Transcripts For CNBC Squawk 20240703

With plans to spend even more aggressively on a. I. Also, that Second Quarter guidance, perhaps, not that exciting on top of that, we got a massive earnings day comcast, five dow components also reporting, merck, honeywell, caterpillar, dow and ibm, one of the biggest laggards on the s p, by the way lets begin with the Market Reaction to the weaker than expected gdp, jim. 1. 6 looking for prior actually, it was about 2. 5 . Goldman was at 3. 1 . This is one where people were obviously the wrong way on both. Wrong on how slow it is and wrong on inflation so, the fed needs some help. These were numbers where you could say, you know what, they can cut. But david, you dont cut when you have this kind of inflation. So, the core price index, up 3. 7 when you were looking for 3. 4. What are you smirking about . These are awful numbers. Im not smirking. I was looking at you happily, happy to see you my gosh. What am i, your kid you bring me to work today listen to me gdp no. The worry now is stagflation, right . I was leading to that all right, well, i beat you to it. Yeah, you did look, stagflation, to people who arent familiar with things, means theres nothing you can do the fed cant get inflation under control. So, therefore, it cant cut rates, which therefore makes it so you get today you get a weakening economy or is this just some sort of weird oneoff, or is it reflective of these things youve been talking about, ive been talking about a little as well march is a crummy month when you hear restaurant receipts and think various things like that diesel prices. I dont know you got a frugal consumer thank you, goldman, for upgrade, tjx. We have industrials just doing okay we have caterpillar. We dont have that revenue raise im looking for. We have tech, where you have servicenow theyre going to be coming on soon this stock is down very badly, and one reason is because people say, wait a second, they didnt raise as much as they usually raise. Thats a kind of false positive. In other words, theyre still raising. What it amounts to, david, is youre struggling on a day like today to say, what do i do i got this tenyear at 4. 7 . I was told if it didnt hold 4. 6 , i should sell. Not to mention, we havent seen 5 in a little while in that twoyear. Hello. I bought that twoyear early this week. Im already taking a beating can you imagine taking a beating on a twoyear . Carl, im not giving up on it, because today is a tough day, but we left here last night, and you could say we left here on ford, and ford is great, and were talking about how we have a part of ford that is worth the price of ford. You want to go through the names that raised guidance mark, ford, Royal Caribbean, Waste Management, chipotle, sp global yes, yes and all that and a fiveplus percent twoyear will get you a down market. Carls right. Were sitting here, and we can bemoan everything. A lot of the 1. 6 number is net exports and inventories. You still got consumption running 2. 5. And i mean, well see. But its not stagflation is a little extreme i agree im just look, i wanted to give the conventional wisdom, because people are going to say, wait a second, why is the market down 4. 6 versus 4. 7 is not that big a deal, but whats happening is lets say earnings beat but sales werent that good today. Were only looking at the sales. So, Waste Management, which i have on tonight, the sales slipped. Well, this stock has been a horse. I mean, lets address the elephant in the room what has meta done this year metas done nothing but go up, 135 year over year. And were going to complain about it today i think Waste Management is a Terrific Company i have them on tonight i hate to say this and jim fish, please dont take it theyre run of the mill good company and a good indicator of industrial activity. Exactly we have ways to look at the economy other than the 4. 6, 4. 7 conundrum. We also know when you get a company like meta lowering the boom, and you get a company like servicenow not raising enough, then people start saying, okay, bonds going the wrong way, the gdp going the wrong way, maybe i have to trim i dont think thats wrong thats what i said yesterday i was apologizing to club members, saying, i hate being this negative, but i dont have the horses when you dont have the horses, you cant foment the horses. To jims point, raising guidance, take a listen. Significantly more over the coming years to build even more advanced models and the Largest Scale a. I. Services in the world. As were scaling capex and Energy Expenses for a. I. , well continue focusing on operating the rest of our company efficiently, but realistically, even with shifting many of our existing resources to focus on a. I. , well still grow our investment envelope meaningfully before we make much revenue from some of these new products are you worried about the opposite of the year discipline . It was a year of efficiency it wasnt necessarily years. All right, so, when someone has something to invest in, and it can give you a good return, then someone who is rational is going to give it now, what he does say, and there are some great lines in the call historically, investing to build these new scaled experience which is what he is doing, has been a very good longterm investment for us and for investors who have stuck with us yep why doesnthe deserve the benefit of the doubt he does im giving it to him. He does deserve the benefit of the doubt, but you have to also take in mind that the next quarter, where the guide was not not as high as had been anticipated by the way, theyre going to start to lap those big concepts that they saw as a result of shein and temu, spending enormously on the platform and so, that makes the revenue guide a little less than perhaps had been anticipated and then, theres 40 billion number, just to sort of stop for a moment and think about that. If, in fact, they were to hit it thats the very high end of that envelope but 40 billion in capex the number itself is staggering. As i quote him, smart investors see the product as scaling. Theres a clear monetizable opportunity there, even before the revenue materializes in other words, you dont have to wait until the numbers explode. You got to get in the ahead of it witness how much the stock was up last year and this year still up almost 20 for the year im defending it. I think you can buy the stock. Wait a couple days, because theres guys who want to get out. He didnt tell you to buy ahead of this quarter. There are still plenty of people who have a 24 a share earnings number for 2025, and believe that it should trade at a 20 multiple, which would mean right back to 480 if you believe that 18 gets you around where we are right now. So, you know, that said, its going to be a little while until we see these products. Right and you say he gets the benefit of the doubt he very well probably deserves that yes but it also does raise some concerns, even though they have 30,000 fewer employees than they did in november of 22 thats you know, a situation where hardware costs more what are the takeaways evercore, really good piece today. Winners, nvidia. Nvidia stock is going to be down today because its part of a cohort called tech meanwhile, all they did was tell you how much money theyre spending on these chips. I got a great one for you whos the second on the evercore list i dont know. Who . Broadcom. Who joined the board in february right hock tan. Thats an interesting he said Something Interesting on the clip. Energy costs speaking to ge vernova, the amount of cost of energy for the first time in years is really going much, much higher. Theyre going to have to all these companies are going to have to compromise and start using natural gas. They cant just rely on wind and solar. Its one thing when alphabet or microsoft or amazon, even, their capex, particularly when it comes to the spending theyre doing as hyperscalers in the datacenter, because thats just money theyre putting in that they immediately charge customers who are using it this is different. This is new products that conceivably are going to be based, by the way, on the incredible amount of data that this company has that is makes it unique in terms of the personal data it has to but everybody can come up with their own guess. Is it going to be an a. I. Agent that helps you create content . Its going to be search dynamite search. What is it going to be that ultimately they have its going to be exciting somehow, its going to be merged with reality labs where theyve already spent, what have they spent overall, 40 million . Questionable so far listen, they got the raybans. They do someone this morning said i saw that. A new fashion style raybans is crushing it new fashion styles are coming dont laugh everybody do you know how Many Companies would kill for some invention like raybans carl, he comes up with this thing called reels its a competitor to tiktok. The president signs a ban on tiktok, and hes got reels, and we think hes not worth trusting and for all the the guys a visionary for all the protestations yesterday by tiktok, information this morning saying theyre beginning to game out some sale scenarios. I saw that. They have to. Reels is going to potentially selling at least some portion of tiktok by the way, on the reality labs spending, i did note another part of the call was he was talking about how we report our financials as a family of apps, and they also report reality labs with an operating loss of 3. 8 billion in the quarter. Maybe they spent as much as 40 billion on the thing remember, they changed the name of the company to meta he goes on to say, i think fundamentally, the same thing with the vision of reality labs to build the next generation of computing platforms in large part so we can build the best apps and experiences, so over time, were going to need to find ways to articulate the value thats generated across both segments, meaning maybe they start breaking reality labs numbers out. I think they have to. They bought 300,000 of just the humdrum nvidia chips h100s . Yeah. Whats he going to do when he gets the blackwell although, of course, amazon wants the blackwell. Of course, we say that all these companies are making their own chips. Well, theyre making the lowend chips. Youre still relying on nvidia, and i know that its fashionable to sell nvidia these days, but when the smoke clears, and it hasnt yet, nvidia is the winner when we come back, were going to see how many earnings we can get to in one block or two on this busy thursday. Plus the ceos of servicenow and southwest, shares under pressure well look at merck, bristol, ho honey well, harley, and a bunch of others when we return they respond to emails with phone calls. And they dont circle back, theyre already there. They wear business sneakers and pad their keyboards with something that makes their clicketyclacking. Clicketyclackier. But no one loves logistics as much as they do. You need tamra, izzy, and emma. They need a retirement plan. Work with principal so we can help you with a retirement and benefits plan thats right for your team. Let our expertise round out yours. 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Im trying to figure out whether the First Quarter may be an aberration and that the next quarter is more important or whether things are just fine things are just fine, jim you know, we had a triple play we beat on the top line. We beat on the bottom line, and we raised our fullyear guidance and we can all debate, did i increase the guide enough, but that seems to be a pretty highclass problem because servicenow has become the a. I. Platform for business transformation, and were proving that the number one gen a. I. Use case in the world today is process optimization, so jim, in terms of things being fine, think about every business work flow and every enterprise around the world is going to be engineered with gen a. I. At its core, and we are that single pane of glass thats going to drive that transformation lets talk about that after listening to Mark Zuckerberg last night, he says that gen a. I. Costs a fortune, and theres absolutely no return within a couple of years why is the return instantly for gen a. I. For servicenow, and Mark Zuckerberg says, forget it . Were may thiking a lot of m on it already because we have small language models that are domain specific. They dont take a lot of compute power. Theyre lightning fast, and theyre highly secure because its the customers own data and we also remain open to the ecosystem and all the models because they fully integrate with servicenow, should the customer wish to go that way, and you know, thats the best of both worlds for the customer totally open, but at the same time, today, were taking Great Companies like microsoft and ibm. Theyre transforming their Employee Experience with digitalfirst support models, freeing up resources and fueling innovation with service nows gen a. I. Or novartis, great ceo, delivering new drugs while increasing operating efficiencies, and hes streamlining clinical trials, research, and Financial Management with gen a. I. From servicenow and were billing for that right now. So, the game is on at servicenow right, again, and i totally agree with that. You know, im looking at the stock being done im looking at people feeling a little jaded about gen a. I. , and im wondering, if i worked at novartis, how am i impacted by servicenow what makes my life better . How am i more productive i need to know this because this is a day where your stock is down and people are feeling very foolish about buying stocks that are making money off of socalled gen a. I. , and i put the socalled in after listening to Mark Zuckerberg, who is a darn smart guy. He sure is. We admire him greatly, and hes got a great company. We just have a different approach to this the proof is in the pudding. I mean, our Free Cash Flow is up 47 year over year total gross profit, up 83 year over year. So, weve proven that we cannot only grow the top line but also the bottom line. So, heres whats happening, jim. Lets take employees and customers. Think about gen a. I. Deflection rates. Theyve doubled in all of our installs, and theyre improving every month. So, the soulcrushing work that people dont want to do, they dont have to do anymore with servicenow think about Software Engineers 48 increase in the speed to innovation with natural language text turning to code think about security and risk. Gen a. I. Remediating vulnerabilities and improving the Security Posture for companies. And i can go on and on these are use cases that were doing right now. So, the ceos that are out there, they want a flag in the ground on gen a. I microsoft has done a great job with their solution, and theyre giving a copilot, and were teaming up with microsoft with our now assist a. I. Copilot, so just think about a ceo listening to the show right now. You want to team up with microsoft, you want to team up with servicenow . Total engineering integration, total teamwork, lets go all right, so, you said Software Engineers doing better. When i listen to jensen huang, hes saying we dont need Software Engineers like we used to are you able to eliminate Software Engineers because youre talking natural language . Why do i need code writers its a great question we still need our engineers, jim, because were going to be the defining Software Enterprise company of the 21st century. Weve improved productivity by 50 , so you can say, do i need half the engineers no at servicenow, we say we need all the engineers and were going to keep hiring them, because we intend to define the Enterprise Software market in this century and give customers an entirely new experience, and we want our people fired up, innovating at clock speed. Okay. I totally understand that. And what im trying to do, again, is deal with the research which talks about how they did expect a bigger guide, and what youre saying, which would indicate that you could have blown the doors off, and im wondering whether maybe when we go to your big meeting that is upcoming, your financial day, maybe well hear what disappointed these skeptics, these analyst skeptics they may regret that they were skeptical about the billings when they hear what you do at your conference. Lets face it, right . Five years of this, the execution has been stunning. All the Research Reports that are going out today say nearperfect execution ill take that we know how to win the game. We know how to execute, and when they see what we have in gen a. I. Solutions, the speakers that are coming to endorse that, the logos that are already using that and the many more that are signing up, theyll see that, while its a small percent of todays revenue, i mean, were a 10 billion run rate cloud company, theyll see that a half a trillion by 2027 will be spent on gen a. I and if you think that the number one use case is process optimization in the enterprise, you got a pretty Bright Future in front of you with servicenow, and we always beat our forecast. So, thats the ball game were going to win it. And were excited. I think people know that at the may 6th meeting in las vegas, the financial analyst day, and i think the problem is a lot of people dont understand process apt optimization, but a know is we want it to be cheaper than it is right now thats Bill Mcdermott. The stock is down. The stock has been down because he tends not to take up the numbers big, because he likes to beat the numbers Bill Mcdermott, servicenow, thank you so much. Thank you so much, jim. When we come back, cramers mad dash, countdown to the opening bell tt scyen does look to be a lilepi dont go away. 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 at pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. iconic brands speak for themselves. We are so excited to welcome you to our community. Today is all about you. futures decidedly red here amid this earnings blizzard. Weaker than expected gdp tenyear now close to 4. 75 rgoto get the opening bell in five minutes trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. Get an expanding library filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. Announcer the opening bell is brought to you by ncuveen, a leader in income, alternatives, and responsible investing. All right, lets get to a mad dash. We talked about earnings from so Many Companies one of them is ibm the stock, jim, is looking down rather sharply in the early going here, why . There was a step back in consulting, all the analysts said that. Consulting, not being that strong, had been a business that had been strong. I think a lot of people were hoping that, look, they built this hashicorp to go with their Cloud Business they did a deal yesterday but at the same time, you have tony, i love his questions, theyre always incredibly trenchant he says, you have an outsize Market Reaction, and i think down 20 is not that bad. Its just you take Something Like red hat that used to grow in the pretty good double digits its growing high single digit you take a look at what theyve done in terms of the rationalization, offloading kindrell and making the thing grow faster, and people are saying, thats about it. Thats all there is to it. I think thats too critical. I like their Cloud Business. Theyre fine they shouldnt be down 20. Take it down 10. Book of business was squishy Free Cash Flow generation its okay better than i thought. Heres what i dont like that the analysts like. Im going to little bit of a critical moment here for a. I people like the fact that their a. I. Business exceeded 1 billion all the analysts like that i dont. Thats not good enough theyre all happy with a billion dollar a. I i keep coming back to what i heard last night on mad, which is, dont get all that excited about shortterm gains, gen a. I. Now, bill is talking about process, making process cheaper. I get that but david lets get the opening bell. At the big board, its rubric, the microsoftbacked cybersecurity company, celebrating its ipo. Were going to talk to bi bipul sinha in the next hour at the nasdaq, marex, a Global Financial services platform. Its a rare day where we got earnings, macro, m a times two and an ipo when i asked about rubrik, rubrik, rubrik, is that they lost 28 million in revenue. I think thats suboptimal, but it is well loved by the best cybersecurity people i talk to obviously, we like deals that are a little more make more money. We dont Want Companies that are losing a lot of money, but this thing, it will trade well. People are excited about it. But your appetite is not whetted . I like crowdstrike and palo alto but crowdstrike likes rubrik theres no doubt its a good company. At the same time, we are stuck with a tape today that is not all negative look, the merck you mentioned, rob davis, absolutely terrific i mean, its great but then you go and have bristol myers. You have one and then another, and youre in a situation where because of what happened with meta, people are saying, wait a second im more critical because when you hear someone really smart like zuckerberg say, were going to have to spend a lot of money and it will pay off eventually remember, Bill Mcdermott was saying, our customers are doing well, so were going to get paid. In this particular case, zuckerberg is both the customer and the guy whos building, and hes not going to get paid instantly, and that is casting a pall on things caterpillar, jim umpalby is doing a fantastic job. The stock is now down 25 thats nothing thats nothing and caterpillar had good numbers. But in a market where stocks up 218 here, profits. When you have meta up more than 100 , profits. There are situations where you have a lot of profits to be had, and people are taking them caterpillar with a slight revenue miss no doubt about it inventories were fine. Look at ibm. David was mentioning, ibms been doing pretty well. Yeah, had a good year last 12 months, up over 40 . So, people are taking profits. Thats what i at my club, i said, geez, i hate to say it, but i got six stocks that i think are going to do well shortterm and well, yeah theres just not enough good today to make up for things, but i look at a stock. Ill give you Honeywell Honeywell at one point today was up five buck its now up 50 cents i was going to say, of the dow earnings weve got, honeywell, dow, and merck are all in the green yeah. I mean, i spoke to Jim Fitterling this morning. They have very inexpensive u. S. Costs versus everywhere else in the world. Its up 60 its down now. It was a good quarter. Yield is 4. 9 . Theres a lot of companies that did good quarters when you wanted great quarters, and there were a lot of quarters that did fantastic quarters and gave you not as good forecasts. Bill mcdermott but bill at service now would argue, are you kidding me . Come on. Im a conservative guy im doing really well. I keep coming back to meta is in control here meta and the bonds and metas look you know, when a guy says, trust me, well, david, you know, im from the government. Trust me although, the guy is Mark Zuckerberg, and you know, hes he may be dressing nicely, but hes still a coldblooded killer, and i say that in the nicest way thats an odd way to put it the killers is a good group. I would buy meta here. You know what i mean. He is singularly focused, has been since the dorm room at harvard, and the man can execute. Yeah. And so, to your point, doesnt he get the benefit of the doubt . Well, he very well may that said, when people do the math, especially on the Second Quarter guidance, which, again, as we pointed out a year ago is when the Chinese Ecommerce Company started to spend enormously on the platform start lapping that your revenue numbers are not going to be up as much, although what do you pay for this thing really you think only pay if theyre going to do i like it hes going to come out hes going to figure out how to monetize it faster than he says. Do you think theres a readthrough to microsoft or amazon because of temu and shein . Their spending is still going on its just that it ramped up like a year ago right so your comparisons for these Companies May not be as significant as they were, because youre coming off the quarters where they already were spending a lot on the platform those chinese Ecommerce Companies represent a lot of what was going on. They spent a fortune. They did, amazon, too. Instagram if you buy some of the stuff on amazon, which, by the way, their stuff is about theres no accounting for taste, but i dont regard the stuff as being that great amazon gives you a date. These guys dont give you a date temu is, like, it might come, it might not. You buy something from amazon, and alexa tells you its at your door in about 35 seconds its a little bit scary. Parent Company Reported earnings, as you well know its only time jim doesnt say anything oh, yes he got quiet look at him can we get a shot of jim although there are some firms coming to comcasts defense this morning, talking about broadband arpu up. The financials themselves seemingly met many of the estimates of the analysts who follow the company, even at loss of 65,000 total, broadband customers was more or less where many analysts had been First Quarter revenue was up, was a bit better than the consensus. Ebitda numbers, perhaps, depending on which analysts you talk to or follow was more or less in line or a bit below. But theres kind of a quick read wir wir wireless keeps growing peacock, yeah. Are you going to domestic video . But youre losing broadband customers. Youre a Broadband Company no, youre not. Youre a technology company. Thats the problem do you mind if i do a little narrative work for a second . Let me come to the reason why the stock is actually down, which is really off the call youre doing to do domestic video. Just do domestic video its not domestic video is for the entire industry. Youre still losing 487,000 subs thats not great now, thats a year ago, it was 600,000, but last quarter, it was in the 3s, so thats accelerated quarter to quarter in terms of video sub losses thats the entire ecosystem we talk about so often. Thats cordcutting. Thats not that important a business for comcast, frankly. Its about broadband and thats why, on the call, when the cfo said this, the stock went down take a listen. It continues to be a very competitive environment, and we lost 65,000 subscribers in the First Quarter. Following the loss of 34,000 subscribers in the Fourth Quarter of 2023. As we sit here right now, we do not see this trend improving in the near term. We expect churn could be elevated, given the end of acp, which is only fully funded through april and partially funded through may the affordable connectivity program. Yeah. Government program to get people broadband in areas and help them pay for it will expire we talked about that being an issue. Thats why the stock it was more or less flat on these numbers, even though theyre not great numbers. They were in line, if not better than some had anticipated, but then that. That took it down. Look, you come out hot, and you look at a broader number, and the stocks up 1. 50 when it reports and people look under the hood, and they dont like it i want to point out some things. I just want to and you tell me what they mean. So, peacock does 1. 05 billion. People are looking for 1. 02. Matter no. No matter peacock, theres got to be some scale i may no longer be at the company after i said this. Narrowing losses and subs up 55 thank you experiences. Experiences are great its all about theme parks awesome. Okay. Love them all right revenue, 32. 1 versus 32. 3. Broadband. How about being the first studio to finish number one at the box office and win best picture this century oppenheimer was amazing you sound like edward g. Robinson hey, its soylent green. Now, listen to me. This is not that jim, among the winners today, i know you liked chipotle. Comps up seven looking for five stock got to 3,000 ahead of this 50 for 1 yeah, and theyre going to split it, not until june, unfortunately. The most important thing there, and im glad you brought that up because otherwise people are going to hang themselves they raised the prices for california gigantically. No diminution. None thats incredible. Theres a piece on the tape right now theyre telling employees not to serve chicken in their own meals because of the demand to eintroduce chicken. We celebrated by having the chicken al pastor in our office. We said, this is going to be a fantastic number and it was they are if you want pure joy, business school, you know, speak, they talk about throughput, and they have this boston the boston store that had, like, throughput that was just unbelievable. This is an Amazing Company it is a lesson people should read the conference call. Rather than just Pay Attention to all the negatives i want to accentuate the positive right here. Our phil lebeau covered american earlier this morning. Then theres southwest moving lower on their results phil is at southwest hq in dallas with a special guest. Hey, phil. Looking out on love field, bob jordan, thank you for joining us lets be honest. You miss on the top and the bottom line. Ugly First Quarter, and people are looking at your guidance and the cut and capacity investors are saying to themselves, when does southwest start to grow again . I feel like the ground continues to shift under us. Well, we had a strong First Quarter, despite the financial results. We had record operating revenues, record passengers, record rapid reward member adds, but we have a number of markets in the across our network that are just not performing, so were taking action. Were further optimizing the network. We never like to close cities. Were closing four cities. We are cutting capacity in atlanta and chicago ohare and restructuring other cities and taking other actions, and were committed to doing this until we hit our financial returns. Lets talk about the max planes you started this year expecting to receive 80 max planes you keep having to cut it down lower and lower. New guidance is, what, youre expecting 20 how much is this hurting your ability to plan . You know, we, just starting with boeing at the very top, we support boeing taking the time to fix their issues, become a better company, because that is good for Southwest Airlines and the country longterm. But theres no doubt this is a significant issue. Replanning, adjusting schedules for our customers, and yeah, were significantly down from our originally planned deliveries, but thats not going to be an excuse. We need to hit our financial targets, and well take action were adjusting our network. We are tuning our Revenue Management system. We are taking marketing actions. And were looking at new initiatives, things like the way we seat and the way we board our aircraft lets talk about that for the longest time, this has been an airline where you buy a seat, or ticket, you pick the seat generally speaking is there a possibility we may see a Business Class or some type of a bifurcation within the cabin . Well, theres nothing to report today, except the fact that we are studying this. We always want to know what our customers expect, and so and their preferences, so we are studying our seating and our cabin right now. And again, theres nothing to report today, but customer preferences do change over time, and customers love our current product. I love our current product but it was designed at a time when load factors were significantly lower than they are today. So, were working hard to understand what our customers want weve changed before weve added things like wifi, power, larger overhead bins, and you know, its very early, but the results are interesting, and were continuing to study this and more to come later thats a tease. Jim, i know youve got a couple of questions for bob hello, jim. When youre starting to end operations, i want to know how much of these ending operations are for good, and how much is because of boeing . George Bush International airport, Bellingham International airport in washington, syracuse in new york, mexicos cozumel airport, how many of these are the fault of boeing, and how many are just, were not making enough money here well, weve got to get our financial returns, period, and get back to where were covering our cost of capital as a first step the Network Actions have really nothing to do with the boeing delay. Were taking Network Actions regardless now, the boeing delays are very painful. They cause us to replan. They hurt us on the revenue front. They cause us to be inefficient. And were working all of that. But no, the Network Actions will continue, along with the rest of our comprehensive action plan. Well, you know, bob, i guess im im spoiled here. I listened to phil lebeau closely, and phil interviews everybody in the industry, american, never looked bad, and then boom, the numbers better than i thought delta, better than i thought united, better than i thought. I dont want to see you down there with jetblue in the scrub. Well, the demand for our product is very strong, jim. I mean, again, we had record revenues here in the First Quarter, record passengers, and our sequential while we were off our plan, our sequential revenue performance from the Fourth Quarter actually was higher than historic norms, and our guide would imply that our Second Quarter will be sequentially the norm from the First Quarter. But im not underplaying the fact at all that we have a gap to our financial targets, and we will be absolutely relentless in pursuing those we have work to do a lot of that is around the underperforming part of the network. Weve taken action before in the First Quarter. That has been very helpful in its own plan, and we are taking further actions here in the Second Quarter, and we will take more actions with the network as we need to, along with all the other parts of our action plan that i described bob, are the underperforming areas, are they specific markets . Have you been able to identify why specific markets are u underperforming . Or do you look at it and say, theres a weaknessunderneath, generally speaking, in terms of demand the other big change is costs are much higher. Labor costs, especially, have come up a lot, and it typically takes, you know, the revenue performance a while to catch that but no, we can easily identify areas, particularly in our development markets, and we added a lot of capacity last year as we restored our network and got all of our aircraft flying, so we have a lot of capacity that is in development today. So, no, we can see the areas of underperformance, and that is what we are attacking. And youve done a lot of hiring, especially as you planned on having a number of planes being flown, pilots have you put a pause on that we did. Yeah we were aiming at, in a lot of cases, you aim a year out, particularly with pilots we were aiming at where we thought our aircraft and our fleet plan would be a year from now. Obviously, thats changed. We have stopped and frozen nearly all hiring. We have voluntary programs under way, and we expect to end 2024 at 2,000 heads below 2023, and well be down again in 2025, and through our voluntary time off programs right now, were already seeing nearly a thousand employees take those programs. Change is in the air. Bob jordan, thank you. Happy birthday, my friend thank you ive heard it from a number of people today guys, ill send it back to you stole my thunder, phil. I was about to wish you happy birthday too great work today thats our phil lebeau jim, reaction to some of the airlines today between american and southwest . Look, i hate being tough on bob, because obviously, if you dont have enough new planes where you want them he did not blame boeing he didnt. I tried to get him to say. Theres no more pure boeing story than southwest look, i think that hes dealing with the hand that he got, and within that confine, i mean, look, hes would i buy the stock here i think he was saying, listen, were going to work the kink out. Its still southwest i didnt mean to be as look, its just that everybody else is doing so well in this industry i mean, when you sit there and listen to delta, and you say, i got to buy delta you listen to united, you say, oh, man, i got to get united you listen to southwest and say, well, not yet. We didnt mention rcl today the quarter there, raise guidance thats experiential thats a real bargain. I think people feel like you get on a plane, its not a bargain get on a, you know, david, i dont know the last time you took a cruise, but they are cheap. A cruise . Hows never . Never good for you david what . You know when i had my cruise booked february 22 of 2020. I remember. I was going to be next to katy perry have you taken one since then in the last four years no, my daughter was on one of those electronic music cruises edm i like that. Fourday edm cruise love that viking is coming public i like viking therapeutics. As we go to break, dow is down 570 about a third of that is going to be caterpillar. Keep that in mind. But all sectors are red, except for Consumer Staples as for bonds, we mentioned the q1 pce price index running warm, claims at 207, lowest since february, and then we got to get through this sevenyear note auction at 1 00. Stay with us lot of kids getting treated to some interesting market activity dow down 600 it is take your children to work day. Look at that arent we lucky to get kids at inglewood cliffs. Good news. So excited. I was miserable. Along with the mignon. I was in the fourth tracker. Have fun today, kids. Were back in a moment the future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. The all new godaddy airo. Put your Business Online in minutes with the power of ai. Business. Put your Business Online in minutes its not a ninetofive proposition. Its all day and into the night. Its all the things that keep this world turning. The gotos that keep us going. The places we cheer. And check in. They all choose the advanced Network Solutions and round the clock partnership from comcast business. See why comcast business powers more Small Businesses than anyone else. Get started for 49. 99 a month plus ask how to get up to an 800 prepaid card. Dont wait call today. If youve ever grilled, you know you can count on propane to make everything great. But did you know propane also Powers School buses that produce lower emissions that lead to higher test scores . Or that propane can cut your energy costs at home . It powers big jobs and small ones too. From hospitals to hospitality, people rely on propanean Energy Source thats affordable, plentiful, and environmentally friendly for everyone. Get the facts at propane. Com now. Lets get to jim and stop trading. We have a winner its carrier. This was an amazing quarter. Carrier made great acquisitions in europe, heat pump business, got rid of things to make it a great Balance Sheet and gabe getland is a remarkable executive and people are wondering will he be interested in the boeing job. He says on the call, let me be clear, this is david who runs carrier, i have notified the carrier and boeing boards i am 100 committed to carrier and not interested in serving as ceo of boeing. You know, sometimes you get hes on the board, by the way. Think about this. Judy marks and you have dave at carrier, these are clinics. These are people who know thou run a business otis is doing well, including in china and getland doing well at carrier. People when they did that acquisition they hit the stock they were proven wrong and my congratulations dave, who is, by the way, one of the nicest people in the world. Nice guys finish first. Very nice jim, we got microsoft down 4. 5 google down 4. Ahead of tonight. Good. At least, you know, my father, jimmy, they seasoned the beach and then got there and everyone shooting them wm tonight . Look. Jim fisher is doing fabulous i won tickets to great golf that he does in phoenix the stock is crazy its down i got Tractor Supply after the close and then adco, i always like to make measure on food eric hansotta is fantastic agco is up david killed comcast thats all i have to say hashi corp is up. There you go. Killed . Youre going to stay on this . He shot a peacock today. It is a tough tape, though. Nasdaq now at 2 decline and the dow down 640 dont go away. Happy mothers day some things never change. Like a mothers love. Get something as timeless as a mothers love at harryanddavid. Com. Life is a gift. Share more. Good thursday morning. Welcome to another hour of squawk on the street. Im sara eisen with Carl Quintanilla and david faber, live as always from post nine of the New York Stock Exchange. Take a look at stocks. Ugly day shaping up on wall street ugly reaction to the gdp report. Dow down 668 points, decline of 3 1. 7 . Nasdaq seeing the most pain in moves like meta down double digits nasdaq down 2 right now every sector lower in the s p 500. Worst performing sector would be Communication Services thats where meta lives. That sector is down 6 and other names down in sympathy with meta like comcast we talked about, thats an earnings story, down 6 , alphabet down 4 , charter. Its a combo of the media names and tech names today meta down almost 14 nasdaq down 2 so week to date were actually still positive, but those gains are slipping away. Treasuries just take a look because thats been a big story. The selloff continues with yields higher and heading north. The 10year yield 4. 731 were going back to levels last fall when the 10year briefly hit 5 before that its back to 2007 highs if we are able to breach that level again Rick Santelli says next level is towards 5 . Busy day on the calendar. Pending homes with diana olick hey, diana pending home sales in march rose 3. 4 month to month according to the National Association of realtors. Thats a beat. The street looking for flat. Sales were barely up year over year, 0. 1 higher. This is the best reading of the year, but thats not saying much sales are still hovering around a 30year low. This index is based on signed contracts during the month and in march, Mortgage Rates uneven starting above 7 , dipping below, then back up and down home prices, however, Straight Line up. Banks Strong Demand and low supply Regional Sales rose except the midwest and strongest in the south. Interesting the west region the most expensive a also saw large gains in sales because some potential buyers were worried rates would go higher given the latest news from the fed and they jumped in the realtors are predicting home sales will be 9 higher than last year. Part of that on the expectations that rates will still come down so i guess well see. Sara, as you said, bond yields up again and Mortgage Rates loose follow the yield. All heading up. Thank you. Appreciate it. Diana olick. Start with the gdp surprise because we did get a rare miss on the economy 1. 6 gdp for the First Quarter this is the advanced look, the first look and 2. 5 the expectation. Atlanta fed, which weve been reporting on a lot was tracking more like 2. 7 so that was the weakest and you can look at the bar chart to show what an outlier its been given the strong growth. That was the weakest level since the Second Quarter of 2022 look at the bond reaction, usually buy bonds on a weak economic number but the bond market likely teeing off the price deflator we get across the three months of the First Quarter. The core number there at 3. 7, theres the gdp, it shows you the lower growth we are just encountering in the First Quarter, the pce deflator for the First Quarter at core was 3. 7 and that was almost double the 2 that we saw in the Fourth Quarter of last year also beating the 3. 4 expectation. It was a bad mix of weaker Economic Growth and higher inflation, which does tilt the risk to the upside for pce tomorrow, which is going to be important. Its just the march number, but its in these numbers. And we start with the gdp number and what a it says. Sure. Heres the breakdown. Consumer spending powering the economy, but that was a slowdown and the expectation that would be around 3 . Residential investment a good story that accelerated, but Government Spending up only 1. 2 , which is a contribution was a slowdown and imports were higher but that subtracts from gdp because of the trade numbers. What else would hurt the overall number was inventory investment. Lower inventory and higher imports doesnt spell recession necessarily. Those are sort of statistical and you actually might expect them to go the other way if you were expecting a recession but, its weaker than expected and the spending number was weaker. Consumer spending number for consumer led economy, obviously. Yeah. It was supposed to be better but you know what the bond market could be teeing off of jobless claims again are super low and continue to come in below expectation, continuing claims, those still on it for a long time, have come down. Theyre at the lowest level since february theres no stress to speak of in the labor market which makes investors concerned the inflationary pressures, even though not in the most discretionary parts of the economy like goods, theyre in services more, like insurance and health care, will remain elevated because people have jobs, labor market is tight. Theyre getting paid higher wages. All of this just means that Federal Reserve needs to see more evidence and push out the cutting cycle. We look towards december for a cut instead of september if we get one at all in 2024. Pce tomorrow. Pce tomorrow. And, you know, green economics, which i follow feds preferred gauge for inflation. They say, you know, this tilts the risk we could see a 0. 5 monthly number, which is higher than expected expected around 0. 3 or 0. 4. If january and february go up revised tomorrow. Right. So look, i think the market is doing a lot of work right now as far as higher yields and expectations of stickier inflation but thats going to be an important number. Whats happening on the economy . Will we get this weaker Economic Growth and stickier inflation. Monitoring the sound from the earnings call, fords cfo how he characterizes the environment. You have to factor in right now with Interest Rates that payment prices have gone up, insurance rates have gone up, as well as maintenance rates, and so when you take all that together, we think about afortibility, if youre back towards that range of affordability, price have to come off a couple points or so across the industry. Whirlpool, listen to the commentary there actually ill read that. Thats from the ceo. As expected, according to the whirlpool ceo the north american industry volumes were soft as promotions remained elevated on the back of high Interest Rates which continue to put pressure on Housing Affordability and overall Consumer Discretionary spending and then i wanted to play night swift, the transportation company, some of the weaker parts of the economy and when i say the inflation is not in the discretionary parts of the economy, this is what i mean its no secret we are in one of the deepest rate recessions the truck industry has ever felt it comes during a time when the rest of the economy is performing well, such that cost inflation continues to be a challenge, labor is staying tight, and Interest Rates are up significantly. We have never seen these extremes were currently experiencing. A lot of these cross currents you talked about a tight labor market but a freight recession and pressure on prices weve got examples where the economy is doing just fine Royal Caribbean, what great start to the year. They literally said wow in the release. Wow how about dr. Pepper, promising start to the year. Harleydavidson we look forward to continuing the positive momentum as the riding season comes into full swing. Its not all bad news out there, but it is a mix the picture and, you know, i wonder if just the higher Interest Rates need more time to filter through you are getting these kind of comments like people are adjusting to higher Interest Rates and ther ultimately weighing on purchasing power. We are seeing signs of a consumer thats getting thats stretched, particularly at the low end, but we talked about luxury off of it. True. Thats got a lot of reasons behind it and china is a part of that as well, but definitely are signs. More credit card debt, more delinquencies. Savings rate went down in todays report under 4 . Theyve exhausted the excess savings. As long as the job market hums along, that is a cushion. Yeah. And if we stay below 4 unemployment, this administration will break the record for the most consecutive months below 4, which goes back to the late 60s. Will they get credit for it if we still have an inflation problem . Meantime, meta the locust of the pain today shares tumble after getting crushed on the back of its earnings call, despite a top and bottom line beat street reacting to the lower than expected revenue guide from q2 and higher expenses ahead zuckerberg talking about ai spend. We should invest significantly more over the coming years to build more advanced models and Largest Scale ai services in the world as were scaling capex and Energy Expenses for ai well continue focusing on operating the rest of our company efficiently, but realistically, even with shifting many of our existing resources to focus on ai, well still grow our investment envelope meaningfully before we make much revenue from some of these new sflooktsz bunch of price cuts on the street, one from oppenheimer who cut from 585 to 500, keeping the outperform rating and jason joins us this morning. Good to see you. Thank you. Is this are the concerns really about growth or is it about spend . I think its two things one, this was probably the third most overweight for investors, right. Nvidia, microsoft and then meta. So just very High Expectations while they did deliver on the top line in the quarter they only beat their midpoint by 2 points and folks were expecting more then again, as you cited, you did have the higher full year both op exand capex guidance and comments by Mark Zuckerberg allud alluding to they plan to lean into ai investments. Has zuckerberg deserved the right to be considered a disciplined spender and would not cross over into areas that are not eventually monetizibility i dont think so, yet i think theyre toying with we still have the Facebook Reality lab still on track to losing 20 million, it has to do with ai and the core instagram, facebook, advertising business, and they may want to shift some of that spending kind of on a reporting basis back to the core so no, i dont think hes kind of entirely, you know, earned his way out, but i think when being the Fastest Growing company in advertising, that does earn him a lot of street cred. Hes invested in the past reality labs, still to be determined, but certainly many of the investments theyve made have paid off significantly. What do you think ultimately some of the products that are now being invested in, what are they going to look like when it comes to what this company is doing . Yeah. I mean, at this point, the company has really had to do two things one, they had to figure out how to ultimately fight off tiktok, and that was an engagement driver, which they ultimately did with reelz, and then secondly, they had to pick up signal loss from idfa, which they did with ai they were so successful with that, it gave them confidence that they should be doing more in ai, and that is what theyre leaning in to right now. So are you a buyer on the of the stock on the weakness today . If youre a longterm investor this is your moment to buy shares with a 12 to 18month view again, if youre looking for, you know, upside in earnings over the next three to six months, theres probably other names in our coverage universe everything that this company is doing looks like its the correct strategy its just investors, you know, really have to buy pretty high ahead of earnings. Definitely in the top five in terms of worst days in market cap loss appreciate it. Good to see you. Thank you. As we head to break, heres our road map for the rest of the hour shares of ibm taking a hit after posting a revenue miss i spoke with the ceo about the results and their new deal details coming up. Rubrik is going public today. Well have the companys ceo join us in a first on cnbc interview. Alphabet and microsoft tonight. What investors need noto kw ahead of those numbers as squawk on the street continues on this thursday i dont want you to move. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with xfinity. Welcome back to squawk on the street. Check out ibm, one of the biggest losers of the morning. Revenue came in slightly lower than expected due to some weakness in the consulting business, which missed revenue expectations Ceo Arvind Krishna telling me software was good, fracture was much better than he expected and consulting fell short, but he said, results came in better than our peers the momentum in infrastructure and software makes us feel better about the year and keep the 12 billion Free Cash Flow guidance, an important point for him and was raised from 10 billion. Focusing on consulting, i just dug deeper because that was where the miss was he said Interest Rates are higher, first discretionary area where businesses cut we arent seeing slowdown in infrastructure or software in terms of end prize spend demand. The company had news on the deal front acquiring hashicorp for 35 per share in cash. This was rumored and reported by the journal yesterday. The stock went up on the news yesterday. Krae Arvind Krishna telling me on this deal that its about multicloud ai client infrastructure, which is getting more complex and had having hashi helps manage the complexity and the security. Two other points first on hashi that might be getting lost in the news flow this morning, they do expect it to be accretive to cash flow next year which is only interesting because this is a company that just became cash flow positive. Theyre expecting that within year two, and the other point is on ai because theyre starting to paint a picture for investors about ai demand from their enterprise customers they started tracking this in q3, and according to krishna, its picked up in terms of the growth rate every quarter, quarter to quarter, and bookings surpass a billion dollars in terms of i. T. Related projects that filters into software and consulting theyre not going to break it out more formally because its set to permeate every aspect of their business and they will not give guidance because it should continue to rise but they are putting that marker out there as far as the ai growth and also framing the hashi acquisition as a play for not just this multicloud infrastructure. Ibm does multicloud software this is infrastructure and also an ai apparently the terra form, their open source, hashis opensource downloaded half a billion dollars which speaks to how useful it is according to ibm and arvind. Stock down though. Stock is getting hit. Again, we did point out earlier it was a strong performer or has been over the last 12 months year to date not so much as for the shares of our Parent Company comcast not a good year for those shares after a fairly Strong Performance in 2023 the stock is down some 13. 5 and as you can see, a lot of that taking place just today after the Company Reported earnings that in many ways were in line, if not in some ways exceeded some of the expectations from the analysts that follow the company. Average user on broadband was higher than anticipated, added 289,000wireless customers. Peacock subs were up its the broadband losses that were 65,000. Not necessarily unexpected revenues up 1. 2 ebitda in line video continues to just dramatically be reduced overall. That is in terms of the number of people who are cord cutting only continues to potentially accelerate in some ways. Cord cutting report they put out, you can bet its down another 7 to 8 . Thats putting pressure on the likes of other companies such as disney that still rely on the group of people to subscribe to new York Networks such as espn the broadband business remains the focus for comcast. It is a key generator of revenues and margin at the company and, in fact, on the call, cfo armstrong had this to say about competition in that broadband market it continues to be a very competitive environment, and we lost 65,000 subscribers in the First Quarter. Following the loss of 34,000 subscribers in the Fourth Quarter of 2023. As we sit here right now, we do not see this trend improving in the near term. We expect churn could be elevated given the end of acp, which is only fully funded through april and partially funded through pay. Jason armstrong dave watson the ceo of Comcast Cable on the same call did go on to talk about the fact that overall the broadband market is still growing, and they do expect and have noted that many customers are using more and more bandwidth and that is ultimately a very good trend for the company. You can see comcast having one of the worst days i can remember in quite some time again on the overall trajectory for that broadband business which is not looking particularly good right now. You had another story in which we could use some ho household creation. The key. Largely dependent on rates. Getting supply out there. And affordability is not great either so you have weak supply, weak affordability household formation. You were talking about peacock they added 3 million paid subscribers. They did. You had that chiefs game they spent a lot of money on that there is still a belief ultimately that scale is necessary, whether you speak about peacock or whether youre speaking about pair mount plus or at warner brother discovery the max service and how that scale is going to be accomplished to bring these services to significant levels of profitability, given how much has been invested. Still a money loser for our Parent Company and for nbc u which is part of that. We dont even talk about that often the numbers which were more or less in line its a difficult environment when you have when you continue to lose video subscribers at the rate that is happening in that ecosystem. Ive been silent to this point, not by management, but shock in the decline. It is or was the worst day for dow, s p since january s p has recovered a little bit, back above 5k, vix below 17, and still a big make or break day te with microsoft and alphabet on deck well get you are the after a break. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. In any business, you ride the line between numbers and people. Whats right for the business and whats best for everyone who depends on it. Solving todays challenges while creating future opportunities. It takes balance. Cla cpas, consultants, and wealth advisors. Well get you there. A bit of a murky picture when it comes to big tech results. Tesla surging double digits after its report as you know, meta plunging on pace for the worst day since 22. More big tech earnings on deck tonight. Steve covac is all over microsoft and deirdre bosa in San Francisco tracking alphabet and Kristina Partsinevelos checking in on the chips ahead of intel steve, begin with you. Ahead of this earnings for microsoft the question is, where does the ai money come from . You have to look to the cloud, not necessarily copilot. Microsoft has been quiet about its marquee ai product, opilot which it sells to businesses for a hefty price of 30 per user. [ inaudible ] to the promise to massively boost worker productivity ahead of earnings microsoft did boast about a couple customers that said cognizant is buying 25,000 copilot seats and announced a new cloud deal coke saying we have to look at the azure Cloud Business. Growth slowed in that unit through 2022 and 023 as microsoft helped customers cut cloud costs when everyone was worried about an impending recession. Growth started to reaccelerate in part thanks to ai openai and other ai Companies Run their services on azure which means more money for microsoft. For the december quarter microsoft said 6 of growth came from Artificial Intelligence so well be watching for that number to grow because its the best signal well get on ai sales at microsoft, carl. Steve, thank you. Ill pick it up. Lot to watch there lets get to deirdre bosa now with more on alphabet, which is moving lower today i guess in sympathy with meta. Yep and you know meta is not the only mega cap spending big on ai thats hitting that stock. This is what alphabets Capital Expenditures have looked like over the last few years, hit 11 billion at the end of last year and the ceo saying on last quarters call capex would be notably larger than in 2023. Google has started to monetize its gen ai products through microsoft what steve was talking about. When i spoke to googles cloud chief a few weeks ago i asked him if gen ai was new spend or shifted spend for the customers he was very clear he said net new spend. Now a few other things to look out for, google is still looking for a cfo to replace ruth poreat to let her focus on her new role as president and cio some would call it a small possibility of a first ever Cash Dividend theres a spot if meta can do it, why cant google finally the biggest question, for sure will not be answered, but investors will be looking for clues on, what of that innovators dilemma that google is facing. Its biggest existential threat in decade. Willing to disrupt search for gen ai or disrupted by someone else guys weve discussed that, and then it seemed to disappear as a concern of investors for a bit of time. When it comes to sort of implementing the levels of efficiency, so to speak, that they did at meta, i mean thats a founderled company. Alphabet is no longer founder led. Its not. Its led by Sundar Pichai who has been at the company a long time, not a founder. In terms of the efficiency, hes proved to be quite efficient and have that drive this year. Remember we started the year with these rounds of layoffs although google was kind of seen as a little behind on that so well see i mean, this is a spot that maybe theyre making room for some of the more expensive data scientists that are required for generative ai. Sundar pichai, this year, thats been a theme of his, to show wall street that it can be more efficient and more tough, right. We saw the firing of those 28 workers just last week who staged walkouts, and thats the change in google culture well see how thats going to affect the bottom and top lines. Okay. Deirdre, thank you deirdre bosa were going to end on the chips and intel. Kristina partsinevelos has that for us. We had Texas Instruments earlier this week and that report was less than expected with many wondering if the bottom for nonai segments is near when i talk about nonai we think intel, pc and server segments both are highly dependent on i. T. Spending budgets. Citi points to a pc recovery in march and the launch of windows 12 later this year that could be a driver for a pc refresh cycle. Other positives, mobile business, given intel majority shareholders that could add a bump in other business sesments. Investors remain skeptical, no surprise, intel under performing other chips down 30 year to date with the smh up 20 thats a huge discrepancy. Even if server sales are improving, competition from amd is a headwind for intel. Secondly, intels new foundry business, which will be operating as a separate business with this report, has deeply negative gross margins, profitability is a ways out. Intel, though, will tout its new ai chip which aims to compete with amd and nvidia q2 of this year that doesnt factor into the results yet. Lastly i need to mention micron. The Biden Administration announced a 6. 1 billion in federal grants to build out a plant in new york and continuing to build out plants in idaho look at the stock not reacting because it was already priced in the news came out trickled out about a week ago and been talked about. Not seeing too much of a reaction. All right it is interesting to see some of the chip names up today. Nvidia, broadcom, marvel, intel. Because of the capex. Spending. Meta spending, they benefit Kristina Partsinevelos. Stocks are now on pace for their worst month since last september. Worst month of the year. Less than 24 hours from a fresh read on inflation. Were going to talk top picks amid this volatility next. Plus, not just another gdp and earnings day at cnbc its also take your kids to work day. Back at our headquarters, a lot of cute kids. Really are. Hanging around. Yours arent old enough yet no. I dont work in inglewood cliffs. We do it here at the New York Stock Exchange. You could have brought them here. We do it after snoog the stage manager is working overtime. You could have gone there and had your kids there. I didnt even know. Youre allowed. I would love to they are off today its spring break. I think you made a mistake. A lot of air time the all new godaddy airo helps you get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo welcome back to squawk on the street. Im Bertha Coombs with your cnbc news update. Its a big day for donald trump as the Supreme Court hears arguments on the former president s immunity claim in his election interference case his lawyers argue his efforts to overturn the 2020 results were official acts taken in office. The federal Appeals Court ruled in february against that claim that he is immune from prosecution. Meantime trump is in a new york court today as the former National Enquirer publisher david pecker resuming his testimony in the hush money trial. Pecker is expected to detail the alleged payment to adult film actress Stormy Daniels that is at the heart of the case. Finally, new Yorks Top Court overturned hollywood producer Harvey Weinsteins 2020 rape conviction this morning the court found that the judge in the landmark trial prejudiced the former film moguls case with improper rulings including a decision to let women testify about allegations that were not part of that case. Prosecutors must decide whether to retry weinstein who is serving 16 years for a separate conviction in los angeles. Sara, back to you. Checking into the market selloff an hour into trading and its been broad off the lows but sharply lower. The s p down 1. 3 . Every sector is higher whats bucking the trend gold, radilroads and semiconductors meta weighing on the overall market the nasdaq down 1. 6 microsoft ahead of results is lower as well so is amazon and alphabet Portfolio Manager and cio bill nigran joins us to discuss what to do. The 10year note yield at 4. 71, some big reactions here. Dollar yen above 1. 55. Does this change your thesis on picking stocks for the year, the surprising backup in yields . Good morning, sara. Thank you for having me. No at oakmark we are so longterm focused most of the daytoday news is just noise to us what we look at in the market today that we think is really interesting, its not just that s p is at Something Like 22 or 23 times earnings, its how large the spread is between growthier companies and value companies. One way of looking at that, the russell growth p e is about twice the russell value. Something like 30 times versus 15 that number typically is more like 1. 5 times at oakmark where were trying to sell fully valued stocks and buy inexpensive stocks, our portfolio has kept moving lower and lower in p e even as the market has risen over the past year so get a little more granular if you could about where those enticing bargains are and why you would want to be loading up in this kind of environment . I think, again, one of the interesting things in this market is how broadbased the cheap stocks are they arent concentrated in just one industry so, for example, we own capital one. Its at about ten times expected earnings that would fall to 8. 5 times if they can complete the discover transaction. We own conoco phillips, one of the best enp companies in the united states. Its less than ten times Free Cash Flow if oil stays somewhere around 80 a barrel. Most of that cash flow comes back to shareholders we own santeen, a large provider of medicaid insurance. Its quoted p e is about 11 times earnings comes down to 9 times earnings if you assume they fix their problems in medicare advantage. We own charter, about 8 times earnings that comes down to about 6. 5 times if you add back the amortization and excess depreciation we think its a valuable infrastructure asset. How cheap is too cheap . Are there levels they get to where you have to throw in the towel . No, no, no, not at all. If fundamentals dont behave the way we think they should, that troubles us a lot, but a stock getting cheaper is just an opportunity getting better. Yeah. Sometimes, bill, its because the opportunity is not necessarily as great as had been anticipated. I mean charter, for example, down today on our Parent Companys earnings its been a challenging environment. The eight times youre citing is a reflection, obviously, of that why, on this name and or any others that have those lower multiples, are you constructive on the underlying business, given, to saras point, some of them keep getting cheaper . Well, if charter can even just keep business flat, which i think would be a pretty draconian forecast for them, its got a Free Cash Flow yield of almost 16 , so the return to shareholders would be very high. One of the nice things about buying companies that are selling at such low p es, you dont have to believe that other people are going to think these are great businesses you just if the p es can stay static, the return to the investor is quite good if they move closer to the s p 500 p e, the returns are very good bill, finally, on some of the year to date winners you have, i know youre long term focused but citi and wells multiple returns to s p this year, do you get an itch to ring the register no, not at all. We think bank stocks across the board are quite cheap. The large banks, we think r competitively advantaged were very excited about the restructuring and turnaround that jane fraser has put in place at citi. We think its still among our most attractive names and its why its one of our biggest holdings. Finally, bill, the conversation weve had for years, growth versus value obviously, you emphasize youre long term and you have outperformed often over that longer period, but are we in a period now where value is going to be back in favor in some way . I wish i knew how i could forecast that sign wave of when value comes in favor and when growth comes in favor. Growth has had a very good decade relative to value its historically unprecedented. The result has been the p e spreads are about as wide as theyve ever been. We think that puts the odds pretty strongly in values favor, but its for long term investors. That doesnt say anything about what this quarter or next quarter will look like bill, thanks for weighing in. Appreciate you joining us with some of your longterm picks bill, the cio of oakmark funds with the dow down almost 700. After the break a first on cnbc interview with the ceo of red lobster making its debut at the nyse today hell join us next ngoway. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire Fisher Investments at Fisher Investments we may look like other money managers, but were different. Your job description. other money manager you cant be that different. Fisher Investments we are. We have a team of specialists not only in investing, but also also in financial and Estate Planning and more. other money manager your clients rely on you for all that . Fisher Investments yes. And as a fiduciary, we always put their interests first. other money manager but you still sell Commission Based products, right . Fisher Investments no. We have a simple Management Fee structured so we do better when our clients do better. other money manager huh, were more different than i thought Fisher Investments at Fisher Investments, were clearly different. Microsoft backed and Data Security provider rubrik set to make its debut at the nyse, pricing 32 above the range gives the company about a 5. 6 billion valuation, indication 37 to 39 joining us on set for a first on cnbc is rubriks cofounder and ceo bipul sinha with jon fortt good morning take it away. Good to be back here at the nyse at least something is looking up this morning so far. Well see how it works out bipul, good to see you investors are familiar with palo alto network, platforms like crowdstrike and zscaler. Youre playing in backup and safe recovery and theres ban spotlight on that from the Ransomware Attacks weve been going through the past several years. How do you grow from that . First of all, thank you so much for being here. What an honor to be on this stage in this time today, the rubrik public debut of our customers, our partners, our employees, a lot of us are here. Thank you so much for this opportunity. Yeah. Look, rubrik is a different kind of Cyber Security company we help our customers keep their businesses up and running in the event they have a cyberattack or cyber breach so that kids can go to school, so that hospitals can still operate, so that money comes out, even if the business is impacted. That is different from the traditional Cyber Security focused on stopping attacks. We assume attacks will happen. How do you continue to operate the business even when you have successful attacks and breach . Youre running right now at about 780 plus million annualized recurring revenue you also got about half a billion in Sales Marketing expense. Youre up against some competition. Convault, a legacy player trying to change into doing more of the modern stuff, cothesety that just bought an older line player trying to beef up and get ready go public as well. What should investors expect from your Growth Profile thats different, and how are you going to manage that sales and marketing expen versus the growth you expect coming in the door to profitability . If you take a step back, rubrik has transformed backup and recovery industry into a Data Security platform to deliver cyber recovery and Cyber Resilience this is a market transitional story. Rubrik is leading that market transition whenever you have market transition not all the legacy or old players make it, and thats why you see consolidation in our market the use case of this product has changed. Cyber is the biggest risk and how do you continue to operate the business its a very large market according to gartner in the next three years, its a 50 billion market we are operating in a large market with a product helping customers make sure that they can create the products and services to their end consumers. Is coming to grips with the idea that there will be attacks a sign of failure when it comes to attack security it is actually a sign of a strength because we have to reframe cyber discussion cyber discussion cannot say the offenders are successful when they stop 100 of their attacks. Where are the biggest threats coming from . Biggest threats are coming from the nation state actors theyre coming from insider attacks. We still have teenagers in the basement showing middle fingers to businesses and governments around the world so youve been a venture capitalist and mentioned consolidation is happening in this industry. To what degree is or larger goio be a part of your playbook now that youre public look, we are building Cyber Security, all the data across all the data stage is protected by rubrik. With we want to access this platform, deliver more products and services to our customers. We are always looking out for interesting people, technology, teams, products, and we will continue to accelerate, whether its organic or inorganic. Were looking to see how you open here. Ive known you for a couple of years. Its an exciting day for you good to be here with you at the nyse. Thanks for the opportunity. As we head to break, bright spot is Royal Caribbean getting a nice boost on q2 beat. Well talk to the ceo next hour on money movers after wow what a great arr quteis what they put in their earnings release. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire norman, bad news. Matchii never graduatediption. From med school. What . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. Thats like 20 a month per unlimited line. I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . Welcome back to squawk on the street. These kids on your screen, the children of employees including our producer, ben thompson, on squawk on the street here as cnbc celebrates bring your kids to work day. Two of our own, augie, big 10th birthday coming up this weekend. Way to go, man enjoy. Make sure dad gets you something good. They have red hair like their father happy birthday thats adorable. Im sad my kids arent here. As you should be. You are really distraught. Im sad for your kids, too. They could be having fun at hq. It looks like a blast i want to get an update on a big retail story percolating the ftc suing to block the more than 8. 5 billion own coach owner tapestry and michael kors owner. I spoke to tapestry ceo who told me shes disappointed and quite surprised by the way the ftc is thinking about the market. She said they fundamentally misunderstand the market and the way consumers shop we spend time in the market and we have data and it is intensely competitive. Following up by saying, do you duopoly . She said, i wish our job was that easy. I wish we had to worry about one competitor she was disappointed when i spoke to her about the ftcs argument this would hurt workers. She said, we are proud and focused on this. Our people are our competitive advantage and we experience very low turnover for our industry. I spent a lot of time looking into this, speaking to lawyers about this the reason it is unprecedented almost for the doj or the ftc to block a fashion merger is because its hard to think of an industry that is more competitive when it comes to brands if they are going to define this market by accessible luxury, which is what they do in the complaint, they should define the market they havent done that, to my understanding, besides mentioning price points of handbags if you shop for handbags, you know, first of all, some people who make 100,000 still carry around 4,000 Louis Vuitton bag. There is competition and the market is not segmented by two designers that happen to make handbags around two prices accessible luxury was the term they coined. Coach coined that term. Listen, there was there was a lot redacted from the complaint itself which led those to read it believed there were socalled bad documents that dont look good about competition between the to they would represent 50 if they got together. It depends how you even define accessible luxury im not sure you can do that if you look across instagram, upstart brands, legacy brands, can you find a lot of handbags in the same price range. When it comes to shopping, if taylor swift wears a handbag, whatever it is, the next day that blows up. Thats competition. The judge changed from what we told you the first day. The only other thing i want to tell you about this is joanne, the ceo, does not this does not change her timeline for closing the acquisition by the end of calendar year 2024 they expected a delay. They expected a tough regulatory environment. They feel very confident in their case in litigating this. All right you can see, of course, the performance of those two, no different than the performance of the overall market. But the s p is off the lows, down about 1. 5 . We got a lot more coverage of th vatitfoyowh wisolily r u ene come back. In any business, you ride the line between numbers and people. Whats right for the business and whats best for everyone who depends on it. Solving todays challenges while creating future opportunities. It takes balance. Cla cpas, consultants, and wealth advisors. Well get you there. Good thursday morning. Welcome to money movers. Im Carl Quintanilla with sara eisen on the floor the New York Stock Exchange today the dow is having its worst day in about a year. Gdp disappoints. With that back drop,