treasuries real quick as well, 4.665. now the two-year is over five, just over five. >> another hot number. >> and a lot to chew on. join us tomorrow, we've got a lot more news. >> we don't know what it is yet. >> "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." i'm carl quintailla with gem cramer and david frazer from the new york stock exchange. futures are weak as employment costs come in hot. ten-year 4.67. mcdonald's, 3m, comb all on the move post results. >> another big name the watch is eli lilly, posting that profit beat, hiking the full-year guidance by $2 billion.

elon musk is reportedly going, quote, absolutely hard core around head count and cost reduction as tesla plans for more layoffs. >> let's begin with futures moving lower with the fed kicking off the two-day meeting. 4.2 year-on-year, jim, maybe a little too low. >> the "wall street journal" this morning talking about how powell feels good about higher for longer. i still think march was weak and you're not going to get a really strong number from april. housing, shelter, that's bad. there's also an -- mcdonald's did a great graphic on squawk. there's just this belief among people there's no controlling this thing. i think you do get control. one of the stunning things is walmart can't make any money because people are too

expensive. we're in a period that people think it's inflationary. that has to break. >> what breaks it? >> a recognition that we -- that companies can't offer what they're offering. let's take mcdonald's. lengths say mcdamaged's misses. >> misses on earnings. >> yeah. >> they have to say we raised the price too much. i want a burger that's less money. david, the franchisees don't want to take that hit. but they're not in sync with what the ceo and the shareholders are in sync with.

i'm not calling for marlboro monday. what they have to do is say we're going to take the hit, cut our earnings, lower the price of our burgers. the franchisees take a hit and then you have to lower the price. >> they are not talking about price cuts, but they are talking about larger burgers. >> larger burgers are something that the franchisees can get behind. this is an era where, if you don't offer rollback, like walmart, costco, then you're just not going to get the numbers. mcdonald's doesn't have the numbers. brinker has a higher price. kevin hoffman can afford to raise prices. he's been willing to lose lower-end customers because he makes a lot of money offer the largest margarita maker in the country. >> you know what the margins are on margaritas having owned a bar

before. >> no, david. 97%. i tried to get them to 98% over and over again. >> beer, by the way, cinco de mayo, we didn't give free beer. we had $10 beer on cinco de mayo. then you have a good year, not quarter, year. >> hence brinker is able to make some money. >> yes. the higher-end customer, the guy who pays $25, not sensitive to paying $28. >> qsr is up three premarket. tap is up four -- two premarket, jim. >> qsr, it's very interesting that the division didn't make it is burger king. tim horton had great numbers. popeye's, which is a great bargain, they came in. >> reporter: strong, 4.6 versus 3.4. i have foyle on tonight -- >> and james quincey.

>> yes. >> blockbuster. incredible. it was mission impossible. i put it together. >> play the music. >> is the show ten minutes long. >> qsr is really, really well run. i think you see these numbers and the ebitda is really good, and the numbers are good. you stack it up against mcdonald's and you say why isn't mcdonald's doing that well? >> it's international and a lot has to do with what we've been talking about sings october 7th, how foreigners see american brands. >> that's true. i'm not going to deny that. i think it will wear thin if we get that next quarter because we want these companies to say, listen, we're cutting numbers because we don't think the protests end. no one wants to do that because nobody wants to acknowledge that boycotts are protests. that brings more attention. i just think -- look, as someone

who is picking stocks, i don't care. i want to find the ones that don't have the problem. david, they don't have the problem at brinker. they didn't have the problem at chipotle. >> no, they didn't. >> i can't say here and say, i feel badly about mcdonald's, it doesn't matter. that's not the way the market works. >> starbucks also having issues? >> that's tomorrow morning's business. >> we'll find out tonight. >> i would think so. that happened last time. >> look at columbia university versus starbucks? i don't know. you can see what's happening at universities and you can make the case. the viewer at home frankly doesn't care. they want eli lilly. they're not staying thick and thin from mcdon't's. >> maybe eli lilly is another reason why people aren't eating as many burgers.

i don't know. was it a year ago where so many companies that relied on people's appetites, had a significant impact on the eating ability of the american consumer. the glp-1 numbers only continue to go up, up, up, up, and by the way, the number of different mam different maladies that can be treated. >> they say sales are actually up because people are discovering they have this from the glp-1 when they go with the doctors. it's part of obesity. their sales have gone up. i asked james quincey this morning, is it possible, coca-cola, the numbers have gone up because you can drink as much as you can't and not gain weight. >> it's different from when we saw that spoon in so many of

those stocks? >> he said what it really is they like diet coke and coke zero, those numbers are up big. >> as it pro live rates through the population -- >> it's liquor that has been hit. >> you believe it suppresses the out want for alcohol. >> i see the numbers of liquor. there's a dramatic decline -- by the way, i'm talking about spirits, hard liquor. not talkth about beer. >> if you're on these things can also be extended to food consumption. >> what people are saying is liquor doesn't taste like liquor. that the taste is different. >> nor does coffee for that matter. >> really? coffee? >> soda is not being hurt as much as people thought. >> this is all, of course, on a

medication -- zepbound's first full quarter in the u.s. that is a shot. andrew asked david ricks about the possibility of moving to an oral treatment. take a a listen. >> we're about a year out from the first data that could confirm the safety and efficacy of that pill. it's a long name now, but we'll come up with another one. it's a glp ag nah. that can go a long way and we're excited to get that data in '25. >> they're ahead of everybody. there's guys who say they're close. the problem is that they're often close and it turns out it hurts your stop mark, turns out you throw up. no one wants to throw up and lose weight. this is not people who purge. this is people who like the taste of things and just don't eat as much. they'll get it. they'll get it right. >> and it will be something you take for the rest of your life

potentially, the same way you take your cholesterol medicine if you have high cholesterol, or even if you don't. >> yeah, okay. it's chronic. that's called chronic. >> that's what makes it a beautiful thing. it's not just treating something, for example, that we saw with gilead when it had that huge run-up and its med din for hep c did what it was supposed to. >> i invented a medicine with a patent on it. the only problem is you have to take it four times a day. what the drug companies say, hey, how great. four times a day. this is again the walmart problem. they can't make money in the clinics. the american health care system is so broken. we know that. how much does eli lilly make on each shot? >> i think they do very well. that said, they did spend the money to develop the intellectual property. >> you sound like jensen now. >> there should be some opportunity to profit from all of those years of work that went

it. >> jensen would say you have to pay the price of how much it costs for them to blackwell. >> right. these people who argue, well, look what it costs to make a pill. of course, once you're manufacturing the actual pill, it doesn't cost anything. >> it's arguably a can of soda. the injector costs more than the stuff that's in it. i had a fellow, dan drucker, who i met who was involved with this. >> i remember. >> he's not crazy about how much it costs versus how much it takes to make. >> i don't know where that line is between getting your deserved return on great science and being a pig, so to speak. >> how much does it cost to get a big mac and fries versus ten years ago? >> apparently a lot more. i haven't been in mcdonald's in a long time. >> the egg mcmuffin is still really good. tim horton is the coffee that

some people say is not as good. the numbers are great. >> david has a ton on media. eaton, chang, paypal. tesla a day after that huge 15% surge and futures gaveneti as we look forward to amazon tonight. stay with us. [busy hospital background sounds] this healthcare network uses crowdstrike to defend against cyber attacks and protect patient information. but what if they didn't? [ominous background sounds] this is what it feels like when cyber criminals breach your network. don't risk the health of your business. crowdstrike. we stop breaches.

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and round the clock partnership from comcast business. see why comcast business powers more small businesses than anyone else. get started for $49.99 a month plus ask how to get up to an $800 prepaid card. don't wait- call today. tesla pulling back a bit premarket after surging 15%. the reports saying the company is instituting another round of layoffs including senior executives and hundreds of employees. tesla announced earlier this month tesla was cutting 10% of the workforce. this is probably in addition to that. >> it looked to me like a year of living efficiently. i don't know whether this place got fat and happy. there's a level where you can speak of rigor --

>> hard to describe a musk-run company being fat and happy. doesn't seem to be -- >> maybe these guys were blockers to better people. >> i don't know. >> you're saying maybe -- >> they're looking to cut costs, right. we know that. they're looking to obviously save money in a much more competitive market where they got to try to save margin as best they can as they compete against the number of ev makers, many from china, against, at different price points. tesla lovers will say, hey, there's no comparison still in terms of quality and everything else. obviously we're coming off a very strong day yesterday in which the company's market value exceeded $600 billion. this on the news that full self-driving will be introduced

in china -- >> phil lebeau says it is a big deal. woint get in the way of that. i will say, if this were ford, here is what the narrative would be. david, it's falling apart, losing good people. >> oh, if you were saying this was going on at ford -- >> right. i'm saying musk, we say, hey, is probably getting better. at ford we would say, uh-oh -- >> yeah. >> it's a narrative issue. >> does that make you bitter as a ford supporter? >> no. dave, i've had genuine bitterness in my life. that doesn't make me bitterment if we have to talk about what makes me bitter. >> i don't actually. >> i would lean into the eisen hour. >> the eisen hour. >> i was waiting for that. >> on ford, just curious. >> what? because my travel trust is not

doing well? go ahead, boeing me. i don't care. >> why do you own it? >> why do i own it? it's got a great yield. i think they're ready to do a buyback. the stock is up, and i'm stupid. take your pick. am i worried about starbucks tomorrow because we own it? not at all. because i'm an idiot. here is what the problem is. twlen you pick a stock and it goes down, it's not the fault of the ceo. it's your fault, my fault. i've known this all my life. if i see a company that's doing poorly, it's on me. it's on me. it's not on someone else. >> conversely, if you've got a winner, who gets the credit? >> you had nothing to do with it. >> i'm saying that's how wall street works. if you own -- let's say you own qsr this morning, pat doyle did a great job. but if you owned -- >> mcdonald's. >> then you screwed up.

that's the way it works. i wish it weren't. that's the way it works. >> own it or get into another bus business. >> that's act two, tool and dye. >> tool and dye. that's where i'm headed. >> before that, we'll get cramer's mad dash. we wrap ailn miteuppr ia nu. ps know the importance of keeping their clients on track. sometimes they need help cutting through the noise, to ensure fresh investment ideas keep flowing, and to analyze the market from every angle. at allspring, we deliver the unexpected, by relentlessly exploring where others don't. allspring, follow the insight.

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time more "mad dash." 22 minutes into the show and we haven't mentioned nvidia. >> do you remember nvidia? >> i do. >> do you remember the piece in "60 minutes," a piece about whether we would all be taken over by robots? >> sure. >> here's a piece by ubs, earnings per share to 41. david, this is a cheaper stock. it's cheap stocks. they're talking about shipment for blackwell in december -- they think that means there's

going to be a product hole. i think blackwell ships earlier. blackwell is the big one that makes it so that a lot of people feel they can do video. when people think blackwell, they should be thinking you can inject video and then when you want to do inference, it will be able to do the video for it. that's a remarkable thing. right now we're very good at commands, at words. if we get video going, wow. >> what does that mean? what are you actually saying? >> so you want your robot to act like daniel craig in bond. well, it will watch daniel craig and it will do it. >> it will do it. >> i think what happens when you see that is, wait a second, how did it do that? well, it just ingested video. it's no longer just print. right now it can be moby dick in a second. big deal. when you can put movies in, i

can project you to be cary grant or john garfield. >> garfield comes up more often. >> in you can be able to make video and do things, then you can teach robots to do things we've never believed -- robots will not talk like this. robots will talk like "hey, how are you doing, partner?" >> blackwell, conceivably, when it starts to be used, could leapfrog the technology. >> also, if you're amazon, you can just do it. one of the things that's great about jensen. he said, look, i don't know what people can do with this, but we know they can have it. i tried to look at getty images, they're using a lot of that stuff. when i went to the bar, the nvidia bar with the robot, the robot didn't know much. now the robot will be so smart, so when i get to cinco de mayo it's modelo versus corona.

i think this ubs piece is a little too negative about blackwell. >> all right. take a look at shares of nvidia. perhaps will be down along with the broader market as you just saw from the futures board. opening bell just five minutes away. don't forget you can catch us any time and anywhere by listening to and following the "squawk on the street" opening bell podcast. it's your time to cache in... so don't just play... stay at northern california's premier casino resort. book your getaway now... ...at cachecreek.com.

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watch 3m today, double beat, jim. guides around the midpoint. going to reset the dividend? >> one of the things that's really horrible -- david, i want to talk to you about this. it's not a disgrace or anything, but it turned out that mike roman did not have a good hand, and he didn't know it when he took over. he did not know about all the groundwater spoilage. he disclosed everything he did know. he didn't know about the combat arms hearing loss. he's spending a huge amount of time trying to get things behind them, at the same time doing a health care spinoff, being sure

the dividend -- not slash, but at least be somewhere because this dividend aristocrat. what he did was he cleaned up the mess. now they've got a new ceo, and the ceo has a clean slate. what a great thing. i think he's a hero. >> you do? >> yes, i do. i think he's a hero. he figured out he had to address these problems -- by the way, i think j&j has to, too. they addressed the problems with talc. >> a lot of challenges along the way for -- talking 3m here, of course, for mr. roman as he led the company, and the transition is coming. >> you think that dividend -- change in the dividend is going to be important? >> i think there will be some people who says, he's one of the

big dividend aristocrats of all time. he put them on as firm a footing as ossible. the next thing i don't know know, the dividend can go back up. the existential crisis of 3m is going up. >> the market is responding -- [ bell ringing ]. >> carl, when we look at these guys and get lawsuits. j&j has these talc lawsuits. when you spoke to them four or five years ago, it sounded like they had something crooked. no. you have to defeat them or make deals with them. you can't just ignore them. >> at the big board, als right for life. between 3m and mcdonald's and coke, jim, that's three big downings, right there.

>> i think coca-cola is business as usual. to me, if anything, i want to buy it. becky is going to the pilgrimage this weekend to -- when you go see warren buffett, he likes coca-cola. i think james quincey has done a terrific job. margins are good there, 3% yield no. one got hurt as a manager buying coca-cola. diet coke is doing well, coke zero doing well, latin america doing well, america doing well. the amazon channel is good. there's only so much you can do. it is in the end carbonated water. >> yes, with a lot of sugar. >> you can have the zero. i'm the coke zero guy. >> i don't drink soda so i wouldn't know. >> taking 13 a price will get your attention. >> think about that. here is a guy who understands his audience. it did not get hurt. i posited to james -- people don't want to buy this.

i think when i look at pepsico, i think there's a truce. >> a truce. >> i don't think coke and pepsi are trying to kill each other. i think that may be over. >> uh-oh. sounds like a job for lina kahn. >> no, david, she's got to stop the handbag problem. >> now asking for information on vizio walmart. >> got a second request. >> oh, no. say it ain't so. >> doesn't mean they're going to do something. >> watch it be colgate and crest. >> what about colgate? >> maybe they talk. colgate and crest, maybe they talk. >> procter and gamble. >> i like her on the hand combag issue. that's got to stop. >> the hole in the doughnut. the endless price increases in handbags has got to stop. >> i was very surprised to signed on believing that lawsuit

was justified. you always surprise us, jim. >> the head of erickson in this interview saying eu regulators are driving europe to, quote, irrelevance. >> wow. >> it's happening all over the world. >> what i come back to sometimes -- this, by the way, is regulation broadly speaking as well on the wireless industry. i can remember having covered this industry since its infancy, when europe was ahead of us and then they basically took out all the profit motive from the industry. >> i'm talking about the vote a phone and the other big players, they took out all the profit incentives from the business entirely. what do you know? they made no progress. now their wireless networks are not what ours are. >> not all that can't list over there. >> then again, people do seem pretty happy over there. >> they are happy.

>> that's a dalai lama thing. >> what would jefferson say. the pursuit of happiness -- >> literally written in the doc. >> maybe there's part of it they're getting right even if we outpace them in wireless. >> you bring up the core agreements thing you're working on -- the four agreements. >> no. i try to keep up with you when it comes to my knowledge of history. >> got to be good to yourself, got to be honest to people. i'll get you a copy. takes two hours to read. walgreens, let's get to that. the yield is really good in walgreens. >> how does that happen? >> how does it happen that a stock can go down and the dividend goes higher? because it's not the dividend. it's the yield. >> it is the yield. that is true. the dividend yield on walgreens is 5.68%. >> after what walmart said about clin nis, it makes you think how

can cvs do well with all those clinics. >> they're not disclosing the number of jobs affected. they do cite challenging reimbursement rates. >> labor, they can't find nurses. the whole thing was a disaster. urn like most companies, what is really terrific, they took the hit. they said, look, we're not making any money. they're big boys. i'm impressed by walmart. putting out the new food, private label. walmart continues to impress me by cutting their losses when something is bad and stay with it if something is good. that's what you must do. look at walgreens. they stuck with it all the way down. it want to hear what cvs has to say. they have clinics all over the place. >> are you impressed with ge healthcare? >> we'll talk about it. i'm surprised it's down 10%. they did keep their earnings

projections. peter ardwini has to be disappointed himself, but so far has not expressed that. my travel trust owns it. we know what to say. it's not ardwini's fault. we want to upgrade, buy that stock. a lot of that can be china. i think the second half will be strong. there you go. i like it. >> that's a big decline. >> oh, yeah. >> sorry. i was just noticing. >> double miss. >> i'm not piling on. i'm not. >> don't wince with every bit of information. >> how do you live? you take it so personally. >> you bet i do. i came in, saw it, 6:00. i saw i missed on that one. i said, you know what, jim? you suck. i didn't say he sucked. i said i sucked. >> you don't. you don't. >> that's not the way it's played. i've been in this for 42, 42

years. >> i know you have. i remember when you were a young man. >> it was me because i believed. this price is actually good. i'm saying, look -- you see all these trading shows, this is what it's like. you don't say, hey, i'll buy it, it looks good. how could i have gotten it so wrong? the quarter was good last time. they did gait. ge managed to sell stock higher. the problem is they did have a china problem. maybe it's a buy. maybe it's a buy. i want to see if it's a buy. i still feel badly. yes, i do, because people pay me really good money for a product i put out. they did not pay me good money to miss on ge health care. they paid me to get it right. they deserve that. >> understood. >> they also deserve for me to say i screwed up because i can't do it. i can't say he screwed up. they don't care. they have a right not to care, because it's my job to do it

right, their job. >> we can run that tape now when any of your stocks go down and save ourselves some time. you want to talk samsung, guys? it's one of the more important companies in the world's economy with chips and phones. obviously pretty important to south korea. had earnings that were far above -- >> the true blowout. >> may be benefiting a bit from the weakness of the korean yuan. overall, a very strong quarter. not sure what it portends when it comes to chips or phones or anything else. >> no, it's not clear. said the same thing. you go to skyworks? nxpi -- that's not what you go with. we know micron is doing well. >> memory returned to profitability. >> micron has been sensational. micron is obviously this is a business that's gotten much

better. mu. the stock is up 45 cents. i would be buying that off samsung right here. that was very good. >> we didn't mention huawei profit up sixfold. speaking of which, citi cuts apple to 2.10, trims it by about ten bucks. >> i'm with tony. he cut his price target to 175. no, that was when there was the three-for-one split seven years ago. make that six. that was a critical mean comment. >> it was. i'm letting it go. you have a thing for him. >> his numbers have been always right. >> apple shares up sharply on the upgrade from bernstein we're referring to. down a bit today. i'm going to talk paramount.

also want to talk nba. paramount, ceo i've interviewed i don't know how many times. no long are. bob bakish says good buy. had been anticipated late last week. now they've got a troika running paramount. i can't really recall that many successful companies that were run by a troika of executives. that's not the typical thing you go with when you're looking for true success. that's where they stand right now. three different guys running paramount, obviously all oversee different parts of the company, that they have been overseeing prior to mr. bakish's sdepartur. it's hard when you've got the wind in your face. looks like a hero with the wind in your back.

>> -- >> -- referring to the fact they may have had significant bids for show time but he chose to roll it in as opposed to elg sit and potentially garnering a significant return. sthoing in the press, not my reporting, has played out in terms of tension between him and control shareholder shari redstone. his and/or at least the way some have said they have gone about trying to slow this process that is under way between skydance and paramount may have contributed to his exit. there's so much on all sides of this. he's out. they got three people running the company. if you are the special committee trying to decide between a skydance deal and status quo, my sense is the status quo went down a bit in overall value. i don't recall a lot of success when you have three people

running a company. >> there was a franchise that was very good when i was growing up. it was called the three stooges. by the way, don't forget when shemp left, they had joe on hand. >> as for where things stand in terms of continued negotiations between the special committee and skydance, they continue to make what is progress. having gotten a sense from both sides, skydance side certainly will look at the current potential status quo and say, listen, we came up, we have a $3 billion pipe. we'll be paying a premium for some percentage of stock held by the b holders. when we do the exchange ratio for buying skydance, we're going to assume a far higher stock price for paramount than is currently the case. we're doing what you wanted and now we're more or less done. we've got a charter renegotiation standing out there. it could be a real risk. although i'm hearing -- some are

saying it could end up better than anticipated. we'll see. you've got the prospect of this three heads running the company. will skydance come up from here? i'm still hearing there's a gap. does it mean they don't get there? i don't know. exclusivity expires on friday. that may or may not be important because you can continue to negotiate after that. will sony put in a letter that offers real granularity in terms of what it wants to offer with his partner apollo. nothing else. >> how about basketball? >> on the nba different story entirely. there's a battle going on right now between warner bros. discovery which las the rights right now with the nba, obviously tbs and tnt, and our parent company comcast. espn is done. 11-year deal. they'll have the finals. that's done. an amazon deal -- this is other

reporting. disney i can tell you, both from others, that's done. amazon likely to get a streaming package or a package as well. then the battle is warner brothers discovery versus our parent company. reports not from me has comcast offering as much as $2.5 billion. if that number is to be believed, it's a high number. it may be a reason comcast shares are down today. you can see warner brothers discovery is down because will it have to come back and compete? it does have matching rights. the matching rights go into effect after the exclusivity period expires, which it has. it's not clear, is that entirely monetary? does it also go to what the thing looks like from a -- in terms of protections or like terms. but there are matching rights, and the question, jim, becomes are they going to be there or not for what is a very important property overall and great for the nba, great for player

salaries, great for ownership, the increased rates being paid here. >> i worked for comcast. the first thing i said, that could be fabulous. nba is very excited. >> nba is exciting. it can help with peacock to a certain extent where you have games there and then obviously with the network as well. again, it should be interesting to see how that plays out at this point. but i can tell you sort of espn is happy. they're done, they did it. i they didn't let it go past exclusivity. curious to see the amazon deal as well, jim. those are big numbers. to refresh, it's warner brothers espn right now. you'll get fewer games for a lot morn any is what you're talking about. you're atting amazon and you have this battle between comcast and warner brothers discovery. >> i want to see if david gets

this what is the one industry that's doing the most -- we had to be the graduate with plastics. what would it be at this point? you how you have to be in plastics. what is it? >> what is it? >> you have to be into hvac. >> i would not have gotten that. >> train reported this company, carrier -- >> why is that, jim? >> the government gave big subsidies. >> to be more energy efficient. >> these are companies that are benefiting from the biden administration's belief in climate change. i don't know where you are on the issue. >> i believe. >> you do? >> i believe it's a real thing. carrier brought this great fabulous pump division in europe from the germans. trane, that's stocks don't quit. it's a testament to how they're about trying to best the environment -- make the

environment good while still getting enough power. eaton, same thing. another 52-week high. they thought data centers would go 16, 17, now growing 25. >> big miss though here on chicago pmi. let's get to rick santelli. >> yes. this is april, april read for chicago's pmi. we know manufacturing isn't the bright spot. 37.9. we're expecting a number around 45. this is the lowest level month over month since june of '22. we'll call it all most four years. the fifth consecutive read under 50. it's now the 20th month since we've had a reading above 50. 20 months, going back to august of '22. interest rates haven't budged on this. i think the reason is, is this a stagflationary scenario?

is this giving us clues about the service sector? we'll get those numbers over the next several dwas as well. we have conference board confidence coming up at the top of the hour. suffice it to say, yields are relevant taking back some of the drops since last thursday when we had weak gdp, hotter inflation levels. stagflation seems to be rhyming on many of these numbers. "squawk on the street" will return after a short break.

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nba games. we'll watch it off the back of the weaker than expected chicago pmi. stop trading with jim is coming up next.

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let's get to jim and stop trading. >> piece in the paper in the journal ability goldman to unload gm credit card. we don't know if this is true but goldman continues to pace these deals. they made it so you know apple reports this week they made that card into something someone might want to buy. i continue to like the stock at goldman sachs only just because they are just undoing -- see i like companies who undo, make mistakes and change. >> you're referring to walmart clinics. >> yes. >> goldman -- >> these are companies that have confident ceos who say you know what, this was a mistake, and i'm reversing it. i think if goldman comes down, you buy the stock. when you get out of these things that are not your core competence, your stock is going to go higher. >> katy from morgan stanley, nice chart where they upgraded large cap banks earlier in the year, median capital markets beat, it was 11%, and they say still relative to nominal gdp,

m&a, capital markets, loans are still -- they're below the 20-year, 30-year average. >> the 11, 12 multiple, bank of america has a very low multiple because of their bank -- their bond positions which they can hold to maturity are hurting them, 11 times earnings. i just think that goldman is just showing me they can unhold the apple card -- i shouldn't say unhold. someone wants to take an advantage of the apple card their multiple will go up. the banks have optionality and it's all about hvac. >> i will keep that in mind. >> the line is exactly how do you mean? that's the line. >> yeah. that's exactly right. >> yes. >> i would just say -- >> how do you mean. >> we're aware if you are trying to control the climate, you're golden. >> quincy. >> i have coca-cola, american express and i have restaurant brands. >> what a show!

>> well, i work hard to get these guests. >> yeah. you took quincy. that was big. >> that's going to cost you. >> that was big, getting quincy. >> oh. >> it's not about friends. it's about profits for our viewers. >> it is. >> i'm sorry that i had an outburst about being wrong, but our people who watch me are betting on me being right. when i'm wrong i have to own that and say it. >> we'll see you at 6:00, can't wait. we appear to be closing out april on a weak note, dow down 230. don't go away. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire at corient, matchi wealth managementption. begins and ends with you. we believe the more personal the solution, the more powerful the result. we never lose focus on the life you want to build. it's time for wealth solutions as sophisticated as you are. it's time for corient.

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♪ good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live as always, from post nine of the new york stock exchange. take a look at stocks under pressure today. dow is down about 200 points. the s&p downa little less than 0.2%.

the nasdaq also, so it's not super dramatic, but selling off as the federal reserve kicks off its two-day meeting with the decision announcement coming tomorrow. take a look at treasuries and you can see some of the source of the pain, which is higher yields again. the 2-year yield above 5% after that employment cost index which we're going to talk about in just a moment. the 10-year yield elevated as bonds sell off. three sectors are higher, health care, communication services and information technology. everybody else is lower. energy at the bottom of the pack. 30 minutes into the trading session, here are three big movers we are watching. industrial giant 3m heading higher beating on the top and bottom line despite sales down fractionally year over year. the company naming a new ceo, william bill brown, who will take the reigns tomorrow, with current ceo mike roman becoming executive chair. paypal in the green, raising its profit forecast thanks to resilient spending trends and improving margins. ceo alex cyst calling this a, quote, transition year.

trouble for the online educators, course serra and chegg after guidance came in lighter and chegg announced a new ceo. dan will be stepping down june 1st after which the company's coo will be taking over the role. lot of moves. >> getting conference board this morning. back to rick santelli. hey, rick. >> yes. a common theme here, weaker than expected. look at headline consumer confidence for april from the conference board. expecting a number 104 to 104.5. 97. that's the weakest since february of '21. weakness since november of 23. what may lie ahead in the form of expectation, 66.4. weakest since july of '22. all three had revisions last month and if you look at headline revised from 104.7 to

103.1, weaker, present situation also weaker from 151 all the way down to 146.8. the only bright spot in the report is what lies ahead in the form of expectations was upgraded last month from 73.8 to 74.0. we see that we're up basically a handful of basis points in the long end, short end just slightly behind. we see that interest rates reverse from earlier and sara was exactly right, the employment cost index at 1.2%, that equals what it was at the all-time high precovid from march of 03. covid affected that number but that put context to how much they have jumped. sara, back to you. >> thank you. rick santelli with yields elevated this morning despite weaker data points about employment cost index that rick mentioned that i just want to highlight to show you why it's going in the wrong direction or how it's going in the wrong direction. wage pressure. that's the story today and the

bond market, it's the story in the backdrop for the fed that kicks off. this is the employee cost index. it's a good representation of what it costs employers to pay a their employees by the quarter. there's the year over year numbers, but the quarterly jump was big at 1.2%. we vice president seen that kind of number, and it was a big jump from the fourth quarter of last year when it was only 0.9%. it reflects there still is wage pressures, the year over year numbers is 4.2%. a few takeaways here. look, the fed has been concerned about this relationship, as it should be, between inflation and wage pressures. so we made a chart of the core -- the super core cpi, services inflation ex-housing, exfood and energy, next to the employment cost index, the wages, and what's shows is that

they're very highly correlated. that's something for the fed to be worried about if it's going in the wrong direction, and they're worried about stickier inflation. it's another excuse, this data point, for the fed not to be talking about rate cuts. >> so wages are going up, i mean, and the cost of services is going up along with them. >> correct. >> and that relationship makes sense. >> makes sense. it's inflationary, that said, it's good for employees, right? >> it's good for their spending power. >> yeah. >> of course. but it's not good if the fed's mandate is to bring inflation back to normal 2% levels, and they're not there yet, and they want to start cutting rates to prevent a recession, because they have to make sure that they've got the inflation genie back in the bottle. >> demand for services and/or put people out of work? >> that's always been the story. >> of course. i'm just saying, it's, you know, makes a point. >> here's inflation in orange

and employment cost index, which we just got this morning, which is firm in blue, and what's important here is that they track each other. >> right. >> and so you don't -- the downward shift we've been seeing last year is good news. that's why the fed was even talking about rate cuts. you don't want that to start to tick higher and that's some of the problem that they're facing right now. that's certainly something they're going to be discussing. >> meantime -- >> in the right direction. they're both moving down still. no real uptick, though. >> that wasn't updated. >> it wasn't. >> when you go from 0.9% to 1.2% quarterly growth that's an uptick. >> 4.2 year on year. yesterday goldman said we should begin to see more relief in car insurance. goldman sachs says we should see more relief in rents, financial services, the way the markets have corrected, and then china continues to feed deflation. three reasons they think the

prints are going to get friendly in the coming months. >> weaker numbers in china overnight as well. it could, it very well could, but there still is this wage pressure issue that they have to contend with. you know, california raised the minimum wage to restaurant workers to $20 an hour. we're going to be watching the average hourly earnings in the friday's jobs report. bank of america said even though -- they broke it down. the law applies to 550,000 employees, 3.6% of california's employment. they say, though, that it's enough that it could push up the month over month average hourly numbers to 0.4%. even though there are some one off factors in there like the increase in minimum wages for california, keeps the markets and potentially the fed jittery about firming price pressures. some of it supply side, some portfolio management. >> you're going to have sound from the mcdonald's cfo.

we were talking with jim about the price of burgers. if you're paying $20 an hour in california and you're a franchisee for mcdonald's. >> you're going to raise prices on the consumer. >> you can't lower prices that's for sure. >> at a time where mcdonald's has seen pressure on the low income consumer. here's what cfo said on the call. >> the macro headwinds have been more significant than i think we even anticipated coming into the year, and we continue to see those macro headwinds as we have started quarter 2 in, frankly, many of our large international markets and the u.s. i think we expect in the u.s. that we're going to start the quarter roughly flat from a comp sales perspective from what we can see so far. >> coca-cola similar position. they mentioned some of the pressure on the low income. as far as the coke numbers, which were good, it was all driven by pricing growth.

coke is very representative of what's going on in the macro economy. getting dinged hard by currency pressure, that strong dollar is weighing on sales and earnings, and then it has this pricing pressure. like pricing power that it is passing on to consumers. as a result the volume growth okay 1% volume growth. how they measure it in concentrate sales was pretty weak and a lot of it is driven by the hyper inflationary markets in latin america but getting pricing power in places like north america and europe and that's why the sales organic revenues are double digits and able to raise guidance as well. inflation pressure still out there and housing. i think we have to mention housing and what's going on there. taylor morrison reported, a home builder, we'll talk to them next hour in "money movers," listen how they characterize the market. >> the housing market overall remains healthy, despite the continued headwinds from elevated mortgage rates, some economic uncertainty and global

unrest. with a multimillion unit deficit of housing in our country and support of demographics across multiple generations, the need for new construction that meets the demands of the evolving consumer is as apparent as ever. >> housing market overall remains healthy. corning said, encouraging signs of improvement in market conditions, all excuses the fed can use to not cut interest rates nor maybe they shouldn't with signs of acceleration in the marketplace. >> meantime more discussion about maybe the goldilocks crown has been taken by europe where gdp surprises to the upside, germany skirts recession, what was the month on month, france 0.2, italy 0.3, spain 0.7. >> they had pretty benign inflation numbers as well. they're not seeing the uptick in inflation we're seeing. they haven't had as much fiscal stimulus in their economy one big reason, their consumer doesn't consume as much as

christine lagarde the ecb president said versus our consumer, there are different reasons. we all experienced inflation together, but disinflation is proving bumpy in different parts and the fed makes policy for the u.s., even though it affects everybody else and we see that in the strong dollar. >> let's dive into mcdonald's. pretty interesting story. the fast food chain misses quarterly estimates as same-store sales fall short, boycotts weighing on the middle east again, increased prices on the middle east, helping revenue, pushing lower income customers away. david palmer, senior managing director, restaurant package food analyst joins us this morning. david has a buy, target of 330. what do we make of it, david, when management says the consumer is price weary? >> it was a sobering quarter for sure. one of the most we heard in quite some time. the industry has definitely flattened out. traffic is negative out there. pricing has been rolling off and things aren't getting better.

players are talking about the under 50,000 household income cohort that's about a third of fast food users. it's more than that for a player like mcdonald's. and that's the group that's dropping out. they're the ones that are struggling with all that inflation over the covid period and probably some other things like interest rates and the wealth effects hitting other income groups. >> so what would take you to 330? that would be an all-time high in 12 months? >> yeah. it's going to have to be from adjustments. these guys are the big guys, got a billion dollars in national advertising spending, and they say they're going to push that towards the value message. the tricky thing and we're going to learn more about this in the coming weeks, the tricky thing is how do you do that national, you know, entry price point value when you got $20 labor in california? you know, how do you unify a message around something that's compelling in the deep south and

in the coasts, when many of those labor rates and pricing spending power is different? so that's going to be the big challenge for these guys. you know, if you go back to the last recession, when there was much more daunting challenges from this from an industry perspective, mcdonald's came out ahead because they did have the muscle to -- and they had the cash flow for the franchisees to afford a bigger value message. >> meantime, some chatter about a larger burger this morning that got the tape's attention. can you address that in terms of capex, r&d for franchisees, through puts, stuff like that? >> i think you're talking about the third pound burger they're talking about. >> yep. >> for 2025. that's something they've been thinking about. i think in the near term, one of the -- what they're going to be focused on is more mid-price value. i know the franchisees are asking for the mcwrap as

something that could be under $3, spicy mcchicken, items like that, that could really help them access the lower price tier, but there's going to be a role for premium innovation too. as we've noted there's certainly more strengthamong that income cohort, but they just, right now, first thing's first. they need to stabilize traffic, which is down pretty significantly in the industry, and it's really being driven by that value user that is dropping out more than it's dropping in from trade down. >> right. that was my question, why is traffic down? shouldn't this be a good environment for mcdonald's when there is pressure on the low and middle income consumer, when there is inflationary pressure, where people are looking for good value and good deals? shouldn't this be like mcdonald's moment? >> yes. well what's happened is sort of a magic combination of things. really the inverse of magic for

them being something like 30 p30% inflation food at home and away from home and that is more damaging to the price gap for food away from home because that's about four times higher than the food at home. so you have a kind of a penny price shock that's now coming about at the same time supermarket price inflation on year over year basis has crossed below that of restaurants and those two have created these cosmetic issues. you probably heard on twitter people talking about all the price shock at mcdonald's. these guys have to grab the narrative and change that with nationally advertised value, but because right now it looks like all of restaurants is not a good value right now because of all the inflation that happened. >> what's the answer on international and some of the geopolitic tension on international costs? >> mcdonald's has similar type

of price value issues that they're going to address in certain markets like france and they're getting around that. they're seeing some nice progress there. but even in france, but certainly in the middle east, they have some issues with regard to the boycotting issue, around all u.s. brands in the stance that the u.s. is taking with regard to the israel middle east conflict, so there are those issues that are a drag. there's something like a mid-single digit it drag to that -- where they call the licensed market segment. that middle east area is definitely something that's a drag. the major issue right now is that the company needs to take its pretty good brand positioning and other attributes, and but tress that with some help on the value side in key markets in the u.s. and europe. you will see adjustments in the next month or so. >> next time we'll cover some qsr and maybe china. appreciate the help on mcdonald's. thanks. >> thanks, carl.

as we head to break here's our road map for the rest of the hour. tesla reportedly planning more job cuts. we'll bring you the latest. >> shares of eli lilly are up rather sharply on the back of its earnings beat. the company raising its guidance thanks to its demand for that weight loss drug or class of drugs. those details coming up. amazon set to report tonight. we'll get you ready for that number and talk about where the consensus lies when "squawk on the street" comes right back. ws 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.

. shares of lilly popping higher. the latter of which is experiencing shortages here in the united states. something david rigs did address on "squawk box" this morning. take a listen. >> we don't give out those long-term projections but i can say is our top priority is making more product and we're doing everything we can to do that. it's capital intensive, technically complex and highly regulated. we've put in the last year $11 billion in announcements out there in new capex projects, five big projects in the u.s. actually, including a site in wisconsin we just purchased, so we're pulling out all stops to produce more, but the lag time is significant. >> and here with more on the quarter angelica peoples is back. great to have you back again. some of the full-year guidance got a big bump. >> yeah, carl. thanks for welcoming me back. great to be here. for the quarter lilly's adjusted profit beat estimates and the sales fell short and the company

raising its full-year revenue outlook to $2 billion thanks to the weight loss drugs. zepbound topping expectations around $500 million with demand outpacing supply. sales of mounjaro, that's lilly's diabetes drug also used for weight loss, actually came in a bit below and we'll be listening to the call on more details on why exactly that is. supply is the key issue with these drugs. almost every dose of zepbound is currently in shortage, and lilly has been saying the biggest increase in production will come in the second half of this year. now lilly's raising that guidance with more clarity on just how much more it will be able to make and that stock up about 7.5% this morning. guys? >> i know on "squawk box" i think, ricks was also talking about an oral formulation at some point for these drugs. what is the likelihood of that? what kind of a time period are we talking about until they conceivably could get to that point? >> we'll hear more from lilly

new hampshire next year on the oil drug and we heard from pfizer they had a drug that didn't quite meet expectations and we'll hear from amgen later this week about its own formulation. that's further out. the main story is still the injectables and why there's so much focus on increasing production of them because that will be the story for the foreseeable future. >> is the debate on the stock, at all, around pricing given some of the pressures around novo's drug that is going to face pressure under the ira or are investors comfortable with lilly's position there? >> yeah. so remember lilly actually took an interesting tact with the pricing its drugs zepbound and they came in about 20% below wegovy and they're saying still about $1,000 a month and they're saying that that is -- could be enticing for insurers and updating the street saying they have 67% of commercial insurance

coverage for that drug, so it's still early days and the big problem, though, is still medicare and that's something that they want to increase and change that and get more people covered under these drugs, but it's just going to be a slow going process there. >> companies been buffeted by critical media headlines lately comparing the price of the drug to the cost of production which is quite low, although we had a big discussion this morning about what is a reasonable return, not just on the cost to production but the cost of the research. >> that's always the problem here. the people -- the thing that people want to debate is how much should these drugs cost. david ricks this morning saying they're investing about $11 billion in manufacturing here and, of course, there's also the expense to develop these drugs and that's where these drug companies say that it's fair to get a good return on them. of course, you know, will politicians like bernie sanders and the patients paying these prices will they agree? probably not. that's something that's always

going to be a controversy around these products. >> where are we going to end up when it comes to insurance, particularly, obviously, from medicare? >> yeah. and medicare is still a challenge. that's why you're seeing these companies, including novo and lilly trying to show these drugs do more than just help people lose weight. lilly touting its recent study that shows that this drug can help with sleep apnea and novo showing it can help with heart disease. you will start to see more indications for these drugs, and that could help secure medicare coverage for these products. it's still a long way to come to see broad access where people are readily able to access these without paying so much money out of pocket. >> angelica, thanks for the full rundown and good to have you back. >> thank you. still to come, are the autos running out of road? profits falling at stellantis, mercedes, volkswagen, as tesla

reportedly cuts more jobs. they're all down this morning, tesla, ford, gm, parts makers as well. what investors need to know after the break. (grandpa) i'm the richest guy in the world. (man 1) i have time to give. (man 2) i have people i can count on. (grandma) and a million stories to share. (vo) the key to being rich is knowing what counts.

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a number of major automakers all reporting what is a sharp drop in earnings. phil lebeau is going to wrap it all up for us an i be i will have questions on tesla at the ends, phil. >> sure. start off with these being european automakers but they own jeep and ram in the u.s., they're all global in some respect but start with stellantis. the story has been for much of the last six months you either cut price or volume. they've decided they're not cutting price so look what happened with delivery volumes in the first quarter, for stellantis, in total, down 9.6%. in europe down 6.8%. we should point out here in the u.s. deliveries up 5.9%. they also have affirmed their full-year earnings guidance but this was a revenue miss. take a look at shares of stellantis the inventory continues tobuild in certain

regions around the world and that's going to be a focus for them. as a result you see shares -- q1 sales, these are nothing great to write home about. volkswagen down 4%, porsche down 7%, the audi brand down 11%. a number of one-time issues impacted their q1 results and as a result, the earnings were just shy of system. as you take a look at shares of volkswagen it did reaffirm its guidance for all of 2024. that's not enough for investors right now. down more than 4%. it's a similar story at mercedes-benz. their q1 earnings did top system, but people are looking at this and saying that's fine, you've also reaffirmed your guidance for all of 2024. in general people are not crazy -- i say people, investors, not crazy about the setup in the auto industry right now, and again it's about either pricing or volume an that's what we're seeing the automakers facing a choice on certainly in the first quarter, likely continuing here well into the

second and third quarter. >> love to get your take on tesla in terms of board job cuts and another batch of potentially senior executives as well. what do you make of it, phil? >> remember the report that came out when they announced the 10% job cuts and it was reported in a number of different areas that elon musk wanted to do 20%, but had to be talked out of it. i think we're seeing elon saying i don't think we cut far enough and two senior executives according to the information were let go from the company, dissolving essentially the people working under the one executive in terms of the super charger network and had people working in government affairs that unit, the executive stepped down last week and they've let those individuals go. i'm not surprised, david. if elon wanted to cut more and they said let's hold it at 10%, i'm sure elon said oh, no, i think there's more areas where

we can cut an that's what we're seeing here. >> phil, thanks for that. important story as we watch tesla which had monster gains yesterday. our phil lebeau. still to come today, the biggest risk for stocks according to cnbc's latest fed survey. what it is and why the results could indicate more gains ea ene' back in a couple minutes. [crowd chanting] they ignored your potential, dissed your achievements, and mocked your ambition. but it's not the critic who counts, and you know that. from the beginning, you couldn't be stopped. ♪♪ breaking resistance with every swing and block. ♪♪ your game plan never changed. ♪♪ so enjoy this moment.

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it's time to get away. northern california's premier casino resort is the perfect place... ...to do as much -or as little- as you want. cache in at cache creek casino resort. welcome back. i'm silvana henao with your cnbc news update. the new york judge in donald trump's hush money criminal trial ordered him in criminal contempt this morning for violating a court gag order and fined him $9,000. it bars the former president from attacking witnesses, jurors, and others, shortly after announcing the fine testimony resumed with a former banker who worked when then trump lawyer michael cohen.

pro palestinian student protesters occupied a building at columbia university near an encampment demonstrators set up nearly two weeks ago as they called for the university to divest from israel. columbia warned students to stay away from campus today. king charles was back in the public eye visiting a cancer treatment center months after announcing his own cancer diagnosis. it is the first of several appearances he will make in the coming weeks, as he resumes his public duties buckingham palace said they are encouraged by the king's treatment. >> thanks. just a day away from another fed decision on rates. do stocks have more room to run here? if you ask respondents of cnbc's fed survey, maybe. let's get to our senior economics reporter steve liesman with that angle. >> yeah, carl. maybe more room to limp ahead the best way to put it.

respondents to the cnbc survey are having a pretty lackluster view of near term stocks and the next couple years goes with the forecast for the fed that stays higher for longer. here are the numbers. yesterday's close 5.116. really flat to slightly down from the rest of this year. down after that, there's a little bit more juice of 6.7% from the current levels to 54.63. that average, of course, a mix of bulls and bears who respond to our survey, upside at 5500 and a downside of 4500. hugh johnston writes it's hard to make a case for a bear market unless you can make the case for a recession which does not appear to be the most compelling forecast. on the other side we have douglas gordon saying plateauing inflation could impact market expectations for the removal of restrictive monetary policy, challenging current equity market valuations, particularly by the way, he says, outside of mega cap market leadership. yields seen coming down, not as much as they did before.

the 10-year seen dropping from 4.60 down to 4.30 by year end and 4.10 next year. the general trajectory is down. one positive note while 51% of the 29 respondents see equities over priced for a soft landing, that is a lower number or more optimistic than it was in the prior survey. 69% see them as overpriced for a recession. also a drop from march. here are the biggest risks and it's a little bit of a contradiction here. on the one hand the number one risk is continued high inflation. in the second position there is the opposite, the fed cutting too late or too little followed by global economic weakness, supply disruptions from middle east, the fed cutting too early. that's the opposite side of it. now just a quick note on this morning's data which you were talking about this the upside price on the eci or the employment cost index, the possibility a september rate cut has fallen below 50% for the first time so markets have

thrown out june, they've exed out july and now september is seen as doubtful. sara, guys? >> so december maybe. maybe one cut this year if anything, i guess, steve, and the hope that these trends reversed? >> that's what we have in our survey, is that december is the only month or meeting that has a greater than 50% probability of a rate cut. september is kind of 48-48 or just about even with a bunch of don't knows in there. and you're right, i mean, it could be we look back on these three months and say oh, it was all seasonal. obviously, carl talking earlier about goldman making the case there's a seasonal factor to these price increases. you talked about the minimum wage. a note that my entire career as a financial journalist, i have been, like you, puzzling over whether or not better or worse mcdonald's results mean a better or worse economy, and i do not

have the answer. >> still? you don't have the answer. come on? >> no. because better could mean people trading down, and it means that the economy is doing worse or better could mean a group of people who are lower income going out and doing better. it's gone either way. it has not been, for me, a leading indicator. it's important for the stock and important for the market, but it can't make an economic indicator out of whether mcdonald's doing better or worse. >> historically people consider it a proxy for employment. don't go there unless you have somewhere to go. that's a story for another day. people are offering their suggestion questions for the presser tomorrow and one of them is, what is your threshold for a hike? and i wonder if that is what you would lead with? >> it would be something i would definitely ask. i will point out we have a 22 -- we haven't asked this in a long time because it hasn't been germane, but now we have a 22%

probability of a rate hike. i've gotten some discussions with some market participants this morning who say look it's got to be on the table and more so that powell made a mistake by really putting the put out there on the -- on fed rate hikes he shouldn't have done that and been more balanced. it's a close call but if you read the statement carefully, there's a bias for cutting. in other words, when they say we don't think we should cut until, threads essentially a bias for cutting. i don't know if that comes out this time or if powell introduces rhetorically a much more even-sided possibility of responses here. the hikes are on the table, neutral is on the table and cuts are on the table. i think that's where we might be now. >> i feel like that would do more damage if the hike is on the table thing and that would be a surprise because people would worry about -- >> but sara -- >> what that would mean for the economy. >> i think you're right to point that out, but let me ask you a

question, from the -- from the department of you can pay me now or pay me later, what's worse? powell putting it on the table now as a possibility so the market can price it in, or we get another couple lousy months of inflation, and the market is eventually surprised by the fact that hikes are back on the table? >> i don't think inflation has been that bad that they would consider hikes. and the high rates are still working their way through the economy, right? so -- we'll see. i think it would be a surprise either way. >> i'll color you dovish, sara. >> color me dovish. >> let's bring in robert kaplan, should they be talking about a hike this soon, robert? >> no, they shouldn't be. they should be keeping their options open and i think they will be keeping their options open. >> do you think that -- >> that's what you'll hear in the press conference. >> to steve's point would they change the language to keep the hike on the table as an option

right now instead of the easing language? >> i think that they would be wise to keep the language as it is. my own view, and i would be arguing this in the meeting, one of the reasons why the fed is struggling to be able to cut rates and why service sector inflation and wages are so sticky, is you've heard me say this before, excessive government spending which i don't think is a long-term option for the federal government. i think it's artificial. i think it eventually is going to have to peter out and i think the fed would be wise to keep their options open and not make grand prognostications at this point. >> you have been leading the charge it's fiscal stimulus. tease that out for us. how do you see that permeating the economy, the services sector, the jobs market, and

leading to some of the challenges that the fed faces. >> all right. so let's separate inflation between goods and services. goods are disinflating. in fact, the inflation rate on goods is today very, very low. the supply chain issues have gotten worked out. the inflation issue today is almost exclusively in the not totally but almost exclusively in the service sector and it's because we've got an aging work force and despite some growth in immigration and labor force, we've got a very sticky labor force cost issue, which you saw this morning with the eci, employment cost index. let's just remind us, why do i say fiscal is a big part of this? we ran a 15% gdp deficit in '20 but that was to deal with covid. we ran another 15% in '21 that was arpa, but that money is still being spent today.

we ran 7 and a fraction last year, 7 and a fraction the six months this year. the highest deficit precovid was in 2004 at full employment, highest deficit was 4%. we're running a much higher level of deficits and it's three main programs -- unspent arpa money, inflation reduction act projects, infrastructure act projects, they're going on all off the united states and i see them everywhere and they're increasing the demand for workers. goods and services, but particularly workers. this is why the employment market is so strong is you've got this government generated demand for workers. i think it is somewhat artificial, and i think when the government money starts to peeder out you will see how artificial this is in hindsight. >> when does that happen? >> well the ar pa money is starting to piece er out.

this is the last year where the money has to be obligated and spent by '25. you still got the inflation reduction act projects and infrastructure act projects going strong for my money, i would love to see a whole of government approach to fighting inflation and have the federal government realize that if we're going to make inflation fighting a priority and help 60 million low to moderate income workers make ends meet, slow down implementation of the inflation reduction act and infrastructure act projects, not cancel but slow, and let's wrestle this inflation issue to the ground so working class families can better make ends meet and they can begin to start taking their foot off the interest rate. they can't do it yet with this fiscal spending in my opinion. >> december? you think we can bet on december for the first cut? >> i wouldn't be betting on anything right now. i would be a risk manager here,

and realize that the -- as long as the job market is resilient, which i think it's likely to be, it means the service sector flation is going to be sticky -- inflation is going to be sticky and the fed will have to take it one meeting at a time. those who are making big prognostications maybe the neutral rate is miraculously higher in the economy, i would be careful about saying that, too. i think it is artificial to some extent be and i think we would be wise to recognize that. >> robert kaplan, great to have you. always good insight. thank you very much. former dallas fed president. who else would not be pleased if they put a hike on the table, the ecb, bank of japan, the bank of england, the bank -- all these central banks moving towards cuts. fed goes the other way. >> in addition to the ones that have cut like peru and argentina again. >> basically -- >> meantime still to come a few

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♪ welcome back to "squawk on the street." crypto under some pressure again in today's session. bitcoin prices dropping by more than 10% in the month of april. on pace for the first negative month on eight and the worst month since november 2022. coinbase, marathon, mi microstrategy down 20% or more for the month. binance founder will be sentenced in a seattle courtroom today after pleading guilty to enabling money laundering at binance in a plea deal with the boj. another sign the ipo market is thawing, viking holdings

targeting an outsized ipo. let's get to seema mody with more on how it xaurs to the public players in cruises. >> viking is not your typical cruise. this is an adults-only ultraluxury destination based cruise line that targets the affluent traveler, 55 and older. on board you won't find any casinos or formal dress nights. you will experience cultural sites across europe and less on the caribbean. ships are smaller. 80 of 92 vessels sail down rivers like the mississippi or nile in africa, averaging 190 passengers. whereas the occupancy on board the big cruise lines can be as high as 6,000. that does raise questions for wall street about vikings ability to scale. however, its high price point and ability to get customers to book two years in advance versus the industry average of six months means the amount of revenue it's collecting for a passenger is roughly $7,000 compared to norwegian cruise

line's $3100. founder and ceo, who has 90% of voting power, will join us first on this show tomorrow morning. carl and sara? >> looking forward to it. thank you very much. coming up in the next hour, ceo of home builder taylor morrison raising guidance with net sales orders up nearly 30%. we'll break down the numbers and talk about where rates could go from here on "money movers." don't miss it. don't go away. (vo) what does it mean to be rich? maybe rich is less about reaching a magic number... and more about discovering magic.

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welcome back. keeping an eye on shares of comcast and warner bros. discovery, both down this morning, in part, perhaps, on reporting that others as well as here we have done on the tussle between the two for rights to the nba, to broadcast the nba for warner bros. discovery, the existing holder of that contract, tnt/tbs, and for our parent company, comcast, nbc and potentially the streaming network -- streaming service peacock that would participate. reports have comcast willing to pay as much as $2.5 billion for

a smaller package than currently exists of games. of course, remember the current contract is split between disney and warner bros. disney, as i reported earlier, is all set. they got their espn deal set, 11 years. they get the finals. they're happy. the question is, and amazon may enter the fray, or is expected to as well as an owner of certain number of games for its streaming service. the question becomes, is warner bros. discovery, which does have matching rights, from what i've heard, going to step up and compete here and match what appears to at least be an aggressive effort by, again, parent company of our network, comcast, to try to secure those nba rights? warner bros. discovery, of course, focused on generating free cash flow, having to pay that number. not insignificant if you are that company in terms of what it would mean for that. that may be one reason we're seeing shares of warner bros. discovery down.

comcast, which has taken a beating since earning, lack of broadband growth, nbcu, peacock losses, maybe it would help. >> this would be a big blow to tnt? >> conceivably. you also have the joint venture between disney, fox, warner bros. discovery. warner bros. discovery has hockey, baseball, nascar. but the nba -- and march madness, but the nba, an important component overall. as we pointed out, sports does drive to any extent as possible viewership in terms of keeping some people, at least, not cutting the cord. don't cut the cord. our li mkecora ntues right after this. in any business, you ride the line between numbers and people. what's right for the business and what's best for everyone who depends on it. solving today's challenges while creating future opportunities.

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and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley. it's a beautiful... old school grit. ...day to fly. . wooooo! good tuesday morning. welcome to "money movers." i'm sara eisen with carl quintanilla live from the floor of the new york stock exchange. today 50 stocks outside of tech that can help diversify returns. barclays head of equity strategy venu krishna gives us those names. vincent reinhart on why powell and company will not start to move until december. what's nex