Ahead of the open. Cloud sales growth accelerates the company also aims for spending more on a. I shares of starbucks under pressure theyre down after a decline in samestore sales it also slashed its forecast were going to be joined exclusive by starbucks ceo just a few minutes from now lets begin this new month for markets after ending a rough april with that selloff. Worst day since january 31st worst month since september 23. Some of it was because theres a belief that really, this happened in the last few hours yesterday that if the fed chief is asked the question, do you think that the next move should be increasing rates or decreasing rates, it puts him in a horrible bind . H what is he going to say . This was literally the narrative i heard yesterday as Interest Rates ticked up. You know that people are going to try to trap the chairman, but hes not easily trapped. No, hes not. Although youre not necessarily in favor of the press conferences, as i recall no, because these people are teenagers. Ive run press conferences and been in press conferences, and im not impressed with this Hollywood Squares group they put together that said, we are going to hear from him. Hes not easily trapped, as you say. We can keep an eye on the bonds, of course. Not really that Much Movement at this point no. Despite josh frost generally, carl, will not be much said that he didnt say that was in his comments a week or two ago i think it was Julian Emanuel of every cevercore yesterday sai what you said. What is his threshold for a hike this is this narrative that i actually cant stand we were two for three in terms of the brown shoots yesterday. Consumer confidence was very bad. Chicago pmi was very bad instead, we had this index of people saying its the beall and endall, and thats the wage index. I found that to be fatuous reasoning. I found myself thinking, how many people want this number down how many people 437 its like the house of representatives, basically meantime, jim, tenyear on the treasury news did come back closer to 5 oil today, lowest since february war premium disappearing. Its not necessarily Economic Growth declining we do know, by the way, that theres a permian shutdown, the largest pipe thank you rusty braziel beginning in june thats when i expect the next spike. I was expecting this one, other than the fact that there is once again a hint of peace talks, and this reminds me of the peace talks going into the first iraq war where we had peace talks every friday and fonothing materialized but i find that a little fanciful that the war premium is going away given some of the comments out of the netanyahu this morning, for example, that the rafah operation, he intends to continue, regardless of pressure from blinken i think this is very difficult to talk about, and i would say that the idea that israel can divorce itself from the United States historically has not been true, according to the late henry kissinger, the late herichard nixon, who was nt a friend of israel, but saved israel from destruction. Yep, in 1973. Can we get to earnings now talk amazon, amd, pfizer, j j talc youve got so many manilla folders here i dont know where you want to start. I came in cold and havent done my homework open one up and say something. Amazon, i think, should be up ten. Its not up a lot thats because people are so darn negative, and they didnt do any homework. If they had done some homework, they would have realized that almost every single line item was better best growth they ever had reaccelerated growth at aws. Advertising alltime highs and obviously, we talk about that in terms of how a highmargin business they had a decent margin on the Retail Business. How about international was extraordinary. The ads numbers were extraordinary too. David, my favorite was something right in your bailiwick because i wanted to come armed for what you do yes they like sports, and they say that sports contracts dont come up very much and very often, and when they do, theyre of particular interest yeah. Theyre going to most likely be the streaming, so to speak, choice of the nba as we reported yesterday. Right but why is it just streaming well, theyre going to have a piece of the nba contract. That seems likely. I know theyre not most likely giving voice to that its not signed up its not agreed to yet, jim, but we do know that they are a force there. Ads just starting on the prime service, by the way. So extraordinary. And were still seeing Significant Growth obviously, advertising overall on the home page is quite important. Do you remember when aws had gone from 11, and people were saying it was going to be high singledigit growth . Its 17 its a 100 billion run rate revenue business 100 billion incredible gross margins. This is if it were ever split off, if that was ever forced, this would be an enormous company, as weve pointed out many times, with an incredibly growth rate what about capex has anybody done the math yet between adding up what meta, alphabet, amazon, and microsoft, what theyre going to be spending on capex . Theyre spending so much internally right its difficult to get a number, although they will tell you that they are theyve gotten right with jensen yeah. Theyll get whatever they want from jensen theyre spending so much on so many other things, other than just a. I. , distribution centers, trucks who can take a drive now without seeing an amazon truck that said, theyre going to spend enormously on a. I. As well absolutely. But they also are the trusted aid of so Many Companies that want to get on the cloud and artificial intelligence, and that is restarted. Theres been normalization of Companies Going to the cloud i keep pointing out the international, which was just incredible, that went from negative to positive i dont even know how thats possible take a listen to jassy, guys, talking about why hes so bullish on aws in particular and that hundred billion dollar annualized run rate and revenues remain very bullish in aws. Were at 100 billionplus annualized revenue run rate, yet 85 of the global i. T. Span remains on premises. This is before you even calculate gen a. I. , most of which will be created over the next 10 to 20 years from scratch and on the cloud theres a very large opportunity in front of us what can i say . This is a lot of people, even last literally, a year ago, people were saying this thing could be a goner it turned out to be the juggernaut, and i dont think that you can stop it make sense of me on amd, which is going to be down, despite what is that enormous spending going on for generative a. I. Yes, its not the main provider, as we know, but it would seem to be a beneficiary investors, though, seem to be concerned about the fact that guidance did not go up that much what is the incentive of lisa su to be able to say that the a. I. Chips is going to be 5 to 6 billion next year she raised it from 3. 5 to 4. The long knives come out for her as if theres a shortfall. I heard silly things like microsoft had done an order cut. That is untrue the lies that are being told about this company overnight are shocking the way you can attack it is gaming was terrible, and embedded was not good, and lisa su is saying embedded turns this quarter. So, do i love this stock i know that they are headtohead with nvidia for a lot of things, and nvidia tends to win they do have much better Training Software than they had last time, but the idea that she was supposed to raid the 5 to 6 and thats what got it wrong, i think that is fiction. Is it a the bulls would tell have told me its a bottleneck, not a demand problem. True theres not even a bottleneck not even a bottleneck no. She has the the issue is, why should she say this 5 to 6 well, whats the point so, you do a downside surprise meantime, jim, intel is coming off its worth month, i think, in a couple of decades. Skyworks, of course, warning about belownormal demand in mobile phones. They guide below on the june quarter. The next sentence lets go through that it so upset me liam griffin, you cant mention the name apple, he says, we all got that he goes, mobile business, we saw below normal seasonal trends with lower than expected end market demand in broad markets the december quarter represented the bottom, and we delivered modest sequential growth in march, reflecting a turning point. Its the second part of that, the second phrase that tells me that even though i dont favor apple because i think its up on a Tony Sacconaghi bump, which i think is advised, the fact that hes saying things are bad just when things are good, is extraordinary to me. We know he lost business with apple that was switched to qualcomm, so we cant necessarily generalize i dont like apple ahead of the quarter. I believe its on a bubble but to hang liam and apple on that first part of the quote means you didnt finish the second, and thats unforivable dupont had great numbers, but taiwan semi is the number one, and the second one is samsung. They are levered to nvidia, so i mean, if you want to make an extrapolation there, you got to say that, once again, nvidia is better that preannouncement, by the way, was on every that last preannouncement that he had where every line was down, every one of those line items is now up its a rather extraordinary time its all coming together its almost celestial in the way its coming together for ed breen, and i got to congratulate him. All that pas ptiche of business he put together is on fire one of the fur earnings stories that is up in the premarket today out of dupont. Four. That ones going on four four points. All right water filtration. That was the weakest. It was 10 growth. Its hvac and water f filtration hvac is the key to the market when we come back, Laxman Narasimhan dont go anywhere. 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. Morikawa on 18. Cla cpas, consultants, and wealth advisors. He is really boxed in here. Not a good spot. Off the comcast business van. Into the vending area. Oh, not the fries wheres the ball . Anybody see it . Oh wait, there it is back into play and. Aw no, its in the water. Wait a minute. Alligator. Are you kidding me . You got to be kidding me. Rolling towards the cup, and its in the hole what an impossible shot brought to you by comcast business. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. When we look at the biggest loser today, its going to be starbucks, down double digits, Quarterly Results substantially below street consensus, cutting its fullyear guidance joining us now, exclusively, is starbucks ceo, Laxman Narasimhan mr. Narasimhan, good to have you on the show, and i appreciate that youre coming on, despite the fact that the quarter was extremely weak jim, it was a very tough quarter. Thank you for having me. There were three reasons for this first, we saw unexpected pressures on our locational customers, more intense than we expected that impacted their visitation second, the choppiness of the recovery in china continued with a more intense price war than what we expected and third, challenges of our business in the middle east impacted us not just in the middle east but also in other geographies. Okay. Clearly i understand. Now, what im trying to figure out, sir, is, why did you not feel the need to preannounce this shortfall, given the fact in the previous quarter, your cfo said that she felt that you could have a earnings per share growth in the range of 15 to 20 . This is a substantial decline from that, and given the fact that you said on the call that april did not end well, i would like to know why you did not feel the need to come out and say, our quarter is going to be substantially worse than expected, at least four weeks ago . Jim, we have been working on action plans to address these headwinds, and so what we wanted to come back with was not just the announcement but also the action plans that we have in place, which, by the way, are not business as usual. And im happy to talk about them well, lets finish, because i know that investors are trying to figure out why they should hold on to the stock what i some of the things that i am confused about, i checked with all the major, both public and private, companies that are in a similar business to you, and no one saw a 3 decline in comp stores because of weather, and none of them saw a negative number, except for you. Is it possible that your coffee is just too darn expensive jim, i think that if i look at the u. S. Occasional customer, they have clearly cut back on visits to us if you look at the value for money scores we have, theyre still strong, but theres no question that the occasional customer is cutting back on business to us we have not been able to communicate to them the value that we provide. So, what we are doing about it is its not business as usual, but theres an action plan we have in place in order to do that to reach them and to communicate the value that we are providing. What were doing for that is we are making it attractive for them to come back into the starbucks app and join it. On the app, what you will see is you will see value that we havent seen because theyve not been part of that environment. There are drops that are going to happen every monday there are bundles that were putting in place that are attractive for them. For example, a beverage and a drink at a certain price and so, what you are seeing there is the effort were making in order to ensure that our occasional customers get to see the value that we provide. Our loyal customers why did the Loyalty Program go from 4. 3 to 32. 8 in late quarter . Those people are not occasional. Those people are hard core why did your members i know your membership was up year over year im not concerned with that. Im concerned with why you had not the occasional but the hard core drop off. If you look at the most loyal customers, they continue to come in, continue to buy frequently they continue to customize and upgrade. Its at the tail of the Loyalty Program, particularly those that are in the 90day active as we call it. The folks that didnt come back. They are very similar to the occasional customers we have an action plan in place right now to communicate directly with them, with offers that have gone out, even as recent as this week, in order to ensure that we can reverse the visitation losses that we have seen with them and to bring them back, and yes, youre right, overall, program did grow by 6 . Right thats necessary but whats more important, i think, is the late quarter decline. Before i turn it over to my colleagues, you said its not business as usual, and i want to make a point here, sir you are still expanding as if it is business as usual you had, for instance, on the quarter, you talk about Opening Stores in honduras and ecuador is it not time to pause, sir, and figure out whats really going wrong and spend a deep dive and making it so that this decline in comp store numbers does not continue . It is perilous to the actual existential existence of starbucks. Jim, thank you for the question what i would tell you is if you look across the world, our system sales in latin america expanded double digits our sales in japan expanded double digits. Our business outside of malaysia and indonesia in asia pacific showed growth f. If you look at the fundamentals of the u. S. Business, we are Holding Share in the u. S we are still the largest player in outofhome coffee. If you look at some of the mettics Dunkin Donuts and tim hortons said you are not Holding Share, sir i regard them as being seminal mcdonalds says you are losing share i cant go against those three companies. They are too good and too honest and too big for me to dismiss. We are the leading category player in coffee im talking visitation share and what we have if you look at our inhome coffee business, it grew share, 140 basis points, but if you look at the business underpinning us, tea grew 8 cold grew 1 so, there are elements in here if you look at our partner sentiment and what we have inside stores, attrition is down to its lowest levels so, theres work going on. The thing we didnt do enough of is really attack the occasional customer with delivering and communicating value to them in a more aggressive manner thats what the plan we have thus its david. China continues to be a notunimportant part of the growth plan for this company you cite fierce competition there. Slower than expected recovery. But to jims question, again, why not sort of focus on improving things there and or fighting off the competition you still are opening many stores i know the net number was still a pretty significant one for the quarter in china david, first of all, i think if you look at the Overall Network of stores that we have, theyre in very good healthy if you look at the cash on cash returns that we get from the new stores and the expansion, theyre 40 cash on cash returns. We see no reason to change that equation it does not mean that were not focused on fixing the challenges we have with the occasional customer and with the fact that theyre not visiting us as often. Laxman, i noted your language in terms of citing a deteriorating Economic Outlook weighing on customer traffic do you really think thats the case we talk about it endlessly here as you well know, and its far from clear that there is a deteriorating Economic Outlook, so what is it youre seeing . I think what were seeing is pressures on the wallet for some of our most occasional customers, and they are translating that into what theyre choosing to do how are all right. What are they doing, then . Well, so, some of them are obviously visiting less, as we have seen, hence our action plan, which is about communicating value, which is about ensuring our speed of Service Improves so we capture the demand that we already have, and thirdly, that we bring in products that they find exciting what we are doing is products. If you look at the lavender matcha, really appealed to some of these customers we are bringing in new products as our seasonal launches go that are really appealing to these occasional customers as well so, its about price its about value were bringing those two together to ensure that the occasional customers find it worth their while to spend their money at a starbucks you know, a lot of what theyre saying, laxman, reminds me of what the mcdonalds ceo said yesterday, and ill quote him. He says, in some markets, our relative superiority on affordable has declined. Is that a point of view with which you can empathize . I can i can empathize that with the occasional customers the loyal customers still come in as frequently as they do, the most loyal ones. So, thats going to involve whats the mix of remedying that is it more act marketing than product or vice versa . I think its a combination of how we communicate and deliver value. It is about product, but its also about speed of service. You know, we have people coming into our stores today or mobile pay who dont fulfill their transactions because of wait times. The teams done a phenomenal job in the u. S. In improving speed of service but we see even more opportunity in doing that, and that is essentially what were working on in terms of rolling out the processes and tools so theyre able to meet more of the demand than we already have laxman, what gives you the confidence youre going to be able to meet that demand you cited on the call that customers use the mobile order, the app, put items in their cart and then choose not to complete the order because the waiting time is too long how are you confident youre going to be able to execute to make sure that problem is dealt with i think, david, the speed of Service Improvements weve seen are real the opportunities that we have with the new processes that were rolling out suggest to us that we can make that even better, and the entire Leadership Team is focused and ensuring that we make improvements as we go in order to increase that speed of service even more. Well, laxman, the speed of service is real. Thats a fanciful statement. Its the exact opposite of what is happening and i dont know how you can say it on our air. Jim, the facts are, we have improved speed of service, quarter over quarter if you look at how the processes that we are rolling out, particularly around peak, what we are finding is that we have opportunities to improve that even further with changes in processes and tools that we provide to our partners at peak. But you said that people are using the mobile app, and they are not able to get what they want because they cant. Its too slow. I think your throughput is awful, sir and i do not understand how you can say service is good and also say at the same time that throughput is awful. Jim, throughput has improved. There are opportunities for us to improve it even further and thats what the team is focused on well, you can say that, and you may even believe it. Finally, laxman, yum brands is out today, and they argue the impact from the middle east conflict might be improving in the most affected markets. Can you go along with that i think that we are seeing some improvement in certain markets for sure, but this will take time to normalize okay. One last one, because i know ive been difficult. I am very concerned, because this is a great institution. And i do want to hear something, something that makes me want to hold this stock through the next quarter, even as you said that april is bad do i have any reason to own this stock in the next quarter . Jim, first of all, we are completely focused on a plan that is not business as usual to reverse some of the trends that we have seen, and we have demand that we can meet we have products in the pipeline that are strong, and on top of that, what we have is we have a plan to actively communicate value to those customers who dont see it when they see it, they choose to participate in our brand so, thats the nearterm plan. Further, we have an opportunity across day part, in terms of occasions, including what were doing overnight, its a business were building and theres real opportunity over the course of the next five years to build a 2 billion leg there furthermore, what you have seen is Real Progress as a business if you look at the growth in core categories like tea, cold, if you look at the execution in stores, partner attrition at its lowest levels, but the connection being really high, Customer Connection being really high, partner connection in high being outstanding, the best weve ever had, you put all that together, what youve got is a foundation for business that is really strong. It is true we had a tough quarter, but we have an action plan against that, particularly around how we communicate and deliver value to those occasional customers that will see value when they see what we offer them okay. All right, mr. Narasimhan, starbucks ceo and director as a shareholder in my travel trust, ive done a mistake here. Im saying it on air thank you very much for coming on squawk on the street. Meantime, jim, weve been watching a fiveyear chart of starbucks, and at the open, it does look like prices are going to be pretty much flat over five years. Yeah. Well, look, the problem here is one of trust its very difficult. This is a terrible quarter its difficult to come on air and say things are good. I would have called for more of a truth and reconciliation discussion and more of a realization that is existential, because you cant go from plus 1520 projection to these numbers, particularly when you say that its the weather in the u. S. And tim hortons and mcdonalds do not agree. And so, i am distressed about this situation, despite the fact that i know that mr. Narasimhan says he does have an action plan lets get the opening bell here and the cnbc realtime exchange at the big board, it is viking holdings, celebrating an ipo today. Well talk to the founder and chairman in about an hour. At the nasdaq, its Checkpoint Software jim, what is the tougher quarter, starbucks or cvs . Cvs, i think, was there are some outside forces that hurt vs, including the terribl hack that occurred at United Health i still dont think they have things around it i think they did see their Health Management organization did have a better april, but when i come back, i see what Doug Mcmillon said yesterday when he was talking to people about why walmart got out of this business. 51 Stores Closed im not sure this business is an economic business. The lets stay here for a moment on that first of all, that decline is enormous for cvs obviously, the owner of aetna, this is what were talking about, medicare advantage, the medical cost ratio has gone up, seniors are using more than perhaps they thought in terms of health care services, paying more for them. Absolutely. It hasnt gone particularly well for Ceo Karen Lynch no, it hasnt, and her plan is i dont know how you treat her if she came on as a guest this morning i dealt with her back and forth this morning i was stunned by starbucks stunned. I rarely i have rarely seen you that in that kind of mode ive rarely seen a stock decline like this. On theres karen lynchs quote. Environment doesnt diminish our opportunities. They think they have a pathway to address their nearterm medicare challenges and she goes on to say, they remain committed to the strategy and have the right assets in place. What are they going to do, go up against amazon with the front of the store go up against amazon with the pharmacy how do you go up against amazon . I dont know. Half the call was about how theyre going to destroy the drugstores theyve made significant acquisitions as well, in clinics, for example, that they felt was going to be additive to the business so far, the strategy, not going that well. Its too expensive. To your point, in many cities where, unfortunately, things are behind lock and key at your cvs as well on the retail side, youre much easier just defaulting to amazon, knowing youre going to get it sameday or the next day. Front of store comps were down two its a pincer move between the people who come in and the shrinkage and andy jassy, whos decided he wants this business by how quickly he can get the product to you one more reason amazon deserves to be much higher. There is not a business they have gone into and not destroyed. Theyre coming after Grocery Stores bigtime with this. We have to go there, we should do our show from the small form factory. I cant believe how aggressive theyre being. They have any amount of money to play, and karen lynch does not the commentary that that is going to be the low for the year will go meaningfully higher as a lot of their customers are sort of done cost apt moptimizing ane back to adding to the cloud structure. When you talk to brian, the great cfo there, i had a fight with these guys. I said, what are you doing well, heres what they did they turned it around. And they said they turned it around, and they are good to their word i thought they could only go to low teens. David, they went to high teens, and they did it in an incredibly robust way why is the stock down . Amazon is up. Its not down it was at 182 last night it is still up on a mixed day. Well, actually, were on a down day right now for the Broader Market i know you think the dow is atavistic even the mood you came in with the mood . My wifes in italy shes having a great time. The cow is going to have a baby. I aint in no bad mood its another name that used to get under your skin, so ill enjoying this. What do you think of this quarter there . This was a destocking quarter. China is going up. Youve got the dutyfree numbers that are better the stock is down 6. It was initially down 10, and i think when fabrizio says things are better, im going to go with him. Asia travel retail returning to Net Sales Growth there. The stock was at 300 hes finally got it right. We continue to dump on him no, im not going to dump on a guy whos got it right not everything is pinterest. If were looking consumer, starbucks, el, marriott miss, mastercard not really guiding much higher for the year yeah. Well, look, i think mastercard is doing okay i see that, and i raise it with steve squeri yesterday telling me at the annual meeting that i cannot believe how well American Express is doing that may be a winner take all, loser take none. Thats how well hes doing with gen x and millennials. Bank of america is saying good things but to carls point, it builds on a theme that we have been exploring a bit here, which is the consumer is getting weaker brown shoots. The consumer is more frugal we do have enough brown shoots for me to say the fed has asked the question, if the chairpersons asked a question, would you favor a hike or a cut, i think he would be, we stand pat with the information the data is starting to pile up, going from anecdotal to actually real, that there is strength by the way, laxman says the economic deterioration we questioned him about it did he say he would cut the price of coffee, cogo headtoha with mcdonalds or tim hortons . Dunkin donuts, where hes losing share . It is true that kraft heinz, pricing up almost three. Were fwhot not getting that brk clorox with a guide lower. Well, clorox, you know what clorox is very difficult because they seem to be all over the map, but you know what Procter Gamble has just had a run here that you cant believe, and colgate has been incredibly strong Procter Gamble has premium pricing. I do not disagree with you one bit that we dont have some weakness in the consumer i think, look, i dont think the fed should come out and say, because of some number they got yesterday, that nobody really cared about it yesterday, that they cant one day cut theres enough frugality in the system that tells me that people are concerned, but i do worry that Procter Gamble is the most expensive of all, and they have not cut any price k colgate, very expensive. The inferior guys are running for the hills. Fair point. A story that i think is of importance thats not earningsrelated this morning is Johnson Johnson, and certainly, something im all over it let me do the headlines for you. They have essentially reached a settlement with all of those who have been suing the company in terms of the effect of their talc no, me sothelioma current and future claims related to the Ovarian Cancer related to talc litigation against it and its affiliates in the United States. Theyre saying they dont have everybody yet 99. 75 of all pending talc lawsuits against Johnson Johnson and its affiliates in the United States. They are pointblank saying, they think they can win them over they dont have everybody. Thats not the number theyre using. Jim, im reading from the press release. Plan commits the company to pay ovarian claimants a present value of 6. 475 billion. They say thats a far better recovery than claimants stand to recover at trial most claimants awill not recover at all i thought this was what you have been looking for i spoke to plaintiffs lawyers this morning, and theyre not all j j is saying that okay. The plaintiffs lawyers are not saying that. Okay, to be fair, a press release from the company the plaintiffs lawyers are not giving me the go ahead on that number. On the on the plan by the way, the plan theyre not giving me that. They have a proposed plan, we should point out they do say its a culmination of a consensual resolution strategy they announced last october. What are you telling me, jim they have lawyers with thousands upon thousands of claims they put through four lawyers for me, and i do think that they have enough to be able to get it so that the judge will rule in their favor, but they do have plaintiffs lawyers who are against it, and i just think its important to point out that they feel theyll prevail, but they only have finished the mesothelioma, and they think theyll prevail because there is a judge right now trying to rule about whether there is a true linkage with talc and asbestos this is talc and Ovarian Cancer its very good, but i dont want when you have j j putting out a release and then you have others saying, hold your horses, i do not want to get ahead of the situation, because ive been there before with j j, and as much as i like the company, theyre a little sometimes they can be too optimistic okay. Heres something you dont see every day. Pfizer, up on earnings that was a shocker. Pfizer shares up almost 3 on what they call and this is their wording a solid First Quarter in terms of revenues of 14. 9 billion. Albert borla there it is albert borla saying, we delivered Strong Performance in our noncovid portfolio in the First Quarter of the year. What theyre trying to move towards, in terms of cancer, the seagen acquisition proving important there, and ive taken my shots at pfizer through the years, because if you look at a 20year, theres been no value created at all yield, by the way, is 6. 39 right now. But that said, this has been a company, despite what was that brief runup as a result of the covid, the various covid therapies, it has not done much. No. But the seagen acquisition, too early, right too early it is do you think he went to china and offered his vaccine to president xi, and president xi said, no, and that his vaccine was not as good as their vaccine . Right i know they did, guys, raise diluted adjusted diluted eps guidance, 215 to 235 and again, youre seeing a positive reaction in the overall stock market for that. Right right. Well, i do feel that, look, were getting some good news in the drugs at last. The group has finally got, you know, the group was colored for a little while by bristol myers, which is still in a difficult situation, but i like the fact that j j is closer and closer. I do think were going to start seeing better numbers from pfizer i dont like the fact that these people of mine that the government prevailed in these cases from the Inflation Reduction Act that makes it so medicaid medicare is determining price for a lot of the big drugs, and that is very difficult. We never thought that would happen, and it happened. As ed yardeni might argue, jim, its a byproduct of a big generation of boomers moving into ages where they need medical care if we are looking for bright spots, though, wing is down,bu comps are nearly doubled at 22 ive got them on tonight, and i think its well, look, the stock is probably the best performer in the entire restaurant group, and i do think that it can be down. But its not smci kind of down where they, you know, basically didnt really meet the real revenue guide. Yeah. How about i feel very good about wing stop theres always pinterest. We got pins as well pinterest has got a lot of things right up 18 premarket, hanging on to those opening gains they have a model now that allows them to make some money theres a good you know what, david . Theres a lot of young people who are on there, and theyre doing some business now. Im sure they are but snap too. Pinterest and snap how do you like that both with huge doubledigit gains postearnings. They had a 23 overall Revenue Growth rate for pins obviously, were still talking about a relatively Small Company, 740 million in revenue for the quarter. But maus, guys, up 12 year over year as well how about cannabis msos the news that the dea is going to move to schedule iii, potentially. No confirmation from justice i had Canopy Growth on, cgc, theyre the ones that is most levered to it. They have a decent balance sheet. Not great. Its run by a very legitimate guy, david kline, who used to be the cfo of constellation brands, which is the majority owner of conpy. I t canopy. We need too see theyre allowed to use that supermarkets are allowed to use credit. We need to see that you cant have brinks trucks coming to all the different repositories theyre not allowed to use credit right thats whats really hurt that industry. I do want to come back. I dont want to have confuse people on j j and talc its something weve talked about a lot. You have mentioned it as a gating issue, i think, for the stock for some time. Im very bullish after this it is a plan, just to be clear, that has been proposed by the company that it would this subsidiary theyve created, that would allow it to basically do a prepackaged chapter 11 bankruptcy filing where it would pay out this 6 billion. If 75 of the claimants approve the plan, they say they will seek j j that prepackage chapter 11 unlike prior cases, its the vote of the claimants, not a small minority of plaintiff lawyers who stand to get excess fees, but the claimants who will decide here whether this proce proceeds i want to clarify as best what we can but if they do get this behind them oh, my, if they get it behind them, its huge. Its like what happened with 3m when mike roma got a very bad hand, by the way, and is concluding his career with 3m by solving the problem. I just want to be sure that people understand that its entirely possible that j j thinks they have everybody and then i felt this before, that they did, and then i got bombarded by lawyers who said, did you bother to check with me . Its the claimants who will step up and say, i will accept this offers as opposed to going to trial to say its a done deal is understood. The challenge that they moved it to texas from new jersey. Theyll challenge that there really is a they dont feel that they are going to continue to lose cases, but they have lost 16 out of 17. Im just saying that when i have said that this thing is going to be a done deal before, i found i had a whole lot of friends in the plaintiffs bar who were interested in what i had to say. Theres a lot of money at stake for those plaintiffs attorneys there, given what they take as a percent of the overall award. This is the best offer, and i would be surprised if it doesnt go through, which is why i think the stock should be up we didnt mention the macro adp looking for 180. Consensus for friday is 240. But lot of job growth, especially in the south. I dont know if you saw this piper report on middle america, and how its benefitting from the resurgence in manufacturing and energy reshoring well, i mean, this is the problem. These are highpaid jobs and remember that commerce secretary Gina Raimondo has probably put a hundred thousand people to work building plants outside of syracuse and plants in arizona and i just feel that those jobs are the jobs that continue to keep the growth going, and therefore, doesnt make it so that powell has such an easy path even though we are, again, seeing signs of weakness in a certain segment of consumer. There are brown shoots, which give him the ability to do something, but i think if hes asked that question again, should he tighten or ease, he has the ability to say, look, i see things going wrong in the economy, whether it be trucking or rails at the same time, we get a jobs number on friday that very well may show below 4 unemployment, which carl, i guess, you pointed out, would be a record, right . Would tie the record. Tie the record of consecutive months well, it is its a very difficult decision for him to make, but i think that what hell do is saying because its a difficult decision for him to make, then he has to wait, and if he has to wait, the and the long bond goes higher in interest, that will solve the problem. I mean, remember, its shelter thats an issue, and thats really driven, in part, by immigrants, because you have to house immigrants i think the wages are a push and then, i do think that insurance is so high that people are not reporting car accidents. Its literally its half of super core. Auto insurance and repair. By the way, amid all of this is some fresh pmi manufacturing numbers. Lets get to Rick Santelli hey, rick. Oh, what a difference a tenth makes. 49. 9 was our midmonth read on s p Global Manufacturing pmi, and that would have broken the streak of all the readings so far for 2024, the three before it were above 50 now, it is 50. So, 49. 9, the final read, becomes 50 we keep the streak all four readings, january, february, march and april now are 50 or higher this is the lowest of the year, takes us back to when we were under 50 for the last two months of last year and of course we still have Construction Spending joe j. O. L. T. S. , ism manufacturing, adp was right around the time we put the high yields of the session in were now down four basis points on twos. Parallel shift in the yield curve down four basis points on tens as we get ready for more data and, of course, the fed decision, which should be very little new information, other than the fact that inflations hot. Squawk on the street will return after a short break from pep in their step to shine in their coats, when people switch their dogs food to the farmers dog, the effects can seem like magic. But theres no magic involved. dog bark its just smarter, healthier pet food. Its amazing what real food can do. ive always been driven to get my money right. As a kid, i watched my mom struggle financially. Her sacrifice allowed me to pursue my dreams. To create generational wealth. Im partnering with sofi because they care about making your money work for your ambitions. Just like my mom did for me. Recognize a generational player. Join the official bank of the nba. Sofi. Get your money right. [crowd chanting] they ignored your potential, and mocked your ambition. 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Jim, whats on mad tonight im a believer of no free passes, demonstrated on this show wing stop i have on tonight, historically the stock has rallied after initially a comeback and trying to engage a consumer so im going off premises going with stephen yalf of tanger because i think people want a bargain, theyre tired of paying 6 bucks per coffee i pay 2 here my guy is close to the subway. How much is your guy . Two bucks delicious. I make mine at home, so theres that too. I do that, too, believe me. I do the celsius and the dr. Pepper and finish with a diet mountain dew. When we return, reviking on its ipo. Dont go away. With gold and copper prices pushing towards alltime highs, u. S. Gold corp is advancing its environmentally friendly gold and Copper Mining project and creating american jobs in mining friendly wyoming. With a Proven Management team and board, a tight share structure, and a solid cash balance, u. S. Golds portfolio of worldclass assets are creating American Growth and homegrown Strategic Metals as the us moves towards an electrified future. U. S. Gold corp. Good wednesday morning welcome to another hour of squawk on the street im sara eisen with Carl Quintanilla and david faber. Live from post nine of the new york stock exchange. Looking at stocks, its a mixed picture, the dow is higher now thanks to strength in j j, microsoft, amazon, 3m, boeing, s p is lower the only sectors higher are consumer discretionary, materials and real estate. A lot of movers to talk about there. Nasdaq down. 1 . A mixed picture for tech and stocks overall on this fed day looking at treasuries we have no shortage of catalyst, the 10 year yield is slightly lower so a slight bid in bonds 4. 66 two year remains above 5 but cooling here today shares of cvs plunging after reporting an earnings miss the company cutting outlook due to higher medical costs. Pinterest soaring double digits, posting strong Revenue Growth up 22 from a year ago. And starbucks on pace for the worst day in two years missing earnings estimates china sales falling double digits the choppiness of the recovery in china continued with a more intense price war than expected. Lets get to more with Rick Santelli there are significant big numbers here jolts, i dontjob opening labo turnover, expecting 8. 7 million. Much lighter 8,488,000 thats the smallest j. O. L. T. Number going back to february of 21. February of 21 and last month was revised just a smidge higher from 8. 756 million up to 8. 8 and change if we look at the Construction Spending number. Construction spending was down. 2 we were expecting a number up. 3 so that means now that last month, which was down. 3, becomes unchanged. So now weve taken some back and given some with respect to the revision if we look at the s p ism manufacturing numbers hitting i want to point out the s p moved back up to 50 at the expansion contraction line on the ism manufacturing april numbers it moved from 50 to 50. 3. The last look 49. 2, the weakest since february when it was 47. 8. The prices paid component, 60. 9. 60. 9, hotter than expected hotter than 55. 8 and interesting on a fed day to see, of course, that moving higher 60. 9 on prices paid would be the highest prices paid level since june of 22. New orders 49. 1 dipping back below 50 and on the employment, considering it is jobs jobs jobs friday coming up, expecting a number higher than 48. Better than expected 48. 6. Higher than 47. 4 in the rear view mirror. But it means we have seven in a row below 50 in contraction territory, which is interesting. We did see a pop in Interest Rates when we saw the numbers hit the wire but it has eased back a bit pretty much down four basis points on twos, down four basis points on tens where weve been hovering off and on the last 40 minutes. Back to you a lot to consider today, rick no shortage of catalyst for the bond market and equity market. Rick santelli. And the j. O. L. T. Numbers that rick mentioned significant there, the lowest openings number since 2021. Obviously the high openings a sign of just how much job availability there is in this jobs market and how strong it has been and firm it has been. So the fed is paying attention to that number we have the adp private sector read on jobs today 192,000 jobs added during the month that was better than expected, doesnt change the calculus. Big job Growth Continues to be in the Services Part of the economy. 142,000 added there for april, less than goods. And the large employers, Large Companies are doing most of the heavy lifting or a lot of the heavy lifting in terms of job growth but nice to see they are adding jobs across the board one other interesting number to look at in Wage Inflation is the change in pay, job stayers the change is 5 , and for job changers which is where you get the big pay bump, 9. 3 is still a high number but better than the at least its not as high as the 10 that we saw in the march number so pretty in line on the adp front doesnt see the expectation well see 200,000 jobs created on the government number on friday but the job market is maybe cooling a little bit but not in any significant way. Theres still plenty of demand for labor and a lot of hiring, and thats part of the story and the debate at the fed today. At the same time, sara, youre well aware of this because you cite it a lot and use Conference Calls to support it, we hear the chorus call of the consumer getting weaker. I challenged the starbucks ceo about the economic deterioration they cite he said were seeing people choosing not to buy our coffee because theyre price constrained somehow. Mcdonalds i think there are any number of other examples cited. I wonder going into today how that squares from language we may hear from the fed chair. I heard the question of starbucks, its fair hes not the only one seeing this in 24 hours we saw Many Companies including amazon warn of whats happening in the dete ration listen. Customers are shopping but remain cautious trading down on price when they can and seeking out deals. The category is slowing down and we are losing a little bit of share i think Everybody Knows that the consumer, its sort of seeing a number of things, persistent inflation, the high interest rate. Seeing pressure across all consumer groups and seeing behaviors broadly outside of our categories changing for nearly everyone as they evaluate whats going on. As far as the International Consumer goes its probably more of an emphasis on value than there has been in past quarters seeing the same thing in the u. S. It doesnt sound too hot. It doesnt. But then again it depends on you ask. We also in the last 24 hours heard Companies Say the economy is in great shape and so is the consumer listen the consumer on that we see on balance continues to remain healthy and spending is robust once again we saw growth across all three of our customer segments globally both leisure demand and adr growth have remained remarkably resilient. Results compiled with healthy spending and growth of 18 year over year on a local currency basis. I continue to feel good about the strategy globally away from home its a business that we are seeing continue to improve outside the u. S. And even as we are seeing the slowing with the Restaurant Business here in the u. S so it really depends where you sit. Its no surprise that the strength is in casinos and experiences. Right i was thinking experiences were the first two examples but then master card thats experiences too. And kraft is. Kraft is, theyre having a little bit trying to come back and revitalize their brands. But the bottom line is theres pressure on the consumer no wonder on fed day our data team at cnbc does a good job showing how much our rates have changed for things we use for mortgages, consumer loans, go back to march 2022, before the fed started raising Interest Rates and look then and now. 30 year mortgage, it had already run up in anticipation of the rate hikes its now 7 hnt 45 try getting a Home Equity Loan now. These numbers have substantially increased and this is where the pai pain is on the consumer and economy. The difference in the 10 year note yield was two now bumping up to 4. And the s p 500 has remained resilient in the high rates but doesnt mean were not seeing deterioration. The lags matter because people feel the higher rate impact. And thats something for the fed to consider. Also why i think, and a lot of the fed watchers and economists today think that the bar for talking about rate hikes is very high right now right. And most expect that easing bias to be maintained and thats the biggest question going into the fed meeting today, which is how does he walk back cuts in the near term because of the sticky Inflation Numbers while also maintaining the fact that the next move is going to be a cut. And thats the i think thats the kind of mystery we have here well learn a lot more this afternoon. Stocks coming off their worst month since september, investors looking ahead, our next guest thinks there will be two rate cuts this year, joining us is wells fargo cio, target of 5,200 great to have you in d. C. Thank you the regional is up 1. 5. And i wonder if youre trying to sniff out powell not going uber hawkish today. He cant go uber hawkish. The markets have walked back the six to one rate cut. Hes going to say inflation has made progress but its uneven and we need to be more data dependent and keep going the small bank index, a huge bifurcation you guys have talked about all morning between the high end and low end consumer, services and goods, big company confidence, Small Company confidence and big banks and small banks. The small banks are struggling right now. Im not sure theyre a great play off the fed, ton ca to be candid. Theres whether you have a ton of home equity, mortgage free or not, other delineations. Yeah thats the narrative people try to figure out the consumer, the economy. What theyre missing is the complete bifurcation of the economy. The high end, low end i just talked about whats interesting is if you buy into the fact that the consumer and Small Business are the engine of the u. S. Economy take the Consumer Confidence number, 21 month low we know because, you know, Mortgage Rates are higher, payments are higher. If you look at the low end consumer, the last three years, carl, their nonmortgage payments, what theyre paying in cash flow out of pocket is up 70 . 70 is a real number. That hits them hard. You couple that with Small Business optimism from nfib, below the average for 27 months and in the fourth percentile its really low. So Small Business optimism is low, Consumer Optimism is low and declining, right so we have to watch that, because that is the engine of the economy, to your point. Meantime, the pullback we had after a near 30 gain for 5 months still reasonable to you still reasonable. Whats the real test . Its interesting wi, the last few days weve taken the 20 Day Moving Average now starting to pierce the 50 Day Moving Average from above never a good sign when that happens so probably short term pressure at play when that happens a lot of blue sky between the 50 and 200 day we have to go down to. To us it looks like you could see a correction down to the 4800, level, 4750, 4850, somewhere in that range. Which would be a material nice correction were exactly six months in. We started this rally november 1, its may 1, exactly six months into this strong rally. It probably is time to take the pressure off, particularly with what the dollar is doing and rates are doing and everything else. Is the keydeter meant where the market goes next, making sure that we start to see progress on disinflation. You nailed it heres the thing the enemy of the markets right now is inflation so whats going to push inflation down or continue the deflation . I think its the labor market. If we would see the Unemployment Rate start to rise people would say thats bad for the economy, it wont be itll be actually good for markets because theyll believe thats going to be disinflationary and start to bring that number down we think as the labor market softens, which youre seeing some of that saw it in the j. O. L. T. S number, adp was stronger, we think nonfarm on friday is down. But watch wages and the Unemployment Rate. Those are the two things i think will fixate on how inflation path goes from here. And were fading in the second half on this year the housing and that will push Inflationary Pressure down too. Darryl, well see what we get on friday. Its always a fun time, isnt it, carl it is thanks for coming in. My pleasure. Wall street is boosting its outlook for amazon stock well speak with an analyst about whats ahead for the company. Plus teslas ceo you know who that is, elon musk, hes weighing in on the network of the super charging what it, h means for tesla and other au me tt thtoakrrshause e network. And viking set to go public today. Set to be the biggest ipo of the year squawk on the street continues. With you to make them real. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire youre probably not easily persuaded to switch match mobile providers forion. Your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . You can get two unlimited lines for just 30 each a month. All on the most reliable 5g mobile network nationwide. Wireless that works for you. For a limited time, ask how to save up to 830 off an eligible 5g phone when you switch to comcast business mobile. Dont wait call, click or visit an xfinity store today. We expect the combination of reselling growth to increase Capital Expenditures in 2024 given the way the aws Business Model works is a positive sign of future growth the more demand aws has the more power we have to procure new data centers and hardware. The company posting a beat on the top and bottom line joining us is john blackledge, a buy rating on the stock. A lot for investors to luke here in terms of the beat, 12. 5 sales growth axcceleration on aws. Does it change your views from here no we got what western looking for, the boeings were aws Revenue Growth and income it was above the Investor Expectations of 15 to 16 growth driven by fading cost optimizations that hampered growth over the last year and you had to ramp up workloads and called on Million Dollar run rates, which was positive and investors didnt think they would give us that and the huge opportunity ahead and the op income was huge, over 15 billion, 21 above our street high number driven by high margin aws and advertising businesses and then the rest of the business kind of turned positive so i think thats a big reason why the stocks up today, those two metrics. John, they mentioned the cap x for q1 likely the low of the year, how high does that get and how do you characterize it in light of what we heard for microsoft, alphabet and meta on the same front yeah 14 billion cap x, we went to 62 billion for the total Company Versus we had 54 billion going in so almost like a 15 raise. Within that aws cap x of 40 billion up 60 year over year most acceleration is on the aws side building out for infrastructure capacity which is what we heard from alphabet, meta and microsoft and they are investing on the fulfillment side, same day robotics, et cetera. But the one thing i point out here, meta got this question on their call and alphabet did as well is there going to be a payoff for investors at the end i think its a yes just for last night, aws posted record 37 margin so amazon and aws has proven like hey were going to invest ahead of a future needs and then well show the margin, you know, revenue in the margin. Speaking of margins, what are your estimates for combined margins. Even the Retail Business had an actual margin. What are you targeting overall for the company. This year we have overall a 10 margin we actually, like i said we were street high from here at 63 billion. We went up to 67 billion in operating income and they beat nicely in 1q and then the 2q guide was above where we were at the high end. So we think it it should be good and again thats driven by aws. Which was a massive beat and then advertising which grew the ad business grew 24 in the First Quarter that will be a driver of op income and kind of the rest of the business turning positive. I would say the one thing that management called out a couple of times was the ecommerce business and that margin which people wonder about, they say they had several years of lowering costs on the fulfillment side which is good big gains last year when they went to the regional fulfillment model but theres more to be done so we have margins up this year and up, you know, kind of going forward. The bull case on amazon there with stock up 3 thank you very much john blackledge. Thank you still to come, future of evs and tesla. As we go break, another rough day for bitcoin. Now hitting its lowest level since february be right back. Vering magic. The all new godaddy airo helps you get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo 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 check out shares of pfizer today, cost cuts, strong noncovid sales and results benefitting from a smaller than feared drop in sales from the covid back and down about eight year to date yeah. Always like to look at the 20 year as well lets talk tesla its cutting the Supercharger Team impacting an estimated 500 employees. Elon musk took to his social media platform x last night to explain the decision saying tesla still plans to grow the Supercharger Network just at a slower pace for new locations and more focus on 100 up time and expansion of existing locations. Phil lebeau has what this means for tesla and other maker who is rely on that network as well. Yes, well talk about the auto makers who will make the supercharging standard the standard they can use for their vehicles as well in terms of the network its considered by those with evs to be the gold standards in terms of number of places you can access it, which is 6,249 worldwide about 2,500 in the u. S. In terms of charging ports within those locations, worldwide more than 57,000 the estimate is that somewhere between 24 and 25,000 charging ports are here in the United States because it has been so successful and you can probably see tesla supercharging stations you dont see other charging networks you have now a number of automakers who said were going with this standard, this year ford, gm, hyundai, mercedes, they are or will be in the process of adopting the standards. Cnbc reached out to ford in the process of giving adapters to current owners that can be used at tesla supercharging sites theyre not changing their plans at all looking at who will do it next year, toyota, honda, nissan, bmw. We showed you the charging companies, charge point, ev go, blink and you see shares of tesla. Bottom line is this, tesla, as we say and have been reporting, theyre cutting more than 10 of their staff. It was reported that elon musk wanted to do 20 so its not a huge surprise that the decision was made. We dont need the current staff that are part of the Supercharger Network team. Now whether or not they do more with others and thats how they expand the Supercharger Network in the future that remains to be seen dont forget theyre also getting money from the federal government for their Supercharger Network its not like theyre turning it off completely. When he says more focus on 100 uptime, what does that mean where are we in terms of how long it takes these days depends you know, generally speaking, david, the most recent, they are among the fastest in terms of how quickly you can get an 80 charge whether thats the course of 20 minutes, 25 minutes, it is improving steadily in terms of how quickly you can charge a vehicle. Remember, the holy grail, what everybody would love to see eventually is that recharging your vehicle is about the same length of time it takes to fill up if you go to a gas station but were a long ways from that happening. Phil, thank you still to come, were going to get you ready for a big fed decision as the fmoc con includes the meeting today and gearing up for the biggest ipo of the year so far, viking set bintoeg trading today the companys ceo and founder joins us first on cnbc when we come back. Rary filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. I dont want you to move. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with xfinity. Welcome back your cnbc news update. Secretary of state of Antony Blinken met with the israeli Prime Minister today in a bid to get more aid into gaza the state Department Said he reiterated the position that hamas was standing in the way of a ceasefire deal that would halt fighting and see the release of some hamas Hostages Police clashed with protesters this morning after officers began removing a propalestinian encampment at the university of madison wisconsin. It comes hours after violent clashes broke out at ucla and after new York City Police officers sent special units into a building breached by protesters on the Columbia University campus. And Marjorie Taylor greene said she will force a vote next week to oust House Speaker mike johnson accusing him of betraying the gop by going against conservative wishes bypassing government funding bills and giving aid to ukraine. It came a day after Hakeem Jeffries said the democrats would help save the speakers job. Lets get another check on starbucks this morning trading on five year lows. The company missed estimates, slashed the forecast for the year the ceo joined us in the last hour and jim cramer asked why investors should hold onto the stock. If i look at the u. S. Occasional customer they have clearly cut back on visits to us if you look at the value for money scores we have, theyre still strong but theres no question that the occasional customer is cutting back on visits to us we have not been able to communicate to them the value that we provide. So what we are doing about it, its not business as usual but theres an action plan we have in place in order to do that to reach them and communicate the value that we are providing. What we are doing for that, we are making it attractive for them to come back into the starbucks app and join it. On the app you will see value they havent seen because they havent been part of that environment. There are bundles put in place attractive for them. We asked about some of the comps from mcdonalds lately from young brands some of the commentary from brands like pepsi that argue that certain cohorts of the consumer are beginning to crack. Sure but there are bigger problems here the street is focused on counting two downgrades from deutsch bank to hold and the problem and the notes are consistent, i think jim channelled this well in the interview, theres very little visibility as to when these trends are going to inflect and just what is exactly causing them this occasional consumer, as he said, to leave the brand in such a sharp deterioration of traffic. Sure theres pressure on certain parts of the consumer and the macro landscape but i think a lot of investors are worried theres something more to it and just citing from a bank of america consumer note saying theres tons of pushback and frustration with 51 minutes of prepared remarks and then cut guidance they cross the board. They dont sense the clients see this as a clearing event just yet. Yeah. Always appreciate a ceos willingness to come on and answer those difficult questions when the stock is thats the low of the day i think, down 16 . But even the Loyalty Program they saw a decline, at least perhaps year over year no but quarter to quarter, yes. Thats why you have analysts out there, still a bull on the stock saying the weakness in the consumer was stark, broad based and still unexplained. The results were poor we can offer no defense and down sizably. We know china is week, we know the macro situation there. Not the only ones to warn about that but whats pricing has always been a headwind for starbucks if they have 8 drinks. Yes, it doesnt make things easier in the challenging environment. But they managed to draw people in, whether its through innovation or drinks or promotions. Dunkin donuts not seeing the same level of weakness, tim horton no. Theyre talking about growing shares starbucks down 16 not inspiring much confidence today. Investors are counting down to the feds latest decision on Interest Rates and Steve Liesman made his way down to d. C. Ahead of all of it what are you expecting its a meeting with mostly down side risk for investors the question is how sharply have the last three months shaped the feds outlook. And what they plan to do about it the worst case is powell and or the fed introducing some possibility of a hike, a moderate risk scenario the fed backs off outlooks for cuts. Best Case Scenario is they describe inflation weve seen as a blip im leaning to the moderate scenario probably change growth to be seen as moderate, a downgrade from last month, inflation remaining elevated, they said last month inflation had eased, wont say that again and the high risk, dont say the goals of low unemployment and stable inflation are moving to better balance. You want to watch that line in the statement. Most likely powell and the fed play for time. The two year has increased most of this year so thats tightened financial conditions without changing rates. So powell and the feds tasks might be dont do more harm here dont create a spike in rates or selloff in stocks that may not be warn r wranted rate cut probabilities, 1 today, 9 june these were 99 before. July off the table hopes and dreams for cuts in the winter, november and december up to 77 i think its best to expect the moderate changes the fed can get away with given the changes in the outlook. There remains a view out there amid a lot of economists that some of the inflation weve seen has been seasonal in wages and prices linked to the turn of the year powell and the fed will likely keep that possibility open while they maintain what they think is a still restrictive rate for the economy they think will cool the economy and inflation. Remember, guys, its a year in july since they reached that peak rate. So the idea of long and variable lags i think powell is going to rely on that do you know your number in the order today yet . No, we dont ever know our number we can be last, we can be first. You just dont know david. Thats a good question because he has to have a lot of questions in mind. I always wondered you do go first sometimes. Sometimes i get to go first im always you know, dont expect that but when it comes, you know, you got to be ready with a series of questions wondering if your colleagues will ask them and if powell doesnt answer, what do you do you ask the same question again. Well tune in, of course, steve later today for you and the fed chair as well, Steve Liesman. After the break, viking cruises is set to go public here at the nyc seeing indications right now 26 to 28. Well talk with the chairman and ceo. That will be a first on cnbc interview ahead of the debut for that stock plus check out shares of djt it had a strong day yesterday down today remember, ive talked endlessly about the bonus shares if the stock stayed above for any 20 consecutive trading days, of course since the despacing its been above that. Mr. Trump got the shares, 36 million. It was 40 million overall but 10 go to his other partners, although hes suing them he got 36 million shares, thats 1. 8 billion worth of stock. Naked short sellers are back today. I hate when theyre naked put some clothes on. 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. Luxury cruise line viking Holdings Begins trading today, pricing near 24 a share implying a valuation of 10. 4 billion. The Company Operates 92 cruise vessels around the world joining us is the ceo and seema modi, who covers the cruise industry your story, first of all, you founded the company back in the late 90s why what makes it so different. Were 27 years old and we founded with two guys, two mobile phones and four small river vessels and today were a real company as i think we can prove by being here on the stock exchange. Youre not just any other Cruise Company why . Were different i think when you live life you should try to do things differently and better so we are very different from the big cruise lines we have a few distinguishing factors. We dont allow children under 18 on board we dont have a casino on board. Its a quiet, serene environment for people up in their anyones and people who want to go to destinations not water slides and the like so a different company. At a time when all the cruise lines are changing their product, adding attractions and activities on board you stuck with this idea that all the ships should be basically identical. Does that strategy work over time it has worked extremely well. And im in the the main thing is you work on something, you design it, get it right in the first place. And thats what we have done and it has a lot of advantages both for the guests, for the staff on board and for the shareholders to give good returns. We talked about the customer youre going after baby boomers, royal, carnival, norwegian focused on all travelers. Talk to us about that market, that demographic how much money is there . Theyre the Richest Group we have around. They have the money, they have the time and its in my belief, the moment you try to do everything for everybody you know what happens, you do nothing well so we are very, very clear focused. And that is reflected in all of our customer ratiratings. The rewards we get and so forth. Doesnt make us as large as the others but attractive to the consumers. 10. 5 billion valuation looking to raise 1. 5 billion in the ipo, what are you doing with the proceeds we have had private Equity Partners in the company. So you can say that most of this is because private equity people by the nature of the business theyre in have to have liquidity from time to time so the purpose of this is liquidity to the private equity people i personally have over half the shares of the company and im not selling one share. We normally ask the cruise line ceos about capacity and how much they want to gamble on future Capacity Growth how do you think about that . We are very fortunate because we look we have our guest book far in advance so we have good indication what the b bookings are going to be of course it is in the future so you dont have any guarantees but i think its a huge amount for the product we have. More and more people that get to middle age, 60s, 70s, 80s even and we have had problems just having enough capacity as it has been and youre benefitting from a demographic boom in that age group. Absolutely. Are there is growth coming from additional routes to the same kinds of countries or new countries overall . Right now with our fleet we cover all the rivers in europe we cover the nile and on the oceans we cover really all interesting destinations but were different because when you talk about the big cruise lines theyre large in the caribbean. We have a tiny sliver in the caribbean. The rest is europe if you want to go to europe, when do you think you should go . Spring . No. You should go in the winter. You dont have all the tourists. And its turned out big for us so go in the winter. Thats how we are. We are contrarians. Im going to keep that in mind thats a boomer. Now youre a public excuse me nothing. Okay. Your investors raising price . We have been fortunately because during the pandemic, we behaved quite well, and we have had the fortunate position of having private equity with us, so we dared to place orders for ships when nobody else dared so we now have capacity coming on stream at reasonable prices so, of course, theres going to be growth in that regard i think prices, you shouldnt gouge prices you should have a fair price, and our pricing is so that everything is included people know exactly what it costs to go on a viking cruise we dont do any additional things when you get onboard. So i think the capacity looks very good for us what happens typically during a recession . With the when the highincome consumer gets hurt obviously, the pandemic was something different, but youve been through a lot of cycles now. We have been. 2 2 9 11 made us, because it was so tough, but we said, what can we do we said, lets be different. Lets market more. So on 9 11, we marketed more the financial crisis, we marketed more. We have a fantastic Marketing Program and we spend much more money on marketing than anybody else and we created demand and we are very fortunate with the guests that we have. Because they are of a certain age and with that age comes also time they have time so its the right group to go after. Of course, we say that rich people tend to suffer less in a recessionary periods, but they suffer a little bit. But our guests have funds. We try not to be overly expensive, but we have a great product. And of course, by being public, as you said, they will demand things from us they will but ive written a letter to shareholders, where i say we will there are some things we will do, but there are four things we will not do, or well continue to do first, we obsess about customers. And i took this inspiration from, without too strong a comparison, to jeff bezos. Second, we trut our staff well, and we have the first call of on st staff. Thirdly, we like to be contrarians. Were in business to create longterm value for our shareholders, and we shall not worry too much about Quarterly Results. Of course, we worry a little bit, but it shouldnt drive us and finally, we said we should be concerned about the environment, where we have been leading the pack in terms of what kind of propulsion we have on chip ships and so forth st st so its a big day for us we appreciate you taking time to talk to us and the viewers about it well watch for the open thank you. Well be right back here weve come back a little bit dow is up 75 the s p 500 trying to fight back its still down a little more than a tenth of 1 well be right back. Everyday chaos. This mothers day, help mom take it in stride with thoughtful gifts from weathertech. From playing in the rain with muddy cleats on the floorliners. To dirty camping reminders in the cargo liner. Spunky toddlers testing out the allpurpose mat. Epic food fights contained by the seat protector. Add a cupfone to secure her phone and just like that. Youve made moms life easier. Order these American Made products or a gift card at wt. Com happy mothers day from weathertech. Watching the chips, as always amd down sharply postresults, Kristina Partsinevelos here at post nine to break down the numbers and the pain that appears to be spreading. The two major reasons were seeing amd down, the first has to do with continued weakness in their embedded business, which is programmable chips and the weakness in gaming those two segments are why many analysts have reduced sthatheir estimates. The other negative driver is the mi300. They had a 3. 5 billion revenue guidance for the year. They increased it to 4 billion. Which is a chip thats going to give nvidia a run for its money. The street was hoping for at least 5 billion with buy side whichsper numbers as high as 6 billion. Even though ubs is saying, this is a buying opportunity. A few other antalysts are sayin the same thing kristina, short on time there, but im glad we got through it i was about to keep going thank you, kristina a lot more market coverage for you strahtheig aad good wednesday morning welcome to money movers. Today, when do higher bond yields break equities . Goldmans Peter Oppenheimer helps answer that question today. Then, as europe achieved a soft landing david herro joins with his top
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