Deal Disruptions, Dimon Gets “Real” on AI, Challenges for Lowe's and Macy's 2/27/24

David Faber (0:00)

Market Insight and Analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Good Tuesday morning. Welcome to Squawk on the Street. I'm David Faber with Jim Cramer. We are live from Postline at the New York Stock Exchange. Carl is on assignment. Let's give you a look at futures as we get set to begin trading a half hour from now.

I always defer to Jim when I look at that, because I don't know what it means.

Jim Cramer (0:22)

It's early.

David Faber (0:23)

Yeah, it's early. It's early. But let's get to our roadmap this morning, because it does start with we're kind of on DealWatch this morning, but not the kind you typically think of. Here it's about Chevron warning that it's $53 billion Hess deal, could be at some risk. Then we've got the FTC and nine states. They're suing to block, of course, that Kroger-Albertsons deal, which Kroger wants to buy, Albertsons. We're going to give you a look at retail and macro as well. Both Macy's and Lowe's shares are falling ahead of the open.

That could reverse. That could reverse, that could reverse.

And some, not really here, but there's always some who call it an AI tech bubble.

Jim Cramer (1:01)

Yes.

David Faber (1:01)

Jamie Dimon says not so fast.

My guess is we kind of agree with him. We'll talk about that.

Jim Cramer (1:06)

Well, if you don't call it a bubble and it explodes, then you look like an idiot. If you call it a bubble and it does explode, you still look smart.

So it's an asymmetric level of reasoning.

David Faber (1:15)

You started the day so cynically.

Jim Cramer (1:17)

No, I'm starting to end making it so that we protect our butt. Just kidding. The idea that it's a bubble and then the idea that the Wall Street Journal is a piece saying that everyone's sucking up to Jensen Wong for the bubble, but we have really serious people like Jamie Dimon who directly go to Jensen and say, I need this because this is how you detect fraud. Maybe we have a new paradigm. Maybe every single chip that we have is an inferior chip.

And maybe everything's conventional bombs and then Oppenheimer comes along and we just don't think about that. But we still need conventional bombs just because of the way the world is.

David Faber (1:53)

We're gonna talk a lot more about that. But I do wanna start on something else that we have obviously discussed in the past. But there was something unexpected later in the day yesterday. And it's that at least the possibility, slight though it may be, that Chevron's acquisition of Hess is, in some let's call it Jeopardy, is a result of something we were not made aware of until the proxy and the 10K were filed yesterday from Chevron.

In which they, does that what? Does that bother you? No, it bothered me. No, it doesn't bother me. It was a surprise though, for those who obviously follow these deals. We're talking about one of the biggest deals we've seen in quite some time. We're talking 53 billion, all stock, you may recall. Not a huge premium as well for Hess at the time from Chevron, but nonetheless followed right on, right after Exxon's deal to acquire Pioneer.

What is at question here is a right of first refusal that was part of the Joint Operating Agreement when Exxon and Shell began their development of what has become a prize property, namely that offshore oil reserves of Guyana.

Jim Cramer (3:06)

Maybe one of the largest.

David Faber (3:08)

Interestingly enough, I've spent time. I've actually been there, got there on a helicopter, went to the platforms. There I am.

So kind of interesting for me to actually know this as I do and having spent time with so many of the operators. Exxon operates it, by the way, but Hess, it's the most important asset at Hess. And Jim.

Jim Cramer (3:31)

Hess has good relationships with the present Guyana, which does matter, right?

David Faber (3:35)

It matters. And to boil this down, it would seem, you come back to the language that we don't know and that we haven't seen and we won't see because it's confidential of this right of first refusal. But simply put, Exxon seems to believe or believes that a change in control of Hess represents a change in control in Guyana because Guyana, that 30% represents so much of the company's overall value.

And Chevron, what I'm hearing, and I assume you're hearing the same is, and again, we can't see the language, but I'm told there is simply no way that's true. The language is not in any way indicative of a change in control of Hess being that. It doesn't say that and they've made that clear, but the two sides continue to talk somehow about something having to do with this.