good morning and welcome to "squawk box" right here on c nbc. we're live at the nasdaq market site a at times square. . ooh here with melissa lee. becky and joe are off. nice to see you. >> nice to be here. >> s&p up. we're looking at 20 points higher. take a look at treasury yields. we're going to talk about jay powell's comments which moved the markets just yesterday. they moved them -- well, we'll talk about it. ten-year note, 4.639, the 2-year at 4.951. miss "fast money." >> we did go 5% on the 2-year briefly. >> we did briefly. >> yeah. >> there was a move. >> but now it's down a little

bit. this is what happened here. the 2-year treasury yield topping 5% after fed chair jay powell made his first comment after the hotter than expected data. >> we said it's moving sustainably toward 2% before proemtsly easing policy. the recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence. >> powell echoed recent statements by other fed officials indicating the current policy level will likely stay in place until inflation gets closer to its target. and so effectively, andrew, he's saying the data has been coming in increasingly hot. we've been trending toward it. now the question for the markets is will we have to establish a new trend and is the bar even higher to start cutting rates.

we've seen banks push out in september, which is 68% at this point. some have said maybe none in 2024. maybe it's 2025. >> can you believe we're at 7? >> that's always crazy. i don't think the street should have ever been at 7 or 6. >> five, six weeks ago. >> beginning of the year it was six. >> we have seen literally three weeks ago how it was going to begin in june and there was going to be a cut every month for the rest of the year. >> right. >> yeah. meantime, new this morning, president biden calling for a tripling of the existing tariff rate of chinese steel and aluminum. this is in response to what the u.s. says are unfair trade prac practices. the white house says the current average tariff on steel and aluminum is 7.15%. he wants to try to consider to raising that rate to 22.5%.

in the next hour we're dpoung to talk to white house expert jared bernstein about that topic and so many others. what do you think? it's a big jump? >> it's a hugeup p. while all of these have a political basis, it's basically inflationary. who's going to pay for the higher costs if there are continuing sanctions on oil, steel, and aluminum? >> 100%. has jay powell, you think, consulted with him on this? >> highly unlikely. meantime speaker mike johnson's former aid plan encountered resistance. the house caucus said they would not support it without offsets and concessions on geo security. if have voted to oust the speaker after mike gallagher steps down from the house on friday. it will take only two if all democrats vote against him. we'll bring you more on this story from washington later on in the show. federal boeing engineer

turned whistle-blower will testify before a congressional committee on the safety of the 787 dreamliner. he spoke to tom cause still le o in an exclusive interview. >> should boeing ground the 787 to check the gap sizes? >> i would say they need to. >> the entire fleet worldwide. >> the entire fleet worldwide needs attention. the attention needed is to check your gaps and make sure you don't have potential for premature failing. >> boeing told c kr newsu -- c news they're quite confident. they say the claims about the 787 are inaccurate. meantime united airlines is reporting a loss, much better than the 50 cent loss they had expected. they're expecting better than expected profit for the first quarter and it's announcing its

revamped fleet plan will take delivery of just 61 planes. that's dune from the prior 101 jets and an even earlier plan of the 183 jets. united confirming or there were earlier reports it will release airbus planes to make up for the shortfall. it reached deals with aircraft that will begin flying in 2026 and 2027. we'll speak with ceo of united airlines scott kirby. you don't want to miss that. you look at everything else, and we will do that in the 8:00 hour. >> yep. meantime, we do have some interesting political news. david ellison, sown of larry ellison, gave $929 million to back biden.

it comes as his fiancee larry has refrained from donating in 2024. for context, larry donated $31 million to gp candidates during the 2022 congressional midterms. the move by the biden campaign to gain dauvd ellison's report was a move by biden's campaign manager. meantime trump's criminal hush money trial continued yesterday in manhattan. the jury has partially been selected. the judge expected opening statements to begin on monday morning. meantime the other piece of this that everyone's watching at least in our world is shares of trump media, which fell again sharply yesterday. closing down by nearly 14%. it's don 30% in the last two sessions. a sharp drop coming after the company announced a rollout. immediately afterward when we

talked about this, the worldwide streaming plan would be a platform for content delivery. it jumped a couple percent and went the other way. the content expected to include, as they said, news networks, religious challenges, family-friendly content and other content that they believe is, quote, unquote being canceled or suppressed on other platforms. maybe given how tough the streaming world is for the big players. >> and how much money it requires? >> it's hard to see. but, you know, hope springs eternal for some. >> exactly. especially for this stock. >> coming up we'll talk about the fear of the market. that is next. in the next hour we'll talk real estate and home renovations with the "property brothers"s. "squawk box" will be right back.

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fear is back on wall street as the volcano tilt hits a six-year high. she's a cnbc contributor. thanks for being with us. six-year-high levels seems like a big deal, but in particular when you think about what was going on six years ago because february 18th was a huge

volatility event. >> crazy. huge explosion of volatility at that time. s&p 500 lost 10% in a very short time frame and what traders said was alarming this time around is it was down and yet we're seeing a stampede in wagers with the recent turbulence we've seen over the past two weeks. this is really the first sign of fear we're seeing in the market after rlg going in a straight line up for months now. >> historically it's not that high, but historically when vix had been at 16 or lower, what are they saying how high volatility can get and how it will impact the markets? because volatility is a bet it's up and down, right? it's not necessarily that stocks will go down. >> that's true, mlts, but what's

remarkable is in the past few weeks we've seen bets on it. there were bettss that nvidia would keep skyrocketing or it would be more vol title. people were afraid on missing out on the upside and now we're seeing downside hedging. we're seeing the types of trades that would profit if the stockmarkets did fall. think of these as insurance-like contracts. the demand for stock insurance has increased and this is a remarkable shift from the roses and sunshine we saw in the prior months. and i think a lot of it comes down to inflation, geopolitics, and the path of treasury yields that are finally spooking the market after the stockmarket being pretty resill yejt in the face of rising yields. >> when you're talking in terms of hedging, are you also seeing commensurate trades on the option side for spy and nasdaq

100 in terms of hedging? >> you know what's interesting? a lot of traders are telling me this is concentrated in the vix complex. that's interesting because as you've pointed out, we've seen the vix rise to the highest levels. while there's been a pickup on the s&p 500 side, that's what they're reflecting. people are placing call option bets tied to the vix itself. that's a true bet. we're seeing that in the futures market as well where pricing indicates it's increasing over the next month or two. there's this near-term fear that this whole complex is reflecting right now. >> what do you think are the fundamental reasons for it being a two- to three-month bet? is it just the uncertainty about interest rates at this point and probably increase in certainty now that fed chair powell said what he said yesterday in terms of keeping rates where they are for longer. >> melissa, what i did here, is

a lot of this activity started picking up friday heading into the weekend, and it was the geopolitical fears where people are saying we don't know what's going to happen here. that led to that rush into the vix options bets. it's been incredibly elevated especially when you think about the calm we saw previously. >> do you think traders are thinking in their head we will see that 10% decline, the same we saw during that time? >> i think we're 3% to 4% off. what traders are telling me, it is lake people woke up and said the stockmarket can't go down. it can go down and have a little bit of volatility. i think people forgot that. we have a treasury auction at 1:00 p.m. this has become the hottest thing on watt street that used to be really sleepy. but they're causing a lot of volatility. we've seen that after the inflation data where they recorded the biggest one-day jump after an ugly auction.

i think we need to stay tuned for that today. >> down 10% actually lines up on the technical side of things. that's interesting they're targeting that or thinking about that in terms of the time frame, and on the technicalside, that's where we see the s&p getting down to the bottom channel. that's an interesting channel. gunjan, thank you. two big european companies moving on earnings. we'll bring you details after the break. and today marks 100 days until the start of the paris olympics. later this hour, we'll hear from three athletes preparing to represent at the summer games. teth. bk ox" comes rightac afr is ♪ ♪

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shares of lvmh rising. other divisions include champagne and jewelry. they fell by 6% in the first quarter. they attributed that to chinese buying outside the company. shares of adidas jumping in germany early this morning. that comes after the company unexpectedly raised its full-year guidance and increased its year-over-year increases. it's been selling off its yeezy inventory after breaking ties with the rapper formerly known as kanye west. it will result in additional

sales of around 200 million euros. coming up, the u.s. considering additional sanctions on iran in response to attacks on israel over the weekend. that story after the break. as we head to break, a look at s&p 500's winners and losers. [thunder rumbles] >> announcer: wehners and losers is sponsored by state street global advisers. ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ [thunder rumbles]

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welcome back to squc box. the s&p 500 looking right about close to 18 points higher, melissa. apple may be looking to diversify its supply chain furtherer away from china. tim cook is looking on whether to set up a new plant in indiana donisha. he made the comment after meeting with indonesia's president in jakarta overnight. there are new sanctions in

iran last week. the administration is considering ways to further restrict iranian yoil exports. joining us now is megan o'sullivan who serves in the geopolitics energy project. she's on the secretary of state blinken's policy advisory board. thanks for joining us. it's great to see you this morning. we're trying to see where the whole situation goes next and what the role of the united states can or can't be, what kind of influence we have on the situation as it stands right now. >> good morning. it's great to be with you, andrew. the u.s. has a very sig can't amount of influence on the situation. of course, it doesn't have full control. israel is its own entity. it's not a proxy of the united states arc nlds it will make its own decisions. but the biden administration and international community really does have the ability to set a

framework that can influence the very intense indiana term debate going on with israel right now on how to respond. it will -- it being the biden administration and its european partners and other allies will stress that it is possible to hold iran responsible without a big us rah i will military response. that's a big focus for the united states and others. >> we have already gone from a situation -- let's say before what happened over the weekend, you know, it's unclear -- i'm being polite -- unclear whether president biden's message to netanyahu on some of the efforts in gaza were the appropriate way to go, and, of course, netanyahu continued over the weekend. the pretty at least according to the readout we got publicly, he said, take this as a win and there's no need to retaliate,

and now we're having a con very sausage about retaliating. that's the background to what kind of leverage do we have in all of this? i would have thought that that might have actually given us a better relationship, more unfluns, but it doesn't appear to be the case. >> well, a couple of things. first on the retaliation question. in my mind there is no question that israel will respond in some fashion. it will need to both in terms of its domestic politics, but more importantly in terms of its regional dynamics. what that looks like, what timeline it's on, what mode it takes is still open to question. that's where the debate is happening. in terms of its point, i think it's true that what the united states did alongside other europeans and even with the help of some arab states was very forceful in saying to israel this can be a new strategic position for is reeling and the

region. that holds weight within israel. whether it holds sufficient weight to keep israel from doing something that is ka lats further is still an unknown. i think what we did see this weekend is even though we had a clear falling out between bibi netanyahu and president biden, that the u.s./israel relationship is still very strong. so there's still the ability to, you know, make the case that iran can be held accountable. and i think if i were an israeli leader, you can't dismiss that and you can't dismiss the situation we saw. it's important, significant, wu also fragile. i had one arab leader say to me that the continuation and the deepening of these partnerships we saw manifest on saturday night really depend on israeli restraint. so if israel wants to capitalize on this new reality, it will require a recalibration of their

response. >> do you believe if there is retaliation that you could retaliate, if you will, without escalating and creating more retaliation? >> well, of course, i believe that there is a world in which that is possible. rye tall yags does not have to mean -- you know, the worst kind of retaliation is something being considered and advocated by some as not only striking, israel striking on iran, but striking iran's nuclear facilities, taking this as an opportunity that israel has seen as a threat for a long time. that's the most extreme. but there are also nonkinetic responses. there are cyber kinetic -- cyber responses. there are diplomatic responses. i think israel will want to go beyond the diplomatic, but i think exactly how far it goes toward the extreme side of the spectrum is very much an open question. whether this escalates, again, there are two parties in this

conflict, and so some of that will have to do with how iran sees its options as well. >> how much of this is performative? someone described what iran did as performative insofar as it was telegraphed days prior. having said that, of course, there were many missiles and drones in the air, and if one of theld would have struck, it would not have been as performative. how do you think about that word even? >> i know this is a debate. i feel very strongly or come out on the side that it's very hard to look at the scale of this response and consider it performative. i think that the collective response of israel, the united states, arab states, the uk couldn't have been taken as a given, and certainly iran was taking a huge risk in waging that kind of response. what we can see from that response is that iran, although

it may another want a larger war, it is willing to take the rusk that a larger war would develop because it sees it as essential to establish itself and make clear to the world it's a rise in power in the region, it's a power that can protect itself interests, that it will respond to the attack in syria that happened ten days prior. and, you know, iran seeing itself as a threshold. it sees itself as part of this emerging partnership with russia, china, north korea. russia is courting iran now rather than the other way around. in light of this new feeling of power that iran has in the region, it felt it needed to respond, was willing to take a risk of wider action. >> you just talked about russia and china, we had david sanger here who has a new book out which he describes as the new

cold war, which is a fascinating read. but, look, we have obvious lu a terrible relationship with russia for a lot of the right reasons. with i have this different type of relationship, or at least we have this different kind of roup. do we have any influence or leverage in terms of what's happening in the middle east compared to the leverage points they may have with iran? >> i think their leverage point is quite limited. what's emerging in the last couple of days is the shift in the chinese star tur toward what's happening in the mid east. you saw china's representative talking to regional actors, talking about calm and de-escalation, but coming out very squarely on the side of iran. that's dufrmt. chinese have made clear that in the past when iran has

threatened to close the straits of hormuz, they've come down against that. we do see a different dynamic now where russia, iran, north korea, and china are working together in concert in a way we have not seep before, and as a result, china, i think, is going to be much more allergic to any kind of western, u.s., israeli reaction to try to put additional pressure on iran. this calls into kwegs what some of the sanctions are. we heard national security adviser jake sullivan in a statement saying the world should expect in the coming weeks on missiles and drones without china -- this is going to have more lilted i affect where it might have been swrg they had skoopted in exerting a certain amount of pressure on iran's military capabilities. >> meghan, thank you very, very

much. we'll talk to you again very, very soon. as we head to barack, news out from tesla. elon musk's total compensation in 2023 was zero dollar as, zero, nothing. stock is up 1.3%. >> and with ee're going to talk about this because there's much manufacture bend that. up next, new bills gaining privacy and gaining momentum on capitol hill. we have a reminder of that. foll sawowquk pod on your fafrts podcast and listen to us any time. we'll be right back.

welcome back to "squawk box." we've got breaking news on tesla. investors are being asked to revote on elon musk's pay and overturned by a judge in delaware, the board effectively saying he hasn't been paid since 2018. remember, these were options that had been granted to him. they had not come to him. but it's a very interesting situation. it was the richest pay package in history. at the time i remember sitting with joe and becky in davos when the news broke. nobody thought he would be paid this amount of money because there were required thresholds around the market cap and sales that would get the company over $650 billion in market cap at the time. people called it laughable and crazy. >> right. >> and yet the judge effectively overturned that pay package saying the board was not independent and was too close,

effectively, to elon musk, and did not negotiate she believed they should. this vote or revote effectively would make that case and the judge's decision moot if, in fact, they were to vote in favor of it. the company's continuing to appeal that decision, but irrespective of that, this would happen in june when the company has its annual meeting. in 2018, i think people voted on this thinking they would never have to pay it and they would be super happy to pay it if the numbers ever got to where that i are. >> they did get to where they were. >> they did get to where they were, and he did everything the pay package required. >> and he, therefore, earned that pay. >> he earned that pay. i argued at the time this was the most skin in the game pay package that ever existed. >> yes. >> now, there were other people, clearly this judge, who said, look, he has so much of a stake in tesla already you didn't need

to invest further. now in hindsight with a look back because the context is different, it's more of a challenge, the hopes and dreams are different potentially, does a shareholder in this country say, i'm happy to pay this money? do they say, oh, my goodsness i get to save myself $50 billion. it's an up/down vote. now, the flip side is does elon musk or is the suggestion going to be from the board that if we don't pay you this amount of money, that he's going to turn his attention to spacex. where is the point? fascinatingly if you look through the proxy, the company is saying four of the large effort shareholders in the

company including t rowe price came unsolicited. >> unsolicited meaning they proposed it? >> meaning shareholders -- according to the proxy -- came to tess will and say we will vote. we will get rid of the issue. we don't want to deal with this issue anymore. it's an overhang on everything. the other thing that was announced this morning that was fascinated the. the company's been asked to vote in faerng of mooch they're making argument it will make for more democracy among shaurlds. they don't believe that delaware is actually a democratic place, fair for shareholders, because in this case they see the decision they do, but also that texas is where they've made their home and this is where they want the company to be based. >> we knew that part of it.

it's really the pay package revote that is the new element here. >> the big news and the big question is what that fight ultimately looks like. there's also going to be the plaintiff's lawyer that brought this case has a lot of their own money riding on this or at least the fees they're going to get. >> sure. >> they could mount a campaign on the other side of this, meaning this could turn into a proxy war, if you will, of sorts where you have multiple sides coming perhaps on cnbc and other places. the tesla board saying out of fairness, elon musk did everythings he one says pod to do. we should say, at the time, 73% of shareholders voted in favor of the deal at the time in 2018. >> right. >> there may be others is that could come out and say we don't want to vote in issue of this. >> how is this fair with the board being independent of this

aspect? >> what they're saying is we're sharing with you, dear shareholders, the entirety of the case. the case is now in the public domain. they have effectively attached the decision to the proxy. so if you're a shareholder, you can read through everything, and you can see if you believe the -- >> even does that shareholder's vote supersede the judge's decision? >> i think it would be hard for them to bring a second suit and say this is unfair. >> technically they voted on the first pay package. >> they voted on the first pay package, and what this judge and in truth i should say i think i disagreed with this judge's decision. this judge decided there was not enough disclosure how this deal

was made and not enough independent decision-making in all of that. if all of that is not just in the public demain but delivered to you in a shareholder letter saying here are all the problems, this guy is close to this guy, and they're all inter-related, and, by the i roy, the judge thinks this is a terrible deal, and this, this, this, and this, and you still decide to vote on it in that way, i think it would be hard for a shareholder to bring a new suit, the lawyer bringing a new suit to say, well -- >> this is a new chapter in corporate governance. >> completely. >> any time a judge finds they don't agree with something that has happened at a corporation, then afterward the corporation attaches that decision to a proxy and they say, now you vote and whatever you vote will supersede a judge's decision? >> i think this is a very

unusual situation. it's rare where you have a judge overruling a shareholder vote. i actually can't remember a situation like this. that's why some of the people with so outraged by the judge's decision. and the basis of that decision was on this idea of a lack of disclosure. so if, in fact, you believe it's disclosed, i think it would be very hard. i don't think it sets a precedent, per se, because i don't think there are cases that look like this that have arisen so frequently. >> not cases specifically like this. but you just wonder if this sets a press demts in terms of just the notion of a judge's decision that can be rethought or superceded by a shareholder vote afte afterward. >> do it in a different context then. there's a precedent. let's say two companies decided to merge and somebody thought that the company that's the

buyer spending too much money or wasn't a fiduciary, right, and the judge says this is no good. the question is why is the judge saying it's no good? usually it would be around disclosure or something like that. yes, you could go back and do it. usually people don't go back and do it or the deal is off or the timing has changed or the price would be different. >> i would argue it's an overhang. et i don't think this has been an overhang on the stock. >> i think what's going to to be fascinating -- i think the other fascinating piece would be -- yes, t rowe prices are like this when they come out in favor bay that wajts to be there. you may just say, you know what? i'm happy to pay the money. there are others who may not want to do it.

there's a huge retail audience in. this huge. this is sorts of like disney. >> and they love elon musk. >> and they love elon musk. so it's going to be fascinating to see, and also fascinating to see who coming out on the other side. i would think if you're for this, you would take a shoe to this. now that you know -- >> -- we'll have to ask somebody. meantime, several data privacy bills are picking up steam in the house and standards. emily will kins joins us now wi more. >> reporter: they want to make sure kids are safe online. it's gaining momentum on capitol hill. this contains a new marsh that would seek to hold tech companies accountable. the proposal comes from two top

lawm lawmakers. you've got bipartisan, bicameral, and they would allow users to opts out of advertising. they give them the right to export and deleets their data. it would allow consumers to sue companies for violations of the law and create a single national standard. so superseding some of those state laws that ares out there. it's going to be getting a hearing today on capitol hill along with nine other bills addressing items like protecting those under 18 when they use the internet. one of those bills, kids online safety act, has enough co-sponsors to get it to pass. plus it's got be support in the house. it shields members from under 18 from being harass and and attacked and bullied.

but he would like to see the senate get a vote. they're facing upcoming deadlines. some real big breaks in terms of what we're seeing with the legislation, but a question mark as to whether we're going to see votes coming up on these pieces. >> emily, thank you. emily wilkins, d.c. coming up, going for the gold. the olympic torch has been lit, and the 3,000-mile relay from greece to france is coming up. "squawk box" is coming right back.

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news out of eli lilly this morning. the company saying that two late stage trials evaluating zepbound reduce lsleep apnea by

two-thirds. this will surmount osa trials. the stock is up by half a percent on the back of this. andrew? this is exciting now. the 2024 summer olympics in paris and now just 100 days away. joining us are three athletes competing in this summer's games, maggie stephans, ashley johnson, courtney ryan's here, paralympian on the women's wheelchair basketball team. good morning. how excited are you? look at you guys with the medals on. they're real. so, congratulations. >> thank you so much. >> what are you thinking? seriously, it is 100 days. >> 100 days. the adrenaline is real. it is kicking in. i feel like for some people 100 days is a long time. for us, it is time to get to work even more. >> what is the training -- 100 days out, does the training regimen get different? >> no, i think we stay consistent, we push harder, like, every day is, like, a game

day where just trying to get, like, that anxiety, and that nervousness, channel it into the pool and, like, bring our best. >> is it -- this is going to be a different olympics because i'm thinking of tokyo, covid, all of that, we're finally out of all of that. is this -- >> knock on wood, right? >> yeah, yeah. >> let's hope. but, you guys experienced that, and this -- so going into this -- is it just mentally different? >> yeah, it is different mentally different for me. covid, paralympics was my first paralympics. so to have the opportunity to have family, friends and the crowd this time, it is really special and i'm excited. >> you guys are wearing a lot of medals. what is a shot at -- not just a medal, but a gold this year, do you think? >> well, that's the goal. i mean, for us, it is dream big. >> who is the biggest competition for you? when you think in your head how this could play out? >> honestly, for us, it is everyone. >> it is tight.

it is kind of crazy. i think every single game it could be a one-goal game. you have to bring your best. >> yeah, i think it is going to be really fun to watch us. it is going to be close games. >> what do you think of the caitlin clark effect on women's sports right now? >> i mean, she's a huge name right now. and is really pushing the women's movement. we need more athletes like that who are willing to showcase their sport, showcase the power of women. >> do you feel -- but do you feel a shift happening? i was with a whole bunch of sports team owners saying that the next big sort of investment in sports and the real shift and where the money is going to go is women's sports. i think they genuinely believe we're at an inflection point, i know that's been said before, and so i'm curious whether you think this is an inflection point or something different? >> well, choose us, we'll take the investment. we'll take the sport. but, i think it is very true, to be honest.

women's sports has always been there. there has always been the caitlin clarks, there has always been the women paving the way and now they're getting that shine, that moment and the more that we can capitalize on that, you've seen what has happened even in men's sports over time, and women's sports, we're right there, slowly but surely. imagine the potential and the women that could leave their legacies with that little bit of light, so i'm really excited, i think it is definitely the right investment, and i'm right there with everybody else. >> we have a lot of ceos and business leaders and cmos, chief marketing officers who watch our broadcast. if, i'm curious for each of you, if there could be one product or company that endorsed what you do, who would you want them to be? not an easy question, right? >> not an easy question. >> just looking around, i'm going to say amazon. i think that the way that their trajectory has been up and up and up, and i think it reflects

the way women's sports is moving, the way that that consistency just, like, over time builds a strong company. i think that, like, you spoke about women's sports, and the path that we have been on, i think that, yes, having stars like caitlin clark trickles down to sports like ours, and just the olympic movement, and, yeah, if we were invested in a company like amazon, that would be even more amazing. >> and if andy jassy and jeff bezos are watching, you know where to go. courtney, ashley, maggie, thank you for coming in. we look forward to seeing you in paris this summer. good luck. >> thank you. >> thank you. you can watch the summer olympics right here on nbc net works and streaming on peacock. cnbc will be bringing you coverage throughout the games. i'll be in paris and a special three days of "squawk box," 're going to be bring you live from paris july 29th, 30th and 31st. "squawk box" coming right back.

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it's 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc. i'm melissa lee with andrew ross sorkin, joe and becky are off today. among today's top stories, tesla will ask shareholders to vote again on elon musk's multibillion dollar pay package. a delaware court voided the package three months ago. more on this story coming up. the biden administration directing its trade office to consider tripling tariffs on imports of chinese steel and aluminum. we'll speak with jared bernstein about the move in just a few minutes. and shares of asml falling sharply in premarket as the company missed sales forecasts but stuck to the full year outlook. the ceo calling 2024 transition year for the company and expects net sales for 2024 to be similar to 2023. let's get a check on the futures this morning as we head into this wednesday session. we're pointing higher across the board. the dow is looking to be up by 170 points. the s&p looking to add 20. the nasdaq higher by 57. to dom chu with a look at this morning's premarket numbers. hey, dom. >> good morning, melissa,

andrew. let's kick things off with a check on the friendly skies. we have got united airlines which is flying high to the tune of 5% plus around 30,000 shares of volume. this is america's third biggest airline by market value and it reported a smaller than expected loss for the most recent quarter on better than expected revenues. so beats on the top and bottom lines. it also forecasts current quarter profits that came in ahead of analyst estimates. united at the same time lowered its expectations for how many aircraft it will take delivery of this year given some of the production issues that playmaker boeing adding that it will expand the use of least airbus a-320 nio jets. so up 5%. and we'll get much more on that story later on this morning, 8:00 a.m. eastern time hour when united ceo scott kirby joins "squawk box" to talk all things air travel. next up, shares of take two interactive, fractionally higher, just about three quarters of 1%. very thin trading volume so far. this is the video game publisher

behind titles like "grand theft auto." it intends to cut 5% of its global workforce and slash certain video game projects in an effort to try and trim costs. it is all part of a broader cost-cutting campaign at take two which says those cuts should be finishing up by the end of the year. so take-two shares up three quarters of 1%. we'll end with a check on one of the most popular if not the most popular ticker search on our cnbc.com website. that's trump media & technology. dgt. this is the parent company of former president donald trump's social media platform truth social. we're down about 1% or so. this is following a 14% drop yesterday on the heels of it announcing it is going to look to launch a streaming video service that will look to showcase news, product, religious and family friendly content, that sort of thing. now, that move could put it into a very, very and highly competitive and expensive space for streaming content. so, trump media shares very much

in focus, guys. melissa, back over to you. >> all right, thank you, dom chu. let's talk more about the markets, joining us is barry nash director of rusesearch at ironside's macro economics. i'm not going to ask about your backdrop today as you're normally asked. i'm going to ask whether that changes your outlook on the markets, what he said yesterday seems to match up with what the markets and the economists have started pricing in, and that is fewer rate hikes -- rate cuts, excuse me, this year. >> he didn't change anything specifically yesterday. it has been very apparent since we got the march data flow that the fed was not going to be in a position to start the easing process in june between turning positive for the first time since september '22 and payrolls and cpi. the path for the fed to be able to cut to 4%, the level that i

think would painlessly disinvert the curve and remove all this pressure on the banking system allowing them to finance small businesses, construction, real estate developers, and ultimately the federal government, which is the real issue here, which is being able to place all this treasury supply, there is just no path for them to get there right now. and the data really sealed that, so we're in a bit of a sticky wicket. the only question is does the pressure on the treasury market, real rates in particular, become acute enough that we have a retest of 5%, like we had last october, ten-year real rates moving toward 2.5%, the tips yield, that is. that caused a full-on risk off that drags not just small caps and banks and interest rate sensitive parts of the stock market down, but, you know, the whole market, like we -- like

the 10% we had last fall. >> so how do you assess that risk-reward in terms of getting to the 5% threshold which may be a real deal breaker for an equity rally? you have not only the fed now saying that, you know, it is going to take much longer for us to get to rate cutting at this point, and then you have the issue of treasury issuance and the terrible options that we have seen. we have all these forces pushing yields higher, do you see that risk is actually a greater risk today than it was, i don't know, two months ago, one month ago, one week ago? >> well, it is definitely greater for the second quarter than it was for the first. if you think about the actions of the treasury over the last couple of years, it had a bigger bearing on the direction of the bond market than has the actions of the fed in some ways. when janet yellen was draining the treasury general account in early 2021, that offset the big increase in supply related to the american recovery plan last

year when she announced she had an additional sale, that kicked off the higher rates. they moved to increased bill issuance which is ending right now. the reason they had to slow all the bills that they were selling is because it was draining the rp program and causing the fed to slow qt. so, the way this whole thing is interacting, but my point is there was always going to be far more coupons for sale in the second quarter than bills, they were going to reduce bills, and that was going to need to be absorbed in order to absorb it you need the banking system. and the banking system can only buy, you know, five-year treasuries at 4.5% or 4.6%, if they believe that the curve is going to disinvert, the fed will cut to 4. this is always the sort of make or break moment and the data just didn't cooperate. so, yeah, i see that risk as really elevated. next week we could very well have what i would call a belly

ache and what i mean by that is that issuance next week is all in the belly, so-called belly of the treasury curve, 2s, 5s and 7s. and it may not go well. we won't get any more real negative data until we get to the next round of payroll data and that's a couple of weeks away. so maybe the market can absorb it without going straight to 5 on 10s, but we're in a difficult period where the fed is in no position to disinvert the curve and help the banking system be able to absorb all that supply. >> right. we haven't even talked about earnings season. sort of getting to the thick of. barry, great to speak with you, thank you. barry knapp. >> all right, melissa. other news breaking out of deal book this morning. u.s. federal trade commission preparing to block coach parent cap in tapestry.

the reporting suggests that they are planning to block this deal as of now. and you can look at that stock right now, capri holding sale off about 2% on the back of the news. coming up on the other side, president biden's economic pitch in pittsburgh and his threat on tariffs in china. jared bernstein is going to join us to discuss their plans on these tariffs and maybe we'll debate some of the potential impact on inflation as well. and then later, the state of housing, home improvement and the price surge in everything from property taxes to mortgage rates, the property brothers are going to be our special guests in a little bit. we're coming right back. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk,

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they all choose the advanced network solutions and round the clock partnership from comcast business. see why comcast business powers more small businesses than anyone else. get started for $49.99 a month plus ask how to get up to an $800 prepaid card. don't wait- call today. new this morning, president biden calling on his trade representatives to consider tripling the tariff rate on steel and aluminum imports from china. joining us is council of economic advisers chairman jared bernstein. good morning, jared. good to see you. let's talk about this plan, because it is a big increase, if you will, in what that tariff looks like and what the impact will be. we talked about what it may mean for folks in the u.s., in terms of manufacturing fees, but it also could have an impact on

consumers. >> well, great to be with you this morning, andrew. ever since i worked with president biden, and i've been working for a while now, he's recognized the importance of investing in american manufacturing and he's followed through on that as no modern president has before him. and american steel, which by the way, is among the cleanest, lowest, emissions steel produced in the world is key to our manufacturing agenda. it is also the case that we have to protect those investments and the workers who make that steel from unfair exports associated with china's industrial overcapacity. and that's what's behind what you just described. his directing or trade representatives to consider tripling the steel tariffs on china, specifically. >> can you speak, though, we were talking earlier about -- we're struggling with inflation, in this country, which i want to talk about more broadly in a moment. to the extent that this could have an inflationary impact on

the -- on the price of steel, price, right. >> yeah. >> doesn't that trickle down to the consumer, isn't it going to trickle through the economy? >> always important to make that consideration right now as cutting inflation and cutting prices in fact is a key priority of ours. in many ways, this is a targeted intervention that should hn't he much impact at all on inflation and it is the case that the amount of chinese steel that we import is actually quite small at this point, but given their investment in excess capacity, and particularly the high emissions, the high carbon emissions inherent in their steel, this intervention is important in a preventive sense. i'm sure you're well aware of the problem with economists that have taken the poll that

china -- this is what happens when you ignore a country that excessively exports excess capacity, excess savings, back into our country, leading to a real hollowing out of manufacturing during the 2000s. we want to get ahead of that curve in this case, take action that we don't think is going to have much inflationary impact at all, given the magnitude. but if we don't take action, we're putting at risk one of our most critical sectors. what the president calls the backbone of the american economy, the bedrock of our national security, and that's domestic steel production. >> jared, on the broader topic of inflation, can we just talk about how this administration thinks about inflation right now and really in the context of the campaign, look, the trend lines were all going, it seemed like in the right direction and that was a narrative and a story that was positive for the administration to tell, it is now going the opposite direction. when you look at it in a sort of

totality way over the last three and a half years, it is true that there are large parts of the country where wages have not kept up and they'll look at this period and say they're behind, not ahead. speak to that, to the extent that you have thought that there is an argument that the administration would make around it. >> well, first of all, let me just argue with you about one point there, which is on real wage gains. so for the last 13 months, real wages for middle wage workers, year over year basis, have beat inflation and beat it by a good bit. that's one of the reasons why we had such a strong recovery in gdp and consumer spending. so, it is critically important right now that as inflation has eased, and you're correct that it -- that pace has slowed, but, of course, it was 9%, now it is last seen at 3.5%, that's below

the rate of wage growth. so wage growth beating price growth. shelter prices which are such a pressure on inflation, we continue to try to implement an agenda to lower housing costs and, in fact, housing costs have come down. if we look at the cost of goods, commodities and that's related to our discussion we're having today, the improvements in supply chains has really helped there. where we have seen some pressure is on the services side. here we have a very strong labor market, again, solid wage growth, it is beating price growth. and some of those service components have, i think, been unusually high lately. if you look at auto insurance, medical services. some of those we expect to come down. so, look, the dominant forecast is still for inflation to get back on trend and continue easing. in the meantime, we have to do everything we can to lower costs directly, whether it is insulin, prescription drugs, healthcare, clean energy products, or for that matter going after junk

fees everywhere we see them, that's an aggressive agenda that we're going to pursue. >> here is the piece that i think is hard to get around. i'm just curious what you're thinking, which is, yes, over the last 13 months wages have outpaced inflation for many americans. what i'm suggesting is that even with that, it doesn't make up for the two years prior, and so, you know, we look at the -- people look at the data, and they say all the trends are in the right direction, but then to the extent you see them in the polls, you see americans say they feel they are worse off than they were before. my question is, look, i think that's the math for better or worse. what do you say to that? >> well, i'm not 100% sure what you're getting at, so, we have had -- obviously had a very sharp inflationary episode, wasn't just us, a global inflation, very much impacted the pandemic and of geopolitical

conflicts, and, you know, that inflation went way up and it has come way down. we're not back where we need to be. we have more work to do. but i don't see any other path for us than continue to work to lower prices on behalf of households while we maintain the tightest job market we have seen. as you well know, andrew, there are economists telling us there is no way you're going to be able to maintain an unemployment rate for 26 months in a row and get almost 6 points of disinflation. but, in fact, that's what happens. that strikes me as the correct agenda here, to maintain strong economy, while doing everything we can to help lower costs. now, if that's the correct plan, getting back to your question, we ought to see sentiment indicators improve as those trends persist. and, in fact, we have. now, again, we're not back to where we need to be, but if you look at the university of michigan sentiment index, it is up 30% over the past four months. that suggests to me that this plan is, in fact, tracking as we expect it to.

>> okay. jared bernstein, thank you. appreciate it. >> thank you. still to come, if you're worried about a.i. going after your job, you should also worry about states using it to go after your taxes. the details are next. and later, fed chair jay powell warning cuts could come later than expected. the question for investors is will they come at all? we'll discuss that. "squawk box" will be right back. >> announc: meoworerti n f today's aflac trivia question. what year did boeing become a publicly traded company? the answer when "squawk box" returns. good thing i had aflac. hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. it really helped close that gap. go, go, go! yay! go aflac! go duck! get help with expenses health insurance doesn't cover at aflac.com wish we had aflac on our team. you can! ( ♪♪ )

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>> announcer: and now the answer to today's aflac trivia question. what year did boeing become a publicly traded company? the answer, 1962. welcome back to "squawk box." insurance company travelers just out with quarterly earnings coming in at $4.69 a share. below the street's $4.90 estimate. this was driven by an elevated level of catastrophe losses of $712 million, that compares to $535 million last year. the revenue also short of estimates coming in at $10.18 billion, that stock off close to 3% on the back of that news.

if you're worried about artificial intelligence taking your job, or taking over the world, states are using a.i. to go after wealthy taxpayers. robert frank joins us now with more. of course it is. >> of course. they always find a way to use a.i. tax day may be over, but audits for high earners are rising fast and one reason is a.i. high tax states like new york and california have been sending out hundreds of thousands of audit letters to high earners. it is up 56% from the previous year. accountants and tax lawyers say they have seen audits increase dramatically over the last six months. they're doing more audits through a.i. a.i. programs are helping them find patterns with high earners who may be underpaying or underreporting their income. the big focus here is high earners who moved to other states during covid. tax authorities are challenging many of those moves saying those

moves weren't permanent and those folks still owe their state taxes. another big target is remote workers. new york is going after workers who technically report to a new york office or new york headquarters but live and work entirely in a different state. california's deficit is now $38 billion, new york's expected to hit $10 billion next year. so these states are going where the money is, which is the high earners. add to that, the irs is nearly doubling audit rates on high earners as part of the $80 billion funding they got to hire more enforcement. high earners getting it from the states now and the federal, so unless you're a w-2 earner, if you're a high earner, you're probably going to be audited by either the state or the federal government, if you're in a high tax state. >> do we know at this point whether these a.i. audits are more accurate or if they yield a better result in terms of money back? >> that's going to be the big question. both the irs and the states are deploying a.i., and a.i. has

been very good, they tell me, at finding patterns of people who in the past have underreported, they find a similar profile of other people that they haven't caught before, so you would think it is going to be better than humans at finding the big data patterns where, yes, this is probably where the money is. so, but, again, you know, 771,000 letters in 2022 and increased vastly from there since. so a lot of audits for these top earners. >> robert, thank you. coming up, new this morning, on tesla, company is going to ask shareholders to vote again on musk's pay package. we're going to talk about it and debate it in a moment. in the next hour, united airlines scott kirby will join us, a lot of big news on that company today, their latest quarter, travel forecast, what is going on with boeing, and more. "squawk box" returns after this.

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welcome back to "squawk box." some big news this morning. tesla isgoing to be going to shareholders asking them to vote again on elon musk's

multibillion dollar pay package that they had already granted back in 2018. but a delaware court had voided that package about three months ago. joining us right now to talk about this on the squawk newsline, jay clayton. the appeal is going to happen in parallel, they're going to continue that. but it appears that such a vote, if in fact it was voted in favor of, would make any type of appeal moot. what do you make of this, this idea that they're basically going to attach the decision to the proxy and say, hey, we just -- if the judge didn't think we disclosed everything before, we disclosed everything now? >> well, i think you've captured it exactly right, andrew. here we go back out to shareholders, and we say you have the facts and now you have the benefit of all this hindsight, and if you vote in favor of the same package again, it, to me, i'm speaking just

very, you know, 30,000 foot level, it does obviate the need for the appeal. and, look, appeal process, court process, is fairly messy, and if you go to direct to shareholders and they have all the information, that seems to be a much more efficient way to deal with this, if, in fact, shareholders want to continue with this pay package. what i'll note is, you know, this is all part of, i would imagine, retention of mr. musk going forward as well. >> and that's the big leverage point in this, which is to say, you know, i think the shareholder has to worry or would have to think about whether they should be worried that he's going to focus his attention elsewhere. having said that, as the judge said, he already owns a huge portion of tesla, is he incentivized to keep going, if you will? >> well, shareholders made the judgment. look, whether shareholders knew or did not know of the conflicts and what the judge cited was

lack of process and the like, when shareholders voted on this in 2018, they understood the economics. it was widely reported, i think it was a 25, to 30 to 1 shot this would pay off, the expected value at the time was $2 billion. the shareholders, the so fist separated shareholders knew what they were voting on. >> in 2018, everyone thought this was a completely shoot for the moon, you know, as i said at the time, skin in the game program. but the context was different. everything was thinking, you know what, if magically this actually were to somehow come to be, god bless, you would be very happy to pay it. however, as you know, there are lots of people when they get in a position and they can look back and say, do i need to pay all $50 billion, if i can cut that by $10 billion, $20 billion, would i? i think that's going to be the question today, and, you know,

they did say tesla, that there are four of the largest shareholders in the company that want this vote and want to vote in favor of it, but i'm curious how you think shareholders should think about this, even the ones that voted in favor of it the first time? >> i do believe, and i'm not an expert on the terms of this pay package, i believe there is a retention element if the shares are awarded as planned in 2018. >> for five years. that was one of the reasons i thought that the program was actually still aligned, he has not been granted any of the shares yet and even if he were to get them today, he would have to hold them for another five years. he's with the shareholders for the next five-year ride. >> so i think you're right to think about this in both ways. what was originally granted, if you're a shareholder, what is the laicke likelihood it is goie reversed on appeal and what is the likelihood you have to replace it if it is not reversed on appeal with something similar? a rational shareholder may say

lotte let's vote on this and get on with it. >> are there no issues to be looked to? can a company put up for vote a pay acpackage for work that was done in the past? that's unusual. how do you think about if you're still at the s.e.c., how would you think about this? >> the s.e.c. is a disclosure-based organization. and the real question here is the disclosure sufficient for people to make an informed voting decision? yeah, in this one, of course the s.e.c. is going to look at it and think about it. but this may be the most disclosed and examined pay package in the history of pay packages. >> final thought, jay, there was obviously a plaintiff's lawyer that brought this case and we were talking about the possibility of the plaintiff lawyer could actually become part of a proxy campaign against the approval of this.

what would happen to the appeal if this, in fact, were to be voted and approved, do you think that -- tesla says they're going to continue withthe appeal. part of that would be because they have to pay the legal fees for the plaintiff's lawyer, right? >> look, let's separate -- let's separate that from, you know, the shareholder voting process. it is america. wonderful thing about america is we're going to hear all sorts of opinions on whether people should vote yes or no with the disclosure. in terms of how the court plays out, and whether the plaintiffs at the end of the day added value for the tesla shareholders, that will be that question. did this process add value and should they be compensated for it. >> we got to run. maybe we're playing it down. i don't know. the texas piece of this, they're going to move to texas, that had been telegraphed. do you think other companies will follow suit? >> andrew, corporate governance

has been evolving for 50 years between the states and between the federal government. and the like. and there has been competition for shareholders and corporations as to where they're going to incorporate. i do think that texas, nevada, others are challenging delaware. and, look, our federal system, it is appropriate to have competition. and i don't think -- i don't think this is necessarily a race to the bottom. >> right. okay. jay, thank you for jumping in and helping us through this. appreciate it. >> thanks, andrew. coming up, fed chair jay powell reversing his interest rate pivot, more on that after the break. the next hour, a bipartisan bill being introduced that would provide a regulatory framework for stable coins. we'll hear from the creators of the bill in the next hour. let's look at furetus. we're still looking at a higher open across the board with the s&p looking to be up by 17. nasdaq higher by 50. "squawk box" will be right back.

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♪ i'm gonna hold you forever... ♪ ♪ i'll be there... ♪ ♪ you don't... ♪ ♪ you don't have to worry... ♪ welcome back to "squawk box." jay powell making his first public comments since last week's hotter than expected inflation data. want to get to our senior economics reporter steve liesman with more on the message to the market. steve? >> yeah, andrew, good morning. after speeches by the fed chair and the vice chair yesterday, based both on what they said and didn't say, there is a case to be made that the fed's base case is no longer to cut rates this year. >> the recent data have clearly

not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence. >> on the plus side, powell didn't threaten rate hikes, but added the fed can maintain a restrictive rate as long as needed. it was equally important what the chair didn't say, both he and vice chair phil jefferson declined to repeat the phrase that rate cuts were likely to be appropriate this year if the economy cooperated. of course, the economy and inflation have not cooperated. inflation has gone sideways the past three months, meaning the fed will need several more months of slowing inflation to gain that confidence to cut interest rates. ben emons wrote, it is incredible, but true, powell reversed his december pivot. i would add to an extent. the markets have two cuts priced in, no probability for may or very small. small for june. under 50% for july and it is only september now that the market has a greater than 50% probability of rate cuts this

year. they're not, by the way, off the table entirely. they're still possible with several consecutive months of inflation progress. looks like fed officials have lost confidence in their own forecast for inflation to decline and that's shifted their base case away from the likelihood of those rate cuts, andrew. >> steve, always smart stuff, we appreciate it very, verymuch. look forward to talking to you again very soon. thanks. coming up, the property brothers, they are here, we'll lko them about everything from the housing market to home building expenses. stay tuned. you're watching "squawk box" and this is cnbc.

people couldn't see my potential. so i had to show them. i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. today i'm the ceo of my own company. it's the way my mind works. i have a very mechanical brain. why are we not rethinking this? i am more... i'm more than who i am on paper.

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drew scott. they are the scott brothers, global co-founders. good morning to you both. >> good morning. who's who, that's the question. can you tell us apart? we can tell you apart? >> you can tell us apart? here's the big question i'm trying to understand. it is the question we talked to jared bernstein about in some ways, it is an inflation question and mortgage-related question, maybe to the question we talked about yesterday, which is at this point, given how high mortgage rates have gone, there seems to be asense there is no mobility, people feel -- those folks in their homes feel they can't leave their home because it is just going to cost too much. >> yeah. >> maybe they shouldn't be leaving their homes anyway. it used to be you get a home and you're in this for your entire -- people would be in a home for 50 years, 60 years. now they say the average person moves every three to five years. i don't know who the hell loves moving that much. but you got taxes, real estate fees, insurance -- all this

stuff. it is a better idea for people to stay in the investment, that's why we say if you buy a house, get something you know your family can grow into and spread those expenses out over a longer period of time. >> like you're saying as well, too, there is a housing crisis, trying to create more density. incentives for people to convert their garages into a rental suite or basement into a rental suite. something like that can make it more cost effective. anyone who paid off their home is in a great spot. there are people who had low interest rates and now their term is up and they have to refinance something that is going to be -- their expense is over double -- >> what about all the folks who are thinking of doing renos because they thought they flipped the home, in the next two years. now you don't do the -- you say i'll do the reno because i want to do it for me, because i'll be in this, but also i might have to redo the reno in seven or eight years. >> a lot of people are realizing it is more expensive than they thought. even if it is converting a garage, i have 50, $70,000, i'll

renovate a garage. a garage conversion is -- the cheapest we have been able to do, it is crazy how much things are costing right now. >> when you started, it was what year? >> we were 18 when we bought our first house. '95, '96. >> you've seen the lowest of the lows. the calculus is different. the incentive to convert the garage to rent it, but if it costs you $300,000, what can you rent it for, the ability to recoup that money is a much longer term plan. what are you finding in terms of the opportunities to do the same traditional flipping that you have become known for? >> you need to be aware of what is available to you. in some states, i believe new york is one of them, they offer a cash incentive for people to create an adu. you need to know what is available. there can be up to $100,000 available to you to put toward that. >> that's an extra piece of property on the property?

>> yes. >> converting your garage into a rental adu or building an adu on your property. i think that's going to be a huge part of the solution and if you look at the expenses a homeowner has at home, if you have additional revenue coming in from someone renting a garage space from you, that's more valuable than just looking at the interest rate you're paying for your mortgage. >> okay, but the folks renting the adu, this is just -- what does adu -- >> auxiliary dwelling unit. >> just a garage or something. >> right, a grandma suite. >> are you doing this as an airbnb style of thing or long-term rental? >> long-term. short-term has its benefits, but has some drawbacks and headaches and certain areas of the country have restrictions on what you can do for short-term rentals. for us, for my rental portfolio, we -- for every ten houses that we add to the portfolio, we have one or two we end up flipping. the numbers did work, but it doesn't seem like a flipping market.

you have to adjust into what makes more sense for the current market and the rental growth there is rental demand, it made more sense. >> how long do you keep things in your portfolio now? >> i don't look to flip. the rentals we don't look to flip. we had other opportunities we had where we ended up stabilizing and selling. >> i'm on tiktok and on instagram. >> i've seen you do the dances. >> very good. >> when i see the guys who are desperately trying to tell me how i'm going to become super wealthy by doing this sort of airbnb game, i'm going to actually either buy property and rent it or rent property and rerent it, you know what i'm talking about. >> but there are restrictions. >> what do you make of the whole phenomenon? >> 99% of all the get rich quick people that you see online are full of beep. if everybody could do this, everybody would do this. >> it doesn't stop me from watching it and thinking about it. >> there is potential. we bought our very first house, we bought it for $250 down and

people are, how is that possible? we read every book we could, infomercials and discovered we could do a vendor take back mortgage and found a situation where that worked. su assumed the mortgage. you didn't have to qualify if you assumed the mortgage, now you can't do that, but all kinds of other but they get in over their heads. because they've been watching those tiktok videos. they spend in the worst way, they're not organized. they end up in over their heads. >> what's the biggest mistake? >> not being organize zbld just not being organized.

they don't realize as soon as one of their subs don't shows up it snowballs. >> another huge mistake, someone who listens, my brother jared said, whatever it is, don't listen to random idiots who have no idea about real estate. usually the loudest voice in your group is who you listen to and then you make big mistakes. >> is there a market do you think is the next big one to take off? >> i think detroit's amazing. when you look within a city, a certain area of the city that's starting to redevelop, so much potential, lot of money gets invested, that area becomes a valuable part of the city. detroit, so much money pouring in, so much redevelopment happening. i bet you in 20 years it's going to be one of the most

technically advanced cities. >> i think canada, the government there has incentives to encourage developers to work with multifamily housing as well as rental, i hope they can do some incentives down here because it's really making a dent in the housing crisis. >> jonathan, drew, detroit, dan will like that. thank you very much. coming up, a look at bitcoin's big move. united ceo scott kirby will be our guest. we'll be right back.

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welcome back. bitcoin, reduces the supply of new bitcoins currently price sitting at 62,720. want to talk about the halving. the run-up in the price and also the flip of that which we saw last weekend, you were kind enough to tweet back at me trying to understand some of the movements. explain to the audience what has happened in the run-up and the move lower. >> talking about bitcoin is crashing to $64,000 was a dream, we're up significantly, since the last halving today, four years, we're up 800%, incredible

performance this year to date, about 40%, compared to gold, gold is up 7%. the reason i bring that up, you actually have lost purchasing power if you held gold. inflation has outpaced gold. for the last five years -- when we start talking about this price run-up, all of a sudden, why is the price going up? etfs is a big piece of it. halving is a big piece of it. the government said they're going debase the currency the united states has a debt problem and we're going to debase the currency. over the weekend the price sells off. first, when there's a moment of fear, everybody panics, they still buy dollars. the second thing is on the weekend even though the bitcoin market is open the bank system

is not open, so you can't get net new dollars into your crypto account to buy bitcoin, if you're holding bitcoin you can sell it. a very interesting dynamic, even though you want to buy more bitcoin you're closed out of the system -- >> you're saying that people would have bought bitcoin -- >> they want the price to go down to buy more of it. >> what have we seen since then? we didn't go up a lot. >> we're basically flat -- >> so no one is buying on the heel of the middle east tension. >> now, bit coin is being pulled into the legacy system. high frequency traders when the news hit twitter and the sentiment changed you saw a massive amount of tweets about drones, rockets, a very quick

selloff. there's got to be some algorithm trading going on where people are trading on headline and the folks who are selling likely are selling actual bitcoin, not the etfs because this was happening over the weekend. then the question seems like the natural follow-up, why were not back in the market to buy etfs and on the back of what i imagined, a bullish sign on the halving piece. >> i think market's are forward looking. part of my analysis, we went up 40% because people are already pricing some of this stuff in. russia invading ukraine, hamas/israel, iran/israel. at some point there's a less severe reaction to each one of these geopolitical events. i think people are starting to say, there are problems in the

middle east, again, that doesn't talk down the severity of what happened. but i think the financial assets themselves are becoming less sensitive to those movements and in terms of buying more bitcoin, there's this interesting dynamic, that everyone i know in the hard-core bitcoin community, they bought as much as they can. what is wall street? they're not rushing to go buy bitcoin today and lot of folks on wall street don't understand the halving. over the next 12 to 18 months we'll see the impact. >> the only reason you wouldn't buy today there's an argument that a lot of firms don't have an offer yet. also the view i think by some that the price's still going to come down. i mean, what do you see as the window where the price sits right no. >> price movements themselves, bitcoin is down about 8%, 9%.

there was 13 drawdowns of 10% or more in the 2020 drawdown. when you see that big drawdowns 8% is a pretty small drawdown. my expectation here wall street is trying to time the market to understand, looking at the price levels, but over time what we have found in these drawdowns they're getting less and less severe, the asset itself is becoming less volatile. the upside gets more limited. >> forthe next 12 months for you, potential high upside. potential downside. >> i think the downside is pretty muted at this time. i'd say i don't see it going below 50. o maybe we can get to 150 to 200.

but we go up from here. >> anthony, thank you, sir. >> absolutely. it's now just after 8:00 a.m. on the east coast. you're watching "squawk box." among today's top stories the big one that's everybody's talking tesla is going to z shareholders to revote on the pay package on elon musk, the same compensation plan that was put in place and then a delaware court voided, meantime president biden calling for a tripling of tariffs on imported steel and aluminum from china and house speaker mike johnson indicating he's going to move ahead on foreign aid package in congress, this despite mounting frustration from some republicans that could threaten his job.

plus, a look at futures, pointing to higher open across the board. s&p 500 up. nasdaq higher by 35. as for treasuries, on the 2-year yield, we crossed at 5. dom chu with the pre-market movers. tesla, shares right now are moving to the upside by a percent or so. now, the details, the company is going back to shareholders to ask them to re-approve a pay package for ceo elon mufshg. it was voided by a delaware judge back in january, that package gave musk a record $56 million worth of compensation if all conditions of those contract were met.

the deal was rejected after a judge in delaware called quote/unquote, an unfathomable sum. they asked shareholders to moving the company's state of corporation from delaware to texas. those shares up two thirds of one percent. meanwhile, the world of high fashion, a couple of stocks are on the move. shares of capri holding are down about 2% right now. parent company of michael kors, jimmy choo. it's being acquired by tapestry. regulators in europe and japan have signed off on this deal but "the new york times" deal book is reporting that regulators will look to file suit to block that deal according to sources familiar with the matter. shares of tapestry are rising on

that news. we'll watch that development. a check on tech giant in europe, asmi holding, dutchmaker of computer chips. new order bookings fell shy. a more cautious spending regime for some computer chipmakers. asmi holding, the talk of europe and and here in the u.s. united airlines now reporting quarterly loss of 15 cents per share. forecasting better than expected profit for the current quarter. want to get over to phil lebeau who's joined by the ceo. phil, nice to see you. >> good to see you, andrew. lots of questions for scott kirby. the first quarter, much better than expected.

what happened that wall street failed to appreciate going into the earnings report. >> you know, i think united airlines was a good first quarter, lot of issues and challenges. but there's a structural change in the industry. you can see it. couple of airlines that are outperforming. united is one of them. picking up customers. we had great domestic performance. put all that together even with the challenges, we had a really good first quarter. >> but you're expecting better than expected profits in the second quarter relative to street estimates going into yesterday, this is coming as we go into the summer where you're going be fighting capacity limitations. how much is that limiting your ability to grow? >> yeah, so, you know, there's a lot of challenges in the

industry, capacity limitation, it's pretty remarkable we started this year with deliveries. we planned for 101, we're now planning for 61. the biggest impact is on our cost structure. we hired enough employees to fly 101 airplanes. >> how long do you expect the pilot unpaid leave offer to be out there and the pause in pilot hiring, is that a two-month situation or we might have to extend it further. >> it's the seasonality of our business. we need them at thanksgiving and christmas. it's a benefit we offer. for that small minority who can afford to it's great opportunity for them to take a month travel the world, use their flight benefits. with regard to pilot hiring i

think we'll be back on track this summer and this was just about, youknow, when we had fewer aircraft. take a couple comonth pause. >> last time we talked, last quarter in houston, you said, look, we're taking the max 10 off of our expectations and order book, you're leasing 35 airbus, how tough was it to put that deal together. >> when you're united airlines most of the aircraft -- >> you tried to buy from airbus. >> we talked to airbus, they're sold out to the end of the decade. very tight market with the challenges happening at boeing. what we've done is get our fleet in a much better place. we'll have consistency, steady deliveries, important we'll have

steady for the operation on pilot hiring and training. you know that consistency is really going to help us. >> first of all there's a whistle-blower testifying on capitol hill today. saying the dreamliner is not safe. look, he's on "nightly news" saying these things can fall out of the sky. when you hear that what's your reaction? >> there's thousands of these airplanes, they've been flying for decades. i'm totally confident the 787 is a safe airplane. >> with the faa audit of your maintenance issue as these were taking place what did you say to your staff and the faa? >> safety at united airlines is the number one priority, always has been. by the way, that's true across all u.s. aviation. at united, we have safety training, reporting culture, it goes well beyond the standards that are required. it and's true while they were unrelated we had a cluster of

several high-profile incidents and because of that it's an opportunity we may have a high safety standard. how can we take this standard even higher? we're working very well with the faa. we're embracing this as an opportunity to take the high standards to an even higher level. look, for cnbc viewers who are watching, our focus is on the safety process internally at united. our numbers we're able to operate well while we do this. >> scott kirby, ceo of united airlines. we'll send it back to you. coming up, a bill being introduced to provide reg regulatory. tech investing and redpoint ventures founding partner geoff yang.

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welcome back. futures here pointing to a higher open. s&p looking to be up by 11. nasdaq, higher by 31. treasuries we're watching that 2-year yield as we re-approach 5%. 4.96% is where we are right now. shares of lvmh are rising. offset sales in other divisions, including jewelry. the company attributed that to chinese consumers spending more as tourists outside the country. shares of adidas jumping in germany earlier this morning after the company unexpectedly

raised its full-year guidance in the first quarter. adidas has been selling off its inventory with kanye west. let's talk about stable coins. new bipartisan legislation regulating stable coins. want to talk to you about where they stand and just handicap whether this is going to get through, i know there's some talk by the way about adding this bill with some others that have to do with banker compensation, even marijuana and other things. >> i'm optimistic, i think there's a certain amount of progress that's been made in this space, we have a great

partners in the house, with mchenry and waters. so i think there's momentum, if we can include this with the faa reauthorization. it can be done quite quickly. >> are we talking about weeks, months? what are the stumbling blocks right now. >> we're getting close to the time here in congress where politics takes over policy, and so i hope we can do it sooner rather than later, but if it lands on the side of the equation where we can't get through the political we might have to wait until later in the year. >> i have a question as it relates to geopolitics, lot of speculation that there's been money moved through stablecoin and the others, to places like iran and russia and others, how

concerned are you about that and how that relates to a bill like this. >> well, i think this bill is the first step towards really addressing ill lis it finance. this legislation creates a framework where it rests on to which the dual banking system, it eases the protections of knowing your customer. this is a bill that's written to have 100%, one to one dollar backed. custody has to be in a bank, so you have those protections in place in our ordinary banking system, this is bringing that level of transparency and accountability into bloc chain and crypto currency. take stablecoin and put it into a proper regulatory framework we can have consumer protection and

transparency. >> the worst thing we could do if stablecoins are being misused around the world is to step away and not regulate them the whole purpose of this bill is to protect consumers while we acknowledge the existence and use of stablecoins. further more, senator gillibrand inc included, a receivership could set up. it's co contemplated that with reserves we require and our decision not to allow stablecoins if something did fail we have that safety valve -- >> we also require that if a stablecoin is issued that it's done by its own entity, a subsidiary, it has to be walled

o off. >> all of this sounds very important protecting the u.s. consumer. i'm curious, because usdc, the stablecoin issued by circle is backed one to one u.s. dollars. tethered is the more popular stablecoin, more popular outside the united states, do you have data on how many u.s. consumers are involved with stablecoins outside like a tether they're not backed one to one. >> so, our bill is for u.s. issuers and if you're not complying and not following the law, then you can be investigated. this has real regulatory heft and teeth. if you're subverting the law you can be fined a day. so this is going to preclude bad

actors from being in the u.s.-based system. >> senators, thank you for joining us this morning. we'll follow the progress of this and hope to have you back as this moves through the senate. thank you. >> thank you. >> thanks. coming up, boeing whistle-blower goes before a key hearing today. we'll speak with richard blummen thal. ay tuned. you're watching "squawk box" on cnbc. in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo it's time to feed the dogs real food, not highly processed pellets. the farmer's dog is fresh food made with whole meat and veggies. it's not dry food. it's not wet food. it's just real food. it's an idea whose time has come.

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prospectus at invesco.com. welcome back. some breaking news this morning, tesla announcing that

shareholders will have an opportunity to vote again now on elon musk's multibillion-dollar pay package granted back in 2018, but then delaware court three months ago voided that package. arguing that the board members were too close and that sh shareholders didn't get proper disclosure about the deal and how it was negotiated. joining us now is ann lipton. we talked to you about this case before. this is a new development. ann, it appears if shareholders vote again and vote in favor it would moot the judge's decision. >> it's not even clear, i think this admit in their proxy what the effect will be. they're claiming that they can reinstate the pay package if they get approval. i'm not sure that's legally correct. i don't think it moots the

or original package. it actually, i don't know that there's much precedent for something like this. if shareholders vote in favor the legal favor is not clear. >> i'm going to disagree with you, you're the lawyer, you can tell me, it seems to me if in fact tesla were to have a new compensation plan for elon musk, they would bring that new plan and this is the equivalent of a any plan if you will to the shareholders and how that arrangement was made properly no new case that the shareholders would bring against that new plan, why isn't that the equivalent of that. >> because they don't say that. it's an interesting question why they didn't say it. the way they put it in the proxy is that this is a ratification of the old plan.

which means, what they're saying is, we should give musk $55 billion less than that now because tesla stock is down for his past work. it's not clear to me that something's they can authorize. >> why can't they authorize, because at some point they'll have to pay him something. >> well, they don't have to pay for past work and that's exactly the issue, what they're saying, let's give you several billion dollars for work they've already performed and that kind of generosity that's unnecessary, is could easily be considered waste legally and can only be approved by a unanimous shareholder vote. >> if 51% of the shareholders and tesla is saying by the way they believe four of the largest shareholders in the company came

to them and said please put this to a vote and we'll vote in favor of it. in fact the independent shareholders, not elon musk and his brothers, if they vote in favor of this, the proxies, the decision is attached to the proxy, so you can look and decide that everything about this is bad if you decided and you still voted in favor it. you're saying you don't believe that's legally viable vote. >> yeah, because if it's payment for past work, i mean, let's put it this way, a company decided, i want to the assets -- it's framed as a payment for work he's already performed which means the company that doesn't get any benefits from it. >> let me ask you a different question, if they came out and said, you know what, we're going to create a new plan that's

prospective, same plan, effectively, you basically have to do nothing for one day that would count as the last part, the last five years, and then there's additional payments for future things, would that change the dynamic -- >> absolutely. it would. it raises the question, why didn't they frame it that way? maybe people would have accused them of dishonesty. a new pay package going forward for compensating him for work he'll perform that's the kind of thing, shareholders can ratify. >> do you not believe that he shouldn't be paid for the last five years. >> this is part of the decision, every time he increased tesla's value he was motivated to do so.

people like mark zuckerberg don't take a salary and that's why. >> clearly, you a view he should not be paid. >> he has been very well compensated. in the fact that he owns -- i'm not making a judgment about that, my judgment, all i'm saying is that he absolutely was compensated in the sense of -- >> do you believe a judge should be able to determine whether a board or company compensates an individual -- decides to compensate an individual, this is the issue, whether you think the amount of money is too much or too little, this or that i don't understand. i think there's a fair argument you could make it, i don't think i'd agree with it, around the disclosure issues.

there's a disclosure issue. the question is, should a judge in any state be responsible for determining how pay is decided? >> the way this unfolded in tesla and i think that this is appropriate is that normally it's not the judge's decision, absolutely, and i think every delaware judge would agree. it's not the judge's decision. it's the decision of the board and shareholders. the court only steps in when it believes those eventies were functionally disabled -- >> how are they disabled now -- >> they're not disabled now. the problem, again, this is not a compensation decision anymore. as long as it's framed as paying him for work he already did, it's not a payment -- it's not compensation for his future earnings. that's legally very possibly a difference.

>> i understand the argument you're making, but i also say to myself, if i madea deal with a company, said, look, andrew, i'm going pay you x amount of money and you're going to work for the next five years based on this assumption. at the end of five years, a court decided they didn't want me to get this kind of money, i'd say, that feels unfair -- by the way, in elon's case he had other opportunities. he could have refocused his efforts on spacex. he's an unique individual -- there are other things he can do. my question is, from a straight fairness perspective -- >> here's the problem. >> you don't get that money on that assumption, do you not believe the company should try to figure out some way to c

compensate you. >> can i challenge your hypothetical, you framed it as the company came to you and offered you this money and was taken away. what she found he went to tesla. he controlled his own package. in violation of his fiduciary obligation. >> at this point, if in fact this whole vote is put to a vote with everything that's known again, you can't manipulate anybody. >> but you can't paid for past work done. >> that's a separate -- >> it becomes another set of issues at this point. >> yeah. paying someone for work they've done and not providing new value is very possibly simply not something that a majority of shareholders can approve. it needs all of the shareholders. >> ann, let's assume you're

right, what happens next? >> what happens next is, actually, very possible we see the shareholder lawsuits right away. what i expect shareholders will ask for internal tesla documents, what are known as 220 documents, they have a right of inspection for internal documents. now this proxy for the move to texas, the move the texas, there's a lot in the proxy, i'm not sure there's as much detail on the pay package, so they're going -- i think what the shareholders are going to ask for is internal documents, and a not insignificant chance that the fcc will ask for clarification. the immediate moves i'd expect. internal documents asked by sh shareholders and then

clarification by s.e.c. i'm not sure exactly whether there might be concerns they're having conflicting incentives. >> okay, it's longer debate. i hope we have an opportunity to have it again. ann, thank you for joining us this morning. it's fascinating and thank you for having me. coming up, venture capitalist geoff yang will join us. stay tuned. you're watching squawk box on cnbc.

welcome back. french a.i. startup has been speaking to investors about raising hundred millions of dollars, according to a new report from the information the can company's existing investors. microsoft invested $16 million in the company back in february. it was last valued at just over $2 billion in a funding round in december. it's the pride of paris at the moment. this company. it's a remarkable thing. >> when you go over there for the olympics you're going to visit -- >> absolutely. that's on my list of things to do. >> along with the eiffel tower.

>> absolutely. let's talk about investing in tech and a.i. joining us is geoff yang. founding partner at redpoint ventures. there's a loft enthusiasm in this space particularly on the hardware side, can we call that side of the a.i. picture a bubble and where are we on the other side in terms of software? >> well, i mean, you know, every decade or so there's platform that comes along that unlocks enormous value. everyone builds on the last and everyone historically has been bigger. this one i think could be the biggest. so there's a lot of momentum behind it. you see it in the market today. in the private market, the a.i. companies are getting a substantial increase in valuation, maybe about 3x of other companies. they're growing faster. by our numbers, these companies are growing about 2.5-times

faster. 450% year over year. so, we know this is a very large and vibrant opportunity. >> do you think -- i mean, if we're in a situation where companies start looking at their budgets carefully and we could be very well in that situation at some point in time, is a.i. spending bulletproof effectively? is this an area companies have to de -- >> not everything is butletproof, everything goes through highs and lows. this is going to affect pretty much every company and how they think about their business and how they go about doing it. i think, first, you start with the models and then you look at

the infrastructure that helps implements these models. the companies that will benefit from the productivity gainsover build new business models are all new opportunities. using enterprises a.i. it will be foundational in everything they do, it's almost like the internet became foundational. i think that's how -- that's how it will be with a.i. every trend builds on the other one. this one could be bigger. >> in terms of where we're going to show viewers the nasdaq redpoint cloud infrastructure which you put together, it has publicly traded cloud companies, a lot of them have high valuations relative to the s&p 500, geoff, in an environment where interest rates are higher and they'll be higher for longer, higher valuation companies typically come under

pressure, this group is no exception. how do you start thinking about that in terms of impugning the value of the private companies you're putting new money into the public valuations are under pressure? >> so, let's talk about the indexes. we did this in partnership with nasdaq. we're tracking the top companies in the cloud infrastructure space. very much you can think of cloud infrastructure of the picks and shovels to the modern economy. powers every industry and everything we do, including ordering food and booking travel. in the category it spans three major vertical, operations and development tools, cybersecurity and data and a.i., in many respects the discussion we're having about a.i. should be incorporated in this and we did

it because we realized that the market was missing an index in building cloud native infrastructure. so a lot of the companies that you'll end up seeing in this are going to be pure a.i. companies in addition to the other companies that use cloud infrastructure as part of their business and today they have $600 billion market cap and they're very high growth with the median of about 20% revenue growth in the area. and you know, you look at these companies and certainly they're going to be, you know, the valuation because of all the technology companies in this space are going to be tied to what happens with interest rate and interest rate expectations. you see that certainly in the private market. we think over the long term the revenue gains and revenue opportunities are substantial for these companies. as i said, the market opportunity is enormous for a.i.

and you're seeing it in the public markets with how the magnificent seven is doing and all of them have a profound a.i. story. >> geoff, before we let you do, you're a board member of a whole bunch of companies, you dealt with governance issue, this issue of elon musk compensation this morning, that plan put in place in 2018 that the judge overturned, shareholders being asked to reinstate the plan for work that was done prior, we had a guest on they thought it would be considered wasteful to pay him retrospectively like that. what do you think of this? >> it's a tough one, because, you know, you never seen packages like this before and they're definitely the proposal is definitely carving new ground. but elon musk is somebody that doesn't come along very often

and it's, you know, a lot of things that they're doing and a lot of things that he does really practically only something that elon musk can do. it's a tough one. it's hard to fathom a tesla without elon musk. but they're also going in space that's never been done. i think the original package was very much tied to performance and what happened to the stock price and i think what they're trying to do is reinstate something they decided to do before that, that the court stayed they couldn't do. i don't know what the right answer is, i think it would be very hard comp committee to be on, because it's hard to imagine a tesla without elon musk at its helm. >> geoff, thanks for your thoughts. great talking with you. >> thanks for having me. coming up, connecticut

senator richard blumenthal will preview a senate hearing today, it's an important one, a boeing whistle-blower speaking out. don't go anywhere. we'll back with that after this. to help you see untapped possibilities and relentlessly work with you to make them real.

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boeing has maintained there's no safety issue. joining us now is senator richard blumenthal, he's going to be leading today's hearing. we gotten a preview of what this whistle-blower is going to say, i'm curious, what are you looking for and how it contradicts what boeing is saying? >> what we'll hear today from this whistle-blower is a pattern of behavior that put profits over safety. the speed of production almost over everything else. and it's behavior described as whistle-blowers who suffered retaliation. really shockin i ing reprisals. which itself is worthy of further investigations by our

committee, the faa and the department of justice and boeing at a moment of reckoning. a moment that's years in the making. it promised to be better after the plane crashes of 2018 and 2019 that killed 346 people and it's still failing. >> senator, what should the american public think as they watch this hearing today, and would you step on a boeing plane? >> not only would i do, i do step on boeing planes, and the american public should not overreact, should not panic and should continue to value the great employees at boeing and the products that american aerospace makes. but, at the same time, it should insist on a corporate culture that protects employees who have legitimate complaints about how to do better on the production line. how to put fuselages together better and how to produce products that are guaranteed to

be safe, not produce more quickly but more safely. >> how much do you look at this as a failure of the faa in terms of its oversight of these businesses in. >> i've been critical of the faa and your point is extremely important, the faa has failed in the past to exercise oversight, it's now been insisting on stronger activity, stronger examination. the faa system needed an ja overhaul. >> what's the overall message, though, senator, i mean, what do you hope for the committee to accomplish by hearing the whistle-blower not just to make sure that whistle-blower employees are protected but in terms of that corporate culture that doesn't value reports of potentially unsafe practices,

what needs to happen here? what can you do to change that? >> first and foremost, accountability. there needs to be a continuing department of justice investigation about the possibility that the deferred t prosecution agreement was violated here, not jumping to any conclusions, but accountability is very important. our committee's going to have more hearings, and more investigative steps involving the airlines, and boeing itself ought to be called to testify, which we will do, but longer range, the standards applied for manufacturing have to be reviewed, and that's an faa function as well as boeing. the entire aerospace industry ought to be looking in the mirror and asking itself whether it's doing the kind of work that it should be and really keeping faith with the great employees who are also, by the way,

protected by unions in seattle, not in south carolina, in seattle, in the state of washington. those unions played a part in protecting workers from retaliation that was absent in south carolina. >> so, if that deal with the doj was violated, senator blu blumenthal, what does that open boeing up to in terms of liabilities? >> it opens boeing and its management to potential criminal liability but also stronger fines. it paid a couple billion-plus fines a couple years ago, but there's potential for reopening that prosecution if the terms and conditions of the agreement were violated. >> criminal liabilities, meaning -- meaning what, specifically? this would be for the crashes involving the max, correct? and so, this would be criminal

liabilities tied to the deaths of the people who perished in those plane crashes? >> the liability would be tied to those deaths, but also to the continuing pattern of a broken safety culture and manufacturing defects that were known and concealed or covered up through this pattern of retaliation, and again, not jumping to conclusions. there needs to be further investigation. >> senator, before we let you go, just want to get your quick thoughts on what's going on in the house with speaker mike johnson, whether you think he's going to get a bill passed as it relates to funding for israel, ukraine, whether you think they're going to be separate, whether he's going to keep his job, what do you think? >> there's no mystery about what is needed. ukraine is at a moment of the most severe peril. i visited ukraine five times in the last two years, and i've

seen firsthand not only president zelenskyy but his military team, they will fight to the death, but they are severely outmanned, outgunned, firing only one artillery shell for every ten that the russians fire at them, so the need is desperate. my hope is that speaker johnson will have a package of some kind. it looks like this kind of rube goldberg combination of measures, but the simple solution here is simply to pass the senate's bill, approved by a 70-vote margin, overwhelmingly bipartisan, and whether he'll keep his job or not, i think, is almost beside the point. i hate to be simplistic about it, but our own national security is at a moment of peril. if ukraine falls, putin will keep going, and our troops will be fighting and dying just as

the ukrainians are doing right now, and no one needs to talk about how important the aid to israel is. >> senator, i want to thank you for joining us this morning and talking through all these issues. we look forward to your hearing today with that whistle-blower for boeing. >> thanks for having me. coming up, we will talk markets and get you ready for the training day ahead on wall street. stay tuned. watch watch. you're

little more than half an

hour before the opening bell on wall street, investors digesting comments from jerome powell. joining us now is head of america's asset allocation at ubs global wealth management. jason, great to have you with us. >> good to be here. >> higher for longer, something that markets have been dealing with, but it's now longer-er, if you will? is that a deal breaker for this rally? >> i don't think it's a game-changer for the rally because partly why the fed is going to have to be on higher for longer is because the economy continues to chug along. the consequence, of course, is that is keeping inflation elevated. but if the economy is holding up at these higher rates, there's not a strong reason for the fed to cut. it's not a reason why the markets need to pull back significantly from these levels. >> what are we going to see from earnings season, in terms of companies dealing with higher interest rates, dealing still with higher prices in terms of labor at the very least, and i'm asking you this because part of the key to this, you know, chugging along economy is the

consumer piece of it, and while consumers have been increasing their debt amounts, they've been using their savings, taking out credit card at higher interest rates, as long as they're employed, that's okay, but as soon as that stops, and that starts showing cracks, that's a problem. >> well, what we've seen thus far, at least from the financials, when it comes to the consumer, is that the message is the consumer is still quite healthy, and we're seeing that across a variety of data. you mentioned the credit card data. it's ticking up. when we think about overall wealth, just in the fourth quarter alone, total household weather in the u.s. increased nearly $5 trillion. total household debt, nearly $200 billion. the balance sheets of households in aggregate are in good shape. there's some an ecdotes of stres but it seems to be more a reflection of mixed shift, a lot of services spending still, maybe not as much on the goods side. the consumer is holding up reasonably well. the economy should continue to hold up. >> we might be a couple of bad auctions away from a 5% on the ten-year yield, jason.

as we sit at five-month highs at this point on the ten-year yield, and we could tick higher for various other reasons, is there a number where you think, you know, that's trouble for equities? >> so, i think we kind of think 4.75% is a level where you can get some real stress in equities. it's not just a level. it's also the pace. if you get a move of 75 basis points in two months, that's a bigger problem as opposed to five or six months. if it does shoot up to 5%, you're going to see stress in equities. at the same time, i think you're going to see, like we saw last fall, investors step in and willing to buy bonds, buy duration at those levels and yields could pull back pretty quickly. they'll only stay at those levels if we have a repricing of where the fed's terminal rate is. i think that has to be the key catalyst for rates to stay higher for longer, so it's a bit, you lose on one side, gain on the other. >> great to speak with you. thank you. jason draho, ubs. let's take a final check on the markets before we hand it

over to our friends on "squawk on the street." the dow jones looks like it will open up about 30 points higher. the s&p 500, up about 20 points. want to check treasurys real quick. 4.635% on the ten-year. i want to thank melissa lee for another day of hanging out. >> always a pleasure. >> all this big elon musk/tesla news. i'm sure we'll continue that debate. join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla. band's pack together as cramer returns with david faber here at post nine of the new york stock exchange. s&p is trying to snap a three-day losing streak amid a series of corporate misses today. u.s. bank corp., asml, travelers, jb hunt, market still digesting paul's hawkish comments from tuesday. our road map begins with the fight against inflation. plus, united is one of the biggest gainers on the s&p in

the