Transcripts For CNBC Squawk 20240703

Worst down by 1 the nasdaq off by. 6 . The s p down by. 50 lets take a look at treasuries now. You can see at this point the tenyear yield at 4. 68 yesterday on that data that we got at 8 30, the twoyear moved above 5 we have the pce number today squawk planner two reports before the opening bell chevron and exxonmobil in the next 90 minutes. You see two big interviews after those reports. Darren woods will join us at 7 30 eastern time this morning chevrons c, o mike wirth will be on at 9 45. Po we will get key Economic Data at 8 30. Core pce is expected to rise without food and energy. That is down from the february reading of 2. 8 . U. S. Secretary of state Antony Blinken meeting with xi jinping. He told xi there has been progress since the meeting with President Biden back in november there are still many issues that need to be resolved. The meeting comes as u. S. Officials have been raising concerns about chinas economic assistance to russia earlier in the day, secretary blinken met for more than three hours with the China Foreign minister. An update on the rising tension from protests on College Campuses usc will not hold the may graduation event that was expected to draw 65,000 attendees. They cited s d Safety Measures in place more than 90 people have been arrested there last night at ohio state, state police and patrol moved in after 10 00 ap. M. And asked the crowd to leave or would be charged with trespassing dozens were removed and arrested several protests popped up around the country yesterday this was the scene at northwestern in illinois this is the protest as George Washington university and protests at America University there. You can run through a list of other campuses things building here shares of snapchats parent snap soared to 1. 2 billion by improvements in the ad platform. Ad revenue accounted for that total activity daily active users improving guidance for the quarter above the estimates. This stock has been a volatile one. Good news is it is up 23 . Getting back to where it was a couple of months ago. Shares of intel are falling. First Quarter Sales missed estimates. The Current Quarter forecast came in weaker than expected Ceo Pat Gelsinger did speak to jon fortt yesterday about the forecast. We delivered a solid q1 we met revenue we beat on eps we gave an outlook for first half to second half. A much stronger second half outlook as we saw with growth across every business forecast for the second half. Somewhat like the market indicates and maybe a little bit of market weakness in the first half of the year we are working through that. Well talk more about this with the analyst in the intel performance later in the hour. Year to date down 35 . Mining giant Anglo American has rejected the takeover bid from bhp bhp said it made an all stock offer that valued anglo at 38. Billion you see anglo shares are off and bhp shares as well down less than 1 . The bank of japan keeping rates unchanged. This comes after flainflation in tokyo came in lower than expected the bank of japan will continue buying bonds at same pace as previous months. Coming up, more tech movers and dividends announced by companies that have never done it before. Phet and microsoft make those moves. Well show you those next. Were coming right back. [sfx wind, rain and rolling thunder] nobodys born with grit. British announcer rose is really struggling. Its something you build over time. American announcer thats 21 missed cuts in a row. [car trunk slammed shut] for 88 years, Morgan Stanley has offered clients determination and forward thinking to create the future. Crowd stop it . Only you can see. American announcer rose, back in the winners circle. [crowd cheers] [music out] 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. Alphabet and microsoft reporting yesterday. Both Beat Estimates on the top and bottom line. Alphabet announced the first ever dividend. Joining us is paul meeks mixed feeling like everyone about dividends. This is good in this case. It doesnt mean the end of the growth period, does it, paul you know, im a fan of that company for other reasons. I have covered tech for a long time usually when Tech Companies, particularly if they have been around a while, announce a dividend, you start to wonder wow. Dont they have anything else to do with the Free Cash Flow will this impinge the r d spending there is upside with the growth drivers, but the way i look at this particular dividend is maybe they check a box for some Institutional Investors that need to check the box with dividend paying stocks this is no draw for me. Why do you think the stock is up on something earning this or because yeah. I think there were some people, particularly after metas checkered result the day before that were a little worried about the results here they had to climb a wall of worry. In the meantime, the core ad business was very strong and the google Cloud Business was very strong and it looks like they are now doing all the right things, at least in the long term to build a. I. Product suite. I think theyre in pretty good shape. How about microsoft i like it, too. Microsoft will be up a bit today. The only thing i worry about microsoft is ive always felt they have to show evidence that copilot is actually going to be a thing. When i say be a thing, it has to show its a money maker. Im worried they still talk about copilot, a. I. Assistant, in the grantd pr terms that don show results they are investing heavily in a. I. They have a 49 ownership of openai the core business seems to be accelerating or in pretty good shape. I think both of the jumps in the stocks premarket are justified. The macro environment got more complicated yesterday we will see about today. Maybe it gets more complicated the action in both tech stocks, this doesnt look like worries about stagflation or rates not coming down or rates going up. The economy slowing. This is purely based on the individual Companies Just did or said will that continue or should tech investors be wary of the macro environment . Joe, that is an interesting question they should be wary. The biggest thing with the valuation or any stock is the level of rates i think what is happening here is confirmation in the core business with the Quarterly Results. Excitement about future a. I. Growth, but we have finally come around as a consensus view that the fed will not necessarily lower rates quickly or steeply and that had been a concern that cause a caused a little bit of a tech wreck. It is now baked in what does that mean for your feelings on the nasdaq for the rest of the year i think the nasdaq will out perform the s p, but i dont think it will be one size fits all. You have to be very carefully looking at the tech names. As we have seen and were not through the entire quarterly reporting season yet with some Companies Like overnight in the teaser with intel which had bad news stock will be down a lot theres some with good news. It is not a shotgun shooters market you have to be precise and rifle shoot with specific tech names every one of the companies talked about a. I. And what they will spend and what it will do for them at this point, that is still a positive win when you hear about a. I. Plans does that ever pivot were getting into streaming disney goes and then a year later, we have streaming joe, we are around with the hoopla around dotcom. The turn of the century. Here is what i think i think theres too much expected in the near and intermediate term. Im talking about a couple of years how the a. I. Products will be monetized i dont know if they will ever be monetized to the way people think. In the meantime, the infrastructure building and that Nuclear Arms Race continues with the capital expense announcements with the tech majors who does that benefit . The same old same old. The guys applying the picks and shovels with nvidia and amd and broadcom and marvell i dont know if the apps at the end of the day will be a real driver financially i stick with the guys building the large language homodels im not betting on the a. I. Apps at this point, companies are not punished for big spending on a. I. Build outs . You think that could happen . I think theres always going to be over time as we go longer and longer in the phase and people say whats the return of the investments. You think about it and the capital expense numbers are insane in this space, the strong will get stronger because they can spend. Im just going with the guys that are assisting in that a. I. Infrastructure bill. Not the guys making the products all right paul meeks from harvest. Are you a harvest guy or harvest moon guy youre a harvest moon person, right . Harvest was an entire album. A song. Harvest moon i like joe, im a jersey guy im Bruce Springsteen 24 7 365 born in the usa. Thats right. Thunder road. Thank you, paul. Chevron out with the Quarterly Results. Profit came in at 2. 93 a share on adjusted eps. That is better than the 2. 87 the street was expecting revenue was 48. 7 billion. That is below 50. 6 billion the street was looking for here. The instant reaction is for the stock to be off. 4 . Downstream earnings were down to 783 million that compares to 1. 8 billion before upstream earnings up 5. 23 billion from 5. 16 billion in the quarter before i spoke with mike wirth of chevron about the numbers and point of pride for the company is the increase in production. It was up 12 worldwide for the quarter over a year ago and it was up 35 in the United States. The biggest part of the increase of production in the United States was the acquisition of pce energy the Permian Basin actually up by 12 . Wirth tells me chevron is on track to 1 Million Barrels per day. Wirth says chevron is under valued compared to the s p he points to the dividend yield. If you look at this, this is chevron against the s p 500 over the year up 10 over that time. Chevron has under performed exxonmobil during that time. Chevron up 18. 5 year to date. We will continue to take a along look at some of the things wirth says they plan to grow 4 to 7 this year. Wirth says despite the weak gdp print yesterday and weaker than expected manufacturing report this week, Global Demand for oil is strong. By the way, he thinks u. S. Gdp will be stronger than 1. 6 in the first read at the First Quarter yesterday. Wirth was meeting with treasury secretary janet yellen and janet gran granholm. Demand is strong the market is balanced if there is any disruption in the middle east or europe, the risk is to the upside. Thats what the administration is concerned about as for the other big question, happens with the hess acquisition. They expect approval from the ftc to come within a few weeks there is arbitration with exxonmobil that concerns hess 30 stake in the guyana project. Exxon filed for arbitration to resolve if it could preempt the asset and offer a competing bid. Guyana is the reason recchevrona willing to pay for hess. Wirth says we think that sounds reasonable exxonmobil ceo darren woods is joining us this morning. We will ask him about the guyana oil property that stock down. 40 when we come back, a new report says former President Trumps allies are working on a proposal to challenge the fed independence if trump wins a second term. We havehave details after this. On may 4th, Warren Buffett will answer questions at the annuaan annual meeting if you have a question, send to us and we will look through and ask questions during the meeting. Squawk box will be right back. 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. marci so, how long have you lived here . And how are the restaurants around here . D more are they good, bad, meh . luke marci, weve gotta go. marci im sorry. luke weve got seventeen thousand more parks to visit. [marci screams] luke we bring you the best neighborhood info. marci ding dong luke homesdotcom. Welcome back to squawk box. New this morning, a report is breath taking in so many ways. The talk of the town on wall street and elsewhere the journal reporting that Donald Trumps allies are drafting proposals to that tempt to erode the Federal Reserve independence if the former president wins a second term now arguing he should be consulted on try rate decisions. The fed regulations subject to the white house review and the president should be more forcefully use the Treasury Department on the check on the central bank if trump wins the second term, he should have the ability to oust jay powell before the term begins it wasnt clear if trump was aware of the proposals and some former trump economic aides were not aware of it. A spokesperson for Trumps Campaign saying if it is not coming from us, dont take it as official not denying it either. I have to say as somebody who lives in this world, if you are in the world of finance and you think the president is going to do this, there is always some level of implicit pressure points and things and we heard trump publicly make comments about the fed. H. W. Bush made comments i remember talking to paul volcker before he passed away. He had conversations with james baker on behalf of reagan back in the day this is very different some of the former president s advisers requiring that candidates for the fed chair privately agree to consult with trump on the central bank decisions. Others made the case that trump could sit on the fed board of governors on an actsing basis. People described this as far fetched. Nonetheless, for those in the finance world who said, okay, i like the tax policies or im okay with this or that this is different if the Federal Reserve no names attached to it no names attached to it. The people that were asked dont know anything about it i like to know who are the people Peter Navarro . Not to disparage him i dont know about the sources, but which allies of trump, if trump doesnt know about it, which it says, he may or may not. We dont know. Thats what im saying. Who is this . How crazy . What constitutes an tally or a confidante we all think this is a crazy situation to have a president sit on the board it is crazy and insane. I dont know who the allies are here it is running at the top of the web site right now theyre citing multiple people who claim they are close to the president. I believe people close to the president that may be like this that i would dispute you would dispute. I know a couple of them by the way, a story like this, to me, unto itself, undermines the credit bbility o the future fed under trump i would imagine it would make it harder to find a credible individual to run the Federal Reserve because now this story has been published, and the president , by the way, hasnt said this is crazy we do not agree with this. The spokesperson did not do. Lets say you name your next Federal Reserve chair. What is the first question kthat everybody is asking . Have you made a secret deal with the president . Were aware his allies are working on a secret deal i would say did you have any agreement with the president before hand to consult with him . Othe otherwise, you could say i didnt have a secret deal. The public will sit around as we are this second and say there is something untoward going on here. After what happened to jay powell and all through the first term god forbid all through trumps administration, who would want the job given the daily tonguelashing jay powell got. A lot of people would like the job. They would be taking it eyes wide open to what to expect from what we saw with the jaw boning on jay powell daily. We already saw how relentless trump was with lower rates as a real estate guy. I dont know there was any scenario and most president s are like that. They want lower rates. This he they want to have a strong economy. This very concept that there are people close to the president , former president , talking about these things and want to approach it in such a coordinated way undermines the credibility of whoever that person would be if they would ever to get the job just by default. You will look at that person and say are you a puppet of the president . You would need to see more about this actually with the voracity of it being a serious proposal and who were talking about that is proposing it before your hair totally is gone from being on fire i want to know is it really a possibility . Think of the people that advised trump on other matters correct thats why my hairs on fire my hair is on fire for a reason. Rudy giuliani. Look at the people around him. Thats not saying something to you, i dont know what is. Thats the point. Thats saying something. Thats the point. Okay. The people advising the current guy on myriads of subjects i dont have any hair either you look like youre doing pretty well up there i pay a lot for that. A conflicted fed worries me more than a conflicted Justice Department both worry me more than a the prospects a weaponized justice de department have you not seen the Supreme Court . Call me. What have they done that you dont like the questioning yesterday that people are talking about. Lets stop this. Trump is screwed. High court poised to reject trumps immunity claims. There will be some middle ground in the meantime, we have exxonmobil earnings out. 2. 06 a share for the First Quarter. The estimate was 2. 20 revenue did come in above expectations at83. 1 billion against the 83. 7 billion. These are quick reactions to these things exxon goes into it and says they had quarterly gross production of 600,000 oil barrels a day in guyana that is the new find it has been the one that chevron and exxon are going back and forth over again, we heard from mike wirth saying he hopes the dispute between them will have resolution in the next five to six months we will speak with the exxonmobil ceo darren woods. He will join us on squawk box in the interview coming up at 7 30 a. M. Eastern time we will talk more about what we see in the numbers with him and then a lot of other things out there, including where he Sees Oil Prices headed and what he thinks of the dispute with chevron. The Supreme Court is its own branch not part of the administration thats supposed to be independent. Fed is supposed to be independent. I know. If you are weaponizing the Justice Department, you cannot say look at the Supreme Court. The Supreme Court may be the only governor on the weaponized Justice Department it becomes complicated when so many of the individuals have been nominated and put in place by one person. Tough toenails, my friend that is how it worked out. That doesnt mean you add 15 members. It will be a conservative court for a while. Im sorry it happened. It is. It is what it is there it is 63. Youre happy about it. That unto itself creates credibility issues its not81 you see why it undermines the sense of democracy in the country because a lot of people feel theyre underrepresented as a result of that having an open southern border impacts democracy i can go both sides until you are blue in the face. You are very good at that coming up, we will take you live to washington afor a look a the growing challenges against the Biden Administration as we head to break, here is a look at the s p 500 winners and losers from yesterday. Announcer executive edge is sponsored by at t business next level moments need the next level network. 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 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 morning welcome back to squawk box here on cnbc on friday morning we are live at the Nasdaq Market site in times inqsquare the futures are looking up after a complicated week thats polite ersion the dow up 41. Nasdaq up 184 points the s p is up 36 points. Joe. The tension between the business groups and regulatory agencies is increasingly playing out in court Megan Cassella has more on the volume of cases has shooared. Good morning the chamber of commerce marks the seventh time they sued the Biden Administration so far. This comes as business groups are pushing back and regulatory overreach. If you compare to previous administrations, the chamber filed 15 cases against Obamas Administration it is not just the chamber, but the American Bankers Association filed four lawsuits against the administration and banking regulators in the lafst 18 months these suits come as total regulation increased under biden from George Mason University you see that here. The chamber used litigation as a last resort and says it is choosing to sue when it sees agencies acting outside the limits of the authority. It is not just about a single regulation it is about the thousand regulations that are going to go final this year. We went from a time to argue about a particular regulation to a period where the concern is about the direction as a whole the Biden Administration says its goal with the regulations is to protect consumers the groups say it creates an environment of regulatory whiplash joe. Yes, indeed very good. Megan cassella, thank you. I think im headed your way. Andrew, we may be headed your way. You will feel our presence i get a rash when i get too close. So do they. With me on my way down there . That is the toe fungus no. When we come back, the countdown is on to key inflation data we will tell you how it could change the feds rate plans. Thats next. By the way, reminder, you can get the best of squawk box in the daily podcast follow squawk pod on the favorite podcast app and listen anytime. Well be right back. 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. A future where you grew a dream into a reality. Its waiting for you. Mere minutes away. The future is nothing but power and its all yours. The all new godaddy airo. Get your Business Online in minutes with the power of ai. Right now, for a look at the feds rate path ahead of the central bank meeting, we bring in evercore isi chairman who heads the Bank Strategy team khrisna, thank you for being here we have the team meeting coming up with the weaker than expected jobs numbers and weaker than ex expected gdp what does it all add up to for the fed . Well, it certainly wasnt a great set of releases yesterday for the fed. I think they will be over overwhelmingly focus odd the flask data the growth was weaker than the headline level cooling in consumption at the margin is what the fed would like to see. The inflation data is what the fed does not want to see we learned yesterday that in the First Quarter of the year, taken together, inflation was hotter than we previously understood. We will understand that better with the monthly pce report for march today. It certainly confirms that things went in the wrong way for fed in the First Quarter the twoyear yield is reflecting that this morning above 5 again where do you think rates are headed krishna guha i think the fed is able to cut rates in july or september and get another one done by the end of the year. That is hanging by a thread. At this point, the fed simply cant move forward until and unless they get a step down in the monthly pace of inflation that holds over at least three months to see a new trend emerging pointing back down towards 2 think maybe three inflation prints in a row with that month over month core pce that they watch so carefully around. 20 or the low. 2 until or unless that happens, theyre stuck. That is your expectation for what will happen today if you think a rate cut is likely, you think the pce number is coming in today not today we know what todays number is around. 3. Why do we know that . This is march and they have given us january, february and march together we subtract january and february and infer march. We learn the distribution across january, february and march. We learn the composition of inflation in march all of this matters. The basic idea that march is going to print too high. We know that already that is already in the price the question is do we stay lower for april, may and june which is what we need to get on rate cuts in july or do we not slip in september . That is a difficult meeting right up against the election and bad base effects and more broadly in the inflation does not step down over the months ahead, the fed at some point has to make a deeper reassessment of the inflation dynamics in the United States of how much work theyve done and how much they need to do Going Forward they whill hope to deliver by saying where they are nfor longer i dont think anyone inside the fed is actively considering the rate hikes in the way the market discussion is, but at some horizon into next year, if you are not seeing what you want in particular and in inflation were to accelerate back up again above 3 or 3. 25, that is when rate hikes could come back on the table. Not now. Possibly later krishna, what do you think of the journal story that says advisers close to trump would like to draw up plans to rein in the fed independence the idea of making a mandatory litmus test that any candidate for fed chairman would have to agree to consult with President Trump before making changes to Interest Rates and beyond . I think that would be a seriously bad idea i think if anyone tried to move forward with that, the bond market and stock market would make it clear what a bad idea that was i think what i hope that former President Trump will understood and his sophisticated advisers will tell him having an independent fed would help you achieve your goals having an independent fed has credibility with bond yields lower. Cost of funds for your government is lower. It means the market and investors have more confidence which means the stock market is higher that is a gift for any president. It would be a gift for President Trump and you would be insane to hurt yourself and your own administration by undermining fed independence well put. Krishna, thank you anytime coming up on the other side, exxonmobil ceo darren woods will join us at 7 30 this morning the stock is slightly lower after earnings well talk to him about those and key inflation data coming up at 8 30 a. M. Eastern time. Were coming rhtig back on squawk box here on a friday morning. When you own a Small Business every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. If youre short on time for marketing constant contacts powerful tools can help. You can automate email and sms messages so customers get the right message at the right time. Save Time Marketing with constant contact. Because all it takes is 30 seconds to make someones day. Get started today at constantcontact. Com. Helping the small stand tall. The reverend Cecil Williams has died he was the long time pastor of san franciscos glide Memorial Church in the tenderloin neighborhood there he was a well known ally of the Lgbtq Community and civil rights leader under his leadership, glide became a haven for the homeless and marginalized in san francisco. For many years investor Warren Buffett raised money for the glide foundation through his annual auction for a personal lunch date buffett first met williams when his late wife susie volunteered with glides free meals program. In comments to alex crippen of the cnbc buffett watch, he called williams one of greatest thinkers of our time if you needed a place to sleep, if you needed medical help, if you needed a job, they will try to educate you for it. Buffett said williams should have received the president ial medal of freedom he certainly deserved the medal more than a lot of other people, buffett said ill put it that way Cecil Williams was 94. Coming up, were going to show you what ceo intel Ceo Pat Gelsinger said about the disappointing guidance that is aprelypant weighing on the stock this morning 32 32 round trip squawk box will be right back. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . 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. We delivered a solid q1. We beat revenue. We beat on eps we gave an outlook for first half to second half, a much stronger second half outlook as we saw with growth across every business forecast for the second half and somewhat like the market indicates, maybe a little bit of market weakness in the first half of the year so were working through that. That was intels Ceo Pat Gelsinger. They reported mixed reports and offered a weakguidance for the Second Quarter i want to bring in chris cosell for some analysis on this. You look at the stock, and it has been an underperformer maybe thats putting it politely, chris. Yes we have an underperform rating on the stock you know, for the quarter itself, there is some weakness here in the first half of the year we have gone through the inventory construction we had last year. The end markets havent come back as strongly as perhaps intel would have happened in the server and pc side and gross margin pressure as well. I think what is really important for the stock is something they said at the beginning of the month, when they gave some details about the Manufacturing Business the disappointment there was the manufacturing part of the business wouldnt get to break even until 2027. Thats a lot longer than people had hoped for. What happened here is that Pat Gelsinger has done a very good job in fixing intels manufacturing. The problem is that comes at enormous cost, and, you know, what happened in four years since they started this is the markets changed and the change was obviously a. I. And intel is not participating fully in that. And the rest of intels market such as the traditional cpu server business just isnt growing fast enough to cover the massive costs. I think there are a few questions. One, will it ever grow fast enough or is the need for faster chips going to make those chips that theyre making effectively obsolete and the investments that Pat Gelsinger is making today, do you think they ultimately actually will pay off or that somebody else is already going to leapfrog them again well, you know, there is still going to be growth in the traditional server market, not as much growth as there has been in the past. More of that money is flowing to a. I. And gpus and nvidia specifically what they hope now is that the other business theyre putting on top of this is a foundry business, where they would compete with tsmc. It is far out in time. Thats kind of, you know, 27, 28 before that business really gets going. It is very uncertain tsmc is a strong competitor. And when they started this journey, the foundry business at least for investors was looked at to be optionality it is not optionality anymore. Thats what is needed to drive profitability for intel. What do you think this company should be worth, stock right now trading at 32. 46. Yeah, so, our price target now is 29 some of those disclosures they made at the beginning of the year, the the metrics they provided you gave you the hope for somewhere in the range of 4 of earnings, but far out in time i think thats a 27, 28 event right now. For right now, you know, our preference is, you know, for some of the faster growing parts of the market, you know, nvidia, amd, you know, micron and memory, where theyre fully participating in a. I. Right now, you know, and the problem you have also with semiconductors is it is a cyclical business. By the time you get to potentially the payoff on intel in 27, 28, we could be going through another industry downturn our view is, you know, it is a stock that we have taken another look at it, after were through the cycle perhaps into the next cycle. In terms of real quick, stack rank if you will the chip stocks, the Chip Companies on our screen we got intel, nvidia, qualcomm, and advanced micro who else do you want to throw in the mix . If you were to stack rank them in terms of how you want to own them or not, tell the viewers. Right, so, nvidia is our top pick, our top pick for a while for obvious reasons. We think there is a lot of legs to go in a. I we like amd as well. We think amd is the number two to nvidia, just like they have been number two to intel for a long, long time. We like qualcomm also on the prospect of a hand set recovery, but, you know, i put even higher on that is, again, a. I. Names like micron for memory and then the semicap equipment Companies Like Applied Materials that provides the equipment for that. Chris, thank you for joining us this morning. Have a great weekend. Thank you you too. You bet it is just about 7 00 right now on the east coast. Youre watching squawk box right here on cnbc im Andrew Ross Sorkin with joe kernen, becky quick. Todays top stories, Jpmorgan Chase Ceo Jamie Dimon reiterating his skepticism around the potential for the u. S. Economy to achieve a soft landing in an interview with the wall street journal, cautioning that investors are too optimistic, citing sticky inflation and Interest Rates u. S. Secretary of state Antony Blinken met with chinese president xi jinping earlier this morning xi telling blinken there has been some progress in the months since his meeting with President Biden back in last november, but there are still many issues that need to be resolved. And also, walmart now saying that rob walton, the eldest son of founder sam walton, the longest serving member of the board, is stepping down. The company has nominated chipotle ceo brian nichol to replace him. Right now, a check on the futures this morning we have been in the green all morning. Dow futures at this point up by about 37 they paired their gains, that comes after we have seen some weakness from some of the Oil Companies that have come out with a little lighter than expected numbers earning on the top or the bottom line s p futures up by 36 and the nasdaq with some strength from stronger than anticipated earnings from a lot of Tech Companies last night as indicated by up about 180. Over to dom chu with a look at this mornings premarket movers and the numbers keep rolling in. To your point with the two biggest influences on the best performing ing sector in the s 500, thats energy the late breaking Energy Earnings news for exxonmobil and chevron are maybe to the downside, more decidedly so. Exxonmobil down 1. 5 chevron down 1 . Exxon is trading on 30,000 shares of volume this is americas biggest oil and gas company by market value. It reported profits that fell shy of estimates on better than expected revenue, so mixed exxon was hurt by lower nat gas prices and smaller Profit Margins for refining operations. For chevron, it was also mixed, but with profits better than estimates on revenues that fell shy of the mark, also hurt by smaller margins for Refinery Operations and lower nat gas prices so both of those shares lower. We will get much more on both of those stories later on this morning. And this hour specifically when exxonmobil ceo darren woods joins the squawk box team for an exclusive interview later on this hour. And then in the 9 00 a. M. Hour, on squawk on the street, chevrons ceo mike wirth joins for a cnbc exclusive interview as well. So, two ceos for two of the worlds biggest Oil Companies coming up. A big morning mover on the earnings front from last nights close, snap inc. , it is up roughly 25 in extended trading over 320,000 shares of volume. It reported a surprise profit per share of revenues that beat expectations Revenue Growth spiked to 21 for the quarter. And that snaps a streak of six straight quarters of either just single digit growth or outright growth declines. That growth is powered by better performance in advertising platform, so snap is up big, 25 . Interesting analyst call on the automotive side and thats Sonic Automotive shares higher by 5. 5 right now on thinner premarket trading volumes. This is an auto dealership company. It is getting upgraded over at bank of america by two notches, now buy rated versus a prior sell rating. The price target, if youre interested in that call, head over to cnbc. Com pro, subscribers there can get access to that and other top analyst calls of the day thats the state of play right now, back over to you. Dom, you mentioned sonic and now all i can think about is cherry limeade and tater tots. Different kind of sonic, right . Im thinking about putting fritos in everything from burritos to yeah. Thanks, dom. You got it. Lets look at some of the technicals in the market joining us now, chris barone, head of technical and Macro Research it says here, ill take your word for it, that you were talking about a correction earlier this month in april and that was different you guys at your shop, you can think whatever you want. You dont need to agree with jason all the time, right you werent looking for a correction long before april 2nd . I think as we move through margin, the incredible strength to start the year, by the time you got to late march, early april, there were weird things happening. We saw the move in yields, we saw dollar go long with it you start to get this little streak of countercyclical leadership the utilities, thatjust didnt feel right for a market that was up 10, 12, 15 year to date. And we kind of put out the watch your back tactical caution call. I just dont want to get too cute with that call. At the end of the day, the primary trend of the market is still up and when you get 5, 6, 7 drawdowns on up trends you want to be a buyer. I think last week we started to see some of that we had a surge in the number of stocks making one month lows when you start to get 50, 55, 60 of the index making a new low, youre generally in the ballpark of a good tradable bottom i think were close. I dont know if yesterday or last friday is going to be the low, but i think were close enough in the context of a bull market to be putting risk back on here. Earlier this week, that was the consensus, i would say, we were hearing was that, look, we were expecting 5 to 10 and, you know, now it looks like we have wrung out enough of the sentiment, it has turned bearish enough, and you get that gdp number combined with a hotter rekindled inflation worries. At one point we were down a lot yesterday. We came back quite a bit but it shook people up it looked like we could still be in a pullback mode you think were close to the end of the pullback . I think were at the end or near the end i just want to remember, corrections dont end on good news they end on bad news it is bad data that emboldens the bearishness out there. I thought Something Interesting happened last week spot vix trading above the future contracts thats a sign of stress. You began to see some stress in the put calls. I thought a lot of the survey data we got this week was interesting. The bullishness has come out of the market the sentiment story is coming together maybe what is unappreciated as the market corrected, how well the financials reacted the brokers and not just domestically, the european banks continued to chug along, the japanese banks there is a good streak of kind of Financial Leadership that has emerged out of the correction and you want to look to in a corrective phase, what are the leadership clues that the market is offering. They tend to come out the other side as pretty potent. Some of thean angst is about rates staying higher longer. That can hurt and help the financials. I think it is less about the nominal level of rates what is happening is the curb statement. Look at 2s, 10s, from negative 45 to, you know, just about negative 30, negative 28 right now. My suspicion is thats why banks and utilities are kind of working together here, generally good for both groups. All right, chris, chris barone, thank you. Thank you when we come back, google and microsoft riding the a. I. Wave google handily beating expectations, delivering its first ever dividend, microsoft cloud growth accelerating on the back of its a. I. Push. Were going to talk about both of those names next. And then later, exxonmobil ceo darren woods is going to talk Quarterly Results in the Energy Markets squawk box coming right back business. 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. Microsoft and alphabet both reporting better than expected results. And both accelerating their a. I. Strategies still, i guess, good steve kovach, sometimes it can turn bad, he joins us with more on how a. I. Is impacting both tech giants. Got to spend money to get there. But then but then when you start spending too much, there comes a day. There will be more spending right lets talk about the two monetization stories on Artificial Intelligence. It is clear right now were still in the very early days and not a lot of disclosure from either company on whats working, just some promising nuggets of information showing both companies could be on the cusp of something big. For microsoft, we saw the a. I. Sales in the azure cloud unit. It contributed 7 Percentage Points of the overall 31 year over year Revenue Growth thats up from 6 quarter over quarter. But, thats where the a. I. Story kind of ends as far as monetization goes. Lots of mushy talk from Ceo Satya Nadella on copilot. We have no idea how well it is selling, but little nuggets of information here nadella did mention a handful of companies that bought at least 10,000 subscriptions to copilot as for google and alphabet, Sundar Pichai shot back, he said tests showed early increased usage in a. I. Search if that pans out, that is, of course, more chances that stuff adds in search beyond ads, he said google will monetize a. I. Through subscriptions and the cloud, just like microsoft is doing now. One other interesting argument from pichai, theyre not related to a. I. , he said youtube and google cloud combined will have 100 billion run rate this year. Thats kind of his way of saying alphabet is more than just selling search ads right it is probably not i was thinking, like, streaming, i said that earlier, remember how streaming, everybody were going to spend all this money on streaming and disney went to 200 because streaming, we got streaming. And then like peacock, paramount. Then it is, like, how much money are we spending on streaming . Thats nothing compared to what theyre spending on and the promise is exponential. Greater for a. I. This is talked about on the call i think mark mahaney asked this or someone else, basically saying, you are spending so much on a. I. , what makes you think that there is going to be a payoff down the road and they basically talked about how flexible theyre being because theyre managing they meaning microsoft, managing their capex based on the demand theyre seeing they run all the openai stuff on azure, huge demand there, so, they have to flex to the demand. When you think graham and dodd, the only reason they buy stock is you hope the cash flow from the dividend keeps increasing over time as the company does better. Why does anyone ever thats one argument, why does anyone ever buy a stock that doesnt pay a dividend we saw what happened with alphabet there largely moved up because sometimes it sometimes it goes the other way, it means growth phase of the company is over. But thats not what theyre hinting at theyre hinting at were on the cusp of the next growth phase because of you point to youtube and cloud saying were not just a search and ads business. Why pay a dividend then the reason meta did it, it has given the shareholders what they want. We saw how the stock reacted yeah. I wouldnt give it back. All right. Yeah thanks, steve. Up next, the wall street journal reports that Donald Trumps allies are quietly drafting proposals that would attempt to erode the Federal Reserves independence we have that story next. As we head to a break, check out shares of colgate palmolive, theyre higher after beating the streets expectations on the top and bottom lines for First Quarter. You see the stock up by 3. 3 squawk box will be right back. Announcer time for todays aflac trivia qstn. Ueio which bank is credited with installing the worlds first atm . The answer when squawk box continues. Good thing i had aflac. Hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. It really helped close that gap. Go, go, go yay go aflac go duck get help with Expenses Health insurance doesnt cover at aflac. Com wish we had aflac on our team. You can [music] i enrolled in umgc because i became very passionate about Emergency Management. The professors were great because theyve had several Years Experience in the field. Theyve seen Emergency Management handson. Im able to learn from their experience and really make a difference. I picked university of maryland global campus because you get so much more out of it than just a diploma. Learn about our more than 125 online degrees and certificates at umgc. Edu [ music ] announcer and now the answer to todays aflac trivia question which bank is credited with installing the worlds first atm . The answer, Barclays Bank in 1967 welcome pback to squawk box. The wall street journal reporting that Donald Trumps allies are quietly drafting proposals that would attempt to underride the Federal Reserves independence the journal saying it wasnt clear if trump was aware of the proposals and the work was so secretive that some prominent former trump economic aides werent aware of it. Joining us right now in the article, well have the guy on, a long shot bid. And so much more. It makes as much sense as bleach for covid, and that didnt last very long, right were going to have liz hoffman on i can interview you, if youd like to tell me ask liz well have nick timarose on later. I just read the article. The way we characterize it there, trump allies are considering. And in the article, it says a small group of trump allies that in a long shot you want me to read you the article. Didnt say small Donald Trumps allies are quietly drafting proposals that sounds like all of them some donald trump some crazy doesnt say some. To erode the Federal Reserves independence if the former president wins a second term in the midst of a deepening divide i think it is going i want to make one other comment. The spokesperson, as we said, said this is not official, but did not condemn it, did not say it is 100 wrong, not insane and crazy, didnt say that. Did he say he knew about it they did not. The point is, if you thought it was insane and crazy, you would say it is insane and crazy liz hoffman, is it insane and crazy, cnbc contributor . Yes yes. This is pretty insane. I mean, look, the entire system, the entire model rests on fed independence and the last administration was critical of some decisions and i think decided to undermine that and then mostly for policy reasons the fed has, you know, i think has a bit of a credibility problem. If you add politics into the mix, it seems incredibly dangerous to me. Do you believe this could be a plausible situation . I mean, im not a fed lawyer. I dont know how structurally it would work, but the idea you would consult the president on Interest Rate decisions and a president that has very strong, very public feelings about Interest Rates he likes cheap debt, has talked publicly about that for a long time he wants rates to be low and there is policy times when rates should not be low. And we all love the fed, obviously, but there are fed critics who have said there should be a tailor rule, no one should have a gut feeling that, oh, it is transitory this time, we better go up this time, now go back down, now back up, we have how many different people weighing in on any given day there are fed critics that dont like the way it is being done right now. I dont obviously, an administration isnt going to be any better than an appointed fed, Federal Reserve figuring it out, but what about the whole idea, that nobody, there should be a rulesbased system for deciding how to do these things and not flying by the seat of the pants depending on who gets installed as fed head . Someone has to make the decisions. The fed has gotten much more transparent over the years you get a lot more information, you understand why theyre making decisions that theyre making i think there has been a more robust discussion about what they got wrong, certainly in britain. Some people said shut up. Some people say all this to say last time jay powell said, yeah, were not there yet, but were very close, now were not very close again i dont know i dont want to pivot off this issue yet, because i want to read you something. Let me read you this sentence of this story some of the former president s advisers have discussed requiring that candidates for fed chair privately agree to consult informally with trump on the Central Banks decisions others have made the case that trump himself could sit on the feds board of governors on an acting basis what does this is a to you and what do you think that the business community, some who have supported trump, last time and appear to be supporting him again this time, are thinking as theyre reading this article this morning i think theyre thinking it is incredibly dangerous. Look, i dont this it seems tricky to accomplish from a legal point of view. There is lots of the fed works the way it works to your point if the chairman made some kind of private promise to the president , to check in with him before making decisions, i mean, thats really going to unnerve the business and Financial Community who really trusts in the feds independence. Can you imagine somebody who wanted this job before, wanting it today yes yeah but working for donald trump has been, i would say, not always additive to peoples careers and people came through the administration from the private sector, i think they have been rebuilding their credibility for a couple of years in certain circles and i would think people would be loathe to kind of go through that again that said, fed chair is a very good job and very interesting job for people who spend their life in the markets. Liz, thank you for jumping on this story this morning. I know we originally anticipated talking about private equity, you got a great piece in semafor, which i hope everybody reads. Thanks anytime you have seen some of the stories written, that it is amazing hes still ready to serve, some of the people that ron t are on the list. I know some of them. We dont need to go into some of them, but people are willing to serve whoever happens to be sitting in that chair at any given time it is a cynical way of looking at it. You may be willing to serve your country. That too. You can always fall back on that but you better know what youre getting into, obviously. Yeah. And they got four years to look at. Yeah. Coming up, exxonmobil ceo darren woods joins us to discuss First Quarter results and much more tuathis hour are up a little bit, the nasdaq is helping out quite a bit, up 190. Squawk box will be right back. 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 lifes daily battles are not meant to be fought alone. Were not powerless. So long as we dont lose sight of whats important. Dont be afraid to seize that moment to talk to your friends. Cloud, you okay . Because checking in on a friend can create a safe space. The first step on our new journey. You coming . Reach out to a friend about their mental health. Seize the awkward. Its totally worth it. When we come back, exxonmobil earning 2. 06 a share for First Quarter. That was a little shy of the streets expectations of 2. 20 revenue did, however, come in above expectations at 83. 1 billion. Lets take a look at the stock right now, it is dowbyn 1. 4 . The ceo darren woods will join us right after this break. Squawk box will be right back. University of maryland global campus is a school for real life, one that values the successes youve already achieved. Earn up to 90 undergraduate credits for relevant experience and get the support you need from your first day to Graduation Day and beyond. What will your next success be . Welcome back, everybody. Exxonmobil out with First Quarter results this morning the company earning 2. 06 a share for First Quarter. That was shy of the consensus estimate of 2. 20. Revenue did beat expectations, though, at 83. 1 billion and joining us right now for an exclusive interview is darren woods, exxonmobils chairman and ceo. Welcome. Thank you for being here today good morning, becky good to be here. Why dont you talk about what happened during the quarter. Stock is off by about 1. 4 revenue is stronger than anticipated, but the earnings per share was below what the street was looking for. If you look at the business in our operations, they delivered exactly in line with our plan in fact, in some cases they outperformed you can see that in our cash flow operations which conceded consensus by a billion dollars the miss the street had for our earnings are a function of some noncash tax and inventory adjustments which we see quarter on quarter occasionally and this quarter they happened to stack up we feel good about the operations and what the business is delivering. One of the highlights that you point out is the gross production numbers that youre seeing now in guyana 600,000 barrels a day there. That has turned out to be a hugely important stake for you yes, i think a great example of capability of this organization, and each of the different sectors coming together, technology company, operations company, our projects Company Coming together to make these things possible. We deliver these projects at an industryleading pace, we deliver them ahead of schedule, below budget and when we bring them on, the Operations Team starts optimizing and we tend to reset what we think is possible and very safely raise the production to a point where we are now running those three ships those Production Units at a rate higher than what we made the Investment Decision on so extremely proud of that we have got three more in the works, i feel really good about. This is a tremendous example of what the organization is capable of doing. But the production that youve seen in guyana is im sure part of the reason that youre involved now in this arbitration, with chevron. Chevron wants to buy hess. Hess is a 30 partnership in that deal with you you guys have a 45 stake in it. What is the arbitration over itn as one of the best deep water developments in the history of the industry so, a lot of value that has been created through the hard work of the partners, but specifically with our engineering organization, our projects organization, so understand why chevrons interested in participating in such an attractive development the partnership that exists today is run or defined by a joint operating agreement. That agreement gives existing partners rights when there are changes in controls. The chevron hess transaction ignored those rights, were standing up for the rights to make sure we protect the value we created there, to make sure we understand what the guyana assets, the value of those assets are in the chevron hess transaction and make sure we have a line of sight to how best to optimize value for our shareholders. Im sure you understand chevrons position im sure they explained it to you. They are saying that there is a hess subsidiary that wont change and they think that that is enough to satisfy what theyre calling a contract language dispute that they think is something that is routinely put in and usually is not taken up by the other partners how is this different and how do you think it will play out well, i am familiar with their argument and their interpretation we wrote the joa, so we have a pretty clear line of sight as to the intent and the circumstances that apply and the language that applies to the circumstances so we feel pretty confident in our interpretation and thats the point of the arbitration the joa allows for that. It is understandable that partners from time to time can have a different interpretation of that. Well take it to the arbitration process and let the facts speak for themselves. Would you put in a bid yourself if arbitration allowed you to do that you are still caught up with Pioneer Natural Resources trying to digest that major acquisition. Would you have the money to go ahead and try to put a bid in for the assets as well i made it clear in the past, this is not a play for hess. Were not interested in a transaction on hess. This is around protecting the value we created as part of the development. Making sure that the preemption rights we believe exist in the joa are recognized and confirmed and then understanding what the value theyre putting on that asset is and what the options are to maximize the value to your shareholders. What does that mean just to dig into it, does that mean youre not looking to buy hess outright but you would be looking to buy the assets or just want to be compensated and maybe push for a higher deal for those assets where you guys are compensated as well . I think there are a lot of options on the table were going to look and see what the cash value of that well confirm the rights of preemption and look to see what the cash value of the asset is within the transaction and explore the opportunities that are available to us. Darren, while youre here, definitely want to talk to you about what youre seeing in the demand for oil these days. We have gotten a few concerning number, that gdp number that was below expectations yesterday, a lower than expected Manufacturing Index number are you seeing any sort of slowdown and what do you see on the global stage i would tell you, actually, the First Quarter was stronger than frankly we had anticipated. And so, the First Quarter looks good as we look forward to the rest of the year, our expectations, were going to see demand growth for oil, probably hit another record this year, last year hit a record this year we expect it to hit another record Transportation Fuel demand is very healthy if you look at the First Quarter refining margins that make Petroleum Products from crude, it was the second highest First Quarter margin we have seen over the last ten years, so, very constructive First Quarter for refining were in a dip now as we head to the transition to the summer driving season so, well see how that picks up going in nothing indicates thats coming off the crude markets look fairly well supplied, but balanced, natural gas is a little on right now. I think thats a shortterm issue. The one market that we see some weakness in from a margin stand point is chemical. Not a function of the demand, the demand growth. It is a function of the supply that is coming on. So, frankly we see a relatively positive outlook for the businesses that were in, in our industry you know, the geopolitical concerns have been a huge issue, both jamie dimon this week and then mike wirth, spoke with him about it they both think theyre kind of surprised that you dont see Oil Prices Higher because of what is happening on the geopolitical stage. How about you . I think it is we demonstrated the ability to respond to a lot of disruption so, inventories are fairly low and that generally leads to higher oil prices. I think there is the potential for that to happen but i think to the credit for the industry, we responded well to the things we have seen and continue to supply products the world needs fairly reliably, fairly consistently. If we lose that confidence, if those disruptions begin to manifest themselves differently, we may see things change pretty quickly, frankly. Darren, earlier this year you talked to us about a suit you brought against shareholders these were some activist shareholders that were trying to put a proposal on the proxy to speed up climate change, actions at exxonmobil. You all sued them and said basically theyre just gadflies who are really slowing things down they withdrew their proposal to have it put on the proxy and you all continued with the lawsuit where do things stand right now . I think the specifics of the lawsuit and the two activists that were masquerading as investors are just a symptom of a much bigger problem. The process that we have today is broken. The u. S. Has one of the shining examples of the world as shareholder democracy. And that process, though, is being corrupted with activists who are bringing an agenda into the proxy process. And frankly an s. E. C. That is not following its own rules. That shareholder suit was to make a bigger point and win on a bigger issue, which is trying to bring this back, the process back into line with the rules that exist today and make sure people are following the rules and the rules are being enforced frankly were fighting for shareholder democracy here to make sure the system works as intended, rather than let it be abused thats what the case is, what were fighting for in this case. And you guys are really arent pulling any punches youre asking for legal fees and expenses to be reimbursed too. You want to make a send a message with this. I think when you have groups that are taking advantage of a legitimate process, and frankly depriving people who want to use that process legitimately of their rights, there needs to be action and consequences associated with that we had a very similar situation with an attorney with the pioneer transaction where they filed a suit to try to block that transaction and the vote without some type of payoff. We took that suit to court we won the judge sanctioned that particular attorney. So i think that trying to stand up for shareholder rights is an important part of the process, and how we think about our obligation here. Taking things seriously and not going to put up with it. Darren, let me ask you about some of the protests we have seen on College Campuses we have seen them here in new york, down in texas, where you are, across the country. I know you watched the show yesterday. I wonder if you had any thoughts about what youre seeing on the college campuss . When we look at recruiting and bringing people in the company, were focused on the fit of the individuals, the culture that they bring, the values that they bring we believe strongly in the value of tdiversity and diverse thinking and challenging one another to open our aperture and make sure were exploring every angle of an opportunity or issue and were addressing it with the best input of all those involved but that requires a level of respect and understanding. I think what were seeing on campuses today in some places is something very different from that harassment and intimidation, i think there is no place for that frankly at those universities, and certainly no place for that in a company like exxonmobil so, we wouldnt we wouldnt look to bring folks like that into our company, and if that action or those protests reflect the values of the campuses where theyre doing it, we wouldnt be interested in recruiting the students from those campuses. Darren, want to thank you for being with us today. And for talking about such a wide range of issues darren woods sure. Appreciate it thanks, becky. Coming up, financials in focus. Closer look at that sector then dr. Sttco gottlieb on a. I. s push into healthcare and what that could mean, coming 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. Your record label is taking off. But so is your sound engineer. 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 welcome back to squawk. Investors gauge the path of rates. Dom chu is taking a closer look this morning for this months sectoromics. Good morning. Would you believe the Financial Sector is actually the third best performing sector in the entire s p 500 so far in 2024, behind just energy and Communication Services that sector and focus is a huge one for investors with this focus on Interest Rates. And one year over the last year, it is still up about 26 , so pretty decent for this particular sector. With regard to those investors who are looking for dividend yields in this sector, it has been a big part of that story. We screen the s p 500 Financial Sector and looked at all of the stocks that have been outperforming or been in line with the sector over the last 12 months solid or better performance than the overall sector and look at the largest dividend payers in that sector. Among those names that have bigger than expected Dividend Payments for the sector overall and relatively positive Price Performance versus the sector, check out names like key corp. , 5. 6 yield also comerica, 5. 4 . Truist financial and citizens financial at about 5 as well. So each of these names on the Regional Bank side have higher than average Dividend Payments alongside some relative strength as well overall. So, when it comes to financials, at one point over the last 20, 30 years, they were very much viewed those banks, as big dividend payers the financial crises, and a lot of readjustments for the banking system, regulatorywise overall have taken that narrative out. Keep an eye on those names theyre back for some as dividend payers. Back over to you. Dom, thank you. Talk to you very, very soon. Thanks. When we come pback, moderna and openai collaborating to potentially change healthcare. Dr. Scott gottlieb will join us next to talk about this. A big inflation number ahead of the open that could give more ary t feds rate path the personal Consumption Expenditures data will be released and well be on top of it squawk box will be right back. Announcer sectoromics is announcer sectoromics is sponsored by 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. Moderna is betting on Artificial Intelligence joinings forces with chatgpt, openai exposure to a. I. Chatbots. Joining us to talk about the evolution former fda commissioner Scott Gottlieb and also a cnbc contributor and serves on two boards and doctor gottlieb, we should point out youre an expert yourself in this launching your own company this week, an a. I. Based drug developer you all have raised 1 billion for . Right backed by venture capitalists with a partner Drug Developers have been making use of a. I. Toop tools a very lg timeago. 20 years ago designing molecules on computers and simulations in dose finding different now, large models not just enterprise level fga but in the Drug Discovery and Drug Development process. You see large drugmakers trying to get instances of large language modules within their own ecosystems load their own data and use it. Ive seen drugmakers partnering with microsoft interesting to see them partner with openai to do the same thing. The renext Inflection Point when you can build highquality digital training sets to design models purposely built to solve human biology. Right now using models barred from the Consumer Tech world they havent been built to solve for human biology and we dont have good Clinical Training sets the goal were funding Building Models purposely built for biology. Models based on biology itself or based on studies done over 15, 20 years on all kinds of ways these play out how does it work both. Whats happening now is a lot of data we have to train models first of all using Consumer Tech models in the data to train the models on hasnt been collected in a fashion where its optimized for training and Artificial Intelligence models. You might have prprotoomic situations but at a very large scale. Think of changing genes and trying to figure how it correlates with different f phen phenotypes, in the human body. Those that dont exist in nature you get a really good sense of biology of different systems within the body and can build a model based on that information and train it more adequately. So many of these clinical tests fail in the phase two, phase three studies on this. It shows great promise but you cant get through the requirements that these tests show you think well have better ability to more quickly get drugs to market . I think both. I think first of all these tools are used in different portions of the Drug Development process to try to bring efficiency something as simple as trying to pull together the application that youre filing with the agency, or looking at postmarket data to monitor for events trying to figure out kwauzality from signals identifying in the market also to truly understand biology, different systems and Disease States allowing us to identify targets we wouldnt have otherwise might see something adjacent impacting a Disease State the models pointing us to and into designed drugs we might not be able to do experimentally. The company im involved with, first and foremost, thats the target antibody drugs using experimental models like mice. Mice replicate human immune systems trying to get them to produce antibodies and extracts them hit or miss. Using a. I. Technology, developed by cofounder of the company also, using this model try to design antibodies intelligently that bind to protein targets might not have gotten them to do this before. Antibodies have small interactions and sometimes very hard to figure how to design antibodies to bond to certain targets if you cant get a mouse to produce that particular antibody you cant isolate it from a person. How long before you see this helping . The market list . Were seeing it already other companies are already using these tools. The Inflection Point when you do things more deliberately when you, instead of barring some of the models developed for more technological application you can actually develop models that are based on human biology and based on training sets built for the purpose of designing models thats happening now david baker built, rf diffusion allowing you to design antibodies to bind to different targets. Seen what google did with alpha fold adid. Seeing these tools use but at early stages because we havent done it in deliberate fashion. Scott, think about metabolism and all of these processes and weve been lucky at different times to find things that, one gene could, you know, got a mutation going and fixes it somehow, but gene therapy and working on one gene its very rare how many genes are involved in most diseases or conditions . Hundreds, thousands . Or yeah. Youre getting right to the point. The only way to understand it the total picture of what youre doing, and designing drugs to address it, its and for, i think, about 15 years ago, up at the cancer center. Got rid of the guy running it and put in like a data guy almost ann i. T. Guy . Thats the point. Look inside systems. The model might tell you different elements are biology impacting a Disease State. Might be able to target it with one drug design a protein drug to hit multiple targets, or design multiple drugs and provide them in combination you might not have perceived otherwise without the model giving a clearer picture what the biology is of the disease. Were focused in to try to find one cause feature of disease and target that with a drug. Historically weve done it thats now how diseases arise. No. Before you go, concern about avian flu detected in the nations milk supply should i be concerned about drinking this . Whats the impact . You shouldnt be concerned. Detecting viral remnants of heat activated virus. First of all i would never drink raw milk, or drink it now. Not that it wont kill the virus. If they find live virus in milk, i dont think they will, if they did and theyre looking, im more inclined it came from contamination of packaging the reason fda and cdc did this testing of milk, usda and state regulators wouldnt allow them on the farms to do more widespread testing because they didnt want to do the testing. Instead of testing the cows test the milk much more pervasive on dairy farms than perceived unfortunate. Scary because it could jump unfortunate because the more we have this spread in animals more it could spread on humans. Dont want to disturb the herds . I had e. Coli my inspector werent allowed on the farms initially so i sent them to test the water running off the farms i thaw the e. Coli was coming from always a tension between Human Health Problem who want to swab everything and Animal Health people worried about economic implications and dont want federal inspectors on their farms. A clever move by cdc and fda to test the milk to identify which parms have outbreaks hopefully forcing hands of arg a agriculture to do more testing. And what if i got a spike protein from an n 1 h 1 . Protein itself probably inactivated. Maybe. I dont know im going to keep eating frosted flakes vaccine for this particular strain. 8 00 a. M. On the east coast youre watching squawk box on the east coast im joe kernen along with becky quick and Andrew Ross Sorkin. Giants exxon mobil and chevron reporting results. Reporting new results. Thats good. I mean, who wants old results, right . Exxon lower refining margins in its fuel business as revenues beat forecast, but profit missed chevron, saw something different. Light sales but better than expected profit. Downstream earnings down in the quarter, but upstream oh, thats weird too downstreamers down, upstreamers up, as you would hope. Two other Corporate Giants were watching after reporting alphabet and microsoft alphabet saw fastest rate of Revenue Growth since 2022 and announced its firstever dividend microsoft saw more of its cloud growth coming from a. I. In the quarter. Then theres shares of s. N. A. P posting quarterly profit versus an expected loss Second Quarter guidance also ahead of expectations. Countdown on to the feds preferred measure of inflation personal Consumption Expenditures price index or pce. Steve liesman joins us now whats the expectation going to get to that in a second, but i got to parse this out. Learned yesterday of upside surprise in First Quarter inflation. Learned this morning what month or months the surprise happened in, and economist, and the economy, it matters. Heres the consensus becky asked about. Before yesterdays number. Look for the pce, headline to be up 0. 3 versus 0. 3 in the prior month. Year over year up a tick from 2. 5. Core the fed watches, again, forecast before yesterdays number to be unchanged, up 0. 3 versus 0. 3 and the core ticking down, but all bets could be off. We know something in there is likely wrong forecasters know the quarter overall is higher. Not what month it happened during the quarter, in other words, how far in the Rearview Mirror is this inflation problem were talking about . The question this morning, whether january and february revised higher or extra inflation is focused in march. The problem is now getting worse and not better bank of america writing, regardless of the month of tra jotra jectory, driving cuts to new lows thinking about drive Interest Rates to new highs. May, forget about it june, forget about it. July, almost nearly forget about it september is where the market now is focused with a 58 probability. You know, another bad number could be down to even money. One positive yesterdays gdp report showed decent growth. A normal way to look at the, the core of the company. Business and Consumer Spending, it was robust. Not at strong as some forecast economists forecast consumers kept spending levels up in march. Well see if we have a persistent offset this morning decent earnings, decent economic growth, somewhat higher inflation and why the market goes down yesterday and this morning looks decent. Thanks, steve see you in a few minutes to talk more about it. Bring in ceo of Global Investments energy good morning to you. I think were all trying to understand what the numbers were yesterday. Whether in a bad position, because gdp going down, inflation going up worst place to be. I dont know if well see what kind of number, what well see today. Wondering what the numbers going to look like when you look at december, january, whether that will change things. How are you looking at it . I t its possible we get upward revisions pce we release this morning maybe the number comes in hotter based on full quarter data yesterday. Zooming out, have to acknowledge this is happening against the backdrop what is still really solid growth i know there was that headline miss on gdp. Look at underlying measures of domestic demand, that continues to trend at a really strong level and encouraging to us given how were feeling about the equity market. You would look at the equity market end of this year, where do you think were going to end . Basically calling for the s p 500 to end in the range 5200 to 5300 resting solid upside from here for investors continue to be focused finding alpha opportunities. How diverse, if you will, is that upside, in your mind . Do you think its concentrated in a Certain Group of stocks look, we believe the leaders up to this point can continue to thrive and likely will participate in that upside but what were really focused on is a broadening of this strength. Particularly in the more cyclicly segments of the economy given what youre seeing with Global Manufacturing data as an example. Right youre not worried i mean, historically when you walk into a president ial election, theres been a lot of sort of stagnation about everything sort of a, lets just wait and see. Yeah. Uncertainty sort of praralysis we have a benefit knowing what were going to get with either candidate, depending how the election turns out when you look at history, both of them kind of saw doubledigit s p 500 returns throughout their president ial term. I dont think either is by and large a bad thing for the stock market. First question you have to answer all day, do you agree or disagree we your boss about a hard landing, given what he just said that its impossible said in the journal very hard to have a soft landing right now have you guys talked about that yeah. Were actually speaking i dont know if hes consulted you what he was going to say or whether you consulted him what you were going to say careful. Well see a soft landing in the United States, but as ever just like how jamie talks about being prepared for all outcomes we continue to work with investors making sure theyre portfolios have different positions to weather and navigate different outcomes as well. So its jamie you mean mr. Dimon, i think . Mr. Dimon excuse me. Dimon maybe it is jamie. I dont know. I was going to say, do you want to weigh in on whats going to happen if the Federal Reserve is no longer independent or have 15 Supreme Court justices what the other side looks to do. I thought you didnt like talking about politics anything that we read, we will take like its fact. Talk about it until we realize well never talk about it again. Talk about it a lot today guaranty. Sure. Worried about independence of the fed or the 45 longterm Capital Gains rate which is worse oh, man probably the 45 Capital Gains rate, but theres always way to figure out how to navigate new changes. Which is more likely . Thank you. Coming up, former white house coordinator on the progress of the president s chips and science act. Plus the inflation gauge at 8 30 investors watching pce data closely for any signs of what jay powell may do in the future. Assuming hes still squawk box will be right back. Its time to feed the dogs real food, not highly processed pellets. The farmers dog is fresh food made with whole meat and veggies. Its not dry food. Its not wet food. Its just real food. Its an idea whose time has come. 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. Manufacturing incentives from the nearly 53 billion chips and science act now allocated. Yesterday President Biden was in syracuse, new york, to announce an agreement with memory chipmaker micron for up to 6. Billion in subsidies joining us where things stand now, a professor at a school of business good to see you as usual, professor. Can i call you professor where are we how much have we done . What do you think . How much is left you can call me ronnie if you like but weve accomplished a lot. I think over last 45 days youve seen four major awards, tmmc, and micron what youve talked about has been spoken for. A huge accomplishment for a program that started in 2022 you remember, concern whether the government could execute on this program, able to get the money out the door and whether we would be able to build chipmaking again in the United States weve seen really good progress. A lot of work to do. Were on the right track. The i guess its important at the same time were talking about this we are funding taiwan i guess there is a pressing need for us to get prepared here onshore . Well, thats right. If you think about the number of chips in the u. S. , most advanced knows its very low. We dont really produce much at all. Now with the four major producers, samsung, intel. Tmsc and micron, for the first time in decades we are leading edge producers here in the United States. The only country that can boast to have all Top Manufacturers with facilities in the United States what the chip program accomplished a lot of work to do to build these factories, get the workers we need to work there and be productive in factories but its a great start and relatively quickly in terms of last 45 days seeing these major awards. Helping the United States on national security, as mentioned. Creating a lot of jobs and Economic Prosperity here at home. We always want to try to do that obviously, ron, but there are arguments on both sides of the government picking winners and losers whether its, you know, industries, total industries, or, you know, trying to transition here. Transition away there. Picking individual companies youre always going to get pushback from people that say that the government isnt very good at this do you agree that normally this isnt the best way and maybe this was a a unique circumstance where this makes a lot more sense i mean, bipartisan bill when it finally happened republicans that voted for it . Right i think the reason it was bipartisan support because computer chips nash security if you want to make things they cost the least, get the most scale and get the best production so we can all buy highest quality products at the best price when it comes to computer chips all produced in one part of the world, and suddenly we didnt have access to the chips, thats a Big National Security vulnerability for the United States in this case its important for the government to put a push behind the chip industry, not just american firms but support across a wide variety of technologies and research and development. Not just one state but across the country. You saw awards in idaho, oregon, new york, arizona, ohio. To me looks like a Strong Foundation for an industry not picking winners and losers when it comes to computer chips. One more question along those lines, ronnie. Say that you are buying commoditytype chips where the level of security or even expertise is not what it is in other areas. If comparative advantage would make sense for, in terms of cost, to make it somewhere besides onshore, domestically, would that still make sense, or do you just blanket statement jobs here. Bring it back here labor might be two or three times as expensive as it would be somewhere else . Totally goes against everything that we did for decades, where we try to get a and it helped inflationwise, long term. You just think a blanket statement were making them here eves if it costs two or three times as much . Depends on the industries that we are supporting and why were making them here you saw this drain on the pandemic supply chain obstruction and couldnt get access to basic products and really important inputs you remember cars sitting on lots with dealers because they didnt have the chips. Cars in short supply prices went up and actually drove inflation. Key products, critical products and computer chips able to build that industry here in the United States do it with discretion and milestones around production of chips and the right technologies, thats a good bet for the United States of america to make and bipartisan support and interesting to see all facilities in the United States. Not necessarily going to happen without the chips act. Amazing to see 300 billion of private sector investment. This is a Public Sector investment, 52 billion but already leveraged to private investment a sign appreciate sector will do things here in the United States and bleti betting on the chip iy here, too. Hate to admit maybe its going to work well, ronnie in this case lets just not the broad brush, cant use maybe help intel get above a ten year, wherever it is last time i saw it was 32. Ronnie, thanks professor. Thank you thanks for having me. When we come back, breaking pce inflation data due out at 8 30 a. M. Eastern ti qukilbe right back. 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. at enterprise mobility, we never stop looking for new mobility solutions. Because sometimes the best road forward, is the one you didnt expect. grace didnt believe in magic. But her daughter was happy to prove her wrong. You were made to dream about it for years. We were made to help you book it in minutes. Squawk box, welcome back a new report saying Donald Trumps allies quietly drafting proposals attempting to erode the Federal Reserves independence if the former president win as second term joining us one of the authors of this article chief economics correspondent for the wall street journal now known as one of the great whisperers around the Federal Reserve. Nick, tell us about this report. Tell us about how close you think donald trump is to all of this or whether were just talking about some, you know, crazy people off to the side what are we supposed to think here andrew, a good question i think the challenge with this is that there isnt the normal Campaign Policy apparatus with the Trump Campaign what we sop in the first term in the white house. I think whatever the different advisers or people around the president put in front of him has a chance of becoming policy at least for that day, for that period of time so i think you have to take seriously what different people around the president are proposing or would like to propose to him, because if its something that he wants to do, he can turn to them and say, yeah lets do this. So i think what you have right now, i mean, in some respects the story is surprising, because this idea that you would have, you know, an arrangement with the fed that is not the norm weve had in the last 40 years on the other hand, its not that surprising, because look at what the first trump term was like. This is what the president wanted to have he wanted to have a fed chair who he could call and say rates need to go down right now. You need to stop raising Interest Rates so i think the challenge here is just who is going to be the fed chair if donald trump has a second term . Who is going to be the nec director, the treasury secretary . Because the personnel wielding policy, the people who have these jobs will get to determine whether the institutional norms that existed with the fed continue i was surprised that when you saw a comment from the administration, rather than deny this was happening or say that they know nothing about it, and that they would condemn it and it wasnt something they were interested in, they didnt take that opportunity did that surprise you . Not really. I dont read much into that. I think like i said. Theres just not a conventional policy process with the campaign or really there wasnt much of a conventional policy process at the end of the first term. I think there are two important differences from the first term if donald trump is reelected. One is that when he took the presidency in 2017, the fed had a number of vacancies. So he had an early opportunity to remake the fed board. Now, he picked more of establishment figures like randy corals and jay powell. This time, if you look who he was nominated end of his first term you had different, more choices like judy shelton, herman cain. This time around he wont have vak al vacancies unless they leave. Seats filled nobody steps down its a year before he gets one vacancy. You talked to someone, youre right, i dont know whos in charge hes got other things going on that probably not as cohesive a campaign when youre, you know, due somewhere else every single day. To your point. Be very clear if it doesnt come directly from the strategy and say dont take it seriously. They said that, didnt they . They absolutely did say that, but donald trump is talking to people right now about the fed hes interested in different views. Hes thinking about this he cares about the fed a lot he thinks a lot about Interest Rates and knows what 25 basis point increases Interest Rates will do. The second part i was going to make is and go along with it. You quote people in the article. Two or three guys said, no way this would ever happen and youve got to get confirmation of anybody. Secretly, too part of the story which was that he said thwas going to be an implicit secret arrangement made effectively between a candidate who would have to effectively pledge their allegiance to the president. And thenen confirmed . Get confirmed and with a, with a private, secret deal theyre going to be talking to each other to basically get approval before they make these decisions here i mean, i dont know, nick i read the story and thought if true, this is outrageous start calling a spade a spade. Well, im not sure. I mean, you know, youre right the person that the president ultimately picks to run the fed that is how the president gets to influence Monetary Policy that is the institutional arrangement we have, and the then the question about whether Senate Republicans would go along with this. When we started hearing about this some time ago i started talking to Senate Republicans to see what they thought. You can see. Put them in the article. Senate republicans i spoke to did not like this idea very much, but the question is, end of the day, if donald trump is the president and he has several seat majority in the senate, will he be able to get whoever he wants on to the fed board and into the chair that certainly seems possible. So i think its something you have to take seriously. I dont see how the supreme i dont see how the Supreme Court is any less sancrect as than the fed its a crazy idea. Help you find and unlock opportunities in the market. E trade from Morgan Stanley all right. Time for the march pce inflation data Rick Santelli is standing by rick, take it away markets up ahead of the number. Yes waiting for, of course, first spending all the associated inflation metrics. A march number looking for roughly up half 1 on income and it delivers. Up half 1 up 0. 5 on income up 0. 8 on spending or con sempgs th consumption 0. 8 equal the last look since january 2023 backtoback, 0. 8 on spending revisions still may be forthcoming. Look at inflation adjusted called real personal spending also up more than expected up half 1 up half 1 equals december of last year to find a bigger number you have to go to january of last year now, lets look at the deflator, month over month personal Consumption Expenditure deflator expected up 0. 3, delivers up 0. 3. Rearview mirror up 0. 3 deflate the year over year, first hotter than expected up 2. 7. Rearview mirror unrevised up 2. 5 to find a bigger number than up 2. 7 youre looking at october of last year. Now, lets look at the deflator month over month, and this is a core number. Expecting up 0. 3 it is up 0. 3 backtoback 0. 3 finally year over year core deflator, also another year over year number and hotter than expected up 2. 8 we looked for 2. 7. A very talkedabout number maybe the most talked about on all of them and equals our last look 2. 8 2. 8 actually was the lowest to find a lower number youre going back to march of 21 back to back the only issue, and of course sure many will say, awe, making huge progress. Reality, its stalling thats the issue nobodys arguing progress hasnt been made. The issue, what have you done for me today, and we see some Inflation Numbers remaining sticky albeit lower levellins a few ye ago. Back to you. Stay with us. Bringing in a few more voices on the data stony brook economics professor. And manhattan institutes senior fellow and our very own steve liesman. Steve, dig through the numbers a lot for people to get their heads around. Yes thank you, becky im trying to figure out how we got here, but i have seen very modest upward revisions. I cant i dont see out to the where the action must have taken place, but let me just say i think we dodged a bullet this number went into with the following metric in place. 0. 3 poor march good. 0. 4 bad. Got the 0. 3. I do not see, please, correct me, rick, if im wrong i dont see an upward revision for february either. I see february still at 0. 3. That didnt change ricks assessment is 100 right. We have made progress. That progress has stalled. But what didnt happen, at least in the first iteration of this number, is we didnt get an upward wrevision or higher than expected number for march. To the extent that quarterly number caused everybody to freak out yesterday was higher than expected looks like it happened in january. Why is that important . Well, because we knew january was weird. We had a lot of seasonal effects in there a lot of onetime price increases and now we learned january looks like worse than we had thought, but february and march, that sort of continued and didnt get worse it may be just very incrementally better we still i dont think this causes the fed to cut rates in june or even july. Im going to take a quick look at the futures market while im talking here, but i dont think it pushes further ahead, the idea of rate cuts. Im looking here, becky. Kind of unchanged pretty much. Maybe a little bit more love for a cut in september, but only marginally so. Were still not going to happen in january. Consumption a business hotter, though, steve. The growth side of the economy had been hotter. You make a case for this, it actually does mean why do we need rate cuts here . Seems the economy is doing fine where rates are and inflation still sticky i think thats a fair point, rick, but also say the idea, the stag is not there in the stagflation part my assessment yesterday of the gdp numbers was looking under the hood i thought better than the first take made it appear and the headline number made it appear you still had good core growth there in Consumer Spending and business spending just not as hot as expected by some on the street out there i think the story here is, we still have this crazy offset, this jeckell and hyde story out there of inflation bad worry about it rate cuts not coming but decent earnings and decent growth on the consumer side. Rick, the question, i dont know the answer and appreciate your view on this is, does the economy have to cool below potential . Does unemployment have to rise in order to bring inflation down we may be at that point, but we dont see this hotter Consumer Spending necessarily pushing up inflation. Just not necessarily pushing it down. Okay. Lets get some Service Sector where inflation is sorry. We can get to the panel. Seems though its sticky. Sticky. Okay i think what you said is really, really important, rick this idea that progress is stalling stephanie, weigh in on that, because this is that last mile, and this is where things get really tough and really tricky. Yeah, it is it is also important to remember that, you know, as we bunk along and watch whats happening with inflation we have sinkcratic thinks that come in. Rent a lagging indicator, looking whats happening to leases being signed today. Still havent felt the catchup from that. So, yeah there are reasons why things appear to be stalling out but i think we understand them and overall this continues to be a really good story about where we are in this economy. The consumer is strong the labor market is good i dont think its a huge problem. Inflation is coming in in line with expectations. We got a very good thing going here, and were focused on second decimal points and whether we get all the way back down to 2 and talk about risking, you know, a very good economy for the sake of getting all the way back down to 2 . I think its just more than just a decimal point away. You laid out, this great economy, everything doing really well is not an argument for a rate cut. If isnt. And im not making one not making one i think weve gone from, we dont talk about higher for longer anymore talking fewer and later. I think thats what a datadependent fed is going to get from reading of this data. Thats a fair assessment. Okay. Allison, weigh in on this. How do you see this playing out and whats it mean well, i think in some ways imagine 20 years ago talking rate cut in this environment demand strong, inflation high, but not higher than people are used to and honestly Interest Rates are higher than people are used to. Rick is right. Pretty sticky. I think we can see that in high demand numbers certainly wages are still high the fact inflation is largely coming from services to me suggests this is just this rate may be bonus of the economy. The fed will have to decide. Maintaining their target, is it really worth potentially inflicting economic damage or are we going to learn to live with high er rates and higher inflation . Shocking to me, everybody on the mantle agrees. Its not an argument for cutting rates and well just have to wait and see raise your hand if you agree with that assessment got two votes rick and steve, you disagree yeah. You know, heres my problem. My problem is yesterdays number, yesterdays number underscored how much we overevaluated gdp. We can talk about income, which has been goosed guy a number of issues, but wages, minimum wages, government involvement, that is an issue to put to one side in terms of the spending, spending seems to be doing pretty well all in all credit card balances going up, various delinquencies going up much less growth than we saw, yesterdays gdp. This number shows a lot of different programs money sloshing around remains but the glide path is lower. So i disagree. I think the anecdotal evidence i look at suggests the economy, steam engine postcovid timing off on everything and the feds models arent working exactly right. Its slowing but inflation isnt going away im sticking to my stagflation story. Steve i think theres scope for one or two cuts based on the feds own framework. Which is that if you look at the idea that they had forecast four pce for the year at 2. 6 , its run at 2. 8 and in that context the Federal Reserve forecast 75 basis points in cuts i think the fed is just a bit overly restrictive the problem is that powell has talked about rate cuts as a process. I think theres room to tweak at the top by a quarter even a half point and still get the effect of a restrictive policy and take away some of the risk that allison talked about, about the possibility of creating greater weakness in the economy. I think theres rationale for a tweak. Not rationale for a process of cutting rates substantially lower at this point. Rick, we actually just showed the yield on the ten year. Ticked a little lower on these numbers. Does that surprise you you know, it does surprise me a little bit, but i think that being on a friday where you had a big jump and many traders are readjusting to the landscape that the real key is, not where were trading right now but where we close the week and ill remain very focused on one level if we close yields above 467ish i still think our next major stop will be 5 . Stephanie. One thing quickly a little off topic, very important for the markets here rick, seeing the yen 156, almost 157. People had talked about the idea that the doj may come in at 155. Theyve been kind of quiet are your guys down there in the pits bracing, thinking about considering the idea that there could be some intervention on here on the level of the yen not bracing, licking their chops. History dictates traders moving against the bank of japan usually win that battle. I think thats why the bank of japan is so remiss to once again relitigate the whole structure of intervention and fx markets. Put that on everybodys radar. Good thing. Glad you did we havent talked about it much this morning stephanie, give you the last word on this. Well, i was fixated on something about japan. I seem to remember the trade, when investors bet against the boj they lose. Okay. We will leave it there stephanie, allison, rick, steve, thank our panel for the roundup on numbers. Coming up, bank of america joining us on the markets. Savita subramanian plus a rundown stocks making moves in the premarket heres what gets you started software maker, microsoftbacked economy ended first day of trading on new york stc 15 . Stay tedun youre watching squawk box on cnbc. 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. Inflation data hotter than expected year over year looking at the core. Monthly numbers in line with expectations 0. 3 . Futures taking all of this in stride right now dow futures up by 75 points s p up by 45 nasdaq up by 190. Straight to dom chu. Looking at other stuff this morning that is moving in the markets before we open up at 9 30 whats on the list to beckys point, saw a good amount of intraday volatility around release of that pce data affecting mostly Interest Rate markets. You see here yields across the board, lower a slight bid to the Government Bond market here in the u. S. That focuses on the twoyear note yield hovering just below and hair above 4. 67 , for those who use etfs, socalled tlt etf up one half percent as well. Yield picture. Mega Cap Technology folks like to see activity play out in equity side with regard to inflation and rates. Look at alphabet and microsoft these two stocks because of the earnings drivers that we have had seen a little bit of volatility in the trade. Now settled back into kind of where they were before alphabet up 11 . Microsoft up 4 . Meta platforms up a quarter after losing 10. 5 on the heels of its Earnings Report tech trade playing out at well energy side of things. A quick check on exxon mobil and chevron. Both shares still down chevron down one half of 1 . And exon mobil down on mixed Earnings Report for both Companies Impacted by nat gas prices and refining margins came in a little lower than what some people hoped for crude prices up one quarter of 1 now three quarters of 1 . And energy etf down one half of 1 as well the state of play, andrew. Back to you. Thank you very much, dom. Have a great weekend you, too. Up next, bank of America Savita subramanian joins us onset to talk about a big week for the markets and todays inflation data. And reminder, Berkshire Hathaway annual meeting with Warren Buffett you have a question, sending to le trell go through them and secto ad during the meeting. Stay tuned well be right back. You an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. 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. I cant believe you corporate types are still calling each other rock stars. Youre a rock star. Were all rock stars. Oooo look look at my data driven insights, im a rock star. Great job putting finance and hr on one platform with workday. Thank you guys, can you keep it down. Im working. You people are guitar noises . Hand over the air guitar. Ive got another one. Futures following the new pce inflation data, and you can see that we are seeing some gains. Briefly, doing better than that just a little while ago on the dow and the nasdaq its pulled back from there. Here to talk markets, Savita Subramanian from b of a securities and i would say, for a couple of months actually, longer, you have been feeling pretty good about things i have. And still even after all this recent stuff, i think the way you phrased it, the bell curve between stagflation and recession, theres a lot of room theres so much room in between. That could be good. Yes, exactly. And i think that, you know what what weve been pointing out in conversations with clients, i feel like theres been this swing from, the world is ending, were going into recession, to, inflation is out of control, its stagflation, but theres 96 of that bell curve is, you know, all the rest of the scenarios that are more likely to happen, and i think that what investors may not be appreciating is that the economy is actually doing okay maybe its slowing a little bit from last year, because of things like fiscal impulse and, you know, other factors, but consumption is still Healthy People are still gainfully employed the layoff cycle seems like its not necessarily amplifying i mean, so far, during this earnings season, we have heard some layoffs, but not nothing to write home about. So, i still feel like were in a spot thats, you know, kind of a Glass Half Full view about a month ago, i think, its crazy, ive got it in the notes here, they found it. Big argument between two bank of america strategists. Michael hartnett, head of investment, and you, whos head of the quantitative u. S. Equities okay. So, you were saying things really are not that euphoric yet. He was thinking youre starting to he was saying youre starting to see some euphoria manifested in the magnificent seven. Right so, we have he may have been on to something in terms of this i agree yeah but youre still now theres even less euphoria exactly the magnificent seven was crowded. That was not our favorite place to be. We were underweight Information Technology heading into this year for a couple of months, that was not the right call, but its starting to play through. I think the idea is theres more in the market besides a. I. Capex takers theres more to the s p 500 than just semiconductors and software companies, and you know, meta and these mega cap Tech Companies, and i think whats happening now is were seeing the market broaden out, and other companies are starting to beat earnings expectations and rally, but the magnificent seven is kind of dragging everything down maybe that continues a little bit longer, but i think were in an environment where the health of the consumer and the corporate is still not imperilled by anything were seeing in the macrodata. Hasnt been much of a pullback, but yesterday, it looked like it might turn into something worse, maybe 10 instead of just 5 sure, and 10 corrections are kind of normal i mean, they happen once a year on average, 5 pullbacks happen three times a year on average. So, you know, kind of felt like we were due for a pullback but i think whats going on right now is were still in that wall of worry type of environment, and i think there is euphoria in certain themes, like the magnificent seven, like, you know, glp1, other areas of the market. Maybe its moving into power now, you know, the idea that we need all this power to fire up the chips and, you know, get this a. I. Thing going, but i think that, at some level, when you look at positioning of any kind of asset owner, if you look at Pension Funds in the u. S. , they have the lowest allocation to public equities that weve seen since at least the 90s and the reason is everyones gone into private illiquid real estate, private equity, private credit public equities are like the forgotten land, except for these few companies that have led the s p 500. Nobody loves small caps. Theres a huge array of u. S. Equity opportunities that are really flying under the radar today, and thats what i like. If you did have to pick a poison, would it be that growth is slowing or that inflation is sticky i think that if growth is slowing, were going to be wrong on the view that you dont want to be in these mega cap Tech Companies. But i think if inflation is sticky, you really want to be in equities definitely more than you want to be in fixed income equities, they earn, and the earnings are nominal, whereas fixed income is literally, by definition, fixed income, and for retirees, which hold the bulk of assets out there, what do you need in an environment where inflation is sticky and yields are still kind of low i mean, 5 isnt crazy high. Weve seen higher yields in prior cycles you want to own inflation protective income, which i think is the reason to own the s p 500. We really did go from, i guess you cant be in goldilocks land that long, but we were 3, 3. 5 gdp, inflation trending in the right way, the fed can cut three, four, five times, the economys strong, but inflations low, were going to be able to cut, and then that was all that all kind of it went up in smoke. Nothing changed, though we had one quarter of like a slowdown in gdp. Weve still got hot Services Demand weve got consumers still spending weve got Balance Sheets still okay delinquencies are rising things are normalizing, but were not going off a cliff. But i think thats the thats the view that the average investor has and you think were you surprised leishman said we could get a couple cuts still . Yeah, i mean, i think hes hes talking about the feds framework for it still leaves an opening. You think i think theres a very high probability the fed does nothing this year, maybe we even get another hike thats what i was thinking but its okay if the economys strong exactly necessary if the economys strong it could be because something falls apart or breaks. I dont know why were hoping for rate cuts. It means something is breaking i still think jamie dimon might be right about that. That would be the scariest thing. The stagflation argument. Yep its not under control and they need to go further, even though the economys already slowing. If we are in that stagflationary setup, what do you want to own . Highdividend yield, utilities, energy you dont want to own bonds in a stagflationary environment, and i think thats the critical message. Theres still a huge glut of assets what do you do with the riskon stuff, nvidia, magnificent seven stuff and Everything Else in that environment . I think within a stagflationary setup, you look for the folks that are generating the highest Free Cash Flow, and that is, right now, its energy, financials, some tech, but not all tech look for companies that arent spending on capex. I think whats different in the magnificent seven today versus last year is that these companies are actually spending on capex, and theyre not firing people anymore last year, they were firing people and cutting capex they were shoring up capital, and they outperformed. Their earnings were the best game in town this year, theyre spending, and theyre not necessarily cutting costs, and i think thats the difference is youre seeing other areas of the economy actually accelerate, whereas mega cap tech is decelerating. Right savita, thanks happy friday final check on the markets, and the futures had spiked right at 8 30, but now we see the dow, still up, 51 points. Rough session yesterday. Got the nasdaq, you know, with some of the strong tech earnings, sharply higher ill see you were going to be hanging out. See you monday, everybody ill see you monday i will not see you guys this weekend. Make sure you join us we hang out most weekends. Join us next week. Squawk on the street is next good friday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the New York Stock Exchange futures are feeling some relief, not just from microsoft, google earnings and guidance, but this morning, core pce, mostly in line lowest year on year number since 2021 bond yields are lower across the curve. Our road