Transcripts For CNBC Squawk 20240703

Because the odds for a june fed rate policy pivot, well, theyre going it was just it was ridiculous. It was always going to be hot. Yeah, yeah. No. Plus, big tech divergence, alphabet, amazon at highs, jim, but apple and tesla, i dont know if you noticed, theyve been struggling a bit. Nvidia, were going to talk about that stock, of course. How could we not . Its entering a correction. Well, if you dont know what it is or if you think its my dog, then why dont you sell some. Finally, jim, the airlines are leading s p premarket gainers. Delta topping quarterly estimates. Its focused on efficiencies im focused on the fact that phil lebeau has been here for 25 years and hes the best. Lets not lose sight of real things. Hes the best he is. Rely on phil more than we ever have. Lets start with the market, get your reaction to the hotter than expected cpi print. Weve heard from the analysis in terms of expectations for a fed rate cut, which are fading fast. The yield curve inverting a bit. The twoyear moving up more in yield than the tenyear right now. You start thinking, why did the fed kind of commit to neutrality . These numbers, what was bad was worse. Weve been worried about shelter for a long time, shelter going in the wrong direction. I think the employment number on friday gave you a good read of what was going to happen, things that have to cost more. We have a surge in people who work in travel and leisure, so of course, those wages have gone up. They had a surge in health care. Those wages have gone up. David, theres a premium to oil, and we know theres a war premium to oil, and that should be the least of our concerns. As long as theres a war, theres going to be a premium. If you think that war in the middle east is going to last for a long time, theres going to remain a premium. The only number that i really the numbers that i really freak out about, i guess im supposed to freak out about, are just the endless ways to find people to have somewhere to live. That includes immigrants, of which, by the way, since the government doesnt have any numbers at all, we have to presume is hot. It wont stay by the way, raising Mortgage Rates only makes it exasperates. Exacerbates. You dont want to build. If youre tol brol brothers, yo say, im going to make fewer homes. Thats the part that wouldnt make things better if you raised rates. Thats where the fed is really in a box. Finally, food stopped being more expensive at home its a little more expensive at the store. I like that. But these numbers are the numbers of an economy that is on the move, that is terrific, and if were all going to sweat the program, decide that the tenyear and 30year auctions going to go bad and get to 5 , you and i have been there at 5 . Thats called a great level, so i dont want to lose sight of how unnatural but the fact that we may very well get no rate cuts for the remainder of this year is very different than what people had anticipated as 2023 came to an end, not to mention even a few weeks ago or months ago. Well, those people what does that mean for the Broader Market . Those people are wrong. They can also vote with their feet and say, im not going to buy equities. They can go buy cds. They can buy the short rate. I have a lot of short rate paper, and im looking at it and saying, what do i do . Buy more . Buy cds . The cd rates went down yesterday. Its kind of disconcerting. But i think there are a lot of people who are on the wrong side of this trade, and theyre frantically getting out, and you see them first in the futures, and then there will be a lot of people who are very scared and are in the mag seven and they dont know what the mag seven are, other than its not Steve Mcqueen and yul brenner. Then, they think datacenters arent going to be built out. Thats wrong. Fellow travelers just say, this markets been good since the fed pivoted. Oh, my, maybe the feds done. All right, so, what does the year look like for a stock market in which the fed is, you know, were neutral in other words, no rate cuts . Well, one or none. Rick santellis been very right about whats going to happen with the auctions, i think, and yesterday, he said there was a short rate auction that was very bad, and i think this auction is going to be very bad today. But i also think i come back to say, let it come in. If you haventtaken any profits and you dont know what you own lets get to nvidia. Im sticking by it. I have a longterm view of nvidia, i have had since 2012. Am i changed . No. The intel socalled claim that theyre faster, stronger, this or that, give me a break. No ones committing to that. Nvidias a great company. Its got a very low multiple, but if you dont know what nvidia is, david, and you bought it because you liked what i said about it, just sell some. Just, like, please sell some so i dont have to hear when its at 800, why didnt i get that. We do have Morgan Stanley raising its price target as this continues to strengthen for nvidia. They have, but so what . Theyre talking about the hyperscalers, planning out data expansion centers that would tend to indicate durability. There is great durability. Own it, dont trade it. We also know there are people who dont know what they own, and when you meet people who stop you and say, thank you for nvidia, and you follow up and say, what does nvidia do . Theyre stunned. Theyre stunned. They dont know. They think, well, nvidia, let me tell you, they they wow. Jensen. Thats what they say. Those are the people who have theyre the fellow troavelers that im most worried about. They dont know what theyre doing with nvidia. They see it go down and say, it must be wrong. Those are the people, youre going to have them reassess, just like there are people who are reassessing the fed. And then, once rates get to where they have to go, which is not that high, because there is, frankly, at a certain level, selfcorrection, youre fine. But nobody wants to hear that youre fine. We have cash for the travel trust. Ive been waiting for a decline. Were getting a decline. Does that mean i should now wait for a bigger decline . No. I dont know where as were calling it a correction. This decline of 12 from the highs. Nvidias multiple is down to what, jim . Where are we . It could be 23. Yeah. But david, if we go if we bore people and dont talk about musk havent talked about buffett lately. If we go over this news release from the on the Consumer Price index, yeah. The department of labor. Its energy. Its rent. Its its Auto Insurance. Can we have some competition in Auto Insurance . Food away from home keeps going up. What are you going to do . Stay home. The last month was actually not that bad in terms of food away from home. And liquor prices are coming down. A lot of people dont realize that. These are just sticky. You need commodities to come in a little. They are. And you need labor to cost less, and thats what the immigration issue is. The hidden labor workers in the kitchen will make it so eventually youll be able to get a cheap burger or fries and not diet coke but jack and diet. All right, so, youre not overly concerned as we look at a market we watch the s p have a significant decline, again, when we start trading 22 minutes from now. Again, if you know what you own and you look at the news release from the bureau of labor statistics, and you decide, you know what, im going to bail out of nvidia, because i see this food away from home number is bad, and im worried about used cars and trucks, well, i mean used cars and trucks are actually pretty good, so forget that. But you shouldnt have been in. You got a chance. Youre up a lot. Sell it to me. Come down so i can buy it. I know what it is. I know what nvidia does. I know that blackwell is multiple times better than what intel is doing. I know that google and nvidia are working together. I know that jensen huang said if googles making a chip, i want to help. Is that a reason to bail . Well, go ahead. I said it over and over again after the gtc conference, the stock goes now. Now were in the gtc conference. What a shocker . Shocker. As for the mag seven overall, mentioned it at the top. Alphabet, amazon, of course, alltime highs. Alphabet is something of a surprise. Again, ive made this point a number of times. Given the existential crisis that lasted a week there for investors. And thomas curry is the star of the show. And the number of wellknown pundits reflecting on social media for x, for example, about the coming demise or questioning its ability to compete or whether that got down to it might still have its monopoly in search threatened. It had the multiple in the french fry company, for heavens sake. Thomas kurian, of course, the yeah, they had their big thats a big get. Yeah, that is a big get. If youre not respectful to kurian and you call him tom . Interview over immediately. Im not familiar with the gentleman. Want to take a listen to what he had to say . What the hell else are we going to do . Watch the market go down . Lets have some information. This was him yesterday, the google cloud ceo. Take a listen. One of thems offering a closed system. They have one model, one provider of that model. They dont even own that model. The other one does not have any a. I. Expertise, so they only offer third party models. We blend both. We have our own models, and we have the expertise to build systems and integrate these models into our products to that people can use it. At the same time, were not taking a closed, proprietary point of view. Told you hes going to do 50 billion. Yesterday, i told you he was going to do 50 billion, and people were like, what does that mean . Hes doing very well. Hes taking share. Theres an awful lot of share to take. I mean, thats the point. You can have an environment in which the hyperscalers, amazon, microsoft through azure, and google cloud all are beneficiaries of whats happening in terms of generative a. I. I hate baseball analysis because second inning, now baseball games go so fast, but i do think that the cloud is just in such demand, and theyre only about 80 i would say about maybe 15 of businesses have moved to the cloud. Lot of room. Its a lot of room. What do people do . As long as Interest Rates are going higher, and we do have some auctions, and the auctions probably go badly, you start picking at things when you see things overdone, but you must know what they are. Okay . You must know that abbvie has a bunch of really good drugs, so when it gets to 4 yield, thats good, not bad. You have to kind of flip the equation and say, wow, you know what . The markets been good ever since the fed pivoted, but now were not sure about the fed. Lets go back to what looks interesting. Actually, lets get granular. Lets talk about caterpillar, because we all know what caterpillar does. Earth movers . They do more than that. Theyre central to datacenter and to oil, not to china anymore. Cat got up to 17 times earnings, and its had a run of 25 . All right . 25 for one of the companies that is decyclicalized, which is what i call it. Its a strange term, but i got it from the ceo. Is that stock due to come in . Yes. Do you buy it or sell it . Its an infrastructure play. The federal money is just getting there right now. That is something its 370. At 330, which is probably going to be at 3 30, at 330 at 3 30, i would buy cat. Let the people who have just been riding it and say, ive been great in cat, let them get scared. Let them get scared. Okay . Okay, jim. Lets talk disney. Theres one. We got to talk disney again . No. Lets forget disney. I know. Its enough. Im looking for dow stocks that i know are going to be the reason im doing this is the dow is down 500. How about your favorite . Salesforce. Lets get to probably goes down 5 . Servicenow probably goes down 3 . These are a. I. Companies. A. I. Goes down between 3 and 5 , and everyone gets scared and thinks its over. Maybe they retreat to the tenyear. Maybe they retreat to cds. Im saying this is the squall. Weve been expecting it. Im not saying, enjoy it. I am saying, it probably lasts a little bit, because we have to endure jamie dimon saying hes very concerned that rate thats tomorrows business i mean, fridays business. Were getting jpmorgan. Memos starting, earnings season begins at the end of the week. Were working off his comments from the annual letter in which he said that rates could hit as high as 8 as a risk. He didnt say its going to happen. Hell, like, Say Something negative, and kill his own stock for a couple weeks, and youll say, whyd you do that . Hell say, thats what i think. Meanwhile, his stock is up over 52 in a year. Yes. It sells at 12 times earnings, which is too low a multiple, but i think that when i look at im trying to pick dow stocks. Im not being random here. You ditched me on disney, that was fine. I didnt care. But jpmorgan is at 12 times earnings, and he is going to say negative things because thats what he does. So, do you buy it or sell it after he said negative things . How about you wait four days, start the buyback of the company well, hes not going to buy that much here, but i just think that this is real life, that jamie dimons stock is up huge. So, people are going to sell a little. Thats what happens. Thats what happens, jim. Thats what happens. We are potentially going to have a down day. Well see how we move towards the in the midst of the trading day. This is not the playoffs. No. And what happens is were one and done. Its not that. This is a longterm situation. And we can trade it. You want me to trade it . Oh deere, i bought it and sold it. No, let it come in a little. If you dont know what the company does. If you think deere is a deer, and you think cat is a cat, well, i mean, go to the darn zoo. You shouldnt be doing this stuff anyway. Right. Of course, these days, a lot of a lot of it has been reduced to almost trading on your phone as though youre betting basketball. My wife maybe she watches the show. Lovely woman. Ive had the show for 12 years. Im aware how long weve been doing this. Why dont you tell her . Why change a good thing . When we come back, delta is one of the mornings bright spots. Were going to explain why. Take another look at futures, of course. Jims not worried. 14 minutes until we open. David, im really scared. The market is up huge. Were right back after this. 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. At Morgan Stanley, old school hard work meets bold new thinking. To help you see untapped possibilities and relentlessly work with you to make them real. I cant believe you corporate types are still at it. Just stop calling each other rock stars. And using workday to put finance and h. R. On one platform. Tim, you are a rock star. Using responsible ai doesnt make you a rock star. It kinda does. You are not rock stars. clears throat okay. Most of you are not rock stars. Oooh. Data driven insights, and large language models. Oh, thats so rock roll. It is, right. He gets it. Yeah. 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. Weve seen a 15point acceleration since the start of the year in Business Travel, and were now back, revenuewise, at or above prepandemic levels. The volumes are still a little bit off, maybe 90 , but were doing really, really well. That was deltas ceo, ed bastian, discussing the state of Business Travel with phil lebeau. That was an interview earlier on squawk box. The airline did post Quarterly Results that were above analyst estimates. It is forecasting strong Summer Travel demand. I thought that was interesting, jim. It was a question we asked so often during the course of the pandemic and since then, would Business Travel ever, ever get back to the level . Hes saying, dollarwise, i believe it has. Stock is up 2. 50 when phil interviewed mr. Bastian, and deltas really on its game. Theres some there are actually a lot of different dispersion among the airlines about whos doing a good job. Theres disarray among the spirit, jetblue, not clear whether united is momentum. Southwest air is, unfortunately, really bad, and delta has shined here, and thats because its really well run, and i applaud mr. Bastian. Hes done a great job. That stock will be down today. Thats the kind of thing im looking at. All the analysts tomorrow will come out and recommend it, and its got a good model. Pilots are being laid off right now. Pilots are being laid off, yeah. We had a pilot shortage. That ended. Thats a good example of what can happen if you take rates higher and not everybody does well. So, thats where the economy is working. And where its not, david, can we just, like, talk about the idea that there are theres no price cutting in insurance . Theres nothing. Your Health Care Insurance has gone up, up, up. Theres no Competition Among those companies. It seems like theres no Competition Among Auto Insurance, and were accepting, and that is a shame. I dont understand why the capitalist system isnt working and someone doesnt come in with a decent Rate Health Care plan and a decent rate insurance, because thats killing us, and the fact that we havent been able to build enough buildings to be able to accommodate 10 Million People that have come here, legally and illegally, in the last three years. And those are the things that i dont want to get too political, but those are the things that are going to create an issue when it gets to the election. Those are the things people get mad at and blame the president. Well, and or right, inflation overall. Again, were running at whatever 3. 5 or more. Weve dealt with 4 before. Thats off 19 to 20. Get ready. You got a mad dash coming up. Were going to get back to talking about stocks as we count down to an opening bell. You see futures, you know were going to have a far lower open based on that cpi print that was, as we like to say, hotter than expected. Bracing, perhaps, many hopes that had already been dashed to a certain extent that we would get rate cuts in the near term. Tesqwkn e re et afr this. At pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Theres a look at the tenyear note. Of course, yield is moving up. Not as sharply as the twoyear in comparison. So, that has had a little bit of a steepening effect on the yield curve. But there it is. 4. 483 . Of course, a significant move higher based on that cpi number, and theres a look at your twoyear. I mean, jim, we talked about your 5 . Well, i told you, the feds ucni peng bell coming up. The opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. All right, lets get to it. Quick mad dash, jim. Yesterday, we had this piper teen survey. What did they like . They liked hoka. They liked uggs. Today, truist comes out with some credit card data saying that uggs is being outperformed, but hoka had a weak february, david, and thats going to cause people to say, why did i buy that yesterday . Hoka, weak, no way. Love those hokas. They didnt slag on. On had good numbers. Those squeaky sneakers. And the pebbles in the soles. Never wore those ons again. I take them off when i come in the house because i dont want pebbles all in the house. Bambam. Im off on on. A lot of red on that board. Here at the big board, auna celebrating its recent listing at the nasdaq excuse me, recent listing. Over at the nasdaq, weve got the National Security emerging markets index etf because, jim, there is an etf for everything. Did you see that private credit etf that came out the other day . It just got crushed. I mean, the values, like, 4 and its at 60. Theres literally an etf for everything. And a lot of them are silly, but david, china etf, yes, no, maybe. Jack ma saying things. Jack ma is saying things, and it may be having an feeffect on baba. Are they pivoting towards capitalism . No, listen, mr. Mas comments about alibaba it is interesting, because we talk so often about that being the bellwether of the Chinese Market in some way, and certainly its the name that many investors know the best, but they lost their mojo at baba. Im glad you brought that up. Temu, pinduoduo, bytedance, not a Public Company, theyve been outclassed, and so ma kind of saying, hey, you know what . We got to get back to business, a lengthy memo thats been reported to employees, expressing support for their restructuring efforts. You know, saying, hey, weve had a somewhat tumultuous time recently, but we must not only have the courage to admit and correct yesterdays problems but also make reforms for the future. This year, there have been many doubts and questions about the company, and babel alibaba shar an outlier today because they are up about 2 . I think the stock is very inexpensive. Can we reflect on saras excellent interview . Sure. We have our treasury secretary go to china and basically slam the chinese, right . Then, we have fitch downgrading china, okay . Well, these arent supposed to happen. Were supposed to go there and try to sell more prell, for heavens sake. Were supposed to open more plants and take share. Meantime, what happens . Tim cook. Devices in india. Yes, 14 yeah. Do you think hes sitting there and saying, oh my god, chinas not growing and india has the youngest population . Im saying theres a shift going on, and we act as if the chinese, because they do have a very powerful military, are always threatening us. Taiwan semi with a fantastic number last night. When i listened to the interview with sara, i say to myself, wow. Wheres the old days where we were mendikens for Chinese Business . Those days are over. Direct Foreign Investment has fallen dramatically. Big election in mexico. Were not spending any time in mexico, which is ridiculous. Why do you say that . Theyre a fabulous trading partner. You cant even buy anything that makes any money for you. You can buy the peso, which i think is very strong, but ultimately, thats our biggest trading partner, and i dont know why biden doesnt spend more time trying to figure out how to fix the border, because we have a president there whos have procapitalism, and the new president will most likely be pro capitalism. Thats where we should be spending more time, india and mexico. The sunset interview with yellen was meaningful. The thing that the chinese are exporting more than anything else i know is cyber terrorism. Last i looked, that doesnt really have a good multiple. No, it doesnt, and it is a huge issue, one that we cant really talk about enough in some ways, but we dont because its become so commonplace. It was many years ago when i did my doc on chinese cyber espionage. You didnt bring your phone, famously. You always have to bring a burner. That was the closest you ever came to the wire. I dont know how many years it was. Its only increased since then. There was a brief lull during a part of the obama administration, but its come back. They have thousands of people dedicated to doing nothing but, as we know, cyber espionage. Are you watching whats going on with United Health and the duelling press releases by companies that are actually i thought you were going to take me more to your guest from last night. We can talk about the breach at United Health care, but what did kurtz have to say about microsoft . I thought it was interesting how outspoken he was. Lets take a listen. George kurtz on mad money last night, ceo of crowdstrike, talking about how or not how active microsoft has been in terms of combatting. And being transparent. Its really important. We should all listen to this. What was really concerning to me is if theyre not being transparent and forthright with the public, what are they doing to their customers . I think thats one of the most damning things that came out of the report is the cultural change that has to take place at microsoft at the moment. Microsoft did give us more context on that. Microsoft did give me a release saying that they are changing things, but there was an investigation. Microsoft said they had found the hack and it was not true, and microsoft admitted that it wasnt true, and i think that george, if i had prodded him, given one more minute, i would have asked him, what would happen if this were boing and David Calhoun went live to the faa . I think we would see very few boeing planes in the air. They would be grounded. Microsoft would be grounded. But microsoft, they were beating up in 2000, and ever since then, free ride. You think they have not received enough scrutiny for their lack of and or i mean, theyre so important for the number of hacks that have taken place and or their unwillingness to fully communicate around them. I think theyre i think that theyre surprised there isnt more appropriate. I think Satya Nadella would say, were trying frantically to get this culture together and this is never going to happen again. The report by Homeland Security this is not a department of google and amazon is so damning, that i was like, no, they could not have lied to Homeland Security, could they . Could they have said a hack was done, rooted out, and it wasnt . Seems like a bad thing to choose to do. Suboptimal. Yes. But anyway, i think that george brought it out. Im trying to get the department of Homeland Security guy on. We did read a statement from microsoft, which admit, by the way, they got to fix their culture. Heres what happened when this report came out. Microsoft was up 15 cents. Hey, you know . The people have spoken. Homeland security . Aint got nothing for you. Those kinds of stories dont typically get a big reaction in the equity markets. Microsoft shares up some 45 over the course of the year. Of course, it is the Largest Market Cap Company of any in our market at 3. 13 trillion. Theyre having a great quarter. Far exceeding that of apple at this point. New pc is going to have a copilot button. Its going the biggest refresh cycle in history. I know today is not the day to talk about it, because were supposed to be very scared. If you are just joining us, you can see at the bottom of your screen, cpi exfood was hotter than anticipated. What was hot . Rent and gasoline. That has led to a surge in rates, and of course, an overall belief that we will not see a nearterm rate cut, certainly june seems to be off the table. So to the extent that the fed is data dependent, and we have, by the way, all right, were down 1. 1 in the s p and 1. 08 in the nasdaq, jim. Its not bad. The auction later is going to go badly. Heating oil is up. We dont use heating oil in the country. 8 of the country uses heating oil. Im not going to this is this thing was created before we had a surfeit of nat gas. Now youre going to take the cpi to task . If you dont go granular, you cant explain why this index is incorrect versus things americans really do. Go to tj maxx, for heavens sake. That plastic belt fooled you. It was up 7 . Where . I dont know, jim. I dont know where. I dont shop. Gap stores . Okay . I dont know. Maybe its up macys because theyre being challenged. Thank you. Yes. Macys did add two members to its board. Whod they add . They are gentlemen named clark and markey. Im looking for various press releases here. Rep, ark house, along with a creditfocused fund, have been trying to buy the company. Yeah. And they have agreed with macys to add two board members, immediately, as i go through my papers here, trying to find it. Heres my macys file. Stocks not doing much. Are they walking away . Richard clark and Richard Markey will join the finance committee, tasked with reviewing the ark house and brigade proposal to acquire macys. Remember, youve also got that acquisition out there that at least they are now doing Due Diligence on and trying to move forward with a plan to potentially buy the company. Interesting, because arkhouse is sort of the activist here. Brigade, their partner, is really a 25 billion creditfocused fund that would and is potentially happy to move forward with the offer. The last offer was 24, right, jim . 24 bucks a share. Macys is six times earnings, which is in the pathetic portion of the s p, along with ford and gm. Macys is incredibly inexpensive. Tony spring, succeeded jeff ganette. Tonys got really good eyes, meaning that he has bloomingdale focus. I dont know if youve seen the stores. The stores are electric. Electric . No,i havent. As i said previous lly, i dont macys will be harder to turn, but what hes doing with macys is he continues jeffs approach of closing the ones that have bad numbers. So, should the stock have six times earnings . People think the Department Store is dead. I understand that. I dont think i think tony spring can resurrect it. Watch but at the same time, all right, but 24 bucks. Sold to you or not . Here you are, macys shareholders, 24 bucks, take it or not on a 19 stock right now . Its going to take a while. Its not going to trade at 24. This is that dilemma. Do i take the 24 now or bet that im going to get to 30 in three years . 24 in this market seems good. Youre taking the 24, jim. I know. And i dont mean you are. Move on. The market doesnt want to give tony spring his due. The market is down 504. Give me the cash. Figure it out as a private company. All right. Glad we settled that. We dont need to how about poultry, david . Poultry was up. Enough with the cpi. Why do you think the markets down, because of macys . I dont know. Lets talk about ubs for a minute. Lets go overseas, shall we . Bloomberg story. The stock is down. Its almost a year since Credit Suisse failed. Ill go with you. U. P. S. , down three, and ubs. Ill see you u. P. S. And raise you ubs. Shares down. Substantial increase in regulatory requirements under reforms the swiss government is advocating for in the wake of the collapse of Credit Suisse. The council reporting banks that will basically be what else is there . Santander. Thats not a swiss bank. But in europe, its the largest bank in europe. Must holdal significantly more capital against their foreign units. Ubs very aggressive in the u. S. Once again. Forget, though, Credit Suisse, they were a major player for so many years. All they did was get everything just get things wrong for so many years of getting things wrong. Theyve been on the wrong side of the trade for remember archagos . Anyhow, thats why ubs shares are down. Back to our domestic stocks. What do you got . Nvidias up, so therefore, if remember, if you think that nvidia is a dog, then you get your little chancy here. Up, in part because of the Morgan Stanley price target move we mentioned. Theyre talking about a stock based on their 25 calendar year 2025 calendar year estimate, the stock trades at 28 times. If i have to hear 28 times. If its part of a bubble once more, i say, again, people dont understand that they have tremendous earnings power, that theyre well ahead of everybody else, that blackwell is going to crush everyone. Thats their new iteration. But david, look, were yeast u used to this. These stocks go down. The reason ive said, own it, dont trade it is because its inexpensive in the same way that alphabet, google, is inexpensive. Amazon is expensive, but its doing the job. I was going to mention amazon we go through some of the mag seven. We talked about amazon yesterday as it approached 2 trillion in market value. Didnt quite get there. Its barely down. Its backed off a tiny bit, but right near alltime highs. Its barely down. Its not cheap. They have andy on tomorrow on squawk. On squawk box, i saw that. Andy is not promotional. Hes very calm. Giant fan. Sorry. But i think that in the end, that stocks had a very big move, and if someone wants to sell them, im not going to fight him. Im not selling any from my trust. What are you doing . Im looking through my notes to find Something Else to talk about. Have it in your head for heavens sake. I have lots in my head. May not compare with quite the number of voices in your head. Oil and gas. You really want to talk about oil and gas . People dont stop recommending them. I thought it was interesting. I wanted to talk about bytedance. Its a private company, but you know what . Sometimes, we should talking about private companies. Theyre enormous. Private credit is enormous. Bloomberg reports that earnings before interest tax, depreciation, and amortization, 43 billion in 2023. Put a multiple on that. Wait a second. 40 billion. Wheres that come from . Yeah. Thats amazing. Thats what theyre talking about. We talk about tiktok here. We havent actually discussed that story in a while, in part because the senate, we thought, might move very quickly to move its own bill or companion bill to the houses ban on tiktok here in the u. S. Hasnt happened as of yet. But bytedance has so much going on in the Chinese Market, in the form of doien, which is morphing into an allinone platform, akin to ten cents we chat, and encroaching on alibaba in terms of ecommerce. Bytedance. Amazing. One day, it will come public. Im not sure its not going to come public here. But i mean, put a multiple on 40 billion ebitda growing at that rate. Im astonished its that big. That was something that might transcend even the problems we have, fitch downgrade, yellen having one of the Largest Private Companies in the world. Thats incredible. Yeah. Im glad you appreciate that. Now, you get to talk about a Public Company again, jim. Go ahead. Okay. Im going to do that. Im going to talk about you got to look through notes . Isnt it in your head . David, im going to talk about tesla. Okay. Every day. The long knives are out for musk. Just when everything was going up, everyone was a fellow traveler, now its going down. Hes tripolar, which i think is really unbelievable. Theyre studying that at hopkins. Hes despised. I mean, its incredible. Full selfdriving, you know, hey, we got to oh nobody believes in full selfdriving. Lithium is bottoming. Remember when he devoted one call to the incredible rise in lithium. Yeah. You got that going. But i think what he lacks is sales. Thats often i feel like youve been warming up to the stock. What will happen is cathie wood will come on air, use a 200 times earnings, 800 price target, people will say its the bottom because its cathie wood, and youll get a rally. Or ron baron will come on. These are fellow traveler, amen corner people, they always say its done going down. If i said nvidias done going down and it doesnt, theyre going to put me in the stockade over here. They got a nice safe downstairs. They can just put you down there. Way down deep. You never hear from me again there. No. Im just saying that tesla, right now, its on the other side, so everyone thinks that this unbelievable magician, brilliant man, is not no longer capable of coming up with anything. And i would rather be an insurer. Id rather be with buffett in geico. Im not sure you want to be with banks. Bank of america, of course, that bond portfolio, always yeah. Theyre doing fine. Because their longterm bonds are far lower rates. We didnt talk about the rails. Those are going to be up. Norfolk southern. Those are oneway stocks now. Norfolk southern. Good proxy fight going on there. Lets give people a quick look at the bond market because it has been a big mover off that cpi number this morning. As you might anticipate. As ive said, two years, perhaps, a bit up more. Where are we now . 4. 496 on the twoyear. Both yields, obviously, appreciably higher, in part on the belief that, hey, that fed, maybe we dont see any rate cuts in 2024. Well be right back. Encore energy, americas clean energy company, now in production in south texas. Energizing america with reliable and affordable uranium for Nuclear Energy fuel from our environmentally friendly extraction process. Encore energy. Ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. Tomorrow night cnbc premiers the second installment of cities of success Carl Quintanilla is in colorado with a look at how denver and boulder have leveraged the Rocky Mountain lifestyle. Business is so hot there. Thats 10 00 p. M. Easter cities of success. Up next we got stop trading with jim. 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. Lets get to it. Got time for stop trading from jim. One i wanted to be able to bottom fish soon was boeing. Morgan stanley goes 235 down to 180, production is slowing. The stock was getting hit. I wish i had something positive to say. Do you think its time im due an apology for all the crap you gave me for getting you you out of the boeing. Thats why i did this at the end of the show. I want bell to know that davids mother i am apologizing. You got me out. I missed the 100 point move but boeing is still too early. It does go back. The reason im referring to, the conversation we had where you were talking about the pain and difficult things of boeing yet you hadnt chosen to sell the stock. You were right. I got out. I didnt make money but i got out. I have a company tonight, david, that is a little off the beaten track. It is a mushroom company. You got a mushroom company. A health care company. A little off the beaten track. Mindmed. Were talking ha lewis najen eccs . Yeah. Not the kind from chatgpt. We can hallucinate chat. Opening up new neural pathway. I thought it would be a nice diversion from the gloom and doom. You say you get to an age, a full trip, you have to have something guiding you. It can be beneficial. Ket mien. Maybe you and i will try that some time. Not the ket a mean. Get the mind guy you had a bad option today. If you dont know what you own, sell something. Hes jim cramer youll see him tonight on mad money as for us well stay on top of this mornings selloff. Dont go anywhere. 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. Good wednesday morning welcome to another hour of squawk on the street im sara eisen with david faber. Carl on is assignment today. Selloff mode as we digest a hotter than expected cpi report. Another hot read on inflation. The s p down a full percent. Nasdaq down a percent as well and nasdaq down 183 points. Almost 1. 5 . Treasuries in the eye of the storm as weve seen yields higher across the board. Theyve been inching higher but look at the 2 year note yield, a new high back to november, 4. 9 . Bumping up against the 5 level. 30 minutes into the trading session, three movers. Delta is moving higher after beating earningsest at mas swinging to a profit in q1 well look at the quarter later this hour with phil lebeau. Deckers taking a hit after a street downgrade and a price cut. Truist saying it has concerns over the growth of the brand. And nvidia trying to buck the selloff. The stock trading in correction t territory down 10 from recent highs but up today 2 . We have Economic Data crossing the tape lets get to rick santelli. These are february numbers, whole wholesale inventories the final numbers. It remains up. 5 and that is the biggest month over month change going back to november of 22. On wholesale trade sales, a fresh number, expecting the number just below 1 . Much stronger up 2. 3 . That happens to be the biggest positive month over month change since march of 22. A subtle revision of last month from minus 1. 7 to minus 1. 4 so part of the pop in sales is reversing last months negatives but both are positive february numbers and should in many ways impact better gdp numbers and hopefully fill the pipeline in the future. We know weve had bumpy rides along the way. Interest rates, what moves weve had. 472 was where it was, currently up 495. Cpi, 444 now up 439 up 15 basis points back to you. Is there a level were watching . Like a breakout . Obviously back to november highs now. Yes. I would say that really, in my opinion, the breakout was when we closed above 433 from a technical basis. I think four and a half was always in the card my next level is coming in around 467. Got it, thank you rick. On the ten year. Showing the two year now near 5 . Part of the move today is really driven by the cpi report. Im so glad youre here. First of all welcome back. Thank you. I couldnt miss the march cpi. An incredible trip. 30 hours of travel back and forth. Im sure you have no idea where you are. But youre with me, back in new york. Im a little messed up. No directs from new york to china. I love when you go through the components of the cpi and tell me whats moving and not, give me your take point for the headline versus the estimates of. 3. Whats it mean, sarah . The overall take is the fed and the market was looking at january and maybe february as okay could be an anomaly seasonal factors thats why it was so disappointing to get another read of. 4 of a month over month gain on the headline. Theres the change, the. 4 , matching last month but those were hotter readings and we wanted to see going into the next quarter lower readings. The disinflationary trend from last year was still intact. So now the numbers are higher than the fed wants them to be. Look at core, the fed takes out food and energy, more volatile. Also. 4 increase there. And a higher number there in terms of the year over year number. And a couple more, core services, exshelter, rent because thats the super core that they look at. Thats a problem. Rose. 6 on the month. And then, over the last three months that measure has surged 8. 2 at an annualized rate. Thats not what the fed wants to see. That doesnt sound good. The upshot is, the fed is saying it left its options open need to see more evidence were go down to 2 this is not that. So less than 20 at this point we were confident earlier in the year we were going to get a cut in june now not so much. We punted to november. Getting two rate cuts now that the market is expecting . Well see. There are those that say no rate cuts this year because the economy and inflation but things do change as we k know. Things can change. I want to go through the cpi and show you where the price pressures are coming from. Good news and bad news. Food at home continues to decline, no real inflation month over month for grocery prices. Food away from home, 4. 2 restaurants. Yeah. Year over year increase, not great. Shelter sticky still, 5. 7 . Go through some of the other service measures i wanted to pull out. Transportation services were really high. I saw that as well. Month over month. And that has to do with car insurance. Look at that yearly year gain in car insurance, marchtomarch, 22 . Significant increases in different states they happen at different times. Eventually you get to the end you expect but to your point its painful. Its painful. The good news is i show you new and used cars here, goods deinf deinf deinf deinf deinf deinf deinflation deflation is still a thing. Gas prices have you seen it . Gas is going up. Gas is going up. Were higher than where we were as you can see on a week, on a month, on a year basis on gas prices. Americans feel that and it filters through. So the next stop is ppi, wholesale inflation we get tomorrow both factor into the fed preferred measure the pce coming towards the end of the month and that will be definitive. But the market is telling you, rising dollar, rising yields, rate cuts later. Later. Not sooner. And later obviously means a lot more data between now and then that we have to digest to figure out if ever. Correct. The problem, and its not so much of a problem is the economy remains strong. And nominal wage growth is 4 to 5 not consistent with inflation. And gas prices are on the rise and food prices are high and services are high because people are getting paid so theyre paying for it. So its not all bad. No. The economy is strong. The economy is strong. And thats okay. But you dont want to see inflation stay stubbornly high when rates are already more than 23 year high and considered in restrictive territory. I suppose theyre restrictive. Although for those at home and looking at their money market account, versus an allocation to equities when you get up into the high fours or five thats attractive. Not a bad thing to earn some interest on your savings. Good for savings. Not good if youre trying to get a mortgage, if youre waiting for the lower rates to get a mortgage and we got them for a little bit and now the rates march back up. Auto loans. All those loans that are sensitive, credit card rates to whats happening on Interest Rates. Another headline i wanted to mention, whats not helping is china has not been really been helping on the growth and market side. Fitch cutting chinas ratings outlook on growth risks. They warn about rising debt and warn the economy hasnt been as strong. Well get to it in more detail i hope at some point but any bigger takeaways. Forgetting your time with yellen, that was the main thing, but if you have any sense for whats going on in china . That was a peking university p. I was there over the weekend and it was a holiday. It was the tomb sweeping holiday, so people were off work and more people in beijing at the tourist attractions. We went to the some of the malls. My sense first of all i loved beijing i hadnt been there before. Thought it was a great city. The forbidden city. 7,000 structures. So cool. Really interesting history. They love yellen, as i mentioned many times. You mentioned that. I think thats pretty unique probably among american policy makers not sure whos coming next on that front. But it doesnt feel weak. Felt like people were out and about, going to nike and adidas and lululemon and the gap. Amazing to see the brands we talk about every day those are the main stores along the with ev show rooms in the malls that we were at. Of course. But food was good. Just takes a really long time to get there and hard to get a visa. So tourism. I didnt see a ton of westerners and the airports were empty. And takes a while to adjust back to the time zone. What day is it . If you fall asleep ill wake you dont worry. Let let a bring in mike santoli for a take on where we stand. S p down 1 . Its cpi day, sara, thats all you need to know. It is also wednesday. Thats why i came in. I figured that. Down 1 . Whats interesting is where the market immediately went to, s p 500, 5150 thursdays low. Spent most of the last month twine 5150 and 5250. So the point is the market was sort of testing its tolerance for that level. See if it holds see if we can still rotate what did the market immediately go to this morning when it needed a little rescuing, it went to nvidia and meta and lilly. Basically the themes that are not sensitive to cpi and yields at least in an immediate term. So well see if that keeps working. The market is having its patience tested as well, in terms of having inflation fall into line. I keep saying this, back late last year, the decline in inflation and the fed pivot immediately made good economic news, good market news. It meant all they cared about was getting inflation in line they didnt think they needed to slow the economy much to get it done. That equation is now getting questioned more, sara was saying about Services Based inflation, which is the stubborn piece. Youre finding people saying its a matter of time before the shelter factors start to kick in and maybe that takes some of the pressure off of cpi, people saying pce, the feds target, is a little bit more tolerant right now of some of these moves in the end prices, in other words a big spread right now between cpi and cpe and if the fed wants to anchor to those things thats fine. I dont think the market needs, in quotes, rate cuts soon but it becomes harder to wait. If the ten year goes to four and a half and the short end higher, and its longer and do we have to hike again, it raises the odds of a fed mistake. It raises the odds the economy is not going to be able to handle it. Thats all that matters for market. Its not really the valuation math between yields and stocks to me as much as it can the economy handle what the fed has to do in terms of patience. You know, secretary yellen said that shes not worried, inflation is going back down to 2 . Shes been on the economy and the nonrecession call but wasnt right on the transitory inflation call. After hearing that, i hear from ceos and cfos they say we dont agree. Economy is strong, inflation remains sticky. Theyre the ones, i guess, passing it on. So people are getting higher wages and then those Services Prices are absorbed. Whats she basing her view on . Inflation expectations are very well anchored. Weve seen a little bit of a creep up but not much. Shes a central banker at heart, thats what she looks at. They have not shown anything worrisome on that front and weve already seen it has been a fairly large slow down in the inflation rate from what to where we are right now in the 3 . And so, she thinks the shelter ultimately is going to exactly. As you plug in market based measures of rent to the equation for cpi it gets you towards the target. Not you cant just do that. You cant just sort of tweak the methodology on the fly. Thats what gives confidence to people running these models and saying thats where were trending. I think its a decent chance that 2 remains this kind of aspirational goal the way that 2 was aspirational on the upside in 2010s, we went years without getting up to 2 inflation on the sustainable basis and did okay. You tried to tweak policy along the way. I know i talked to you about the 2015 example when yellen was fed chair and they wanted to hike, get off zero. The Economic Data none of it said they should. No growth, no inflation, and they said were still going to force a hike. Thats the only way to punctuate a rate cycle, do the opposite of what youve been doing. Maybe thats where we are with the current fed saying we need to squeeze an ease in there. An adjustment not an ease is the way theyre looking at it. Yes. But they want to see more progress or at least inline numbers and were not getting that. Thats why they hope to get lucky in the next couple of months. Mike, thank you. Lets get more of the streets, david zervos joins us. Good to have you. David, give me your take on the cpi print and the market reaction. You know, i guess theres disappointment but at the end of the day i like the market reaction. I like the fact that the curve is inverting. I like the fact that as sarah was talking about, longterm expectations are remaining anchored. And people are adjusting the timing of these rate cuts. These what i like to call victory cuts. Victory still a little bit elusive and the cuts will come a little bit later. I do think, david, it comes down to some of the things weve been talking about on the sessions that weve had the last year or so. That policy really isnt as restrictive as people think it is. And theres a lot of folks at the fed still trying to figure it out, the market trying to figure it out. I go back to my thesis, which has been the Balance Sheets that the Central Banks are still highly accommodative. So i dont know if im right or wrong but i certainly feel like some vindication on the idea that policy is just not as restrictive as a 5. 25 to 5. 5 rate that mike suggests. So based on that and this print we got today, i know you were not one of those looking for four or five or six rate cuts in 2024 but looking for any lets call it in the back half of the year . So i made a clear statement to our clients to start the year. Its not about how many or when. Its just about ability. Which means if things get messy, a bunch of data starts to turn sour and negative, both inflation and growth, and i think they have the ability to cut and that wasnt in play over the last couple of years. So that fed put is there. Maybe today the fed put is a little less powerful because theyre going to be thinking, well, the inflation is a little sticky. But i think weve come a long way and we should celebrate the almost 600 basis points of disinflation thats occurred the last two years. Hopefully thats not transitory. I dont think it is. I think its more in the yellen camp but who knows. Nobody knows. I dont want to base my views on that. I want to base my views on the fact that really where we sit today is a place the fed has accomplished a lot and has credibility. What the market is telling you today with the moves and fixed income and the equities arent that bad, still 7 for the year. Its going to take more time but the feds commitment to anchoring long run expectations has never been longer. I wonder if were in this cycle where easier financial conditions are making it harder to fight inflation . If you look at housing for instance, we saw rates come down as the market got really excited about fed cuts and that stimulated some more Housing Demand and housing activity and all this optimism in the stock market and bond market. So it might make it hard to cut for the fed just because these financial conditions will go easy. What do you think . Is there a link . I think youre right. I think a lot of the financial conditions are easier than we thought. I think a lot of what has transpired with the feds Balance Sheet and kind of immunizing wall street from a lot of traditional losses it would have on their mortgage books and other books because they owned a lot of these securities. I think that helps with financial conditions. I think our Financial Sector is in incredible shape and thats a stimulus, even as rates went higher. So i think theres a lot of effects, sara, that we still dont understand. That we dont process fully from 15 years of running extraordinarily large Balance Sheets at Central Banks. We have 7. 6 trillion still of assets on the fed balance street, 8 trillion on the ecb Balance Sheet, 6 on the ecb Balance Sheet. I think our efforts as economists need to center on that. Because clearly something is not right. 550 basis points in a normal historical setting would have knocked the economy down more than this and it just hasnt. Its just continued to accelerate even as inflation has come down the last few years. So i think a lot of soul searching has to happen for economists, rethinking of models on how Interest Rates transmit themselves through the Financial System what youre talking about, but more broadly economy has a whole. Its been an amazing story for two years and we need to better understand i think what the wholistic level of policy restrictiveness is Balance Sheet and rates included in both. Not just focussing on rates. David, to be continued. And its certainly worth continuing to think about as well. In terms of that 7. 6 trillion Balance Sheet. David zervos from jeffries. Nvidia shares higher in to todays selloff but the stock is in correction territory, down 10 from recent highs. Plus the state of the financials, earnings from the big banks a couple of days away, what investors need to know. And Delta Airlines another bright spot in todays sell off. Whats ahead for the company on the back of the latest rul. Ests we have the s p down a little less than 1 . Energy is the only sector higher. Well be right back. The all new godaddy airo helps you get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo welcome back to squawk on the street. Nvidia shares higher in todays down day but the stock has fallen into correction territory, down 10 from recent highs and the semis as a group lower for the month. The next guest believes the periods of consolidation sets up for stronger moves later, vivek aria from bank of america joins us now. Do you see this as the stocks needed to cool down . I think, sarah, this is the ninth or tenth time in the last two years we have seen nvidia stock have a 10 or so correction. Every time it has done that it has been a Good Opportunity to relook at the stock. Because fundamentally whats happening is that we are going to have at least a four plus year of the a. I. Deployment infrastructure across Cloud Service providers, enterprises. Still in the second year of those, so anyone trying to call this as a peak in my view is being too premature. The size of the opportunity is growing. Size of opportunity is growing. Second the pipeline is extremely strong. Today a lot of the a. I. Infrastructure has been built on a product they conceived during the covid time. Generative a. I. Was not a thing at that time. It was the new part of black welcoming out that we think is coming out with generative a. I. So a longer opportunity size, much stronger pipeline and the third most important thing is valuation. We think nvidia is the cheapest large cap growth stock in our coverage. Selling for under 30 times, 30 plus. The s p 500 is trading two times price growth ratio and nvidia is less than one time. We think increasing size of opportunity, better pipeline, and volatility is part of the game here. I wonder if investors are worried about competition. We got the news about google announcing their own armed design cpu thchip. Is that a threat to names like nvidia. The competition is going to be there since the a. I. Market started we have seen custom chips amount for 10 to 15 . And we have seen nothing that changes that view. Google has been designing their internal chips, actually designing in collaboration with broad com since 2017 and to now their Data Center Business has probably grown 20 to 30 times. So google designing their own chips i dont think is extraordinary. Cpu is something that nvidia doesnt even sell to them. So i dont think that cpu announcement should have any implication on nvidia. The other interesting thing that i think sometimes gets forgotten if you look at who is ahead in terms of monetizing generative a. I. Its Companies Like open a. I. , microsoft, meta. Look at whos the largest adopter of nvidia chips rather than custom chips its microsoft, meta, versus others, so is it coincidence . Do you think theyre hyper scaler partners, the ones spending the money on a. I. , will be able to go elsewhere to another competitor or develop their own like google is doing . I think that we will continue to have this mix because there is just a wide range, right. The large Cloud Companies have internal workloads, surge, monetization of the video infrastructure and they have pluc public work clouds where enterprises are working with them to set up their own a. I. Training and inference and thats what nvidia does extremely well because it has this large base of deployed hardware based on their operating system and that is what incentivizes enterprises to come and ask for nvidia based hardware when they come to the public clouds. The big picture view is accelerators is 100 billion market we think it doubles in the next three years at least and in that nvidia maintains 75, 80 market share and the rest of the industry has 20, 25 market share. So theres a range of choices but i think its a large and prospering market. Youre a buyer on the dip. Thank you for joining us. Vivek arya bank of america, 1,100 price target. The key point is the multiple staying below 30. If you get the Earnings Growth its cheap then. Still to come, keeping an eye on delta. Shares are higher even amid the selloff today. Looking at the numbers and the sector. Tomorrow morning you wont want to miss this, an exclusive with amazon ceo andyas at live on squawk box, 8 30 a. M. Well be right back. Welcome back to squawk on the street im Contessa Brewer with your cnbc news update. The exchief Financial Officer of the Trump Organization was sentenced this morning to five months at new york citys Rikers Island jail his jail time for perjury comes a month after he admitted to lying under oath in Donald Trumps civil fraud case. The u. S. And japan are set to announce a historic upgrade to the Security Alliance today. President biden held taulks wit the Prime Minister. The pms visit is first state visit by a japanese leader in nine years. And the first ever limit on so called pfas in drinking water. Its to reduce the lowest levels measured. The agency said it will reduce exposure for 100 Million People and prevent thousands of illnesses, including cancers. Back to you. Delta a bright spot this morning swinging higher after swinging to a profit if the first quarter. Phil lebeau caught up with the ceo. What are the headlines . What stands out is the consistency of the first quarter. They beat the street in terms of a bottom line profit by 9 cents with revenues coming in this just shy of expectations. But the numbers within the numbers, this is a tough quarter. In terms of lets look at cost per available seat mile up 1. 5 the guidance earlier in the year was an increase of 3 . Better than expected. Passenger revenue, flat, and swung to positive domestic passenger revenue. So an improvements in the operations and thats filtering down. Demand, internationally its hot right now. We talk about how transatlantic demand in the spring and summer will be strong theyre seeing it with transatlantic and transpacific. Corporate travel, thats improving as well. Heres ceo ed bastian. Weve seen a 15 point acceleration since the start of the year in Business Travel and were now back revenuewise, at or above prepandemic levels. Volumes still a bit off, maybe 90 but were doing really well. Shares of delta this year, seeing a split in performance between delta shares and their competitors in terms of what theyve done this year. Delta reiterating the guidance to earn between 220 and 250 a share in the second quarter. The street right now is 223, that was the consensus this morning headed into the results. Bang to you. Phil, explains the bump in shares today. Appreciate it. After the break, former dallas fed president Richard Fisher here to weigh in on the hotter than expected inflation report. What it means for possible rate cuts ahead. Markets have recovered some of the early losses, the dow down 335 it was down about 500 at the start of the hour. S p down. 75 . Energy is the up ononly sector higher. And meta shares bucking the trend also higher. Noos nasdaq down. 8 . Well be right back. The road to opportunity. Is often the road overlooked. At enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. Because we believe the more ways we all have to move forward the further we all go. Dude, whatre you doing . Im protecting my car. Thats too much work. Weathertech is so much easier. Lasermeasured floorliners up here, seat protector and cargoliner back there. Nice out here, side window deflectors. And mud flaps. And the bumpstep, to keep the bumper dentfree. Cool its the best protection for your vehicle, new or preowned. Great. But where do i . Order. Weathertech. Com. Sfx bubblewrap bubble popped sound. Welcome back to squawk on the street. Traders slashing their bets on a fed rate cut in june, following that hotter than expected cpi print we got for march. Lets bring in Richard Fisher. Great to have you back, richard. The odds for june go for 50 before the report to around 20 chance now. Does that make sense to you . Do you think well get it . Its all over the place. Feds funds arent much for a predictor. Look at what they expected at the beginning of the year, even going to say six rate cuts, et cetera. You just have david zervos, one of my new colleagues im the new colleague at jeffries, and i agree with what he said. I think you have to step back here and take the look from 30,000 feet. Whats the objective of the fed . Its to wipe the egg off their face for when they let the inflation horse out of the barn as i like to say. Brought it back into the corral, a little distempered. It needs to calm down. Until that happens theyre going to keep rates pretty much where they are in my opinion. The other thing, sarah, we have to worry about is enormous fiscal deficits and financing rolling over treasury debts. Now having gone to the short side, as they announced at the end of last year, the cost of money has gone from almost nil short term to the u. S. Treasury to 5 . And that keeps compounding. The first half of this year, for example, we spent more on interest costs than we spent on defense spending. This is, to me, good stuff to the standpoint of forcing fiscal authorities to hopefully get their act under control. Dont you think the bond market is reacting more to just the fed policy path at this point . The economy, where inflation is going, when those things calm down you dont see a lot of worry out there about the fiscal path or the size of the auctions and stuff like that. I think its a little bit of both, sarah. Were beginning to see that build. Clearly theyre coming off the fed, all the stuff we just talked about. But you cant reduce the pressure that comes from having to finance these massive refinancings and growing deficits we have in the united states. Its not just us. You just had the japanese Prime Minister on that clip on the news. They too, all of europe, everybody is going to market at higher rates than they did before. And their needs are tremendous given defense costs in had particular because of russia, north korea, china. So this is across the board and i think its enthaving some influence but clearly what the fed does is anchor expectations. I dont know what the federal budget looks like if you slash things, particularly to your point given defense needs at least the seemingly endless needs we have in terms of providing defense to others not just our own. This is purely economics, settlset aside whos in office. Theres no difference between republicans and democrats when it comes to spending with one exception, democrats used to enjoy it more, thats what my mentor used to say. 10 trillion has to be coming to market this year. At a much higher cost. On the longer term side, the ten year and so on, it was 2 . Now its 4 1 2. Now i believe, my own personal belief for what its worth. The risk is for higher rates on the longer side than for lower rates. That has to do with the option sizes running at 60 billion and so on. So again, fed fund futures are important. Theyre fun to trade around. To me they dont provide much information. And one last thing if i can say this, carl its david, actually. Sorry, david. I cant see you. I hear your voice. David, if you look at the analysis we got this morning right after the release, people say take out the insurance cost, take out this, that. Thats what arthur burns did when he was chairman and what led to the disaster we had in the 1970s. So you have to take it as a whole, cpi is 3. 5 . See what the pce reports out as. These are the facts and the fed is held bent, correctly, on getting back to that 2 number they keep touting as their target. Not going to change. I guess with your view that rates will remain higher, and already were starting to see these elevated yields again across the curve, back to november high, dollar stronger, i wonder if that starts to weaken the economy to a point we can look at rate cuts again . Sarah weve been everyone is forecasting a recession, hard landing soft landing. I thought david zervos was good this morning explaining it. The markets are still trading rich, the spreads are still narrow and that is an accommodative stance that the market is leading us into and so far helping to propel the economy. Absolutely. Richard fisher always appreciate the incite good to see you. Thanks for having me. Still a Warner Brothers discovery board member as well. No longer at t. I didnt realize that. A levered company once again the shares of levered Balance Sheet Companies Get hurt when we have an up yield day. Hes telling that board higher for longer. I know. Cut down that debt. Cut down that debt. Quick programming note were a day away from the second installment of cnbcs cities of success an hour long special highlighting businesses and power houses. Tomorrow is about denver and boulder. Kro carl is going to join us live with more ahead of that, which airs tomorrow at 10 00 p. M. Eastern. Quick break, dont go anywhere. Trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. Get an expanding library filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. We really dont want people to think of feeding food like ours is spoiling their dogs. Good, real food is simple. It looks like food, it smells like food, its what dogs are supposed to be eating. No living being should ever eat processed food for every single meal of their life. Its amazing to me how many people write in about their dogs changing for the better. The farmers dog is just our way to help people take care of them. Markets off the lows of the morning but you can see still down sharply on what was that hotter than expected cpi report. Lets get to bob pisani. Dont have to get to him, hes right here. I can touch him. Feel so good when you can touch me. Weve been here 30 years together. Enough of that. The market . The narrative is getting more complex. Let me explain why here, obviously the good news is the economy is strong and earnings are strong. Thats why were not down even more. But if you look at what else is going on you have the sticky inflation so that makes this narrative more complex. This is bad news for small caps, speculative tech, reits and utilities but good caps, but good news for the inflation trade. Small caps down much more than midcaps and big caps. Borrowing costs are higher. Higher risks are small caps. All of this is perfectly understandable. Big cap tech, not down as much as you might think because of the earnings power thats out there. Apple, microsoft, this is all 1 , half a percent, and nvidia is up today. What gets hit is speculative technology, which obviously have higher costs associated with them. Heres kathy woods stuff, teledoc. You see down two to three times down more than big cap technology. Utilities, this is a little complex, but higher rates are generally bad for utilities. Higher rates mean increased borrowing costs. So if utilities cant pass on the high costs, tehe Equity Investments suffer. Reits are really tough on this. Its a complex issue. Reits rely on debt financing, rising rates, increased borrowing costs, higher borrowing costs hurt profit margins. Thats why you see them down so much here. If rates go up, because the economy is strong, that can benefit longterm reits. So the kneejerk reaction is sell reits on this, but longterm, Strong Economy, can it be helpful to reits again. Kind of complicated . Whats working is the inflation trade. We havent used that in a while. Commodities and look, weve been talking about the refiners like valero, marathon, new highs recently. The sector is skbroverbought. Thats the problem to the sector. For stocks to work, you have to have companies that are not super Interest Rate defensive. Kroger, walmart, procter gamble, constellation, as well here. And inflation in some parts may not be so bad. Higher rates are good for insurance stocks. Look at these insurance companies. Theyre all up here today. Life insurers, remember, they reinvest the premiums from policy holders, and put them in bonds. So the higher yields lead to higher investment income, and that enhances the returns on the portfolios, and you see insurance stocks are doing well. This is all kind of tricky. And the bottom line, the most important thing is if the economy holds up, the earnings are going to hold up. And already, you see, were off of the lows. Im not saying its because people are thinking longterm, but that to me is the key. Higher rates with Strong Economy and strong earnings is something the stock market ultimately can handle. Higher rates with an economy going down, of course, and earnings going down, now were going to have much bigger problems with the s p down 50 points. Well, i think, also higher inflation not good, right . Because it does increase the chances, as mike was talking about, of a fed mistake, right . If we get stickier inflation, what does the fed do . Even if the economy is in a better place . We had six Interest Rate hikes in december, three a few weeks ago, now were going two, essentially. Does that mean the s p is down 50 points was were going from three to two . Ill take three to two. And 50 points down on the s p, any day. So far, i think thats a pretty modest reaction. If the economy holds up to your point. Thank you, bob. Coming up next hour, well check in with evercorpss vice chair krishna guha, thats coming up at the top of the hour. Be right back, stay with us with the dow continuing to recover f e wsf moing. Down 350 right now. Coming up, big interview tomorrow on the show, the imf managing director, kristalin georgeiva. Its her socalled curtain razor, what she does ahead of the imf meetings next week, when she gives a bit of a preview. And the last time they did in january, they expected 3. 1 global growth, not too shabby, soft landing, and moderating inflation pressures. I do wonder if she changes her tune, based on now three hot inflation reports out of the u. S. . Yeah. Well also get an ecb meeting tomorrow. No one expects a change there. Commentary always interesting. I cant wait. Good to have you back. Thank you. Thank you for traveling 30 hours. It was worth it yeah. Absolutely. All right, a lot more coverage of this market selloff after that hotter an eecd thxptecpi number. Dont go anywhere. You know whats brilliant . Boring. Think about it. Boring is the unsung catalyst for bold. What straps bold to a rocket and hurtles it into space . Boring does. Great job astropersons. Over. Boring is the jumping off point for all the unboring things we do. Boring makes vacations happen, early retirements possible, and startups start up. Because its smart, dependable, and steady. All words you want from your bank. Taking chances is for skateboarding. And gas station sushi. Not banking. Thats why pnc bank strives to be boring with your money. The pragmatic, calculated kind of boring. Moving to boca . Boooring. That was a dolphin, right . Its simple really, for nearly 160 years, pnc bank has had one goal to be brilliantly boring with your money so you can be happily fulfilled with your life. Which is pretty unboring if you think about it. Thank you, boring. Good wednesday morning. Welcome to money movers. Im sara eisen with mike santoli live on the floor of the new york stock exchange. Markets move lower following that hotter than expected cpi print on inflation. Krishna guha joins us with some reaction. Well get to three stocks that oak mark says are undervalued, including one householdnamein the industrial sector. And one chartist says the regional ban