good morning welcome to "squawk box" here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. i'm in washington, d.c. this morning. we have a big lineup ahead both from d.c. and the nasdaq market site this morning from here, we are talking to s.e.c. chair gary gensler. that interview in the 8:00 hour. joe, you have a big interview in the 7:00 hour. i wish i could be at the table with you i hope to be involved in the con v versation. you have druckenmiller >> it will be a half hour. there will be time or 25 minutes or so, i think, stanley was last on in october. i was just figuring out how to

start. how do you start six months, andrew, in terms of the markets and the economy and what we've heard from the fed. it's like a tolstoy novel. you could do a month and it would take a half hour to go over everything we have seen you throw in a.i. and his investments around the world and you remind yourself 30 years -- 30% plus every year. that is almost -- >> it's an amazing thing >> probably will never been done again. i don't know how it was done once unless you made some deal with someone who knows these things to do that well is spooky. it's scary i guess it comes from being smart. we're okay. >> he's one of the smartest when it comes to these issues

>> that will be 25 minutes of stan he's going to be in your chair you got to give your chair to someone. >> i would warm it up for stan. >> perfect let's check the markets which we'll be talking about at length today u.s. futures indicated up about 78 points. mixed on nasdaq which is off a little so much of it has to do with a lot of what we are talking about which is treasuries and fed and the kind of signals we've gotten in recent months and whether they make sense. a lot of things to talk about. the ten-year yield since friday backed off those numbers that were a little closer to 5% we are 4.46% two-year note was above 5% or looked like it would stay there for a while. now you see it is 4.81%.

the faa has opened a new investigation into boeing. this is just like the roaches you find now we are infested after the company disclosed -- something just flew by me. employees may have skipped inspections of 787 dreamliners and falsified the records. that almost sounds more than negligence boeing notified the faa that it may not have completed inspections on the dreamliners in this case, related to bonding and grounding aimed at reducing electrical hazards near the aircraft's fuel tanks. the inspections were not co cond conducted, but the work marked as completed boeing said it took swift and

serious corrective action with multiple teammates, it says, but did not elaborate on what that was. the faa said boeing was reinn expecting all in production and must formulate a plan to address the dreamliner fleet which is already out there. boeing said there was no immediate safety of flight issue related to the inspections just reading that -- >> that's inexcusable. >> electrical issues around the fuel tank. >> make sure there is not an explosion on the plane. >> electrical, fuel tank, airplanes. it sounds ominous. >> the good news is they caught it through a system set up where employees could report it. the good news is somebody was reporting it and somebody was saying something there was a system set up for that the idea that someone on the line would think that was something they could get away with and do? >> probably more than just

someone. teammates. members of the team which is like 0-12 this season. >> not a winning team at the moment let's talk about winners or losers talk about what's going on with the conference the milken conference. elon musk speaking out much of that with michael milken and talking about space travel and illegal immigration and free speech and falling birth rates and also talking about artificial intelligence. here's what he had to say. >> i feel it is very important we evolve a.i. in a way that is beneficial to humanity and there's some importance pr

principles here. i think you want to have a maximum truth seeking a.i. which is very important where the a.i. should not be taught to lie or taught to say things that are not true even if those things politically incorrect. it should say what it believes to be true >> musk said there is almost no a.i. used in space exploration not because he is against using it, but because they have not is seen a use case for it just yet. becky. >> thoughtful comments on all of those things it gives us a lot to think about. apple has been working on a chip designed to run a.i. software in data center servers according to the wall street journal report which says the project has been in the works for several years, but it is uncertain if or when the chip will be unveiled the components will likely run a.i. models rather than training them where nvidia dominates. apple expected to announce the progress on a.i. products at the

developer conference that is coming up in june. shares of palantir are falling. 8 cents a share matching ce estimates. gui guidance coming in below analysts estimates this a letter to shareholders, alex karp says it will continue to be transformed by software. this is vital to protect the innocent from harm i'm talking to alex karp later on this morning. we'll have more tomorrow morning. when we come back, a survey of young americans painting a dismal picture of the housing market the millions of people stuck on the sidelines. these are younger americans and it is dire we'll talk about that straight

ahead. a huge lineup still to come today, the cfo of disney will join us after the company reports later this hour. investor stan druckenmiller will be here at 7:00 a.m. and later, s.e.c. chair gary gensler will be here. "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. u kn'? 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. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it.

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welcome back young home buyers are negative on the availability of housing in the country at this point with 68% calling it non- non-affordable and 6% saying housing was available and affordable according to the cnbc generation lab poll. joining us now is the realtor.com chief economist. it is not surprising to hear these numbers because they were who a horrific i cannot believe how much money you need to make to afford housing in this markmarket >> we have been talking about the under supply of housing for the last decade. we can see pre-pandemic levels that housing is down 34%

home prices have gone up about a similar margin 36% combined with higher mortgage rates higher prices mean you need to earn over $100,000 in 34 of the 50 largest metro markets we are not talking luxury homes. >> if you look at the top of the list, most of them in california san jose, $361,000 l.a. is almost $300,000. san diego is almost $260,000 san francisco is pricing out entire generations from this market >> i think that's true we don't see first-time buyers because they are established with high prices if you look at what it costs to buy, over $250,000 to buy a home over renting is expensive, but

not as expensive as it is to buy. many are making the decision to rent that's why homeownership rates trail behind the typical u.s. housing market it is challenging in these markets. it is a challenging market, but there are areas where we do see opportunities. particularly in the midwest and inively more affordable. if you compare to four years ago, there are fewer homes on the market compared to last year, we are seeing an increase to homes on the market for sale which are up over 30% compared to a year ago. if you look at the median price point, homes in that price category are up 40%. we are seeing a bit of a turn around and improvement, but from what is still a pretty dire situation for young people >> you think that's where the logjam is starting to break at the entry level housing. that's because those people who

live in those homes have outgrown them and cannot put off moving up or moving out? >> potentially we don't have a lot of detail who is listing the $250,000 to $300,000 homes we are seeing more in the south. that is starting to turn things around and give shoppers on the market more opportunity. that said, as long as mortgage rates remain high, it will be challenging for young people to navigate those more affordable options. i should note on the price per square foot basis, we are not seeing prices come down, but a shift of what is for sale. that is good news for a person looking for an entry level home. it is still relatively expensive. fortunately, we talked about the price of housing going up. we have seen incomes go up that has been one bright spot. over the last couple months, we have seen incomes catch up and grow faster than the cost of buying a home. a lot depends on mortgage rates

here it mediates the buying power of hous households as incomies catch up, it gives the improvement of the affordability picture. we need to see more construction to make a break. >> danielle, what if interest rates went up from here? that is not the expectation for conventional wisdom. if interest rates went up, what would the impact be here >> i think if interest rates go up, iter to buy a home that affects sellers as much as buyers we tend to see inventory pull back when interest rates move higher which can be more challenging for first-time home buyers first timers are willing to engage in the market they are at the taj stage wherey are ready to become a homeowner

and lock into a low mortgage rate it does become more challenging and looking at qualification ratios and it is hard for them to get into the market that is not my expecting ationen >> danielle, thank you >> absolutely. coming up on the other side of the break, the ceo of hims and hers health speaking out the earnings call on the controversial comments on the campus protests. we have a huge lineup. the cfo of disney and stanley druckenmiller and gary gensler from washington, d.c. here this morning. all of that coming up on "squawk box"thprraro as e ogm lls on back after this.

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welcome back to "squawk box this morning shares of hims and hers are up a penny. revenue beating with the subscribers rose to 1.7 million. the company raised full-year guidance a lot of folks got on the call to listen to this. the ceo addressed the comments where he praised pro-palestinian protesters and he and others were eager to hire them. >> i'm saddened for the support for peaceful protests has been interpreted as violence. i do believe deeply in the right

for people to use their voices in peaceful protest to drive change this right is critical to our democracy and must be protected. our world today is more just because students throughout history have courageously taken to their campuses and used voices to force change >> in response to that question, he said he did not expect the comments to have any material impact on the company business we saw the stock fall after the comments and a flurry of comments on reddit and twitter and others with customers saying they had no interest in using the service. we will watch to see next quarter. joe. >> that was like -- we all agree. we don't like when jewish kids can't go to school and someone might get hurt there are no classes that's what we know about the

right to protest we got that. i don't know -- i keep seeing ads for that company i don't know what the hell that company is if you need ed, they got that. if you are bald. not that i mpetent and bald do you know what the company does >> you know it well. >> i'm not bald. >> i understand that what the hell is that company? what's the hers part >> i think they sell a bunch of products that are somewhat similar on the other side for women. >> you are pretending and naive about the company. you know every other company a.i. you have all that.

total ignorance about it >> i'm feeling uncomfortable already. i'm looking for a safe space >> seriously i watch it what do you do they talk about curing everything it's weird i get up a lot at night. do you got anything for that it's crazy >> melatonin >> then i need something from p&g if i'm totally asleep. i do need to get up, andrew. i don't know >> it's called coffee. when we come back, disney is set to report in the next few minutes. we will bring you those numbers as they hit. a first on cnbc the interview with cfo hugh johnston

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coming up, disney set to re report we will bring you the numbers and the first on cnbc interview

with the cfo hugh johnston we will have stanley druckenmiller here at 7:00 we will talk markets and more. we will have gary gensler as well all that as "squawk box" rolls on

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good morning we have breaking news. earnings just out from disney with the quarterly results we have earnings of $1.21 a share. 11 cents better than estimates revenue below expectations a slight miss. it marks the fourth straight revenue miss on that side for disney if you dig through the numbers, entertainment slipping 5%. sports revenue growing with

higher domestic espn revenue $8.4 billion direct dire direct-to-consumer business driven by higher ad revenue. disney increasing 6% over the prior quarter to $117.6 million the i which is in line with estimates. bob iger says the company's combined streaming business is on track to achieve profitability in the 40 qfourth quarter. that is the holy grail for disney after this, we will break all of the numbers down we hhave hugh johnston who will join us after the break and talk about the ecosphere which is in

a major transition later in the broadcast, we have stanley druckenmiller at the table, that's live at 7:00 and gary gensler will join us later. that is all live from washington "squawk box" is coming right back after this. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

welcome back to "squawk box. disney out with earnings of $1.21 per share. better than $1.10 than expected.

we should say revenue is a slight miss. we have hugh johnston with us. hugh, good morning to you. let's walk through the numbers for those investors out there trying to understand what's happening at the firm. as i mentioned, you beat on every estimate on the profit end, but revenue did miss slightly >> good morning, andrew. great to be with you guys. it was another strong quarter for disney we feel terrific about it. operating income grew 17%. eps grew 30% that was 11 cents ahead of wall street the improvement in direct-to-consumer streaming that business lost $600 million in the entertainment portion made $47 million that is a couple quarters ahead. we got there in q2 overall streaming was up 12%

which led to 5% revenue growth per quarter. the streaming business was up with 10% revenue growth. 12% oi growth. good strength in the company we feel terrific about the momentum we have right now >> let's breakdown some of it. the first piece is bob iger saying you will be profitable by the end of the quarter >> absolutely. we will go down a little bit in q3 based on icc cricket rights in india and in q4, we are back to profitability and we will build on that in 2025. >> what are you seeing in the strength of the consumer you look at the experience business and it is holding up. are you seeing any distinction we talked to ceos who are talking about trading down i don't know, are people buying less lunch what are you seeing? >> we don't see much of that i understand what's going on broadly with the consumer. certainly the consumer at the

lower levels of income appears to be making more choices of how they spend their money we're not seeing a lot of that right now. we tend to play a little bit higher income. as a result, we don't see a lot of traded down at this point. if anything, as consumers consolidate, we may be the beneficiaries. >> can we talk about sports? as you know, the nba rights are in play. i don't know how much color you may or may not want to give us on the negotiations. as you see sports going forward in the amount of money you have to spend on rights like the nba, what kind of profit margin can you expect from that group >> i think this sports business is a super strong business espn has about a 35% market share of sports. biggest player in sports i expect we will continue to choose to get the rights that we need to make espn a strong performer. other things we may choose to

carve off a sports right or give up a certain right that are less relevant to the portfolio. the nba is important to us we expect to continue to have a good relationship with them going into the future. >> we are looking at the lineal numbers. they continue to come down how far do you think they ultimately come down do you think there's a plateau where they plateau out or do you think it's a long-term straight line down at this point? >> i did believe you have to see some flattening at some point. people choose cable for reasons other than the fact they will pay a little bit more. it may be better access to broadband or not comfortable with the technology switch there is a convenience factor. i think it will flatten out. we have not seen it yet, but i would not be surprised if we see it in the next couple years. >> joe has a question. >> i'm trying to figure out

streaming, hugh. it would be nice to be profitable andrew stated it was the holy grail for the fourth quarter you are slightly profitable. do you see 20% growth year after year at some point does it become or ever get past digital nickels we traded for and analog dollars does that happen >> it does, joe. the overall entertainment business is a healthy business you see eyeballs going from one channel to the next with digital to cable there are margins, initially, but as we scale, we can equal out those margins so it is less of a factor for us i think building that streaming business and making it into an important growth driver for the company is a good idea the margins will be there for us what do we have to do in order to do that we need to deliver quality

programming and terrific engagement bundling helps with that we need to work on password sharing. we need to get distribution costs down we need to use technology to market directly to consumers and also give them good recommendations. by virtue of doing that and building out an international business will be one of the great growth businesses for the walt disney company. >> hugh, can you speak to the balance with the streaming business and lineal business which has come up in the context of the debate of the rights for the nba in terms of how important linear is going to be? in terms of nbc possibly taking it away from warner. we will see if that happens. the calculus is they put more programs on lineal and on network at the same time they put some on streaming. how will you be thinking about the balance with the programming and original programming with

live sports going direct on streaming and exclusively on streaming versus the linear piece. >> i won't speak to comcast's strategy we have been successful putting things on espn and on abc. whether it is the nba or the nfl. we did that a few times in the fall i actually think there is a good balance. part of the reason for that is you really have very different audiences between linear and the streaming business the streaming briusiness on average is 20 years younger than the linear business. you can reach more by leveraging both i feel they are both than credible assets for us >> how concerned are you about the competition and context of the big tech companies and netflix when it comes to live programming? netflix, for example, was not engaged in live programming. recently this weekend, they

produced the tom brady roast and had great success. they have this big fight coming up this summer you are putting sports on streaming. peacock is doing it, too there is a larger question if you are competing with the tech folks and their economics may be different than yours. >> we're always going to have to deal with competition coming at the economics. the economics of linear or streaming only business or someone in the technology business who has a broader set of economics to leverage that said, the core strengths of our company, particularly the ip we own, and our position in sports gives us good strength as we compete with those guys as well i would expect we'll continue to see good, healthy competition in the industry for a long, long time. >> will you weigh in on a lot of chess pieces on the board in the media world. paramount seems to be making headlines every day.

a number of others and what you think may or may not shake loose or what you think you may ultimately and could you participate in any of the transactions that people are talking about with the asset sales? >> i don't see us doing any m&a any time soon. the environment in washington is not good at the moment when they want to license the content or if they take other actions. i don't see big m&a in our future >> can you weigh in on the business in china and what you are seeing there with the strength of their economy there and also some of the issues that may get more complicated as there seems to be increasing divide with the u.s. and china as it comes to politics? >> it is a great question. what you can tell you now is the shanghai park is doing i

incredibly well. the shanghai government is building capability to get more access to the park we built a new attraction. that attraction is doing really well we feel great about the business and we're being treated well as a company. positive from disney's perspective. >> hugh, thank you for joining us thank you for joining us after the earnings crossed the wires to help us make sense of it all. we look forward to talking to you soon thank you. >> happy to do it. great to be with you guys. coming up, an extended interview with investor stanley druckenmiller. that is straight ahead at the top of the hour at 7:00. then gary gensler and former google tceo eric schmidt will join us. "squawk box" will be right back.

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welcome back to "squawk box. now the latest on the campus protests harvard and m.i.t. warning to protests harvard and m.i.t. are warning students to leave the encampment, and those schools threaten students with suspension if they don't disperse harvard interim president said the encampment presents a risk to the campus and community, and in the meantime in chapel hill, north carolina, members of the faculty marched to the administration building

demanding amnesty for students arrested and suspended during last week's protests they said 760 faculty members arguing the student activist had been unjustly treated by the administration and called on the unc officials to respect the rights of students to protest. meantime, elizabeth holmes trimmed months of her initial sentence of 11 years, and she's now due to be released two years earlier than expected. holmes is being held at federal prison camp in byron, texas. there are arguments to be heard for her appeal in june back to you, becky dow futures up by 65 points,

and you have the nasdaq off by about 17 we want to get over to dom chu for the premarket movers starting with shares of palantir, which were down by nearly at this point 10%, just around 1.5 million shares of trading volume the data science and artificial intelligence companies these days reporting quarterly results after last night's close, and profits in line with estimates and revenues better than expected but its current quarter and revenue guidance fell below the guidance estimates next up, banking giant ubs, and shares are up, around 75,000 shares of volume, and that's in line for how it's trading in europe as well, and it returned

to praofitability on the quarter and ubs was helped by continuing to make good progress of integration of smaller rival, credit suisse. and then nike up, 10,000 shares of volume, and you can see the shares are up by about 1%. head over to cnbc.com/pro. i will send things back over to you. >> dom, thank you. coming up, investor stan bruckenmiller coming up for an

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that's like $20 a month per unlimited line... i don't want to miss that. that's amazing doc. mobile savings are calling. visit xfinitymobile.com to learn more. doc? on the east coast. you are watching "squawk box." i am andrew ross sorkin along with joe kernen and becky quick. a lot is going on this morning disney reports below expectations, just a slight miss and marking the fourth straight revenue miss meanwhile, the investigation

into boeing, and boeing informed the faa, workers did not perform some of the inspections to perform adequate bonding and electrical grounding on the 787 wing to body joint boeing said it took swift and corrective action but did not elaborate on what that was boeing is now reinspecting all 787s in production, and there's no risk related to those inspections. target price on target now, $100 per share. >> thanks, andrew. we have a lot of ground to

cover with our next guest, so let's get to it. stan bruckenmiller, averaging 30% for 30 years and never had a down year. i think it might be like pete rose, kind of, i don't think anybody will get 4,200 hits, and i don't think anybody will ever again get 30% of average, do you? >> i have no idea. i have no idea how i did it. i don't know who that person even was >> do you have tips, i saw, but it's an amazing record and for anybody that doesn't know stan bruckenmiller, i just wanted to say that last time we spoke was october, six months or so and that's a lifetime in the markets and economy and especially with the fed. i know you watch, and i have been perplexed, and we will talk about perplexity later, but i

have been perfplexed about the unwaivering on the -- this period, did cuts make sense the whole time what is causing that >> thank you, and i'm happy to be here. thank you for having me on i was -- i was perplexed with the december pivot, if that's what you are referring to. it seemed to me the fed was in a perfect position inflation was coming down and to some extent i feel like they fumbled at the 5 yard line with the game on the line i remember saying to some of my

partners, that's the speech we might hear in march opposed to now, because there's four or five more months that potentially could lead to inflation coming down the way they need it to come down. instead, they set financial conditions on fire again bitcoin -- i can't remember where it started from but it went from, like, 30,000 to 70,000 equities obviously, credit, interest rates ironically, duquesne was a major beneficial of it because i had spoken at a robinhood conference, and like an idiot, forgot there was press there and revealed that i had -- paul got me going in the interview and revealed i had a massive leverage position in two years

because i thought the risk reward -- i think they were 510 or 515, and the risk reward for what was going on, we could potentially pull this thing off sometime in the next year, and the risk reward was treuf terrific for that, and i didn't get the low, but i did get 430 at that point it was obvious that financial conditions, which is one of the things that it put me in in the first place, we were starting to get antidotals from businesses that their businesses were picking up, so i exited the position. i was a major beneficiary. once financial conditions took off, it became very clear this

thing could go -- why are we talking about cuts because inflation, if you remember, we did trillions of dollars, but somehow now that we are at 3 versus 2, we had to, and it didn't make sense and it was a huge mistake i don't know if you remember, but kevin -- well, what is a

major reform we do, we have to get rid of guidance. first of all, we are all wrong on the economy, and when you put guidance out, unlike me when i am wrong, they sort of get trapped in the forward guidance and stuck in it. at some extent they were stuck in the talk about continuing to cut rates, so financial conditions just continued to belt up. finally, in i guess a month or so ago, the fed pivoted, but then bizarrely, the last press conference seems to still be hanging on to this asymmetric directive that we are not going to hike and we expect to cut but we are going to wait for the day

where it's not a guarantee we will cut for the life of me i can't figure out why, because if you look at the six-month rate of inflation, the chart is clear. it comes down from very rapid rates. now if anything, it looks like it turned up look, i don't know where inflation will be for a year jerome powell doesn't know where inflation will be. i don't think anybody knows. they worked so hard and did so much work when they went from basically from zero to 5%, and i would hate to see them throw it away here. >> the first time i notice san diego when we said, yeah, we won't do it today but we are getting close. that went from -- we think things are going to work out, and he's never taken them off

the table, and he took that off the table. you think a hike is off the table, definitely, 0% chance >> no, because there's not a 0% chance that inflation will bottom, and i don't know, a would do nothing, do what feds used to do, when you need to raise rates, raise them, and when you lower them, lower them. don't go on "60 minutes. you are not a rock star. bernanke did a lot of things that by hindsight i don't feel good about one of the worst is forward guidance you have a bunch of academics talking about sending a message to the market, you know, as a practitioner i would rather them

get rid of the forward guidance and do their job when you need to raise, raise rates and when you need to cut them, cut them >> i thought you were going to give me the reason s is it similar to how long we stayed at zero in a hot economy and calling it transitory? seems like the same side of the coin >> definitely in the press conference, there's the implication it's transitory. i don't know what the reason is. i hope it's not political. i assume it's not political. i do worry that this obsession with nailing the soft landing -- okay, my favorite -- i would

like to remind those who think this has been in their political interests, reagan won 49 states in 1984 after the economy was absolutely in the tank in 1982 because he did the right thing honestly, if you think it's political, particularly the treasury actions, and donald trump should send them a thank you note the day powell pivoted, gasoline was $2, and it went to $2.80, and it's now at $2.55. i think a lot of wealthy know how to manage this thing, and the average american cares more about gasoline prices than stock prices they are getting hurt. there was an interview earlier on your show about people being priced out of the housing

market inflation is 21% higher than in 2019 to me, even politically, that's more consequential than keeping the markets up than trying to nail the soft landing and not having a recession >> let me ask you about how this plays into -- it's another, i think, issue of being, you know, things are going well and then we totally over spent fiscally as well in bidenomics. >> bidenomics, if i was a professor, i would give him an "f." basically, they misdiagnosed covid and thought we were going into a depression. the fed did, too i worried about it, too, in the early days the fed eventually pivoted, better late than never the treasury is still acting like we are in a depression. it's interesting because i

studied the great depression, and you had a private sector crippled with debt and basically no new ideas the private sector could not be any more today than in the great depression the balance sheets are fine. they are healthy you have ever seen more innovative ideas that the private sector could take advantage of now you have blockchain, ai, the whole thing. all the government needed to do was get out of their way and let them innovate. instead they have spent and spent and spent. my new fear now is that spending and the resulting interest rates on the debt that has been created are going to crowd out some of the innovation that has taken place, and we had a 7%

budget deficit at full employment it's unheard of. this is when you have grid spending, and you have -- i'm sorry, you have defense spending, and you have datacenter spending -- >> for ai. >> -- and, of course, you have green. this is going to take place. you are going to build a capital stock. how do you build a capital spock with government is intruding with inflation and all this spending it's sad i think we are looking at one of the most exciting periods in potential of productivity and enhancing investments ever, and why we are spending like we are still in the great depression is beyond me, and they have not stopped, and they are trying to circumvent in court to -- we are

talking about spending hundreds of billions of dollars to put in students' pockets, and i assume it's because of the election they are now floating ideas for fannie and freddie to change the rules so you can refinance -- you can take out a second lien mortgage and you can keep the rate in the first mortgage, and we need to get the government out of the way >> how much are the inflation numbers we are seeing because of the spending versus the fed? >> i would say it's the spending and the fed is the greatest enabler. apparently -- well, we already

have started we will shrink qt from 60 billion to 25 billion, and land apparently at 7 trillion somehow because of the plumbing, all of a sudden we need a $7 trillion balance sheet just to function if you remember in bernanke's speech, he said don't worry, it's temporary the balance sheet will be back to 800 billion this is never going to grow again. i would say it's mainly the treasury, because we just don't have room for all this, and it could get worse because we need to build the cap stock the fed needs to stop helping them out i understand chair powell's statement that he wants to stay in his lane. he wants to stay in his lane du during covid, and i didn't blame

him, and now all of a sudden we don't comment on fiscal policy well, you commented on it when you wanted them to be more stimulative. you know, somebody has to say something. it's interesting, since my last interview here in october, there does seem to be a lot more recognition by various people i see on your show and elsewhere of the fiscal situation facing us everybody seems to get it but yellen, who keeps spending and spending again, i think it's done politically, because it's causing inflation and it doesn't take a genius to figure out the average american is getting hurt by the inflation >> your excitement about ai sort of came into play with that discussion because you are worried it will take a lot of investment, and there's no savings. you have to build up the defense. there are wars everywhere. you were early with nvidia, and you were early with ai

you pared back a little bit. >> my partner was in with nvidia, and he called me in 2022 and said all this excitement about blockchain was going to be far outweighed by ai, and he told me i should buy this company, nvidia, and i didn't even know how to spell it. i bought it. a month later, chatgpt happened. even an old guy like me could figure out, okay, what that meant, so i increased the position substantially i said in an interview in june of that year that i expected to own nvidia for two or three years, that this was a mega trend like i had never seen,

potentially bigger than the internet when the stock went to 900, i am not warren buffett and i don't own things for 20 years, and i wish i was warren buffett, and we did cut that position and a lot of other positions in late march. i just need a break. we have had -- we have had a hell of a run, and a lot of what we recognized has become recognized by the marketplace now. we expected powell to come back and repivot, which he subsequently did no, long-term, we're as bullish on ai as we ever have been if we were sitting here in 1999 talking about the internet, for anybody who was talking about it, i don't think anybody would have estimated it was as big as

it got in 20 years we didn't have the iphone or uber or facebook, yadda, yadda and yet if you bought the nasdaq in '99, it went down 80% before that all came to fruition. that's not going to be ai, and it could crrhyme with all the capital spending we are going to do the big payoff might be four to five years from now, and ai could be a little over hyped now but under behind long-term >> what you just did with nvidia, that's what buffett did with apple, and he thinks tim cook is great. >> yeah, well, i will be very

surprised if i don't own nvidia on and off in the next ten years. >> you are so bullish on ai, and andrew, you did a great interview with perplexity, and i think that's where you decided that might be a place you want to be? >> yep >> i love perplexity again, a funny story my young partner, the one who basically has been behind all our ai play went with his staff, and he told me -- i don't know, in january that all the kids on the west coast were not using chatgpt or google anymore, they were using this thing called perplexity ai. i, of course, tried it out it was just unbelievable it's an answer machine the speed and the depth of the answers and the quality and then

the fact that they give you the sources, if you want to go deeper, was nothing like i have ever seen. if you don't believe me, just chatgpt, gemini, and perplexity a question and get the answer and you will see -- you will see exactly what i am talking about. i fell so in love with it. we tried to get in on a round that we were lucky enough to be accommodated i love the founder he's super aggressive and his team is super innovative, and he has humility he's everything we love in a founder. there's a land grab going on now in the answer machine business, and it's a big test to take on google, but if you think about it, google has $300 billion in sales, and if perplexity goes to $2 billion in sales it would be

a huge winner. 95% of my searches, i use perplexity the best thing i can do with the viewers today, try this thing out, you will love it. >> stan, i have two questions. one ai related and one market related. perplexity is a version of ai, and how concerned are you about that many of the large language models may turn into commodities or a fee kature, if you will, of all the services and how much information can be extracted from them? >> great question. i am concerned i am open-minded of that happening. it's one of the reasons we cut our positions back, you never know where we will be in two or three years. i also wonder, andrew, whether

chatgpt was a huge leap over two, and -- four was a huge leap over three, and i am sure five will be a lot better than four but the cost of the models and the inkcremental value you are getting out of it at some point may hit the road, and i don't know how long the training thing is going to go on, and it may separate into different verticals. it's all to be determined. it's why i am glad i don't have wa warren buffett's problem, and it's a position so big you can't rotate >> how do you see the two candidates as it relates to the markets and to inflation on one end, i know you have been critical of this administration, the biden administration and how it has approached inflation, and on the other end former president trump becomes the president again, and of course, i imagine he will not only

jawbone the fed to have lower rates, and obviously there's an article in the "wall street journal" that talked about whether they will have independence in the future, and the tariffs in china and whether that will be inflationary. how do you measure both of those things >> one of the reasons i am confused about all this asymmetric talk towards cuts, if trump were to get elected, i could see a scenario, if inflation is not squashed and eliminated by then where you mentioned it, tariffs, immigration and animal spirits, because i think business will get very excited with the lack of regulation and the cessation is some of the things i talked about, and inflation actually takes off again the way it did in the '70s. i'm open-minded -- i am not predicting this, but i am open minded to say under a trump

administration, inflation being at 6% at sometime in 2025. with biden, i am more worried about stagflation with all the government spending, with all the trips that yellen has been using to manipulate the yield curve, with the way the fed seems to have reignited financial conditions, i think the inflationary outcome could be there, but i also fear regulation and everything else preventing productivity, so i am basically a guy without a candidate. i am an old style reagan free market pro immigration anti- ta tariff republican. it's going to be an interesting

experiment this is a highly, highly intelligent leader who taught in austria in the school of economics, and last time i with entitlements, i talked about what we would do, and he cut social security 35% when he came in office, and they went from a deficit to 4 or 5% to a 3% deficit, and his approval rating has not gone down. in addition to being highly intelligent and knowing economics, he's a showman and so far has been able to maintain the street because they like the showman showman. i invested in argentina.

by the way, the way i invested in argentina, it's a funny story. i saw the speech in tdavos, andi dialed up and said give me the investments, and we did work on them and i increased my positions, and so far it has been great i don't know how much time the populous will give this guy, but so far his popularity is maintained >> musk was tweeting about that, he met with him yesterday and tweeted i recommend you invest, and you heard from him as well you were so impressed that you wanted to tell your friends about this guy >> yeah, he's -- he's over the

top in terms of -- >> i have seen some interviews >> -- the spectrum but that country has been so devastated for so long they were the 8th richest country in the world and now they are, like, 150, and argentina was ready for this, and it took somebody not crazy but on the spectrum to do these kinds of reforms it's really the inverse we have going on here, and we are the richest country in the world, and we wonder if you continue to go down the path toward the public sector over the private sector, and i agree we will always be the place you want to invest in, but i would hate to see argentina out doing america, and that's where we are going

with this. >> if you are worried about inflation being the problem in another donald trump administration, would you be advocating for a tough federal reserve chairman in that case? i ask because i don't think either of the candidates wants to see a strong fed chair. trump has been much more vocal about this in the past i wouldn't say brow beating jay powell but flogging him when he was his fed chairman what would you say to jerome powell if he is still in that position and continuing for a few years there? >> well, obviously i would like a strong fed chair, but obviously i am not the one who is going to be appointing him. both candidates, it's probably the last thing they want because of politics, a strong fed chair.

e en even ronald reagan went with greenspan. if donald trump were elected, i would tell powell to run policy and do what he thinks is right, and i hope he can bear listening to the tirade that would potentially happen if the president didn't agree with whatever medicine was needed at the time >> you tell kevin not to listen to everything. i am sure kevin will be fine kevin warsh. we are at 25 minutes do you want to say a couple words about copper >> we have been investing in japan, oh, since, middle to late last year. i was lucky enough to start

duquesne in 1981, and that's the era of the boone pickens and multiply that times ten what is going on in gee pan. it's an amazing situation. not like argentina, they have been through the ringer where they are trying to do something more capitalists it's funny, i am going over there in a couple weeks, and i told the brokerage firm, make sure they know i am not an activist they said, no, they like activist they want you over there and they like activist that's all you need to know on that that, and the fact that pricing has returned, and it's cheaper than here, and if you believe in change, there you go copper is a pretty simple story. takes about 12 years, to produce

copper, and you have evs, the grid, data centers and believe it or not, munitions these missiles all got enough copper in them and the world is getting hot where we think the supply and demand situation is incredible for the next five or six years. >> you would invest in china when is never too strong a word >> we exited china in 2018 we have not made a single trade of security there other than their currency once in a while, and i won't say which way. i will never invest in china as long as the current leader is there. the reason i will never say never is if they had a change in leadership, i would at least consider the situation, but to me, i didn't invest in russia

and i'm not investing in china there are so many exciting things going on in the united states and argentina and japan, why in the world would i want to put money this china frankly as an american, outside of my investment day job, i feel good about that decision >> we didn't talk about colleges and what is happening, but i have run out of words. >> becky and joe, it has been great to be here appreciate it. >> great to have you, as always. thanks, stan "squawk box" will be right back the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization.

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welcome back to "squawk box" this morning a couple quick stock headlines right now. goldman sachs raising its price target on nvidia, saying it's the positive eps revisions driving another leg up in the stock. and then heuims & hers health, e

company's ceo addressed his recent comments in which he praised pro palestinian protesters and said he and other executives were eager to hire them >> i am deeply saddened that my support for peaceful protests has been interpreted by some as increasing violence or big totry of any kind. i do believe the right is critical to our democracy and must be protected. our world today is more just because students throughout history have courageously taken to their campuses and used tirhe voices to force change >> we will speak to a leadership expert, eric dezenhall about

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limited operation and designed to put pressure on hamas david ignatius, its 12th spy novel, and while it's fiction it's in the wheelhouse of what is happening today with inner stellar espionage. we will talk to him about that, too. thank you for being here today >> thanks, becky >> let's talk about what we are hearing in the headlines in the middle east, what is happening with rafah where do you see this playing out? what happens next? >> i think we are still in the phase of jockeying to get an acceptable deal for a cease-fire and a hostage release. there are different drafts that have been floated back and forth as all this happens with negotiation in the middle east and anywhere else, there are disagreements, and abrupt

objections, and sometimes in the middle east, this last negotiation was accompanied by the military, and this is not the full scale inflation of rafah that israel has been warning about. president biden is leaning very hard through ci director burns on all the parties he really wants this this is the absolute centerpiece of his diplomacy, foreign policy, really, for the rest of his term, i think. i would expect that to continue. he's leaning hard on israel. the problem here is that in a diplomatic agreement like this, you try and fuzz up precisely who wins and loses that's the one thing that israel is not prepared to be ambiguous about. israel wants to come out of the war with hamas defeated as a military force for gaza going forward. i think that's nonnegotiable so there's a limit on how much

bill burns or any negotiator can do here. >> sometimes the wars can feel far away, and your column in the "washington post" looks at the threats that the u.s. faces are at a whole other level when it comes to terrorism what can you tell us >> i think your viewers should be aware, concerned, and not overly so about a new issue that is worrying the fbi that led to the meeting of the national security council principal's meeting, so discuss the offshoot of the islamic group called isis

k. their operatives began meeting people and recruiting people, and there are two operations that we should have to take seriously. first, in january they set off a bomb in iran that killed 95 iranians in iran. in russia, in march, they sent out terrorists attackers that killed 144 russians at a big venue called moscow city hall. the intelligence was aware of both before they happened and sent warnings to iran and russia, but they didn't do anything about them. there's concerns that some of those same, and others are coming into the border and come into the united states

it's about 50 central asuians, 0 a day in the past year, adding up to well over 10,000 some of those are registered the people know who they are, and some are not registered, and they are mystery people. the fbi thinks some of them, some small number have been in contact with and otherwise intersected with known isis-k facilitators there's a concern that there's a pool of people out there that might be used in an operation that might be equivalent to what we saw in iran and moscow. again, i want to underline the nsc, which it looked at this decided there was not any imminent threat, but isis-k is rising in the runs of people that do terrorism. >> let's talk about "phantom

orbit. that's a war taking place and it plays out in space and it's something you have been playing out for years, and i think a lot of people don't understand the space implications in that war, but you see this as really the next frontier when it comes to warfare. >> i do. i think the ukraine war, in some ways, is the first space war ukraine simply couldn't fight without the assistance it gets from elon musk's star link subsidiary of x, and it can provide broadband and internet coverage pretty much anywhere in the world. ukraine uses that to download key information for its troops in the field in addition, ukraine calls on all the array of commercial satellite data available from companies like max r, planet x,

and go down the list, the companies that offer virtually every kind of information that used to be available only to government intelligence agencies, and you can now buy on the open market and get synthetic radar imagery of commercial satellites, and can you get voice signals collected by the orbit satellites, so it's a new world. one thing that i discovered in doing research for this book is that the intensity and energy of the commercial space area, and launch costs are declining r radically, yes, and launch costs are going down so the ability to put up something useful as part of a network increases this is a sector that, for me, as a novelist was fascinating

and for your viewers, pretty interesting, too >> we are out of time, david, but we would love to come back and talk about this, some of the threats, the potential for nuclear in space is interesting, too. thank you for your time. >> thank you for the chance to talk about it, becky apple expected to announce new updates through the ipad, and a preview of that event is next we are looking at a little red and green in the futures this morning it's not christmas, but we are seeing that. the dow up about 25, and the nasdaq lower we'll be right back.

welcome back to "squawk box" this morning apple expected to update its entire lineup of ipads

>> it's the kind of event you go to on youtube, and they press the hour-long presentation now, this event, of course, for investors will not be just about the devices. take a look at ipad sales. they have been down five of the last six quarters. ipad sales are going to grow again this quarter by double-digit percentage points that's also going to help apple meet its revenue guidance of low single-digit percentage growth don't expect anything serious on ai for this event, though. maybe a mention or two about the hardware that's capable of processing some ai tasks, because the real ai announcement isn't expected until june 10th at an in-person developer's conference at apple's headquarters out there in cupertino. as for the fun stuff, the gadgets we're expecting, bloomberg reported to expect a refresh of all of the ipad models with the ipad pro expected to have the biggest upgrade, including the same slick screen technology that you already have on your iphone. and that thing is probably going

to cost a fortune. and then there's, of course, the ipad air, the mid-tier device, the ipad mini, and the bargain regular ipad all getting a bunch of updates but this is an adviser to the main event, june 10th, big ai announcement >> you missed what i'm the most excited about today as an ipad user >> what is that? >> the new magic keyboard that is expected today, which is going to make the ipad a bit more laptop-like, if you will. macbook-like, with apparently a better keyboard and a better case and a bigger track pad. i don't know if it will come to be, but i will tell you as somebody who spends way too much time on all of these gossip sites, that's the thing on my list >> a new pencil, too those of you who like using the sty stylus, there's a big deal >> it's a game changer >> it's a macbook replacement for a lot of people, including

you. the keyboard is an important component to that, probably a new update there >> steve kovach, nice to see you. we'll see what happens later today. when we come back, the ceo of hims and hers walking back his support of college campus protests a little bit. we'll speak to leadership expert eric dezenhall about the corporate and college response to the situation and in the next hour, two big interviews from d.c. here. gary gensler will join us for an exclusive interview. and former google chairman and ceo, eric schmidt talking all things ai. quk"et awhe. "saw rurns after this. believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. [crowd chanting]

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leaders and executives across the country are reacting to the widespread protests occurring on college campuses. many have spoken out about ceasing to hire students from universities that have been the site of excessive protesting but in the latest, the hims and hers ceo clarified his comments in support of the anti-israel protesters after the stock dropped over 8%. joinings now is leadership expert, eric dezenhall, of dezenhall resources chair. and, you know, we saw this play out, eric, and, i don't know,

he's shocked, shocked that he could have been misinterpreted for what he was saying i don't know what percentage, percentage of the protesters are passive, gentle souls marching along, saying, you know, we will overcome most of the time, what i see are people that are fairly -- some of them are violent, but even if they're not violent, their words are violent. they're saying, genocide to the jews, go back to the auschwitz, they're saying things that are totally unacceptable this guy has a screw loose to send out a website for applying to his company for a job there's no walking it back it's obvious what we're hearing from most of these protesters. so i think this guy just -- he looks young and clueless and the stock deserved to go down 8%. >> well, look, i think the question is, at what point do we start taking people at their word i mean, when somebody says that

they support protests that are widely known to be violent and bigoted, and then they send out a link to apply for jobs, at what point do we go, well, what do they mean by that i mean, similarly, harvard has said that they're concerned about anti-semitism, yet over the weekend i read that their new commencement speaker has a history of calling israel the third reich. so at what point do we go, yeah, you said it, and you meant it, and now the marketplace decides. i can't tell you whether the stock market or consumers at this point care, but i think we know what these protests are we know what they stand for. and a position has been taken. >> there is an us and them component to it, though. at university of north carolina, 800 faculty members are signing a letter that says, forgive everyone, you know, i don't know if they said, give everyone as,

but they're basically saying, any of the tough things that you did to try to stem what's going on, you need to reverse all of these things and it's nice to back your students, but when you're backing your students that are doing things that are so beyond the pale, it's like an us versus them somebody is in the wrong side of this, eric it seems -- >> well, i think one of the things that universities and companies are beginning to understand, but you're not hearing a lot about this, is the degree to which they are beginning to realize how much of this is orchestrated i mean, for example, the playbook now is a university president says, you can protest because you have free speech at point "a," but you can't do it at point "b. protest organizers encourage people, especially protesters and women to go to point "b." camera crews are waiting, and

when the person who is protesting at the wrong place is restrained, asked to leave, or is arrested, they fall to the ground, they scream bloody murder, and that becomes the story that the media cover as the hand mmaidens of these activists. what i am hearing from both ceos and university leaders is, we're tired of getting played. i think that you are starting to see this idea that schools and companies are not these hothouse flowers, that the minute that you allow -- you say to the children, stop jumping on the bed, the school and the company don't collapse it doesn't immediately become penn state and the other thing that i'm getting a lot of is not just, you're not really hearing that many companies saying, i'm not going to hire from columbia. but i am hearing on a viral level executives saying, quietly, the minute i see a resume from certain schools, i'm passing it over, because i just

don't need my staff to be indoctrinated pb i'm running a company. now the question becomes, do the colleges care? they may not they made a decision a long time ago that this is the money they are going to accept. this is the route that they are going to take. maybe they're fine with it i don't know >> i don't where to go with the ceos -- but i feel like we've all been played. and you know who we've been played by? hamas. and i think the biden administration has been played by hamas this is commentary, but they knew exactly how this was going to play out. there's a good piece in the journal once again about what needs to be done but the pr crescendo is building up, and it's weird but what do you think of the biden administration's response? and even trying stem the college protests >> well, i think that they're very much in a tough place, but i think that the biden administration has made a decision that they will -- i

think that they will ultimately realize that they are probably not going to lose much of the jewish vote, but the muslim vote in michigan, specially, is in play and that is what they're looking for. it's a choice and i think that they're probably right, that they're not going to lose a lot of the jewish vote so this is the calculation as for companies, i think that what's interesting is i have found that companies that tread lightly on these issues do better than companies that feel this compulsion to weigh in and weigh in big for every company that takes a strong stance here, there are 30 that are just surfing very lightly and they do just fine. and i don't think companies have begun to understand that, until just beginning with the bud light incident and i think that they're starting to realize it now >> all right, well, a lot of them, where they can virtue signal without any risk, they love doing that.

and now when it really matters, that they would take a stand, they don't but that's a cynical viewpoint eric, thanks go good to have you on this morning. >> you bet hey, skjoe, we have a news alert to tell folks about, just crossing the wire. uber and instacart now making its delivery service available in another platform's app. so soon customers that use instacart will be able to order delivery in a new restaurant tab powered by bereats uber saying this deal allows them to further expand orders on its platform, while instacart says they'll help expand their platforms, offering beyond grocery to adding restaurants. we'll look at that stock you're seeing it up, probably going to move instacart more than necessarily going to be moving uber's stock. and we'll see what it means and the truth is, if it impacts anybody, it's probably going to impact door dash we'll keep our eyes on this one this morning

tomorrow, at 7:00 a.m., i'll be speaking with uber ceo dara khosrowshahi right here on "squawk box" following the company's quarterly results so we can ask him about this, plus we'll have the numbers becky? okay let's take a look at where the futures stand right now. you will see that the nasdaq is down by about 21 if you've been watching the dow, it's been a mixed picture this morning. dow has been a little bit higher continues to be up by 41 points. and the s&p is basically flat right now. treasury market, take a look and see where things stand for when it comes to the bond market. the two-year has picked up a little bit at 483. let's get over to dom chu with a look at this morning's pre-market movers. good morning, dom. >> good morning, becky let's get you caught up on some of the other earnings head liners this morning. let's talk about the u.s.-list of shares of bp. they're down, around 60 to 70,000 shares of volume. it reported quarterly profits

that fell shy of analyst estimates, as it like other integrated oil measures dealt with falling energy prices during the period. it was also impacted by a refinery outage of one of its facilities in indiana. it did maintain its level and stock buyback plan about 12%, just over 3 million shares reporting quarterly results after last night's close profits were in line with estimates. res revenues were better than expected, but its full-line guidance fell below estimates. it fell after a massive rally with those shares that have tripled in value and speaking of artificial intelligence, shares of the most valuable semi-conductor company in the world, they're down about 1% this morning, half a million shares of volume after a three-day rally that's added roughly 11% to its market value, just there

this comes despite analysts at goldman sachs this morning reiterating its buy rating and conviction buy list decision they raised their target price to $1,100 from $1,000, and they cited among other things, continued signs of robust ai server demand. for more thon that and other to analyst calls of the day, head over to cnbc.com/pro, subscribers there can get more detail and analysis of that story. but nvidia, stock to watch things back over to you. we asked stan druckenmiller earlier about the fed's focus on possible rate cuts druckenmiller mentioned the fo fed's dovish pivot last december and then said this -- >> it seemed to me that the fed was in a perfect position, inflation was coming down, financial conditions were tightening, and to some extent, i feel like they fumbled on the

five-yard line with the game on the line >> his point was that by saying that fed cuts could come, that interest rate cuts could come, it really spurred things in the markets and things took off. joining us to talk about this is liz young. he's the head of sflaeinvestment strategy at sofi. how do you feel about where things could go. he doesn't know where inflation could be a year from now jay powell doesn't think anybody knows the answer to that question and really, things could go either direction >> well, i think what happened at the end of last year is we started to feel like we were pretty sure that we knew what was going to happen with inflation. it had come down in a linear fashion. everybody felt confident that it was going to continue doing so and then the fed said what they said in december i think part of the issue in december was that it was overly interrupted by markets as a dovish pivot i think they were trying -- >> i don't think that was an overinterpretation

it felt very much like anybody who was watching, but, yeah, rate cuts are coming, and sooner, rather than later. >> i think it was -- they would be appropriate at some point, in 2024 and everybody said, okay, well, when's the next meeting in 2024? maybe we'll get them then. and we'll get anxious for them and the market interrupted it as, okay, the fed put is back on the table. they're there to save us if we need them, inflation is moving in the right direction, and what happened was, and to stanley's point, they had given this forward guidance, and the data started to turn. and then we had to backtrack and say, well, now inflation is surprised up to the upside four months in a row. if that happens again, for another quarter, then i think they have to backtrack this cut talk and this no-hike talk, which markets are not going to interrupt well >> so how are you feeling about overall, the economy, how you feeling about where the markets have interrupted the signs in the economy to this point? >> i think right now the market is so short-termy, we are

hanging on every single day to point, every single fed statement, and the economy right now is just showing the fed things that they wanted to see so we got that first quarter of below-trend gdp growth they've been seeing that they needed that in order to fight inflation and get it back to target and we are expecting that we'll have below-trend gdp growth for the remainder of the year, but still positive i think that's a good thing, if that's actually what occurs. the difference will be whether or not the market is okay with that i think the fed is going to have a lot higher threshold for pain and a lot higher threshold for softness in the economy, as they should, and we need a consumer who stops overspending and doesn't use too much credit to do so. that will eventually solve the inflation problem, or at least it should put supply andgademand back into better balance so far, we've been able to digest many fewer rate cuts than we thought if the narrative shifts back to hikes, you saw what happened, as

soon as hikes were taken off the table, everybody was ecstatic, right? if the narrative shifts back to hikes being possible, we'll see a lot of bumps >> i guess the concerns, if you're looking for something to really worry about in that scenario, not that this is bad news on the face of it, but the jobs market is still very strong you still do see some wage growth i guess the concern becomes, if rents or rent equivalents start picking back up, that that could feed the inflation >> and that, as we know is a really lagging indicator, it takes a long time for things to show up in rents and we'll hear the rebuttals of, it's not a good measure of housing anyway but there was an interesting article in the journal today about gen "z" and what's happening to that next generation incomes on average only up from 59,000 to $60,000 a year since 2020 but credit card balances are at 2,800 on average and on that period, where they've only made $1,000 more a year, rent is up 22% so taking a bite out of certain

consumers, a lot of times we talk about the lower income consumer, i think it's also the younger consumer and who needs to be the next generation of spending and inflation and rent is definitely taking a bite out of that. >> are you better off than you were four years ago? >> if you're paying rent, perhaps not. >> i'm saying, anyone that you're talking about, it's an -- that's why the numbers are where they are because you do not -- and at the supermarket, it's the same thing. it's like, okay, i'm not getting this, this, this and this, because i don't have the money at this point for it >> and what do you substitute? >> and that's where the numbers are where they are anybody who scratches their head isn't paying attention >> thank you >> thank you coming up right here from washington, d.c., s.e.c. chair gary gensler join us for an exclusive interview. that's right after a very quick break. "squawk box" returns with gary gensler right after this wealth s and ends with you.

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welcome back to "squawk box. joining me now right here in washington for an exclusive interview is s.e.c. chair, gary gensler. we goat to see each other in person this morning. >> fnice to see you. >> one of the things i wanted to ask you, when you look at the headlines around what the s.e.c. is doing and what your priorities are, it's hard to tell how much of your focus today is on the stock market writ large versus the world of crypto and trying to figure out the future of etheorem and other things how do you see it? >> well, i see it this way we oversee $110 trillion capital market about half of that is the stock market, half, as you might know, is the bond market and other markets. crypto is a small piece of our real markets and -- but it's an outsized piece of the scams and frauds and problems in that market, because without pre-judging any one token, much of this field is

not-compliant with the protections of our securities laws and so thus, you end up with like an outsized ratio of journalist's questions and crypto journalists to market cap. >> is that a function of the fact that's where your attention is too >> no, it's a function of where your attention is. i've been on your show, what, a dozen times? and every show, you ask about crypto and my guessing is this will be a majority crypto interview, while the capital markets are $110 trillion. so it's also about where the financial media is focused >> well, i want to ask you actually about a whole bunch of things in the classic stock market >> i'm looking forward to it >> but let me ask you this vlad tenev of robinhood, you've delivered a wells notice to them, i know you don't want to speak directly to them but literally just yesterday, he put out a statement effectively attacking you and the s.e.c.

brian armstrong from coinbase said ervffectively, welcome to e club >> so the listeners and the american public can understand, we have a really important responsibility as being a cop on the beat, and assuring that people that are asking you to put your money into buy or sell securities, are following the law so you get disclosures, that you get certain protections. and we have live in-court litigation with at least one of those companies, coinbase, in front of judges, at this point in time. >> ways the state of play though with robinhood to the extent that you discuss it. and for those investors who are out there who are watching this morning who might have money at robinhood, what are they supposed to think about these? >> i can't speak to any one company, but stepping back from it, the field of crypto assets, without pre-judging any one of them, many of those tokens are securities under the law of the

land, as interpreted by the u.s. supreme court. so we follow that law. and you, the investors, are not getting the required or needed disclosures about those assets and so, like, this is earnings season right now, andrew everyone is asking about, what's the earnings release and how many companies are beating earnings or falling behind and so forth where is the disclosures from these crypto tokens similar to these season of earnings releases >> let me ask you this, ultimately, and i think this is the big question in cryptoland right now, is etheorem a commodity or is etheorem a security and therefore, will there one day be an etf? that's the fundamental question on the table in crypto land. do you agree >> you're the one that's out there asking the questions all i wanted say is, to me, the fundamental question is, is how do we ensure that the american investor is protected and right now, they're not getting the

required or needed disclosures, and the intermediaries in the center of this rather centralized market generally are conflicted in doing things we would never allow the new york stock exchange to do the new york stock exchange is not allowed to trade against the investors. >> let me ask you about this you've seen the consensus lawsuit. and i know you have a wells notice with them as well this is patrick henry saying the following. and i want you to respond to it. just months after a federal judge sanctioned s.e.c. enforcement lawyers for lying in court, new evidence shows that chair gary gensler himself misled congress. chair gensler refused to answer questions about the s.e.c.'s classification of ether and new court filings show this was an intentional attempt to misrepresent the commission's position >> we speak to congress directly in hearings like that, and also directly to members. and we share with them

accurately what we're doing. so viewers can also understand, we don't speak about whether we have an investigation, or whether we don't have an investigation. and we don't speak about whether somebody is, in our opinion, not following the law, unless we actually bring a case. so we stay quiet on many questions that you might ask at this live interview or even -- >> but ultimately, should investors -- there are a lot of folks who bought etheorem, expecting that one day there will be potentially an etf and it will be considered a genuine security that's tradeable on these exchanges. will that happen >> again, that's something in front of our commission right now. we're a five-member commission and those filings will take up at the appropriate time. >> is that something, from a timing perspective, though this is an election year this administration may be the administration come next year and may not be the

administration how does that impact the work you're doing >> i'm just focused on how we can do the most for 330 million americans. what we can do to drive efficient say, resiliency, competition in the equity markets, the treasury markets, the fixed income markets and yes, also addressing some of the activity in the crypto markets, where actors are not uniformly following the law. they just -- there's a lot of -- a lot of people have lost their hard-earned funds in the field that you seem to be so fascinated by. >> i'll go to something else that people are fascinated by, that is not crypto the case is closed the auditing firm for trump media, and we've been following trump media as a stock, which former president trump is the majority shareholder, was charged with, quote, massive fraud. this is accounting firm, not the company itself >> can you explain what the

fraud was and to the extent that investors should be thinking about this >> we have a system here in the u.s., where if you want to raise money from the public, you have to get audited by a firm to check the numbers. to make sure that the numbers are accurate and there's auditing standards this small firm, that had well over 300 public company clients, audit clients, was very small and did not follow the standards. didn't follow the standards of having extra partners reviewing their files. they, at times, as we put out in this settlement, had misled their clients about the actual work they were doing, even taking prior work, and this copy and pasting into later work and the like and so, yes, last week, we settled. and those public companies, it was about 350of them, their

auditor chose to settle and not appear before the s.e.c. >> let me ask you about trump media. a lot of folks have watched this stock move in ways that seem to defy, at least historical conventions of the kind of metrics that we're all used to as the head of the s.e.c., as somebody who's responsible for the integrity of the markets, what do you make of something like that? >> we're also paid to be merit neutral. investors get to decide, as long as they get the full, fair, and complete, and truthful, i would say, information they're not getting that in crypto -- >> you think you think they're not getting it in crypto. you genuinely think that >> i genuinely think they're not getting that in crypto and if they're a cryptocurrency, it's required and needed public companies need to do that as well, but their auditor -- the gatekeeper matters and this is a case where a

gatekeeper failed those 350 companies and the investors on the other side of those companies. >> let me just drill into this for one more second, though. there's an idea with a trump media, for example, and sometimes with other meme stocks, that they are moving in ways nant be attached to metrics, because the metrics don't matter because the, quote, investors are investing in it, if you even call it investing, for a different purpose. does that make expense to you or not? >> i've been around capital markets for over four decades. >> by the way, some people call it manipulating the market, though that is the accusation that some people would say, there are people effectively trying to manipulate it for reasons that are other than just trying to get the highest value. >> so manipulation is not allowed in our markets in essence, misleading the public and within an intent to move that price and so forth but you are allowed consider

every individual is allowed to form their own view. that's one of the booeauties of our capital markets. it's that tens of thousands and millions of people can do their own research -- >> but some people think it is a financing vehicle for a political campaign >> again, i'm not going to speak -- as much as you try, i'm not going to speak on any one company. but it's what's important is that their disclosures are accurate and that folks aren't in the market, front running or trading on insider information or manipulating any one of the thousands of securities that trade. >> different question, just this morning, we put out a report actually in dealbook around blackstone and their fund, around their valuations. there's lots of questions on wall street about how a lot of these reits and semiliquid reits effectively mark their books some use third parties and those

numbers are defined by the third party, with no optionality in blackstone's case, it appears that they have allowed themselves disclosed to have latitude in how they come up with those numbers and they pay themselves based on those numbers. so if you can actually make the numbers your own, and you can pay yourself baused on those numbers, how do you look at something like that? >> stepping back again from any one company, valuations are very important in the fund business whether they're registered funds that you can buy in the public called mutual funds, or even private funds like private equity and venture capital those valuations are really critical for -- and the law says that you've got to do those in an appropriate way and so that's what's critical. and when i say critical, it's for people who are investing, they don't overpay, and people that are redeeming that they get the right valuation. and so that's how we look at it, really is to make sure that any

fund adviser who's doing the valuations is following the letter of those valuations >> i would love to sit you here for a lot longer, but we're effectively out of time. i mentioned there's a presidential election year do you want to be part of this administration if the president wins again and would you want to remain the chair of the s.e.c.? would you want to be the treasury secretary what do you want to do next? >> i am just focused on this job. but this is one of the greatest privileges -- i mean, anybody who's listening, i'm honored to serve my third president as the third 33rd chair of the s.e.c., overseeing $110 trillion capital markets. this is a terrific job where we can actually help americans, investors, and issuers for decades to come. so my term is well into 2026 and if i have the honor to continue to serve, i look forward to it. >> gary gensler, thank you for coming in this morning nice to see you. thank you so much. joe? >> thanks, andrew. coming up, another can't-miss interview, this one

with former google ceo, eric schmidt, talk about ai, regulation, and a lot more all of that's on the agenda. stay tuned you're watching "squawk box" on cnbc

still to come, we will take you inside disney's second quarter results and bring you new commentary from the earnings call that will just about to kick off right now, that stock is down 5 and a third percent. and a new interview with google ceo, eric schmidt. a reminder as we head to the break, you can get the best of dct.awk box" in our daily poas follow squawk pod and you can listen name. we'll be right back. anything for mother's day? go to 1-800-flowers.com. oh my gosh! wow! gorgeous! i feel like royalty. thank you. 1-800-flowers.com. happy mother's day. happy mother's day!

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we're back on "squawk box. the futures, as you can see, the dow managing to be up this morning, even though disney is indicated down $6. $6 so that's exerting some pressure on the dow managing to trade higher,

though even though revenue miss for the fourth straight quarter at disney treasuries >> treasury yields, if you've been watching closely, they've crept lower over the last week rick santelli joins us right now and we've got his take on what we're seeing b what do you think, rick? >> i think that yields pretty much hit their recent peak of 470 as the high yield close. that was from the 25th of april. and i think that close is going to stand for a while i'm very much looking to test 5% at some point later in the year, but i think at this point, i would harken back to the 10th of april, when we had the march release of cpi on that particular session, the knee-jerk reaction at 8:30 eastern brought us from a 433 yield up to a 4.5 yield. that was the first impulse, when inflation was running hot, that's where we popped

and i do suspect that that's going to be the range that we play in for a while. maybe the mid-4.30s, maybe as high as 4.60 but ultimately, i think the trade continues to be buy the wink and sell the cut. there's definitely a winkish aspect to the fed. there's definitely a bias. i can't put my finger on it exactly, but over the last several plus months, the guidance from the fed, the notion that a cut is the base line case is going to come to fruition and one way or the other, the markets are suspecting that is coming and you get bigger moves to the upside in equities when it aligns in a certain way versus a more symmetric approach, when you get data where you have less growth or you have higher inflationary pressures, you don't seem to be getting the same kick down in the equities or the kick-up in the interest rate complex. so that would be my base line case, is that we're going to see rates ease back a bit.

but ultimately, i still think the big fed trade is going to be after the first ease, i think that you're going to see a major steepening of the yield curve, and i think longer-dated treasuries from the 7, maybe the ten-year on are going to be much more stubborn about the debt that we've accumulated, the policies that we have, the regulations we continue to pile on, all of those issues, i think, are going to keep longer-term rates much more buoyant, and they're not going to be friendly to the housing market >> okay. rick, thank you. >> thank you up next, former google ceo, eric schmidt joins me -- no, joins andrew -- i'm not andrew no one would ever confuse us but will be live with andrew, right there. not here you don't want to miss this conversation "squawk box" will be right back.

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welcome back, everybody. cnbc has learned a number of private equity firms have been considering a buyout of peloton, as the connected fitness company looks to refinance its debt and get back to growth after 13-straight quarters of losses firms zs have zeroed in on how o cut peloton's expenses last week, peloton announced a broad restructuring plan that is expected to reduce its annual run rate expenses by more than $200 million by the end of fiscal 2025. you can see that stock right now, up by 19% andrew >> thanks, becky joining me right here in washington, d.c. to talk aboutator artificial intelligence, the tech race, and so much more, eric schmidt is here cofounder of schmidt futures and the special competitive studies project. good morning to you. >> good to be here you're one of the most read-in people when it comes to the world of ai right now. and i think we're all trying to

understand really almost, if you could stack rank all of these models and all of these companies for us, i think we'r all trying to understand who's ahead, who's behind, where does google stand relative to meta with llama, to open ai and microsoft. how do you see all of this >> first, i hate to tell you, but i think this stuff is underhyped zblur >> underhyped? >> not overhyped because the arrival of intelligence of a non-human form is really a big deal for the world. >> and you think it's here >> it's coming, it's here, it's to about happen, it happens in stages >> how quickly, though >> well, we used to say 20 years. now within 5 >> within 5. >> the reason is the scaling laws for these systems are continuing to go up without any loss or degradation of power what happened is, openai in this generation invented this category, with their microsoft partnership, they're going to spend $3200 billion on this.

google invented and is now in the game i'm assuming the numbers are similar. you have other entrants that are incredibly interesting so, for example, meta has just released a $400 billion model called llama 3 in open source form, which allegedly is as close to gpt-4, which is from a year and a half ago. the open source industry is following the closed source. the big winner right now is still nvidia and the reason is that they have a virtual monopoly on the software stack between the hardware and the software that everyone is using. >> so everybody is buying their chips. would you buy other chips, by the way? do you think that amd -- do you think intel will ever get into this game in the right way >> it's really important nvidia have a competitor, but nvidia is so far ahead, that they have very good software support for their chips. and the other guys are trying to catch up everybody i know is trying to use the other chips, but they're still primarily buying nvidia, for a while. >> can the folks that you have not mentioned, apple, amazon,

which is trying to build their own large language model, can some of these other companies catch up >> they can. amazon has a deep partnership with a company called anthropic, which is super important disclosure, i'm an investor there. if you look at apple, apple always goes its own way, and apple always makes a better user interface than anyone else and i'm sure that's what they're doing. >> what do you make -- anthropic has a partnership with google, also with amazon you've seen the openai partnership with microsoft microsoft has participated in this aqua hire of inflection we're here in washington a lot of these deals, if you will, strategic partnerships, in a different world, would be acquisitions i think the big companies would love to buy these companies. the ftc and lina khan are looking at a number of these deals and saying, actually, maybe they actually are mergers. they're just not being called that what do you think? >> well, look, first place, the

doj is suing all of the big tech companies for something. so i guess that's the new season here and i obviously don't agree with that i think you should regulate, not litigate these things. but in any case, from the standpoint of scale, the fastest way to run, because this is happening so quickly, is to find the partnerships and pour in money. the amounts of money that are going into these companies are insane tlurm there are rumors th that helon hassed a an infinite amount. people want to invest in this and they want to win his pucitch is, the combinationo twitter-x and the tesla geographic information gives him a leg up we just don't know the reason i'm saying it's underhyped is you're seeing the future of reasoning, the future of human interaction, the future of research, the future of planning is being invented right now. there's something called agents, agent is basically a large

language model that can do something. there's something called infinite context windows, which means that you can -- it's like having an infinite short-term memory, which i certainly don't have, where you can basically keep feeding it information and it keeps learning and changing it gives you recipes this stuff is happening at a corporate level very, very fast. american businesses will change because of this. >> who are the losers? and i think one question that people have is, what happens to google google has owned what's called the blue link economy. and by the way, the blue link economy is not just google's, but everybody else who has benefited from folks searching on google for stuff, clicking on the blue link, and going back to all sorts of different websites in a world where the ai provides the answer, and doesn't necessarily need to send you to 12 places where you're going to go find it yourself, wants to all of that? >> disclosure, google shareholder here, it's pretty important to understand that google is not about blue links,

it's about organizing the world's information. what better tool than the arrival of ai to do that better. do you think you can monetize that you betcha much of the earliy work that i did when i was there was using early versions of advertising ai to make the advertising more effective. so unless you think advertising is going to go away, which i don't think, ai makes it more powerful, not less powerful. >> how scared should we be all of all of this and i ask, becky and were both in omaha over the weekend and warren buffett issued a warning, if you will, about ai, and the dangers of it. and just the ability to manipulate people in ways that i'm not sure everyone has thought about. >> well, there's lots of ways to influence people you're seeing that in disinformation and so forth. people are going to have to learn to be more critical. the information presented to you may be generated by something, not a human, and they may be fooling you. as society, we will adapt to

that i'm not afraid at all of this. i'm beyond excited to cure cancer, to solve climate change. new material sciences, advances in science and transportation and so forth all of the things that bedevil us as humans, we'll make progress on. we can solve these things with the right tools and the right attitude and the right regulations. >> you mentioned climate change. one of the big questions about ai is whether we'll have enough energy to power all of these chips that need to be firing 24/7 >> i keep reminding people, think canada they're very nice, they're very smart, they're very near us, and they have a lot of hydropower. but more seriously, these systems, the net return for building these things makes energy much more efficient i put my money in the data centers -- >> so you wouldn't be buying energy companies >> i would buy energy companies that are going to make the transition to more sophisticated distribution networks. remember that ai allows better allocation of resources. basically, it allows you better

planning you save money, you become more efficient. this is true in the media industries it's true in the energy industries there's every reason to think that the use of ai will make our businesses more efficient, therefore, just literally waste less money that's good. it's good for economics. >> the other big topic here in washington is china and the u.s. relationship with china. we just saw the tiktok decision. well, before we even go on, what do you make of the tiktok decision >> well, i'm in general in favor of regulation, regulation, not banning and not litigation so again, the government has made this decision, and from my perspective, the law is now in place. china has indicated that it's unlikely that they're going to release the code, so we'll see there are lots of people making proposals along that lines >> what do you think happens do you think tiktok will exist in the united states a year from now, two years from now? >> assuming the legal challenges -- it survives the legal challenges, the effect is tiktok will be banned. that's a major decision for the

nation, because 150 million people use tiktok every day. it's an astounding product in terms of its impact. there are all sorts of issues with it. again, my proposal is, regulate it when i was young, you and i were young, we had the equal time rule we need something analogous to that >> do you think it can be regulated? yes, it's like television. it's a programmer who's making a choice of things for you to see. coming back to china, the trump administration and the biden administration restricted access to high-speed chips and particularly nvidia chips. that has set china back, and they're certainly angry about that and they're certainly -- they have a huge industrial policy around ai and leading and so forth it's going to be hard, because they need the hardware that they can't get. they certainly have the smart people it is a race the national competitiveness of america will be determined to whatever way we have industrial competition against china. china, for example, is already

making electric vehicles and allegedly dumping them into the global markets this is a huge competitive challenge. we as a nation need to get our act together to stay focused on this >> what should we think when we see u.s. businesses that are doing business in china? so elon musk just went to china, has new deal with them apple has a big presence in china from the manufacturing capability and also sells into that market. i don't know what you think is going to happen to that market do you see retribution how should we think about the risks of doing business in china? >> these are geopolitical decisions. both president xi and president biden met in a series of conversations to try to deescalate the tensions. to me that's a very good thing we are co-dependent in the sense that china is the primary supplier of the components of the systems we build, and they actually use our stuff we're not at war with china. they are a strategic competitor. we need to continue to do better than they are, but we also need to not escalate beyond a certain

level. >> now, to bring it all back to ai, because i'm not sure we even know maybe you have a better sense of it where is china on ai relative to the u.s. they may not have the fastest nvidia chips, but in terms of the models you think they're developing behind the scenes or even in front of the scenes -- >> they have some problems it's not as much chinese language for them to train against. that's why english is so strong in these large language models they have other problems, a huge reduction in foreign investment and a huge reduction in at-risk venture capital, something which in our case in the u.s. has exploded in this crazy way that will set them back. another thing about china, they're very application focused, not platform focused. they're trying to build for-profit application companies which in the chinese way makes sense. some of them may ultimately be successful three of the four top apps in america are of chinese origin. at the moment the leadership is u.s. we should be very proud to be

here america has invented this future this particular future, the one which is ai and quantum and the other technologies that people are talking about, we have a shot of actually dominating the world for the next 10, 20 years if we do it right. >> finally, we are in an election year. there's lots of concerns about ai being used for misinformation and the like akin to what people said took place in 2016 and maybe before with the social media companies, has a lesson be learned from that period, do you think? >> it better have. there will be many, many actors who will try to influence the democratic elections around the world in 2024. it's very easy to do a deep fake of you or me doing something stupid or crazy, easy to cast your voice with fake images. people have to learn to be skeptical of what they see more importantly, social media companies in particular have a duty and responsibility to police these deep fakes. there are technical ways to

label them and prevent them on their platforms. if they don't, they will all suffer a huge regulatory burden from whatever of the two parties wins >> i ask you one final question, and i was just thinking about google right now we were having a whole conversation earlier in the broadcast about what's happening on college campuses and the like it occurred to me there was this incident at google a couple weeks ago where they fired some employees. you've been there for a very long time. we're talking about corporate america and how they deal with these very contentious issues inside the business. >> in order for america to win, people are going to have to show up to work, work hard in a professional context somehow during covid we forgot those lessons. google is a business i strongly support the decisions made, people have to understand the stuff you do at work and stuff you don't do at work it's pretty straightforward. you and i live that life i think this is the generation that will learn the same lesson. >> eric schmidt, thank you for

joining us this morning. becky. >> andrew, thank you very much when we come back, the latest from disney's cosend quarter earnings call. "squawk box" will be right back. giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

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goldman sachs announcing that robert kaplan is rejoining the firm as vice chairman and a member of the management committee. most recently kaplan served as president and ceo of the federal reserve bank of dallas that was from 2015 to 2021 kaplan initially joined goldman in 1983 and became a partner in 1990. disney's earnings conference call is under way. julia boorstin joins us know wih the latest. >> shares are trading down about 8% premarket this as the company beat on the bottom line with earnings per share 11 cents above estimates what we're seeing right now, that outperformance, ethe stock is being weighed down by the fact that revenue was a hair short of expectations. the company also gave warnings

that the direct-to-consumer entertainment business would report a loss in the fiscal third quarter. they also said they don't expect to see subscriber growth in the quarter. as the linear networks continue to struggle, excluding espn, operating income at those networks fell 22% in the fiscal second quarter entertainment streaming, though, is a bright spot with $47 million in direct-to-consumer profits. the company saying it will be a meaningful growth driver in the next fiscal year here is what ceo bob iger said just moments ago. >> 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 we have prioritized the steps necessary to achieve this. >> we still didn't get any details on the streaming sports joint venture that is set to launch in the fall or the espn flagship that they are launching next year. that flagship streaming service. as for the parks division, cfo hugh johnston said on the call moments ago, quote, we are seeing some evidence of moderation from peak post-covid travel they did go on to say they expect income growth to rebound significantly in the fiscal fourth quarter between that and the streaming warnings about the fiscal third quarter, it looks like it may be one more rough quarter in that business, but then everything turning around by fiscal fourth quarter. so that kind of lumpiness that iger warned about. >> all right, julia, thanks. every time it seems to be actually starting to get some traction, it backs off, so we're

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.