Opportunities are everywhere you turn. But at t. Rowe price, were letting curiosity light the way. Asking Smart Questions about opportunities like advances in healthcare. And how these innovations will create a healthier world tomorrow. Better questions. Better outcomes. Retail sales rising since september but missing expectations and wholesale prices accelerated at a faster than expected pace last month Dollar General hitting fresh highs after a surprise samestore sales growth. Products and apparel saw weakness. Dicks Sporting Goods in the green beating estimates and raising their dividend. It was the largest sales quarter ever for the company. A surprise announcement from under armour after the bell the ceo is stepping down after a little more than a year. Kevin plank will return as ceo. Leonard will stay on as an adviser through april and plank will remain on under armours board. I spoke to the executive chairman of dicks at stack, and he said we are enthusiastic that kevin plank is back at the helm. Under armour a long time vendor for dicks Sporting Goods. Im hearing theres forward moment for macys, and its activist battle. A proxy admitted by archouse and brigade and seems that macys is in the process of drafting a confidentiality agreement to turn over nonpublic Financial Information to the activist. That is a fairly significant step right now. Their bid is 24, but depending on what 24 per share but what the confidentiality agreement and Due Diligence could show the activist it is possible that they could go ahead and up that bid, but they are Going Forward again with this proxy battle. Kind of an interesting move there. I was a little surprised that theyre potentially drafting this agreement to turn over some of this information. I think there had been an expectation that macys would give them the high what they had done previously. I think they may have heard from shareholders who say its probably time to try to engage. Allowing them to do diligence, if it would lead to a higher bid, if youre a shareholder at macys, you followed the company for years and theres challenges. There are. If you can get to 24 or more secure, just take it and let them deal with it and restructuring, whatever they have to do in the private markets. Interesting new timing with the ceo stepping in coming from blooming dales previously of course moving to macys at the beginning of february looking to go after the macys business which is booming dales. They are smaller than the main brand but an area he knows well. Interesting timing for this to all come together at this point i think at the very least. And i also find it interesting timing about whats going on with under armour about two months ago or so, i was in an event and i was at a table with mr. Plank and miss leonard. I was surprised at the announcement. Shes done a lot of work to try to learn the Company Coming in from the hospitality side of things. Shes brought in a lot of executives. I saw her at a blackstone conference i think last week. It is curious in terms of the timing. Thats what i think too. Kevin plank has been involved in the Company Since stepping down and remaining executive chairman there. Very curious. I would love to bring in guests to talk about it. The wwd ceo and michael, retail analyst joining us now. Jan, start with macys, you previously worked for part of the company then eventually became macys. What do you make of this possible Forward Development between macys and activist archouse . When all this started i said there was a 30 chance and then i went to 40 as they got higher on the price and now talking about Due Diligence. Maybe a 5050 deal now. Seems like were getting to the point that macys board could get to the point of saying yes depending on how much leverage theyre putting on the company and how high the price can get. When trying to keep the leverage low and price higher it makes it harder to get the deal done but also makes it more likely to get the deal done as the price goes up. So, yeah, i think that this could happen now and we could see a restructuring from a point of view from trying to make the real estate values evident out in the world. Thats been the problem the whole time. The real estate is worth a lot. Theyve never been paid for it. Archouse thinks they can get paid for it. Sort of that is the question. The deal price is one thing and you want to do right by shareholders, your fiduciary duty to entertain these offers and maybe that is the best deal out there. Maybe they will up it once they get information if they get it from the Due Diligence if this confidentiality agreement is signed. But this group doesnt have any previous history running a retailer or running any company, so what happens i guess to the company itself and then as a follow on question this is not the first activist that has tried to unlock the value of the real estate and admittedly, again, has less experience than others that have tried to unlock the value of the real estate with macys . Why could potentially this one make sense to do both of these things . Run the company an unlock the value of the real estate for investors . I look at transactions for 20 years every time whether we needed to or not to make sure there was no way to unlock the value of the real estate. Will they get it done . Maybe. It puts an enormous amount of pressure on the operating side of the business as you bring the stores to what basically amounts to full strength, right. You reduce the earnings in the operating side of the business. You make real estate worth more. If you can do it really carefully and make it all work in theory, you can drive more value out. Remember somebody tried with target. His name shall remain anonymous. Somebody tried to do it with macys before and we tried to do it with our businesses. Theyre hard to get done and make work. The last time campo did this with macys, called federation at the time, they went into bankruptcy. Youre fighting the battle between the operating business still healthy enough. The operating business is going through a time when theyre trying to make it better already, needs improvement now. Not like its running at the top of the game. Right. Michael, i want to turn to you and talk about dicks Sporting Goods. Those shares are rocketing higher this morning after they put up a really strong quarter. I spoke with executive chairman ed stack, and he said look, were fortunate enough to be in this place right now where we repositioned the business in a way that our consumer, kids in sports and equipment were giving them the best opportunity to succeed, were giving them what they want. I loved this. In retail, loyalty is the absence of a better alternative. Right now were giving them the better alternative. Is it as simple as they . They have the right merchandise at the right time for when people need it . What is the secret to dicks Sporting Goods success right now . Yeah. Its been a great turnaround story, and versus precovid, the margins are up more than 2x. Theyre not the only alternative, but we think they are the best and as theyve gotten bigger and better, more access to brands and that continues to separate them from the competitors. Theyve done a great job with the Loyalty Program and that helps gain share and bring customers back in. Really the double digit margins out there able to sustain shows the strength of the turnaround versus precovid when the margins were about 5 . Sporting goods is a tough business but theyre executing well and taking market share at higher margin. Its been interesting the reads weve heard about the consumer from the different companies. You dont cover necessarily all of the names, but we have good results from Dollar General, dollar tree talking about pressure on the lower income consumer, particularly the Family Dollar business. Obviously, dicks turning in some strong numbers. From your view and coverage how would you say the consumer maybe lets say the middle income consumer, is faring right now . Sure. Our view, both from a tops down macro level and bottoms up from the company, is were seeing a soft landing type scenario. Retail sales remain positive. What we saw today if we adjust out the leap year for february, nonseasonally adjusted basis up 2 . Thats a solid number but below historical averages and weve been seeing it sort of slow the last couple months. As it relates to dicks, good quarter, very good margins, stock is up but to be clear the comp was the quarter was 2. 8 . Thats a good number. Not off the charts. This is all speaking to me saying that the consumer is okay, out there spending a little bit, but it is slower than it has been precovid and also during the covid years. Thats a soft landing. Interesting stuff. Jan, i want to go back to you before we go quickly and give us your opinion on what you think is going on over there at under armour. I was surprised by the announcement and timing. Were you . I was very surprised by the announcement. Certainly surprised by the timing. The company was struggling when kevin stepped out, right. So putting kevin back in im hoping is temporary until they find somebody else they really want to run the place. Under armor needs to be reinvigorating. I dont think kevin was the guy for that. He created it, made it get bigger, 55 times kind of Earnings Company priced at the point in time it started to fade. Now nobody cares if theyre wearing under armour or not. Somebody needs to change that. Im not sure bringing kevin back makes that happen. Im looking for the next person to run the place. Jan and michael, thank you for joining us. So much to talk through in retail today. Thank you. Still ahead this morning tiktoks ceo hitting back after the house voted to force a sale of the app and the former treasury yields secretary Steven Mnuchin jumping into the ring. The latest on the growing saga after this break. Theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com welcome back to squawk on the street. Im Bertha Coombs with your cnbc news update. Former President Donald Trump is back in court this morning. This time for a hearing in his florida federal classified documents case. His lawyers are asking the judge to dismiss the case arguing he was allowed to hold on to the documents after leaving the presidency. Trump has entered a not guilty plea. The u. S. Military resumed flights today of the osprey aircraft in japan months after its grounding. The military pulled the aircraft from service back in december following numerous crashes including a deadly incident off japans coast in november that killed all eight u. S. Crew members on board. U. S. Military said it was caused by an unprecedented part failure. Spacex says it might have lost its massive starship just before splash down in the indian ocean as it conducts what was otherwise a largely successful third test flight. Todays test marks the furthest and fastest the rocket has thrown. Its the most powerful rocket and is expected to be used in future missions to the moon and mars. You can stee, david, it takes a lot of trying. The spacex way. Keep trying and they get it right because basically they become essentially what is nasa for us, wants us to become an interplanetary species, mr. Musk, and thats the key. Get to mars. To the moon. Got to get to mars. Tiktoks ceo along with officials in beijing on the offense after yesterdays house vote and Parent Company bytedance the chinese company, of course, to divest the app or see it banned here in the United States. And new this morning, Steven Mnuchin is possibly interested in putting together a group or is interested in trying to buy the u. S. Assets of tiktok. Lets get to emily who has the latest for us as we watch this bill move on to the senate as well. Yeah. Theres been a lot of Movement Since yesterday when the house voted to pass that bill forcing tiktok to be sold or banned in the u. S. And Steven Mnuchin on squawk box this morning saying that he is going to put together a group to buy tiktok. Listen to what he had to say. I think the legislation should pass and i think it should be sold. I understand the technology. Its a great business. Im going to put together a group to buy tiktok. Youre trying to buy tiktok . I am. It should be owned by u. S. Businesses. Theres no way that chinese would ever let a u. S. Company own Something Like this in china. You say have you put a group together . Im working on it. Youre exploring a group. Ive spoken to a bunch of people. Who would be part of your group. I cant tell that to you now. It would be a combination of investors and no one investor that controlled this. Reporter mnuchin said he thinks china will be willing to sell so long as theres not a transfer of technology, meaning the app would need to be rebuilt in the u. S. Warned that tiktok should not be owned by any other Major Tech Company for antitrust concerns. Hes not the only one looking to potentially buy tiktok. The wall street journal reported activisions blizzard Ceo Bobby Kotick is looking for partners to buy tiktok with him. The bill needs to pass the senate and while it might have flown through the house with bipartisan support, dont expect the same kind of momentum right now. It has been endorsed by the heads of the intelligence committee, but majority leader Chuck Schumer has not promised a vote and several lawmakers have expressed wanting to make changes to the bill or amend it in certain ways and tiktok is ramping up the lobbying efforts. It had users on the hill this week to meet with lawmakers and has a powerful team of d. C. Insiders for lobbyists and they were caught off guard by the house bill but now beginning to rally in the senate. Parent company bytedance spent 8. 7 million last year lobbying efforts in Congress According to open secrets. You also saw tiktoks ceo shou zi chew report a video saying this bill would be a ban trying to push back against lawmakers who want tiktok to remain in the u. S. Just cant have that connection with bytedance. The Chinese Commerce Ministry Said today they will be meeting to protectand safeguard chinas interests in that, so a lot more to come here in how bytedance might move and china might move and if the senate might wind up moving. Guys . Very interesting. Thank you for following it for us with all the twists and turns and very quick period of time it seems. Dramatic movements. As we head to break check out the biggest gainers on the s p this morning. Weve got microsoft up almost 3 . Thats one of those names we have follow closely as well as googles Parent Company alphabet up by 2 . More with one chief investment strategist warning theres risks to the rally. Checking in on the markets about an hour in trading. Open tire lost gains and the dow down 100 plus and now down 25 as everything is driven by the pivot around the 10year yield. Our next guest believes it will be difficult for stocks to finish the year higher than current levels, but that said, still sees Investment Opportunities. Capital markets chief investment strategist brian belski has a target of 5100. You say dont miss take our indifference on market direction as a recommendation to avoid exposure to u. S. Stocks, right . We dont. Thank you so much for having us. Were worried about the johnny come lately bulls. Weve been saying were in a 25year secular bull market since 2010. In the new part of the bull, the cyclical bull market started in october of 2022. We said that in november 2022. It seems everyone is saying now we said 16 months ago from a sentiment perspective, that has us excessively worried. Ill remind everyone our bull case we published on november of this past year 2023, was for 5500. So its not that were bearish. We think on a near term basis that market is ahead of itself, that everyone is kind of chasing the same stocks in this herd mentality traditionally its not a good time to buy stocks and adding positions. Were bullish longer term. You think the market is placing too much emphasis on the timing and magnitude of fed cuts. When does that end . Well, too many people have been watching fed funds futures which have been wrong for a year and a half and i think the predominant theme of the fed in watching and doing what fed says has been in place now for all intents and purposes carl since august of 2007. When we were down to zero interests thats not normal. I think what is going to happen over the next several years we return to the normalcy of a three 3 to 5 10year treasury. Any time the treasury ticks 4 the market sells off. Thats not risk. Thats okay. We actually said this in our report, too, in november saying wouldnt it be cool if the fed doesnt do anything and if the fed does nothing and i think that theres a very good chance the fed stays pat all year long and i think that could surprise a lot of investors. You are at 250 for 24 eps. Any chance that goes higher . Yes. In fact, we think and as you probably remember, weve been bullish on financials, especially the money center banks, the Asset Managers and broker dealers and we think those earnings in particular are way too under stated. Thats where were going to get the lift up. As well as some of the tech earnings that i think are going to surprise. Remember seasonally the tech stocks do well the second half of the year in terms of their earnings so i think were going to see continued earnings surprise there. Our 260 number our bull case is attainable by year end. Finally at what point does election risk or election volatility risk begin to creep in . Is that a summertime story or later, sooner . You know, i think we give politicians too much credit. Weve written a lot about how politics have nothing to do with the absolute performance of the stock market, whats happening in the economy, in the stocks in general. Look at 2020 into 2021, the reason why the stock market went up in 2021 is because of 0 Interest Rates, nothing to do with the fear of the blue wave and all of that which everyone was worried about. Thats the best near term example we give politicians too much credit. I will say there could be some volatility come around Convention Season which is, obviously, in july, so hang on to your seat. Yeah. Its good to check in with you, brian. Talk soon. Brian belski at bofa. Turmoil in the ev world. Fis ker shares plunging. The discussion about fisker considering reorganizes under bankruptcy protection should not come as a surprise. This was reported by the wall street journal. A couple weeks ago when fisker reported q4 results they expressed serious doubt about staying in business. Why . Take a look at 2023. The high in terms of vehicle sales 4,929 well below what they were originally targeting. Revenue coming in at 273 million. The debt about a billion dollars. So for Henrik Fisker and his team the question becomes a couple things. One, first off, how much cash do they have on hand as they continue manufacturing vehicles. By the way, they do not manufacture the vehicles. It is a contract manufacturer in austria, magna stair, where the vehicle is built. Nonetheless, the request is how do you increase your sales . Their Fourth Quarter loss of 463 million shows how much theyre struggling in terms of sales, particularly here in the United States, which is where fisker thought that it would see a boost in sales. The goal this year is sales between 20 and 22,000 vehicles. Theyve already worked with dealerships to do sales through the dealerships. You have to ask yourself with the talk of bankruptcy how many customers will say im in the market to buy an electric vehicle one well over 50,000. Shares of fisker a penny stock down 50 trading at over 16 cents a share. By the way, they are expected, if you go by their Earnings Report a couple weeks ago, plan on dropping a 10k on march 15th, which is tomorrow, well see if we get any news between now and then. Also, take a look at shares of tesla, rivian, byd. Barclays out with a note this morning saying the ev euphoria has turned into an ev winter and theyre bringing down their expectations in terms of global penetration for evs this year they expect it to be just 19 of total vehicle sales. It was originally 22 , the expectation, and remember by the end of the decade when people were saying worldwide, we might see evs being half of all vehicles sold. Barclays now bringing down its estimate from 48 penetration down to 43 penetration. It continues in terms of the very bearish tone when it comes to evs and ev stocks. Barclays has made ev winter a catch phrase lately. Thanks, phil lebeau. When we come back the fallout facing the rent stabilized economy. Well get to leslie picker with a preview of whats ahead. Hey, leslie. Hey, carl. The recent turmoil at new York Community bank corp, and its exposure to the faltering rent stabilized economy brought into focus the opaque corner of real estate. Behind this door behind me, number 9 is an ninhabitable rent stabilized apartment sitting vacant for a full year. The landlord blames the 2019 law that makes it too difficult to rekoop his investment for the necessary renovations. Well take you inside after this break. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from Morgan Stanley power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from Morgan Stanley ontario has all the partners you need to make the electric vehicle of the future. With one of north americas largest i. T. Clusters. 65,000 stem graduates per year. And all the Critical Minerals to make electric vehicle batteries. Ontario. Your innovation partner. Fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Morikawa on 18. He is really boxed in here. Ris not a good spot. Ses off the comcast business van. Into the vending area. Oh, not the fries wheres the ball . Anybody see it . Oh wait, there it is back into play and. Aw no, its in the water. Wait a minute. Are you kidding me . You got to be kidding me. Rolling towards the cup, and its in the hole what an impossible shot brought to you by comcast business. Nearly half of all apartments in new york city are rent stabilized. Thats causing big problems for some lenders thanks to a 2019 law that many didnt think of much at the time. Leslie picker joins us now from a very special place i think i see there to explain what this is all about. Leslie . Yeah david. This is what an apartment can look like when a tenant moves out of a rent stabilized apartment after living here for nearly 30 years. At the time this apartment went for 775 per month. For a full year it sat vacant because the landlord said it needs 50,000 worth of renovations to bring it up to code. Since 2019, many such renovations have been unaffordable for landlords because of a new york law that caps rent stabilized increases at 3 . In order to tackle affordability in the city. Properties have plummeted 06 to 70 over the last five years, a degradation trickling down to the property lenders, new york bank corp the poster child of this phenomenon. The landlord of his apartment says hes getting squeezed because his revenue is declining with some apartments no longer inhabitable while his taxes and insurance and Interest Rates are going up. Youre seeing foreclosures left and right and banks going under. Something must be done. The status quo is not is not tolerable. We are watching our buildings disintegrate before our eyes. Theres no money to be put into it. A recent report by d. A. Davidson find nycb is the most exposed as well as flushing financial, northfield and valley national. A new study, though, from the city comptroller says that the 2019 law has not led to an increase in vacancies or distress among rent stabilized housing. The city says the number of vacant rent stabilized apartments unavailable to be rented actually declined 39 between 2021 and 2023. Theres also big name investors who bought, you know, sizable shares of apartments some time back, leslie, in the private equity arena expecting they would be able to raise rents commensurate with putting in and investing in the properties and theyre out of luck. Exactly. Prior to 2019, this was seen as a really safe investment from a credit standpoint if you were a bank. It was seen as a very viable option as well from a lending standpoint and thats because you were able to basically raise the rent over a certain period of time and once it got to a level maybe over 2,000 a month, you could deregulate that rent and allow for more market rates to apply, which made for a better return on your investment if you were to renovate these apartments. All of that changed, of course, in 2019 in kind of capping the amount that you could charge renters, which was seen as a way to protect tenants, but on the flip side, made the math much more difficult to swallow in terms of these renovations that as you can see here are very Much Required to bring this apartment up to code. Youre not going to put the investment in if you cant get a return. Where are you . What neighborhood . Were on the Lower East Side. This was a former tenement building 100 years ago. This building is 100 years old. Were on the Lower East Side in the tenement area of manhattan. This was probably housed a family 100 lived in what appears to be about 500 square feet, moving to america. Since then it has turned to rent stabilized in the 70s and now sitting vacant, needing a lot of work to bring this up to 2024 standards. Leslie, thank you. Lets get an update to a story bertha brought us. Spacex confirming the loss of the massive test flight. They say they lost communication with the rocket during atmospheric reentry. Todays test of the biggest rocket we have seen did mark the furthest and fastest the rocket has ever flown. Ive been following elon musk on x, who has been extolling the virtues of this test flight. As he says, well be a multiplanetary species, get ready. Well get to mars. Spacex hitting new milestones, but sadly, the ship itself is but letter than the first time. Exactly. When they had that rapid unscheduled disassembly, as they called it. He keeps trying, again and again. As we head to break, check out the names hitting fresh 5 2week highs. You can see marathon petroleum, diamondback energy. E ta beauty will report after thbell. Well break down the stocks to watch next. Investment opportunities are everywhere you turn. Do you charge forward . Freeze in your tracks . Or, let curiosity light the way. At t. Rowe price, we ask Smart Questions about opportunities like advances in healthcare and how these innovations will create a healthier world tomorrow. Better questions. Better outcomes. Her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we got him under a new plan. But then they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. The price lock, the price lock. So, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. Welcome back to squawk on the street. Lets get to dominic chu and get to lastminute movers. A few analyst calls getting attention this morning. Fintech and trading, shares of robinhood up. Were riding a wave of better than expected report of assets under custody after yesterdays low. Analysts at bernstein initiated coverage of the Trading Platform with outperform rating. Meanwhile on fast food, jack in the box catching a bid thanks to wedbush who changed that to outperform from neutral with expected positive momentum from the companys smash jack burger lineup. And well end in aerospace and defense with rtx, being helped by analysts at wells fargo. They upgraded that to an overweight rating and target price goes up to 120 from 100. They think rtx will see the worst of the effects of the companys gtf engines that happened last summer. Also a recovery in defense related profit margins. Those shares up 1. 25 . Back over to you. Thank you very much. One area of the Energy Complex outperforming, hitting new highs, Pippa Stevens is tracking them for us. Talking about the refiners hitting another round of record highs this morning. Before just now going negative. Still outperforming other areas of the Energy Complex. Fuel demand has remained steady while refinery utilization has pulled back, which has lifted product prices and, therefore, refiners margins. As we move into the spring and summer driving season, gasoline futures are already up nearly 30 this year. The widely followed 321 crack spread is over 20 which john kildoff called phenomenal. In recent days ukraine has targeted russian refiners which could further tighten the Global Market which is already feeling the impact of higher transport costs. In the u. S. Capacity has declined in recent years as facilities close or retrofitted and no plans for big u. S. Refineries with Morgan Stanley listing updated cycles. Thank you. Taking a look at the Broader Market, we are down on the s p by some 0. 3 . Big four of the mega caps, apple, alphabet, amazon and microsoft helping to keep the nasdaq in almost neutral territory this morning. All four of those names i just mentioned up well more than 1 . Microsoft leading the way with 2. 5 gain this morning. We have a lot more market coverage for you straight ahead. Dont go anywhere. In fixed income today, fiy helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart rylee from rylees realty hi this listing sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. at pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Good thursday morning. Welcome to money movers. Im Carl Quintanilla with courtney raisin. Today the market reacts to hotter than expected inflation data. Rbcs head of fixed income will break down the path for rate cuts and why he expects a wave of defaults in private credit ahead. Getting hammered after earnings. An exclusive with the ceo coming up this hour. Bernstein says a, quote, monster of a crypto cycle can lead to a 75 surge in shares of robinhood. The analyst behind that call will join us after initiating a buy this morning. Right now the market lost some early gains. Dows down 71. Tenyear definitely elevated as it