Weve got United Health, bank of america, Morgan Stanley, Johnson Johnson also beating on the bottom line, although different reactions in the markets. Sara eisen sits down to ecb president , Christine Lagarde discussing inflation, Interest Rates and where the central bank is diverging from the fed when it comes to rate policy. Stocks look to rebound again, similar picture in terms of the premarket yesterday. We know how beholding the market is to some of these headlines. For sure. The yields are basically still pushing higher at a pretty moderate pace, but in service of the pain threshold for stocks and the economy, this has been a similar backdrop to what we had late last year except with the economy in more secure footing it seems. We basically unwound this idea, you can have the eem mat lack disinflation, talking about the economy almost in overheat mode. What have we done or accomplished in the markets so far in april . That long streak of no 2 dips in the s p, thats over. One of the longest streaks over above average, thats over. You kind of have this unwind of the momentum and systematic trade that is very, very long going into all this. It is a lot about whether yields impinge. We havent had yields above 4. 6 in the tenyear in the post Global Financial crisis world except for october of last year. October of last year, thats what really was the crucible of the deepening of the correcting. Where was the s p, under 41. It shows its not a onetoone, yields are here, therefore stocks should be here. If it starts to look like its thats whats backed off the stock market. Bofa, expectations for higher global inflation going back a few years and for global growth. The nolanding scenario is at kind of a record high. Thats the world that this new reality has been encountering which is everybody kind of embracing the idea. Not only that the economy was in good shape globally, but that you could have this no tradeoffs world that you dont have to worry about inflation staying higher or maybe the fed being more patient. It seems mostly all good excuses for the market to have what it needed to have which is a little bit of a reset. 10 up in the First Quarter in the s p. Every single time thats happened except for one, the rest of the year was higher. The smallest pullback was 4 , and that was back in the 1960s. In the last 50 years, if youre up 10 in the First Quarter, the minimum pullback is 6. 5 . Were up 4 right now. This time yesterday we were all remarking on how it seems somewhat unusual how strong the market appeared to be given the geopolitical tensions. We dont know what the israeli response will be to the iranian attack over the weekend. We, of course, reversed yesterday. Anything you can share, mike, in terms of when it comes today to day to day. It was almost a net deescalation. We didnt think it was going to spiral from here. Oil is your cue. If oil is steady, calm, backing off, it probably tells you were not being held captive to the geopolitical concerns, but then the bonds started to sell off again. On friday you had a little haven bid in treasuries. That was gone. In fact, it became a little bit more of an aggressive selloff. Were looking for that level where bonds either settle whats interesting is everyone is saying this morning, stocks starting to look over sold. Earnings should be a net positive because they are going to be an aggregate. We kind of know that at this point. As we accumulate more earnings reports, that could create more support. Tactically speaking, do we get over sold, do we have a fear entering this market. Its sort of maybe kind of at this point. Its not as if its a clear picture. Volatility index toward 20, but not quite above 20 yesterday. The thing to look for, when bonds start getting bought because people are worried about the stock market going down and yields have gone high enough that, in fact, it could pinch off growth. A really bad Housing Starts number this morning. Bonds got a very brief bid and equity futures rallied a little bit. Were talking about small moves. Talking multifamily, the print this morning on starts close to a decade low. Permits down 4. Well hear from powell today and barkin and williams, and jefferson should be hitting the tape sometime about now. You want to hear how theyre characterizing the three straight hot cpi reports. I doubt theres going to be a big rethink theyll convey. I do think if they kind of stick to the story of we can be patient, the economy is giving us that luxury, but we do have an easing bias, thats not new news, but it maybe doesnt resolve everything wed like to see resolved. Mike mentions earnings. Its all about the banks. Goldman upgraded as they point out the recent quarter demonstrates the strength of their franchise and what theyre calling an Investment Banking upturn. Morgan stanley and bofa, plenty of good metrics to look at. It would feel like it right now. Both stocks appear tore higher. Certainly Morgan Stanley coming in with return on common equity 19. 7 during the quarter, expense etch fish see ratio at 71 . They say it demonstrates operating leverage. Again, what was a better market environment. We certainly sold goldman outperform, it appeared, many of its peers. Morgan stanley has sort of trudged along as a stock and underperformed the group of the large cap banking sector. Today will be a bit of a different story at least in the early going. As you can see, both bank of america looks to appear up and Morgan Stanley more so on the strength of the numbers. It does seem Capital Markets and Investment Banking was a net positive contributor to all the big ones. Sometimes thats not the case. Sometimes its like who is positioned right. This seems like there was enough to go around. That seemed to be the margin of upside forthe old Merrill Lynch business. A little leakage and credit in bofa. It was expected in the credit card area. Most of the lenders on the consumer side are saying we see this bump in delinquencies, we dont think its going to persist or get worse. It seems as if there was a moment in time from certain vintages of credit balances that maybe are souring. Some of the chargeoffs in commercial real estate. Interesting piece in the journal about big tech not being a pillar of Office Occupancy as much as it was precovid. And then you talk about the consumer. Average credit card consumer fico 777 has been trending higher over several quarters. We heard this from Morgan Stanley research a few weeks ago. It takes the edge off the concerns it completely does. Its really remarkable. I know people have gone back and looked at the pandemicera stimulus and how it essentially cleaned up a lot of consumer Balance Sheets. It gets people out of paying minimum payments and all the rest of it. It seems to have had legs. You do have those things like the Household Financial obligations ratio is very low, even though inflation has been high and people have built up their balances. Thats basically how much of your disposable income goes to service tech. It seems as around tejs its something to be concerned about. When it comes to bofa, its about whereby the yields are, the unrealized losses, the general trends in deposit costs and how sensitive they are to every move in fed rates. Also want to hit unh, one of the larger market Cap Companies out there, some 410 billion. It will be a bit higher as well, United Healthcare group, based on numbers that came in, at least revenue numbers in particular ahead of expectations. This group has been getting hard hit in terms of actions from the government side when it came to medicare advantage, for example, overall. In particular there had been a lot of concern at United Health about that cyberattack. Weve talked about it, weve been reporting on it. Its amazing that in some ways the market is willing to overlook what is a billion dollars in cost from the cyberattack. Impact for the quarter totaled about 870 million. That was 74 cents a share. The company on the Conference Call estimating fullyear impact a buck 15 to a buck 35. That will be roughly a range of about a billion to 1. 15 billion overall for the full year. Those costs are enormous. That said, mike, the Market Reaction obviously to the numbers overall is positive, and even perhaps the fact that that number may have been a bit lower than anticipated, as large as it is. The stock was in like a 20 pullback. You mentioned it, they have been hard hit. It goes to levels first reached 2 1 2 years ago. I think the companys willingness to essentially keep a lot of the guidance steady in terms of medical loss rates, things like that, cleaned up the story just a bit. It does seem as if were going to see where its been on a yeartodate basis. It is, by the way, most of the early dow futures gain you see, is unh. If not all. About 200 points. We do have, i believe, the cfo ceo talking about the cyberattack and offering at least some perspective. Take a listen. This was an unpress tented attack by a malicious actor on the u. S. Health system. We rapidly deployed resources to develop alternative solutions and moved promptly to restore claims and payment services. Weve made substantial progress, and we will not rest until care providers connectivity needs are met and help ensure the uninterrupted care broad impact on the pgss of the company. It was focused on the change health care business, by the way, a company they bought not that long ago. Perhaps they had overlooked exactly how weak their ability to combat cyberattacks was at the time. I dont know. Its remarkable constantly how the market is willing to sort of say this was an extraordinary event, well take it from here and hope the numbers hold up for the rest of the year in terms of the bottom line. Well get to j j as well. The cfo on squawk earlier to come. Still to come, university of South Carolinas Basketball Team is in the building celebrating the championship. Well talk to coach staley and firstround draft pick cardoso. Thats when squawk on the street continues. 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 ameritrade is now part of schwab. Bringing 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. 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. University of South Carolina gamecocks won their Second National championship in three years, as you know, defeating iowa, Caitlin Clark and posting the tenth perfect season in the history of d 1 Womens College basketball. This morning theyre ringing the opening bell at the big board. Joining us, Kamilla Cardoso and third overall pick in last nights wnba draft and South Carolina coach dawn staley. Thank you for your amazing season and incredible interview after the victory. Weve been talking about the ratings and what it means for womens sports. Do you think were in a moment of sorts for Womens College basketball at least . I do. I do think were in a moment ive said this a long time that i think our game has been held back to now its at a point where its busting through the seams. I dont think were going to look back. I think its going to get better and better. What do you think has been holding it back . I think the Decision Makers have held our sport back to the point of maybe because they dont think they would get return on their investment. I think now is the time in which theyre seeing theres a return on your investment when you pour into our game. Has it always have you felt that way, that were in a change by the way, congratulations on monday night. I was looking at the odds for the sky getting the title. It jumped more than any other team on monday. Thank you, thank you. I think our game is improving a lot. I think theres much more to keep improving. Talk about the season and how it felt going from beginning to end and knowing that there were so many eyes on you, especially in the final four. I think we had an amazing season. Since our first game, i knew we had an amazing team and we was going to do great things together. I was proud of every single one of those girls. Does it change i know youve been doing this a while in terms of recruiting and getting women to come to the skooth and the path theyre expected to take in terms of playing to these huge audiences. You actually have obviously the wnba has been around a while. At this point it seems like a more defined path that people can follow. Womens basketball is a sport, and it feels like that now with the good, the bad, the ugly of it. We have it all. We have villains. We have incredible talent in our sport. Its being highlighted. The good, the bad and the ugly, again, is being highlighted. Thats what you have in every sport thats here and present. By that you mean you get celebrated and, of course, the critics come out and the hot takes come out. Absolutely. I welcome it all. I welcome the critics. I welcome people thinking were not a sport. I welcome, because theyre taking time out of their day to talk about us not being a sport. I welcome it all. We also have people who have marveled over our sport and the people that are in it. Im super proud of where we are, and im encouraged by the future that well have. Theres always the money thing. Theres been so much discussion about nil and how agent legalities are compensated. You look at the contracts on monday night and people are realizing, wait, theres still a lot of disparity. Do you think that changes . I dont do nil, so i dont know. I think now were at a point where there are more eyeballs on our game and our sport, so theyre seeing the disparities, either salary disparities i will say the wnba is moving in the right direction. Were still a very young league, a very, very young league, just like the nba. The nba didnt become what its become in 28 years. Think about that. I do think our future is bright. I do think again people are going to look at our sport and pour into it because they see dollar signs at the end of the day. That has to mean more schools that did not prioritize Womens Basketball, for example, are going to invest in it, right . Therefore, the competition becomes harder . I hope every school, every university treats Womens Basketball and womens sports like the university of South Carolina. They invest. They invest in my salary, they invest in student athletes. Youll see theyre getting were here. Were on a channel that probably everybody goes by real quick ive done it, but ive stopped and looked to see what this is about. I hope that this is a time in which youll have more Womens Basketball coaches here on stage because i do think our game is going to be rich with talent and financial gain. You were so gracious in your victory interview about Caitlin Clark. Now shes on snl doing weekend update. In order to create the success youre talking about, you need superstars, yes . Caitlin clark is a superstar. I credit her with raising the level. Were creating more aye balls on our sport, and we need to thank her for that. A lot of people think im being facetious when i say that. Im not. Im all for the greater good of our game. If shes a big part of it, we need to find the next superstar to take the game to the next level along with the storylines like the team we had, undefeated season we need to tell all the stories of the game. Its inspiring coach. Thank you for both here. Congratulations again. Well be watching in chicago. Speaking of able, you can watch the first ever cnbc changemakers on thursday, april 18th. Youll hear from changemakers including the commissioner of the wnba. Scan the qr code to learn more. Visit cnbc. Com changemakers. We continue to watch somewhere around above 4. 67 on the tenyear. Take a quick bakre. Were back in a moment. Dont go away. Rm. Amelia, weather. 70 degrees and sunny today. Amelia, unlock the door. Im afraid i cant do that, jen. Why not . Did you forget something . My protein shake. The future isnt scary, not investing in it is. Youre so dramatic amelia. Bye jen. 100 innovative companies, one etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges expenses and more prospectus at invesco. Com. Hi, im ben and ive lost 60 pounds on golo. guitar music risks, charges expenses and more ive struggled with weight my whole life. Im sure youre like me and youve tried diet after diet. If you want to stop the insanity, try golo. Still to come, an exclusive with ecb president lagarde. Well take a quick break as we continue to watch futures in the green. Busy tuesday setting up. Squawk on the street is back in a moment. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. Watching shares of j j this morning beating quarterly estimates, getting boosts from strong medical device sales. Tweaks the guide for the year a little higher. Cfo on squawk, actually looking at the plaintiffs bar and how thats funded in the future. A little bit of an upside to that revenue guidance above mid singledigit which is certainly welcome. It did seem as if the street was looking for more on the medical device side. Theres still headwinds. Fx might be an issue with the dollar being as strong as it is. Now cheap stock, under 14 times earnings, rarely is traded that inexpensively in the last 8 or 10 years. It shows you its in that zone where people are assuming not a lot of growth. It sort of is what it is. Its much more about i think whether it gets into that quality portfolio. They raised the dividend for like the 63rd straight year, somethinglike that. 3 plus dividend yield. It feels as if its not accelerating but certainly hitting its marks. You can never tell what chart were looking at. I think that might be three years. That does show earnings have moved up somewhat and, therefore, to your point, multiple continues to move down. This stock has done nothing for at least three years, and a bit more than that. Yeah. Its kind of where a lot of pharma was until really several months ago. All the glp stuff came through and other tough drivers like merck has also been a good performer. Its left j j behind. The underperformance has dropped off a lot of screened for some managers. Lets get the opening bell. At the c nfrjtnbc big board. University of South Carolina womens Basketball Team. We just spoke with coach sailly and Kamilla Cardoso. Bloomberg media, also, as we check opening levels here. As mike mentioned earlier, a lot of the dow game will be encased in unh. The dow is mostly about unh. The s p is at an interesting spot, above 5,000 here. Folks are saying areas below 5,000 where maybe that would contain the initial pullback. I talk about how we go back in time, not just down in price. Coming into this week we were back at early march levels when powell had said we see our way clear to a rate cut pretty soon. We had a perfect jobs report on march 8th. You check the premises along the way. Where we are is the day of the nvidia pop after its earnings. You go to this moment in time where you said a lot of stuff is working all at once and see if you get some support by the idea that on the earnings side at least, the ai themes, nothing much has changed, certainly not for the worse. Speaking of things that havent changed for the worse, teslas stock price continues to deteriorate. Its worth spending a moment on. This is the very early going. Somewhat mixed picture as we start with trading. The s p 500 lets call it flat. Nasdaq is already down. Tesla shares down 3. 3 . You can see it right there. Its below a 500 billion market cap for the first time i can remember, mike, in some time. Half a trillion has been obviously its been more than a trillion dollar market value and hit a high of 1. 2 trillion at one point. We discussed ad nauseam the issues facing the company in terms of demand for its product which seems to be at least slowing growth in terms of overall demand for evs, but even more so the challenges that tesla faces in the likes of the chinese ev makers, both in the domestic market in china but also important markets that tesla competes with them, exporting from its own shanghai factory which is 50 of its overall production. Its not just the layoffs yesterday. Many times stocks react positively to layoff news. That wasnt the case. But also the departure of a couple of Key Executives with long tenures at the company. Absolutely. It seems as if first of all, its a lot of assumptions that got into the valuation, have been challenged. Yes, its the idea they have a head start thats unassailable and theyll be able to charge premium prices and keep ramping vom volumes. Earnings estimates are down 30 for this year and last year in the last five months. For 2025 theyre not supposed to earn four bucks a share. Youre 40 times next years supposed earnings. Jpmorgan has an underweight on tesla. They say the retrenchment in employment and capacity is reaching implications for the hyper growth narrative still embedded in teslas share price. Thats whats being bled out of this valuation. Theyre going to talk about full selfdriving, theyll talk about the software elements, the subscription base. Its not enough to overcome what seems like demand problems for all categories of evs that theyre not immune from. That was the other reason that i think the pretty hefty layoff announcement did hit in a negative way which was you can no longer say this is a supply issue. Its obviously demand constraint, not supply constraint. Every five years we have to retool for the next growth cycle. Yeah. I guess the question is what is they havent done a great job of filling the forward pipeline of these models are coming out, theyre going to be compelling. At a different price point. Yeah. Suggesting material downside risk. Thats the jpmorgan note. Revenue could decline 13 yearonyear for the coming quarter. Well get those results next week. The other story out of electric which broke the layoff news yesterday, now saying that despite musks denials, that they have, in fact, put a 25,000 car code named the nv9 on the back burner. August 8th is still a ways away. It is true. I dont know if hes trying to massage the details and say that the robotaxi initiative is still alive, and that might be the same platform as the 25,000. The point being, in the here and now what we can visibly observe in terms of this quarter, next quarter and the direction of earnings estimates, its just a tough sell. Now, i pointed out before, this is right where, you look at the chart there, where you actually have found some buyers around the half trillion dollar market cap. Well see if that matters in the short term as it gets a little stretched to the downside. It wouldnt be a 52week low until 15 the 2. 37. That said, upgrade of rivian at ubs and more continued data on hybrid growth, q1 growth up. The rivian upgrade seemed to be, its down enough. Its 70 off its highs, and lets not be greedy about the negative call at this point. Wasnt there an up graepd of gm today as well because of the general story, the steady state demand, plus the buyback. Obviously, if this perception that slowing investments into lower return evs is now the assumption, it gets a little bump there. Rivian shares, of course, that company at one point did have 100 billion market value if i recall. Briefly. Briefly, over 130 a share immediately after its it became public. There you go. 82 decline over three years. Still an 8plus billion dollar market value. Theyre meeting delivery estimates at least at this point. You see them around, the cars. You see them around, yeah. Obviously the large amazon contract remains an important component of overall sales for them. For sure. Got some initiations to work with today. Another one on reddit as bofa initiates neutral, goldman initiates ge vernova i think with a buy. Draftkings, goldman again with a buy. Certainly talking to the coach this morning about womens sports and rights and the interest that that naturally feeds into betting, for example. Draftkings up a couple percent on that. I feel like theres just this general sense out there of maybe weve reached a point with Sports Betting whether its so competitive or weve had such this buildout and you have all the wave of legalizations that maybe its going to sort of plateau a little bit, hasnt really been the case. Draftkings continues to get its share. It still remains to be seen if this is going to be an attractively profitable business long term. Theyre making it up on volume at this point. As long as the sort of overall total value bet numbers keep going up, it seems like the story remains intact. I do want to mention shares of live nation this morning as well, a new story out yesterday from the journal saying that antitrust authorities at least may be moving towards an action against that company, a lawsuit, antitrust lawsuit. There you see it right there. Live nation owns ticketmaster. At the time that deal was approved, i think there were many surprised, perhaps, that it was approved, given there was always a concern about the issuance of the tickets and the control of that market and obviously the company that also controls the venues as well. That said, theres been a Consent Decree. Theres been a monitor. Jumping to the conclusion that the doj is going to move to file a lawsuit may be a bit premature. Certainly one would expect there to be conversation, as there very well may have been. With a Consent Decree in place, its not exactly clear, mike, what the ask is here in terms of the donl. I dont know, it wasnt clear specifically from the journals reporting at this point. But the stock is taking a bit of a breathe ir here. It had been actually looking down more in the very early going. It may be a while before its clear. If they were to bring a case and try to break the company up, that would be a years long process. Sure. In terms of what the ask is, presumably they look at the exclusive contracts for all the different venues, and they have that kind of vertical lock on the business. Yes. They have to prove that theyve been precluding real competition as a result of the significant market share. They had a consent that went along with it. Have they been violating it in some way . The company saying, even if you have complaints, its a monitor that exists that you call and interact with somehow. I do think that while investors may be and have been waiting for this as a possibility, again its not clear exact think what theyve done wrong and what is going to be done to change that behavior. Maybe, did taylor swift call the monitor line. That obviously put them under the microscope, including clearly the issues they had in terms of the demand for her tickets. The stock came off the boil to some degree. It was the leading, kind of reopening the economy. The pricing for experiences are stayed high. So its held most of the pandemic bump in the stock, just because the underlying business has been so good and everyone kept waiting for people to get enough of going to events. It hasnt happened. Its all about services. It, in fact, shows up in inflation rather than other parts of the economy. The rick rieder chart. Have you seen it . Lists price of nfl tickets. Was it yardeni that said the price of an adidas or nike sneaker is virtually unchanged wasnt it larry fink as well . Was it with fink on friday . Yeah, it was fink. Whereas the price of concert ticket or sporting ticket yeah. Thinking of what yardeni said about crude. The s p 500 going negative even though oil is down. Looking for information out of the israeli war cabinet, meeting for a third day in a row. Various reports about them attempting perhaps to make a response that it doesnt involve casualties, maybe a cyberattack, nothing but speculation at this point. Yardenis point was if, in fact, there was a serious geopolitical disruption to crude that took it back to 128, the 2021 highs, that would be reminiscent of the thing weve worried about the most which is a double top in cpi for sure. Whenever theres an oil shock recessions have tended to be preceded by a doubling of oil prices on some level. Thats what that would be. Theres all kinds of reasons to worry about that. Also, theres some people saying, is there something in the geopolitical events that has the ie makings of a more accommodative fed . Is that going to be the cover story for why the fed can get a cut . I dont think you ever want to wish for those circumstances where that would be what we get. I zee crude down, stocks down. There is an unwind going down. Vast majority of stocks are lower again. Nvidia, microsoft up, unh holding the indexes together. Looking at 85 of New York Stock Exchange volume to the downside again today. Thats been the rule, that when yields are up, no more broadening of the market. Small caps underperform, the big defensive quality floeth stocks. Morgan stanley is the only gainer off of earnings again. We discussed it a bit towards the top of the program. Bank of america shares down 2. 5 . Jpmorgan down. In this earnings season at least, the reaction to jpmorgans quarter was the one most notable with the stock declining more than it had in a very long period of time. You can see bank of america shares down 2. 6 . Overall, mike, the quarter looked okay, but the financials in general have been i mean after what was a very strong First Quarter, have not looked good these last few weeks. No. Theyve been stuck. They are right at the nexus of that, the economy can stay strong and were going to get the fed to ease kind of idea. If that starts to take on some water, then i do think financials as a group not as well positioned. Jpmorgan i just think has so much air under it, such a strong stock. Jamie dimon says we dont want to buy a lot back at these prices. Costs when up when it wasnt expected. Thats a dialing back of the enthusiasm. The stock at the end of the day yesterday did not end up sharply at all. Meantime, still to come, exclusive with ecb president Christine Lagarde. Whats her time terrible for cutting rates if any . Tenyear well ak above 4. 6 this morning. That may explain the lack of enthusiasm. Powell at 1 15, williams 12 30, barkin at 1 00. S p holding on to 50. 50. Stay with us. I have a business idea. And it just might change the world. But heres the thing, i cant do it. Alone. So, are you in . Im in. Nothing else to do. Yeah, i dont know. Um, i need to speak to my agent. snoring i think creeds out. 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. Hi, my name is joann, and i lost 75 pounds on golo. Cla cpas, consultants, and wealth advisors. The other times ive lost weight, i was tired, run down. With golo, you feel great as you lose weight. I have enough energy to exercise every day. energetic music fades new projects means new project managers. You need to hire. I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Welcome back to squawk on the street. Our sarah ice innings en is in d. C. Today and has a big exclusive. Sara, take it away. Exclusively in washington, d. C. Is the president of the European Central bank, christine lag lagarde. Welcome. Thank you so much, sara. Happy to be here. Youre in town for the imb World Bank Meetings as always. Interesting timing because geopolitics are front and center. These meetings come after the iranian attack on israel. I wonder if some of these events change the Economic Outlook for you at all or impact them. Geopolitical developments have been with us for a long time. Certainly from our perspective in europe, the developments started in a harsh and difficult way with the unacceptable invasion by russia of ukraine. That was a major Geopolitical Development that had significant economic impact, particularly on the energy front. Then, of course, we had more and more. Not really often commented upon, like sudan and yemen. Obviously since october 7th, it has been a succession of Geopolitical Developments which have a bearing on economic activity. I think it has a bearing on, number one, Consumer Confidence and confidence of investors. Where are we heading . What are the developments . What impact will it have . It also has an impact on Commodity Prices. Its not been very significant in the last few weeks, but obviously those Geopolitical Developments matter a lot. We factor them into our forecast, our modelling as much as we can, and we have to constantly monitor and see how it develops and what impact it has on all these fronts that i have mentioned. On commodities, oil has been affected. We watch oil, of course, with iran. Brents are trading around 90. If it spikes higher, if theres an escalation, does that become a factor that changes your inflationary outlook for europe and potentially your policy . We will as you say, we are monitoring very closely the most recent reaction in the last few days has been moderate. It went up, it went down, but its a moderate movement. We have gone through the period of significant hike of oil prices and we will be informed by that episode. I think that, you know, since the particularly the latest development in ukraine and the Energy Crisis that europe suffered in particular on oil and gas, have change the landscape as well in terms of sources of supply, in terms of dependence, independence, level of inventories, relationship with other countries, and i think the situation will be different from what it was then, but it does impact and does impact across the world, not just the area. Its not just oil thats been rising. Sure. Weve seen prices from aluminum to cocoa to copper, which is happening at a time where overall inflation rates have been coming down. Yep. And i wonder how confident you feel about that level continuing to fall in the wake of some of these rises in commodities . You know, i think on commodities we cannot be brought it cannot be a general assessment. We have to go sort of sector by sector by sector. When we look at food, for instance, whether processed or unprocessed you have the first difference, and then cocoa has been a very has had a significant impact, but you also have to, you know, drill down, taking out cocoa, what is actually the inflation on food. Now you cant leave cocoa, and all the other elements have to be really measured in that basket of food elements, but all Commodity Prices have an impact and we have to be extremely attentive to those movements. Clearly on energy and on food, it has a direct and rapid impact. The market is thinking that youre going to cut rates in june. Youve signaled june. Is that still the plan . You know, we are we are observing disinflationary process that is moving according to our expectations, and as i said in our latest press conference after the Monetary Policy decision that we made to keep rates on hold, we just need to build a bit more confidence in this disinflationary process, but if it moves according to our expectations and we dont have, you know, a major shock in development, we are heading towards, you know, a moment where we have to moderate the restrictive Monetary Policy that we have applied certainly since september when we decided to hold rate and to keep that restrictive Monetary Policy. Time, subject to the no development of additional shock, it will be time to moderate the restrictive Monetary Policy in reasonably short order. Sounds like june. Thats your next meeting. How do you think about the policy path from there . Every meeting gets a cut . Every other meeting . Ive been extremely clear on that and i have said deliberately we are not precommitting to any rate path. Why is that . Because number one, we are data dependent. Because theres huge uncertainty out there. We just spoke about Geopolitical Development. We have to be attentive to those developments. We have to look at the data. We have to draw conclusions from those data. We will continue to apply the three key criterias that we have signaled, which have served us well. Its the inflation outlook, the underlying inflation, and its the strength of Monetary Policy transmission. So we will at each and every meeting, particularly when we have projections, but not necessarily only when we have projections, we will look at the evolution and whether or not those data under the three criteria headline if you will, confirm our perspective or not. Thats what we will do. Market expects three this year. Is that reasonable . You know, i wouldnt comment on that because if you asked me two or three months ago, we were expecting more than three, and i think we are better off from our central bank perspective. Of course, looking at what they anticipate, because they are big boys and they too many boys but big boys always. And they run their models, observe things, they take risk, they assess, you know, term premium, but we have to be data dependent. We have to look at our own work and we are very steady and focused on what we are seeing and we apply judgment at the end of the day. What is produced by these numbers and data and model projections, have to be taken into account with judgment on the part of the governors. Ill try it one other way, which is how restrictive do you see rates right now being for the economy . I think we have said that we believe that they are restrictive enough and they are producing an impact. Waesh saying by the same token as data comes in in the next couple months april and may will be key moments for data, our confidence will grow that this has been Strong Enough and we can begin to dial down and moderate the restriction imposed by Monetary Policy. On the inflation front in particular, 2. 4 inflation, youve come a long way down. What is the path to 2 look like . Bumpy. It will be you know, i think its important to actually understand that because we have had this very regular, steady decline in the last few months, you know, 2. 8, 2. 6, 2. 4. I have no idea what the next one will be, but it might not be 2. 2. Its not linear, and given the base effects that will be produced by very low prices of energy, a year ago, we will have a bumfypy road. Rates, inflationary rates, might go down, might go up a little bit. They will fluctuate around this line that, for the moment, is going downwards and as i said, unless we have major shocks that would disrupt that expectation, we should continue to be directionally down to our 2 target, which we believe we will reach sustainably in mid 25. Thats the expected path of inflation. Why do you think that inflation has come down farther at this point in eurozone versus in the u. S. Where were still in the 3s . I think were talking about two different two different economies, two different series of shocks, and a different kind of inflation. But what is most different between europe and the United States of america, is the behavior of the consumer and then we can go into why that is. I think what we observe is, european consumers that are very cautious, that continue to save significantly when you look at the saving rate in europe it is high and higher than precovid. When you look at the American Consumer the American Consumer consumes and the level of savings overall is less than what it was precovid. Thats a major difference. If you go to the root of why is that . Fiscal . Its fiscal. Its energy. And its the natural tendency of the American Consumers to have confidence, to spend, not to save so much. But fiscal has played a role. It was significantly high in this country, and it was targeted to households, to consumers, so when people got a check in the mail, they really had money in their hands that they could spend and as a result of that consumed. You said at the last meeting that you are not fed dependent, youre data dependent, because the view on the fed and what were hearing from policymakers is, its going to be a little bit longer before they think about cutting Interest Rates. Do you not worry about a gap, a divergence in policy, between these two major Central Banks . Well, let me explain what i meant by we are not fed dependent, which i think is absolutely correct. There was a debate about the cpi numbers, which came out just very briefly before we had our Monetary Policy decision, and suddenly everybody fretted about that number and the assumption was, well, if the fed is going to be delayed, which nobody knows and i would certainly not make pass a judgment on that, of course, its going to impact the ecb and the ecb will be delayed. We are data dependent, so our data came down in march. We have had a little bit of data in april. But its on that basis that we have to make our decisions, and not on the basis of any central bank in the world, be it the fed, which is the largest and with the largest economy measure of gdp. We cannot make decision on that basis, hence, we are not fed dependent. But what i will say, the evolution of inflation, the evolution of Monetary Policy in any of the large economies that actually have a bearing on the global activity in the world, of course, we take into account, and we take that into account in our own measurements and in our own models. It does find it ways in how we forecast. As i said, one of the three key criterias are inflation outlook and the other two, but inflation outlook, and that, of course, receives and is informed by multiple data, including what happens in other countries. And also currencies. I wonder how closely youre following central bankers dont talk about currencies as a matter of principle because we dont target currencies. Its a transmission mechanism. Yes. It does have an impact on inflation, so we have to be very attentive to Exchange Rates, to the value of currencies, to the value of the euro, and how much it impacts inflation in terms of imported inflation, for instance. Trade is affected also. If euro goes back to parody against the u. S. Dollar, is that a good or bad thing for europe . As i said, i dont want to comment on Exchange Rate of any particular number. Youre seeing whats happening with the japanese yen, for instance, which has been plummeting because of the huge Interest Rate differential between japan and the u. S. And i do wonder if that factors in and would be a concern if you do go ahead of the fed in cutting rates . We will be driven by our data. We will be driven by our analysis of the situation and we will be targeting the sustainable 2 target we have which will determine price stability. This is our mandate. We are singlemindedly focused on the 3 target and price target. Were looking at lots of other things, including, you know, inflation, including the volume of trades, including the productivity numbers. The multiple data that find their way into the world that will determine. European Central Bank President Christine Lagarde talking exclusively with our sara eisen in washington this morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with david faber, live here at post nine of the New York Stock Exchange. Alongside sara live in d. C. After that fascinating interview with lagarde which well talk about in a moment. Stocks for the most part steady. S p down a few points. Dow supported by unh. Up 100. Our attention around 4. 675. Sara, wow the American Consumer consumes. David and i were saying it back. And the european consumer saves. I was a little surprised. I thought she was going to pin it or month fiscal stimulus as to why here in the u. S. , were seeing higher inflation rates and higher growth rates. Heres great chart to just show you the difference in what each economy is seeing in terms of inflation. So europes inflation or disinflation has come all the way down to 2. 4 . Thats why she feels confident in talking about the next move being a cut. I thought the headline on that front is, ecb will cut rates soon barring any major surprises. She did not talk me away from the next meeting which is june. Were viewing this process moving according to our expectations and if theres no additional shock it will be time to moderate restrictive Monetary Policy in short order. If you see on that chart the u. S. In blue, is in the 3 range. Europe in the 2 range. The u. S. Has flared a little bit this year and thats the gap, and she pins it on the American Consumer. We talk a little bit later and youll hear in the next hour, carl and, david, on money movers about what shes expecting for the european economy which hasnt really grown much, it hasnt fallen into recession, we also talk about and youll hear in the next hour the Balance Sheet which doesnt get a lot of attention, not the sexiest topic, but its important right now as it relates to the liquidity backdrop and how shes thinking about what the size of that Balance Sheet should look like. Im excited to share that in the next hour of money movers and our entire interview 8 00 p. M. Eastern, a leader special, and, david, i talked to her about everything including her own leadership and how she became a central banker. Shes a lawyer. She was leading a major american law firm. She was a finance minister of france. She was the head of the imf. Now shes in this eightyear term leading the European Central bank until 2027. Yeah. She has had a somewhat unique but certainly incredible career to your point. I didnt know a number of those things, so i look forward to the longer interview that isnt just going to be necessarily will be focused on, but not necessarily all about ecb policy. What else do you got for us this morning . I know youre in d. C. But still prepared beyond lagarde here in terms of things we should be watching certainly from a macro perspective this morning, as carl said, we continue tokeep a close eye on that 10year in particular. Watching the 10year and the fed speak because we dont have Major Economic data releases for the rest of the week. We got some housing numbers today, but as far as it shifting the view on policy and rates, thats really the topic de jour mongts investor community. We did get comments from mary daly a Voting Member at the San Francisco fed. The worst thing she says to do is act urgently when urgency is not required. Very different tune here than Christine Lagarde. We have to be thoughtful about not getting too confident that the latest sticky inflation is an indication we are Going Forward and cant get to confidence she says on the other side basically, that its necessarily definitive in terms of what they should do. The lack of urgency, there we go, the projection that inflation will continue to come down is going to materialize, that we dont have to be urgent. Its a continuation, and now theyre all singing from the same hymn book of the backtracking of okay, were moving into a rate cut. Theyre not saying that theyre not going to be cutting rates. Theyre saying they dont have to be urgent about it, and they dont have to be immediate about it. I think there was less of that than say what were hearing from europe and the ecb. Just because, you know, europe is on the mind with the Christine Lagarde headlines, if you look at the gap between u. S. And europe gdp that does tell the story of the u. S. Consumer consuming and the european consumer saving. Its also just interesting we talk a little bit and hear about it in the leaders interview, about where the growth can come from in europe. Why doesnt europe have a silicon valley. Why dont they have a Single Market yet. Would that make the economy more dynamic and encourage more investment and more capital . Those types of so Bigger Picture issues that maybe should be part of the more immediate conversation about growth right now. We also talk about china with some of the numbers out of there today and how thats feeding into the export economies with places like germany. We did get gdp and Industrial Production number out of china. The continued focus is on what is an economy certainly led by exports, by industrials, as opposed to anything having to do with domestic consumption at this point despite the hopes that were dashed, the Chinese Consumer would step up in a bigger way after the lockdowns ended some time back. And thats a savings rate story. High savings rate. Larry fink of blackrock talking about that and the chinese are saving, theyre not consuming, and now there is this chorus of policymakers and ceos, starting with treasury secretary yellen in beijing last week but ecb president lagarde saying that the source of the growth should come from consumption and they should pivot that economy and ultimately that would be better for Global Economic growth. Look, its a fascinating time. Geopolitics how thats going to Impact Global gdp Going Forward. The fragmentation, a lot of discussion about that too, carl and, david, about moving supply chains closer for security reasons, trade barriers and tariffs, which is, obviously, front and center because of what former President Trump has been saying he will do if he becomes president again, which is increase those kind of protections and restrictions. Right. Something else front and center this morning, the financials in particular, we got results from the likes of bank of america and Morgan Stanley. Theyre moving in two Different Directions. You can see it reight there. Results are down, but Morgan Stanley a bright spot. Over to leslie picker who has been tracking that action and shes been on the Conference Calls and can tell us whats going on here. Hey, david. Yeah, that Morgan Stanley call still ongoing now with the market very receptive of the quarter. Toward the top of the call, pick addressed what he called, quote, client onboarding and monitoring in the Wealth Management business that was a nod to last weeks report in the wall street journal that multiple agencies were probing the way that Morgan Stanley vets clients at risk of money laundering. The results in the quarter speak for themselves, and he said discussions with regulators have been ongoing. This is not a new matter. Weve been focused on our client on boarding and monitoring processes for a good while. We have Ongoing Communications with our regulators, as all the large banks do. As james said in january, we want to ensure we continue to be world class in every aspect of this growing business. Pick also said the firm has been spending time, effort and money for multiple years and the costs associated with this are largely already in the expense run rate. This is picks first full quarter as ceo. When he also spoke about what he called Building Momentum in Investment Banking, both in m a and underwriting pipeline. Additional regulatory clarity and a sustained Capital Markets recovery should have a Multiplier Effect across our global franchise. Further unlocking the unique power of our integrated firm. On the bank of america call earlier, there were several questions about Net Interest Income Going Forward. Thats the profitability metric for loan making. Executives on the call expect nii to be a little changed in q2 which they expect to be the low point for the year and grow again in q3 and q4. The cfo saying at the end of q1 there were three rate cuts expected starting in june, but if there were fewer the firm would benefit from that. That isnt necessarily an upping of that guidance thats kind of in line with what theyve said previously so perhaps the market was hoping to see a little bit more in terms of that benefit and thats why the stock is down about 3. 9 right now. Guys. I was going to come back. That is the main reason you think, leslie . Its not quite the performance or lack of performance that we saw after jpmorgans earnings release, but nonetheless, thats not reat. What else, anything else at play here . Again, the numbers did not disappoint, at least in terms of what they were expecting . When the numbers came out before any kind of guidance was given or reiterated, the stock was doing fine and had been solidly in the green for most of the morning. It was kind of that hammering of what to expect on the Net Interest Income front. Its also worth noting that bank of america had sequential growth in Net Interest Income, kind of a divergence from some of its peers, but a lot of the street was looking for some kind of a boost from this higher for longer environment. However, bank of america, as Erika Najarian of ubs would call it, in this rate trap dynamic where they are benefitted by higher rates, but they have these underwater securities on their Balance Sheet which can put together some kind of a drag and that number ticked up to 109 billion in unrealized losses this quarter as well. Higher rates are good in some ways for this bank, but also can be a drag as well. Leslie picker and a whole lot more on bank of america this afternoon. 3 00 p. M. Eastern. Ceo Brian Moynihan will be joining me on closing bell. As we head to break our road map for the rest of the hour. The pulse of Health Care Earnings with results from dow members j j and United Health taking shares in Different Directions. Netflix shares have outperformed this afternoon, but, of course, can the gains continue is the key question for investors. Well talk to one analyst making a new call ahead of the earnings well get later in the week. Chinese stocks in the cross hairs of lawmakers. The exclusive is cominup ag s a big show still ahead. Squawk on the street is back after this break. Youre probably not easily persuaded to switch mobile providers for 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 turn to the impact of middle east tension in the oil markets. Our next guest believes oil prices will ease lower. A cnbc contributor joins us this morning, john, great to have you. I guess that would be taken as a welcome sign. How confident are you in that call . What needs to happen to make it happen . First of all, i think a lot of the least angst and concerns have been priced into this market. Look, i mean, brent is hovering around 90 a barrel, carl. A lot has been priced in. Also, too, the uptick in demand that weve seen from china, some of the data has gotten better, although theres plenty for data as well. Thats pushing against any further increases in my view. So it shouldnt take much. If we can get the situation between iran and israel to calm down here and for a potential peace deal to finally be brokered with respect to gaza, we should be all set here for prices to head lower in time for the driving season. Yeah. Memorial day. Would that allow the administration the ability to afford or avoid either producers or talking about the spr . I do. I think the administration is very on top of the oil market for obvious reasons and also, too, they didnt want to sort of rattle the market with their spr releases. One second, carl. Im sorry. No worries. Still got me, john . I am here, carl. Sorry about that. Yes. I do think that the prices should ease sufficiently that administration can stay intact on trying to fill the spr, refill it, and also, obviously, not tap it and not have to draw upon all that. I think prices should, again, ease as some of these situations come off the oil. Although there is always the possibility, of course, that israel will respond forcibly to the iranian attack and that we will see a significant escalation, if, in fact, that occurs, what does that do to your forecast . I mean no doubt about that, david. The market, thats why brent is at 90 a barrel, going back over 100 is a chip shot from here for sure. I think we certainly rally. I mean big buying in the crude market last week around earlier in the week, tuesday, wednesday, as a result of, you know, word coming into the market about what the iranians were finally going to do. Yes, its very much a cliff trade at the moment. Do we go much higher or do we go somewhat lower. Thats what were staring down. I think people are overreacting to a degree, to the situation in the middle east. Iran, obviously, doesnt want to provoke an israeli the israeli response and the israelis are getting pressure not to do so. If you play thats way, thats what oil market seems to be treading on right now, steady to lower should be the direction. I wonder about if its higher, if its higher for longer, john, if the duration of this conflict and war is leading to any rethink of how long prices might stay elevated and what youre seeing in the forward curves around that point . Interestingly, the forward curve is indicating that prices in the back of the second half of the year are appreciably lower than what we are right now. However in the Commodity Markets that curve structure is indicative of a tight market, of a market thats very vulnerable to upside moves, so thats what the concern is. John, appreciate that and well watch it closely this week as we see crowd below the flat line today. Thanks. Thank you. Speaking of tensions in the middle east, lets get to the latest on the ground. Matt bradley joins us live from beirut, lebanon. Matt . Yes. So what were hearing here in beirut is, you know, the thud, the prospect of war in the background. Now the situation here is not so dire. This is a country that is, unfortunately, quite used to violence, but there has been those warning signs from the israelis. Nbc news was told by the israelis that there could be an imminent israeli counter attack to the iranian counter attack that happened over the weekend. This was, by the iranians, a response to israel striking one of their diplomatic buildings, a consulate, in damascus, a couple weeks ago, and so theres been a titfortat and were about to see the latest titfortat within the next 24 hours if the israelis are to be believed. One of the troubling things weve seen here is that the israelis sounds like might not do a reprisal attack against iran itself. That made that such an unprecedented move attacking from iran itself by the Iranian Military against israeli land itself. There was that this fight that is normally done between proxies and other militant groups was not done directly between nations for the first time in decades. It looks as though the israeli attack, again if the leaks were hearing are to be believed, might go against iranian proxies. That would put lebanon in the cross hairs. Hezbollah, the main dominant force, is waiting for more of a fight, but weve been seeing Something Like a war already going on over the border between southern lebanon and israel. It will take a lot to see that increase any more than it already is. Weve seen hundreds of People Killed in fighting across that border. If it werent for whats going on in the gaza strip and israel that would be a big headline for the past several months but it has been dwarfed by the huge loss of life weve been seeing from the hamas attacks on october 7 and then the more than 30,000 palestinians who have been killed, most of them civilians, according to the Gaza Ministry of health over the last six months. So this is a situation that really does risk an internationalization of the conflict and thats why were seeing frantic diplomacy on all sides trying to tamper emotions, trying to keep the israelis from launching some kind of attack that could tip this over the edge. A lot of this is about israeli domestic political concerns. Benjamin netanyahu, the prime minister, is facing calls from the right wing of his already very right wing government, demanding some sort of attack, demanding not to let irans huge Missile Barrage go unanswered even throw it caused very little damage. Again, this is a very good moment for all sides to step back from the brink, but it looks as though we might not get that lucky. Thank you very much. Well watch the tense northern border. Matt bradley in beirut, thanks. Were going to continue to watch that and still to come, fresh earnings out of two dow components, United Health care and j j heading in opposite directions this morning. Stay with us on squawk on the street. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Welcome back to squawk on the street. To health care, dow component the out and shares moving Different Directions on the back of those numbers. Bertha coombs has been covering it since early this morning. Good morning. Hey, carl. J js adjusted earnings of 271 per share solidly beat expectations. On the top line revenues of 21. 4 billion were in line. The quarter benefitted from a big jump in medical device sales. Weve been hearing about that from the insurers a lot of people are getting these transplants. Med tech was below consensus. J j cut its guidance, particularly on the top line a bit below expectations. On the other side United Health big beat on the top and bottom line. Adjusted earnings of 691 per share, nearly 100 billion in revenues, despite the impact of the change health care cyberattack which made for a complex report. On the call the ceo said United Healths scale has really helped them provide support for providers during the outage as theyve worked to get billing and Payment Systems fully restored. Extraordinary example of really the resources of usg and the support of many of the Biggest Companies across america in the tech environment coming in to help recover from this particular attack, which was, you know, straight out an attack on the u. S. Health system and designed to create maximum damage. Now one of the big takeaways for United Healths peers from the report is the company sees medical cost trends still high, but stable, notwithstanding all the disruption from the claims processes. The Health Insurance giant side posted a medical cost ratio of 84. 3 , how much premiums theyre paying for medical costs that includes a 40 basis points impact from change disruption, which is well below what they saw in the Fourth Quarter of last year having a positive effect for the likes of humana which has been struggling with high costs amongst seniors. Were seeing it across the board. Thank you. The 6 move good for 170 dow points. Such a weight on the Dow Jones Industrial average. After the break, is the china rebound real . Fresh Economic Data there overnight. Well break down the numbers after the break. A big earnings interview next hour on money movers. The ceo of pnc financial, the shares falling 3 on a revenue miss for the quarter. Bill demchecks read from the ground across the economy and what theyre seeing on rat aess well in the 11 00 hour. Dont go anywhere. [city noise] Investment Opportunities are everywhere you turn. Do you charge forward . Freeze in your tracks . or, let curiosity light the way. At t. Rowe price, were asking Smart Questions about opportunities like clean water. And how clean water advances can help transform our tomorrows. Better questions. Better outcomes. T. Rowe price my name is oluseyi and some of my favorite moments throughout my life are watching sports with my dad. Now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. Giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. Welcome back. Im Pippa Stevens with your cnbc news update. Jury selection continues this morning in Donald Trumps hush money trial in new york. No jurors were selected monday. The former president is required to attend the trial, which could last up to eight weeks. He has entered a not guilty plea on 34 counts tied to a payment he made to adult film actress Stormy Daniels at the end of the 2016 election cycle to cover up an alleged affair. The house will send its articles of impeachment against Homeland Security secretary al han be dro mayor kags to the nate today, according to a spokesperson for mike johnson. The move will kick off a trial in the Upper Chamber expected to end with democratic led chamber dismissing the issue. A fire broke out at the koppen hager stock market. Emergency responders and employees pushed to save large paintings from the building. The flames caused the buildings roof to collapse and sent the famed spire tumbling town. Its not clear what started the fire. Carl . Terrible images. Thank you. Ill take it. Pippa stevens. A host of new Economic Data out of china today raising questions about the recovery narrative there and ecb president Christine Lagarde just told me she isnt sure where the economy there is going. Have a listen. China is no longer the single well the largest supply and trade partner for the u. S. , for instance, but it is still a significant trade partner for many countries. That export engine is slowing down. Massive infrastructure project, that engine is probably slowing down as well, and it remains to be seen how much focus and push there is on consumption. Question mark, i dont have the answer. That was in response to a question i asked her about whether weve seen peak china in termsof growth rates, which she admitted those days of 8 growth, really do seem like theyre behind us. Lets get to our eunice yoon on the ground in beijing with the latest on how todays data is being framed and how we should look at it. Yeah. Thats right, sara. It looks increasingly as though chinas answer to that question might be that they should crank up the factories and sell overseas because thats really what powered the q1 gdp growth and put in the numbers that are a surprise to the upside. They came in at 5. 3 , versus an expected 4. 6 . The march data, though, raised some doubts that therecovery could last. The retail sales numbers, the Industrial Production both missed. New home sales and new home prices i should say fell at their fastest clip since 2015. The investment figure for the property sector was down by 17 from a year ago. Sales were down by 24 from a year ago. Property sector very important to drive the economy forward. Fixed investment, a traditional driver, actually priced to the upside for the quarter. A lot of that money going into the Manufacturing Sector again to help super charge the sector and a lot of those sales overseas. Much to the dismay, of course, to the trading partners of china, the u. S. As well as europe. In fact, most recent critic of this was the german chancellor who is in china the past couple days and criticized what he described as chinas overproduction and said there need to be more progress on some of these longstanding structural issues. Sara . So eunice, what do you make of the consumption data that weve seen so far thats been mostly weaker than expected on retail sales and the fact that now you have this louder chorus of u. S. Policymakers, european policymakers, ceos, calling on china to shift the model toward thinking more about consumers . How is that landing in china, and is there any evidence that they would do something about it . There isnt a whole lot of evidence that china is going to change its tact to try to really ramp up the consumption. They definitely give all the lip service and weve heard from the premier many times saying that they want to upgrade big ticket items, home appliances, go green, that sort of thing, but in terms of really juicing up the consumption, what they need to do is rev up the confidence and what were seeing in the property sector, the outlook that people are worried about, the fact that job market hasnt been doing so well, thats really whats driving the people to save here as opposed to spend. Yeah. Big topic we were talking about last week. Eunice and i missed each other in beijing but now i know where youre standing on the balcony. Thank you very much. Our eunice yoon. Speaking of that trip, treasury secretary janet yellen is on the wires making some headlines speaking at the imf World Bank Meetings and taking some questions from reporters. Shes mostly talking about geopolitics. One interesting head line because it relates to, obviously, the fluid situation in the middle east. She said, all options are on the table to disrupt irans terrorist financing and also she fully expects there will be further sanctions against iran in coming days. One more, she says weve been working to diminish irans ability to export oil. There may be more that we can do. Lets get more on this and the market right now. Joining us is jpmorgan asset chief global strategist david kelly. Oil prices weaker again, but i wonder if theyre out of the woods, especially if the treasury secretary is talking about more restrictions to iranian oil and how theyve been able to sell it to places like china and bring in a lot of cash. Well, there is always a potential for a supply shock, and i think, obviously, the heightened tensions between the United States and iran and israel increased the risk of either our sanctions or, perhaps, activity by iran in the strait of hormuz having an impact on oil prices. In some ways, what you reported about china is equally important. Chinese consumers are, you know, they lack confidence and that is slowing the chinese economy down more than is portrayed in the gdp numbers. That has an impact on total global consumption. Im not seeing a about ig growth in global commodity consumption that would Push Oil Prices up to a permanently high level. Weve seen Oil Prices Move up and they are at high levels and they could get pushed higher by shock, but longer term over a year, two years, three years, unless we see more Global Economic growth i dont think well see a permanently higher plateau in oil places. What do you see as the stock markets next catalyst . Feels like were adjusting here to a new rate path or rate expectations from the fed. Were in earnings season. Are the earnings going to justify these levels and what comes next . I think the earnings season will be okay. I think what u. S. Economy is proving, you can see this in the jobs report from march which seems like a long time ago, seems like the economy can do very good economic growth, with still a lot of wage restraint, because of immigrants coming and because workers in the United States are generally passive in terms of demanding wage increases. What that should allow happen, we should see the inflation decline begin to resume. Its stalled out over the last six months or so, but i think we will see it begin to decline more and if inflation resumes a downward path it may not be fast enough to allow for a june rate cut but the rate cuts will come back on the table if inflation begins to come down more. Thats the most important thing to look at. Can we get a further slide in inflation here . Earnings i think will be good, but i dont think the market is teeing off that. Whats the rate environment going to be for markets in general. Why are you confident inflation will continue its downtrend from here with the rise in commodities with the reacceleration in u. S. Growth, including manufacturing going back above pmi above 50 expansion . Well, growth is okay. I know that its 2. 8 for the First Quarter. Were lower than that. Housing starts are a little bit on the weak side. Retail sales look okay. We still see the economy slowing down to about a 2 growth rate. Whats interesting here is the growth in immigration seems to be having an impact on the labor supply which is allowing us to do that wil with lower inflation. I dont think you have that overheating. If you actually look at the way inflation is calculated, so much of it that is in rent and in auto insurance, those two categories represent over twothirds of the inflation that we actually saw in the month of march and yearoveryear basis. Thats going to fade Going Forward almost certainly when you look at those numbers. Its hard for the overall inflation to go up if those two categories are coming down. We continue to see yields march higher. 10year towards 4. 7 , 2year yield at 5 . David do we need those yields to start falling again for the equity rally to resume . Possibly because what were also seeing is were seeing much more volatility in longterm Interest Rates in the last few years, but certainly this year a lot of volatility and we also do need to see, you know, a change in attitude at the fed. The fed is so nervous about being seen as being dovish here and thats why, you know, when that cpi print hit, that was enough to say, well if you dont look at the dot plot, theyre not going to go in june. Theyre nervous about easing just because of lower inflation, the possibility of lower inflation in the future. I think thats really whats keeping the rate outlook high here. As i said, if inflation begins to crack again, Interest Rates should come down even in a bumpy fashion should help out Financial Markets in general. Bulls will be encouraged by your words and your predictions there. Thank you very much for the time today. You bet. David kelly. Tune in tonight for the full interview with ecb president Christine Lagarde. Its a cnbc leaders special 8 00 p. M. Eastern time. A lot of conversations there about the big picture and what president lagarde is seeing right now. And some comments, carl, that ive never heard from her and ive been covering her a very long time. Cant wait for that. Look forward to that tonight, 8 00 p. M. Eastern. Still ahead a bullish call on netflix ahead of earnings this week. Were going to talk to the analyst behind that call when were back in a moment. Welcome back to squawk on the street. Investors are getting ready to tune in to earnings from netflix later this week. The shares have been a strong outperformer up almost 30 this year right near new highs. Stock getting a price target hike today. Joining us is the analyst that made that call, guggenheims Michael Morris boosting to 700, it had been 600. Always good to have you. What is giving you the confidence to make a price hike like that, especially, you know, i mean, netflix can be notoriously volatile around its earnings print. Thats absolutely an accurate statement. Its very hard to predict the quarter especially around the companys most important metric for sentiment which is member trends. If you think about a business with 260 million global members, paying members right now, and 1 or 2 million net add change can impact sentiment in the short term it is difficult to predict in the quarters. The longer term prospects for the company, the reason we raised our price target, really around two things, number one, we think there continues to be a tremendous amount of Addressable Market opportunity in the u. S. , but really outside the u. S. For membership growth over time, and number two, we think as a Company Continues to widen its lead amongst streaming competition, theyre able to better target their investment dollars into areas that drive adoption of the service. We like where they are on the Virtuous Cycle even now after the success the company has had over the last number of years. You seem to also believe that total Addressable Market is going to expand. You mentioned it briefly. As a result of what broadband becoming more available in some of these parts of the world essentially, i guess, where it is not been available previously . Thats a part of it. Certainly i think when i look at a Growth Opportunity into 6 or 700 million broadband customers worldwide and 260 million current members i reference its about penetrating the broadband households that currently exist. It shouldnt be lost there are a couple of other expanders there. One is that Broadband Availability does continue to also grow on a worldwide basis, and two were talking about broadband households, right. As we think about sitting at home watching netflix with our broadband subscription, but as you grow globally, especially in emerging market economies, its really about transaction and broadband enabled smartphones as well, so that Addressable Market i would argue is bigger than the 6 to 700 million households we talk about right now. We end to focus long term here but also short term on occasion, particularly when there could be a lot of Price Movement around earnings print such as netflix. Do you think theyre going to benefit from the crackdown on password sharing or has that run its course . There is benefit there. The implemented policies in the Second Quarter of 2023 was a ace was impacted. So, that rolling impact, whether by market or by type of customer, theyve tried to be selective about when theyve put the policies in place, is still ongoing. But i do believe its in the latter stages. At the same time, i dont want to lose sight of that forward growth. I think the genre expansion that the company is doing on the content side is continuing to fuel demand in the u. S. , the most mature economy, the data we look at, indicates that the First Quarter of 2024 was particularly strong in the u. S. But it also will feed into that Growth Opportunity outside the u. S. So, the password crackdown certainly a benefit to the company. And i think benefitted member growth. But we think that the core growth is still the story Going Forward from here. All right. Michael, appreciate it. Thank you. Thank you for having me. In d. C. , an interview you do not want to miss next hour with the california congresswoman maxine waters. Shell be joining me in washington. The Ranking Member on House Committee for financial services. Thats at money movers, which kicks off at 11 00 a. M. After the break, a group of lawmakers want the nasdaq to delist certain Chinese Companies. Ayituseronhy. St wh he squawk on the street. 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 washing djt, the first dip below the 200day moving average since halloween. Big story in the journal this morning. The journals words, once hot stock turned cold. Market cap has gone from 9 billion plus to 3. 8, somewhere in there. Well continue to monitor that as they talk this morning about the r d phase. Their new streaming service, which they hope eventually brings a streaming application to households. Yeah. And revenues and profits to the company. Carl, were also watching this issue of Chinese Companies. Theyre back in the crosshairs because washington lawmakers are urging the nasdaq to delist some companies in the space over National Security concerns. Lets get to emily wilkins, who has been following that story. How serious is this, emily . Reporter hey, sara. At this point its just an inquiry. Could become pretty serious pretty quickly. This group of lawmakers is encouraging nasdaq to delist Chinese Companies that have been black listed by the Defense Department. In first letter seen by cnbc, republicans on the select committee on the Chinese Communist party, theyre raising the alarm that Chinese Company has raised over 190 million while being on the Defense Department list of Chinese Military companies. Congresswoman ashley henson, a member of the select committee who led the letter, said that the funds went towards building a mega factory in china to help chinas Liberation Army and access military equipment. In a statement to cnbc she said shes looking forward to working with nasdaq to delist hesai and protect u. S. Investors from unwillingly funding Chinese Companies that could pose risks to National Security. This is not the first time the select committee targeted hesai. They use lasers to measure the speed and distance of physical options, selfdriving vehicles throughout cities. It could pose a serious National Security risk for lawmakers based on the data they collect. Hesai was on the department of defenses list of Chinese Military companies, but they said that addition was unjust, capricious and meritless. They said they have no ties to militaries in any country. And lawmakers still have these concerns and want more on nasdaqs policies around black listed companies. She hopes this begins a discussion. Well see what the next steps are. Well certainly follow nasdaqs response and what they find out. What can you tell us about the bills that Speaker Mike Johnson is trying to get through the house right now, where that stands and where he stands . Reporter so, johnson is really trying to get forward that package thats almost 100 billion of aid to ukraine, to israel, to taiwan and the indopacific. His strategy for doing so right now, because remember the ukrainian aid is not popular among house republicans, he wants to basically take the package, break it into four different votes, let everyone vote on individual pieces and put it together. House republicans just wrapped up a meeting and it does not sound like theres a lot of support for that plan, or at least as much needs to be. Johnson is facing yet another potential outster like kevin mccarthy. That motion to vacate was filed a couple of weeks ago. It was just one lawmaker. Now another one joining. Again, perilous position for speaker johnson, as well as aid for ukraine. Ha you. Our live market coverage will continue right after this. Giving traders even more ways to sharpen their skills with tailored education. Get an expanding library filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. 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 good Tuesday Morning again. Welcome to money movers. Im sara eisen live in washington, d. C. , today. Carl quintanilla live from New York Stock Exchange. An exclusive with the European Central Bank President Christine Lagarde on the outlook for rate policy and the outlook for the european economy
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