headed all the way back down to 107 or so. final check on the markets dow managing to still gain despite a nine point loss in disney nasdaq is flat s&p indicated up six or so i can only imagine what else you're down there for. i don't even want to think about the leaders and movers and shakers you're going to be with. >> we're going to bring you some of that video tomorrow morning there's your tease >> that's why you want to join us tomorrow. "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber is at the milliken global institute in los angeles. disney earnings are definitely top of mind this morning along with an apple ipad event in about an hour.

buying yields in oil are lower roadmap begins with disney better than expected with streaming numbers nearly breaking even. shares, as you just heard, under pressure. >> plus elon musk reups his ai warnings saying it will over time biological intelligence speaking of ai, i'll be joined by the man sam altman calls his secret weapon at open ai as well as former treasury secretary steve mnuchin. that will be over the next couple hours carl >> all right let's begin with disney, guys. lower in the premarket got the raised guidance. narrowly overall streaming losses to about $18 million. disney plus and hulu with a surprise profit. box office sales did see a decline in the period, jim as julia just pointed out, although parks and experiences up ten, some moderation, and

post covid travel. >> when you go over the arpu, the average revenue per user for streaming, it's quite good india -- the amount of money they were making on the indian sub is quite different would i go into this train wreck and buy it here? it's not a train wreck frankly, i didn't expect any park to be as strong we do have to worry comcast, the parent company of this network did have good parks. suffice it to say, this is an overreaction the stock is down from 1.21. there's a belief that magic is not back that seems wrong to me i would take the other side of the trade after the sellers try to make themselves right at the opening, take it down ten. this is simply not that bad. >> 2k5i6d, we mentioned the streaming losses if you exclude espn plus, it

looks like they're on track to getting that by q4 >> yeah. i think it's interesting -- and i'll come back to jim on his reaction coming in, jim, i think a lot of investors would have said if you give us this kind of number for direct to consumer, namely profitable, as carl said, except for some sports stuff and/or on the way to clear profitability, that might have been seen as a positive, not to mention parks obviously strong it is the guidance clearly weighing on the stock right now, jim for this next quarter, for operating income from dtc and more importantly from experiences. overall, i would think you have to argue they're on track to sort of hit the things they've talked about hitting in terms of from the beginning of the year >> exactly i think, david, one of the things we can never let ourselves do, but we often let ourselves do is look at the stock price. let's find out why it's really

bad. the fact is they guided to an overall good number. good gains over the year maybe there's some weakness here carl, if we define ourselves by what premarket trading has been during this entire year, we will have made fools of ourselves i'm not buying into the fact that this stock is down nine if they had a bad last five weeks i've been no fan of what's going on at disney i think that's obviously i was vocal about it i don't care about the consequences of being pro what pelts wanted to do i think bob iger is doing a good job. frankly, the fact that the stock is down this much is i think it's wrong i think it's a good opportunity to get in for the next year. it may not be the best opportunity for the next 72 minutes, and if we're going to decide the next 72 minutes is what matters, why even come

here >> we're going to talk about what druck said this morning on squawk north american box office is tracking down 48 this quarter. >> amc is going to report this weekend. you'll have to hide your eyes. it's going to be worse than a total eclipse of the sun i don't think these are things you should be focused on david, we know disney had a bad movie schedule one of the reasons why peltz was such a force, he was saying the movie schedule was bad i know it's going to get better. this seems like reaction to a quarter that was two quarters ago, not to one that's about to be before a good second half second half is what matters here, isn't it >> it is, and i agree with you, thats it is somewhat surprising. guidance seems to be the key area of concern for investors.

the conference call is still under way. there's q&a going on right now perhaps they'll get a bit deeper into that. some of it has to do with hot star they're consolidating properties in india they took the good growth charge as well for the overall value, some of the properties there that hit the reported number for the quarter. jim, yeah, i think that is probably the case. again, a couple of calls i had with investors this morning were like, looked fine to them. it's the guidance. that wanted some answers we have sound from bob iger on the call a few moments ago talking about, of course, the long, steady climb towards profitability in direct to consumer take a listen. >> we also remain on track to reach profitability in our combined streaming businesses in q4 we've said all along our path to profitability will not be linear and while we're anticipating a

softer third quarter due in large part to the seasonality of our india sports offerings, we fully expect streaming to be a growth driver for the company in the future, and yes have ply or tied the steps necessary to achieve this >> still dealing with, of course, the decline of linear networks, as are all of these companies, i should point out. revenue there 2.77 billion consensus was a bit lower than that actually. operating income at $752 million which is still a big number, still an important number for this company, jim, was a bit weaker than the estimates. >> average revenue per user in india is 70 cents. the core is $7.28 if you back everything out i think people are reacting incorrectly. david, when you mentioned a quarter is soft, then what's going to happen is that the heat-seeking missiles come all over it. the other thing that's happening this quarter is we're seeing, if

you have a huge quarter, whether it be a celsius or builders first source, really good company, but you don't raise it as much as the beat in the first quarter, then your stock is annihilated. i understand this. these are people resetting expectations hur jo hugh johnston is a good ceo. if he thinks things are really bad, he'll say things are not good he's not saying that carl, they just came through a bitter proxy fight i didn't expect this to be the blowout quarter. i don't know who did, other than people who are ill-informed. perhaps they're more ill-informed shareholders than non-ill-informed i would think if you want to be at disney because you think they manage to win the proxy fight and they're the better operator, you buy the stock. it seems almost brave and foolish. are we supposed to be saying get to the chopper

i would forever to say, all right, i'll take some here and buy some lower and expect that sellers will come to their senses or buyers will come in. this stock was at 121 a few weeks ago. maybe that was when you should get to the chopper >> looking at some reaction. bofa reiterates overweight, wells reiterates overweight. >> the country is softer that's why the fed is going to cut. gasoline went up a bit people are more worried about their jobs the san francisco fed just told you that the money that you save during covid is gone is this when you're supposed to blow out the darn quarter? >> jpmorgan pushed back on that fed report today saying they'r not counting a lot of capital gains and dividends and inheritances i gives you a false picture that

the consumer is rolling over. >> what the heck people died, we've got money bring it on. if you want to know where things are bad, it's a morgan stanley piece about lucid burning $10 billion a day. of course, that's a typo. >> i did see that. you tweeted it out. >> burn baby burn. they happen to be from norris town, an adjoining school district to me look, we can take one of two attitudes. we can say, you know what, i can't believe things aren't stronger whether you had arc best on last night, a trucking company, or you had a railroad or disney you can say, you wouldn't be in this thing if the fed cuts i'd say yes. do you want to be in toll brothers do you want to be any company that's levered -- masco? yes. when you're in the teeth of things, when you're staring down the gun of a next quarter, you have to realize that if the fed cuts, you're going to be buying what you're selling. right now at this moment you

feel awful and like a fool but if you're going to sell this stock ahead of what is going to be a fed rate cut, i will bet you will lose money. >> okay. i'll remember that day 6:10 here on the west coast. what day is today? the 7th? may 7th. okay we'll put that down on the ledger. >> number 11 to place, japanese horse wouldn't have come here unless it was going to place in the kentucky derby no this is not rocket science oh, rocket science, boeing can't do rocket science. that's too bad what can boeing do right now >> we'll get to spirit's numbers in a little bit. meantime, guys, we're in the midst of this four-day win for the dow. jim, thanks. mike sec car difficult best may in four years. >> these stupid things don't mean anything -- look, there's a lot to be said when the fed is about -- we've had weaker numbers. it want to go back two weeks two weeks ago what we were

worried about is numbers had heated up and the fed was thinking about raising which was, by the way, a completely false narrative that was ginned up i'm sure one of the rich people this morning said the fed was stupid. >> druck had harsh words for powell and bernanke. >> i have harsh words for most of the people. i read a very critical book about lincoln last night he turned out to be a bit of a fraud going into the war i think jay powell has made it so we have a 3.8% unemployment and he's slowing things down what do you want from people do you want him to be able to -- that he should be able to outrun a kryptonite bullet? what do we want of a person? how about we have full employment for people who have never had full employment before what do rich people want what do rich people really want?

>> learnings are blooming. can it comes the increased risk of a stock market meltdown which he was worried about before. >> look, guys, disney is not melting up builders first source is not meltion up celsius is not melting up. rockwell innovation is not melting up home depot and lowe's are not melting up >> data dog, you want to go through all the names? >> look at this. simon property had a good number that's david simon if he ever missed the numbers, he wouldn't know how to miss a number if his life depended on it nvidia is down a lot i just say if everything is melting up, could something please melt up on my screen? something? could hugh johnston tell me there's a melt up going on on

disney and i don't see it. peloton is melting up. >> it is up 20 points -- >> here is what i'm going to say. the world is falling apart and crazy except for the stock market >> there'sa lot to watch, especially in the middle east today. we'll get to the latest on israel all-time highs on the ftse we'll talk about that. when we come back, elon musk had a lot to say about ai at the milken conference. "squawk on the street" is back in a minute.

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we're keeping an eye on shares of tesla as we always like to do here on "squawk on the street." they're looking down this morning when we hope about 13 minutes from now stocks on an 18% -- overall weighing on the stock, an 18% decline in china sales year-over-year which is one of the keys for why it's down

yesterday elon musk wasn't talking about tesla. musk was talking instead about ai of course, he has made a habit of warning about the progress of ai some of his predictions perhaps a bit scary. take a listen. >> the percentage of intelligence that is biological grows smaller with each passing mo month. eventually it will be less than 1% that's actually not what -- i don't want ai that is brittle. if the ai is somehow brittle, silicon circuit boards don't do well out in the elements so i think biological intelligence can serve as a backstop, as a buffer of

intelligence, but almost all -- as a percentage, almost all intelligence will be digital so then it's like what role will there be for us? i don't know >> reminds me of the interview actually, guys, that we did almost a year ago exactly. that last question which i guess he's still pondering in terms of what is left for us in terms of making a life useful and interesting when the machines have way more intelligence than we do. it's not something obviously that we talk about every day when it comes to ai at this point, as you might imagine, it was a big subject of any number of panels here, including one i led yesterday with the leaders of ai with businesses such as amazon web services and salesforce

they're a lot more instructive in terms of what they're already seeing from their business in terms of the applications and the tools to use those applications in the enterprise then when you step out, you talk about some of the more existential questions. well, you get musk on that that lows along with a lot of things i've been talking about for the last year. >> the existential question is there. let's say you have someone teaching a class on tolstoy. i had a year on tolstoy. it was a fantastic class the professor might skew you toward ol stoi was a great libertarian and wanted to help everyone ai may have a different bias maybe that tolstoy believes the regime is coming to an end it's absolutely true humans have bias and ai will have bias. you can argue whether we're already inning flunsed by tiktok and it's all playing a role in how younger people think

david, there are many forces that are pulling us right now that have more to do with automation than we think in the end, who programs them is bad. if they're bad actors then the programming is going to be bad the difficulty is what will be the bias of machine if it's teaching tolstoy >> okay. that's one thing to think about. but at some point they'll be programming themselves at some point they'll be generating the large language model, synthetic data they can keep learning on by the way, we talked a lot about blackwell, the chip coming from nvidia. you know better than anyone given the time you spent there with jensen, it's going to be 30 times more powerful, jim i don't know that we're ready to fully appreciate what that is going to mean and bring. the rate of change is only increasing when you ask when we're going to get to artificial general intelligence, i mean, you get

answers that put it within the time frame of our contracts at this network. >> 18 months no, 18 months and we're going to see things that we wouldn't believe. you're absolutely right, david i know we're going to commercial and it's not the time to discuss. what they think about the shakespeare histories versus the tragedies. david, they're going to make up a mind of their own. we don't know how they're going to come down it scares people and perhaps it should. >> we'll also talk about tesla sales in china versus the overall sales in the country as well on avs. we'll get cramer's mad dash, count down to the opening bell as "squawk on the street" comes back after this.

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coventry direct, redefining insurance. take a look at the premarket here, gaining a little steam dow just notched its fourth positive session in a row. as we said a moment ago, may is tracking at the moment to be the best may for the s&p since 2020. opening bell coming up in about 4:30 don't forget, you can catch us any time, anywhere

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let's get cramer's "mad dash." >> a good piece in the journal about apple developing chips these are the chips known for inference. understand when you do nvidia which of course is down despite the fact that goldman has a good piece reiterating buy, that's not the kind of chip you buy for inference. you buy it for training. training is a little harder. you've got to put the data in. inference is, if you like x, you might like y this is a very good sign it's the beginning of what i regard as the apple offense on ai the one tim cook told me is going to happen, but nobody seems to care until they see it. they're starting to see it with this ai for data centers they'll be seeing it with the developers conference and see it with the next phone. apple suddenly has a clear path. it's very different, by the way, from disney. the disney path was not clear.

the apple path is clear. [ cheers and applause >>ality the big board, public storage and 1-800-flowers.com. don't forget mother's day weekend approaches company expected to deliver more than 20 million stems for the holiday this year. jim, you mentioned apple there is the ipad event which we'll see in about half an hour. >> you'll see good things from that the people who are negative on apple. [ cheers and applause >> all you had to do was look at the numbers in the phone and you should sell. this is no longer the case now you have to think about them playing offense in ai in all their different devices. you're starting to think, wait a second, maybe it deserves a 25

multiple, 26 multiple. carl, i've always said own it, don't trade apple. i did that because tim cook and his team are very bankable, except for the people who insist on trading it constantly >> i don't know why they want to do that. >> mane time, you can't escape the stories. dij times is exploring a maker rivian gets most of the mentions. >> i test drove a rivian i liked it much. i think the notion of a car is something people think is important. david, frankly, the car is not their core competence. if they can't do the vision pro right, and i think they can, how are they supposed to do the car right. hand it off to rivian. is that the right thing to do, david? certainly not the right thing to do, to hand it off to lucid. >> no. lucid shares, well, 6.4 billion

market value rivian at 10 billion, i do remember -- i can't help it, sorry -- when it was over 100 billion market value keeps its production guidance intact at least. rivian has the amazon contract, although that's been an important component. they've been meeting production targets as well, haven't they, jim? >> they sure have. i think the worry about rivian is do they have enough money to open the big georgia plant and how much will they get for their current plant. i think that's an issue. we keep forgetting how much it costs to make cars david, there are some negative stories about musk and tesla circulating, including this national highway -- the recall response by july 1 obviously bad numbers in china is he still a teflon figure, musk >> why, is he?

>> i'm saying is he still teflon he's obviously cerebral. sr. reeb bral versus cash flow. >> well, we know from the last -- listen, it is a capital intensive business the last quarter was well responded to by investors after the stock had been beaten down some 40% for the course of the year still talking about it being down 27-plus percent i don't know i'd call him teflon at all concerns continue, jim, whether in the chinese market itself, whether it's a result of competition from some of the chinese ev makers, and on and on from there. >> i'm thinking about the cathie wood/ron baron component which is this forever young thing. my problem here, carl, is in the end if you're ford motor and doing everything you can and still can't get your stock down 12, what happens when you do this one and continue to make --

maybe your cash flow won't be there. it's very, very difficult to build an investment page for tesla. you can't do it on robots. you just can't you can do nvidia on robots for tesla because that's who they have to use. >> lots of price targets have the core auto business as a fraction of the target. >> i know. sometimes events can overrun st stocks david, obviously these things are -- there's an element of musk is a genius so, therefore, let's buy it i actually say i think tim cook is terrific so, therefore, you have to own it i want to do that except autos are such a capital intensive business, david. i have a hard time liking the stock. >> are you talking about tesla right now? >> i like musk. >> i get it. he had said to many -- he said on the conference call, if you want to be in an auto company

and that's what you're interested in, don't buy my stock. he said we're an autonomy and robotics company that has focused people on full self-driving once again, when they're going to get there they seem to have made significant progress when i talk about the rate of change increasing and what blackwell is going to mean in terms of how much more computing hour it brings versus the h100, you have to keep that in mind as well, what they're going to be able to do what are they on 12.3 now or something like that. each iteration is that much better for full self-driving will they really get there will the government be capable of actually putting in guidelines that ol lau them to operate? who knows. i don't know, jim. that's where he's got investors focused. that and obviously infusing artificial intelligence in all those robots that occasionally we show dancing. >> well, it's funny. what is really working with

artificial intelligence. they have a deal with nvidia if a box falls and they don't get hurt and they can pick up everything the amazing thing when i asked the person who created the forklift for them, i said, well, isn't this going to replace people he said to me no one wants these jobs i keep hearing we're going to replace people, but you go to china and no one wants to be a forklift operator. you go to the united states and no one wants to be a forklift operator we're creating things because we don't have enough forklift operators. a little pedestrian narrative. not everything is going to be really exciting and brilliant. some of it is going to be lifting a box. >> although truck miller this morning, jim, said perplexity is about 95% of his searchs. >> he made a killing on perplexity by asking about

argentina. >> cut some in march becky pointed out it rhymes with buffet trimming some apple. >> we tripmmed some nvidia i do think nvidia is resting before the next leg. >> earnings are the 22nd. >> it's coming up. i think earnings will be fine. remember, blackwell doesn't ship until the fall david is right blackwell is the sum total focus of what they can do because it's so much faster and because it can see video. video is going to be so important. i also think, david, i know -- >> jim, it's about more than speed. it's about power. >> what it can think. >> by the way, it does it more efficient li at a lower usage rate you know all this. i'm just repeating it. >> yes, i was in a car --

>> -- we still are going to have -- this has come up a lot a.i., when you bring 5,000 people together in the business world, a lot of people are going to be talking about it they have here it's clearly on my mind. it's got much better efficiency. but you'll have so much more of it that the electricity issue still one everybody is going to be talking about are we going to be able to generate enough power in the next 20 years in this country so we can become slaves to the robots. >> talking about canada now. there are so many companies working to fix the grid, that those are terrific investments the grid investment is still very much front and center david, back to blackwell for a second i talked to jensen huang about it, the ceo of nvidia, he would say it's so fast we don't know what it can do that doesn't mean terminator it means you have -- i bring up

the vision pro because it seems so humorous. when we see what's been written for it, that's what's going to matter we have to know what's going to be written for blackwell by amazon, by alphabet, by meta and then we will know how powerful it is it's just right now hardware and software that hasn't been fully programmed we don't know. it could be unbelievably great i'm betting on it's unbelievably great. i'm betting that these guys have -- benioff, we'll be pleasantly surprised i think bristol-myers will be helped, novartis will be helped. i'm a bull on what blackwell can do >> well, the applications and the tools, it's all happening, by the way it's not as though there's nothing -- this is happening in the enterprise -- right now and obviously will only pick up with

increasing pace when blackwell -- when that chip starts to get introduced and it's actually pouring a lot of these activities. >> are people scared of blackwell? are they scared? >> i mean scared -- they're not scared -- i'm not going to say they're scared certainly there's got to be concern, and you hear it from musk, in that things are moving very quickly the rate of change is only increasing and we don't know. we just don't know >> well, what jensen would say -- >> you can have a very long discussion full of positives with many people who are the evangelical -- who are the supporters of a.i. at the end you ask are you worried, and they'll go, of course i'm worried >> what's really incredible, all you have to do is think about whatever we can do, whatever movement we can make, a robot

powered by blackwell will be able to do it better that's what you have to think about, whether it be a 40-point game, whether it be a perfect game it can pinch hit and it can shoot. >> speaking of calls, jim, a bunch of stuff in retail bofa, nike, u.s. one list. citi upping gap and target. >> gap has come down too much. target yield is almost 3%. i think that's a chief place to be able to get in target i still think costco is going to have best in show. no one has been talking about it lately there is an overwhelming sense that when we see anything related to housing, it misses unless it has such value, wayfair, or such prestige, williams sonoma. williams sonoma is the outlier i keep coming back to it it can't figure it out

except laura al ber, it's a digital first product. maybe she's done it right. she's the outlier. >> next week when we get hd, low, rh, best buy, chewy, wolf. >> chewy keeps missing wolf, i don't know wolf. i do know home depot and lowe's, more people shooting lower again. look, these are right in the crosshairs of wooi we need a cut. there's going to be this gap where you say, okay, well, we can't buy builders first source, one of the greatest stocks of our time, by the way, top 5 s&p in the last five years, we can't buy, down 26 today because they didn't raise enough. home depot build a company to compete with first source. we need the rate cut faster than the stocks if we had a rate cut today, builders first source would go higher, not lower. we need a rate cut

that's what this is about. i'm not a billionaire, but i still know what the hell i'm doing in some cases. just in some david. >> guys, did you see this partnership, not doing much for uber stock instacart is up, pouring restaurant delivery on instacart. let me give you the quick headlines. >> doordash -- >> -- nation able to use the instacart app to order if hundreds of thousands of restaurants powered by uber eats going to be basically a new tab, restaurants, in the instacart app. >> doordash was at one point down ten, now it's down two. tomorrow andrew has estara dash will be down seven and then it will be down three, because the people who are trading have no idea what the hell they're doing, but that's okay no one is going to grade them.

that's what's happening to doordash, down ten at one point. can you believe this, david? >> at some point you're going to have to start blaming the machines you're going to have to say the a.i. has no idea what it's doing. the machines are already doing a lot of this. >> anybody who can read moby dick in one second knows what the hell they're talking about, david. machine or human. >> that's a good line. in fact, it can. >> yeah. call me ismail, david. >> one second. >> one second. >> gave him one second >> does it really get melville in the way you do? >> well, does it really matter what i do? really existential >> jim, we didn't touch boeing or spirit. >> thank heaven. >> wider than expected loss, worse than expected free cash flow emi emirates, the ceo telling boeing to, quote, get your act

together i'm not happy with boeing. in this case he's saying you need to step it up on the 777x >> spirit barely down. it could be big on that incredible loss. half of me says david calhoun is making a lot of money because that's the american way if you're a ceo it doesn't seem to have anything to do with what you do half awful me says that boeing is such a -- came up with a b 29. >> that was a while ago. >> i guess you're only as good as your last plane. >> see what boeing is doing there. >> i don't know what to say. it's bad. >> that's fine we didn't touch on palantir. >> stock was at 25 yesterday they got ahead of themselves palantir still trades like a gamestop or an amc from days of old. if you read the letter by carp,

it's quite good. it talks about his bootcamp an how people learn to write. i'm not going to tell people to get in front of that freight train. i thought that letter was coherent i want to bank can karp. it wasn't a bad quarter despite the fact that the stock -- >> we didn't really touch on crude. still circulating around 79. it looks like there is activity in rafah they appear to have taken control of one of the border crossings with egypt as the cease-fire talks yesterday were a mess. >> it would be interesting if they open the gate to egypt because egypt doesn't want oh of i don't want to get too much into that. i do know there had been a work premium, it's gone away. pumping about 600,000 fewer barrels right now because of difficulties with pipes.

david, oil is defying -- no one seems to know why oil is trading where it is. we could ask blackwell, and maybe that's what we have to do. >> we'll be able to in a not too distant time eventually continuing this a.i.-themed broadcast today buy our own avatars. >> -- >> he may. sometimes i wonder whether he already is -- >> early adopter of blackwell? >> i think he's already -- >> -- i love blackwell >> guys, real quickly, i want to get to one other piece of news in the world of m&a. they're reporting on essentially what appears to have been a bear hug by the largest pulp manufacturing, suzanne know, i believe. they have at least broached the idea of trying to buy

international paper for $15 billion. of course, their bid is based on getting financing. it's already -- again, all reuters reporting -- been rejected as inadequate it's trying to stop international paper from buying a company in the uk, d.s. smith. >> oh, man that's cool. >> these things can be highly unlikely to get to the finish line it has ip shares up. you try to get the shareholder base to change torques drop the smith bid, talk to the other company which apparently is willing to pay a premium you can see what it's dwon to the stock. it had been up even more than that that's all reporting from reuters. >> can you get reutersstle is gy starbucks or poeps co- >> i don't know that i can i'm sure someone can report it as a possibility even though it's highly unlikely to happen

would you like that to happen, jim? >> my travel trust has starbucks. i figured this was a good time for you to ask me why we own it. >> well, why do you own it, jim? >> well, i don't know, but my morale will improve when you stop beating me. >> you brought it on yourself that time. >> i'm trying to create something for reuters and you make it difficult for me >> for some reason you choose to continue to own it. >> i'm talking to blackwell right now. don't bother me. >> we'll see what blackwell has to say about the bond market kashkari has an essay right now questioning whether or not policy is tight enough says prices may be settling to a level above the 2% target. we'll hear from him at 11:30 a.m. as as for the dow, up 50, disney with about a 70-point drag back in a minute

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let's get to jim and stop trading. >> a lot of the high fires are getting hurt celsius come in up 40%, reported a good quarter, didn't talk about an inventory issue that was hard to understand the stock is back to being down 2. that's kind of a pattern the stock overreacts and comes back. except for disney where they're saying the quarter is not going to be that good. you have to take a leap of faith. >> tonight >> i have reddit, a red hot situation going on there and palo alto, which i think is making a very big comeback from when it was hurt by the last quarter. >> wow it's not easy right now. >> i've seen worse. >> yeah. yeah. >> let's remember that given what's happening around the world, this is pretty darn - >> 5% off all-time highs

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. good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla at post nine of the new york stock exchange, sara eisen and david faber at the milken institute global conference in l.a take a look at the markets on this tuesday green arrows, 5187 and the dow going for five straight wins today. three stocks we're watching. apple kicks off its ipad event this hour. the first new ipad in about two years. we'll bring you the headlines. shares of disney are dropping on the back of earnings revenue did miss, down for a

fourth straight quarter. the combined streaming business posted a surprise profit shares of palantir plunging, raised its guidance for the full year, but that was below estimates. another busy day in l.a., sara. >> we have a lot of conversations coming your way this hour and next and digesting a little bit about what we've heard as right lates to the overall environment. got a good chance to speak with jane fraser yesterday, the ceo of citigroup, about her turnaround and she was feeling good she said, you know, the restructuring is done and now we move forward and we show result. the layoffs are done and the more ral is good for what she's seeing on the consumer, pretty good visibility into the card business and bank business she called it a k-shaped recovery listen to what she says. >> it's a k-shaped consumer. >> k >> k-shaped. a lot of growth in spending has

been in the last few quarters has been with the affluent customer we're seeing a more cautious, low income consumer. they're feeling more of the pressure of the cost of living, which has been high and increased for them while there is employment, debt servicing levels is higher than they were before, so they're being mindful of their spend. >> a warning about the key segment of the consumer space there. we're hoping for a soft landing, but added the caveat as she has, david, it's not always easy to achieve. so we'll see i guess people aren't as optimistic as i would expect i don't know what your conversations have been like ken griffin was talking about how he thought there would be a default cycle, a stress cycle, hard to predict when it will be a tricky balance the fed getting it right on cutting interest rates and inflation coming all the way back down to

2% a lot has to go right. >> >> it's interesting given what generally is a positive economic landscape i agree with you, the conversations i've had have tilted towards being a bit more cautious and concerned, whether it's options and -- or rising debt in terms of interest payments, things of that nature and/or how, you know, how beneficial the trump tax cuts have been for corporate earnings and potentially if they go away, given our need to raise revenues so those kinds of conversations more than hey, everything is great. >> right. >> not unexpected sometimes people are more focused on what may happen andwhat may be bad than what is good. >> bruce flat, ceo of brookfield asset management was on, he's got businesses everywhere from credit to infrastructure to renewables, to retail to commercial real estate and i thought he actually was more optimistic than i've heard him in a while i specifically asked him if he

thinks we have an inflation problem and here's what he said on that. >> i think inflation was last year's story like it stalled. it's going down. the trend is down. the markets are coming back. what indicates to us is, liquidity is coming back in the markets and every mojts for 12 months, liquidity has been coming back. that drives more thransactions, activity, it drives buyers and sellers together, so the world is opening back up after a tough 24 months, and it's getting better. >> feel good effect of lower rates helping drive liquidity and deals and transactions and ca capital markets activity he's got a pretty good view into that i thought that was notable as well and then, you know, you just hit on it, but the political conversation. >> yeah. >> front and center ahead of the election what are you hearing >> i mean, again, i sort of shared some of that. >> trump -

>> continued concerns in terms of rising national debt as a result of, obviously, significant deficits, what it's going to mean when we have a trillion dollars in interest payments every year as part of the budget process if, in fact, we get to that level, what may even be a need to raise more revenue regardless of who is in -- who wins the election. things of that nature. >> a lot of blasting i would say of the biden administration here from this crowd. >> yep. >> on regulation ken griffin did not hold back. he never does. >> regulation, i mean when you talk to ceos and certainly we both do a lot and those who do deals, it's always going to come down to antitrust in terms of their dislike for lina klan and a -- lina kan. >> usually griffen goes off on gensler and during this conference it was on lina khan. >> we've had the most hyper

aggressive ftc in modern history and i really don't understand their agenda american businesses consolidating under long-standing principles of undue concentration, is good in terms of the rationalization and efficiency of our economy. the ftc's adamant anti-merger stance is really reducing the efficiency of capital formation in the united states we don't know how big that number is, if that's a number in the hundreds of billions, trillions of dollars like we don't know where this is going to land, but it's a big hit. >> highlighting the economic impact here of the blocking of the mergers and then he went off as well on the whole banning of the noncompetes and how that -- the ability for firms like his to be able to give away trade secrets just as ludicrous and reducing competitiveness of u.s. firms. especially financial firms. >> believe me, as you might imagine, given i live in the m&a

world to a certain extent, i hear about it all the time and there's no doubt that regulatory continues to be a negating issue, for example, on deals and/or some of the actions that are taken seen in part penalizing u.s. companies and benefitting some of our international competitors, which in some ways is what griffen was talking about there. >> some people here using europe as an example of what not to do. >> what not to do. >> we don't have to talk about the big ai firms in europe. >> what else you got >> the political front the crowd is increasingly preparing for a trump presidency that's what i hear. >> you are too. >> i mean, look, we've got this new gen lab poll that we do at cnbc, young folks, that we polled about how they feel about the economy and the job market one is stood out to me how do you feel about the job market only 6% extremely good 38% pretty good, 44%, so that's the biggest chunk, feel pretty bad about the job market, which is just interesting because we have unemployment rate under 4%

and it's been there for a really long time. we have wage growth in a way that we haven't had in years and yet, the sentiment or at least responses to polls indicate otherwise and that's maybe why when we ask which would do best on the economy president trump got 40% of the vote, president biden 34% of the robert and robert kennedy jr., carl, got 25% of the vote. >> 29. >> 29. okay close numbers here but clearly for the younger generation, he's having a bit of an impact. we're going to talk about the political, economic, environment, throughout the day. in the next hour on "money movers" i will talk to the cio of bridgewater, mike arougheti about the opportunities of private credit, mattel's ceo, comes to milken all the time, about, i don't know, disney earnings might be interesting to bring up given the move in the stock today and just in general what he's seeing as far as

consumer demand. k carl >> apple's ipad event is under way this hour. getting headlines right now. hey, steve. >> it's a virtual event, not a big cupertino one and we already got an update to the ipad air model. tim cook announcing that one it's going to come in two sizes. also a little ai angle here as well, saying it's a good tablet for artificial intelligence, not many details beyond that look, here's why beyond the gadgets this is important. ipad sales have been down five of the last six quarters and apple reported last week down 17% for the march quarter but also said, ipad sales are going to grow this quarter by double digit percentage point and that's going to help apple meet its revenue guidance on the top line, low single digit it percentage growth. don't expect anything serious like said, but as far as artificial intelligence goes, they are talking about how the hardware is capable of processing some ai tasks the real ai announcement,

though, is expected on june 10th at the in-person wwdc event in cupertino. for the fun stuff an ipad air that was revealed two sizes and bloomberg reported a frefresh of all models today is about ipad and the pro we expect to hear from that in a few minutes is going to have the biggest upgrade reportedly with the same slick screen technology you already have on your iphone and guess what, it's probably going to cost a fortune. then, of course, the ipad air announced, ipad mini and the bargain regular ipad getting a bunch of internal updates. this is just an appetizer to the ai announcement at wwdc. aside from this event i want to turn it over to risk vian and t about the shares, on a report out of asia, rivian and apple in talks for some kind of car partnership. rivian does not have a car play, so i'm reading into that not necessarily like some sort of

apple robotaxi rivian partnership. this is more likely something on the car play side that's where you plug in your phone and get the apps and so forth from your phone on the display we're getting rivian earnings tonight so we'll see if there's any announcement there, guys. >> i made some waves premarket today. thanks fascinating look at the ipad rollout. turn to disney the company does report a surprise profit and streaming entertainment and raises its earnings forecast. shares under pressure. hugh johnston on the call talking about travel demand at the parks. >> while consumers continue to travel in record numbers and we are still seeing healthy demand, we are seeing some evidence of a global moderation from peak post-covid travel. >> michael morris, guggenheim media analyst joins us, michael has a buy on disney and target of 140 it's great to see you again. i do wonder, you know, for a print where streaming was going to be one of the key narratives,

is the parks' commentary a bit of a supprprise >> absolutely. i think the clip you showed hit the mark in terms of what investors are reacting to this morning. first, was guidance that the company provided with their earnings release they expect third quarter operating profit at their experience segment, primarily their parks business, to be flat on a year over year basis for a number of reasons. investors had questions about how much of the pressure on the parks' segment in the coming quarter is temporarily versus long term. when you hear that commentary from the cfo expressing a little bit of moderation on a segment that really is the rock of this business as they go through the transition - >> right now - >> on media, it's -- it shakes confidence that's what we're seeing right now. >> your point is just given the contribution that parks and experiences, which includes cruises and includes consumer

products, makes the overall operating net. >> completely. the business is complex as we all know and it's a work in progress right now it's something to remember there was so much focus on the shareholder battle, the proxy battle, about a month ago. the management team, which is really kind of regaining their footing with bob iger coming back, a new cfo in the seat, they had a lot of focus on that part of the business, and now we're in a bit of a lull, which the market knows as we're waiting for some of the new content to come online, but during that period, the parks was the business that people always would gravitate to with respect to their confidence because it was a juggernaut and demand from consumers is so strong >> so i just want to understand here then, michael, the guidance that seems to be pressuring the stock right now, is it a concern to you are you going to lower your numbers overall? is the market making too much of it in your opinion >> first of all, it's a concern. it's always a concern.

and when i look at the guidance that they just gave me for the third quarter, compared to where my numbers were before, that guidance is below my number. so i can't really say what i would do with my model, but those are the differences right there. it's absolutely a concern. over the longer term, i still feel very good about this company and this business and the parks asset in particular. we want to make sure we're being accurate in how we model what's happening in the macro environment. it's really, if you look at the comment that cfo hugh johnston made, it wasn't he's seeing significant consumer weakness, it was more modest talking about post-covid demand being a bit more moderated we don't want to have a sort of panicked reaction here i would point out that even with the updated guidance and where consensus numbers are right now, they took their guidance up for the year on earnings even with this parks' commentary, so this stock trades roughly in line,

slight premium to the s&p 500. i think disney is an outstanding asset that's in the early stages of a transformation, and i love the idea of buying it at a market multiple. >> i think many people if you told them or had given them the numbers of direct to consumer would have been encouraged and, perhaps, thought the stock would be up. clearly it's the guidance that's weighing here. am i wrong in thinking, though, that the trends you're seeing in direct-to-consumer are what investors would embrace? >> yes but as with everything with disney it's a little bit complicated, right they had a strong direct to consumer subscriber number at the disney plus service in the quarter, domestically in particular remember that number was boosted by a new agreement they reached with charter communications to carry that disney plus service for all of their subscribers what the market is really interested in, what we believe investors are interested in is the core growth and trats skrektry to that profitability that they've forecasted.

and that's still a bit of a gray area we need to see some of these new films come out and do well we need to see them drive enthusiasm for the company at the box office and drive continued enthusiasm for uptake of subscribers, and we need to see that move to the double digit profit really materialize. right now we're kind of still focused on just breaking even. >> michael, appreciate it. complex cross currents across media. thanks for the help today. good to see you. >> thank you as we head to a break, let's give you a road map for the rest of our hour here big interviews are coming up here at milken former treasury secretary steven mnuchin will join me to get his take on tiktok, of course, and nycb, that big investment and more a rare inside look at openai when we speak with the company's chief operating officer brad lightcap. >> keeping a close eye on apple's big ipad event which we mentioned a moment ago big show continues as "squawk on

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welcome back to "squawk on the street." ferrari is moving lower despite an earnings beat robert frank is at hq. hey, robert. >> good morning, carl. those shares down about 3% ferrari is sold out of eight all of its models for at least two years. investors seemed concern about the production being flat on the quarter. the company saying that was due to some models being phased out

and the new models ramping up. revenue up 11%, earnings up 13%. they're making more from the same number of cars, what ceo calls value over volume. so basically increasing profits without growing production the price of their new cylinder -- 12 cylinder car launch last week was $423,000, much higher than the previous value. they're selling more of their $2 million daytona sp 3s. china was down, so they shifted more cars to the u.s. and europe they're planning to unveil their ev hybrid factory. the first ev will be unveiled next year. half of ferraris are hybrid. the factory will allow them to expand hybrids this was a richly priced stock going into this print. it's trading at around 49 times forward earnings that's about the same as her mess, twice of that of lvmh.

you love looking at market cap ferrari is 50% higher than gm's total value. >> yeah. it's always, you know, funny, when we talk autos, which we often do, starting with tesla, we rarely mention race and, of course, i'm always interested in hearing about the company and always sort of stopped in my tracks by the 80 plus billion market value or wherever it may be right now robert, thank you. up next, the man sam altman calls his secret weapon. don't miss my interview with openai coo brad lightcap also aheador fmer treasury secretary steven mnuchin will join us here at the milken conference "squawk on the street" will be right back the all new godaddy airo helps you

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big theme here at the milken conference that we talked about in the first hour of "squawk on the street" has been ai. i had a chance to sit down with openai coo brad lightcap yesterday. it was a bit of a wide ranging interview including a new tool that was announced this morning by the company called media manager. it's not going to be rolled out for some time, but the intent is

to give content owners control of what machine learning research can be trained on take a listen. >> ai is an interesting technology it really, since basically the dawn of the web, we haven't had a technology that's in many ways i think kind of redefined the relationship between content owners and publishers and technology providers, and so we're spending a lot of time thinking about what does that new relationship look like we believe very strongly that there has to be a dialog and a conversation between companies that train ai models and content owners and publishers, and so this is, you know, our first step in what i think is the beginning of a dialog as to how we think content should be managed, should be, you know, should be allocated and ultimately kind of used responsibly for everyone's benefit in the age of ai and so -- >> what is this tool going to do >> this tool specifically allows content owners to identify their

content and specify specifically how they would like their content used with respect to ai training and further use and so we think it's an important first step it's not the -- it's not going to be, you know, the be all end all. there's a lot more work to do and we have a lot left to learn, but we think it's an important first step. >> is it your expectation it will at least mitigate the extent of copyright infrjment that have been the case previously for the company >> our goal is to do right by content owners and creators, and so ultimately we have to rethink that, that social contract ai has tremendous potential. in fact, a lot of the potential actually is benefit for the exact creator set that we want to work with in this capacity. so finding that balance is our goal and this is step one. >> when is it going to be rolled snout. >> we're still working on it it's an intake process, feedback

and learning what it is we want to build we're targeting probably year after next i think to say conservatively. we're going to start that process soon. >> right but what it would allow for, if i'm a content creator and/or any sort of media company, i can dictate what i'm okay with having your large language model use as data to feed it and what i'm not okay with, correct >> we've taken that step already in some ways. >> night we've released technology, similar to the robots, txd exclusion, allows companies to specify how their content should be treated. this is a step further on that p.a path, and we're really excited for it. >> you are the coo of a company, you say you spend a lot of your time figuring out how this tech, meaning generative ai, is going to get integrated into the world. what does that mean? >> so openai is a research and

deployment company, and we sometimes forget about the deployment part of what we do, but really, the way we look at it is, this technology ultimately has to be useful for people it has to be able to work inside of a business. it has to be able to help people learn things it has to be able to help people manage their health care better. that's a really had hard problem when you think about it. in many ways almost the research is the easy part the deployment part is the tricky part. so i spent a lot of my time thinking about what it is that businesses need to be more productive, to make their workforces more efficient, to use the technology safely in critical business processes. we spend a lot of time thinking ability what it is that users want out of the technology, how to make it more personal, how to make them more product ftive we think there's upside in education. how do we build a better technology to help people learn better in a personal way this is the beginning for us but this is what we spend time thinking about. >> we remember when chatgtp was

introduce. >> llama 3 or gemini competing for that same enterprise ai customer what wins ease of use, interface i'm curious what are the conversations between you and the enterprise >> yeah. it's going to be a lot of things like i said, the hard part is actually bringing the technology into the world and wiring it into the enterprise. the modern enterprise is extraordinarily complex. of course we want to be respecting of enterprise data. we want to be respecting of user privacy. and so getting those parts right is going to be critical to this. we're focused mostly on what we need to do to build the product layer on top of the research layer, the model layer and we -- we're excited for what we have coming this year in that regard but it will be a transition and so our goal is just to work with as many companies as we can in that process. >> yeah.

again, many people know that microsoft has, obviously, provided a good deal of capital to power the company, but given your ambitions, it would seem you have an endless need for capital. how do you meet that >> we foe kucused on control and develop the best at the cheapest rate sam used to have a phrase, intelligence is too cheap to meter which is kind of an eloquent thing if you think about it if you have intelligence you can turn on accessible to anyone, point it at any thing and it can solve those problems that's a remarkable breakthrough in the world. we think the benefits are absolutely worth it. >> i mean i don't know and, obviously, it's a private company, part of it is a nonprofit, but can you give us some sense, though, in terms of whether you're generate freeing cash flow or what your potential needs for capital are going forward? >> we think of it in two veins

the systems we build to train these models these are large and complex super computers that we custom build. the other is the compute we need to serve the models. the consumption of the models in a deployed capacity. we're looking at both of these things we think the world is woefully under prepared for how much compute we will need on a longer horizon. >> what do you mean when you say that >> we think there's going to be a tremendous level of demand and it's going to multiply if you look at really, a, the fact that the models will get bigger over time and so they're just going to need more compute to power we expect people to use them more three, the models are going to be able to go off and be useful by using more compute. so we think that, you know, that's an important "the exchange" get right and we don't want that to be a delay on looking? >> compute and power, obviously, mean electricity as well you hear about that a lot. i'm curious as to how you guys

think about it is there going to be a problem in terms of -- to that compute level you're talking about >> yeah. this is an ongoing conversation. it's something that we have to start talking about now. i don't know if we are on the default right track or not i would rather not wait and find out. we're starting to have these conversations in a productive way. the good news, i think the world wants to have this conversation, and so i think the resources of the world will align to figure out a way to do this productively. >> the company exists to advance openai, stakeholder general intelligence is developed and benefits all of humanity that's your -- do you believe you're still doing that? >> i do. one of the things that's remarkable about olympenai i wa worried how diluted our mission would feel it's actually felt stronger. i think the rate of progress in the field and the promise that

the technology has, its ability to start delivering real investment pacts in people's lives, not in ten years but right now is galvanizing people to wants to understand what we're about and help us deliver it we get stories every day of how this technology has changed people, changed their life, change their business, and we think the models are still actually pretty dumb all things considered and only upside from here >> carl, they continue to, obviously, say that they're focused on the safe part of their mission statement as well. not just the beneficial to all of humanity, although that's saying something openai such a fascinating company. it's private it's got the for profit part that controls chatgpt. but it's run by that not for profit board, which is also tasked as well, carl, figuring out when we reach artificial general intelligence, i don't know exactly and brad didn't

really offer a great deal of detail in terms of how they're going to know when we get there, but that is something else that they are also tasked with, joust you know. >> yeah. talk about boiling the frog scenario i was curious, eric schmitt on with andrew on "squawk on the street" today from d.c. talking about an era in which we would be presented most of the time with intelligence not by a human being and in schmidt's view i'm to the afraid of that. as a society we will adapt >> yeah. that is the optimistic view, obviously, that we will adapt to it that we'll understand the deep fakes that are present and get sophisticated and deal with that that gets to the safety issue, though, and the guardrails so many have talked about and whether they're going to be there. by the way, also on the larger aspect of competition, obviously, openai is funded a lot by microsoft, but also competes with it to -- in other

areas, even though it, obviously, powers copilot. llama 3, which schmidt mentioned as well, is seen as very powerful, open source from meta, and, you know, maybe equal to if not already exceeding some of the capabilities of chatgpt. it's an interesting race as well on the technology. >> yeah. it's such a big turn, trying to help viewers understand it all we certainly did a good job today between you out west and andrew out east. david, great stuff still to come from milken later on today still ahead, we're going to keep a close eye on apple's ipad event going on this hour the company did unveil new versions of its air and pro tablets. shares higher here in a pretty constructive tape as we're about 15 points from 5200. you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady.

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let's get to the broader markets. mega cap still in control of the markets, simply stabilization now and growth later on, our scott crowner, of equity

strategist joins us here to understand earnings season welcome back. >> thank you. >> stabilization meaning this quarter shaping up to be i think you describe it as a beat and hold. >> right we got continued strong growth out of the mega cap growth part of the market. when you look at the mag seven we continue to see the earnings growth expectations move higher. the other 493 are stabilizing, showing some early signs of improvement. under the service when you look at it as a single stock level more s&p 500 companies set up for a positive growth. >> your year number is 245 on earnings which you think is going to be okay. >> shouldn't be a problem. shouldn't be a problem now consensus is a little bit below. >> yeah. >> what we're suggesting on the heels of q1, the path higher still looks pretty good. we can see sort of 250 in our line of sight. harder to get to the 260 number that's been part of our bull thesis since the beginning of the year. >> we have had some desks go to

250. you're not there yet >> well, it's going to be one step at a time we're preparing -- we've been using 245 since last july so we think we're sort of ahead of the pack in general in terms of this earnings resilience and improving strength call. we're looking to get is when we can get a little bit more significant upside to earnings growth, which is probably as you look ahead to 2025. >> you think guidance has been as often the case, conservative for the year coming out of the q1 there is much reason to promise the moon >> no. there isn't. it's appropriately conservative given what we know or think we know about the economic setup, where we are with the fed and so forth. that kind of comes back to where you think you are in flainflati higher for longer. sets up for a c-suite dynamic, why not stay somewhat cautious or cautiously optimistic. >> as for the fed the house view has been, you know, 100, maybe a little bit more, basis points in cuts this year. >> yeah. >> how do you -- do you think that has returned to consensus

in some fashion? >> there's a fed put that's back. >> i think the data last week on employment sort of got the wheels back in motion that hey, maybe we do get that mid year fall time frame pivot. house view is that essentially the pent up effect of rate hikes to date is such that you should begin to see employment come under pressure what i like to do from a u.s. equity lens perspective is just kind of draw this distinction between fed influence on main street versus wall street. we think the s&p 500 is beating to a different drum. >> do you go along with the view that there are cracks forming at the lower cohort, for example? >> i think there's definitely fraying around the edges and particularly that lower end consumer which is part of this be careful what you wish for out of the fed if you're a saver you're in one place. if you're living paycheck to paycheck you're in a different place. it's the same thing with s&p 500 companies. if you're debt laden you're feeling the impact of the higher rate circumstance.

if you're one of the mega cap growth companies that's free cash flow generative you're in a different situation. we have to be careful of how the impact of fed policy is translating to main street as opposed to to what we think is happening on wall street. >> good way to think about balances at the corporate levels good to see you. >> you bet. >> scott crowner from citi david? >> carl, up next we have the former treasury secretary steven mnuchin joining me right here at the milken institute conference. we have a lot to talk about including the future of tiktok given he has been putting together an investor group should the company actually be available. that is the u.s. and sort of global outside china assets. we're going to get the latest on that as we head to a break check out the resultses of our cnbc generation lab poll. we surveyed over 1,000 between 18 and 34 about a host of topic, the economy, coming election and asked if the government should ban tiktok or leave it alone

70% said leave it alone. we're back after ts.hi larm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. ♪ (suspenseful music) ♪ why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia. bye jen. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

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welcome back to "squawk on the street." we are continuing our coverage from the milken institute global conference joining me is steven mnuchin the former treasury secretary of the united states. nice to see you. >> nice to see you as well good to be here. >> we've been talking a bit lately and we're happy to be able to do that with you, nycb not that long ago, and then followed up by an interview you did when you said somewhat unexpectedly you're looking for an investor group to put together to buy tiktok want to start there if we could given it is on pace to be banned the legislation has been signed. where are you in your efforts to potentially be there, should there be an opportunity to buy the assets outside of china? >> we're still very interested in buying it we're investing in it because it may not be a purchase. it could be a spinoff and investing in it which would keep

the existing investors but dilute down the chinese ownership. we spent a lot of time with technology companies given the year it can be rebuilt, so it can be separated from bytedance's technology. if the company wants to pursue, we're very interested. the problem is, if they're going to pursue litigation, and that takes six months, it will inevitably end up with too short of a period of time to rebuild the technology. >> why i want to understand the timeline there because it has a year. could you not potentially agree to some sort of a deal during the course of that where you would have an opportunity to rebuild the algorithm, the source code, so to speak i don't understand why the litigation would interfere. >> the best outcome if they agree to do a deal now and have a year to rebuild the technology which i think could be done. my concern if they spend six months litigating and then decide to do a deal and only six

months left, it's impossible to build the technology in that time period. >> i see i understand now they seem -- let's go to the chinese here it's always difficult to know, and you would be in a better position given you have a lot more history in terms of understanding the communications from that country, but it doesn't appear they're particularly interested in allowing bytedance to sell or spin off the asset is that your understanding >> they're clearly not interested in giving an export license on the critical technology, the algorithm, and that's why our premise is we have to disconnect it and rebuild it ahead of time so from a technology standpoint i think we could do it without the license. from a political standpoint, it's, obviously, a more difficult political situation now that law has been passed. >> you also mentioned something about a potential spin where you would dilute the existing owners of bytedance, part owners of the spin, but come in as additional

capital, is that something you've discussed as a possibility? >> it is something i've discussed. i think it's the best way to do it because there is 60% foreign ownership now and many of those investors would like to stay in, so it doesn't have to be a complete sale. it has to be disconnected from bytedance, and it needs to get the chinese ownership below 20% to comply with the law. >> is there a -- is there interest in buying it without the source code? in other words, just for the user base of the idea that, i don't know, somehow it could be powered in some way and over time rebuild it as you say >> i think if it goes dark, it won't have a lot of value. i think as it relates to the source code, there has to be some mechanism that you can run it and then effectively flip the switch and run it with u.s. technology as i said, with a year -- the good news the original proposal was six months, it changed to 12 months but it's a big effort.

one would have to start right away to do this. >> has it started right away doesn't appear you're saying it has. >> it hasn't because they're not yet ready to negotiate >> you think they will be? >> we'll see i'm not going to speculate on that. >> you think you would have the capital participate should there be an opportunity? >> yeah, there's a lot of interest we've had a lot of interest from investors. as i said before, no investor would have more than 10% it wouldn't be foreign-controlled it would be all u.s. controlled. there's a lot of interest. look, it's a great business. i think if it were separated from bytedance, it would have technology to u.s. technology, u.s. a.i. and u.s. data centers. >> and it's an amazing company the u.s. business has not been generating much in terms of ebitda or free cash flow at this point because they've invested -- they've been investing so much. do you have a sense as to how you would go about determining what is actually a fair value for the asset?

>> you know, i've had preliminary thoughts we would have to look at that more carefully i do think it's a business that can generate a lot of cash it has continued growth. i think there's opportunities in e-commerce and payments that can be expanded. so, there's a lot of opportunities around the business >> four-plus years ago when it was being discussed, the groups that were conceivably trying to buy it then, they weretalking about not just the u.s. business but outside of china is that also the case for you? >> that is that is. i mean, the u.s. business alone is -- would have substantially less value you want to be able to access the major markets outside of china. >> i see i don't know, you want to put a percentage guess on what your chances are? >> i think i'll hold off on speculating. >> all right let's move on to your other big investment which was news-making some time ago, nycb, a struggling regional bank you came in with significant capital with an investor group they reported earnings recently.

were you encouraged by what you saw? >> i was encouraged. first only not only bring capital but we brought a whole new management team. joseph otting that worked at one west and he's been a magnet for talent he brought in a new chief credit officer, a new general counsel, new cfo, new head of real estate we've really rebuilt the management team. there are great people from new york community bank who are staying as part of the management team. joseph laid out a three-year plan that it will take to get the bank to normal profitability, which is basically 11% to 12% roe, 11% to 12% cet1 by the end of 2026. >> your expectation is it will not require any additional capital at this point? >> no. we think it has more than sufficient capital and trading at a significant discount to

tangible book value. there's a lot of opportunity if the management team executes >> and then, broadly speaking, curious to get your take sara and i were talking earlier. she's been speaking to a lot of the participants here about what is -- you know, what seems to be a fairly robust economy, somewhat less than positive feel i don't know do you share that? >> i think we're going to see a slowdown in the u.s. economy as you look at the risks around the world, obviously we're very concerned with what's going on in the mideast and israel, the situation in ukraine, and i think we're going to have higher interest rates for a while in the u.s. and even if the fed ultimately lowers fed funds to 3.5%, which will take a considerable period of time, i still think you could have 4.5% ten-year treasuries in a reasonable yield curve so, i think we're going to have interest rates at these levels for some period of time. >> but at the same time, you do think we're slowing down, which would auger for a potential for

rate cuts, wouldn't it >> i think there will be rate cuts i don't think it's a question of when i think it's a question of where we get i think we'll get back to 3.5% fed funds rate down from 5.25% is a big move, but that will take a while and i think the fed is in no great rush to do that, given the recent inflation numbers >> right although 3.5 -- we got so accustomed to zero, basically. we were all doing perfectly well and the economy was in 3.5% rate environment, weren't we? >> it is it just takes a lot of people got hooked on zero interest rates. we have to get adjusted back to what's the new normal. >> do you share the overall concern that i've heard a number of participants have in terms of the national debt, which obviously went up under president trump, continue to go up significantly under president biden as well, that interest costs alone may aproximate as much as $1 trillion.

how concerned should we be >> we should be very concerned if you look at what we did at the beginning of the administration, had it not been for covid, the trump tax cuts would have paid for themselves obviously we got to covid. the first $2 trillion we absolutely needed to spend or we would have had a worldwide depression, not recession. in hindsight we shouldn't have spent the second $2 trillion and the biden administration having ongoing spending after that and normalizing trillion dollar spending, it's a big concern and something i think both parties are going to have to address >> we could go on for quite some time, particularly on that but we're out of time here i certainly appreciate you taking the time with us. thank you. >> thanks for being here. >> thank you for being here. steve mnuchin. let's get back to steve kovach ahead of apple's ipad

event. >> two top ipad models, the ipad pro and ipad air apple calling these devices incredibly powerful for artificial intelligence. the example they gave, not too many they showed some document scanning and video and photo editing but we'll find out how this hardware enables artificial intelligence at the conference as for the hardware, the ipad air gets an upgrade. looks the same, faster processor and comes in a bigger size the ipad pro, this is debuting the newest m-chip, this is called the m-4, those mac chips they've been using some of the higher end ipad models use them. again, they're really talking up the artificial intelligence capabilities of this chip. you're looking at it right now, the m-4, saying it unlocks a lot of potential again, this is just the hardware we don't know how apple is really thinking about artificial intelligence in a real way on the software side. so, more to come there, i

assume a bunch of accessories new keyboard cases they call the magic keyboard makes your ipad look like a mac book when you click it in there. a new apple pencil, they call the apple pencil pro these are not cheap devices. the ipad air will start at $599 and the pro starts at $999, or the bigger model will be $1300 plus whatever you got for the keyboard there that's what we got out of apple today, guys. >> that's a lot, steve thank you. bringing us up to speed on the ipad event. close to session highs our live market coverage continues after this

good tuesday morning women come to "money movers. i'm sara eisen live from milken institute in los angeles carl quintanilla from the new york stock exchange. today the co-chief investment officer of one of the world's largest hedge funds, bridgewater. why the firm is limiting its exposure to stocks we'll talk to the ceo of aries, mike arougheti, opportunities in