Transcripts For CNBC Squawk 20240703

Whats happening with treasury yields a tz you know, the trend has been higher and that continues this morning the 10year is at 4. 63 the 2year while its in the green, its a little bit below where we were yesterday, 4. 94. Still below 5 well take a quick look at Oil Prices Data showing a drop in crude stocks, a positive sign for demand yesterday oil prices were higher, this morning giving back just about 39d . But wti is just below 30 a barrel. Meantime protests arrive ingn campus speaker johnson speaks about it. Meantime late last night columbias president providing an update, saying the school is now in talks with student protesters to clear an encampment on its west lawn. Theres a deadline tonight to dismantle or theyre consider other options to clear the area. The school now says theyre not tolerate discriminating behavior theyll put them through appropriate disciplinary processes. We will see. I know there are a whole bunch of donors watching all of this, waiting to figure out i spoke with a bunch of them yesterday off the record on some of these things, but some of those major donors say the president should have taken a much stronger stand to begin with were waiting to see how this plays out. But if you look at this, these are College Student who are graduating right now who spent the first year remote due to covid. And now youre closing out the four years with potentially not being able to go to classes. Well see what happens with the graduation too. Its not that the diagram shows the protesters are covid fearmongerers. Theyre wearing the masks. Theyre wearing their masks to cover up their identity. I know, but i see masks now i mean, there are people all over the place Wearing Masks theyre not protesting. Take your masks off. If youre doing this, let us know who you are theyve made it fine to wear a mask during these things they used to say no face coverings at all that changed during covid. But thats the one this keeps getting hit. The whole thing is you saw yesterday we talked about the president of columbia. You know, it was 20 what was it, 23 years ago, months after i dont know what her capacity was at that point, but she said that terrorism is a form of protest after 9 11 just months after 9 11, and she ended up running the place. In the highest place maybe that could have been your first clue. Part of what is taking place here is these arent all students some of these are outside people, so theyre ready to take anybody whos not a student i have to say im so not sympathetic to the argument that there are a lot of people out there making this repeatedly theyre making this point there are outside agitators. In every instance there will be outside agitators. Im not making an excuse. My point is they should kick them out. But my point is they should also teal with the students. A lot of times the students are letting in the agitators the idea that theyre out there and taking over the school is, i think, one of the great myths. Theyve allowed it to happen if it has happened they havent kicked them off campus. I think they got funding for the tents. The ma i yore is furious because they were throwing bottles and chairs as Police Officers thats not a peaceful protest. I know you dont like my old movie references, but the guy in the graduate accuses Dustin Hoffman and says, hey, are you one of those outside agitators he gets mad because people are yelling. You know, its classic that was 1967 probably there were outside agitators going all the way back to 1967. In washington, the Senate Passed a foreign aid bill, the vote, 7918. Theyre now sending it to President Biden to sign. It includes 68 billion to you crepe, 26. 4 billion for aid to israel, and 8. 1 billion to taiwan and indopacific security also included in the bill, the requirement that tiktok be divested from its chinese parent, or ban bytedance has some time to sign the billwith a possible threemonth extension if there are signs that a deal is progressing. Tiktok is set to challenge the bill on First Amendment grounds, and groups of tiktok users are expected to take legal act at some time. Meanwhile, the ftc bans noncompete clauses that prevents employees from taking jobs in the same interest. We talked about this with lina khan whelp she originally announced it its now here. It impedes the moving along of labor markets and can increase prices the new rule can strike down existing ones for all employees except Senior Executives, and theyre defined as the following. They need to earn 150,000 a year and are in policymaking roles. I think theres going to be some questions about some of the people who make more than 150,000 who think they have policymaking roles or dont well see. The new rule is expected to take effect in about four months. The businesses say theyre going to challenge it. Well have a lot more on this story. Its going to have huge ripple effects throughout the economy perhaps good, in some cases, bad, and well hear what folks have to say about it in a little bit. There are situations that have been acruised incredibly if you look at hair salons where basically when you walk in the door, you cant work anywhere within a 30mile radius. Thats ridiculous. Those people have been completely held back you can see definite situations where its been abused i dont know what the side effects are or unintended side effects down the road. I think if you look at the numbers, it should create real income for a lot of people who have been unable to leave their jobs and theyre actually able to get a raise within 30 miles and not have to move. Youre talking trade secrets. We talked the other day about real estate and inability to fizzing will i move because theyre locked into mortgages. This will be a boost in the short term and maybe the long term having said that, i think the trade secret thing is a real issue and theyre going to have to try to figure out how to deal with that. Plus the 150,000 threshold is going to be interesting. There are those who make more who dont think they have policymaking oles maybe they will from a defined perspective think they they do we do. We make the policy literally as we speak. I dont any if we feel powerful. Shares of mattel are higher after the toy maker announced a 5 cent loss in the First Quarter. Revenue of 110 million was short of the sorry, 810 million was short of the 832 million estimate, but it did affirm its full year guidance. Theyre facing comps around the barbie movie the company addressed it last night on mad money. We couldnt be more excited about barbie. We expect more shelf space in the second quarter, more offering for the collector when engaging them. Right now you can see shares are up by about 2. 75 . On may 4th Warren Buffett will be holding questions for five hours if youre a shareholder and youve got a question, please send it to berkshirequestions cm nbc. Com. Well be answering those questioning during the meeting. For those born in you remember Threes Company. Are you kidding me . John ritter, the greatest. I went to the set of Threes Company as a child. One of the greatest shows in history. I loved him. Prior to mr. Furley, who was don notknotts, who was a classi himself was mr. Roper, who was norman fel wl who accused him of being an outsider. Thats anyway, is that we used to now ill be singing the song. Were working on were trying to skew it a little bit im not helping. Youre not helping. Coming up but we want to keep anybody, right a bunch of Suzanne Somers just died unfortunately. But, remember, she was replaced by somebody and then she was replaced by somebody coming up, at t and boeing set to report before the opening bell. Well bring you the numbers and reaction on wall street. First, tesla shares jumping after elon musk says the Company Plans to begin production on a more affordable model earlier than expected. As we head to break, check out what musk said about autonomous driving. If anybody double believe tesla is going to solve autonomy, they should not invests in the company announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. This is our future, ma. Godaddy airo. Creates a logo, website, even social posts. 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 when i was your age, we never had anything like this. Get your Business Online in minutes what . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi with xfinity. After military service, you bring a lot back to civilian life. Leadership skills. Technical ability. And a drive to serve in new ways. Syracuse universitys Daniello Institute for veterans and military families has empowered more than 200,000 veterans to serve their communities and their careers. From professional certifications, to job training, to help navigating programs and services, we give veterans access to support from anywhere in the world. Teslas revenue dropped by 9 in the last quarter, marking the largest decline all the way back since 2012, but the stock jumped in late trading after elon musk told investors that new affordable ev models could arrive sooner than expected. Weve updated our future vehicle lineup to accelerate the launch of new models ahead of the start of production in the second half of 2025. So we expect it to be more like the early 2025 if not late this year. Joining us now is collin rush, Oppenheimer Senior Research Analyst i dont know if you watch the show yesterday we had one of your not a colleague, but someone who is also an allnalyst who said t bad news is in the stock i said i dont know if the revenues are in it or the numbers are shrinking, but what might not be in it is worry about this shortterm how long it would take to make this cheaper ev he said thats in it, too, and it looks like he was right, colin. Do you think the stock had already reflected most of the bad news its kind of borderline here. I think its an interesting point that, you know, they pulled forward the low cost ev, but they have offered very little detail on what that cost cut is going to look like. Its pretty clear theyve saturated with the model 3 and model y and its clear the model has stalled. The cyber truck has been pretty disappointing in terms of the production side of it. So theyre looking for a different production they cant push any more vehicles through the existing lines into the market. I think theyre making a pretty big break going into this analyst day in august to really start driving the company forward. I think this is an aggressive Management Team being very aggressive, trying to pivot as quickly as possible and to a different growth vector. Did you hear grumblings that the company there are concerns that the company was shifting its focus away from the cheaper model to robo taxis and thats why elon musk was trying to allay some of those concerned yesterday . Did you hear that . Theyre been funding for two months or more that they were shifting it was clearly shifting more of where the vehicle was produced again, were very short on details as to what that cost number is targeting as they start production and what the vehicle will look like, and so as we look at the model, what we ended up doing is taking eps out and running the margins a little longer we pulled 20 cents out a full 50 increments out of our eps numbers. Were now back to a controversial stock thats really as much a storied stock as a reality stock at this point where numbers are coming lower and the real growth story is with the ai and robo taxis. That was a big drop in margins. That will probably continue, although theres i dont know what were talking about in terms of layoffs and what it will end up being, but does the company have to be really, really profitable, or can it now be can you buy the stock because of the, you know, sort of the future . You know, lets just put profitability or great profitability on hold and do all these other things and invest in all these other things will that be enough to satisfy shareholders and will shareholders have to change . Will it be a different type of shareholder . Its going back to the earlier days when this was really a storied stock, that they were going to make an eb and disrupt the market now theyre shifting the narrative from being an ev making into being an autonomous maker. Theres going to be a little shift. This is the first time elon said he was going to drive across the country with his kids in a selfdriving vehicle was well over five years ago, and were still not even close to having that happen. So when you look at this, theres going to be a certain segment of investors that will look at this in the long term. But the shorts got a look at this last night. Theres a demand issue theyre getting more of a cost factor than anticipated. But theres still a lot of investment risks that the company is looking at. Theyre going to start pressing in the next several weeks. Will there be any lasting damage in terms of who buys teslas we saw yesterday someone said youd never see a trump Bumper Sticker on a prius its never happened. Tesla says, i bought this before he went insane its already happened the buyer for this vehicle has shifted dramatically there was a geological support for the brand for a number of years that the twitter process has really degraded for the tesla brand. You know, its now going after folks that are vying for a costeffective model that gets them around. Thats the yield to the model 2 and the cost factor profile. Theyre going after the buyer thats less political and is really more about cheap, affordable transportation. You know, thats where the buying pool is now, the next shift is really about, you know, whether folks want to be early adopters on this automatic technology. Were going to find out. Okay. Were going to end it there, colin. I nknow definitely the people wo own the stock might shift and the people who love elon have definitely shifted its a Different Group i dont know how longlasting it is and whether it matters, but that will well have to wait to find out, i guess thank you. See you. Thank you coming up tomorrow on squawk, weve got longtime investor ron baron hes going to talk about the quarter and where hes putting his money to work. Its a conversation you dont want to miss. Next, a new update on meta smart glasses. A new look and added functionality. Weve got details next at corient, Wealth Management begins and ends with you. We believe the more personal the solution, the more powerful the result. We treat your goals as our own. We never lose focus on the life you want to build. And our experienced advisors design custom built strategies to help you get there. Its time for a Wealth Management experience as sophisticated as you are. Its time for corient. Smart glasses. There are new features they can trabs late text from other languages and use the ai assistant to answer questions or complete tasks handsfree. I can tell you as a beta user of these glasses, of the new features, they are pretty extraordinary. It is just beyond. I thought about bringing them today so everybody could see, but i realize you couldnt they look like real glasses. You mean fashionwise fashion wowise, theyre gret glasses. Theyre very attractive. You wouldnt know theyre anything. Thats whats so great about them. Putting aside the ai, you can be on the telephone and just listen, no headphones. You can listen to music if youd like, but most importantly, you can now because they have cameras in them, you can say, you know, i dont know, if something was broken in front of us, you would say, i need to fix this, how would i do it, and it would literally talk to you, you go to the left, do this, nope, dont do that, do this, you could go traveling, you could say, what is this, talking about a painting. Could you put your apple goggles on over the glasses . Youre not seeing anything through the glasses. But you cant put anything over it, then. Could you, if you wanted to . I dont know why you would. I dont know. You love both products i dont know what a guy like you does when you have so many beta this is the future. Well all be wearing these things the coolest part is you know how weve gone to come tail parties and things where you cant remember someones name, right this is not there yet im pretty convinced within the next five years, this thing will say, thats becky quick and thats joe kernen. Youre going to look like an idiot standing at a party in sunglasses. No, no. Everybody will know that you dont remember and that youre getting help and it wont be any more sincere. Well all be getting help. Its better than looking at their name tag. I hate that. The worst part is when they dont have name tag . Can i tell you something im not going to say the name of the guy, but the whole thing was so embarrassing. I just had a meeting with him. A major ceo of a company im at ive done the same thing. Im at a thing in davao, switzerland, talking to the guy. Hes very nice to me he has a badge but i cant see the badge. I say, what do you do. He says or he i said, where do you work. He says the name of this company. And i dont know any better, so i say, and what do you do there . And he says i run it or Something Like that. The whole thing was so embarrassing were in this profession, we should know some of these things the glasses would have helped me. Ive done worse ive called you by the wrong name i know exactly who you are. We all have great sense about this. Im just saying. There was once an anchor who turned to the guy on the left and said, who are you, and the guy said, hi, im larry, and the anchor said, oh, yeah, larry, what do you do he said, im treasury secretary. Larry sumner. I remember that. Another guy before george bush was speaking, he said, i dont know who this guy is talking, george bush and King Abdullah it was the king of jordan. See, the glasses could be very helpful thats the only point. Would that have helped . I dont know. Do you think . I dont know. You wont tell . Ill tell you everybody. You know everybody and remember everybody. I try this person was new to me. I talk to people i know thats the worst. Youre aaron sorkin or jonathan talk to elon about it. It looks like earnings per share coming in at 55 cents. Thats better than the 54 cents the street was expecting revenue, a little light. 30 billion versus the 35 billion the street was looking for. Free cash flee coming in at 3. 1 billion. They had post paid phone debt adds, 349,000 fiber anytime ads of 250,000 the companys pointing out 170 basis points and adjusted ebita Margin Expansion took place during the quarter they point back to the cost cuts theyve been doing the stock is down 2 the revenue was coming in a little light i spoke with the cfo about this. He said the reason revenue was down but that it didnt impact profitability is because a lot of customers are hanging onto phoners longer than they had he said, all in all, it doesnt particularly matter for at t because as long as they stay customers, thats fine the profitability wasnt impacted because the phones are not profitable for at t or the other Telecom Companies that sell them. They do it for the customers again, i asked if the customers are holding onto the phones longer because of concerns about spending for customers he said, he didnt think so. He thinks its because the last upgrade cycle didnt have much new out there, plus the phones are a little expensive it takes customers a little longer to go through with them adjustment of ebitda, increase of 100 basis points there. The company pointed out they were able to bring down their debt by 27 billion since john stankey became ceo while they were investing in infrastructure 120 billion in geo Fiber Networks over that time. That includes 40 billion with spectrum too the stock is down by about 1. 9 . When we come back, new lobbying disclosures report a flood of cash coming into washington thats straight ahead. As we head to a break right now, lets take a look at yesterdays s p 500s winners yesterdays s p 500s winners and losers [thunder rumbles] announcer winners 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] good morning, everybody. Welcome back to squawk box. Were live at times square the futures, not a lot of movement unless youre watching nasdaq, up by about 100 points. Meantime some new corporate filings are revealing a surge of lobby money thats now pouring into washington. Im going to get to washington where Emily Wilkins is to talk about which companies are ramping up the spending. Good morning. Reporter good morning, andrew yeah, meta has set a new lobbying record for the company in the first three months of 2024 they spent over 7. 6 million, according to disclosure documents. A meta spokesperson said the increase was less about policy and more about win meta employees in which they got their bonus this year. That i changed up the structure of it. Billion, still, theres no shortage of big issues impacting on capitol hill. Meta lobbyists spoke to lawmakers, the white house, and Administration Officials on china, ai, and legislation to help americans keep their data protected online and keep kids safe on the internet. Other tech giants also spent millions of dollars each lobbying the government in the First Quarter, although, theyre spending roughly that what they spent in the past quarters. Bytedance spent 2. 68 million in the first three months of 2024 and thats double what they spent in the same amount of time in the last quarter of 2023. But none of it was enough to prevent senators from passing a bill that would ban tiktok from the u. S. Unless it divested from Parent Company bytedance and finds a new buyer in the next nine months. Guys emily, thank you for that report were going to keep an eye on all of that. The tiktok story is front and center thanks. When we come back, we have some new comments omfr jamie dimon on what he thinks is driving growth thats next. Dude, whatre you doing . Im protecting my car. Thats too much work. Weathertech is so much easier. Lasermeasured floorliners up here, seat protector and cargoliner back there. Nice out here, side window deflectors. And mud flaps. And the bumpstep, to keep the bumper dentfree. Cool its the best protection for your vehicle, new or preowned. Great. But where do i . Order. Weathertech. Com. Sfx bubblewrap bubble popped sound. Jpmorgan chase Ceo Jamie Dimon speaking yesterday at the Economic Club of new york, he talked a lot about what we heard from him recently. He talked about his concerns he talked about what a Strong Economy this has been, and then he brought up some ideas yesterday about what really concerns him about the economy in spite of that strong growth. Part of the reason i think weve had this strong growth is the fiscal spending. You know, why not spend another 2 trillion. If we did, what would happen youll have more money people invest more money, people hire more people, and youd have more growth. But its also quite inflationary, and you have tradeoffs there so far were in pretty good shape and so far we have a soft landing top of scenario. Im on the cautious side of that one. A great quote when i started working on wall street, i cant say it in its actual language, but its Something Like the markets will do whatever it has to do to hurt the most people. I mean that was his point that things could turn at any point and he thinks the market could be setting up for one of those scenarios when it come founds as many people as possibleful he also weighed in on a lot of things including politics and whats happening in washington and he weighed in on the rise in anticapitalism. If the young people like socialism, let them go to venezuela, cuba, argentina, and the other places let them learn the hard way what its like. We can learn a lot from the rest of the world im not afraid of china. Im afraid we wont get our own act together. Kind of played in on some of the things youve seen play out on College Campuses across he always talked about how hes a redblood american, defended Capitalistic Society he talked about the new york economy. He said new york shouldnt take for granted its success. It should be more concerned about things like taxes, crime, housing policies he gets calls all the time from a city like a memphis or dallas or austin always wanting to say what would it take for you to come here. He said he feels very welcome everyplace except washington, d. C. He says he gets treated like crap. Whichever way it goes, youve got to bring in the people from the other party. But the thing they need to have in common is they need to have pract practitioners, which means somebody who knowsing is about the private sec to what would that look like if President Biden is reelected i dont think he would ever do that he would never bring in and i think if trump were to win this time around, i dont think he he might try to bring in jamie dimon. Then i wonder, is there any way jamie dimon would serve on the Trump Administration no way. He said he would never go to washington, d. C. He always wanted to be president , but he didnt think anything would be practisupporte and he said if anyone should go, its the practitioners, not you, but me. Oh, this is me. When we come back, the ban of ncoonmplete clauses to groups that protested at their offices. Were going to dig into those issues next. Announcer this cnbc segment sponsored by baird visit bairdifference. Com new projects means new project managers. You need to hire. I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Welcome back to squawk box. Google has now fired 50 employees who were involved in protests over a cloud compute deal in israel joining us for that and the ftcs new ban on tiktok. Author of the command news line letter and Joanne Lipman is here at the table, lecturer at yale university, a contributor to cnbc welcome to both of you alex, i think youre up super early this morning because youre on the west coast lets talking google in terms of the culture in the val i have going from this sort of open campus, university model, say what you want, what you will to what looks like a bigger clampdown. Yeah, i think you just hit it on the head. I think google personifies this Culture Shift thats happening across tech. Really across corporate america, but especially corporate tech. You have Senior Executives on stage in tears when trump got elected in 2016 and the implications of that fast forward you have senator pa jaya saying we dont want politics in the workplace, and this is after they confirmed they fired 28 employees. For google, thats rare, but also by and large. Thats a lot of firings at once. Heres the thing were all trying to understand what ensome of this began back in 16 and some of the protests in 18 and even 20, and it felt like the employees were running the place, right the inmates were running the asylum to some degree. There was a view among management they couldnt clamp down on this even if they wanted to because the engineers and employees were so important and if they did something about it, they would have an even bigger problem, that the labor market was so tight, these people would race off to other jobs. Problem, that these people would race off to other jobs what is the calculus today versus the calculus then i mean, i think youve seen a lot of power shift from the rank and file back to the company and what was unusual about this protest is that it was a sitin protest. So there were people physically impeding others. And standing in the offices of the ceo google cloud, for example. That is really taking things to a new level. Google is no stranger to protests but i think they saw this as an opportunity to put a flag down and say, look, were not going to tolerate this kind of behavior and then they ended up firing an additional 20. Are you then of the view this was so egregious, but it is not really a cultural shift, meaning the protests of old, which might not have actually happened literally in the physical office of the ceo of a division, those protests will be okay tomorrow but these protests wont or you think this is a new paradigm i think it is a new paradigm. We are seeing a cultural shift i think about, you know, just so happened coincidentally in 2018, there was a huge walkout, about Workplace Culture and it was about sexual harassment, november 2018, i happened to be at the google flex, google headquarters to give a talk that day. It was supported by the company. It was huge, but it was peaceful and it was it almost felt like a party, right . You have this environment versus where you are today. And i think there is a couple of major differences that have happened you know, one is employers have been trying to pull back ever since, you know, the pandemic where employees all got the, you know, the power, theyre trying to pull some of that back. But there are a couple of real differences and the hugest one, i think, is that in those 2018, 2016, you had employees who were together, who were pushing together, unified against management for whatever reason today, you have employee against employee much more splintered. Much more splintered and also you have employees who are saying, im feeling unsafe and youre in an environment with now with, you know, with hamas and israel, where youve got an increase in antisemitic incidents and antimuslim incidents. So it is a different environment. And the one other thing i just want to point out is even in the last five years, the dialogue, the cultural, National Dialogue has gotten way coarser from everything from politics to congress to public life to people like elon musk who are now out there who are sort of, you know, ginning up sort of a really kind ofvitriolic dialogue. Alex, i want to talk about this ftc decision and how it is going to change things california, by the way, has always been a state or at least more recently has been a state where these noncompetes are not enforceable. Is this going to change the dynamic there . Are we just talking about a different kind of worker, 150,000 seems to be the threshold for preventing noncompetes in the future, but you have to have some kind of policy oriented role that could be potentially little fuzzy and fungible. I havent really seen a ton of high profile examples of Tech Companies enforcing the noncompetes. Youve seen amazon do it selectively. There is an example with an executive who went to google cloud in the last few years, where they tried to enforce a noncompete because he was coming from seattle but, yeah, youre right, california hasnt had this, the california Tech Industry is the best Tech Industry and one of the best industries in the world. I havent met anyone who likes a noncompete, who isnt the one who enforced it. I think this is generally good there has been a Chilling Effect, generally. But as it relates specifically to tech, i havent seen a ton of examples of this actually being enforced i think it is more that kind of unspoken Chilling Effect we got to go. We have 20 seconds a good thing or bad thing longterm for labor . Very much a good thing. If you were a ceo, you go to court over this or no . I think they will go to court over this. I dont know that i think the question is does the ftc actually have the mandate, do they have the power to put this into place and well see how it plays out joanne, thank you alex, thank you. Appreciate it, guys. Thank you coming up, a read on the Auto Industry r foone of the nations largest Dealership Networks the ceo of group one is going to join us next upbeat music with the push of a button, constant contacts ai tools help you know what to say, even when you dont. Hi constant contact. Helping the small stand tall. One of the nations largest auto dealerships out with its Quarterly Results earlier this morning. Group 1 automotive beating the streets expectations, both on the top and the bottom lines joining us right now for an exclusive interview is daryl kenningham, group 1 automotives president and ceo. And, daryl, congratulations, and thanks for being with us today thank you so much, becky. Pleasure to be here. So talk to us a little bit about what youre seeing in the industry right now it seems as if prices might actually be starting to come down, both for used and new cars were seeing prices come down a bit on the new car side, for sure and some of that is related to the oems and their support in the marketplace. The use side, pricing is still fairly firm, because there is a shortage of preowned vehicles in the market and thats thats putting a bit of a floor on the pricing on the used side. But, yeah, there is some more competition for sure youre seeing a little bit of pressure on gross profits on the new car side as a result the average, though, is still incredibly high. Average transaction price for used car, 29,000, average transaction price for a new vehicle, 51,000 you have to wonder how consumers are feeling about that, especially with Interest Rates higher today is that an impediment to getting people into cars well, were where were certainly seeing it is in the lower end of the market with cheaper used cars and there is more competition for that and were certainly seeing that. Youre also seeing our oem partners support their vehicles with some Interest Rate programs and some large banks, same way, youre seeing leasing come back to some degree, which has been largely nonexistent for the last three years. So, youre seeing more levers being pulled to try to make the affordability story a little bit better but it is no secret, vehicles are more expensive, the truck mix, suv mix is as high as it has ever been and the content and the vehicles is as high as it has ever been daryl, tesla shares are up this morning after the company came out with its earnings last night. It is not because of what happened in the last quarter it is about hopes for the future tesla sales were actually down and tesla is the best of the bunch when it comes to the evs what do you see just in terms of consumer demand, consumer desire for an electric vehicle . You know, ev is a challenge these days and i think you saw the tesla results. The thing that we like is the legacy oems have optionality on powertrains. And youre seeing hybrid vehicles are the hottest thing in the market right now. Our day supply hybrid vehicles is the lowest of any powertrain we have. And ev is the highest supply we have across the board. Good thing about the legacy oems is they have the production flexibility to move between those powertrains as consumer demand warrants. So, we have followed tesla very closely. They do a lot of things really, really well. And but thats something that i think the legacy oems have as an advantage right now. I think probably for the foreseeable future as the transition to alternative powertrains continues. Daryl, thank you very much for your time today. Daryl kenningham from group 1 automotive thanks very much. Appreciate it. It is just 7 00 a. M. Right now on the east coast. Youre watching squawk box right here on cnbc im Andrew Ross Sorkin with joe kernen and becky quick we got a lot of top stories to tell you about the senate just passing a foreign aid bill with a vote of 79 to 18, sending it to President Biden to sign. It includes a requirement that tiktok be divested from its chinese parent or be banned. Lots of questions about what happens to tiktok next meantime, the federal trade Commission Voting for a nationwide ban against noncompete agreements. The company is used to prevent employees from taking jobs with competitors in the same industry and, yes, industry planning to sue over these new rules and the House Speaker mike johnson planning to visit Columbia University right here in new york today, to meet with jewish students and discuss antisemitism on americas College Campuses as donors weigh what to do and whether to withhold money and try to use their influence over this issue. Meantime, take a look at future, dow off about 31 points right about now. Nasdaq up about 95 points. The s p 500 up about 5 1 2 points to dom chu with a look at this mornings premarket movers. Andrew, joe, becky, lets start off with late breaking earnings news of the morning so far. Shares of hilton up 2 , around 2,000 shares of Trading Volume this is the Hotel Operator behind its namesake brand and other brands like waldorf astoria, Embassy Suites and double tree amongst others profits and revenues came in better than estimates. The beat and raise was driven in part by growth in the operating and financial efficiency versus room capacity. Something known as revpar. That helped offset drags from bad weather, renovations and holiday timings during the quarter. The hilton shares up 1. 75 from hospitality and leisure to toys and games hasbro up nearly 4 right now, thinner premarket Trading Volumes. This is the Company Behind toy franchises like transformers, also gi joe, also games like monopoly and dungeons and dragons. It offset lower demand from some toy products hasbro shares up about 4 . Well end with a big driver for the broader market, especially when it comes to that tech and techrelated trade, thats tesla. Shares motoring higher if you will by 12 . Just other 2. 2 million shares of volume earnings and refvenue came in sh of expectations, but there is optimism about teslas plans to accelerate the launch of new models of cars, especially those targeted at lower price points some are getting more positive like those at bank of america, theyup upgraded that stock fro buy rating to a prior hold and they cited the potential for more positive catalysts down the line keep an eye on tesla, big driver of the tech trade. Back over to you dom, thanks. Fed officials and wall street economists engaged in a critical debate over the recent boon in productivity and whether it is here to stay the answer could impact everything from inflation and that outlook to Interest Rates to how we all live in the future you finally decided to delve into this. Senior economics reporter Steve Liesman joins us. It is a big deal. I wish i had better answers, but i think i have good stuff on the debate. We have obliquely mentioned it a lot thats the end of my story. I want to talk what yall are doing about this let me do this story. Were not helping productivity. Then im going to compliment you, joe maybe not you, but im ill get there. Hold on. When the gdp number comes out tomorrow, wall street is going to pour over the spending and the inflation details, looking for the clues about the economy. But what it wont see is maybe the most important number of all, the underlying productivity data for the economy the growth in the economys efficiencies often the biggest part of growth and it has been booming. Look at this data here for the five years before the pandemic, grew at a trend like 1. 4 from the beginning of the pandemic through First Quarter of last year it dropped to 1. 3 . You had a huge surge at the beginning followed by a really worrying decline, people thought were in a downtrend but the past three quarters off the charts 3. 7 , which is double or more the long run average here. The boom has launched a debate taking place alongside the inflation debate about whether it is a real or a blip the consequences as Austan Goolsbee said last week are far reaching thats fundamentally going to change everything about the economy, in a way. And it would have direct implications for Monetary Policy it would put us back in an environment that would very much be like the late 90s, where you could have faster wage Growth Without inflation, could have faster gdp growth. We have had really nice productivity in the last year or so, but it is probably still very much affected by the post pandemic factors that were seeing i think we need to see more to understand whether there is a longer term here is what the skeptics are saying, it is all noise, because they like to look at productivity over a fiveyear span there is work from home they think that may be distorting where people arent reporting the hours worked, being mismeasured, they say it is too soon to tell. Theyre saying work from home say source of greater efficiency with better matching of employees with jobs. Companies are learning to do more with less in the inflation fight during the pandemic and the higher growth and inflation has led to that higher productivity, mother being necessity of invention for the fed, higher productivity could mean lower for longer because it is like a longterm positive supply shock. It is like adding factories and workers without really adding either but getting there could be tricky, could mean more demand for capital, which could mean higher for a shorter time until the positive effects take hold what i wanted to say at the beginning was im watching every single interview youre doing about a. I. , and with company ceos as part of the reporting of the story, because, remember, were not looking for productivity growth. We get that. 1. 5 is about what we do we need to know if the growth rate is increasing so think about, like, a pc or a chip, right, cwhich grows the speed increases at 1. 5 a year if it grows by 15 , what is that thats like ten years of improvement in a single year what we want to know is the rate of productivity or efficiency increasing thats what changes everything can i just add, jamie dimon, we were talking about his comments in new york earlier, he talked about a. I he said they have 400 uses for it already rattled off things like risk, fraud, marketing, idea generating, theyre already using a. I. , it is embedded into that stuff, they have taken they took a woman and put hadder in charge of all a. I. And she directly reports to jamie dimon, and i think Companies Taking and doing things like that are going to start super hyping up the actual i dont think it is here yet. I dont think a. I. Is part of this at all yet. Thats my opinion. You know the only place, College Students have more time, because they dont have to write any papers. Absolutely true. I ask you, great interview with anthropic yesterday, what can i use it for and you racked your brain and said on draft kings i might be able to thats the most important question it is not just tell me about this whiz bang technology. Tell me what it is used for, how it is going to work its way into the economy and how we live. I can tell you how to use it. Jpmorgan is using it to some degree, but i dont think it is taking jobs away just yet. But we talked about actually in finance, anybody or in marketing or anybody who is making a deck, you know, a power point presentation. For a merger an acquisition. For any kind of time you make a presentation to anybody, you know if youre a Marketing Company that has to try to come up with different advertising, or pitching different things, all of those all the time that is wasted taking your idea and your brain and trying to put it on paper and make it look great, that is thats where today the time can actually be impressed. Thats the argument for not being as mad as i am about College Students using this. They have to figure out how to use the a. I. Tools because the workplace. Instead of getting my roommate to write this you almost did an on the other hand segment of jon fortt. Im in the skeptic camp. I think it is post pandemic money still around and jamie dimon said, fiscal spending, if you spend trillions, consumers will have more money and thats a good point. Can i just provide now youre going back to the other hand. I want to offer investors a way to think about this the way economists door to what it is worth, there is a guy, robert gordon, a very skeptical person when it comes to technology. He looks at this and says, okay, yeah, this stuff is good, but is it any better than the other stuff we had before . Does it replace or add to the but hes smart in the following. So the point is from an investor standpoint, dont get overwhelmed by how, you know, the whiz bangery of it, because it all looks great, but does it really add to how efficient we are as an economy . Dont get overwhelmed of it, be skeptical of it. I think this is possible, a. I. , but i dont think it is happening. I dont think this is a. I i think what were seeing now is something completely different they look totally productive. I guess the debate i was talking about is the debate were having now there we go. Nice job, guys they dont have to do the paper, they can go out and demonstrate. Thats it when we come back ask jason about this. Were awaiting results from boeing theyre expected around 7 30 a. M. Eastern time. Up next, though, we have former council of economic advisers chairman jason furman. Hell talk to us about why the Biden Administrations student loan forgiveness plan could make loan forgiveness plan could make inflation worse and well as so this is pickleball . Pickle ah, these guys are intense. With e trade from morgan stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Him about this too well be right back. Or college, since you like to get schooled. Thats a pretty good burn, right . When you need to prepare for unpredictable adventures. gasp you need weathertech. [hot dog splat. ] laser measured floorliners front and rear. [drink slurp and splat. ] scream seat protector to save the seats. [honk ] theyre all yours were here hey, i knew you were comin. So i weatherteched the car can we get ice cream . We can now. Kid proof your vehicle with American Made products at weathertech. Com. Business. Its not a ninetofive with am proposition. Roducts its all day and into the night. Its all the things that keep this world turning. The gotos that keep us going. The places we cheer. And check in. 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. Dont wait call today. All right, welcome back. The Biden Administration published its new student loan forgiveness proposal following an earlier Supreme Court rejection on their first round attempt. Our next guest says the plan is poorly targeted and will make inflation worse. Joining us right now is former council of economic advisers chairman jason furman. An economics professor at Harvards Kennedy school of goof government, we should point out you were in your position in a Democratic Administration, so you were speaking out against what a Democratic Administration is proposing to do right now what are your problems with it look, we have unsustainable debt we have high mortgage rates. We have an economy that has not landed softly. This is a plan that we have only heard estimates for part of the cost of it but when you take the plan as a whole, it is likely to be 250 to 750 billion is that a quantitatively huge contributor to the problems i cited . No is it moving in the wrong direction on all of them yes, it is and we shouldnt be doing that right now. I have seen arguments out there that say, hey, what are you talking about that this costs anybody any money. All it is is we just say, poof, it goes away, nobody has to pay this and it doesnt result in anything yeah. I mean, there is, like, all sorts of magic fairy dust, pixy dust arguments out there theyre not arguments we give anyone a passing grade in my classroom. The goal of this is to raise consumption. And in fact ive seen analysis, proponents of it saying this will increase consumption. Consumption right now is really, really strong. You make it stronger and thats what puts upward pressure on Interest Rates, upward pressure on inflation, and, of course, this gets recorded as an increase in spending and ultimately a higher path for the debt. There is a problem with the cost of college these days and having students who get out with 100, 150, 250,000 in debt is a serious issue. How should we be addressing this i think this is a serious issue. If you look at where the defaults are, they tend to be people with actually lower amounts of debt, a couple thousand dollars they can have defaults that stay with them for their life, so you have the administration that already did an income driven repayment program, people with low incomes that were struggling to pay back the debt this is on top of that i think what you need to do is target the people who have been the most unlucky, or gone to colleges that really ripped them off and this is 30 Million People this is very, very broad it is not very targeted. Thats what i see the issue is and, finally, you know, probably would rather have Congress Weigh in on issues you got, jason, other issues maybe with some im going to bring up this Capital Gains proposal, and then i havent talked to you, i dont know whether you think 44. 6 is too high, but i have heard anecdotally that not everybody from president Obamas Administration is pleased with some of the stuff that is happening now in the Biden Administration is there any scenario where you would that would be the highest rate since its creation in 1922, do you think that would hurt Capital Development or deployment at 44. 6 . Is that a good number for you . Look, i like the president s budget we have a lot of problems in our fiscal situation, if you pass the budget in its entirety, we would be on a path of less debt than the path were on now you have to make tough choices on taxes look, the best tax system, if we didnt have any needs in our country, would be to not collect taxes from anyone. Every way of collecting taxes has some downside or tradeoff but overall, i think they have a broadly responsible budget and im quite enthusiastic about it. Sorry to disappoint you, joe. It disappoints me greatly. We were batting around the noncompete news this morning out of the ftc and the impact on labor, employment and potentially wages longer term. Lina khan saying this will the rebillions of dollars in new wages. Do you think thats the case. I like the idea of banning non noncompetes for many classes of workers. I wish they built in some exceptions there is a legitimate purpose for them but i think this probably will improve Bargaining Power for lower wage workers and im enthusiastic about that part of it the ftcs specific estimates, i dont know you do need to take into account, for example, sometimes you have to compensate people more in exchange for a noncompete and work out those types of dynamics as well. But step in the right direction, maybe goes a bit overshoots that right direction a bit jason, you know, ive quoted you a bunch of times on the air in the past week because you tweeted out i think a week or two ago now, that if, in fact, the Federal Reserve raises Interest Rates, i think you were suggesting in this calendar year, you thought it would be a function not of inflation going down, but actually of an employment problem in this country. Cutting rates cutting rates im sorry, cutting rates i thought that was a very sort of provocative view on whether you think that actually will come true. Yeah, look, i mean, you have the sort of monkeys paw situation here there is all sorts of people wishing for a rate cut if that gets delivered, it may get delivered because the Employment Situation deteriorated i think a cut in december would be possible. Based on lower inflation but before then, you had a fed that has been repeatedly burned by thinking inflation had come down and it reasserts itself i dont think youre going to be able to have one, two or three months of low inflation that are reassuring after the three really high months we just had so, i dont think there is going to be enough time to build enough confidence that inflation has come down to justify lower rates. Im not predicting a downturn in the economy, but it can turn on a dime if that happens, then i think the fed could be there to help rescue it. Something breaks in the economy beyond just since the h word came up, i cant remember, are you across the river, are you in cambridge . Im in cambridge. Kennedys in cambridge. An office in the Economics Department too. Something is happening in the yard, i cant remember what it was, or youre not yesterday there was, like, huge gatherings of students playing spike ball and frisbee when i was walking through the yard. There is some concern as well and here we go again, jason, and i just wonder, at this point, i dont know why it is happening, how it is happening, but it seems like there is kind of an epidemic among College President s of a group think about, i dont know, palestine, antisemitism, how are your do you regret sticking your neck out for claudine gay at the time when it happened in hindsight now, dont you think there is a serious issue at the top of these Ivy League Schools . I think she certainly made mistakes i didnt defend her on the plagiarism set of issues, which i think are real issues for her as the president of harvard. As far as her testimony at the time, yeah, she did a bad job, all three of them did a bad job, im positive shes not remotely antisemitic. I think she did a lot of things right in a difficult situation i think it would have been a mistake to push her out of harvard over what happened in those hearings and, look, right now, most of ur students are focused on learning, theyre focused on studying, and theyre focused on playing spike ball we have students with real strong passions, thats a fine thing too. There is ways you can express those passions and ways youre not allowed to express those passions but, you know, a healthy debate following a set of time, place and manner rules on speech is what we should be aiming for and what, for the most part, we have, not completely, of course. Jason, very quickly, i dont know if you heard our conversation with Steve Liesman before, talking about productivity gains, whether you think this is the beginning of a longer term trend, what we have seen over the last three months, or if you think that this is a temporary thing that is pushed up by Something Like additional spending from the government what are your thoughts i think there is a real possibility of a productivity revival in this country. I think if it happens, it will be more like on a two to tenyear time horizon. So it wont be relevant and helpful for the fed and what it is facing right now. The data the last three months is pure noise. You measure productivity over the last two years, and it is up 0. 2 you measured it over the last five years, it is up less than forecast prior to the pandemic so, i dont what were seeing in the data is just noise and postpandemic gyrations what were seeing when we read about whats happening in a. I. , the developments, the technology, i think thats real. It is not in the data yet. It is not in the economy yet in a huge way i think it will be, just not here to rescue us from this landing issue were facing now jason, thank you for coming to play and taking a range of questions from us. It is great talking to you. Great talking to you. Thanks. Coming up, as we just mentioned, the federal trade commission cracking down on noncompete agreements, banning their use by employers the agency may have a fight on its hand well talk about that fight when squawk box returns after this. Announcer time now for todays aflatriac iv question. Which state currently has the lowest average price for a lowest average price for a gallon o helped pay for medical expenses, groceries, rent. It really helped close that gap. Go, go, go yay go aflac go duck the answer when squawk box continues. At aflac. Com wish we had aflac on our team. You can i cant believe you corporate types are still at it. Just stop calling each other rock stars. And using workday to put finance and h. R. On one platform. Tim, you are a rock star. Using responsible ai doesnt make you a rock star. It kinda does. You are not rock stars. clears throat okay. Most of you are not rock stars. Oooh. Data driven insights, and large language models. Oh, thats so rock roll. It is, right. He gets it. Yeah. Announcer now the answer to todays aflac trivia question. Which state currently has the lowest average price for a gallon of gasoline the answer, mississippi. The average price per gallon is 3. 09. Welcome back to squawk box. The federal trade commission banning employers from using noncompete contracts it is now official eamon javers joins with us the latest en what is likely to be a big fight on all of this, eamon. This is a Sweeping Change in the way america does business. The federal trade Commission Voting yesterday by a margin of 3 to 2 to ban almost all noncompete agreements in the United States. The ftc chair lina khan saying the reason is that noncompetes suppress wages they stifle innovation, and slow down new business formation. And she said, the new rules will free American Workers to pursue their dreams and create new dynamism in the american economy. The ftc says that about one in five americans or about 30 million workers are subject to a noncompete clause, one that they often had little choice but to agree to, and they say that those agreements have become increasingly common in low skilled, low paid roles. The ftc says the rule will lead to new business formation, growing by 2. 7 each year, leading to more than 8,500 new businesses created each year the measure, as you say, it is not a done deal, just yet. It is set to go into effect in august but the u. S. Chamber of commerce and other groups are expected to File Lawsuits to block it, so enforcement may not take place for years if at all. Opponents here argue that the ftc simply doesnt have the authority under the constitution to make such a Sweeping Change and that congress should have to pass a law if it decides it wants to undo noncompetes across the board nationally this applies to all existing noncompetes as well. So, in most cases, if you have a noncompete agreement in your contract right now, that will no longer be enforceable when this rule goes through. Senior executives who represent less than 1 of workers can still have existing noncompetes in place, but employers will not be allowed to impose new noncompete agreements, even on them, once the rule is final one other thing, guys, employers have to notify employees who have noncompetes that those are no longer enforceable once this happens. So, in august, if this goes through, you would imagine getting a notice from your employer saying, by the way, youre free to walk if you want to so, a couple of questions, there is this 151,000 threshold and this policy piece in terms of what the role is that you may have, and i think you have to have both. How are those things going to be defined. And to the extent there are folks who get paid less than 150,000 but have stock locked up, one of the questions that has been asked, just in the past 24 hours by a number of folks, i think on wall street and elsewhere, that have stock locked up, but less than the 150,000 salary, what happens in those types of contexts . Do we know thats a good question. I dont know, andrew, on stock lockups. Thats fascinating you know, look, this is designed to be a sweeping ban on noncompetes. It is in most cases is what the ftc is saying. I think one of the questions you have to look at is, you know, broadly speaking for the whole u. S. Economy, does this improve wages for workers or are these negotiations sort of built into these noncompete deals so that if i have agreed to a noncompete, my salary is higher and will you now see employers try to lower the salaries on people where noncompetes are no longer enforceable, saying we paid you an extra bonus so to speak to have this noncompete, and now it is not enforceable, were going to lower your salary. The restricted shares become compensation once if you walk away before it, you dont get it so, but if you get it, it is taxable income and you have to report it to the irs, i would think it would follow some of the same irs rules, somewhere along the way. Right look, the other thing the ftc says here is one of the big arguments that employers use to encourage noncompetes is they say, look, we got to protect our intellectual property. We cant have people walking out the door with their brains full of our information, thats not great. We have to protect that. What the ftc says is you can use other things to protect that kind of information from walking out the door you can use nondisclosure agreements, those, of course, still valid. So someone signs a contract, they have to agree not to disclose certain irnt ntellectu property thats valid too enforce a nondisclosure agreement because you have to go to court effectively, arbitration, depending what happens, then it is to prevent them from going elsewhere and thats the push pull of this, right . And the interesting thing is what happens in august, right . Even if this is in litigation, if the u. S. Chamber files this lawsuit, which we expect that they will and others, you know, do these agreements sort of effectively become unenforceable in august anyway and see a barrage of employees working out the door, saying, you know, okay, go ahead, sue me thats fascinating thank you boeing releasing Quarterly Results. Lets get over to phil lebeau with those numbers phil becky, this is a smaller than expected loss from boeing for the First Quarter, losing 1. 13, the street was expecting a loss of 1. 76 revenue coming in better than expected but other than that, these are ugly numbers for First Quarter not surprising given the situation with commercial airplane deliveries being dramatically lower Free Cash Flow, negative 3. 93 billion, operating margin 0. 5 , negative 0. 5 , negative 0. 8 in the First Quarter of last year commercial Airplane Division lost 1. 14 billion, well above what they lost last year in the First Quarter. The commercial airplane revenue found 31 , not a surprise, again, given the limited number of deliveries compared to last year boeing defense unit perhaps a small bright spot here, with a profit of 151 million there is no guidance for the rest of the 2024 and in terms of the longterm guidance it not in the earnings release, but we asked the company if theyre standing by the target of 10 billion in Free Cash Flow by late 2026. And the company says, yes, they have not pulled that guidance, that is still there. One of the many things we will be discussing with david calhoun, coming up on squawk on the street, you do not want to miss our exclusive with him, well talk about the state of the business right now it is in flux as everybody knows. And well get an update for him on where things stand on the ceo search as well guys, back to you. Very good, phil thanks for that. Check out the shares of biogen, theyre higher after the Company Reported better than expected quarterly profit, helped by increasing sales for the new alzheimers treatment. Squawk box is coming right back welcome back to squawk box. New this morning, the uks competition and markets authority seeking comments from interested parties on whether the partnerships between big tech and a. I. Companies can impact competition in the uk specifically it is focused on microsoft and amazon and anthropic. This is the first part of an information gathering process and doesnt mean formal investigation will follow. In response, amazon says it is unprecedented for the regulatory to review a collaboration of this type. We talked to the ceo of anthropic about this very issue yesterday because a similar thing is happening here in the United States with u. S. Government taking a look at the role of these partnerships between openai and microsoft anthropic, google has a relationship with amazon, what those things mean and whether they are work arounds to some degree, what may have been a merger of sorts, of course, the ceo in this case of anthropic saying theyre completely independent, there is no board representation, which is different than the way openai is set up, for example, as it relates to amazon. Coming up on the other side of this, rockefeller internationals Ruchir Sharma bhe and talk about why an economic downturn could be coming sooner than expected. You dont want to miss this. Come on back our next guest has an oped in the Financial Times titled the overstimulated super power basically, positing that the economy is overheated and a slowdown could come faster than expected joining us now, Ruchir Sharma, Breakout Capital founder and cio, his new book what went wrong with capitalism comes out in june. Good to see you, ruchir. And i guess you can tell us exactly what your point of view is here, but were all aware of what happened after the pandemic in terms of fiscal and monetary, what you would think is overstimulation. Yes, joe. I think what was exceptional is part of the u. S. Economy is concerned was that the u. S. Government and the central bank you can argue kept stimulating well after the pandemic was over so, compared to europe and japan, the u. S. , i think, runru running fiscal deficits far higher than those countries did. Last year in 2023, by most accounts the external amount of Government Spending alone accounted for onethird of the entire xik Economic Growth in te United States. The other country and the monetary stimulus during the pandemic and then tapered off, the u. S. Government in 2021, 22, even last year, 2023, three years after the pandemic was over kept on stimulating and the result is we have massive fiscal deficits, a big burden now in terms of the share of gdp, which is behind only japan and italy, and the u. S. Has been exceptional and so is the amount of monetary overhang in the economy. Look at aggregate like growth, those are yet to return to trend. After three years of the pandemic it shows you how it is countering a lot of the feds Interest Rate hikes as well. Yeah, so it kept growth, ar artificially high. It is responsible for that also, you do blame it for inflation, for both asset prices and for consumers. All ill say, ruchir, is that many argue that were the envy of the entire world with the economy that we have right now and if youre looking for policymakers to learn a lesson from what youre seeing, were learning a very bad lesson right now, and that is that it works, all of this printing and all of this overstimulation we have not nothing has come home to roost, so, youre not right yet. Absolutely. I lived through many cycles. The last one being what happened in 2008, 2009. At that point in time, the economy, which seemed to save the world and was the envy of the world was china. Chyooin china massively overstimulated after that if you go back and read the press commentary, for over a decade, china was the envy of the world. Here we are a decade later and china is paying the price for it they dont know where to go. So the point i make with the United States is that, yes, the United States has a lot of strength including what is happening on the a. I. Boom on the tech front and it should be the envy of the world, but this is a multifactor model the point im making is that the exceptional growth were seeing compared to the rest of the world it is because of these opposition factors and we i know how you write a book, you want it to be sort of has a catchy title what youre describing when you say your book is entitled, coming out soon whats wrong with capitalism, every yothingo talked about is not something wrong with capitalism, it is something wrong with policy and government i think it is behind the scenes something youre seeing in the i havent read the book yet, obviously, but, i mean, capitalism is done right, i dont think you have problems like this. But it is not necessarily done right when the government gets involved thats exactly the Central Point of the book, which is that capitalism did not fail. It was ruined. It was ruined by the fact that if you look at the suite of government interventions over the last few decades, it has expanded in every which way. It expanded in terms of the number of bailouts, in the number of regulations, 3,000 new regulations that comes through every year so, what i argue in the book is that the capitalism we have today is a very distorted form of capitalism and this is not what the founders had in mind. And the share of the government and its role in the economy has expanded significantly so, thats the Central Point of the book, yes. I knew it i knew it, ruchir. We had you on before, and but the way it sounds, it could have been the same as joes book, which we had on yesterday. The road to freedom, either the road to freedom or remember the first one, the road to surf dom. Exactly yes. It is coming out on the 11th of june we could talk more about that extensively then thats a good point. It was ruined. Ill give you a couple of hours if you come in im not in a position to allow that, but i would. Ruchir, thanks. Thank you like were going to overrule that, no. Youre going to let him come in for a couple of hours yeah. On this tesla shares getting a boost after elon musk says more affordable evs are on the way. But will that be enough to put a charge in demand former tesla president john mcneil will join us next dont want to miss it. Dont want to miss it. Were coming right back. Sometimes, the lows of bipolar depression feel darkest before dawn. With caplyta, theres a chance to let i™. Caplyta is proven to deliver significant relief across bipolar depression. Unlike some medicines that only treat bipolar i, caplyta treats both bipolar i and ii depression. And in clinical trials, Movement Disorders and weight gain were not common. Call your doctor about sudden mood changes, behaviors, or suicidal thoughts. Antidepressants may increase these risks in young adults. Elderly dementia patients have increased risk of death or stroke. Report fever, confusion, stiff or uncontrollable muscle movements which may be life threatening or permanent. These arent all the serious side effects. Caplyta can help you let in the lyte™. Ask your doctor about caplyta. Find savings and support at caplyta. Com you founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire my name is oluseyi matchin and some of myription. Favorite moments throughout my life are watching sports with my dad. Now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. Giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. Food isnt just fuel to live. Its fuel to grow. My family relied on public assistance to help provide meals for us. These meals fueled my involvement in theater and the arts as a child, which fostered my love for acting. The feeding America Network of food banks helps millions of people put food on the table. When people are fed, futures are nourished. Join the movement to end hunger and together we can open Endless Possibilities for people to thrive. Visit feedingamerica. Org actnow welcome back to squawk box. Elon musk defended the ev growth yesterday reporting lower than expected earnings. Take a listen. See the ev Adoption Rate globally under pressure, and a lot of other watermain going back on evs and pursuing plugin hybrids instead. We believe this is not the right strategy and ultimately well dominate the market. Elon announcing tesla starting production by early 2025, evs. Investors cheering the news. Joining us, former tesla president. Good morning to you. Good morning. So tell us how were supposed to think about this. A lot of investors looking at both the sales piece, which is decline whats happening in evs. The bulls saying, this is great news that the lowerpriced vehicle may be coming. Unclear of the timeline. Robo taxes apparently part of this and a capex piece of this how much money theyll actually intend to do this. Seems pulling back a little bit on some sort of big plans to sort of completely remake these factories and sort of taking a middle path in terms of using some of the facilities they already have is that a decent summary of whats happened on that call a decent summary. Kind of two contrasts yesterday. Gm earnings before the market. Tesla earnings after the mark. Gm did a triple beat, and they are getting through their production issues now ramping evs. Whichy a think creates demand challenges for tesla, because there are so many now Ev Industries coming to market. So i think they are having to answer the pressure to have lower cost evs. Right. Same time, theyre trying to move the story to the economy and the longerterm for the investors, though, today, speaking about tesla. Do you have to think about it . Hes made the case you have to think about it as an Autonomous Vehicle company long term,s to capture valuations where even tesla sits in terms of the stock price today yeah. A little, hey, look over here, when the core business is weak recast a different story i think a little bit of that going on for sure. Because their core business is weak and straightforward about that i think, yeah. The support of a valuation youve got to believe in this recast, into autonomous. Straight up do you believe it . I think there are already two companies doing driverless cars, and so theres a race where two are already out there. Right. And tesla, if they can get to be the third i do believe cars need to be autonomous ten years from now. Probably you wont buy a car if its not. Ten years from now. The question is, given there are already vehicles, they have a total kind of radar, lots of other sensors. A very expensive process, cruze and the like yeah. Can tesla do it with the tech stack already on the vehicle, to say elon said repeatedly he wants to do it with cameras and Processing Power the big question. Waiting since 2015 for the finish line to arrive. The finish line keeps moving out and out and out and people as they work on the problem, 95 done the last 5 like as big as the first 95 . Where that finish line is, when we get there, tesla or others, i dont think anybody knows, but closer than weve been. In terms of these more affordable vehicles. Yeah. Do you think those will compete well against what youre seeing out of gm and these other carmakers . I think you need lower got to open the market and the big and broad market is at the lower price. In a couple months can buy a chevy equinox after tax incentive, a 300 plus lowrange car. Smallest ev. A number of those vehicles coming out i think thats going to be formidable kempcompetition for consumer. More concerned about the idea even, the ev adoption is not staying at pace . Right . I mean, thats the the sort of bigger overhang of the whole situation. Are people going to hybrids . Going to stick with combustion engines . Whats really happening here like we awe knew the First Quarter was happened what happens First Quarter most manufacturers lost the tax incentive credit now back i think were going to see different numbers coming out of the rest of the year, because it was a slow First Quarter consumers know they wait a few weeks or months wait get it or just this market doesnt work without government incentives . If they a little of both make evs affordable. So the governments helping. While the Car Manufacturers bring prices down and costs down those costdowns are happening when you have, like a chevy volt, and thats priced in the 20s, youve got a viable car without tax incentives even more viable with tax incentives. And a car manufacturer, or a car sales person, group one, who heads all of these car companies, consumers really want hybrids, to, walking in there. A different between hybrids and plugin hybrids. More expensive than gas. Doesnt answer the cost issue. Plugin hybrids, a range, most people drive every day, with a plugin hybrid youll see peopleleaning into plugin hybrids where gm is. What do you make of the political divide among evs talk to leaders, rate of states buying ev is not a palatable product, that this has been so politicized that theres a view that its like having a Bumper Sticker on the back of your car. If you drive an ev, for certain type of person, thats a bad sign and for a certain kind of person its a good sign and maybe splits across Political Parties in some ways do you believe that . Is that actually happening i live in a purple state on the red side of the purple state. Driving a Chevy Silverado ev its got 460 miles range pull up in the grocery store, Hardware Store parking lot and get questions. What is that thing is it fullsize, how much range do you get can i look at it so i dont get that vibe from the farmers and ranchers that are you dont believe the sort of theyre not saying, im not interested in this because of my political views. Theyre genuinely interested. And Energy Information administration and biden is estimating, what, u. S. Cars, pertage by 2050, electric. Do you know what their estimate was . Figure its moving around a lot between 50 and now down 12 . Already at about 8 so i think its a layup to go from 8 to 12 between now and 2030. This is 2050. Oh, i dont i dont think. What the Biden Administration is saying. Not from a red state person. Thats from i think the Car Manufacturers have very different screw viewsf that market. Yeah. Ev market will be sales at 14 of total sales 14 by 2050. According to biden. Right i think right now i think wrong about it by 2050 for sure look at our countries with a head start in this race, china at 40 norway at 50 germanys approaching those numbers. So i think i think thats its going to be far sooner than 2050. Finland is the happiest place on earth. It is puts me at eat. Thank you appreciate you being here today. Thanks for having me. Great to have you here given your experience at tesla and weve got a quick programming note tomorrow tesla investor ron baron our guest and well discuss with him. 8 00 a. M. On the east coast. Youre watching squawk box. Im joe kernen along with Andrew Ross Sorkin and becky quick. Senate sending a 95 billion aid bill reports say ibm is in talks to buy Cloud Software maker, and that stock jumped close to 20 yesterday on that news. That hashish corp. Or i might invest in that okay. Right. Yeah. And tech giant oracle moves headquarters to nashville to be closer to whats become a health care epicenter in the u. S. Oracle already moved hq from Silicon Valley to austin, texas, a couple years ago, in 2020. A look at futures on this wednesday. Right . It is wednesday. Wednesday morning. A look now you see the dow looks like its still indicated off. Only by less than a point at this moment. S p futures picked up. Now indicated up by 12 and nasdaq up by 118 if youre watching the treasury market youll see that the ten year now yielding 464. Two year at 494 and we want to check in with dom chu for a look at the mornings premarket movers a wild guess is it earnings news driving things today becky, joe, andrew, yes earnings bonanza driving our wednesday morning movers here. So to beckys point, start with tesla. You just talked about. Arguably driving a lot of market narrative especially the nasdaq. 12 higher electric vehicle giant posting actually worse than expected quarterly profits and revenues but optimism helped by confirmation that the company will accelerate plans to rule out new vehicle models including a march ore affordable option and elevated stock from buy to neutral citing things potential for more positive catalyst rest of the year. More on that story, top calls of the day, subscribers head to cnbc. Com pro for a more detailed ana analysis latebreaking news this past hour, aerospace boeing, dow component, shares 3. 25 higher it reported a smaller than expected quarterly loss per share on better than expected revenues also reported a smaller than expected drawdown on its Free Cash Flow than analysts feared boeing saying its stabilizing its supply change reducing production rates on topselling 737 max model jets in the wake of that regulatory scrutiny over Quality Control issues. Tune into squawk on the street, exclusive interview in the 9 00 a. M. Eastern hour and end with of you roughly 4 Telecommunications Giant with a mixed quarter. Profits beat expectations. Revenues fell shy of the mark. At t managed to exceed expectations for number of Wireless Phone subscribers added and posted better Free Cash Flow as well. That Free Cash Flow, of course, very scrutinized by investors hedging fund at ts big Dividend Payments current levels, a dividend yield around, get this, 6. 7 just to put it in perspective, roughly five times higher than the broader s p 500, becky send it back to you guys. Great dom, thank you very much meantime, meta reports Quarterly Results after the bell today. Joining us right now with a preview barton crockett, rosenblood senior securities analyst. Barton, meta on a tear not just the stock, looking at growth of the companys earnings, too. Something you think is sustainable . Certainly, i mean, theyre in a tremendous place now i think in the First Quarter growing advertising 27 , what they model growing at like 24 Fourth Quarter. That will be the fastest growth any of the major kind of internet complex, amazon growing 25 . Google consolidatedly growing close to 8 . So really big and growing massively. The comparisons get tougher for them as you move over balance of the year growing spending this year it is going to be a real test, a gut check to see do they have ability to compound big growth on top of big growth with big numbers . Our bias, favorably, making great investments in a. I. Driven marketing tools. If anything, around tiktok, this helps them well positioned even after the great performance. Why do you think they are going to see the most growth in the ad market versus all the big tech competitors because of those a. I. Tools . I think that is a big part of it theyve been investing at scale. Direct marketing focus machine learning, a. I. You know, something they seem to have built a better mouse trap than the incremental dollars moving their way growing farther than social media peers. That speaks to the product this is a direct marketingdriven marketplace for them its results driven and getting the money because marketers are getting results. Can you weigh in on a broader conversation having through the morning. Talking productivity, growth seen in the last three quarters, sustainable, real, caused by Government Spending . Whether something to do with a. I. I know a lot of places havent seen huge uses for a. I. , but jamie dimon from jpmorgan talked theyre using in actively in 400 different use cases, fraud, marketing idea generating. Moderna a big story in wall street journal doing a deal with openai hoping to by end of the week have the chatgpt schable to all employees how they see that building things for direct development. Youre talking how meta is outstripping and outgaining competitors in the advertising space, because its using a. I. Tools, too do you think a. I. Tools are used broadly enough to actually increase productivity at this point . Look, i cant say that ive calculated numbers on that everything i have is anecdotal feels like potential there doesnt feel in the companies alook at its been realized broadly and outside of what were seeing with meta but certainly amazons making a lot of noise Cloud Service providers are leaning into this and tons of innovation and experimentation and i think that this is, you know, moving beyond kind of a chatbot that would amuse you and help you do your homework to something getting stitched into your everyday kind of Business Activity and people are doing it well and peel doing it less well, but on balance i wouldnt be surprised if we look back in a couple years and its meaningfully helped the macro backdrop. Thanks for your time this morning. Thank you. When we come back, the chief equity strategist, not andrew, calling the rally. Barry bannister call on the market well be right back. Next guest, weve pointed out, quite a bit, accurately called the rally last year really lonely. Says hes now very cautious on the market this year in favors value over Growth Stocks Barry Bannister chief equity strategist steeple i can vouch what i just said on the air. That did happen. At stifels. Better at bottom fishing than top ticking. My nature. We have had the view since last year that 2022 to 23 actually had a recession. If you look at a recession, income, production, sales, employment and fixed investment. Only thing didnt weaken employment, structure of labor had a recession in Everything Else real retail sales. Were recovering from a recession, which is why youve had a burst of productivity after recession. Not a classic we call it pseudorecession. A major slowdown like the midteens. One in the 80s. One in the 00s. Because of that actions in the market very much like a postrecession. Caught the fed off guard the economy came back. By does that make you less bullish . Think about it, the yield curve is inverted. Meaning short rates abrovove log rates. I think the curve will flatten i think the long rates will go up five was the norm before the financial krcrisis in 08. Of the five year well see five again i think the problem is messaging theyll cut a little bit greenspan and bernanke took over for greenspan kept rates at about five the fed can cut a little bit manage it. Like course corrections but cant really whack rates like in the last decade. Your view whether stocks continue to perform well is based op whether the fed cuts or not . No. Fed is extremely important. Rates driven, second delivery, machine. We think, just thought valuations some of the internet excuse me the a. I. Hype a little overdone. Looking for 10 correction off march 28th down to about 4750 on s p 500. Trade around these ranges. E okay, earnings, multiple already as good as its going to get . Had a minor earnings recession outside of tech. Negative outside of just better now, arent we yes youre seeing earnings, employment, these arela latecycle phenomenal. After the pseudorecovery, fed has to be on guard. Interesting correction earnings goal up 10 . Just it earnings probabl struggling to do 10 this year. Interest rates have normalizing of Interest Rates is up gets complicated has to do with r star neutral rates, term premium, but generally speaking, we think a higher rate environment longterm. Multiples elevated on some hype. Youre not, hairs not on fire about inflation being worse than were expecting feds going to have to actually tighten down the road . Instead of cutting you just think we got ahead of ourselves . 0 pe 10 corrected back on track after that postworld war ii, 3. 7 year over year. 3 looks sticky at that level on headlines. Core pce inflation the fed watches is about 2. 5 . That core pce in the world, fed thinks depending on Growth Potential of the economy got to keep rates a little closer to 5 than 4 thats what the adjustment is. Long end will be higher than the short end. The short end higher than what people are used to. When will you be as bullish as you were last year . Wed have to have another bear market. I do think there will be a brit of bit of a term premium shock. People will realize next yeesh economy is bumping up on resource constraints inflation will bottom up have he leaves orange, powell hiking rates and market sell off. Another great entry you think 20 down . Yeah. Probably more of a 2025 story, though. Do 10 this year 10 correction. No, no. Rally back think back to the end of the year going to have a relatively resilient economy and what weve focused on call it cyclical value. A broadening out into financials, industrials, energy, basic materials, industrials, some already moved we think it will broaden out Fourth Quarter and less tech sin tri tech centric. I was kidding, caddying. A lousy caddie. Talking all the time instead of a lousy golfer. No. I know he does. A tennis pro, a college golfer, too. Shes good. Ever visit the park, stifel. Offices everywhere. Not everywhere. Im based in the sarasota office. Are you thats rough. One of our branches one in downtown sarasota, venice, in tampa you can choose where you want to work. A quick out, barry. Thank you. Just used think of the way you see coach ks name basically the same right . Yeah. All right. grunting at morgan stanley, old school hard work meets bold new thinking. laughter at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. Old school grit. New world ideas. Morgan stanley. My name is teresa barber. I was in the United States navy and i served overseas in the middle east and africa. Early on in my career i had a commander that taught our Suicide Prevention training on a friday afternoon and the very next day, he took his own life. 90 percent of suicide attempts involving a gun are fatal. You dont know how much somebody can hide whats going on in their head. Store your guns securely. Help stop suicide. Box. Our next guest says the bankening company is back to being a boring business. That is a good thing analyst at wells fargo a lot to discuss about the banking business including travails of citi group and other institutions youve got something in your hands. Yes what are you holding . Well, citigroup is dominant number one pick. And what i say here is lets go citigroup reorg take 13. Take 13. 13th restructuring. Lucky 13, is what youre saying for citigroup everything is a little upsidedown this time, its different for citigroup. Finished seven months of what they call a cyclicification. People say implode, lose revenue, crusustomers and best First Quarter. Beating expectations by onethird. Top line, bottom line and going really well. Maintain the best of industry guidance for 2024. Guess what next three years, earnings doubling. Right. Goldman sachs, upped 70 . No other bank up 50 . Stock, call it 62 for now. You think 12 months from now at the rate theyre going, call it 24 months from now, given your longterm outlook for the company, its what we have earnings going from 5 a share last year to 10 a share in 2026. Over doubledigit return on equity havent seen that for a while. Gets them to tangible book value, which means a double in citigroup stock somewhere around 110 to 120. By end of when . 2026. Two years, three quarters away. And direct put it up there so everyone can see. Take 13, director is mike mayo so were clear date is the present. Okay see if you have to come back and erase, take 14 and what it actually says. Its difference this time, this restructuring is creating five lines of business its services, banking, markets, consumer and wealth. This is similar towhat proctprocter gamble did five years ago. Wells fargo, chris kerry and citigroup five lines of business more transparency, accountability very competitive businesses already. The wealth business is a competitive business. I can see wealth. 10 of the company i dont know where thats going to go. They say going to improve. 80 of the company is very well positioned at citigroup. You have global payments, services business. Best in class. 25 of the company markets and banking as you know top five Global Investment bank and top three credit card player thats 80,percent of the company. Those people saying citigroup, never own it thats wrong okay the companies restructuring every bank out there, your topic . Mydominant topic. Look, i recommend number two and three pick now . Goliath is winning, working bank of america and jpmorgan number two and three pick. Tied they are benefiting from the diversification, not too much commercial real estate still an issue cre is tbd to be determined, play over a few years. Not a lot of commercial real estate exposure. The other hand generating a deposit, deposdeposits in the industry talking multiyear eps inflection point, because adding earnings to the industry down probably 20 end of this year playing for 25 and 26 when earnings go up onethird having revenues from negative to positive traditional banking revenues income going from negative to positive offeri ing levels negative to positive going in the right directions. A long way, the time is coming to own more bank stocks. Got to run. A bank right now you dont want to own look, several banks with commercial real estate exposure. Not saying going to be bad saying not good. A series of banks. Comarc kaw, mnt, regions, zions. If you want a cheap stock go with citigroup 30 discount to the book value. Save that. There will not be a take 14 this is it. No take 14. Okay. There it is. On television. When we come back, former Td Ameritrade joe moglia joins us for a conversation on state of the market and whats happening with College Sports and ncaa. Reminder heading to the break. May 4th Warren Buffett in court answering questions. A shareholder with a question send it to berkshire questions at cnbc. Com. Read through them and selecting mti. O ask during theeeng stay tuned youve watching squawk box and this is cnbc. When it comes to investing, we live in uncertain times. Some assets can evaporate at the click of a button. Others can deflate with a single policy change. Savvy investors know that gold has stood the test of time as a reliable real asset. So how do you invest in gold . Sandstorm gold royalties is a publicly traded Company Offering a diversified portfolio of mining royalties in one simple investment. Learn more about a brighter way to invest in gold at sandstormgold. Com. Music unnecessary action hero learn more about a brighter way to invest in gold unnecessary. Was that necessary . No. Neither is missing your daughters competition to do payroll. With paycom, employees do their own payroll so you dont have to miss your daughters big day. Time to shine. Get paycom and make the unnecessary unnecessary. Everybody. This is cnbc seconds away from march durable goods orders ahead of that watching futures this morning dow basically back to flat down by about 7. 5 points. S p indicated up 14 points nasdaq continues to grow this morning. Up by 130 points for futures there. Treasury yields same level seen in the last week or so tenyear still at 464 basically. Twol year at 493 Rick Santelli is standing by at the cme in chicago and rick h hahas data with us. Yes in a few seconds well see march preliminary durable goods. Volatile series. Of course, a couple weeks may change headline lately affected by transportation all right. Numbers are hitting the wires. Expecting the number close up to 2. 5 and delivers. Up 2. Per6 headline durable go. Best number back to november of last year when it was up 5. 4 strip out transportation, it comes back down to earth we can see in this instance transportation was a positive. Moves down to 0. 2. Expected up 0. 2. Nondefense ex aircraft up 0. 2 Rearview Mirror a revision, big revision from up 0. 7 to only up 0. 4. Maybe pay closest attention to the shipment side. Expected to be up 0. 2. It is up 0. 2 review mirror minus 0. 6 unrevised. Thats the worst level going back to feb ofof 2021. Play close attention durable good orders beginning of the year a big negative. Reversing some of that saw earlier in the year much was transportation orders. See Interest Rates, you pointed out, becky, havent done much lately they did prior to lately was hugely significant in case anybody didnt notice, we kind of went through 4. 5 closing yield basis like a hot knife through butter 467, 16th of this month, high yield close going back to november, and it is a doozy of a resistance level i mentioned it about three weeks ago. Watch that one closely closing yield basis. Becky, back to you. 467 on the ten year is the doozy . Yes correct. Closing basis. Right now at 464. Got a big pce number coming out friday if you had to take a wager, higher, lower, which way would you go back towards 4 or 5 next i think whats going to happen is i think the preferred Inflation Numbers will come out roughly at expected. The yields will back away a bit. I think 467 on closing yield ways remains intact. Im still of the belief the huge spending and huge deficit like 70 billion record auction today fiveyear notes will eventually push that yield above that level, and i dont have any significant resistance between 467 and the 5 . Thank you. Steve liesman joins us with more now steve what are you looking through . Last number we get before tomorrows gdp number, it will affect them. Used at part of inputs the revision, down, february reported influence i cant find it. Keep looking for it. Shipment number. Capital goods number, aircraft shipments a number feeding into gdp. Whether that would revise down from february. I dont know if rick is still there, but yesterday he reported the pmi numbers at 9 45. If you have a twoday chart of the ten year or two year, either one. Never seen the market react to the pmi numbers at 9 45 the way they did yesterday huge declines with the notion this was a leading edge of the swelling economy just want to be careful of this number it did come in hot on the headline number, but take up the transportation tremendous volatility from boeing orders. Jo know the exact number like to three in january, four in february number goes up and down why we look at capital ex a aircraft investment. Watching this a. I. Stuff how much money pummelling into a. I. Critical factors in term for productivity music is playing im continuing to talk its time to be quiet, i think. Really. Coming up, joined by former dallas fed president Robert Kaplan on the new data. Stay tuned youre watching squawk box on cnbc. Welcome back to squa box. Talking about the global goods data just got and gdp, Inflation Numbers due up later in the week bringing in former dallas fed president Robert Kaplan and get his thoughts on maybe the way the fed should see this, will see this will you take us inside the brain of jay powell to the extent you think you can do some mind reading for us . I think this most recent durable goods number is consistent with a resilient economy and i think overarching narrative in my mind is, we have historically restricted Monetary Policy being blunted to a great extent by historically stimulative fiscal policy. Unspent American Rescue act money still being spent, Inflation Reduction Act projects, infrastructure act projects and the conflict between those two has meant that the particularly the services sector, inflation in the Service Sector has been stickier goods are disinflating thats being helped by china overcapacity, and particularly global overcapacity, but services, particularly labor, is where ground zero is of this inflation issue. If im at the fed i think what theyre thinking is were at full employment, and they can afford to be patient, and they do not want to make a mistake by beginning rate cuts and then having a resurgence of inflation, particularly in the Service Sector so theyre going to wait, and i think theyre going to push back expectations for a rate cut, and leave their options open for when they might act and the direction, even, they might act. Its because of this conflict between monetary and fiscal. To the extent theres a rate cut in the future maybe, youre suggesting potentially a rate hike in the future, is this now into a 2025 event . I still think theres a chance that the fed could cut rates in 24 they would like to cut rates it would be helpful to the banks, helpful to Small Business and a perversive impact on rents by having high rates, because its very hard to buy a home its hard to build a multifamily rental project, might actually be putting upward pressure on rents. So i think theyre going to keep their options open i think the bar is extremely high for actually raising rates down the road, but i think theyre going to be patient, noncommittal and kick the can down a few more months. So what do you think the chances are that they raise rates . I still think extremely low, and i would far rather see the fed and their loathed to do this call out the impact of fiscal spending and id love to see it a more whole of government approach to fighting inflation what do i mean by that slow down implementation of the Inflation Reduction Act. Slow down implementation of the infrastructure act slow down implementation of unspent arca money because if you leave it solely to the fed to fight inflation, well have higher rates longer and its having distorting effects and other damaging effects to the economy, i think, over the long run. What do you think, or do you have any concern about the employment picture as the year progresses i mean, this is the issue mr. Furman raced earlier today long as youve got this sized fiscal stimulus, people have to remember we were in a 1. 1 trillion deficit the First Six Months ran a fraction of a deficit last year historically high at full employment and these Inflation Reduction Act projects Infrastructure Projects are stimulating demand for workers and seeing it all over the country. I think the labor market will remain resilient. So just so were clear, though flip this around equity markets now, still an expectation or some grant we do get a cut before end of the year if that doesnt happen, how do you think about the valuations youre seeing out there . I think theres still a chance for a cut this year, if that doesnt happen, got to remember the big Platform Companies like meta, amazon, nvidia, these are companies that dont tend to use that, their Platform Companies i think those companies can still perform very, very well, even if rates are sticky i think were going to see higher rates shake out on smaller or Midsized Companies without the size and scale and access to technology and more sensitive to labor costs i think theyll be disproportionately, negatively affected if rates stay higher longer and anything Interest Ratesensitive negatively impacted. President kaplan, appreciate the time and perspective this morning. Thank you. Coming up former tv mogul joe moglia joins us and check out shares of moderna announcing a share with openai giving the Pharma Companies employees access to chatgpt enterprise u stay tuned yore watching squawk box on cnbc. Welcome back, everybody. Jpmorgan chairman and Ceo Jamie Dimon praising the economy at the club at new york. Unbelievable. Booming. Business is booming for a while. Since covid and kind of before then slow growth the economy was 30 low growth 20 years. If i was the government looking to say, why . A lot of, they have reasons for it regulations and bureaucracieses, stupidity and foreign policies antigrowth taxation and a bunch of other types of stuff, but if you look at the economy since then, its been booming. Joining us now to talk about the economy and the markets is joe moglia, former today america chairman and ceo and chairman at Coastal Carolina university joe, talk about a brunch of stuff, but lets start when weve seen with the economy and how the markets have played off of that. Jamie says how great the economys doing, but also said later that most of the time the markets try to confound the most people as possible and could be setting up for one of those time i think hes more concerned what the future holds jamie second greatest ceo of our time in the financial world, you know, often when he comes on got to be concerned what going on in the world. Concerned whats going on with the economy and prepared for that. Risk management. Yes were you there first . Didnt want to say that i thought you would and then didnt want to correct you. Im just trying to actually, the process the still trying to process, after you mentioned okay. I got it. I think, hes right where the economy is today one of the things im a little concerned with great for the individual consumer around 3. 7. Last year 4. 4 traditionally 8 significantly less than its been having less money to spend obviously as time goes on. Certainly concerns with the economy. Biggest one i think, our economys in good shape. A great labor market, inflation under control. Historys on our side. One of the things keep keeps coming up on the show, 10 correction since the financial crisis, reality, 2008, 11 positive years. Only 5 corrections. Right. Recently saw about a 5 one i think may or may not see that. If we do, once, not the end of the world. You think its changed postfinancial crisis because of the feds intervention and the Government Spending gone into all of these issues from the pandemic on . I think when weve had the significant crisis with regard to the pandemic, answer is, yes. Financial crisis, and had bailouts answer is, yes with regard to that right now our economys . Reasonably good shape. The concern whats going on geopolitically more tense than a month ago. I think, implore the aid packages approved, but thats just going to further irritate, i think, russia and china and iran thats just going to exacerbate the tensions that already exist. Thats the biggest concern that ive got in the back of my head. Oil prices still at like 83 a barrel, barely thats the one really surprising thing from all of this geopolitical potential fallout, particularly focused in the middle east . I agree unless we think theres not going to be anymore problems in the middle east, the risk Oil Prices Going higher rather than not. Going to have negative impact on the economy. We have bounced around today and every day just this idea that the markets have hung in so well i mean, we saw a 5 pullback of the s p 500. Erased this week what gives earnings coming in strong. Some of the Inflation Numbers stronger than expected the fed less likely to cut liesman pointing out only 16 of the fed cut come june. Numbers coming down for july and even september at this point everythings clear yeah. I think everything really looks pretty good. Pretty good with the exception of the geopolitical issues going on historically, in an election year, when we have an incumbent, theres a 12 gain that year, and thats, i think, 16 election years in a row the economy is in good shape, and i think the fed is doing a good job looking at the data, and theyll do a good job making decisions as they assess that data but were okay there are significant issues, i think, around the world that can have major impact on us, but right now, the market doesnt seem to be overly concerned with that we talk to you about the markets and the fed a lot. We dont talk a lot about whats happening in collegiate sports with the ncaa, and thats something you know very well from your years as a coach in the ncaa and your years and experience now at Coastal Carolina what do you think is happening with bringing in n. I. L. And the splintering of the different leagues . I think the Biggest Issue that i have got with regards to n. I. L. , not the players getting paid there is no structure. There is no organization theres been a lack of leadership from the ncaa from the very beginning, and frankly, College Athletic leadership has not stepped up to fill that gap. The only way, in my opinion, and there is a lot of talk about doing this now, that this is going to get fixed is the power five schools totally break away from the ncaa, period, have their own executive team that is totally autonomous, separate from the ncaa altogether if the nfl model themselves or ran themselves the way College Athletics is today, they would go out of business you model yourself after the n. I. L. You have collective bargaining and salary caps, and eventually, youll figure this out right now, its the wild, wild, wild west. With regard to our team, for example, theres not a player in our program theres not a kid we talk to on the portal or a kid were recruiting that doesnt begin with, what kind of n. I. L. Opportunities do we have . This is absolutely a business, and the athletes we have in college today are far more especially in football far more professional athletes that be student athletes. Nobodys thought about eligibility or graduation rates. Nobodys talking about what youre going to major in its just about how much money im going to receive this needs structure, and right now, it hasnt got any the problem with this is what i mean, as a fan, i know what the problem is its a Different Team every single season. Its hard to follow sports like you used to, for your own alma mater, but whats the problem from your perspective on whats happening . Lack of leadership. We need somebody to be able to step up, and everybodys going to is operating in a way thats under their own best interests. The Television Revenues are significant. So, the big ten, excluding the schools that are coming from the west coast, this year, could very well make 100 million apiece just for football every year, and that may go up thats nothing to do with n. I. L. Nobody wants to necessarily change that because of the amount of money that happens to be involved, but at the end of the day, this cannot go on forever. Why not its chaos. Its chaos theres no structure theres nothing nothing along that line. Thats why im adamant ive been saying this for three years now power five football has to break away. If it does and gets a legitimate executive team that models themselves after the nfl, it will work. Everybody else will follow suit well, they got to get that right first, and then they need to have right model, and then you can go on from there big bucks involved with that. It is amazingly interesting from a fans perspective and from the business side of things too. Joe, i want to thank you very much for coming in today thank you, becky, andrew. Number one. Numero uno. Coming up, the biggest takeaways from boeings results. Well speak with a top analyst in just a moment youre watching squawk box, youre watching squawk box, and this is cnbc amelia, weather. 70 degrees and sunny today. Amelia, unlock the door. Im afraid i cant do that, jen. Why not . Did you forget something . My protein shake. The future isnt scary, not investing in it is. Youre so dramatic amelia. Bye jen. 100 innovative companies, one etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges expenses and more prospectus at invesco. Com. Boeing was out with First Quarter ruesults, reporting a smaller than expected loss, but commercial airplane revenue dropped by almost a third versus last year. Joining us with his reaction is ron epstein, bank of America Securities research analyst, he has a 109 price target on boeing with a neutral rating the stocks reacting well today, ron, and its not far from your target these results were, i guess, to be expected. Its not a great time for boeing are they managing through it with some positive prospects for the future its too soon to tell the real question on investors minds is, whos going to be the new Leadership Team . You saw a lot of change at the Company Recently the ceo announced that hell be stepping down. So, whos going to replace him and then theyll bring in their own team youve got a new leader at boeing commercial, a new chairman of the board. Theres been a lot of change i think the real salient points in the quarter, maybe why the stocks up a bit, is the Free Cash Flow burn, albeit 3. 9 3. 9 billion is a lot, it was less than what the street was looking for. Their defense business was a little bit better. There were 2 margins, roughly and then, if you look at their services business, that was really kind of the shining star. And its been, you know, services had good margins. But i think, you know, the real thing on investors minds are, you know, one, who is this next Management Team going to be . And then two, expectations set by this current team regarding the turnaround, are those expectations realistic how long is it going to take its really, where to from here . And were in a bit of a Holding Pattern until we hear that and in a letter to employees, david calhoun, the current ceo, said theyll be delivering a lot of 737s and 787s out of inventory this year. That should drive cash flow generation in the second half of the year, but to be honest with you, thats what weve heard from this Management Team again and again and again, so whats changed now . Why is that going to happen in the second half of the year . With our 195 price target, were very comfortable neutral here its a showme situation for sure do they need an engineer, do you think . Would that help . So it doesnt get into the safety issues again . Yeah, i think you need an engineer in the top level of the company, an engineer at ceo or cfo or someone in that team. As weve discussed before, theres been such a migration away from a focus on just sort of engineering excellence and so on and so forth and a real focus on the financials. I think having engineering prowess at the top although, they had one not that long ago, and that didnt work either. Were out of time, i think, ron. Youre close enough to 195 to be, you say, youre very comfortable at neutral right now. That makes sense well take one thank you. Well see you again. Theres the futures. We gotto go. Well be back tomorrow, all of us make sure you join us. Squawk on the street is next good wednesday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the New York Stock Exchange s p coming off backtoback gains, first time in two months, dow trying to make it five straight gains for the first time this year hilton, texan, boeing, all in the earnings mix were going to begin with tesla, surging in the premarket, despite this quarterly mix, including a biggest revenue slide in a decade. Shares of th