Transcripts For CNBC Squawk 20240703

The twoyear yield at 4. 22 joe. Honeywell is out with the First Quarter profit of 2. 25 a share. Revenue 9. 11 billion. The forecast was 9. 03 billion a little bit better than expected look at lets get to meta he did not change it to a. I. They are still spending more on the metaverse or part of the a. I. Spending . Who are they who are you . It is part of the metaverse shares of meta plummeted after the Company Issued a light forecast is overshadowed what was better than expected First Quarter results. I want to bring in dan flax. It was a fascinating call. In many ways, Mark Zuckerberg called it. A lot of volatility around the stock in what he calls these type of periods when they invest in this stuff. The question is whether investors and like them investing in this stuff, dan, and the market spoke last night. We have seen this movie before, perhaps. Good morning, andrew. We have seen this movie before with the transition to stories they have done well with reels in the last 24 months. What we see in a. I. Makes sense from the investment standpoint it will take time to monetize and Revenue Growth while strong and moderate over the course of the year it is the right strategy they are laying the foundation for future growth and we have to see how the next several months and 2025 play out. Is this a different perspective that you have than you might have had or other investors had two or three years ago when they were investing heavily in what was described as the met thhametaverse a. I. And investments they are making in the data centers is one example are a little bit different. If i contrast it with the metaverse and devices, the devices are really about trying to build products and build a new platform beyond the mobile era where apple and googlioglha been dominant. This is delivering a riecher experience for users as it were to get more functionality. On the other side with advertisers as well. That is directly related to their core business and i think it makes sense of course, there are elements of a. I. In the metaverse. Metaverse will take much longer to build out a lot of what i think mark is trying to do here is to, as you said, create a platform that isnt reliant on android or apple, but the question is can effect toively take control of t back so much of what theyre doing has to work effectively on top of these other platforms i think in the future he is still and meta is still going to need to build and be successful on top of other platforms. If they are able to did o that, though, and the track record is strong on their platform with the users and advertisers to create value they had success with small and medium businesses globally i expect that to continue. That is how the Technology Industry and broader ecosystem works. Dan, i guess part of the question people have is you can see the real base case and reasons that microsoft is doing this spending because theres a huge potential market and huge market for use cases when it comes to business. Use case is when it comes to the consumer are a little harder to find your way around at least ones you can monetize and maybe they need to lay that out more i do realize when it comes to advertising and what they have been able to deploy is advertising which outshines competitors. It may be a tough case with the monetizing i think for the consumer and the distinction you make, becky, is correct in terms of the enterprise you can invest we will see with microsoft and azure tonight. It is generating quantifiable revenue. With meta, it will take time it will manifest in a different way. You will see user metrics continue to remain healthy you will see more and more engagement with video and more immersive experiences. The ability to tease out exactly how it is being monetized with the generative a. I. Will be tougher. I think the end result will be a healthy user base and durable growth for the advertising business again, it will take a little bit of time. Finally, when do you think there will be advertising built into all this . On the engagement with llama in the past two weeks built into instagram and facebook, im playing with it more im genuinely i dont think everybody is doing that. You think it will be in six months i do. You are good at early adoption and using it. I think what will happen is more people will use it to create generative images of their families they will edit videos. I think it will keep you in this in a way and that is part of the goal, dan, to keep you on the platform the question is, is this cokeepn you on the platform or new ways to sell advertising. I have meta glasses. When will they feed me advertising . That is interesting from the revenue perspective. I think on the glasses, andrew, it will take a few years for them to infuse significant advertising there because the User Experience has along way to go to mature with glasses and those devices to optics. It needs to get better on the core business, i expect in the coming months and next year, generative a. I. To tr contribute to the User Experience and they are Building Tools to help monetize which drives revenue for facebook. Dan, thank you. Thank you ibm shares are lower this morning. The Company Reported earnings of 1. 68 a share. That was 8 cents better. Revenue lower than expected and the Software Revenue and Ck Consulting revenue below expectations the Company Announced it is acquiring hashi corp for 35 a share. The deal had been rumored since tuesday. I think the stock is doing better if it was hashishcorp we need to give more color than what we have i read your story. Can we talk about it at the end . Sure. Lets tell everybody the immediate news ford shares are higher this morning after earnings of 49 cents a share which Beat Estimates of 42 cents. Revenue lighter than expected. Sales of trucks offset losses in the electric vehicle segment the company maintained gooid an guidance and the Capital Spending on the electric vehicles is that what you want to dig into it is up a little the notion is they didnt do worse than what was possible in ev losses. The ev loss for the quarter was 1. 3 billion operating loss they sold 10,000 evs do the math. For every ev the company sells, it is losing 130,000. It is not getting fafarley said is not there the losses in the ev unit with the 1. 3 billion here the Company Still has huge profits from big f150 gas guzzlers bizarre. Its what we have seen. He said it will be profitable soon i dont know how i think at one point, one of the guys at ford said watch out, elon were coming they said that not too long ago. Were coming, but losing 130,000 for every Single Person who walks off the lot. The dozens of people who are buying. If you have 10,000 in sales, it is not profitable it could be down the road. They are doing what meta did after the metaverse spending and say we are reining things in besides the f150, your favorite thing hybrids. That offsets the weakness in the ev you know what i look forward to every day . What . The squawk planner. It is a highlight for so many viewers who are marking their calendar look at the data here is the key Economic Data we are getting. Weekly jobless claims is coming up the first read on gdp in the First Quarter all at 8 30. The number to beat is growth rate of 2. 4 that would be down from 3. 4 in the prior quarter. On the earnings calendar, we hear from caterpillar and merck and comcast. After the closing bell, we hear from alphabet and microsoft and intel. Coming up, the protests expanding on College Campuses. House Speaker Mike Johnson is threatening to pull federal funding. Those details are next. Huge lineup ahead. Including long time tesla investor ron baron and robert kraft. He is talking about something much more important than the patriots some people think there is nothing more important than the patriots this is important. Bobs efforts here. Ftc chair lieina khanill we with us. Squawk box will be right back. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. At mor anley, 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. Youve got xfinity wifi at home. Take it on the go with Xfinity Mobile. Customers now get exclusive access to wifi speed up to a gig in millions of locations. Plus, buy one unlimited line and get one free. Thats like getting two unlimited lines for twenty dollars a month each for a year. So, ditch the other guys and switch today. Buy one line of unlimited, get one free for a year with Xfinity Mobile plus, save even more and get an eligible 5g phone on us visit xfinitymobile. Com today. House Speaker Mike Johnson is calling on columbias president to resign if she cannot bring order to the campus he is threatening to pull federal funding for schools that dont create Safe Environments for jewish students. He hinted the National Guard could step in if the violence is not stopped. We met with the president and top officials before we came out on the steps here. We encouraged her to take immediate action and stamp this out. Our feeling is they have not acted to restore order on the campus this is dangerous. This is not Free Expression or first amendment. They are threatening and intimidating the speakers appearance was met by boos and heckling of the crowd. He paused his remarks and said enjoy your free speech the propalestinians evncampmen was set up yesterday protests also he rerupted on the campus of new mexico at albuquerque. Police got involved in protests with some campuses and arresting 73 people at the university of Southern California in los angeles and 34 people at the university of texas in austin. It seems like these issues are stepping up close to the end of the school year. It is a shame for people who wanted to graduate columbia. I guess we dont need to run a sound bite these tents are set up next to the kick ball where jason was located . We talked to him right after. They must have stopped playing kick ball. All those whackos. They shutdown the yard. You needed a student identification it is happening we have talked about how students protest in general. What is different about this is i read a letter posted online from the jewish students at columbia here is what they have been hearing in terms of the protests hamas make us proud. Take another soldier out we say justice, you say how. Burn tel aviv to the ground. Hamas, we love you we support your rockets. Hamas, give them hell. Those are chants thats different from peaceful protests. There were a lot of Business Leaders who watch this broadcast and robert kraft has taken action we will see what influence that has on columbia. The truth is and i have been on the phone with him all week, most executives in america as businesses want to do nothing and say nothing. Everybody remains silent this is where you hire your employees. This is the culture of the next generation of all these businesses protesters. Yes you know, everybody talks about their responsibilities to society and responsibility to do something. All of the people watching this broadcast this second could do something. They hire from columbia and hire from the universities. I know last time we got into the debate whether you should hire from these places. You know, bill ackman said he would not hire some of the kids. Larry summers said that is a mistake. These kids are naive we are past the point of naive for anyone involved in the protests it is past the point of naive. This has been going on for a long time. We are no longer talking about the protests that were being made on october 8th or 9th the level of vitriol or antisemitic speech. The innocent students will be harmed from this all of the other students from columbia and other universities who also say nothing and sit in the corner and say im gonot gon to do it in any other environment, in any other environment, gays, blacks, you name the minority group, people would be screaming from the rooftops about the way this is going on. The ceos are only too happy to weigh in on all those progressive media safe issues. Bill ackman when we had him on, i said, bill, you have been enabling this. Im not going to say the s word he copped to it. He said you are right. I watched a lot of stuff go through. It comes home to roost, andrew if you are going to instill a lot of these progressive notions, it is not just this it goes across the board we have seen a slow seat in the academia it is an echo chamber. How can it be every college like this it is a sick and sad situation get the masks off. You will not not hire people if you dont know who is at the demonstrations in the first place. I can understand why biden doesnt say anything really solid because he has to win michigan he has all where is the ceo up for reelection is he worried about customers . I hear it all the time. When Michael Jordan said republicans buy snsneakers, too. All of the woke companies did not care what they did to the right. Now it comes home to roost. It is not about the right. It was back then. Its about guns. It is antisemitism that is through the whole country. I understand. It has come back to roost. They will tell you because they think their customers will come for them and boycott their companies. Not just the kids broader. Employees are going to make a problem for them all of these folks who have some moral center, but dont know what to do with it are saying if i want to say something, but i cant. That, to me, is a sad state of affairs of where we are in america today. The leaders of the Business World which will pay all of these people money eventually are not willing to say enough. Were not doing it this way. It is a powder keg right now. You remember andrew, you are right you dont remember the 60s netanyahu is not finished. They are thinking what to do in the remaining bastion where hamas is what will happen them . What environment will we live in at that point . Once the fuse gets lit, how do they go to usc and university of texas austin and high schools now. Im confused where it came from. I guess we have been lulled into a false sense of security who these colleges are hiring. Under the radar the point im making, it is not just universities. The kids i dont know, they are ideolistic. There is a need for education. People need to understand what is happening here. Who doesnt know what happened on october 7th by now i dont know. The point being made if you said this about any other african americans, you would never work in academia again if you said that. They are saying that they are saying that. Thats what im saying. I dont understand nothing more to say. What about mike johnson no federalfunds for colleges that allow this to go on a lot of these are private institutions it is an interesting one. I dont know that one is harder for me. Im more of a private sector guy. I know you think im not public money moves debate. Were wrapped in a riddle the surrounded by a conundrum. Shares of sanofi are rising after beating expectations the ceo will join us after the break. And on may 4th, Warren Buffett will hold court at the berkshire kahathaway annual meeting. If youant wto submit a question, send them to us and we will ask them during the meeting. Squawk box will be right back. 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. Unnecessary action hero. The nemesis. Leit appears that despite myay to isinister gold efforts, employees are still managing their own hr and payroll. Why would you think mere humans deserve to do their own payroll . Because their livelihoods depend on it . Because they have bills to pay . Hear me now, paycom return the world of hr and payroll to its rightful place of chaos or face a tsunami of unnecessary the likes of which you have never seen what is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. Welcome back sanofi reported better than expected profit for the First Quarter. Joining us is the ceo paul hudson paul, thank you for being here why dont you talk about what happened with the numbers. Profits were down with the effects. You know, it has been a great start to the year for us we are happy with how things are progressing. The pipeline is continuing to evolve news flow is building. Performance is strong and we have been working toward this year for some time this was forecast to be one of the tougher quarters and as we get deeper into the year, we hope to gather more momentum it looks like the Market Reaction is pretty good. 5. 25 increase in the shares this has been a big part of the story that you have been trying to get through to investors. You shocked investors when you talked about how you were going to be making investments for the long haul. Do you feel like you are getting confidence back from the same investors . This is the truth we said we would double down on science. We said we would accelerate the number of programs in phase three. 90 of the pipeline is first in class or best in class you need to do that. That work takes time we have been at it for a little white now. While now. We are going into full launch mode we dont have loss of excl exclusivity ahead of us. As we get into the launch mode and were doing that now generating 10 billion in new sales from launches by 2030, you will see real Momentum Shift in the great company. Are you seeing that momentum on the ground right now . The numbers you talk about after 2030 is fantastic. People want to see the numbers right now. Where do you see the most . You know, we launched a drug for vaccine for rsv and hemophelia a we are executing really well we are doing things that have never been done before near normal life with hemophilia a. 90 reduction of rsv we are doing things breathtaking there is more to come behind it. I said we have been ought it for some time. Where we are right now is really at the beginning of the very impressive period for the company. Paul, thank you for your time that stock up 5. 25 . We really enjoyed hearing the story as it develops we love to have you back again i look forward to it. He said the stock will work it will be something to watch. Keytruda merck earning 2. 07 per share compared to 1. 88 1. 88. Merck raised fullyear guidance with oncology drugs and vaccines helping drive sales growth they breakout a lot of the metrics. Keytruda sales a quarter here 6. 95 billion. 6. 95 billion. Up 20 just do the math that was a launch and drug and certainly one of the biggest drivers of what is happening it explains that rising stock price. That is almost a 30 billion a y year when whene come back, new rs for airlines requiring automatic cash refund over delays and cancellations. We will bring you the redetailsf how this will work. Later, backlash against the ftc vote to bann non compete we have lina khan in the 8 00 hour what it means to you as the employee and the fight overall of it. As we head to break, a look at the s p winners and losers power e trades easytouse tools, like dynamic charting and riskreward analysis, help make trading feel effortless. And its customizable scans with social sentiment help you find and unlock opportunities in the market. E trade from Morgan Stanley with powerful, easytouse tools, power e trade makes complex trading easier. React to fastmoving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you wont miss an opportunity. E trade from Morgan Stanley voya there are some things that work better together. Like your Workplace Benefits and retirement savings. Voya helps you choose the right amounts without over or under investing. So you can feel confident in your financial choices voya, well planned, well invested, well protected. To start a business, you need an idea. Its a pillow with a speaker in it thats right craig. A team thats highly competent. Im just here for the internets. At t its superfast. Reliable. You locked us out . arrggghh ahhhh solutionoriented. [jenna screams] and most importantly. Is the internet out . Dont worry, we have at t internet backup. The next level network. I sold a pillow dows caterpillar releases results. Earning 5. 60 a share for the First Quarter. That was above the street expectation of 5. 14 revenue did come in below forecast, but the company is saying the First Quarter lower sales volume was mostly offset by favorable price realization caterpilla best performing dow component. That may be with the huge gains of the stock over the course of the year also looking at what is happening with the company with execution and 1 trillion federal spending windfall in all of the areas for caterpillar we will continue to see what happens. If you look at the reaction overall on the street to the earnings from last night and today, little bit of a disappointment dow futures are indicated off by 180 points nasdaq indicated down 150. S p futures off 30 points. Andrew. Time for the executive edge. Lets talk about the Biden Administration requiring airlines to provide cash refunds when flights cancels and disclosure of fees and bag chec fees earlier in the booking process. The rules require cash refunds if the departure is more than three hours or six hours for International Passengers who are entitled to refunds. Passengers haggle to get the cash you would call and wait on hold. The rules take effect in six months the issue is the enforcement of this you will have a problem and magically within seven days, you should look at your credit card bill and all of a sudden, the money should be refunded to you. If it is canceled or delayed . If it is canceled, they are supposed to send the money if there is a delay, it would be sent to you. If you wait it would not be a full refund. Thequestion about all this is it is supposed to work so you dont have to call the airline they are supposed to do it the real question is how will this be enforced and if you see the department of transportation which put this in place fines the airlines and what other steps they take to ensure the airlines do this there will be a cost i would be curious with the cost ill speak to phil lebeau about what it may do to Airline Ticket prices, but in the next six months, what cap ex will be moving them to coordinate. You have to build systems so the money can get back to you. You might be able to drive them to another bailout. I would also say if this works, it should change behavior not by customers, but by the airlines all of the oversold routes where they know they are making it so difficult to begin with and they may have to say that route, we c cannot throw an extra flight on that route. It is equal to just on time manufacturing. What about the what . 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Get started today at constantcontact. Com. Helping the small stand tall. Welcome back to squawk box. The former wall street deal maker and Lehman Brothers and Michael Bloombergs righthand man is responsible for the new york city skyline you see today. The high line and hudson yards and city bikes thanks to Dan Doctoroff. He was diagnosed with als two years ago. I spoke with him at the Whitney Museum i was a maniac. A maniac . I drove people incredibly hard they knew that i loved them. That brought loyalty both ways Dan Doctoroff rose to prominence in new york when he tried to bring the olympics to the city. Give us the chance and we will make you proud. Ultimately, new york lost to london what i learned was even when you lose, you can win. That original bid ultimately laid the foundation for the future of new york city that we see all around us today. The high line, hudson yards, the shed, and the Whitney Museum now downtown my time at city hall was the most glorious part of my career. We transformed the city after 9 11 in the urbanist, those who worked with doctoroff over the years, write about his impact. Including Michael Bloomberg. I have a question for you this is Michael Bloomberg in the foreward in the book for all dan has accomplished, what stood out is those who do the best by doing the imaginable and possible we can see him all around us you had this team that is genuinely devoted to you in a very special way a lot of folks in the world want to be leaders. You demonstrated it. Im curious what you think it is you have done to motivate these people to incentivize these people and make these people feel like they can walk through walls on your behalf i dont think it was on my behalf i think it was the team. We had great people and people who i recruited and people who are energized by the ability to get things done. Doctoroff is now fighting als and dedicating this chapter of his life to finding a cure for als for everyone you were diagnosed with als in 2021. Thats why i cant talk how are you you know, i am doing so much better than i thought i would be at this point in time. When i was diagnosed, something flipped in me. I was always future focused. Now, i live daytoday i dont think about the course of the disease the only thing i think about thats future focused is eliminating als. Just take me inside your head for a second when you first learned this wha you thought and how you think about it every single day. I know you say you dont think about the end. Im curious what that feels like ive been remarkably happy since i was diagnosed. What i discovered facing this fatal disease is that there are only two things in life that matter its relationships and having purpose. Im fortunate that i have both doctoroff founded target als in 2020. There is a new book out. The urbanist which is on sale today. I remember when dan was diagnosed and i visited him several years ago. I will say he is doing much better than i think he antic anticipated. Ill admit, i anticipated. His ability to raise this money and to try to find a cure i think he knows he may not be able to find a cure for himself, but for everybody else is something and his impact on the city is quite something. I think his state of mind is a beautiful thing. To say all that matters is the relationships and the purpose in life thats an incredible message to all of us. The mind shift and i think so many people in life, the mind shift of being future focused and he was somebody like that. We know a lot of people like that i include myself in that being present now versus thinking about the next thing is and his ability to be present and think about that not just in terms of als and target als, but with his family and Everything Else is very special thats inspiring. It is inspiring the book is a cool book. It speaks volumes about dan and volumes about new york city. Coming up on the other side of the break, we will talk former trade Michael Froman will be with us squawk box comes back right after this ny 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. iconic brands speak for themselves. We are so excited to welcome you to our community. Today is all about you. welcome back to squawk box. Secretary of state Antony Blinken is meeting with chinese officials in shanghai today. Hes working on solving some key issues between the u. S. And china that threaten the stability of both countries. Joining us right now is former u. S. Trade representative Michael Froman, the president of the council on Foreign Relations and we welcome him to the table. So, set the table, if you will, for these discussions. How much influence and what kind of progress do you think that Antony Blinken can even make as it relates to some of the economic issues, but also the issues that were seeing around the world as it relates to iran and russia and what kind of pressure or leverage the chinese will or will not have on any of these issues on our behalf. I think secretary blinken and the whole administration has to do whatever they can to put pressure on all these issues, we have to have a certain degree of humility over our capacity to influence chinese behavior, particularly when it comes to economic policy. Chinas economy is facing tremendous headwinds, they have decided to go down the road of exportled growth, precisely at a time when the International Environment will close off markets to them. There is a real train wreck coming here, where this is the next generation of trade conflict, whether on evs or other products theyre building too many of for the u. S. , for europe, for china, for the rest of the world. Can i throw in tiktok, because i think that will come up in the discussion, between them across the waters how do you think that changes the dynamic at all, if it does meaning what the u. S. Is doing as it relates to tiktok, how the chinese view that, see that and to the extent that creates more friction or not . I think it probably complicates the conversation secretary blinken wants to have with the chinese about having the chinese treat American Companies better, precisely at a time that congress acted against a specific american company. But i think that the jury so to speak is still out on that the law has passed President Biden signed it. There is likely to be litigation and it is very unclear at this point exactly how this is going to play out. Do you think the chinese, when that happens, do the chinese say to themselves, those americans, theyre terrible . Or do they say, maybe we actually have to rethink how we do things . I think i think it is probably more the first. I think they sometimes they try and dismiss it as Election Year activity, but this is broader than Election Year activity i think it is the protectionism on steel and aluminum, the concerns about electric vehicles, or issues around tiktok these are areas where there is bipartisan consensus, likely to be on the agenda for some time, it has been on the agenda for some time, and, you know, for years we warned the chinese that their tremendous growth was made possible by a benign International Environment. And that International Environment became less benign, which it has, it would be much more difficult for them. And thats what has happened. In terms of iran, in terms of russia, what does that conversation even look like . I think the u. S. Warns them very in very strict terms about what theyre doing to support russias effort against ukraine, and russias effort to militarize its economy very early on in the ukraine conflict, they made it clear they did not want to see lethal products crossing over from china into russia. As far as i know, what china has done instead is boost the dual use products, which has allowed russia to rebuild its economy into a militarized economy. We got to run, but how direct are the conversations . There is one person on the other side of the table and the other. Is it friendly, unfriendly is there a tension in these rooms . I think this Administration Made these kconversations very direct, and instead there is advance warning, they tell the chinese, we are going to impose tariffs, this is why were doing it, this is what it means, we are going to raise concerns about your support for russia and your partnership with iran it is a direct set of conversations. Thank you for helping to explain all of this. Thank you very much. We have a big lineup ahead long time tesla hes a tesla investor, hes a tesla bull, maybe we dont put words in his mouth given the 40 selloff in the stock, but i have a feeling he might still be bullish. Ron baron. New England Patriots owner robert kraft and ftc chair lina khan squawk box will be right back. Matching your job description. Visit indeed. Com hire at corient, mat Wealth Management beginsn. 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. I wanna hold you forever hey little bear bear. Im gonna love you forever cmon, bear. You dont. You dont have to worry. Be by your side. Ill be there. With my arms wrapped around. Our Parent Company comcast just out with earnings the expectations that analysts had and there are a myriad of expectations, not just what we normally do for a company in terms of the top and bottom line, but lets look at those two those two components, consolidated revenue was 30. 1 billion. And that was about 200 million ahead of the consensus of 29. 88 billion. Adjusted earnings per share, which may or may not be the best thing to use with comcast with all the cash flow and ebitda numbers, such a varied and multifaceted company, but just to look at it, 1. 04 was 5 cents above the street consensus of 99 cents a share. If you want to know what kind of growth that was, adjusted earnings per share, almost 14 Free Cash Flow growth may be more representative, that was up 19. 4 . And you can where do you want to start theme parks continue to do well. I didnt know that the outsiders was im sorry, the holdovers was one of ours too, one of universals. But oppenheimer, holdovers, a lot of hype for oppenheimer and exciting slate according to the company for this year including the fall guy. Whos in the fall guy . Ryan gosling and emily blunt. Ever since he was ken, i find him more hes an attractive man. Adjusted ebitda 8. 2 billion, that was up 1. 3 andrew, we were we kicked this around because we were on tv were in the tv business. Kind of yeah. Business news with cable news with the ticker. But video and comcast says again and again, theyre not going to chase unprofitable business. But what was the number again . It was over 400,000, down domestic video customers decreased 487,000 to 13. 6 million and thats been thats the cord cutting that people worry about and but at the same time, peacock is up 55 . That was good that was after that unbelievable nfl football that football game. The football oppenheimer as the most paid one movie in peacock history. Youre not in a boat with a going like that you do want the streaming business to try to go up quicker than the the economics of the streaming business will ever be as good as the cable business. Thats the fundamental question. You can have the axis going this way and this way. Can we hope we can all pray. We can hope and pray. Hope and pray hope and prayers hope and prayers right now, the shares are reacting positively. Yeah, thats good but, you know 13. 6 million, how many half heres the other piece of good news that i think is fair to say, some of the folks who are leaving the traditional cable bundle are not just buying in by peacock, theyre buying in by youtube tv, which is a bundle, theyre buying into the hulu live product, which is a bundle so there is this sort of movement around where people are looking almost for the interface and the truth is a lot of the folks who have been subscribed through the bundle have been getting it at a discount thats the er pother piece. Youve seen them discount heavily because there have been moments where, you know, i shouldnt say this, if you call up your Cable Provider right now and say im thinking of leaving for youtube tv, all of a sudden, theyll say, okay, used to be a 90 product, well sell you for the next 24 months or 12 months for 30. So, and this goes back to profitable subs versus unprofitable subs. During the pandemic it was broadband, just so you know. Arpu, average revenue, was up 4. 2 highly competitive market. But subs flat basically. Broadband subs were relatively flat year over year domestic broadband revenue grew by 3. 9 but you wonder how that growth, where growth is going to be theme parks, growth is going to be movie studios wireless business, wireless was up quite a bit and i guess there is some growth out there, but you definitely saw part of the of the great pandemic performance was when everybody was adding getting wired up and thats not happening. Stock is down from 60 something. But up today and American Airlines just reporting. Phil lebeau has the numbers. Hi, phil. This is a miss on the top and bottom line. In the First Quarter for American Airlines, a wider than expected loss of 34 cents a share. The street was expecting a loss of 29 cents a share. Revenue just shy of estimates coming in at 12. 57 billion. The metrics within the First Quarter, operating margins 0. 1 . Free cash flow of 1. 37 billion. And the passenger revenue per seat down 4. 9 compared to First Quarter of last year cost per seat mile excluding fuel, up 3. 2 . Now for the important part that a lot of people are focused on the guidance for the Second Quarter, eps guidance, 115 to 145 the street estimate is 118 for the Second Quarter q2 capacity up 7 to 9 for the full year 2024, eps guidance of 225 to 325 and i think that the consensus is somewhere in the 240 range. Thats on the lower end. The midpoint is above the consensus and the Free Cash Flow guide stands at 2 billion for the full year. Thats a reiteration of what they said previously we will be talking exclusively with American Airlines Ceo Robert Isom coming up in half an hour lots to discuss. Not only the results for q1, the guidance, what is going on in terms of acceptance of boeing aircraft, we know what is happening with boeing, and well talk to him about the new dot passenger refund rules something i know youll be interested in hearing about. Andrew, back to you guys okay, phil lebeau, thank you. Appreciate it. Joining us now to talk earnings season in todays gdp data, gabriela santos, chief Market Strategist for the americas at jpmorgan Asset Management im just excited because at the top of the show, i was pretty sure it was 2024 and it is. But youve got a whole little thing built around so i can remember 2024. It is going to be in your view a 2024 year. Economy go over what what is the first two . So, 2 real growth. 0 recession in base case. 0 chance of a no, thats where sometimes it gets confusing 0 recession in the base case doesnt mean 0 Recession Risk at any time, it is 15 , 20 . We feel like it is around there, it has come down over the past few months the rest of it is 2 pce inflation toward the end of the year and 4 or lower on the unemployment rate. And i think this is really important to anchor the conversation because one of the narratives right now in the market causing some angst in april is we keep going back and forth in this narrative pingpong of soft landing, hard landing, no landing. Maybe there is a little bit more upside to growth, a little more upside to inflation, but youre still rounding down to that 2024 and i think well get some more data today, with gdp, with the two handle, tomorrow, pce, also a two handle and hopefully that helps to calm some of the Interest Rate volatility we have recently seen on this as well as some of the recent market volatility, equity market volatility. One of your other points, were still going to sound weird, were still high for longer not higher for longer. Yes youre saying that we may not get the cuts as soon as or as many cuts, but no hikes in your view. Thats right. I think two letters make all the difference and that was really the er. And that was really the fed pivot in december. It was just that it was saying, look, just really was the last rate hike, we see risks as more balanced, we see the diffusion of inflation has come down, Inflation Expectations are anchored. Thats enough now. The next move, it is inclined to be a cut, not tomorrow but thats the next move and that makes a difference. It gives you it gives companies, consumers, investors more more visibility about the cost of capital and as a result unleashed a powerful rally there for five months. We seem to be, and someone complained yesterday, we dont talk about bitcoin when it goes down, we do when it goes down. It has been it is down again today, were in a risk off environment right now. Are we not the dow is called down triple digits meta is going to take the nasdaq down are we in a risk off phase and how much further does it go . We hit 5, do we hit 10 yes, so, i think just to put in context those really that really powerful rally for five months there came with very low volatility Interest Rate volatility, equity market volatility, that was abnormally low we had gone 279 days without it 2 pullback. It is much more shall we say normal to have 5 corrections three times during the year, 10 intrayear as well. So far normal behavior, shall we say. In terms of is it over, is it going to get worse, i think what is macro driven and thats affecting more of your cyclical area of the market, i do think that calms down, if we do get that two handle on gdp and pce but then there is a separate issue going on, which is much more micro and focused on earnings and a very high bar that was set there for some companies, and i dont think were out of the woods quite yet as earnings last night showed. Lets see overnight. We get two more important ones but that is a very microstory, much more focused on that concentration risk that we had been warning about and it is clearly an important issue here this week. Youre a financial person you do use the term middle east and you say still worth monitoring but really only in the context of oil we just spent we just decided to fund another 90 billion how about look at what it is for. Ukraine is still scary the middle east still scary. Taiwan, still scary. Any of these things ever going to come home to be something really scary for the stock market i do think were in a period where we left behind very low geopolitical risk environment we had been in for decades and we are in a more heightened geopolitical risk environment. And that has huge implications longer term. For example, we are in an era of more defense spending and thats very much true, not just here in the u. S. , but in europe, in japan, and other parts of the world, and thats led to a very strong recovery for aerospace and defense companies. With industrials here in the u. S. And also in europe. One of the top sectors last year were also in an environment where there is more diversification of supply chains, also huge implications for countries that are winning, like mexico, like india. So there is a longer term read through. Thi i think in terms of shock for the market, it is commodities and oil. Gabriela, thank you. Coming up, Adena Friedman on the state of the markets, Companies Investing in a. I. , also Quarterly Results were coming right back. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. 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 my name is oluseyi get your Business Online in minutes and some of my 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. Nasdaq First Quarter results out this morning profit at 63 cents a share compared to estimate of 65 cents revenue, slightly above wall street forecasts joining us now, nasdaq ceo and chair Adena Friedman how are you . Fine, how are you thank you for youre already here im always here youre already here but thank you for coming youre on our set. If you had to characterize the quarter overall, was it similar to last time you were on, would you say, the previous quarter . Tougher operating conditions should be better there is a lot going on inside of nasdaq and were proud of the results with hewe had7 overall growth and lower volatility in the markets. When you look at our solutions businesses, where we really have been transforming the company, we had 13 growth on our solutions businesses, and that includes 10 growth in our Fintech Division where we have regular tech, Risk Management and Financial Crime technology that business grew 23 we had stellar growth in index with 38 core growth in our index business and we crossed over 500 billion in assets under management this quarter in our index franchise. Super exciting about the overall performance of the company, even with a muted ipo backdrop. How long have you been ceo now . 7 1 2 about a little over 7 years. A lot of the things you just talked about were not part of the company 7 1 2 years ago, were they . Thats true we have been really growing in terms of where you needed to nothing is happening in when it gets quiet, in terms of trading, and when the ipo market is as you call it muted, are you happy that you did these other things. Were very happy. Not only is it great to have a diversified platform where you can grow in different market conditions, but we also have much more impact with our clients. Were now going to banks and saying we can help you solve some of your biggest challenges. They want to be able to provide capital to the markets, and get deposits into their banks. But they have to manage crime out of their systems, manage risks in the market, manage a lot of Regulatory Burden and were their partner to do that we have better impact and an interesting Growth Profile that business, our Fintech Division grew 10 this quarter. There has been some talk about extending the trading day, even 24 hour trading days. Where do you come down on that what do you think . It is interesting to see how demand is starting to come in from all over the world, particularly for nasdaq listed companies. So, what we have been doing inside our businesses, we have been expanding the distribution of our data to the entire world. So thats been a growth driver for us to get data, real time market data in the hands of broker dealers and brokers, retail brokers all over the world as well as driving indexes and index products to exchange we list our index products all over the world. That kind of helps satisfy some of the investor interest but we also operate, you know, our systems are open 16 hours a day. And the markets are technically open 9 30 to 4 00, but we open our system for trading at 4 00 in the morning and we stop at 8 00 going to 24 7 is a different proposition. Thats crazy. Would there be no more opening bell, no more closing bell how do you do percentage changes . I think there is no law there is a lot of operational challenge that comes from 24 7, even 24 5 trading. Just technically we provide technology to other markets who trade that way we know how to do it, we know what it takes, operationally, you have to be ready to respond in any given moment and with companies, it is different than it is with Commodities Companies have earnings. You have stuff you want back when there is not an active market. And there is an entire infrastructure in the Mutual Fund Industry that ties to that 4 00 Closing Price so, if we were if there were a shift more towards global trade, you know, 24 7 or 24 5 trading, we have a lot of chang we have to introduce and a lot of Institutional Investors like to go home and have dinner so, how do you make is so that it is not just about retail. Retail, it is good to give access to retail investors, but it is much better if you have a very vibrant liquidity environment. A big issue is some sort of market shakedown and nobody is around to say, okay, how do we put this i think thats important too. What if youre a company ceo and at 3 00 in the morning something happens to your stock . You have to think about all of those things we had conversations with our clients about it but were not kind of moving in that direction right now i think were still evaluating it. At this point, have you used a. I. For anything that has increased your productivity at the nasdaq okay. Is it when will that start, or im going to answer for her. Okay. And then last but not least, i mean, isnt the nasdaq like the perfect home for every one of these startup these smart kids that andrew interviews constantly at all these a. I. Companies. Theyre all coming here. Any company, we want them all. If a. I. Is a million different facets we look at a. I. , as we say, on the business, how do we make the company more productive, a. I. In the product, and how do we make our products deliver more productivity to our clients. So we have a really great announcement this quarter where we basically launched a copilot tool inside the antiFinancial Crime division that automates all the investigative a lot of the investigative work that they have to do on potential bad actors, that cuts down the time of that investigation by 90 it is a huge productivity gain to the clients, and we just rolled that out globally this week now, we also put our first a. I. Driven order type on the market a couple of weeks ago, s. E. C. Approved, a. I. Driven order type that helps increase bill rates and on the business, we have been rolling out the pilots as well as the q coding pilots within our Development Organization and the microsoft 365 copilot across our entire team were seeing productivity gains from it as well. My view it is a revolutionary technology so, you rolled some stuff out this week. You didnt ask me to ask you that i would have if you told me to ask you that question, i would have. Were sometimes very excited to talk about it one potential quick curveball, just because we have her here in the next hour, im curious, you assume you have in y do you have noncompetes . I wasnt surprised, it was discussed for a while. I personally feel like our company has a lot of ip. We provide opportunities for our executives to build that ip inside of nasdaq and therefore we feel like we should have some period of time where were protected as they if they were to go out into the world. Do you have executives making less than 150,000, though if thats the limit usually those types of jobs youre making more than that. I would say we have noncompetes not across our entire employee base, but with a certain employee set my view is that ip protection is something to be considered as youre managing the movements of your team. I also understand that i think the new reality i think this targets in a lot of ways people who are making less money who are being held captive to something somebody who walks into a hair salon, and i say this because every hairdresser ive known complains about this, you walk into a hair salon and you have to sign a noncompete right away. I say you have to be reasonable were very reasonable in giving our employees the opportunity to go seek employment somewhere else if they want. And our noncompetes are quite rt going forward. Do they not know who you are. Im glad i dont have that ear piece in my ear. Im enjoying the conversation. We have to go thank you. Great, thank you very much. Still to come this morning, American Airlines ceo on Quarterly Results. And the upcoming Summer Travel season and then, long time tesla investor ron baron on the recent moves by tesla to cut jobs and slash ev prices. Squawk box will be right back. Announcer time now for das latoyafc trivia question. What city was the first host of the nfl draft . The answer when squawk box continues. Hiphop limping mmhmm medical bills uhhuh pancakes cash who pays you cash when you have medical bills . Grrr no idea. [tapping] gap the gap left by Health Insurance . Who pays cash to help close that gap . Aflac oh, aflac get help with expenses Health Insurance doesnt cover at aflac. Com pictionary . 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. [alarm beeping] amelia, turn off alarm. 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. Announcer and now the answer to todays aflack trivia question iccias the first host of the nfl draft . The answer, philadelphia it hosted the event in 1936. Welcome back American Airlines releasing results moments ago. Straight over to phil lebeau who joins us now with a special guest. Good morning good morning, andrew. Robert isom, ceo of american. Good morning. Wider than expected loss. People look at First Quarter, but then they look at the full year your reaffirming guidance. You knew the First Quarter would be rough what do you look at as you look out into the summer and into the fall thank you for being here, on your birthday. Our First Quarter, we expected the loss, it is exacerbated by the runup in fuel prices. We werent able to recapture all of that. As i look to the remainder of the year, were in a much better position in terms of dynamics in the industry and capacity and so were going to be projecting a strong Second Quarter. And a full year that hits our original guidance. One of those dynamics you announced was in the last half hour, youre modifying how many boeing aircraft youre taking this year obviously because of the production problems, both at the max and the dreamliner how much does this impact what youre planning for this year . Not much for us remember, we spent almost 30 billion on new aircraft to get to the point were at right now. We have the youngest fleet in the industry im proud of that. We have taken delivery of so many aircraft. This year boeing will be off by seven aircraft from where we projected. We built in safety factors for that were going to be reducing a bit in terms of capacity but it is not going to have a Material Impact. May not have a Material Impact are you frustrated by what youre seeing with boeing and what you youre not really sure what the future holds my message to boeing hasnt changed since the last time we talked lets get your act together. Deliver, first focus on the banks. Get aircraft that are quality, at first and foremost, and safe. Have you told this to dave calhoun or Stephanie Pope who runs commercial airplanes . I told that to everybody i talked to at boeing. Right now, it is more about their actions, not about what they say im confident over the long run theyll get their act together we have an order for max 10s those dont come until 2028. By that time, im confident. If they dont get it together, well make sure were protected. Well have the capacity to make sure that right now, one of the things were doing this year is we have a fantastic regional operation that is funded by embry aircraft, that supplier has been incredibly reliable and im very proud of that fitting in very well with our network plans. The dot passed and announced new Consumer Protection rules yesterday. Specifically regarding cash refunds. But the rules, some look at these rules and say, it is not entirely clear when somebody will get a refund or is entitled to a refund. How much will you have to modify your operations, day to day, as you incorporate these rules. Well, our philosophy and our focus is on making sure we run the most Reliable Airline possible that delivers for our customers day in and day out if the new with the new rules, were matching up in terms of making sure we deliver. Now, that said, there is a lot of gray areas out there. And we really need to make sure we understand what those are i dont with weather, and with maintenance, those are safety issues for us i want to make sure that we have the right motivations out in the field. There is also a lot of other parties that play a role in terms of making sure the air system works well. And whether it is the faa and air traffic control, whether it is, you know, rocket launches or, you know, how we handled medical diversions, there is a lot of gray areas that we have to make sure dont have an impact that wasnt intended. Is there an immediate cost impact this summer as you start to put the rules in place . No, for most of the rules we already do them and quite a bit more just this past year, we refunded over 2 billion to customers im confident that we really have what we need going forward. But it is just the gray areas that we have to have definition around. Real quick, Small Business, still remains strong in terms of bookings, right . As i take a look out into the summer, and the remainder of the year, demand is strong across the board. Small businesses especially, that is really fueled american since the pandemic Corporate Travel is coming back as well. And im really pleased with what i see going forward. Robert, thank you very much always good to be down here at the american headquarters. Back to you. Thank you very much we should tell the audience not to go anywhere ron baron will be with us. We have new England Patriots owner kraft Group Founder and columbia grad bob kraft will join us, also the founder of the foundation to combat antisemitism so much to discuss with him. Plus, ftc chair lina khan will join us following its vote to ban noncompete agreements. Squawk box returns after this. Welcome back, everybody. Our guest right now on set joining us is long time tesla investor ron baron of course, he is the chairman and ceo of baron capital, and, ron, we always look forward to these conversations with you got a lot of ground that we want to cover obviously we want to talk tesla. But i know you had a few thoughts right off the top about some things we have been talking about on the show this morning. I was watching the program this morning and it is totally inspiring. And doctoroff and robert kraft has been a friend of mine for a long time. Thank you for being sensitive to people who are jewish. Having so many jews on your program in one day must be amazing. And so, one of the things im admiring on bill ackman and mark wellen and one of the things that i guess people dont always realize is that, you know, when i go to temple, there is security when i walk around the security, i have to have security. When i go to my golf club, i have to have security. It is just hard to comprehend. I never felt threatened before in my life i feel threatened now. It is really uncomfortable but im optimistic and in 1930s, when hitler came to power, there was nothing like people standing up right now, like they are, nonjewish people standing up, so, im always optimistic person and always a hopeful person and i think things are, at the bright side, people are standing up to protect everyones rights, not just ignoring it. Are you getting involved on any of these levels . Not the way robert is what i did i do the best i can. If someone is a pro hamas supporter, i fire them someone wants to sue me, thats fine so, we do social searches before we hire someone and try to have influence on any organizations that im involved in and one of the things i did is that we right after october 7thi reprinted my rabbis sermon and sent it to over 600,000 people, just so people can see how it affected jews. Thats this thing. Anyway, thats i came here to talk about stocks, not politics. But thank you for giving me a chance to be part of this program today amazing program. Thank you for letting us know how you feel about these things too. Why dont we jump right in and look at the markets and maybe specifically tesla tesla captured everyones attention. Youve been probably the longest tesla shareholder and one of the most outspoken bulls out there on this. You are a huge believer in elon musk i think you just came back from a trip to visit both spacex and tesla. Yeah. So, about the markets first, briefly about that, were longterm investors, we visit companies in which we invest, we study the businesses, look at the opportunities. But were longterm when you see the performance of the stocks that we invested i started in the business in 1970 and i was living in my friends basement, i was in debt. 1982, started baron capital, had 10 million under management with an m and now 1982, 1992, 100 million, now 43 billion and we made our clients 44 billion in profits since we started. And im hoping that we make a double in the next five or six, seven years and well make a double again, five, six, seven years after that i am 80. So, not that many people who are 80, i guess buffett does, mummer did. Also very interesting, i was listening to your interview with charlie munger, 34 days before he died. And you said, charlie, do you have a bucket list and he said, yes, i do, becky and you said, what is it he said, well, and hes 99 at the time, well, ive always wanted to catch a 200 pound tuna, but, you know, im not quite as strong as i was four years ago. Hes 99. So, it is encouraging. Less than two weeks before he passed so he was up to the very end. I am longterm all the way in everything were doing and i asked you, you know, to not introduce me as a tesla bull, because that sounds we didnt know that i made that up. Please make me an investor. I am incredibly bullish about the opportunities for tesla, but i dont want people to think this is the only thing he does, one way. But it is the largest holding, to be fair. Tesla is your largest holding, spacex is your second largest. You have a long list of investments, but these two, because you got in so early, are your two largest holdings. We have 400 investments and the top 30 represent about 56, 57 of our assets. And by being a longterm investor, you can actually do quite well and our it is hard for most people to do better than the stock markets. I recommend people do passive investing and if you did that, thats a good way to hedge against inflation. So inflation makes everything cost twice as much every 14, 15 years, 4 , 5 a year, sometimes it get downs a little bit. It is 4 , 5 a year for my whole lifetime and so the way you hedge against that is investing in both businesses and longterm, 98 , 97 of our assets beat the market 96 up 20 and 45 are the top 1 , thats Baron Partners fund, the Number One Fund in the United States. We invested in tesla in i met him in 2010. Elon musk elon musk i was introduced to him. Would you like to meet him, yeah, i would like to meet him i read about him with electric cars and space and so i met him. 2010, comes to my office, and hes unshaven, 37 years old at the time, unshaven, just made 100 million in pay pal, didnt have to work anymore but working like crazy, unshaven, baggie cargo pants, clogs, hair all over the place and talking about how he wants to have electric cars. And i was hoping he was going to be successful but i thought it wasnt likely and in my lifetime, 50, 60 Car Companies have gone bankrupt 2010, continue to study and work on it, became public, i didnt invest in it, and now it is for four years, you know, kept visiting and talking and finally im convinced i should be investing. And in 2014, they were doing 40,000 cars a year and he told me, visiting him in his factory, sitting in a corner, with mike lippert who works with me, and we were there for two hours, 2 and 1 2 hours and i was really prepared, so were talking about all these things and then mike says, i got to go, i got another meeting, see you tonight, i cant believe im leaving this meeting, most interesting meeting ive ever listened to. He leaves and catch up in the hotel, he says i said, mike, at least you were smart enough to own tesla he said i dont own it anymore i said, you dont own it, after you just listened to are you crazy . He said i sold it before we got here i said i got to own it and the stock tripled and then it doubled again and i still didnt own a share for the next three years to 2014 to 2016, after the stock had gone up seven or eight times, the next four years, we invested 400 million and then we made about we made right now about 4 billion we had made 5 billion, and we made about 4 billion right now. We sold about a quarter or a third of our stock, about three years ago, and priced 220 a share, now 160, and at that time, had it gone from 40,000 cars a year to 600,000 cars a year and now doing 1. 8 million so business is three times bigger. I remember when you sold a few years ago, you sold that stake, you did it because you were worried about the portfolio being too heavily invested in one particular stock up 20 times, yes. Up 20 times do you hit that point again . Do you have to trim more because you now have 3 billion, what did you say 4 billion 3 billion as of 3 31 today. It must be 4 billion. It is around i dont know, it is around 3. 5 billion, 4 billion, Something Like that the. It wasnt that you didnt believe . It was too big of an investment . Yes, yes. At some point, i think spacex is going to be i think well make 20 times in spacex over the next 15 years. I think well make it quadruple in the next six or seven and can it be too big . Sure so im always watching just because youre managing other peoples money. But i do think that were going to get a lot more money to manage, therefore it is going to get diluted down by the new money coming in. Always thinking about how large the position should be, yes. What do you think right now the stock came out, the earnings this week came out, it was a disappointment for the quarter it was the worst cash flow quarter that the company has seen in its history, but the stock was up 12 because elon started talking about what he sees in the future and the idea of bringing out cheaper cars to go through these things where do you stand on the what the company should be valued i know joe is not a big believer in electric cars. He likes his porsche but i think all the cars will be electric and i think the hybrid is a holding off action so Automobile Companies dont have to lose money on the electric cars but the electric cars i think is going to be all the cars 10, 15 years from now i think hybrids, i know you love hybrids, thats not going to last either. Theyre too expensive and not effective enough and theyre not going to be part of the mix either it will be all electric. And so what i think is going to happen is that the reason the stock is down is not because of the quarter. The reason the stock is down the stock is up because of the stuff that he says. The stock is down so much. It is down 35 year to datdate up 1 over the course of the last year. Yeah. Not so exciting to be up 1 in a year when everything is, you know, the market is so strong. So, you know, i dont rich and m not poor but im not making, i havent made a lot of progress last three years like a rubber band im going to catch up again. What i think about the reason stock is down is people are concerned he was going to abandon the idea of having a lowcost car and go allin to robotaxis. The reason stock is down and then, there was a report in reuters that said hes canceling this new factory thats going to make robo cars, make lowcost cars, 25,000 cars, competition from china only one company in china profitable, by the way byd. Buffetts company. Wa warrens company m ford loses, everyone loses on this its interesting talking yesterday about motors motors in the car cost 5,000 a car. Thats what normal, these 100yearold kpips we companies we can make a motor for 1,000. You need a battery. Combustion cars, stagnant business becomes and used to operating the way theyve always operated they dont look for new ways to operate, operating, oriented towards making things cheaper. He can do things for 1,000 others cost 5,000 amazing. If you want to be an, a gasoline car company. Im pointing out that people get entrenched and do things without trying to make things better, cheaper, faster all the time Warren Munger said show me incentives ill show you how people act thats the idea. Incentive. Whats the incentive for someone 55, 60 got to get off this. The idea, thats the reason stock is down. Whats the reason its going to go up going to go up huge. When . Now now is the bottom. What theyre doing is going into robotaxis and going to make the lowcost cars. Theyre making the lowcost car except excess capacity make 3 million, make it 1 million 8. Extra cars, existing facility, no more capital, not make direct cars as cheaply as before, expected to. Overall, they have to do 5 million new cars. And robotaxi question that is future of this company and a lot of value is reliant on that. Uhhuh. The question, what do you think genuine timing of a robotaxi relying on cameras only the question, can you do it with just cameras relative to what waymo and cruze have done, using radar, lidar and the rig that lives on those vehicles . We have a small investment cruze to see what theyre doing and waymo, their cars are 250,000. Because of all the sensors and trying to take cost out for us, basically, advantage we have right now at tesla, they have sold 6 million cars. 3. 5 to 4 million are collecting data data is valuable doubling the amount of compute every 90 days. I dont disagree. A timing question how quickly you can actually put them into the wild i was just in california. I was last sunday in vale, what theyre doing with a. I. , Capital Spending sunday in monday in spacex in last with engineers, finance people. Afternoon went to tesla with the autonomous driving people and also the compute people. Then afterwards, ron, nice to see how unbelievable. The first 11 versions were, had to be designed so they had to code every single thing that happened. Right now all a. I. Impossible. Therefore werent making progress two, three years. And now whats happened, version 12, all of this enormous amounts of data, compute to figure out humans cant do it compute to figure everything out. Now youre on the verge with autonomous driving in your car said, okay show me. We do the few hours, couple, three hours. Before i go back to new york i say, okay. I want to see how it works go into a parking lot get into the car and i have an analyst with me and then they had the compute person and they had al, you know, investor person. Sitting in the car where you want to go i want to the see steve jobs house. Okay punch in the address get into the car car drives around. By itself. All we did punch it in drive around in the parking lot. Goes to the road traffic going both ways. It looks both way looking for entry to get in. Gets an entry. Pulls in, makes lefthand turn drives right behind cars in front of us. Stop sign. Car stops, goes. Second car stops, goes pull up to the stop sign car looks both directions, make as righthand turn just drives. All of a sudden its a Pedestrian Crossing the street the car stops to let the pedestrian cross the street. The pedestrian, i dont know if i was set up in this pedestrian waves and then the car starts going again then it pulls up and make as lefthand turn and then goes in front of steve jobs house a nice house just a house, though i was expecting a house a house. Stopped in front of the house. That house and he doesnt wife does. House next door and then looks like three quarters acre for a sale next door for 15 million and we go back drove all by itself. All by take me to steve jobs house. All by itself whats going to happen is that i thought the idea had been that you are going to sell a lot of cars so as a result of that once they have those cars there youll sell autonomous driving he said the other day negotiating to sell autonomous driving for some other cars, too. No one has a compute, no one has the data. Thats the longterm thing. Tesla is everywhere. If making cars. Make 7,000 in profit a car selling 35,000 minus the credit timing . Give me timing the whole game now. Now its now. You think its forever this is how much youll make making 7,000 in profit a car for a car that they sell for do you have time how much time we got here . Running short on time about four minutes. I say now you believe honestly theyre going to announce, robel oh taxis available now . Talking about in august 08. 20,000 car make 40,000 50,000 a car a year had a million cars, 2 million, 5 million, make hundreds of millions. I believe promise of the company and amaziamazing. I ask the question about timing, a view those vehicles are not comparable yet to what waymo or the others are doing those guys cant even do it in some cities. Most cities, in fact. Robo, certainly its moment in autonomous. For the government approval that comes with it takes a while for all of those things to happen two, three years for everything. Make hundreds of billions of dollars a year on that business. Hundreds of billions not including battery, a. I. , robots. And stop for that pedestrian, that was big when you told me it did that hadnt, a problem. Ron, right you were surprised it stopped yeah did you have your foot on the brake covering nothing. Total believer in, ready to go. Sitting next to the guy. You werent driving. Nobody was driving. And before you get to spacex quickly. Teslas pay package for elon musk a huge center of controversy, Delaware Court overwrote it vote on shareholders saw another article i just read said even if you vote on it again it could be brought back to court how would you resolve this well, i think that the Class Action Lawsuit for someone who had ten shares of something. Yeah. Lawyers wanting 5 billion . Thats crazy. So the way it seems to me is, a contract that was arranged and arrived at and agreed to, and how do you go back on a contract that isnt fair. The only reason the company is surviving, good night slept on the floor under his desk for let me go to space xvrmt. Lets do it running real short. Ingesting 2014,s to 16, tesla. 2017 on invested 900 billion in spacex both 2 billion 3 partnership, 650 million of that make double in 2027, when we go public 2030 i think make another double and then 2030s i think can make five times again thinking about 20, 30 times your money. They have the only way you can get to space for nothing well, not for nothing. Its 20 million costing us now. About to cost 6 until to get to space. Cost others 100 million, 200 million. Get to space cheaply because they use rockets over and over and over again like an airplane. We have internet for the entire planet from space. Elons 38 google 1 we own 1. 25 partnerships charge 2 and 20 we charge 1 on the way to half a percent to carry reason for that, Customer Acquisition tool i want people to know were doing them a favor a way i want to make sure all my mutual funds are Customer Acquisition for me i want them to know i want to be on all platforms for broker firms. What were going for that. The opportunity, Goldman Sachs and Morgan Stanley think the internet opportunity is 1. 2 trillion dollars in revenues a year elon thinks it 50 of those revenueses next 15 years for a company valuing today for 180 billion so excite d about this reading about sam altman doesnt get along with elon, of course think different from everyone else and everything you do makes everything youve done before just a footnote to what youre going to do next i think spacex has that opportunity. Anyway mindboggling you know, we cant even get our minds around what, the potential of cheap travel into you know, suborbit or even its the internet you want equal distribution of wealth you have to have everything knowledgeable you need education only way is with the internet. Basically 8 billion people on the planet 30 dont have the internet. In order for us to make a quad dr drupal by 2030, 30 40 a year now and we have now, its 12 billion annual revenue 5 billion cash, no debt growing. Everyone they do offerings of 750 million twice a year for employees. The company, and elon buys 48 . Its not quite enough. Still adds my feeling is that this is a business that when people start seeing financials about it theyll be so excited. Three or four times over subscribed every one of these offerings, no investment banker in five days, five days. Biggest buyers are be fidelity, gic the biggest buyers and blackstone. Everyone cut back dra maefkly a dramatically were the large eest buyer. Did you buy some bitcoin . Congratulations. Still havent no. You always tell me you wish youd listen but never did. I didnt say wished i listened i said congratulations to you. Not something i do withstood all that congratulations. Still withstanding it on a daily basis. I know. I read that periodically. Its just you talked about investing in productive assets i invest in productive assets. Not commodities. Ron, thank you for kcoming i and sharing your time and knowledge. Thanks for inviting me. Its fun by the way, unbelievable like, unbelievable just to look at it. Amazing story new york story. Yeah. And a story about life and the a way to think about thing tos. Robert kraft stands out known him 40 years. Hes coming up, a tease have him on in a moment. Hes really good. A picture of him. Look goods. Looks pretty good pretty good. He doesnt its 8 03 30 on the east coast youre watching x ing sq box on cnbc im joe kernen along with becky quick and Andrew Ross Sorkin rons still here packing up futures not looking good down 205 now. 100 points is caterpillar. Yeah. Numbers beat bottom line. This on the top line, talk more in a moment. Caterpillar huge run upyear to date up 23 this morning third best performer. Meta ailing, partially ailing nasdaq, take a look at treasuries ten year this morning, spinning distance 5 . Andrew over to dom chu with a look at this mornings premarket movers and i know were feeling pressure things moving douwn now. Too many headliners hitting all of them right now. Movers to your point sure youll hit a lot more throughout the course of the hour start with becky, what she alluded to in terms of dow components and caterpillar to start here because shares of caterpillar off 4 Construction Equipment giant lower on 40,000 shares of volume reporting mixed results, revenue miss, growth in energy and transportation unit offsets declines, helped, in construction and Resource Industries opinion cat xbeexpec sales decline Current Quarter and sales roughly flat for the full year and to beckys point shares one of the best performers in the Dow Jones Industrial so far this year but responsible for just about 100some points. Moving on to a fellow dow component. Merck. Higher nearly 2. 75 . Beats for profits and revenues driven by large sales from a franchise and merck raised full year revenue and Profit Guidance shares adding about 20, 30 points to overall dow component. Well check, end with a check on cnbc and nbc university Parent Company comcast. Shares moving between gains and losses premarket. Currently down a half percent just around 100,000 shares volume cable broadband and media com glomer it. Comcast helped by growth in areas like Wireless Phone subscribers and revenue at peacock streaming ed video business helped offset losses for broadband and Cable Television our Parent Company down one half of 1 . Back to you. Dom, thank you. When we come back, the nfl patriots owner columbia graduate bob kraft joins us it also founder of foundation to combat antisemitism lots to discuss with robert kraft. Later, ftc chair lina khan joins us following the ftcs vote to ban noncompete agreements squawk box will be right back. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. 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. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Welcome back to squawk box, everybody. Futures this morning are under pressure we came in with stocks down maybe 140, 150 for the dow this about two hours ago gotten more earnings putting additional pressure across the board on all the stocks. Last night meta shares this morning caterpillar, again hit expectations for earnings per share missed revenue line. A big part of the selloff. Dow futures often by 215 points. Nasdaq futures off by 180 and then the s p down by 35. News out just in the last couple minutes information reporting that bytedance is exploring scenarios for selling tiktok without the algorithm recommends videos to users. Three people aware yesterday President Biden signing into a law a measure banning tiktok in the u. S. If its chinese Parent Company doesnt divest in the next year. Interesting development insofar as a longterm question whether the Chinese Government would allow bytedance to sell and whether they would sell at all sounds like if they were to sell, see whether that even happens, sell it without the algorithm. What happens, you asked what happened would have data, all users basically sell shell of the app and have to create their own. Algorithms. Hard pasrt, think Steve Mnuchins team or bobbys team, all together, whatever building an algorithm is as good and doing it on the fly is a very, very, very hard thing to do. How do you value the Customer Base without the algorithms . Without the flywheel, so to speak. And quickly degrade not a good took years for meta to make their program work nearly as well. Interesting. New England Patriots owner and Columbia University alumni, robert kraft, is not comfortable supporting the school until it takes action to stem growing hatred on campus and until it can protect its students and staff. Kraft says the school that provided him with so much opportunity is no longer recognizable to him. Protests against the israelhamas war and calls for the university to divvest spawnd threats and harassment against jewish students and bob kraft joins us you wrote an oped welcome, bob. Good to see you, as always this is the cover. Actually the cover of the New York Post. Not everybody on the cover you get on the cover of the New York Post rather questionable 24 th in this case a positive thing. You wrote an oped key points what you put forth in that oped well, i just you know, im thinking of columbia where i went they have a core curriculum that really helped train me as a young kid coming from new england. You know, i wasnt ready for the world. From boston. And i think that alexander and john james would be flipping in their graves if they saw whats going on at columbia now. Which was such an open forum when i went there, you know, during the vietnam war, and free speech prevailed, and people expressed their opinion, and they didnt cover their faces, and there was accountability, and there wasnt a, the anger and hate that exists now on campuses, and its very sad to me to see the faculty taking strong positions and doing that, and sort of trying to teach young people what to think rather than how to think, and have the openness you know, you think about the greatness of this country is that people came from all backgrounds, and came here and you felt, your ancestors felt comfortable and they felt they belonged and had a chance and now its shocking to me that young jewish students at columbia in new york city are scared theyre going home as a young student from the boston area, who came back two weeks ago, and told her dad that they wanted transfer out of columbia because they didnt feel safe on the campus and im going, this is 2024 in the United States of america am i hearing things right . Bob, its hard to understand how we got here. You did a good summary its taken time and almost an echo chamber at a lot of these places so i dont know how we got here, but i dont know how we get out of this, and you saw what happened yesterday once again, maybe start slowly and by end of the day talking about usc and university of texas at austin, and i dont know whether a heavyhanded approach is something that makes sense at this point . Obviously, everybody is entitled to free speech, but you are not entitled to threaten people and harm people. So theres a like that can be drawn. Do you think a heavyhanded approach and where are you right now, bob wheres that shock from . Well, look. Are you in florida . Wheres that shot from no. Im in boston. We have a little thing known as the draft tonight, and okay. To be honest i think Governor Desantis at this point is talking about if you close down a bridge or road youre going to jail. You x, going to jail you do this is that the approach to take it didnt work back in the, years and years ago when college kids are are on a mission like this. Im wondering what the right approach is at this point . So that, you know, you want to protect jewish students, but i dont know if you want to have a situation where you see, you know, riot police. Well, we want to protect all students, and all people thats the foundation of this country. And i do want to say a word that, i think mayor adams and Governor Hochul and the new York Police Department did a great job when they were called in but this is about enforcing the rules that we have on campus, and Holding People accountable i dont think people should have free speech and be covering their faces. I dont think any group should be allowed to just come and camp on College Campus without getting the permits or following the rules. Weve let people not follow the rules, and then were compromising with them instead of getting them, you know, getting the place in order i must tell you. One of the things that i sort of look up to and at midmire now ie way the jesuits run now. They have free speech but have rules and follow them. I see it right here in boston at boston college, and they all do a great job. Hey, bob, i give you great credit for speaking out on an issue that seems blatantly obvious to y so many unwilling to speak out and im curious why you think that is . Because when it comes to bringing some form of pressure to bear, frankly, on the administrations of these universities that seem to allow so much of this antisemitic hate and im with you. I think its important we also differentiate between what is antisemitic and free speech and the possibility of folks protesting policies and the like, but doing that in a way that does not fundamentally harass and put other people in danger, but when i speak to Business Leaders, many of them, friends of yours, they dont want to speak out. Theyre really afraid, andrew and, you know, it bothers me i dont know if this is a function of the impact of social media and the lies that go out so fast that, you know people people dont want to be targets look, no one its just in life you learn when leading an organization or doing things, theres a certain culture you try to create, and then when that culture isnt being adhered to, the true leaders have to speak up and be counted on if i told you the amount of people who have reached out to me and said thank you for speaking out letters, texts its just and i hope those people find a way who they feel the same way i feel were were playing with a strong tennants of the foundation of this country, and, you know, it starts, like it did in the 30s in germany and why i started this blue Square Foundation five years ago. I saw signs of hate developing here, and i dont want the 1940s to replicate here, and unfortunately, im seeing signs of that, and good people have to stand up and be counted. You know, thats what leadership is and were just looking, you know so many people from so many different backgrounds have come here, but whether its asians, hispanics, hindu, buddhist, gay people theyre next its all coming, if we dont say something. Bob, just one how do you see this reconciling, bob . And i dont, i dont know what the path looks like. Nobody knows the future. As i was alluding to it earlier, it almost looks like a fuse has been lit on campuses you are youve raised money to try to help this cause. Is it about deploying funds to help the cause or maybe withholding funds from colleges that dont get this under control . Whether its federal or big benefactor es or whats going to be the answer and i dont know whether you win the hearts and minds of people i dont know how you do it through brute force. Its a real problem. And its a conundrum but we got to get it right. Well, first of all, i think theres some organization outside this country that is impacting our College Campuses, and that, for people who have Greater Knowledge than i hopefully are looking into it, but i think its the responsibility of the executive leadership and the trustees of the different schools who are responsible to make sure that rules are being followed, and that means the students, but also faculty and i just wonder whether we shouldnt be looking at the whole area, what responsible comes with tenure, and when violations of policies are made, whether tenured faculty should really remain employed i just these videos youre showing, and why are people covering their faces yep. There should be a rule. You burn the flag in the United States of america, you go to jail if youre going to go and be a rebel rouser and have your face covered, you should be arrested, or come there and have free speech say what you want, but do it where theres accountability, and its really sad to me that the greatest country on earth has this going on, and we have to collectively those people who love america, love the foundation that was founded on, have to band together to make sure that were not breaking our core values. Bob, agreed to all of those things and i agree with, yes the mascot, that might be a simple way to do it, but that will be met with a lot of push back as well shouldnt have masks on. And then maybe you wont ever get a job. Hopefully. If youre doing things you should be disqualified from that bob, thank you we hope to see you again soon. Thanks for all of your efforts. And i love i feel you do the three of you, do a great job, in education and, you know you represent america. So thank you for having me on. Thank you thanks for coming on, bob. When we come back, another candidates interview. Ftc chair lina khan. Talk to her about her agencys banning noncompete clauses in employment agreements and what it meaorns f you. Stay tuned youre watching squawk box on cnbc. No application fee if you apply by may 31st at university of maryland global campus, an accredited university thats transformed adult lives for 75 years. Youre not waiting to win, youre ready to succeed again at umgc. Edu. Up next, breaking quarter gdp data big number and markets down big as we await the flub dow futures off mo 2alst50 points well be right back. Like sushi classy clems not a morning person. Im tasting it or a night person. Or a. People person. But he is an i can solve this in 4 different ways person. And that person. Is impossible to replace. You need clem. Clem needs benefits. Work with principal so we can help you help clem with a retirement and benefits plan thats right for him. Im short but im. Im confident. You know . Let our expertise round out yours. Only at vanguard, youre more than just an investor, youre an owner. Im short but im. Im confident. You know . Our Financial Planning tools and advice can help you prepare for todays longer retirement. Hi mom. Thats the value of ownership. Kraft. Welcome back to squa box. We are just seconds away from our first look at First Quarter gdp and initial jobless claims ahead of that we have seen significant pressure on the futures this morning of course, coming after metas earnings from last night ibms learnings from last night and caterpillars this morning all stocks putting pressure on what we see with the dow futures off. Rick santelli is standing by take it away, yes. Start with initial jobless claims 207,000. Much lower than we expected. Looking for a number closer to 220,000. In the Rearview Mirror 212,000 by the way, five out of the last seven readings 212,000 never seen that before wondering about these numbers truly. Continuing claims. Much lower than expected 1 million 781,000. 1 million 781,000. That is the lowest level going all the way back to january 12th the week of january 12th that is a big drop last week moved down from 1 million 812 also under 1 million 796. A big deal gdp First Quarter disappoint 1. 6 looking for a number almost a full percentage point higher 1. 6 weakest growth on a quarterly basis back to Second Quarter of 22 when it was negative minus 0. 6 consumption, half a percent weaker than expected at 2. 5 2. 5 would be the weakest since Second Quarter last year when it was 0. 8. Moving in the wrong direction, Third Quarter last year up 3. 3 look at price index core on a quarter over quarter basis, it leaped to 3. 7. Were expecting 3. 4. Rearview mirror, 2 . 3. 7 is hottest well, hottest since the First Quarter of last year exactly equals the Second Quarter of last year quickly, take care of business on some lesser important numbers. Look at the trade balance for the month of march, it came in exactly as expected at minus 91. Billion retail inventories less than expected up only 0. 3. Looking for up 0. 5 hole s. Wholesale dropped minus 0. 4 biggest negative month over month drop since june of last year yields paying very, very close attention to gdp numbers how to you spell stagflation going back to november, currently trading 468. Up three basis points. If you look at three opening equities obviously the dow futures dropped to minus 400 and change becky, back to you. Okay. Rick, stay with us rick mentioned, talking dow futures often by 400 points after these numbers. Bring in a couple more voices. Partner and chief economist at apollo and head of u. S. Equity strategy add Rbc Capital Markets and our very own Steve Liesman steve, get to you. Look at things digging through finding in these numbers yeah. I mean, this is a number that you had less consumption than was expected which is odd, because its one of the few things that economists can actually forecast imalities surprised they got it so wrong could have been the government got that wrong just not i dont know if im buying the weakness in there 2. 5. Looking for 3 and change and higher another thing economists cant forecast and never know is the trade numbers. It took off about 0. 9 of a percentage point from growth i dont know what the actual estimate was out there funny about that, when theres a greater trade deficit its just more importing of goods in terms of selling stuff overall, my view, becky, is, looking for a number around 22. Maybe a little less, weaker than expected today sequential decline beginning quarter, look at a quarter earlier, 1 or less or a little above the zero line it came in at 1. 6. Weaker than expected but a sequential decline i dont know exactly what the definition of a soft landing is, but this is within the range of it leave it there and turn to you first as this, is it looking like a soft landing . An issue economists got it wrong or the government got it wrong in combination with jobless claims better than expected combined with last three months on payrolls 276,000, very Strong Economy continues to do well and this is not least because of the fed beginning to talk about rate cuts rather than rate hikes as they did, fall and november of last year. Unleashed a rally in the stock market. Up almost 1 trillion comparison Consumer Spending 2023 was 19 trillion. Basically meant huge wealth gain and that continues to fuel the economy. The fed is looking less and less likely to cut rates anytime very soon. June, if you look at fed fund futures, no. July not so much. Steve pointed out yesterday september. Thats why i dont think theyre cut rates this year. Falling on what inflation will do over the remains eight, nine moss of this year you still get a scenario inflation two, three, four range in other words, the tailwind we have from easy financial conditions, what its done to increase in the stock market, to home prices, same time cash flows fixed income are very high not a surprise consumption, maybe the gdp report special generally speaking retail strong arguing for more strength, more inflation strength and why inflation is picking up. Talk about the stock markets reaction to this we were down 250 dow futures already. Saw numbers down as low as 400 knew now closer to 350. Market is not loving what it sees here. The market primed for a pullback a little more than 5 based on recent decline a number of people calling for a bounce earlier in the week. Put out in our weekly. We think it ends up a 5 to 10 pullback but not quite done yet. Hasnt collapsed enough. Watch of the sentiment indicators maybe gets us there. See where we are end of the week but still have froth that needs to come out. Earnings numbers most part good expectations on wall street are pretty high. Yeah. Punishment for anybody who didnt hit exactly what was expected Even Companies ran the stats through last week. Companies beating punished hards the bar is pretty high. I think its about guidance. I think a lot of questions about margins going forward. One of the biggest sources of skepticism ive seen in my meetings with clients. Doubting well get the massive march expanse this year baked into the consensus you see hot inflation and companies complaining left and right about costs i understand where theyre coming from. Steve, you said this could be a situation where look, bad news particularly, in some, to some effect in the market, but if its a soft landing scenario maybe the market looks at this eventually as good news . Meaning the feds more likely to cut sooner yeah. Really tricky. Take a picture of rick hes probably turning red, because i did not, and i should have, made more of the Inflation Numbers in there, because okay. I do think thats what the market is reacting to right now. Rick was absolutely right to emphasize those numbers when you see the pce number come up, i wonder, by the way, if its going to affect the forecast for fridays pce number, thats tomorrow the monthly number thats a problem however, whether this economy can run below potential in terms of gdp to bring down inflation, there are people out there who do think that the fed may have gotten away with having a decline in inflation by the improvement of the supply side now that thats run its course, the next thing that has to happen to get to target is for the economy to run below potential. So we are this number is one of the first ones below potential weve had in a little bit. A step down from prior quarters. Well see. If youre going to have high inflation and low growth thats not on with the market but if you have lower growth and inflation coming down, thats the scenario that the market wants to see. Rick, weigh in on that . You know, i think theres an asymmetric approach to whats going on that is definitely hot Inflation Numbers. Cooling growth, and jobless claims remain low. That, to me, a healthy labor markets probably just lasting, because of how much money the government has spent how much money the government continues to spend but in the grand scheme of things keep in simple. These numbers arent really good, and if youre looking to fed fund futures to tell you the future youre looking at the wrong contract i think torsten has a better track record calling what the fed will do than looking at distance future contracts for fed funds. Fancy t note contracts good indication to the next meeting to draw conclusions beyond that youre beyond limits what the contract can or cannot do ultimately what the fed needs to pay closest attention to is the idea that theres so much potential problems down the road with so many large industries, so many question marks on things like energy, natural gas how all of those things and some of the special things that you need to put the batteries together some of those minerals all of these issues are coming home to roost at a time where the u. S. Economy is being held back in areas that its good at, like energy, and its being forcefed in other areas like transitions into new standards of driving and vehicles that the public isnt ready for these numbers are telling us that the future is probably less growth and higher prices and higher deficits for a long time. Back quickly. About to roll out here back quickly to the futures. Point this out again showing a second ago you will see that the dow futures are now down by about 430 points 427. Nasdaq off by 260. S p 500 down by 60 and last showed two year about to hit 5 . 4. 99 and change. Thank our guest for being here torsten, lori, rick and steve. Coming up after this break, a very special interview with ftc chair lina khan with us on the continuing issue of worker noncompete. Her agency banned what it means to the industry anwh id att means to you all of it when squawk box returns. 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. University of maryland global campus isnt just an innovative state school, its a school for real life, one that values the successes youve already achieved. Thats why at umgc, you can earn up to 90 credits toward the bachelors for prior learning and life and job experience, why we offer scholarships and affordable tuition, and why we have online classes and the support you need from your first day to Graduation Day and beyond. No application fee if you apply by may 31st at umgc. Edu. All right. Welcome back to squawk box, everybody. If you are just waking up, yeah. Better sit up and Pay Attention to this, this morning. Dow futures under quite a bit of pressure as the rest of the market dow futures down by 430 points nasdaq off by 250. S p futures down by 56 it all just got worse. Things were exacerbated by the weaker than expected gdp number. Much weaker than expected. First quarter, first look at gdp. 1. 6 versus 2. 4 the street expected also had jobless claims, continuing claims, lower than had been anticipated and youre continuing to get earnings in this morning we have had some earnings good merck leading the way now among the dow. But if you look at the down side, ibm reported last night. Last i saw ibm shares down by more than 9 caterpillar reporting this morning. Beat bottom line, missed top line stock off by 5 . Seeing pressure points from all of that. Dont forget last night we heard from meta. Stock down by 12 putting prepreshg pressure on the nasdaq as well meta down by 15. 5 continuing to see all the pressure coming and things adding up. I dont get it. The claims number claims number. Also strong. Very strong strong numbers. What we dont want is inflation high and what we just no ones tackling that question. Right. Over to andrew with a special guest. Thanks, becky talking about noncompetes this morning. The u. S. Chamber of commerce and other business groups suing the federal trade commissionover its decision to ban noncompete clauses for u. S. Workers ftc doesnt have authority, they say, to implement the rule and the rule itself is too broad joining us to respond and help us understand how the rule is supposed to work, ftc chair lina khan good morning. Good morning. Lets talk first, though, about how this rule is supposed to work. Weve talked about it on the air yesterday when it was announced. I actually think theres a business of a misunderstanding whats happened. Contracts already in place for folks being paid over 151,000 and have a policymaking role can stay in place for as long as the contract exists, but new contracts for even people at the very top of these organizations cant be correct . Right once the rule goes into effect, as of right now will probably be around the end of august, beginning of september, any new contracts will not be able to include noncompetes for workers and employees. So we now have a general conversation, a whole number of businesses suing saying this rule is effectively illegal. That it, its an overreach effectively of the government, and that its going to create all sorts of problems for business youve heard the comments that came in over not just the past day but the past month. A lot of comments 26,000 Public Comments 25,000 of them were in support of the ban this was across the country, across sectors, across income levels because end of the day, what noncompetes do is keep talent locked up. They prevent a more efficient matching between employer and employee so getting rid of noncompetes will be good for workers, it will be good for the labor market, but its also going to be good for our economy. Its going to allow a boost in new business formation in new startups and its going to mean if somebody has a good idea, theyre able to bring that idea to market rather than being locked up. I think a lot of people agree with you especially in the context of a waiter a waitress at the restaurant with a noncompete. Makes no sense all sorts of people in that kind of space it gets more complicated, i think, the more senior you get in an organization if, in fact, the rule is not just to keep the current contracts of senior people in place but new contracts would not allow for noncompetes how youre supposed to think about, how a business is supposed to make an investment around one particular individual, if, in fact, they can turn around tomorrow and go to the competitor across the street so we absolutely heard some concerns from businesses especially as it relates to trade secrets or a concern somebody would be able to leave and take the customer list, and those are legitimate concerns and thats why we have things like trade secrets law nondisclosure agreements. Nonsolicitation provisions. All of those would be able to stay in place. Which it comes to, you know, investing in workers and investing in people, thats something that will happen anyway, and if the goal of the business is to keep those people, then they can do that by creating all sorts of incentives right . Pay them more. You can provide better benefits. You can enhance the working conditions so we believe that there are other levers that businesses can use to actually attract and retain an and retain talent. Ill use an example just because were on tv. Most people who are on tv have contracts that prevent them here we are at cnbc. Nbc universal is the Parent Company. Abc is just down the street. Literally, Good Morning America is right there. Cbs is across the street as well i cant walk i could not call up my boss today and say, you know what, thank you so much, this has been wonderful, im going to work over there tomorrow morning do you think i should be able to if you have a current contract that reflects the fact that this noncompete is in the contract, your compensation package probably also reflects that, we dont want to disturb that for people who are doing very well for themselves, who are well situated to bargain the contract and the compensation already reflects the value of the noncompete, but going forward, we believe that those should not be in place and companies will be able to use other mechanisms to retain people if they want. Let me ask you about what might be described as workarounds, which is to say, you look at the state of california where this is already in operation to some degree, and people can develop llcs, partnerships and the like, partnerships in the state of california, if you become a partner, theres a view that nondisclosure not nondisclosure, but noncompetes are different. Do you think there are other places that and by the way, the financial industry, private equity, banks and the like are typically not regulated by the ftc. Are they regulated by this rule or not thats right. The rule is limited by the ftcs authority and the contours of that authority, so in sectors where we dont have authority, be it banks, certain types of common carriers, employees in those sectors will not be covered. But other Government Agencies do have the ability to reach that im so glad you mentioned california sometimes, one argument that gets made is that noncompetes are essential for innovation, but as you noted, noncompetes have been nonenforceable in california since the 1800s, and i think people would be hard pressed to say that california hasnt been able to innovate so, we think that eliminating noncompetes will actually boost innovation, boost new business creation, and be better for the American Economy what do you say to the argument about just cost the cost to a business to enforce nondisclosure agreements, for example, to enforce control of your own ip could go up. I imagine you will see a lot more lawsuits in the future against employees, against rival competitors, because employees will go from one place to another, which they didnt in the past, and they will have to go to court to enforce something that you could argue they were trying to enforce through the noncompete if a business believes that an employee is violating trade secrets law, they absolutely can bring a lawsuit there. The way that our system of law and system of Justice Works is that you can only bring a lawsuit and only penalize somebody once they violate the law. The idea that, instead, we should have noncompetes that preemptively lock people in place just because they might hypothetically in the future one day, you know, violate trade secrets, it doesnt really make sense. Noncompetes is way, way, way overbroad for that purpose i wonder if this comes into yourcalculus at all, the word, inflation. If you look at this, if it works and is successful as you would want it to be, you could also argue, as great as its going to be for wages, it could turn out to be inflationary we absolutely predict that workers wages are going to go up, but we also predict that this is going to create new businesses, new startups, because a lot of the comments that we heard was not just from workers sharing how noncompetes had kept them in abusive jobs or kept them from a better opportunity. It was people who saw their Current Employer wasnt meeting a particular need in the marketplace, and they thought, i should be able to go start my own business, meet that market need we heard from startups about how noncompetes are preventing the most talented scientists from being able to work on the most innovative discoveries, so we think theres a lot of innovation thats being locked up right now that eliminating noncompetes will unleash, and that will be good for the economy overall. Let me ask you a different question were in an Election Year, 2024, and there is a question about whether your boss will be your boss at the end of this year or not, and therefore, whether you might even have this role or not. How do you think about that in the context of the work youre doing now and whether that work would continue under if, for example, former President Trump becomes the president again . One that i think thats been so striking to me about the ftcs work and antimonopoly more generally is the degree of bipartisan agreement that monopoly power is hurting American People in their daytoday lives, and i think weve seen a huge groundswell of public support for the ftcs work, and so whoever ends up having the honor of being in these roles in the future, i think, will continue to have to stay accountable to the public and to public officials. But do you say to yourself, its very possible that a lot of the work that youve done unravels, that some of the cases youre bringing now or planning to bring, you know, become moot . Look, i absolutely hope were going to have more time. But if we dont, we are taking our work undertaking our work with an eye to some of the institutional durability with the hope that it can stay in place. Historically, theres been a long tradition of lawsuits that were filed continuing and going forward, even once administrations change, and so, i expect that that would continue lina khan, thank you for joining us this morning. Thanks so much. Hoptoeeoue s y again very soon squawk box, coming right back after this 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. It is take your kids to workday nationally, and we want to acknowledge the children of our staff and colleagues at cnbc who have brought their kiddos to work today these are little squawkers and beyond i want to give a special shoutout to the squawk team who was there and who we havent seen in a while. Caitlin, ellie, logan, congratulations. Nora, cameron, william, aidan, blake, riley, blake, josephine happy take your kids to workday. I think this is a great thing. We want to look at the futures this morning because theres some massive pressure on the futures and some big upticks in yields. Dow futures down by 430. First quarter gdp came in at 1. 6 , well below the 4. 2 that was expected, the lowest weve seen since the Second Quarter of 2022 the nasdaq, down by 282. This was disappointment in earnings and some pretty High Expectations for earnings, if youre not perfect, you got punished pretty badly and sometimes even if you were well look at what all this means for yields, too, because we have seen yields pick up significantly. The tenyear yield at 4. 71 , thats the highest level since november of last year. Youve got the twoyear now above 5 at 5. 01 , so yields continue to pick up. Why because of the claims number it was weaker than expected the weakest gdp number isnt necessarily what you would think. Its not. But theres going to be a lot that plays out, and well be right back here tomorrow to talk about it with you. Right now, its time for squawk on the street. See you later. Good thursday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer and david faber at post nine of the New York Stock Exchange futures do tumble here, not just on meta and ibm but that disappointing gdp of 1. 6 . A warmer than expected core pce. Tenyear, 4. 7 , is now the high of the year. Our road map begins with that growth surprise. Stocks do look to open sharply lower. Meta shares are set up for what could be the worst day the stock has seen in years