With the S&P 500 coming off a new all-time closing high, Carl Quintanilla, David Faber and Mike Santoli discussed the momentum fueling the markets' record run. How concerned should investors be about unwind risk? The anchors also explored the potential ramifications of Wednesday's House of Representatives vote on legislation that could ban TikTok in the U.S. David reports that Jamie Dimon is backing Bob Iger in Disney's proxy battle against Nelson Peltz's Trian Partners. Also in focus: Wells Fargo downgrades Tesla to "Underweight" -- the equivalent of a "Sell" rating, Citadel’s Ken Griffin on Nvidia, bitcoin's fresh record high, the Eli Lilly-Amazon connection.
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Good Wednesday morning welcome to squawk on the street I'm Carl Kingston here with David Faber Mike Santolia post-9 of the New York Stock Exchange Kramer as the morning off coming off that record closed futures mixed as we sit in this brief data vacuum today between CPI yesterday and PPI retail sales tomorrow bonds are under pressure 10-year approaching for two our roadmap begins with momentum fueling this market's record run how concerned should we be about unwind risk we are also counting down to that house vote on legislation which could result in TikTok being banned in the United States plus Tesla quote ain't looking so magnificent that is the view of Wells Fargo the firm slapping that EV maker with the equivalent of a cel rate. Let's begin with this ongoing market rally as we said S&P is coming off that record closed posting its best day yesterday in March a lot of discussion we were talking about the Wells note today about disjointed momentum trade going on in front of Friday. Yeah it has been a little bit agitated now this has been a sort of a fuse that people have been watching potentially burned down this idea that the market was over reliant on these pure momentum winners so last Friday and then this Monday you did see a reversal you saw it really mostly absorbed in the way of rotation so Nvidia down you know 10% high to low other stuff in the momentum basket and laggards took up the slack yesterday a little bit of a reversal it was a bounce I feel like you know it's admirable that the market is able to repair itself this way in the ongoing basis it's a bull market the pullbacks have been shallow they've been brief but it still hasn't relieved a lot of what could be the excesses within it which is you know the the extreme outperformance of things like semis and the extreme reliance on a day-to-day basis on sometimes a handful of names yesterday was kind of a 50/50 market birthday and yet you had the best day in March and you got a new record so I think that's why people are still a little bit on guard about the field position the markets in it you know you mentioned it's quiet on the macro front yields have been levitating a little bit within their range and what that has tended to mean is whatever broadening action you would expect you know if the economy is going to be great it gets halted when yields go up so January 5th of this year was the low in yields it was the high for the equal weight S&P relative to the NASDAQ and so you see this dynamic out there where you know only the secular winners can perform when yields are going up and you're not going to get a rate cut very soon so I think that's where we are sentiment seems pretty elevated some new data this morning investors intelligence pretty extreme so you know it makes all the sense in the world to expect this market to cool off it hasn't done so yet right this was sort of the topic David of Sarah's discussion with Ken Griffin yesterday about there really being two separate risk profiles in the market right now there is the AI trade and then there's a less expensive sort of industrial base trade that he talked about yeah talking about both and of course perhaps not a surprise and not necessarily something our our viewers are not well aware of which is in video looks pretty good yeah you seem to he seemed to think Carl channel checks he kind of likes it yeah he says they're operating at the top of their game he's been doing his channel checks and it looks good it looks good we can we can take a listen I think to what Mr. Griffin had to say to Sarah Eisen none of us know where we are in this journey what I will tell you is the team in NVIDIA it looks like they're really in top of their game right now yeah I mean there's no ethans or buts they have done just an incredible job is like the the gold mining in California those that sold the pics made a lot of money and it's very clear that NVIDIA right now sells one of the most important ingredients in the AI story they've done an incredible job of capitalizing it what's really interesting to see is that the large language models the barriers to the production of a world-class model appear to be somewhat lower than we had thought they were nine months ago or 12 months ago I mean if you look at just recent events you know entropics most recent model release is a real competitor to what's been done at open AI and that's that's one hell of a statement and in fact I think you could argue that they're not an investor in enthropic right I'm not okay I'm not just to see if I'm talking my book yeah sorry no no go go on so so they're competitors we want to find out who the next NVIDIA is I don't I don't know who the next NVIDIA is going to be I don't you know I don't know where AMD is gonna get on their race against NVIDIA I don't know where Intel is gonna get but right now NVIDIA sits in a pretty good position interesting to listen to I mean in terms of powering the large language models that point he made that an enthropic can become a competitor in the sense of perhaps you don't need quite as much computing power and it's not just the hyperscalers who can play in this game that said of course coming back to the overall theme which is NVIDIA is the Levi Strauss yeah exactly the same way they were and you know if you want to extend that a little bit what he implicitly is saying there is what we know for sure is what the market is confidence of and is willing to give a high probability of success for is massive amounts of up front capital investments happening right now there's supply shortages the payoff ultimately down the road for running AI models or creating them is very much up in the air and maybe it ends up just being kind of a broad scale productivity boost type of thing as opposed to you know many many fabulous business models that grow out of it but it's too early to make that call and the market is saying all we know is whether makes sense or not people have to you know invest headlong in this area it's interesting because he also said that as of right now a lot of these LLMs are not that smart they're just good at aggregating what's already existing on the internet and you talked a bit this morning on squawk about the market search for a second yeah savior keeps looking for you know wanting to look at these existing companies and saying you know are do they have the magic and so obviously it happened with Broadcom they clearly are a player in this area and the market revalues it in a hurry like in a step function and then it happened to Dell last week and arguably Oracle this week you know the Dell move which was a significant one when you look deeper into it in terms of what they're actually putting in the data center the Dell server obviously it was the inclusion of the NVIDIA chips the NVIDIA chip is most of the money there the margins on that product for Dell are not particularly large it's not particularly profitable yes they were absolutely a beneficiary of the fact that they seem to have access to chips that perhaps some of their competitors did not but I do think it's important I believe Michael Dell even was open about this it's not like this is a huge profit making opportunity because frankly they're paying for those chips the same way and they represent 75% of the overall value whatever it may be of what they're putting in the data center there's no doubt about that and I think what's key about the reaction when it came to Dell stockings it was starting at 12 times earnings right so when you have a stock that's priced for essentially no growth long-term and all of a sudden it's like wow we got this cycle we can ride for a little while and we are you know and again with the scarcity of ways to actually leverage it in the market you get some benefit from that right so questions whether it's durable but even in that case it seems the real value ultimately was NVIDIA yeah exactly yeah does come back and by the way poetically today B of A takes NVIDIA to 1100 from 925 they say the forward fit the calendar 25 forward PE 37 is within a large range of the 20s to the 60s and they up as MCI yeah on on exposure to the AI server network yeah exactly I mean look we're almost a quarter through the year so we can start talking about 2025 we can start talking about the PE range that that NVIDIA has had in the last couple of years it's all a way for people to say that the story's not over as he calls it ahead of AI Woodstock all right let's move on to the legislation that is in the house today it could ban TikTok in the U.S. over concerns that the social media app is a threat to national security given its ties to China Emily Wilkins is in DC and brings us the latest Emily hey David well yeah in less than an hour now the house is expected to not only vote but to pass a bill that would give TikTok an all to meet them either divest from Chinese parent company ByteDance or be banned in the U.S. but while the bill sped through the house the road ahead is going to get tougher for this piece of legislation TikTok has ramped up lobbying efforts against the bill and the CEO shows he chew is expected to be in DC this week for meetings there are dozens of video creators on TikTok met with lawmakers yesterday and they also held a press conference with a handful of progressive lawmakers who oppose the bill including Maxwell Frost who said the roughly six-month window that TikTok would have to find a new owner under the legislation would not be enough time it's unreasonable to believe that 180 days that we that a buyer will be found and that the deal can move forward which would result in TikTok being banned whether it's a ban for a year or two years or six months a ban is a ban the bill also lacks a clear path in the Senate right now spoke with senators yesterday and they told me that they share the national security concerns that the house has but they've got some other issues that they're worried about these include things like freedom of speech whether the bill singles out and punishes TikTok in an unconstitutional way and the ramifications of getting rid of a popular app among 170 million American users Congressman Mike Galver who chairs the House Select Committee on the Chinese Communist Party and is one of the bills made backers has said that this bill has been tailored to avoid past pitfalls to other bans on TikTok such as measures that are too targeted against a single company so what our bill is is a regulatory framework it is prospective for companies that are controlled by a foreign adversary is a regulatory framework not a punitive framework and therefore I think any concerns over bill of a tander simply don't obtain in this case senators also told me that they're waiting to see what the house does before taking a closer look at the bill so this is gonna be an interesting vote to watch if nearly all House members support the bill were not expected to be unanimous but it could be close the pressure is really going to be on the Senate to act David thank you Emily Emily Wilkins in DC and of course an interesting journal story today about how perhaps the company may have been surprised at just how swift this effort swiftly this effort was undertaken somewhat furtively as well so it's sort of it was a surprise they kind of thought they were in a good place when President Biden for example joined TikTok around the Super Bowl I continue Mike to just focus on what would it mean if it actually happened how do you do this you know you you have enormous amount of potential value here in the US in terms of TikTok and what it means the parent company bite dance though frankly bite dance has an enormous business in China don't forget and it's easy to say well you'd have to just to vest it or close it down much harder to do and again the source code and the algorithm they're not going to go along with this thing and so it just becomes a very interesting but difficult dance if in fact this actually is something that gets passed right obviously it also would be challenged in the court so who knows when it would actually have to occur yeah yeah it is it is kind of amazing in that sense and also you know there's even a sense out there I mean had they made the case about the national security threat specifically in terms of the harvesting of data the the use of of user details or is it just look this is this is a channel through which you know hostile actors have have propagated messages and the Chinese you know authorities maybe can have some sway so whether that matters or not probably not for the vote but maybe not to but it's not clear that they have made that case I don't think Carl I'm not aware of a specific instance since they've cited where there has been some potentially Chinese control that said of course it's something you're not going to see most likely if it's done well although Sorkin tried to get you know it out of cruise in the last hour on squawk saying do you have evidence yeah even classify that you can just share generically about risk and and hard to get by the way comment from the Chinese foreign ministry spokesperson saying this kind of bullying behavior is used when one can no longer win fair competition the US will only hurt itself there are central argument is that this is going to erode confidence of international investors in deploying money in the United States yeah I mean you know one of the um retributions if you want to call it that at some point bite-tense will go public it certainly won't be here in the United States one would imagine it would be in Hong Kong and by the way would be one of the largest single IPOs and we've talked about the fact that the company most recently valued were at least trading in that secondary market that existed about 220 billion but that may be quite low given how much cash they have the 25 plus billion that I'm told in operating income this company has I mean you can think about a multiple there in terms of what this thing really may be worth even a 10 cent multiple gets you to an enormous value one of the most valuable private companies in the world by far look for that vote beginning at 10 a.m. Eastern before the house GOP goes to their retreat we'll watch them retailers today Dollar Tree the biggest laggard on the S&P this morning as they're going to close hundreds of stores and they do guide below on Q1 revenue we'll get to some autos we mentioned that downgraded Tesla a lot of news in the airlines specifically regarding that Alaska Airlines flight a lot more when we come back what's on the horizon for financial markets at P. 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Jim a leading global asset manager support for this program is provided by Chevron demand for energy is projected to continue rising in the future to help keep up Chevron is increasing their U.S. oil and gas production and they're innovating to help do it responsibly across their operations including their Gulf of Mexico facilities which are some of the world's lowest carbon intensity operations helping supply energy that's affordable reliable and ever cleaner that's energy and progress learn more at chevron.com/ meeting demand welcome back it's three weeks three I don't know which three do you do anyway three weeks until shareholders vote on that proxy battle that is ongoing at Disney where Nelson Pels and Jay Rizzillo are trying to get seated on Disney's board of directors and both sides are fully engaged as you might expect in trying away shareholders to their side with various presentations hitting almost every day one from either side in terms of arguing their case obviously try ends argument hey the performance of the stock price has not been good over a long period of time we need to be on this board to ensure that in fact shareholders are looked after Disney for its part spending a lot of time with its own shareholders in fact I know Bob Iger Boston Baltimore Washington DC you name it sort of visiting with various shareholders because again this is sort of the heat of the moment right now in terms of both sides making their arguments large shareholder base is being the key so the institutions that control many of those shares as you might expect are getting their chance to to hear from Mr. Iger for example in my various reporting and just talking to any number of people as I try to do on occasion the Disney has come up and in fact I can share the following from one Jamie Diamond our viewers may know who that is of course the CEO and chairman of JP Morgan he's decided to weigh in here with his own comments in terms of where he sees things going and what he wants and gave me the following statement Bob is a first-class executive an outstanding leader who I've known for decades he knows the media and entertainment business cold and has a successful track record to prove it it's a complicated industry filled with creative talent requiring the unique expertise and engagement skills that Bob possesses putting people on a board unnecessarily can harm a company I don't know why shareholders would take that risk especially given the significant progress the company has made since Bob came back that again a comment that I was given from Jamie Diamond I should make the point that JP Morgan has advised Disney in the past on defensive matters for example in dealing with activists so they are and have been paid by Disney that said Diamond I don't recall him ever weighing in on a proxy battle previously and so I think it was newsworthy his interest in doing so here obviously he is squarely behind Bob Iger and I think sort of the background in some way to those kinds of comments is simply listen you know shareholders may believe that that in these kinds of situations you know it's not a big deal to add even just one board member but CEOs argue differently you know they would argue as Jamie is here that restructuring the leadership or adding one or two different voices that are you know that are not necessarily I'm not just discordant but actively working against the CEO as Bob Iger would argue is the going to be the case here really is disruptive in what is a transformational period for Disney and that gets the sort of this idea of risk you know whether or not right or wrong Bob Iger views much of this try-in effort really as Ike Perlmutter's effort and Ike Perlmutter and Bob Iger do not see things the same way Perlmutter has tried to get Iger fired in the past certainly didn't want him to come back and it is the perception I believe that if in fact try and were to win one or two board seats Iger believes that it's Perlmutter who is behind it and therefore would make his life very difficult and so you do have to raise at least the question of the instability of management if in fact try and were to win a seat or two would you keep that management in place would they be willing to stay would Bob Iger say you know what as much as I love the company this is not something that I'm interested in dealing with so that certainly is something as well that shareholders may want to at least keep in mind at this point as we continue to monitor guys what is going to be an interesting vote the institutions play the key role here not that retail is not of great importance and both sides making their strong arguments as to why they feel a of course that to resulo and pelt say they should be on the board and as much that Iger and and Disney says this is not what we need right now we are on the right course we do not need so-called rabble rousers in the boardroom we're going to make life very difficult in terms of getting things done you know and David as this battle has gone on arguably it's become harder to argue that Disney has somehow misplayed the hand that it had relative to traditional media competitors if you just look at the way the stocks have performed and the valuations that still are in place you know there's always been this question of you know okay exactly what should have been done differently you can't go back and not by Fox the Fox assets which is one of the criticisms of of pelt it was a bad deal while at this point you have what you have yeah and you're right I mean pelt they would make the argument obviously significant underperformance during a period of time versus the S&P sure but if you compare it to a paramount or a Warner Brothers discovery it's a very different story to your point now they're different companies and parks obviously helps fuel the earnings at Disney and they have used that to try to create a profitable direct to consumer business and Carl that continues to be the key question that many of the shareholders have in terms of when will they get to that profitability obviously last quarter for Disney was a major major advance in terms of those those goals right what is it what words extremely confident yes in Q4 yes watch it closely but Jamie's right about it being a complicated business full of artistic personalities difficult management exercise that's good stuff we'll take a quick break here count down to the opening bell a lot more squawk on the street when we return now is the time to accelerate innovation T mobile for business is powering Formula One Las Vegas Grand Prix operations and epic fan experiences with secure reliable 5g connectivity because an event this big and this fast deserves a network that can set the pace see what our 5g advanced network solutions can do for your business at T mobile calm slash now view 5g device coverage and access details at T mobile calm awaiting the opening bell here take a look at futures one last time as we get set for the bell and the CBC real-time exchange the big board this morning it is L of S investing and wealth management company for women built by women founder CEO Sally Crocek is going to join us on set in about an hour and nothing has that gets deal makers a community of female sea sweet leaders and investors speaking to which Mike got a lot of retail news out of Williams Sonoma and Dollar Tree and Petco - you did dollar tree is you know a little bit of a messy set of guidance I guess is the way the street is taking it anyway gonna be closing a ton of family dollar stores remember that was the merger stock opening up down eleven and a half percent even leading into the number there was a some questions around you know the pacing of tax refunds and and all the macro stuff that's gone into that and it seems as if just you know even though the you know the consumer in general has been hanging in there and the question is is exactly how much fatigue you're seeing in in that segment of of households so this reset lower basically the the guidance sort of bracket the consensus but definitely with a downward skew so seeing the the results there say you know it's almost thirty billion dollar market cap company but Walmart has been the clear preference along with Costco in anything related to broad discount those who are positive on the stock Mike I think making an argument that the underlying comms for Dollar Tree are actually accelerating on a two and a four-year basis yeah I'm just reading some here notes here so the notion this is a setback to the bull case perhaps overblown at least that's one side the other being hey listen they came in 16% below the street so well that's in terms of in terms of guidance yeah and they there was a little bit of a sense out there they were going to benefit from an extra week in the fourth course so it was a little messy and and sort of seeing seeing the impact right here yeah William Sonova on the other hand you know still still doing pretty yeah nice take take a look at the chart up 10% almost this morning 544 beats 515 gross margins beat comms fell a little bit less than expected nice 25% div hike they boost the buyback they actually tweak higher their long-term operating margin guidance interesting given well sort of the atmosphere around housing in general Mike mortgage today four week high as the fixed goes back below 7 yeah that that trade has been recharged a bit you've seen you've seen the builders themselves do a little bit better and yeah we're testing just exactly how sensitive people are going to be with a down tick these little moves in rates Williamson over seems like that pricing power and all the rest of it so it's not so much big ticket appliance it's just they seem to be in the general area of merchandise people want to be I know the JP Morgan desk this morning pointed out that the XHB the home builders ETF outpacing the S&P pretty nicely month to date and over the past month by about 300 basis points yeah it's been fascinating I've put it up multiple times that the home builders and the semis have moved really close with one another even over a one-year basis you wouldn't think that it could keep pace with semis but it's almost a similar thought process behind it which is massive supply constraints therefore pricing power you know also long-run secular drivers that are you know hard to necessarily address so demographics shortage of homes is and of course we know what's going on Sammy so I mean it's a smaller group it's not actually you know something that's going to drive the overall market but if this is one of those arguments that if housing gets recharged you know we had our downturn there manufacturing is perking up inventories look like they're in a good place on now one one group will say well that could rekindle inflationary pressures the other says you know this is this is essentially this sort of rolling reset of the economy that's already happened and so consumers are getting a little hesitant you're seeing a little bit of fraying in the labor market you know the Fed's own labor market indicator has rolled yep pretty decisively I think we should take the Fed at its word palette is where when he says the risks are balanced right now you know he really wants to emphasize that I think they're cognizant of not waiting too too long because of June's the first cut it's 11 months at pause at the highs and rates that's a long time and the only longer one I believe was ahead of the financial crisis well there was one chart circulating yesterday from NFIB you know they ask employers is quality labor your number one problem and that has fallen off a cliff yeah which a lot of people read as being quite bearish for the labor market yeah exactly I mean it's interesting because NFIB directionally does correlate with all the macro stuff but it's super small businesses right it's a lot of owner operator I think 75% is like under 10 employees or something like that but still it does have a lot of materiality for the big picture in terms of can you find people yeah although what gets housing going other than lower rates lower rates and pent up demand I think is the idea and the idea that the people who have waited to put their homes on the market because they were locked in that just sort of wears off over time right you just have to do it or you have to need a bigger place whatever it is yeah I think that to the 5d's right David yes that's what you love those 5d's diapers diapers diplomas diamonds divorce and death right go life goes on yeah it does it does but right now we still have new home sales is a percent of overall far higher far I mean 30% or more when it's usually 10 yeah in a way it's a it's still a clogged market in that sense so it's not a property normally yeah guys we mentioned Tesla at the top of the program but we haven't gotten back to this Wells Fargo downgrade a growth company with no growth seems to be one of the key thesis they are laying out there growth in core markets has moderated with EU and China flattish in the last 12 months US down since the second quarter says Wells more concerning they say is the effect of price cuts are moderating with the second half volume up only 3% that half over year go half despite pricing that is down 5% so the cuts that were resulted obviously in in a reduction in profitability of as much as 6.8 thousand per car yeah they do they go on to say that in the wake of price cuts you wind up with as they say low release residuals we've seen that at some of the rental fleets disgruntled customers and the possible loss of the brand premium 125 is 30% downside yeah and they were at 200 it's not quite as draconian as the Deutsche downgrade earlier in the week where they went to 218 but yeah that's what's a bearish that's even below Bernstein which has been at 150 forever exactly I mean the radically cut earnings estimates in the Wells Fargo downgrade they're looking for $2 this year the consensus is 303 they're looking for $1.90 in 2025 the consensus is 416 so obviously the call here is that the street is asleep in terms of the longer-term dynamics and just for benchmarking sake the company earned $4 in 2022 so in terms of that sort of static profitability at best and now it looks like it you know if Wells is right the slide it makes it look much more expensive obviously as a stock 90 times next year's earnings I think what I would be looking for is the stock to actually rally on one of these calls and where you have this sense out there that yeah doesn't look great but it's in the price and we already have people washed out what's interesting too is that Morgan Stanley today Adam Jonas actually lifts the US autos as a sector it talks about better capital discipline better capital return lower spending on EVs and AVs better restructure portfolios better collaboration 10% upside he says to our targets across the US auto space yeah interestingly 10% upside 7 if you exclude to be still loves Nestle he does is you know big integrated bullish call on on Tesla in terms of the price target but it seems like he's sort of articulating the GM story of recent mites where there've been some really interesting executive moves in the past 24 hours one was that they might have it the former Apple executive who joined to be their softwares are as leaving and then they hire this former Tesla executive to be the new head of manufacturing right GM and so and just the idea of like we're just going to throttle back on battery vehicles to some degree and share some too cash to shareholders as of course GM has done so stock has had a decent run so it's it is interesting and you know you wouldn't think that that you would make that call if you thought the economy was gonna you know obviously stumble hard finally Musk did I think did make his way to the German gigafactory in the wake of that arson attack we might have some video as they look not they got power back now looking to give more clarity on when they can actually resume production the other story I would add guys is this piece out of the South China Morning Post about BYD pricing their new compact SUV at the equivalent of 12 grand US $12,500 for a compact electric SUV amazing Wow which has it's almost like a disposable car exactly like so many things you send us clothes you can put them in a for a year or two I'll get a new one like fast fashion for the car I was gonna say this next model that Tesla is looking to come out with is kind of a compact issue model to the model to so it's tough to be profitable as it is and that's why we're gonna talk to Dan I was next hour about why he still thinks this negative sentiment on Tesla's overdone sees a trillion dollar valuation still possible as these new models lower-cost models roll in channel checks it's been doing his channel checks sorry guys I didn't rent a Tesla a couple of weeks ago and would you think Mike he was fine there's a real souped-up guy that's all you got to say it was massively impressed with the supercharger experience oh that's good that I'll say yeah okay guys alphabets back in the green for the year kind of interesting to note given a lot of concerns there as we've discussed the innovators dilemma sort of a bigger story playing out over a longer period of time in terms of what they will do as they respond to generative AI and what that may mean to search and meta shares are down it's been an interesting week for meta down up down in part you know they would be a beneficiary seems little doubt if in fact tiktok were to actually be banned in the US now despite what may be a positive vote from the house today sending that legislation on to the Senate as Emily Wilkins detailed there's still quite a ways to go here for this thing to become law meta would be a beneficiary Donald Trump former president Trump agrees said said as much on Monday which is why he's reversed himself on his band at tiktok but did you guys notice meta shares on Monday were down sharply oh yeah yeah and you did wonder whether in fact was because of some of the comments that former president Trump made on squawk by I wondered that too and I just didn't know either Mike but I heard from some people they thought it was you can't disprove it for sure and it's plausible I would just say it's very difficult to separate out the fact that that was day two of the momentum you know go check that we got unwind and meta if you just look at the S&P 500 momentum basket it's Nvidia 12% meta 11.4% so it's hard to know if it really was that and we did bounce yesterday in those in those categories it did and it and it had a decent bounce yesterday and guys a story again from earlier on Monday that I didn't really pay close attention to even though we had focused on it a bit was first when choice hotels gave up its bid to try to acquire Windham remember they've been going after directors they had an exchange offer out there was a very aggressive hostile offer there was concern that that had been raised numerous times by Windham about the antitrust effects but I would note an interesting choice here by the FTC yesterday that I can rarely remember seeing in the past they didn't comment on the potential antitrust ramifications of this deal while the while choice was trying to buy Windham but they chose to come out yesterday and say hey you know what we were taking a close look at this thing and just so you know we've thought it would have been a really serious competition question that would have been raised and so the fact that they decided to not pursue it is a win for consumers I thought that was odd given there was no reason for them to weigh in whatsoever they had not done so during the course of choices attempts to acquire Windham and by the way it wasn't clear that it even fell apart as a result of antitrust though that certainly was one of the reasons raised key reasons by choices to why they didn't want to win them why they don't want to engage it was just that that exchange offer never found takers the arms never got interested in this deal but anyway just I thought I mean we chose to weigh in after I guess it would seem gratuitous unless they felt there's value in you know putting that flag out there and saying this is the kind of thing if you're considering it we wouldn't look too kindly that is the reason that is the reason they're trying to stay relevant I guess over there yeah yeah meanwhile also are in the travel space at Goldman initiating some of the cruise lines they go to buy RCL and CCL they talk about this bear case that's been emerging regarding sort of a wind down of the pent up demand but they argue that there's better pricing initiatives more structural things going on in the business that keep them bullish the other thing is this page one New York Times piece about that Alaska Airlines flight where the door panel blew out the times reporting that engineers were concerned enough about the flight that someone to take it out of service airline decided to keep it in service long enough for it to get back to Portland where it could undergo maintenance not really having an impact on air bus although Boeing shares lately are almost retracing the trip up from the October lows yeah they're under some pressure just a ton of street commentary about it you know for the most part it seems as if people are just saying it's it's production is going to come back you know this cap that on production in terms of the max is not that relevant because they're still operating intentionally under it for now but it still defers this moment of real lush cap free cash flow generation that is the basis of all the the bullish calls on the street I mean you know you look and say I think it was Baird who still likes to stop saying okay the 10 the 10 billion free cash flows maybe more like 2026 and that's the basis of their price starting so it's been a struggle for for Boeing to kind of find its footing because it seems like the second round of all this when we had to kind of rewrite the schedule for when they were really going to be profitable I guess the other question is just given the manage the pressure on management and scrutiny and everything can they be a company that says we're fine on all cylinders we're just harvesting a bunch of free cash flow and you know maybe it's not the biggest priority as it as it once was you got a show that you're spending to make sure that production is locked down does there become a question at some point about the words culpability I mean just what exactly has been going on longer-term with this company I mean given the commentary of their customers the CEOs of the airlines and you know really turning up the heat I guess it should be a question I look at what Southwest said yesterday by the way Jeffries does up Southwest today but only to a hold but that's a that's a very much a Boeing story yes at Southwest finally Mike I wonder if you'd touch on Bitcoin 73k today all-time high a lot of discussion about how much the feds watching this as some of these ETFs cut fees to draw in those flows I don't know if the Fed had first of all I guess you would look at it as a you know does this show frothy financial conditions and some level of speculation that they wouldn't want to stoke by cutting rates you know arguably I guess it's part of that equation and then the question of you know financial stability I don't really think it plays into that I don't think there's a right or wrong price for this thing never was you know at 12,000 or at 60 or 70 it's much more about you know gold's at a record people wanting to find alternatives and as equities go higher you know in theory if you're rebalancing into the everything else basket it seems to be there so I don't know I certainly not been right about it up to this point so we'll keep an eye on it meantime we'll watch bonds as well we mentioned some of the elevated yields earlier on today no data although we will get a 30-year note auction later this afternoon after the 10 year yesterday was a little sticky meantime dows up 64 S&P split down seven be right back keep your eye on Lily today bringing on Amazon and the pharmacy unit there to deliver prescriptions direct to consumer via its via its service Lily Direct that includes Zepbound David Ricks guys I don't know if you saw was talking at the Economic Club of New York yesterday saying consumers want a direct relationship with the product provider because I haven't been to a department store in 15 years and a pharmacy is kind of like a department store interesting yeah well certainly no love for the pharmacy benefit managers and everybody else oh yeah Mark Cuban I'll tell you that meantime dows up almost 70 back into it welcome back to squawk on the street our Bob is not he's here taking a closer look at the open at least so far Bob thing is it's one of those days again where let's sell off technology let's buy a little bit into the broader market just take a look at what's going on today I don't find this terribly disturbing I think it's healthy for the market we see energy stocks doing a little better bank stocks material names doing a little bit better overall consumer staples actually were up tech is generally down there you see the sectors that you see what's moving on the upside and what's on the downside of course the big cap semis this is one of those days you know you just impulsively pull back on some of the biggest performance for the year here so you get the AMD micron Nvidia Broadcom moving to the downside Intel all sort of knee jerk reaction moving down here what's very interesting is the market is sort of obsessed with two factors right now factors in an investment sense that is quality and momentum and they have essentially diverse they are the same thing at this point so if you look at the quality leaders that are out there that show up on quality screens quality by the ways high return on equity stable earnings growth those kinds of things Nvidia meta Broadcom shows up all of the time Lily shows up Amazon shows up Microsoft shows up Visa shows up all the time and then you look at the momentum it's virtually the same thing so quality and momentum have converged this year and you see same thing Nvidia meta Broadcom Lily Amazon Microsoft Visa all converged together and what that means is the market is really obsessed with a small group of names so of course these exist in the classic ETF there's the quality ETF QUL momentum MTUM and they have traded pretty much in tandem this year now you see the quality is doing a little bit better the mix is a little different sometimes Nvidia meta has a stronger mix in one versus the other but you get the idea they're essentially moving pretty much in tandem so I don't think this is necessarily a bad thing but it's one of the reasons you get such tight movement in a small group of stocks when the market converges around two factors that have become very important the other two factors that used to move the market which is value and small caps really have sort of fallen away as a major issue so here's where we are right now this is what you call a frustrating market in a good way we're moving forward everything is doing well the market is broadening out a little bit but it's frustrating because it just sort of feels the same way what do we had 16 17 18 new highs this year it's hard to create a new narrative around this so there's no catalyst right now for a meaningful pullback what we have to have is a change in the macro narrative the underpinning so either you have to have some kind of economic slowdown that we need to worry about that's very obvious in a series of numbers that show up or we have to have some kind of inflation worries re-accelerating causing us to be worried about the Federal Reserve coming out and increasing rates neither of those things are happening in the CPI yesterday it certainly didn't change that narrative Friday guys we're gonna get the quarterly expiration of stock index options and index futures triple switching Mike you we've talked about this years it's less impactful because of the monthly and the weeklies and the dailies zero data expiration but when you when you get straight line up in the S&P 500 it's not interesting when it rolls over because everybody is essentially zeroed out on their positions there's no things that stick out you don't have any weird positions betting on big drops big big moves on the upside so it's kind of like unexciting it's boring but in a good way it's funny yeah there's a lot of call options that are in the money and you got to see how people maybe reposition around that in the leaders stop and leading stocks but you're right it doesn't seem like there's a lot of junk okay Bob thanks and Mike's thanks to you Mike sensually coming up in the next hour 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