12% free cash flow. >> i would buy the two-year note. it's a great place to hide. >> amgen, 14 x forward multiple. they're getting in the weight loss game. >> yimy? >> i'm just sitting tight for now. >> see you on "closing bell." "the exchange" is now. ♪ ♪ thank you, scott. i'm deidre bosa in for kelly evans. and here is what is ahead. big banks and energy are in focus today. our market guest is bullish on both but sees a less than rosier picture for the broader market for the next decade. here's here to tell us why. and ai a jobs creator? and a productivity booster, but he's warning of one thing that could get in the way. and you know him from "shark tank." matt higgins is also here.

and fresh off my interview with former weworks ceo adam neumann, i would ask him if he would invest in that new venture. we begin with dom chu and the numbers. we are drifting close to the session lows. >> just about there right now, deidre. it's been deteriorating throughout the course of the last couple of hours here, and as deidre points out, session lows right now. i'll take you through the broader cap s&p 500, which is down 75, 76 points, down 1.5% overall at 5123. so, again, this is the session low right now. we were still down 24 points, even at the session highs, so that gives you an idea of how far we have drifted to the downside here. the level that a lot of traders are watching in the s&p 500 is 5111, that represents the so-called 50-day moving average of the s&p 500, the medium term trendline. the nasdaq really pacing the declines here, down 270 points, 1.5% declines, 16,171 for the

composite. the dow down 471 pointspoints, . one of the big focal points is in the energy trade. believe it or not, every sector in the s&p 500 is lower right now, but energy is outperforming, only down one half of 1%. the energy sector spdr, over the course of this year, the energy sector is the second best performing sector in the s&p 500 next to communication services. so we'll see if that still has some legs. energy something to watch. and analysts at morgan stanley have called that attractive. and big bank earning season kicks off. these stocks have had a monster run for the most part over the course of the last six months or so. but jpmorgan chase, wells fargo, citi group, each lower.

all were generally positive, blackrock also better than expected quarterly results but down 2% right now. deidre, blackrock interesting, biggest asset manager, it now manages just around $10.5 trillion. yes, with a "t" in assets under management. >> we heard from the ceo today, so his comments all the more important because of how important that company is. dom, thank you. my next guest manages a five-star fund. while he's extra bullish on some particular names, he sees a bumpy road ahead for the broader market, expecting zero on the s&p over the next ten years. joining me for now is president and ceo at sneed capital. cole, are we about to enter a lost decade for equities? >> yeah, the answer is yes, nominally. but the real danger whether it's institutional or retires, is

that the real returns are going to be worse. just to give you an analogous period, in 2021 was like 1969. today looks a lot like 1972. regardless of whether those paradigms are perfectly identical, you went into a lost decade in that case where investors made almost 6% in the s&p 500 but lost 4% to 5 hernandez real. you look at the 2000s, they lost money nominally. they lost real money. so i just point out that, because when we say that to people, listen, the s&p might make zero, we're using the st. louis fed data, which they call the fred data. the data just argues that when american households have a large portion of their net worth of assets in stocks, the forward returns are very poor. and like i said, this is higher than '99. that was a negative one. so i might be bullish when i say

zero. >> that is a dire picture, cole, because that is -- you know, the stock market, the s&p 500 is a wealth generator in our country. where does the average person get a return? is it the property market? what is the average person to do here? >> yeah. the question is, should the average person get rewarded or should the broadly diversified investor get rewarded? because prior years they didn't. the real myth we're going bust is everyone is going to participate in the stock market and just do wonderfully so. there's a lot of eras where you see stock market failure left and right. so to your point, the s&p 500 looks very unattractive for a ten-year forward perspective. we have 5% in cash, almost fully invested out there. so it's not like we're hoarding cash, but the composition of the s&p 500 is painful. we're making good money in the energy basis, and the large

institutions and passive owners just don't care. some by rule, some by choice. like buffet said many years ago, the secret to life is weak competition. think about it like this, as value stock pickers, we have to beat zero. i like my odds. >> it's a provocative thought. over the last ten years, you could have been distracted by a bunch of things, but if you held tech, the growthiest part of the market and the mega caps in particular, you would have done very well. right now, there's a thesis that many people share that artificial intelligence is going to underpin gains for the next decade plus. you disagree with that? >> well, no. see, i think where people are wrong is if you look at the forward adoption of technology, you'll see unit volumes go way up. we expect ai will. but what you see price per unit declines. if you just look out at businesses in those spaces, in the long run as the technology grows, margins decline with it. i point that out because i look at ai, it would be like -- it's

wonderful technology. we're going the greatly revolutionize agriculture, or if you are a caveman and figured out the hammer, it's a wonderful tool. but as units grow, the price per unit will decline. people are saying the early units are going to give us the low indication of price on these goods. i don't think that's going to hold true, just like it didn't for the internet. we adopted the internet widely. look at the cost of the smartphone. a billionaire could not have that in 1980. >> hold on, cole. so you don't think the gains made in ai are going to be reflected in technology stocks, is that what you are saying? >> deidre, i'm saying that the predictions of profitability off of those are likely to be undeun underwelling. just to get to where the expectations are right now, they have to do marvelous things. if it was going to give you the 2021 example, it was docu sign.

miraculous and marvelous but didn't end up being what the analyst wrote up. i said this was like 1972. this is the creme de la creme of these companies, like cola, ballistic the blue chips -- >> but technology companies are some of the most profitable companies, sitting on gigantic cash piles. you think banks is a better investment than some of these giant mega cap names, because they're overvalued, is that right? >> they have great balance sheets, they had beautiful profits. didn't save them either. but let me add one more thing on that. everyone is a long-term investor at the top of markets. back to the average investor, they're all long-term right now. at the bottom, you can't find long-term investors. i don't care how many books there are, we're not going to fix that problem, but people believe we have.

but on the banks, do i know about trouble in the last 12 to 18 months in the banks? yes. that has been priced in more so. if you look at the bank reports today, the banks that benefitted from deposit flows a year ago are having a tougher time holding debt interest margins, because those deposits, unless lent out at a higher rate, aren't going to help you. so they take on deposit costs, but they don't have a lending window opening to go out and earn money on that. so we have owned bank of america for a long time, over ten years. which got involved with the regional banks last fall, because we can buy mid teen return banks and they're trading below book, do we have a plausible outcome to make money? >> cole, i wish we had more time. very interesting thesis. >> appreciate it. let's turn to the other side of finance. bitcoin has risen, our next guest says increased crypto volumes could help coyinbase.

but he has an underrate performance on the stock. dan, nice to see you in person. >> twowelcome to the east coast. >> i last saw you on the west coast. let's start with bitcoin as a whole, does it behave like a growth stock or store value? so far we have seen it acting like the latter. >> right now, it's doing well, but longer term it has no yield support. it's basically just fomo. and i think eventually it's going to go down. eventually, this is going to unravel, that there's nothing there. bitcoin, yeah. >> how low does it go? >> i see no value in it personally, so it probably goes back to the 40s or 30s easiy. >> that's not as bad as 20. >> could get there, too. next ice age. >> so tell me about coinbase, your call today. is soz the call today is

basically volumes have been strong. the volumes were just so strong. consensus is underestimating what they're going to put out by 40%. we had to take up our revenue estimates and just to be fair, we had to take up our price target. we still see massive downside from where the stock trades today. >> which is your broader thesis. >> bitcoin goes lower, take rates, which is what they earn are going to come down with competition. >> we've been talking forever how coinbase is trying to diversify their business. have they been successful in the last 12 months? >> not basically. it's still basically bitcoin and all these like, you know, yield supporting businesses are not really taking off, whether it's -- those remain small and insignificant. >> let me ask you, because your take on bitcoin is interesting. gold, do you believe gold will continue to go higher? >> that's probably been around.

i personally believe more in real estate. probably a better call, but yeah, gold, we're used to it. people can -- we have like a predisposition to like it. i think bitcoin is, right now, purely driven by fomo. >> okay. bank earnings, because we saw it this morning from jpmorgan and others, some weakness in depot its. customers are shifting out of zero to low savings account into higher yielding products like cds. we talk about the fintech companies, robinhood, others, offering way higher 4.5% now. are they benefitting? >> they're benefiting, and specifically on sofi, which is the bank i cover, what they're going to do this year, again, my bet is they said they're not going to grow personal loans, they're going to do the opposite and boost personal loans the stock is going to rip.

so they're getting massive deposits, $2 million of insurance and offer these people personal loans. that's what makes sofi a good idea. >> is that in relation to more regulation coming down in relation to more regulation coming down the pipe for the big banks, is their win sort of a loss for the bigger banks? >> 100%, absolutely. people don't need to go into the branch, and sofi often offers no-branch banking. >> historically on the stock market, they have a lot of ground to make. a to the of these fintech names haven't lived up to the promises. is that reflected in the stock price, what will be the catalyst? >> great question. right now, the stock is depressed. i think it's $7 with a $12 price target. what's going to happen? i don't know. but if they boost personal loan growth and extend more loans, that's going to create up to 10% upside to consensus revenue to

profitability. >> talk about those profit margins. when you offer 4.5 or 5% api, that goes into the margins. do we see more profitable f fintechs or do they lower those rates? >> well, for sofi specifically, when they issue or when they originate a personal loan, they get immediately -- they get paid immediately like 5%, 6% on the loan. so they make $2,000 on a $30,000 loan immediately. and that's what makes the profit so rich. >> interesting. that could be a theme for the rest of the year. dan, thank you for coming in. appreciate it. coming up, it's the age-old question, will artificial intelligence cut jobs or create them? aaron levie is here to make his case with one major warning. "shark tank" judge matt

higgins has a billion dollar portfolio. he's going to join us with where he sees the most risk and the most opportunity and how higher rates are playing into his investing strategy. before we head to break, here is another check on the markets. stocks are still near session lows. the dow was down 515 points earlier. down less than 500 now. the nasdaq composite still the laggard here, down. keep an eye on the selloff. "the exchange" is back right after this.

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welcome back to "the exchange." not even a fall from a 10% from its highs was able to slow nvidia shares this week, the company slumping into correction territory on wednesday. but shares are still up by nearly 2% week-to-date. that's each managed to outperform intel and meta, making ai chip announcements this week, and both are on track to end the week in the red. our next guest is going all in on ai. his company just crossed a billion dollars in annual revenue and says there's a lot more opportunity ahead. for more, we are joined by the co-founder of box. aaron, thanks for making the trip. >> thanks for having me. >> you have been in d.c. >> yes. >> and you off talk to the regulators about plans for ai. obviously, you're as excited as anyone about the possibilities

and opportunity. what is the risk of regulation? what if they tell you this week, are you more or less optimistic that our regulators have the right tools and aims here if >> so most of the conversations with were congress. so obviously, those in congress trying to figure out where do we take ai regulation and what are the possible laws that we need to enact? let me just tldr it first. i'm very optimistic based on the conversations i was involved in this week. i think we have a congress that, while obviously in dmeimensionsf it can be dysfunction, there are a lot of good conversations happening around ai. the conversations are about the improvements in health care and logistics and education that ai can offer. and so there's a sort of general understanding that you don't want to overclamp down on this, you don't want to overregulate where you can limit the progress with ai. so it's a great time to be

having this conversation, and i'm optimistic that we will not see overregulation in this space right now. >> we talked about this in the past, the idea that regulations should be handed down by, you know, washington itself, or you let industries regulate themselves, are you optimistic it will roll out that way or that you're going to get congress people sort of trying to hand down blanket regulations? >> i think the general momentum, you know, is increasingly that there's a lot of regulation already on the books around how we should deal with financial services and how we should deal with logistics and transportation, and that each of those agencies and the regulators around those industries are in a better position to understand the impact of ai than having some wholesale regulation about ai generally. i think the risks that we were talking about last year that i was very nervous about is wholesale regulation on ai, which is, you know, we have to limit the performance of these

models, we have to limit how many gpus you can have in a cluster. that made no sense. we're way too early to slow down the rate of progress in ai right now. >> we have talked about the idea of job creation in ai or job loss. i want to play a sound bite for you from larry fink this morning and i'll get you to respond on the back. >> think about all the needs for building out data centers and management. it will reshape our jobs. think about all the jobs that have been lost in society, whether telephone operators, there's so many jobs eliminated. but we have 3.7% unemployment. over time, we create new jobs. and, you know, unfortunately there's a timing differential. in many cases, a geographic differential. >> a lot of people when they think about ai, they hear about new jobs or job decestruction.

the most important word he said is reshaped. when do we get that? even in the beginning of this year, we've seen white collar jobs lost at the likes of google and some other tech companies. how do you think this evolves? >> to be clear, those jobs that maybe were lost yale had nothing to do with ai. there might be ai that is disruptive to a particular product that a customer -- that a company is offering, which could cause them to not need as much -- they might not be as much demand for a service. in general, the losses over the past year or so were companies that overhired for the growth rates. i think the real impact of ai, it's almost better the think of it on a micro basis than a macro basis. it's better to look at it as a company level. if a company can make their sales people more productive,

what's going to happen is those company also have a greater demand for those engineers or sales people. if i can make every sales person 10% more productive, which means they can sell 10% more in terms of services for the same cost, we're going to hire more sales people, not fewer. so when ai is used as a co-pilot or a way of augmenting the capabilities of an employee, you're going to see that the productivity of that particular function goes up, which means the demand will go up. there might be some movement of jobs in that process in different parts of labor, but in a general basis, productivity almost always creates more jobs in the economy. >> so net new jobs. >> even the ones that are in current classified demands that you already are investing in. >> last question, as ceo of box, you work with the hyper scalers and see what they're developing. one of the big things we talk about is the role of google and

the innovator's dilemma it is facing right now. does it disrupt sear to have provide more generative ai to customers or does it hold onto search, its cash cow, what is your view? >> i think first of all, google is in a position where they have to drive in an evolution and transition of the user base over time, from the sort of typing in a single query into a search box to type a question and getting decisions or actions that google is taking. that will take some time, because even us as consumers are taking time to adapt. i think google is in a strong spot to drive that transition. as a technology provider in the hyper scaler cloud infrastructure wars, they are an incredible partner. we have a service called box ai. we connect to different models, including openai and google, and we find their technology to be extremely strong. our customers are clamoring for these use cases around how do they work with their data? google is one of our strongest

partners in this space. >> so do not count them out? >> absolutely not. >> aaron, thank you for coming in. let's get a quick check on stocks. they are at session lows at the moment. the s&p 500 is down. losses in the nasdaq have accelerated. tech very weak, down 1.8%. and we have a news alert on an upcoming ipo. leslie picker has the story. >> yeah, it's our sweet spot here, stub hub is working with advisers to go public this summer. that's according to a person familiar with the matter and confirms a report by the information. i'm told the company is aiming for a valuation that surpasses their latest private round from 2021. that was $16.5 billion, so that would be quite the jump for ceo eric baker, who co-founded the company about 24 years ago. then sold it to ebay in 2007, only to buy it back for $4 billion in 2020 through another company he founded, via go-go.

stub hub declined to comment on plans to go public, but this would support the commentary we heard on the bank earnings calls about expectations for two q ipos. most executives seemed encouraged by this market loosening up. so all of that seems to be boding well for a revival of this ipo market that's been historically dormant. >> i can hear the investment bankers saying we told you, the window is open. thank you. still ahead, consumer spending bouncing back for a second straight month. so what does that day about the 'll inn?ited slowdow webrg you the latest webrg you the latest numbers when we come back. the road to opportunity. is often the road overlooked.

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good afternoon. i'm tyler mathisen with your cnbc news update at this hour.

it just got a whole lot more expensive to get an oil and gas lease on federal land. the biden administration raised prices for the first time since 1960. the original fee was $10,000 a lease, will now be $150,000 per lease and require royalties to be paid for extracted oil and gas. the white house says the fee also provide more money for taxpayers and protect them against any environmental cleanup costs. johnson controls has agreed to pay $750 million settlement with some u.s. public water utilities over its use of "forever chemicals" used in some of its products. the company said is settlement did not mean it acknowledged wrongdoing of its subsidiary, tyco fire products. last year, lawsuits resulted in more than $11 billion in settlements. and kentucky university that is, today hired byu head coach mark pope as the new men's basketball coach.

he will succeed john calapari who seped down to go to oanothe school in arkansas. >> thank you very much, tyler. adam neumann is focusing on connecting people, not through communal work spaces but through community living spaces with his new venture, flow. the company and apartment buildings in ft. lauderdale and miami launched yesterday. i sat down with him to discuss that and what founders can turn things around after failure. >> i am the kind of person that learns more from their mistakes than successes. so all the great things within the past we're going to do again. but then i had time to reflect, for example. partners, i'm lucky to have mark and ben as my partners. >> worth noting that those partners have invested $350 million into adam neumann and flow to date. my next guest also believes in second chances, as long as you

don't make the same mistake twice. joining me now is matt higgins, ceo of rse ventures. matt, thank you for coming in. >> thanks for having me. >> so what you heard from adam neumann there from yesterday, do you believe it? do you think that he's learned lessons from wework that can make him successful? >> he learned the right talking points. in my world, you always look for second-time founders, second-time founders over index on performance. i teach at harvard business school, and one of the topics is how do you rebound from failure. the answer is self-awareness. he exhibited a lot of self-awareness in that interview. he has the right investors, talking about how our board meetings are active and everyone is holding him accountable. i didn't write a check into it, but it makes sense to give another shot. >> so another way of looking at this is cult of the founder. how much -- especially silicon

valley want to believe in founders that sometimes they ignore red flags. how do you know which one you're looking at, whether someone is genuine or whether a founder, you know, hasn't learned from those mistakes but investors so badly want to believe in the story? >> amazing how much investors don't analyze the human. i use industrial psychologists to figure out whether or not the founder has evolved, do they overindex for self-awareness. the italians have a great phrase, the fish rots from the head. so there's a lot of signals that you can look for that investors aren't taught. i think he has learned his lesson, and has a lot of fight in him. >> in terms of due diligence, always important to look at the business model. i asked him if this is a real estate or tech startup. he even brought up an

interesting part, what is tesla, a car company or technology company. how do you look at that in the age of ai, trying to ai wash, let's call it, or put an ai wrapper on things versus they're really doing work in that area. >> if you think about his s-1 he put out at wework, which got we whacked, he tried to turn everything into it's a tech. so i hope he's not trying to frame this as anything other than what it is. stay away from hyperbole. >> matt, stay with us. with inflation proving stickier than expected, markets have been monitoring economic data to predict the fed's next move. let's goat over to kate rooney for more. kate, i love this story so much, because a lot of people don't want to talk interest rates. but the smartest ones do. >> you know what it's like on sand hill road. it is the epicenter of venture.

the fed does really seem to be in focus again. cpi did catch the attention, but a few moeks told me they're checking oil prices to see what it means for the fed. one big impact, the ipo window still seen as tough and a tough time to go public. that's how they cash out and then return money to their investors. so endowments, pension funds, many are watching the ruberic. a lot of people have already taken the pill, as one investor told me. jake abraham of atomic telling me all of this affects the sentiment of limited partners and how much they're going to have to invest back into the venture funds, and if a pension can get a risk-free 5% on a treasury bill, i think venture a little less enticing. tiger global has been the cautionary tale. raised $2 billion for its latest

fund, a third of its $6 billion it was going for. it raised $12 billion back during zero interest rates. all of this impacts on where they will spend. one person skrdescribed it as a tale of two cities. you have ai town booming, but fintech, real estate not doing as well. one investor told me that they are telling their portfolio companies to add dot ai if they cannot raise money. so you're seeing some of those strategies pop up. so replace the dot etf with dot ai. >> absolutely, deidre. >> kate, thank you very much. matt, kate alerted to the discounted cash flow made -- you didn't have to change it very much, because interest rates were at near zero. how much are you now looking at

where interest rates are to make your investments and value portfolio company? >> the interesting part is the vc market is a leading indicator of what is going to happen in this country. >> not lagging anymore. >> before it was leading, putting money to work all over the place. now it's leading. it is still seized up. there's a huge disconnect between public markets where you are getting these crazy forward multiples of 2 1 times. putting dot ai is not going to work unless you talk to people that don't know what they're talking about. so they're going to converge. but this time they figured out, money is not being thrown out and a lot of companies are going to die over the next -- at 12 months. >> there's particular companies in the ai space like an openai. their valuations are through the roof. these are the foundational models with a lot of the researchers and talent at those companies. are those overvalued? >> i think they are.

let's look at arm. arm went out, got bid up, i think it ipo'd in the 50s, went up to 140. as time goes by, investors get smarter. the ai play is real, but they'll stick to the shovels and picks and the microns and long nvidia. and they're going to move away from the periphery that are derivative ai plays. >> software has been a laggard, hasn't really received that kind of rally. >> nor should it. though apple is a sneaky ai play. >> and they have their conversation coming up in june. last question for you, where are you looking now? we had trace stevens on, he's looking at defense tech, hardware, that sort of similar -- >> i'm a co-founder of a company called performance drones. there are two areas that the united states must focus on, building small drones, and electronic warfare. that's what ukraine is showing us. so in the value, it's very hard for defense companies to get funded. so i worked personally as the

co-founder for years to build this technology, the single most versatile small drone in the world and dealing with electronic warfare. >> and you are seeing more government contracts. >> we are, but it's easy to get a government contract to do research. it's very hard to scale. that's still the challenge in the united states. a lot of companies go to die in the valley of death. >> thanks for being with us. matt higgins. we're getting headlines from the kansas city fed president. steve liesman has the story. >> thank you very much. just for one of the newest members of the federal market committee, the kansas city fed who took office in august saying it's a public policy to remain restrictive at this time. he's setting a tight labor market and inflation running above 2% and reasons to stay on hold. he says the fed should wait for evidence that inflation is headed to 2%. inflation, he says, is a surprise to the upside, citing a

4% inflation in the first quarter. he's concerned about a slower improvement in supply chains, which helped inflation a lot last year. among the risks he cited, the returns of goods inflation. it was negative in the report this week. but that is -- he's concerned about global shipping disruptions and high prices of emergency, resilience to high rates from the economy. he says that makes the path of policy more uncertain. and job gains driving up housing inflation. there is good news in all this. he talks about the inbound in immigration easing labor market tightness. he says inflation has stepped down significantly, and the economy is growing well, above trend. the trouble with that, it's that well above trend growth that makes him wary about cutting interest rates. so interesting to note, the reason i wanted to log this in, it's only the second speech he's given on the economy since taking office. we're wondering what he follows

with. >> steve liesman, thanks for bringing that to us. markets are still close to session lows. the dow down about 560 points. with rates spiking and the dollar strengthening, it's not a great day for international equities. sima, what are you seeing? >> it wasn't just the u.s. markets hoping form an interest rate cut this year. the international world was also betting on rates dropping and bringing down the cost of capital. most emerging markets are still sitting on dollar denominated debt, so when rates are higher and the dollar firms up, it gets more expensive for these countries to pay off that debt. while emerging market central banks can still cut rates even with the fed on hold, a regime of higher u.s. rates for the foreseeable future is very difficult for these nations. we also saw overnight, disappointing economic data from china yet again, with exports falling more than expected for the month of march.

so you saw chinese equities underperform and names like alibaba, down 3% to 4%. there was a note from diawa markets, a japanese based research firm that wrote a note saying that they're bringing down their earnings projections for alibaba, which you can see that stock down as well right now. >> just as jack ma comes back a memo to employees, maybe a little bit of cold water there. we've been talking about sort to have narrative changing a little bit in the chinese economy with growth getting better. what impacts are higher interest rates going to have here in the u.s.? >> yeah. similarly for other countries, i think higher interest rates do make the cost of capital a lot higher, and tougher for these countries to pay off. so clearly in this type of environment, if we do see higher interest rates for a prolonged period of time, it's a change in expectations for these countries and investors pricing in a fed rate cut.

that's something that china has to think about, as well. >> thank you. a key dynamic here. we're sticking with international markets. robert frank joins me now to look at the wealthy and passport portfolios. this plays a lot into consumption, right? a lot of chinese want different passports so that they can go and buy luxury goods in other places. >> that's right. it works the other way, too. a lot of americans going over to europe and buying thing there is, including real estate. a record number of americans are getting second passports to hedge their risks. according to henley and partners, the u.s. is the largest market for applications for passports and visas. the american wealthy are adding a second or third or fourth citizenship. they're called past port portfolios, and they're designed to hedge your risks over multiple countries. some cite politics or social unrest. others like second passports for safer business travel,

especially to countries hostile to the u.s. >> the idea of diversification is very well understood by wealthy individuals around what i'm -- but it makes no sense to have one country of citizenship when i have the ability to diversify that aspect of my life, as well. >> america's favorite companies for second passports are portugal, malta, greece, and italy. globally, a record number of millionaires are expected to migrate this year, mainly out of china, russia and some other hot spots. the u.s. still has a net flow of millionaires with an expected 3500 millionaires coming to the u.s. >> i was going to ask you if that worked the other way around, wanting passports here. i lived abroad for a long time before i came here, and people complained about their u.s. passports. grant it, there's a lot of benefits to it. but global taxation, that's one

reason to sort of not hold a u.s. passport. but you say that people in china and russia, the benefits outweigh that? >> we're one of the only countries that taxes your global income no matter where you live and work. if you are a u.s. citizen, you have to file a return. that's a big problem. for many of these people, where the rule of law has fallen apart, they may be out of odds with the government, the u.s. is a safer place for their money. so you're just getting a massive migration all over, just a remix around the world of wealth, just moving to other countries. the u.s., it's just a hedge. >> a tax on security. >> exactly. >> robert frank, thank you very much. for more of robert's stories following the money of global wealth, sign up for his weekly inside wealth newsletter by scanning that qr code or going to cnbc.com. coming up, forget experiences or quiet luxury items. groceries are what millennials and gen-z is spending on.

we'll get into what is driving the supermarket splurges. and another check on stocks. the dow industrials was down as much as 580 points. you can see now, it's come off of those lows. the nasdaq is still the underperformer. the ten-year has dipped below 4.5%.

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welcome back. we continue to monitor the selloff in equities. new data from cnbc and the national retail federation showing a bounceback in consumer spending, despite rates staying higher for longer. steve liesman joins me now with that story. >> consumers continuing to spend. our monitor, we get real credit card data from affinity, we crunched it and came up with 0.4 on the month. same gains as last month, which were a little bit noisy because of the leap day. we took that out for the comparison purposes. year over year, still at 2.7,

pretty good numbers there. the moment over moment came down, it's 0.23 versus 0.27. the year over year did come down, 2.9% from 3% in february. the history shows considerable volatility over we have this negative number in january. it made economists worry. hey, that long-awaited consumer slowdown is coming. it didn't. we had two months of gain. that seems to be a little bit off the charts now, this idea that at least at the beginning of the year, we would see this, and part of this has been by the way, it's helped us -- helped push up q1 gdp forecast. the breakdown by sector shows even results here. non-store retailers, that's your internet, folks, over up 2.5%, and sporting goods and hobys, that's a good number because

it's a discretionary area, and that number has been negative. electronic and maybe acompliances is part of that housing, and we've also had deflation there. higher overall inflation, and deflation has been flat suggesting consumers looking for, what would you call it? value in a competitive market. the government reported this morning that prices for consumer goods fell. so on the input side, deirdre, when it comes to, if you are a ret retailer, your input of stuff, but not input of labor, input of stuff prices are going down, but you still have these rising input of labor costs. >> right. >> perhaps where the minimum wage went up, could be driving prices as well. we'll see. >> there's another piece of this, and that is services inflation, right? >> yeah. >> we've heard of larry fink talk about that this morning, and he said that was the hardest

part to bring down and maybe we're not paying enough attention to that. >> i think we're paying plenty to it, but it's what we had. if you were not paying enough attention to it, you would not have freaked out on wednesday with the cpi, and you would have been -- it would have had a major rally on thursday with the ppi because those input costs came down. the market is very attuned to service inflation. the fed is very attuned to service inflation. that seems to be schmidt just talking from kansas city pegging the idea that service inflation is being driven by titans in the labor market. perhaps you saw it by the way, in that food and beverage number. those numbers are not inflation, so some of the place wes we saw could be gains in prices. >> thank you so much. speaking of consumers, amazon coming off its first new all-time high since 2021, nearly doubling in the last 12 months. in his annual letter, the ceo says he's committed to cutting costs while simultaneously

investing in artificial intelligence. here's what he told andrew ross sorkin on "squawk box" yesterday. >> it's trending down. a place where we see real impact is discretionary items like tvs, or electronics. we're growing our market share at a faster rate than others, but still at a lower rate than we see in a healthy economy. >> for more from that interview and to read jassy's full letter go, to sharecnbc.com. let's take a look now at where younger consumers are spending, and millennials and gen z are spending on groceries, poised to outpace restaurants, travel, apparel, and even fitness. diving into the latest gen z trends is casey. that took me by surprise they're spending on groceries.

>> it's all about the status groceries. they're small luxuries and they don't cost a ton. they can instagram and tiktok about them. not only do they taste good, but there's the sort of flex element that they bring. >> so they're not spending at air one. they're going to you some of the larger chains. is that right? >> yeah. i think the l.a. teens probably are, but otherwise it's, you know, these sort of like the idea of the shoppiest shop, the new york magazine sort of indy labels. yeah, these, like, fancy little spices and things like that. when i was a teen, i wasn't buying fancy spices, but it's a different time. >> yeah, interesting. so we just heard from andy jassy, the ceo of amazon who has a great pulse on the consumer and he said they're trading down, and the sort of phenomenon that's entered the u.s. over the last year or so has been the rise of the chinese ecommerce players, temu and shein, and even my 8-year-old talks about

shopping on temu more than amazon. where's that set in? >> it's crazy there's a new study that the top five retailers among teens, amazon is number one. shein and temu is on that list for the first time ever. i think what you are seeing in your own household is very consistent with young people's shopping behaviors. the thing is young people don't have a lot of money to spend. so the sheins and the temus, they can get a lot for not very much. >> young people really like games and gaming, and that is what shein and temu really play on. i mean, when you go to the site, the first thing it asks you to do is spin a wheel for discounts. i wonder, did they get something there that american ecommerce companies haven't been able to take advantage of? how sustainable is it? you can only imagine they're burning through tons of money to offer those kinds of discounts. >> yeah. i mean, i think the gamification of shopping is a little bit scary when you think about it,

and i don't think it's sustainable, but it's fun while it lasts. >> i guess, and you can get really cheap things. talk a little bit about tiktok because again, you know, that was sort of the first chinese company to gain a real audience in the u.s. and you see others follow. i can see it's dropped off a little bit. >> yeah, i mean, and bring it back to shopping for a second. the gamification of shopping and tiktok makes it so easy where you don't even have to leave the app, but tiktok have fallen off the piper sandler list a bit, and instagram is making strides. instagram was not looking good six months ago even, and now it's number two. so we're really seeing these shifts in realtime. >> yeah, absolutely. casey, wonderful to get your insights. thank you very much. >> thank you so much. let's get a quick news alert. u.s. steel announcing that its shareholders have just voted in favor of the $14 billion acquisition of the company. we will continue to track that

story. shares there are about 2.6%, and before we go, let's get a check on the markets because we have seen session lows this hour. the dow industrials are still down by about 500 points as you can see on your screen. the s&p 500 down 1.5%, the nasdaq still the laggard here, but should note that the ten-year yield has dippebed low 4.5. . i'll join tyler on the other side of this quick break. side of this quick break. "power lunch" is next. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, ...back up, back up... reverse! we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business.

♪ good afternoon, everybody. welcome to "power lunch." busy day alongside deirdre bosa, i'm tyler mathison. glad you could be with us. the dow on pace now for its ninth losing session in the past ten. >> jp morgan after the results of citi group and wells fargo, also following their own reports. we'll have more on those banks congress up. is the market still fed-obsessed or is it now becoming earnings ob obsessed? is that all the session back, nvidia helping to drive yesterday's gain. what's the real driver here? we have the dcla joining us for the full hour. let's begin though with mike santoli at the new york stock exc exc exchange. >> it intensified for a bit. we did get a little bit of a bounce, and whether it's just technical or a little bit cute, the s&p 500 bounced off it