the two-year is at 4.68%, and before that, the ten-year had been above 4.3%. >> get a worm song in your head. ♪ don't worry, be happy ♪ it's international happiness day. ♪ you want happy for the rest of your life ♪ >> i don't like any of these, but i'm happy. >> i am too. we hope you're happy and see you back here tomorrow. right now, it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i'm david faber live from post nine at the new york stock exchange. there he is, jim cramer still in san jose at nvidia's a.i. developers conference. we'll have highlights from -- are you still doing the interview? has it ended? i'm not even sure. that long interview -- >> it never ends. >> -- with jensen huang from nvidia. let's give you a look at futures, of course. as we get ready for what jim and i like to call hump day. i call that a mixed picture.

i don't know what you want to call it, jim. mixed. >> mixed picture. >> yeah. >> looks mixed. >> mixed. all right, good. let's get to our road map. starts with, what else, nvidia and the a.i. boom. shares, of course, up 240% in the last year. we're going to have more from jim's exclusive with the company's ceo, jensen huang, and why he thinks the pc is changing forever. speaking of pcs, the engine behind them, intel, preparing for a $100 billion spending spree across four states, this after securing chips act grants from uncle sam. we're going to hear from commerce secretary raimondo and intel's ceo, pat gelsinger. that will be this hour. of course, don't forget it's powell's moment. wall street waiting for the latest guidance from the fed today on the future of rates. whether that might include some cuts. let's start with nvidia. jim's exclusive, of course, with jensen huang. he spoke on "mad money" about

reinventing the computer. take a listen. >> we reinvented the computer as we know it. the computer's been the same since 1964, since the year after i was born, and we reinvented it with this idea called accelerated computing. now, you could have a computer that's 100 times faster or 20 times more energy efficient, costs 20 times less, and to be able to do -- solve problems at a scale that nobody's ever imagined. >> jim, you know, so many different takeaways, including that. it's something you have been discussing to a certain extent. and i think a lot of investors are just trying to get their arms around all of this. what does it mean? where do i want to be? is it just nvidia? can that growth continue? i mean, so many different questions that seem to emanate from both his presentation and your interview. >> right, right. well, look, i think that you have to go with analogies. i didn't get this one from

jensen, but i've been thinking about it all night, which is that right now, we are really happy because we have propeller airplanes, and they're terrific, and a lot of people are wondering, why do we need something faster? why do we need anything faster? jensen's got a jet. you know what? it's a secret weapon that he is using, and everyone's going to want a jet. we just don't know it yet, david. that's the difference. >> and everything's going to be so much faster. there was that moment where he pointed to, i think, sort of the set-up of the servers, and his point was, this is so much faster, and it's going to take up so much less space, of course. it's still going to be in datacenter, but it's going to replace what is a current datacenter just with -- wasn't that much equipment that he was looking at. >> well, he's got a great accesense of irony, and he's a very humble man. it's difficult to really grasp, sometimes, what he says, because it has so much gravitas.

for instance, he said, jim, on 95% of the chips aren't any good anymore. solid 5% left. only 95% of the chips just aren't what we want, and when you hear that and you hear all these skeptics, you say, well, do they listen to him? is he too calm? does he have to be more jumping up and down? what does he have to do? >> right. and you're seeing that in some of the research now in terms of that point you're making. the strong second leg of gpu growth will be spent on x-86 datacenter to accelerated computing. and to your point, you know, yeah. >> well, david, i dealt with a robot yesterday. i dealt with a robot at a bar. and he wanted -- i said i would like a cocktail, and he said, okay, and he started making me some mocktail, and i said i wanted that, and then i said, shaken, not stirred. well, he didn't understand that. okay? that's, like, me being bond, which is, you know, difficult to

understand to begin with. but next year, when i come back, he will come back with a quip when i say, shaken, not stirred, that will be from "goldfinger." >> right. i could see that. >> you can see that? >> i can. i can see the advance. >> he says he can see it. >> what does it all mean for -- let's go through some of the names, though, the big names that we have been talking about for the last year. whether it's meta, who's the biggest, by the way, the biggest single spender when it comes, i believe, to nvidia chips. they're spending more than anyone. >> right, but i have a comment about meta, which is that later on i'm going to see the vision pro, and what nvidia's doing with the vision pro. i'm not going to see what it's doing with meta, because i'm not sure. i know that jensen, personally, likes the vision pro, and i think that's more additive to apple than anything that we're talking about, including the fact that tim cook, wow, is in china. how about that? let's have a tim cook watch in

china. no, i'd rather talk about what jensen wants to do with the vision pro, which i think is monster, because it's business to business, and that's what apple's been waiting to do. >> yeah, you talked about this a bit yesterday. you really think there are, what, enterprise applications for the vision pro, and -- >> absolutely. buying autos and buying homes. >> it's not the stuff in the vision pro. it's what you can deliver to it as a result of this? >> you watched the interview. you did. you watched it. >> yeah. yeah. >> that's exactly what happened. and that stock was up $1.50 because of that, but people would never say that, because that would require genuine accelerated computing by listening to the interview, and people don't have accelerated computing. do you know that "moby dick" can be read in one second? >> i picked that up, and i mentioned it on air. he didn't even say a second. he kind of indicated less than a second. i didn't know what to do with that. >> i think "war and peace" is a

full second. think about this. >> i know. well, i try not to. it scares me. >> david, that's putting us in english. our viewers get that because they all had to study "moby dick." they understand ahab. they understand starbucks gets it much faster than the airport. starbucks in the book is better than starbucks the store. >> right. but a lot of people are trying to put it all together and what it means for the ecosystem, for meta, not just nvidia, for apple. we talked about things moving to the edge, for example. this week, we had that story earlier in the week from bloomberg about google or alphabet negotiating, potentially, with apple about included gemini. when we say the edge, we mean, essentially, the device, just to be clear, which potentially would require a lot more memory in the device itself, by the way, if you're running these large -- if you're running these kinds of apps. >> but you could put 280 billion

microprocessors in this. we spoke with synopsis yesterday, and you could have 280 billion -- well, they're transistors or pieces of something. >> 208 billion transistors. >> it was too noisy in here. i thought he said 280. wow, granularity. i couldn't hear. >> really? you couldn't hear? i think we have some more from jensen's interview that i think is worth taking a listen and get your reaction on the other side. >> there's no computer company has ever been built like ours. we created a brand-new way of doing computing. everybody we work with, everybody we work with here, there's researchers and scientists from $100 trillion worth of industries, health care, financial services, manufacturing, and such, and when we're done building all these computers, we break them up into parts, and we integrate them into microsoft azure, oci,

gcp, aws, hp and dell and ibm, and they take it to market. >> right. >> so, the application software is being offered by cadence and synopsis and deso, really amazing company we work with, and autodesk and adobe and others. our technology is integrated into theirs. our technology is integrated into all these computer makers, and the world connects it together, and that's the reason why nvidia's everywhere. we're in every cloud, every datacenter. >> we hear all the time, well, you know, but amazon's working on a competitive product or alphabet. all i hear from you is, good. we want to help everybody develop whatever's necessary. you are not at war with customers. >> no. well, we do something very different, first of all. our architecture, on the one hand, could do artificial intelligence. it could do computer graphics, physics simulation, data

processing, sql data processing, which consumes a lot of energy, lot of cost. for many customers, we reduce it by 95%. 20 times reduction in cost and energy used. so much so that google's data progress is now accelerated by it. we announced a partnership with a great company, databricks. they're going to accelerate their -- they're the large-scale data processing cloud company. they're going to accelerate their data processing on it, so all of this is something you can do on our architecture. the other thing you can do with our architecture is everywhere. so, if you're a developer, and you develop on nvidia, you can run on aws, gcp, azure, hp, dell, ibm, anywhere. >> all right, jim, you want to explain to our viewers what exactly that all means? >> sure, he mentioned several times, amazon weapon services. i'm going to spend some time with adam slip skooe today, who runs that. this is about the ability to move so fast that in anthropic's

case, amazon, it moves so fast and it's also more accurate. this new step function of what he brought in, gives you the information faster, can read faster, but isn't as prone to hallucination, and hallucination is what everyone's worried about when it comes to artificial intelligence and answering the -- and having inference. cutting down on hallucination will make it so that people will be much more willing to adopt and use the chatgpts of the world or claude, which i think may be ahead. i think claude 3 may be ahead of everything right now. >> really? anthropic's claude 3, why? >> well, because it has the fewest mistakes and has the quickest answers and has the most in-depth answers, and that is the one that amazon web services has backed. amazon web services is the biggest buyer of the fastest stuff that nvidia does, across the whole line. that's why it's so important to realize why amazon web services has such great business, david.

it's because they have superior recall. >> i thought meta was the biggest buyer. i thought meta was. >> they're the biggest buyer of one kind of chip. >> i see. >> nvidia -- amazon web services is the biggest buyer of the whole suite, all the chips that jensen just mentioned. thank you for running a longer version, because you don't get what he's about until you hear -- listen to that breadth of clients, and you know that this is a company where it's really hard to pin down what they're going to make per share, because every one of those clients, as he told me when he said to andy jassy, would buy anything that he had, every one of those is on allocation. not one of those companies has enough chips right now. think about that. everybody else has inventory problems throughout the chain because there's too much -- there's too much that has to be destocked, and this man cannot meet the demand from those customers. it's an amazing moment for accelerated computing and generative a.i. it's an amazing moment.

and people are thinking too small, except for that one man right there. he's not. >> okay. when we come back, we're going to continue to talk about chips. this time, intel's ceo, pat gelsinger, will be part of the discussion. billions that his company, in fact, is receiving from the u.s., plus what commerce secretary raimondo told jim about the chips act. we're going to be trading here in about 17 minutes. you can see a mixed bag. the nasdaq may be up, but the s&p, perhaps, down ait we're back in minutes.

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welcome back. we're going to stay with the chip sector. a.i., an important component of that as well. the white house announces that intel has been awarded up to $8.5 billion in funded from the chips act, could receive an additional $11 billion. the funding would benefit intel's plans to build chip fabs in four different states. you're going to want to hear what intel's ceo, pat gelsinger, has to say about it all.

that will be later this hour. first, though, take a listen to what commerce secretary gina raimondo had to say to jim about the subsidies. that was in an interview that's going to air tonight on "mad money." >> right now, the united states of america produces zero leading edge chips in the united states. we buy 92% from one company in taiwan. that is not resilient. that is not safe. right? that is an overly concentrated supply chain for a critical item, and that's why it makes sense for the u.s. government to provide these subsidies so that these companies make it in america. >> it's a national security issue, jim. it's certainly seen as that, given that taiwan semi basically controls the manufacturing of the highest-end chips. it's where all the nvidia designs go to be made. intel was the leader for so

long, and then just lost it. when it came to the manufacturing side. not to mention the design side as well. i mean, it was once our premier chip company. it's had a good year as a stock, by the way, up 44%, but it's just to put it in perspective, $177 billion market value versus nvidia's $2.1 trillion market value. >> right, and it's important to recognize that amd passed intel too, which is something that if andy grove were alive, the man who really accelerated intel's growth, i think he would just be shocked. amd, at one point, was being joked about as the company that intel kept alive in order not to have a justice department investigation of monopoly, and now, well, just say amd is the only rival to nvidia. intel does not make the leading chips. maybe it will with the money that it's being -- that it's receiving, but right now, intel, as you said, is just very far behind. they had a series of ceos that,

frankly, were suboptimal, but that was not talked about much because you know, david, other than, i think, on a couple of shows, we never criticize ceos for having no vision. but intel had no vision, and this is what you get when you have no vision. >> yeah, listen, it's sometimes hard to discern from our vantage point how poorly things are going from an execution standpoint. you look quarter to quarter, it sort of takes a while, but to your point, decision not to provide into the iphone when they had a market over the company, frankly, instead of a scientist. many people point to that period of time. you're right, there's no doubt it's a harvard case study to be done, i assume, if they haven't already. pat gelsinger trying to turn it around. >> one of the fun nest moments, jensen came to intel and said, you guys should be doing gaming chips. i happen to have a friend who was on the board at that time and said, gaming chips are very, very fast. maybe we should make and invest in gaming chips, and jensen's

proposal was right on the desk of intel, and andy grove was so dismissive that it became doctrine not to talk about gaming chips, which is why jensen is not historically that much of a pal with intel. >> yeah. that said, you know, the hope is that we are going to be able to make -- or that we will have a lot more manufacturing capacity here in this country, perhaps as much as 20% up from, i think, what is 12 right now in order to make these advance chips because there is that risk. >> well, there's no -- >> taiwan semi. >> there's no payback for five or six years in these chips, so you need to have substaidies. brad conic is the advisor on this, so don't think the government knows -- that they don't know what they're doing. i think brad is probably the most knowledgeable when it comes to doing exactly what the government would like -- >> and your guest tonight, gina raimondo, is deep into this

stuff. >> they talk to amazon and alphabet. they talk to apple. they talk to every major company, and yet, we think that the government's a bunch of idiots. i think that people who call her someone who doesn't know what she's doing, people should look at her body of work. they should be embarrassed of their criticism. embarrassed. and we know that there are people who are very critical of her. >> yeah. every time i run into a ceo in this world, they've heard from her. recently. all right, jim, get ready. you've got an -- we got an adas ta bell,but you have "m dh"o get ready for. stay with us.

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opening bell, six minutes from now. you can see, amongst the top gainers on the nasdaq, as we head into trading is pdd. that's pinduoduo. we'll look through the earnings, clearly getting a very positive reception. and then intel, which we just talked about. we're back after this.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, let's get to a "mad dash." chipotle is on the menu. >> yes. yesterday, i pressed jensen huang to give us a big split,

because i said that individuals love splits, even though they don't create value. well, david, chipotle's listening to this call. they're doing a 50 to 1 stock split. r you can see what's happening. they're doing it so employees get stock and employees want -- this is much easier for employees to understand, but david, the individual wants this. the institutions hate it because it means more commission dollars. it hurts the s&p, because -- for these index funds because they add more friction, but the individual goes crazy. there is nothing new with chipotle, except for this 50 to 1. look what it's doing. a 50 to 1 and the stock has a major move. this is what corporate america should be listening to. this is how you get individuals involved with your stock. >> really? that's still the case, even with all these short-dated options and all these other ways to do things? it still matters to people? >> you're so right to ask that. >> $29 instead of $2,943?

>> that's the right question. but doug mcmillon at walmart said that sam walton had done an analysis of this for his employees. there are people who understand this. they understand that the -- there are sticky investors, and there are fickle investors. the fickle investor, we should stop catering to them. they're the ones that don't care about this stuff at all, but the individual investor will buy chipotle, put it away. when they get that chicken al pastor, which is really good, maybe they'll buy a couple shares. have you had the al pastor? >> no. i don't really attend -- i don't really go to chipotle. sorry. >> do you know what guac is? >> yes, i do. i know what guac is. i do. >> okay. just wanted to be sure. guac costs are higher. >> once again, the avenuocados soaring again? well, when you own the mexican restaurant, we used to get

realtime pricing information on the avocados but not so much anymore >> avocado killed it. i had three months where i lost money because of avocado. i couldn't make it up with corona. >> here's the opening bell. at the big board, redwood trust, real estate investment, celebrating its 30th anniversary. over at the nasdaq, a.i. infrastructure firm astera labs. that's an ipo. its ceo is going to be on money movers about an hour and a half from now. i'm going to start us off somewhere a little bit different than everything we've been talking, and i'm going to the luxury goods -- >> gucci? >> i'm going to start with gucci. >> big customer of salesforce. >> we got an update, some preliminary information regarding the first quarter is what it's called, and they're

talking about challenging current trends, consolidated revenue in the first quarter could decline by as much as 10% on a comparable basis, and they're citing a -- steeper than expected sales drop at gucci, notably in the asia pacific region, where comp revenues in the first quarter could be down by nearly 20%, jim. this is taking that entire -- it's all its cohorts in that area down as well. i want to take a look. you'd expect lvmh and the like. your thoughts? >> it never stops. china has gotten away from conspicuous consumption. the chinese, i think, the government doesn't really want it. i think that the people are not as wealthy as they used to be. and you don't need to have gucci, david. you can live without gucci, okay? >> yeah. i have managed to do that throughout my entire life. interesting. i don't know if you saw this "journal" story about attacks as well on the richest man in the

country. and some leaders of business. nationalist kind of attacks on them. that's going on at the same time. i just pointed out, given the chinese high-end consumer is very important for these companies. you see richemont, lvmh, caring all down. i feel like recently, we've seen different kinds of performance. you know, you'll see one not doing well, but it doesn't necessarily translate to some of the others, including, for example, i remember burberry had a bad quarter, but lvmh didn't. >> lvmh had a great number. richemont wasn't nearly as bad. what i see happening is if you look at the casino stocks, macao has come back. they're letting people gamble in macao. they're very fickle, but i think what you said about the ultra-rich is very important, because unlike, say, senator warren, who can kind of rap about the ultra-rich, their

government can jail the ultra-rich as a much more critical thing. so what we're seeing is the crackdown, again, on conspicuous consumption that, david, i think, must be frightening all of the wealthy in china. has to be. they're not spending. >> then i'll go to pdd holdings, which is, of course, a very important company there, temu is one of its main businesses as our viewers may where ell know, things look pretty good there. pdd is up sharply, 123% overall increase in revenues from the company, and this includes, obviously, domestic, china. it may also be on the earnings side that they did a better job in terms of executing, and so margin's a bit better, and/or the business is just a bit profitable than some had anticipated but this is well above the estimates that analysts had for this company. and again, we're talking about the consumer and china here. >> well, the price of what temu

makes, i mean, it's unbelievable how cheaply you can get it. a lot of until -- my daughter got sent a big box of temu stuff because she's an influencer or something. i bought some stuff for my wife at temu just to see how it worked. it was not well received, frankly. i think it was mostly because of the dow issue, you know? >> the what? poly ethylene. >> the actual making of it, which would trigger a fire hazard throughout new york city, but that's what they make. they make incredibly cheap stuff. the prices are insane. you know what? it's crazy eddie-like prices. >> insane. good old crazy eddie. growing demand driven by encouraging consumer sentiment. that was the company's co-chief executive officer, going on to say, "we will continue our high-quality development strategy and stay dedicated to offer great value and exceptional service."

>> did they say high quality? they mentioned high quality? they saw jassy and amazon, you can buy their stuff an amazon, and they give you a date. if you buy it through them, it comes within two or three weeks. if you buy it through amazon, you get it immediately. you have to pay a little more. i mean, i bought a swimsuit for my wife, which, again, was a suboptimal situation when we received it. >> that's not a smart move, just in general. i mean, come on, man, you've been married a couple of times. you've been married to lisa for a while. what are you doing buying her swimsuits on temu? >> i was going for number three wife. i don't know. >> it's nice. it's thoughtful. i would never do that. you know? >> it was kind of -- it was like, you know, how you get -- like you have a popsicle and your brain freezes? >> you had a brain freeze. yeah. all right. i'll give you that one. >> when it came, i realized -- see, as soon as you started to feel it and it felt like something that is made by dupont, that was indicative.

>> i want to get to boeing. i want to get to a bunch of other things, jim, but we do have to move on, because we do have a special guest, as our viewers know. the biden administration awa awarding intel nearly $20 billion worth of grants and loans. the company right now will receive $8.5 billion in grants but could get an additional $11 billion in loans. that would be to help it build out fab manufacturing, fab facilities here in the u.s. let's bring in jon fortt, because he has the man of the hour, pat gelsinger. jon? >> david, thank you. i am here in chandler, arizona, with pat gelsinger, the ceo of intel. big day for you. been waiting for this for a while. chips act funding. $8.5 billion. that's a lot of money, but shy of the $10 billion that some, maybe you, were hoping that you would get, and then there was this d.o.d. kind of $2.5 billion pullback headline. tell me, with this funding now, what's this going to do for the timetable for you for getting

intel back to manufacturing leadership? >> well, we just say, this is an exciting day for america. it's an exciting day for the chips program. it's an exciting day for intel. behind us, the construction project, we're moving forward rapidly. and the facilities behind us, these need to come online in 2025 to be part of our 18-a, our finish of our getting back to leadership. so, this brings us back to leadership manufacturing for some of our key products. also, will be key for our foundry business as well, and it really is the coming together of everything that we did, a lot of shoe leather, getting the chips act passed and the $8.5 billion, the additional $11 billion of loan guarantees, the investment tax credit, and then more to come with defense and the r&d investments. so, today's a great day. it sort of is, i call it, the end of the beginning of our journey to rebuild semiconductors in america.

this is exciting. >> what's coming with defense? what kind of timetable? >> no particular timetable in that area, but everything we're talking about is the commercial efforts that we've laid out. as we've said, we want to build world-class, at-scale, commercially viable leadership technology, and then we want to add to those capabilities the additional requirements for defense and intelligence. so, that work is under way. but today, a proud day to get the commercial work well under way, and thank you to the chips act. thank you to congress, president biden, and the department of commerce. this is an exciting moment. >> okay, level set with me now, because we're almost exactly three years and one month from when you started this job as intel's ceo. the stock is about a third lower than it was then. there's been a lot going on in the market, but how far are investors now from being able to tell whether this turnaround, in design and in manufacturing, that you told them was going to take a while, this wasn't going

to be overnight, how far are investors from seeing whether this is working? >> i certainly believe that we have taken our investors on a journey. we said, very clearly, this is five years to turn the company around, three years into that journey, and now we see the light at the end of the tunnel on the process technology. we just held our foundry day, where the industry, the eda community, says, oh, the industry can build on intel as their manufacturing partner. the products, you know, our product execution has almost entirely been restored as we'd say, back to delivering the products to our customers that we said we would, launching new categories like the a.i. pc and now this entire a.i. craze is going to demand more leadership technology than even we imagined five years ago and facilities like this and ohio and new mexico and oregon are going to be even more important than i envisioned. so, i would say, halfway through the five-year journey, and we're

a little bit over halfway through the challenges to rebuild this iconic company, and we're appreciative of everything that's come together to make this day possible. >> five notes in four years, still on track? >> absolutely. this will be the culmination of that right behind us as we finish the fifth node, 18-a, and that will be manufactured right here. >> let's put that into context for people, because we've been talking a lot about chips lately. i was in austin a little more than a week ago with lisa su. jensen huang at nvidia has been putting out news this week, just talking about blackwell, which i believe is made on tsmc's latest four-nanometer process. now, you have argued that this isn't apples to apples when you're comparing process technologies, intel's to others. so, if you were to make blackwell for nvidia, how long before your manufacturing facilities would be ready to do that at scale? >> well, what you see behind us here would be the

sub-two-nanometers or 18-a, so two nodes more advanced than what they're using today for that, so that makes it faster, smaller, cheaper, more performance capabilities. and this will start coming online next year in 2025 for manufacturing. so, we would hope to be manufacturing the most advanced a.i. chips for all of them, for intel's products, but for amd and nvidia and apple and amazon and google. we want all of those chips to be manufactured in america, taking advantage of the r&d that's done here, uniquely in america, as well. and that's why today is such a thrilling moment. >> i always got to ask about gaudy 3. any new news on when that accelerator chip, competing with the others, is going to be ready. >> coming very soon. very healthy. we're bringing it up in the labs, and the systems are getting bigger that we're running it on. very healthy. >> going to take a pause here and hear more from you on cnbc on "overtime," but for now, pat

gelsinger, thank you. back to the new york stock exchange. >> jon, thank you. a reminder, by the way, tune in tonight, 4:00 p.m. eastern, actually, that's later today. "closing bell: overtime," jon will have much more of his conversation with intel's ceo, pat gelsinger. we talk about nvidia. we talk about blackwell, and then you've got jon asking, hey, is this facility ever going to be in a position to produce those chips? >> well, look, i think that the problem is once you're finished, the facility, jensen will -- from nvidia, will already have moved on to the next. that is what keeps happening. lisa su put out some chips, and they were terrific, and right on top of that, jensen had the next chips, and all the big customers want are the latest and greatest. so, it's absolutely -- there will be demand for what pat gelsinger is making, but the real demand, when it comes to amazon and alphabet, meta, when it comes to microsoft, are going to be for whatever is the

fastest at the time, and what has software. nvidia will have software. intel is not a software company. so, intel will be at a disadvantage. that said, look, it's very difficult to get engineers in our country. it's 50 to 1 between taiwan and us in terms of the number of engineers. the number of builders, very, very difficult, so i think this is a great thing that the commerce secretary is doing, and these plants would not be built because they're uneconomic without the subsidy. >> that's part of the problem. morris chang, the founder of tsmc, american, of course, he was at texas instruments for much of his life. he's an older gentleman now. he's complained about how expensive it is. in arizona, where they're trying to build a new fab. >> everything i know is from morris. i just read everything he does. he's a good friend of jensen's, and morris is someone who is idolized in the semiconductor capital equipment business, which, of course, is where the real ip is. the real intellectual property belongs to kla, to lam, and

morris chang, godfather of the construction, used to be -- it used to be there was a -- jerry parker used to be the architect of the great intel plants here, israel, and ireland. they lost that. they lost their way at intel, and morris took up the vacuum. that's why taiwan has such an advantage. >> no, i mean, that -- >> they're really terrific. >> 208 billion transistors. that's what we're talking about. the ability to microscopically put all of that -- it's just incredible. >> you're so right. remember what synopsis said. jensen designs, then the software is -- it's handed off to the software for synopsis, and then it goes to taiwan semi. you need that software component in order to be able to stay ahead of everybody else. that's how inference occurs. remember, inference is the ability to ask a question in english and get an answer. and as these machines learn more, the answer's more sophisticatesed. that is not what intel does, and

that is not what intel will be able to do when this plant is done as efficiently as nvidia or amd. >> well, but, they're not writing the large language models. they're not using -- they're not behind that side of it, nvidia. i don't want to get too -- right? they're allowing the platform to operate for the large language model, correct? >> correct. and i think that's -- boy, you are on your game. that's exactly right. people who think that they do both, genejensen will correct v quickly. i think intel is going to do terrific stuff. i am not denigrating. it should be done there. we know from the supply chain problems we had during the pandemic, we are so vulnerable, we need this. at the same time, we have to understand that intel -- these chips may not be as valuable as they seem, because of what jensen is thinking about doing five years from now. >> right. >> that's -- i mean, this plant may not produce chips that are of use for, say, three, four years, and jensen will have moved on. >> he did talk about five years as well, getting to human-level a.i. or general intelligent

action as we say. >> now, david, were you -- >> yeah? what? >> were you at all concerned about the possibility of these computers, let's say, having biases or being able to say, you know what, i think that after looking at everything, they are smarter than we are? >> yeah, of course. you know i'm concerned about that. what have i been talking about for the last year? did you not listen to me at all? >> that was a segue. it was called a segue. >> oh, okay. >> i listen -- no, i should have just said, you know what? david, you've been worried, and i come back with a little bit more concern. i was just trying to get it so that -- >> you're getting a little more concerned? >> i was doing a tv thing. >> you're getting more concerned now, finally? >> i am about the ability for the machines to have their own opinion, and i don't know if i want the machine's opinion on "moby dick." >> not to mention the threat actors and all the sovereigns that are going to have their own

large language models and are buying all these chips from nvidia as well, because they don't want to rely on the u.s. and there's a lot of roads you can go down. >> david, i come back with newfound recognition of your concerns, and i think we're going to have to addressthem continually, because it's what i saw out here. the machines could have -- conceivably have our opinions. >> i did want to come to boeing. the stock is up, despite what doesn't seem to be -- >> why? >> -- great news from the company's cfo, presenting at a conference in which he really does give guidance in terms of negative cash flow that was worse than had been anticipated. as much as for the first quarter, negative 4 to $4.5 $4.5 billion in free cash flow, some of which will not be made up for the year. they are still talking about being cash flow positive, but again -- and it goes back to something called traveled work,

which, for years, they prioritized the movement of the airplane through the factory ahead of getting it done right. that's got to change. that's a quote from dave calhoun. they decided to hold airplanes in position longer and get after this traveled work broadly. it's going to impact revenue, earnings, and cash flows, both in the quarter and the year, and as i just said, it will be between 4 to $4.5 billion. it's essentially has to do with the fuselage that they used to get from spirit that was nonconforming. now they need it to be fully conforming. and it's just going to have the effect of making everything slower, jim. for boeing. as they sort of change their manufacturing process. >> you correctly point out, this is a cash flow story. that's how it's always been valued. and the cash flow drain, it's worse than expected. should the stock be up two? no, it shouldn't. >> i'm kind of curious as to why it is.

>> well, i mean, there may be people who think that what they're going to do is get control of fuselage and do spirit and have spirit not do airbus work, but david, what really matters is that both you and i know from the crisis during the pandemic, it's all about the cash flow with boeing, so therefore the people who are buying it must think it's about something that is ephemeral versus the cash, which is permanent. >> they did say when it comes to spirit aerosystems and, in fact, if they do buy that company, it would be cash, not equity they would use, and the cfo said, "spirit shouldn't be a business. it should be a factory." >> well, when they spun it off, they should have thought about that. >> all right. i'm going to give you a bond report now, jim. it's that time. >> sure. >> and i know you care. we haven't even talked about the fed. let's take a look. >> good. >> you want to throw something in here during the bond report? go ahead. >> the fed meets today.

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looking at some of the laggards right now on the nasdaq led by moderna. fairly volatile. but to that point, big pharma all down. merck, pfizer, j&j all with losses in the session. let's take a break. we'll be right back. of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone.

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the rest of the week. just learning, you know just learning. thank you for watching all that stuff. you and i both know we have to think about it. you're right. i have to congratulate you. i was a little too glib with what can be accomplished with a.i. >> now you're worrying me. >> i was too glib. i know the guardrails are necessary. >> jim, have a great day and great show tonight on mad. coming up, a rough morning for luxury retail. signet jeweller's ceo is going to be with us to discuss the earnings and guidance. y? did you forget marcus? forget what? your chem exam? uggh? flashcard time! the atomic weight of boron. the future isn't scary, not investing in it is. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses

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first one's free. good wednesday morning welcome to another hour of "squawk on the street" i'm sara eisen with david faber live from poet post nine of the new york

stock exchange. happy fed day. we get the decision and the news conference and dot plot and more this afternoon. ahead of that, markets doing a lot of nothing. just waiting and seeing. s&p 500 down 2 points. nasdaq down 18 points. and the dow is down 27. look at treasuries ahead of the fed. there's been a march up to near year-to-date highs in the past few sessions that calm down yesterday calming down a little bit today. two year below 4.7 right now. ten year below 4.3%. 30 minutes into the trading session. here are the movers. shares of shi poll tay rallying this morning. the fast food chain planning a 50 for one stock split. shares are up 30% this year, 80% in the past year. shares of car max moving higher too. the used car dealer upgraded to

buy from hold. saying they could be on the verge of a recovery. and intel, the company set to receive $8.5 billion in chip act grants with billions more loans possible. pat gelsinger telling us the company is halfway through the turn around challenges. we'll talk about the move this hour and you can catch more of that interview later today on closing bell overtime. it is fed day. >> yes, it is. one of your most happy days. >> very exciting. so it's exciting to preview it, too. because the fed has two mandates, stable prices, inflation, and maximum employment. we're at a point now where we think we want to know which one fed chair powell is more concerned about. the last few years it's been inflation. we had sky high inflation rates. but inflation has come down. has it come down enough to worry

about the jobs market. where we aren't seeing a ton of stress but signs it cooled off. >> cooled off from an incredible rate. >> incredible rate. but they want to get ahead of any potential weakening in the labor market by keeping rates so restrictive and high. this is a fed that in the last meeting, the last few public times, there's been concern or at least there's been caution around not keeping rates too high and wrecking the soft landing, which is what everybody wanted, including the fed. yesterday i showed that cpi was remaining stagnant at a sticky level. tom said you have to look at paperpce so we made a chart of pce and core pce showing there's been tremendous progress on inflation coming down. and the year over year numbers pce is back to 2.4%. fed wants it at 2%. >> we're close.

>> we're close. they can look and say we have made a lot of progress. we are going in the right direction. our next move can be a cut and they won't have to kick that can down the roadvery much. >> so now we're thinking maybe not hawkish? >> the market is positioning hawkish seen the yields one rup, dollar strengthen, stocks sell off. january and february had disappointing inflation points, they're going to be cautious about that, might take the dots down from three to two cuts this year. 2025 should be interesting as well. shouldup date the economic growth for 2024, downgrade the economic forecast. all of that would be consistent with what's happening right now. but yeah, it's kind of up for interpretation on how concerned he would be about those january, february numbers and the lack of progress on inflation or looking at a pce number which we know

measures things differently and is their preferred gauge showing a lot of progress. i like to show the two sides not just one. and then the other side of the mandate, which is the economy basically and jobs and how the economy has been doing. and it's so far so good, right? we're a higher growth rate than we expected to be this time of tightening. but looking for signs of weakness. one thing going around the trading desk this morning that i wanted to show you was the capital one chargeoffs from the credit card company debt they assume won't get paid and shows that consumers are having a harder time paying off auto loans and credit card loans. look where we are, it climbed to almost 6%. we're now at back to levels precovid and climbing higher than those levels. those are leading indicators. >> a little bit of tress. >> a little bit of stress. >> or growing on some balance

sheets. >> that's something we need to pay attention to and it's potentially leading in, because it's no wonder if you look at interest rates, we went back to march, we're in the march meeting, march 2022, that was the first hike in the cycle. >> two years ago. >> zero rates until then. you look at things like credit card loan rates right now between then and now, march 2022, march 2024, we're at 21%. they were at 16 then. that -- >> that hurts. >> look at the personal loan five year fixed from 12% to 21%. the mortgage rate we told that story here. >> we have. >> 4% to 7%. used vehicle -- you can go across. this is how it hurts the average consumer. >> without a doubt. >> no wonder we're seeing stress and the fed knows this. we'll look for his comments today on how concerned they are about keeping rates tight. keeping the breaks on the economy at a time where

inflation is showing progress. >> as you point out, it is a balancing act. >> it's an art not a science. >> data dependent. >> can't wait for the a.i. models to show up in the fed. >> when do we have an ai robot chair? >> never. >> i always monitor the companies to how they see the consumer is doing general mills seeing sales falling. and food inflation, listen. >> we still see inflationary environment, it's 4% now, it was double digits last year. and long term it's been kind of two to three percent so hopefully we're headed in the long term direction as we look at next year. we'll give guidance in june on what that looks like. >> still food inflation so that's hurting consumers. we heard that. value is one of the words that i have heard more than ever in consumer company conference

calls. signet jewellers we'll talk about to virginia droson this hour on "squawk on the street." disappointing on the sales front and guidance. here's what she said about the consumer. >> similar to christmas, valentine's day shoppers were highly value motivated. as a result january and early february trend was soft with comp sales down mid teens. since early february trends have notably improved with same store sales down mid to high single digits. the core business continues to outperform with digital banner operational issues dragging comps down. we believe consumers will remain focused this year as they make tradeoffs in their budget. >> value and tradeoffs heard it from target, walmart, from some of these individual brands and retailers. we'll talk more in a few.

let's talk markets now as well 37 the s&p coming off the 18th record closing high of the year and we are gearing up as sara has given us a great blueprint for the fed. let's bring in sam stovall. i assume you were listening to sara the path that may be taken by the fed, how does it figure into your thinking about the broader markets now? >> good morning, david. i think investors, myself included are trying to figure out which way the fed will be going today. we're still sticking with the premises that the fed will be slower to lower interest rates and the first rate cut would occur in june, which is 11 months after the last rate hike which historically has been the time span between the last rate hike, first rate cut and then we

enu end up seeing a full 75 basis points cut this year. but if there is a risk to the forecast i would say because things are looking good, the fed might decide to hold off and due to the third cut in the third quarter. >> which is better for the market, cuts or strong enough economy that everybody feels good about things and stock prices as well? >> i think the average investor would probably like the rate cuts because valuations are getting a bit stretched in my opinion. right now the s&p 500's pe is trading at a greater than 30% premium to its average over the last 20 years. and we're actually seeing 2024 and 2025 earnings forecasts coming down. so i would tend to say that the investors would like to have some sort of afterburners to help propel the market. >> you think it's the better economy that's been propelling

the market or the a.i. story or both? >> in terms of propelling the market, sara, i think it's the a.i. story that is supported by a strong -- i mean, a strong economy, good employment trends, the direction over all of inflation, et cetera. but i would tend to say that the euphoria is really coming more from the a.i. area. because we've been seeing technology of being among the almost absolute leaders in the overall move. >> yeah. and many of them support multiples and still don't seem that rich though. they may be above the markets multiple, but again these are the largest companies that we have in the world, sam, that are growing quickly. i'm curious how you see that, sort of those big megacaps the handful of them versus the broader market overall. >> sure. i've been around long enough, as have you, to remember that the markets thought the pes were

cheap at 60 times forwardes estimates. today looking nowhere near that. technology is trading at a 30 multiple and typically the last 20 years or so that has been a pretty hefty resistance level so i think we have to see improved earnings e mats in order for technology itself to move meaningfully higher. i also acknowledge the fact that we are seeing a pretty strong first quarter relative to all first quarters going back to world war ii. and if ifyou look at those top , 13 had declines 11%, that started predominantly in the second quarter. so i wouldn't be surprised if we end up with a digestion of gains occurring soon. >> okay. sam, thanks for your time. always appreciate it. >> my pleasure. >> as we head to break here's the road map for the rest of the

hour. reddit getting ready to price the ipo tonight. >> plus tim cook is in china there opening up a flag ship store and it comes amid slowing demand for perhaps iphones in the country. we head to beijing. and signet jewellers, the stock is falling hard right now. the company's ceo joins us later this houbig r. show still ahead as the do you recovers down nine points right now. meets bold new thinking. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley. your record label is taking off. but so is your sound engineer.

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it's one of the most highly anticipated ipos of the year which there haven't been many anticipated ones. prices tonight, trades tomorrow here at the nyc. i'll let leslie picker tell you what it is. >> reporter: i can tell you why it's anticipated it's been 827 days since reddit announced it submitted paperwork to go public it appears the long awaited debut is here. reddit is expected to price the ipo after the close with a trading debut tomorrow. i'm told the pricing call between management and team of advisers will begin at 5:00 p.m. eastern. i heard from a few sources they anticipate they won't push too much on pricing. although one source confirmed bloomberg headlines that said they're considering pricing at the high end of the range or above. so we'll see how it filters

throughout the day. they've been marketing between 31 and $34 per share which includes a valuation as high as $6.4 billion, a 36% decline from the 10 billion valuation reddit received in a 2021 private funding round. it calls itself a global digital city where 73.1 million daily active users collaborate through different communities with common interests. but the headlines while the company was on profitability upset users leading to a use r blackout last year. but others see the s&p around record highs, 21% growth, and a

scarcity of new issuance as a reason to buy in. we'll see what happens this evening and in tomorrow's debut. >> 20 years is a long time to not be profitable. what is the reasons that they cite for their inability to get to that important metric? >> that's exactly the concern from some investors as well. took them a while to monetize and seekout advertising. 90% of their revenue right now is advertising base but they're still in the journey of using advertising. they didn't use it for a very long time. they weren't monetizing any of the content for a long time. they say that total addressable market is in the trillions alongside that of a.i., alongside that of commerce. the latter two of those they haven't yet to really fulfill in terms of their ability to, you know, impact the top line, at least in 2023 numbers. that said, they do have that

agreement with google so we should start to see changes there in terms of the breakdown of their top line revenue, but again this is a company that was founded in 2005, but really didn't start monetizing the site until recent years. >> i thought there was a good deep dive on cnbc.com about the redditers, the moderators, users, how they're trying to get them to participate and a lot of people our reporters spoke to didn't sound too hot. >> reporter: it's interesting, as you think about pricing tonight you have the redditers, users, mott raters, friends and family getting 8% of the deal but then on the sell side you have employees. as you think about pricing, you don't want to price it too low and risk upsetting the employees who are finally getting liquid after 19 years of holding equity

in the company but you don't want to price it too high and upset your leashers ofan additional backlash if they were to buy in. so it's interesting what they're trying to get. >> and it's been a while since we had the wall street bets. next hour don't miss the ceo of astera labs. that company going public today. not just a test of ipos but a.i. focused ipos. there's an a.i. story here. shares of gucci owner kering dropping sales today. plus apple's tim cook is in china amid fears of demand there. all that after the break. and more. thank you very much. [applause]

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welcome back. big news for semiconductors today as the broader sector tries to hold gains for the month. the smh on pace for the longest

monthly winning streak since 2021. intel in focus higher on news the company is set to receive the biggest award yet from the biden administration chips act nearly $20 billion in grants and low. the ceo joined us last hour to discuss the news and tell us where intel is in the turn around. >> our product execution has almost entirely been restored, delivering products to our customers, launching new categories, and now the entire a.i. craze is going to demand more leadership technology than even we imagined five years ago in facilities like this, ohio, new mexico and oregon are going to be more important than i envisioned. halfway through the five year journey and a little bit over halfway through the challenges to rebuild the iconic company. >> catch more from jon fortt and pat gelsinger this afternoon on

closing bell overtime. our own jim cramer spoke with gina raimondo about the news. listen to what she said. >> right now the united states produces zero leading edge chips in the united states. we buy 92% from one company in taiwan. that is not resilient. that is not safe. right. this is an overly concentrated supply chain for a critical item. and that's why it makes sense for the u.s. government to provide these subsidies so that these companies make it in america. >> more from the commerce secretary on mad money tonight. i guess the question is how long it takes. now we have the money flowing that's the step. >> it's going to take a while. >> many years. >> yes. and then, of course, the question is if they get to the level where they need to be in

terms of being able to produce the current chips that nvidia is designing but three, four, five years from now, those -- >> chips are going to evolve. >> be more advanced. so do you ever catch up? >> it's a good step, though. gelsinger lobbied so hard for this legislation. so i'm sure he's very happy. it's finally happening. >> it is. and the building is going up behind him. apple's ceo tim cook is visiting shanghai amid a slow down in iphones in china. eunice yoon joins us now >> reporter: thanks, david. as you said, tim cook is in shanghai, in fact, he posted on his chinese social media a video of himself strolling on the iconic waterfront, rubbing shoulders with local celebrities. all of this just one day before apple is set to open a flag ship

store in the city. apple hasn't confirmed whether or not tim cook is going to show. but the expectation is that he is likely going to take part when the doors open at 7:00 p.m. local time this is on thursday. state media has been showcasing tim cook's visit as a sign there's a lot of foreign investor interest in china according to the state media. the official china daily is quoting him as saying there's no supply chain in the world more critical than china. tim cook, it's saying he's going to expand and increase investment in china. he was meeting with chinese suppliers, lends technology as well as everwell precision and byd, the ec company giving tesla a run for the money. now cook on wednesday did meet with those folks.

and this also comes as the expectation is that thes going to be making his way to beijing to take part in a state-backed government forum called the china development forum. the point of the forum has been to have foreign investors rub shoulders with chinese government officials. but contrary to this positive messaging we're getting from the visit with tim cook, the forum itself has been downgraded from three days to two days, and there's been a lot of questions as to whether or not the premier is going to show or at least even sit down for a meeting with some of these foreign investors. so a lot of confused messaging still here as to what the chinese government really wants. >> yeah. you know, on apple, again our latest reports that we got from one of these data firms was sales were down significantly in terms of the iphone in china.

where are we on that ban for government employees? is that a real thing? are you aware of it? is it happening? >> i mean, you hear a lot about it. it's not official. it's not as though we have gotten some transparent edict from government authorities. it's mainly that somebody will say their company, who's a state company, doesn't really encourage the use of iphones or that there is a worry that there could be tracking on these phones. and, of course, that there has been a surge of nationalism around local brands. and that's one of the headwinds that apple has been facing. >> what about the latest on that consumer as we try to figure out the shape of the economic recovery there? david mentioned the earnings, also temu is taking off in the u.s. but a lot of people think it's benefitting from a weaker

consumer in china because of the prices. we have kering on the luxury consumer in the asian pacific. what are you making of the threads and where the chinese consumer stands? >> i think the chinese consumer is still having a crisis of confidence. people are hearing still the bad news. we had some decent news with the latest trade numbers but look overall, people are worried about the housing market. there's a lot of pes schism right now. they're worried about their homes, whether or not they could have a job, i don't know if you heard about the jobless numbers but the chinese government said they're going to be releasing those a couple of of days later so it's not all transparent so in that scenario, people don't necessarily feel certain or confident that it's a good time to be able to spend a lot of

money. >> thank you. 123%, david, revenue growth. >> pdd, although the stock is well off the highs. >> if you break it into transaction services, 357% revenue growth. amazing numbers there. still ahead, checking in with a fed official who believes we're at a key inflection point ahead of today's meeting. and shares of signet jewelers dropping sharply. we'll break down the numbers with the ceo later this hour.

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welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. a federal appeals court is hearing arguments this morning after blocking a controversial immigration law just hours after the supreme court allowed it to take effect.

the measure allows police to arrest migrants who illegally cross the border from mexico in texas and gives state judges the power to deport people. the irish prime minister unexpectedly resigned this morning. he visited president biden in washington just last week said he'll step down as soon as a new party leader is announced. he said he had no firm future plans but he does plan to remain in parliament. in the uk, a data watchdog is launching an investigation into an alleged breach of kate middleton's hospital records. it comes after a report that staff at the hospital where the princess of wales underwent abdominal surgery tried to access her medical records. the princess has been the center of conspiracy theories since she's remained out of the public

eye since that procedure. back to you. it's day two of the fomc meeting. steve liesman is there, and has what investors expect from fed chair powell. >> reporter: an interesting meeting no specific policy change coming but markets are looking for potential changes in the outlook that could influence policy in the direction of the old interest rates and economy. here's what the fed forecast in december versus right now. 1.4 was the gdp forecast running so far estimates 2% for the first quarter. unemployment at 4.1. running at 3.9not far from where the fed thinks we ought to be. and the core pce, 2.4 what the fed expects for the year we're running high at 2.9. with the fed funds expected at 4.6 right now there's room for

the fed to cut if that remains the same. there's concerns individual members may raise their concern. it takes just two feds to be more hawkish. we'll also look at details for what's discussed to unwind the balance sheet. it's down by 1.5 so far in the past year. the cnbc fed survey looks for an average of another trillion or so to come off before the fed finishes quantitative tightening as expected in january. we'll see if that fed forecast is right from the survey. also asked in the survey about politics and fed. it founds that 73% found the presidential inflelection has n influence on the fed's decision to cut. 88% say the fed would go ahead and reverse course and hike if needed despite the presidential

election while a small contingent, 12% thinks it makes them less likely to do so. survey respondents and the market take the fed at their word they're data dependent with no economic risks on the ho horizon. all of this means the fed is likely to be tied to the inflation cycle and when and how much to cut not necessarily the political cycle. >> thank you, steve. our next guest said we are at an inflection point the fed wants to be closer to the 2% target before declaring a victory and ekxpects the rate cuts will be less than expected. ra randy quarles joins us now. it's good that people don't expect the fed to be political, they go far to state their independence and prove it.

we talked to brian ryan yesterday and he said they won't talk about it, but it'll be on their minds if they wait for a rate cut in the third quarter, that is going to be perceived or at least there will be headlines about the fed cutting into the election. do you agree? you were at the table, do you think that's fair? >> i think that if people could be in the room, they would be very pleased to see the lack of politics in the discussions. and that affect the decisions that people are making. you know, obviously the fact that there's an election going on, the members of the committee won't be unaware of that. but it really won't affect their decisions about what they need to do with respect to monetary policy. >> how confident do you think they will feel that inflation is moving down to their target at this point? after what we saw in january and

february. >> i think -- you know, i think right now they should feel confident that it's moving but not moving at the rate necessary for interest rates to come down as quickly and to the degree that markets are currently expecting. i think that there's frequently, in market assessment of the fed's likely policy path, a few that 2% was a rather random or at least arbitrary target so they don't have to get down to 2% before they can declare victory. they can declare victory at 3%. that's not how the fed is going to think. they don't have to get down to 2% but if inflation remains higher than their target, materially higher than their target, they just won't lower interest rates as quickly as markets are expecting. i think it has to be closer to 2.5 as opposed to 2.9 before they can say now we can lower interest rates. >> 2.9 is core pce, it excludes

food and energy. if you factor in food and energy it's at 2.4% the year over year pce number. so how close does it have to get? >> the fed's stated target is the core pce rate and that's what they'll be looking at. because food and energy are relatively volatile and don't really reflect sort of the -- the effective monetary policy, they affect other seasonal and market factors so they'll look at the core pce rate and need to see that come back down closer to target. >> when do you guess that will happen? when do you think the first rate cut comes? the market circling around june. >> certainly not before june. and i think that it's possible that if we don't see further progress on some of these measures that the fed has been clear that they're focussing on, the measures of tightness in the labor market and the inflation

target, that you might not even see a rate cut in june. so i would say that, you know, the current market expectation i think is for three cuts, weighted towards the end of the year. i think two is more likely. given the way that i expect the environment to evolve over the course of the next few months. and it's possible that that would mean there wouldn't be a cut even in june. >> that's what we might get in the dot plot and the outlook. from 3 where they were in september to 2. randy, thank you for the time today. appreciate it. >> thanks. >> randy quarles. still to come, shares of signet jewelers are down despite earnings estimates. we'll have a conversation next with the company's ceo. don't go anywhere.

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check out the biggest s&p laggards for the year. you can see tesla at the very top, but challenged by boeing. news of which this morning we discussed a bit in terms of the changes in the manufacturing process. going to take them more time. as they kind of do something called travel work or they don't do it any longer. it's a job scheduled to be completed in one location and then rescheduled to be completed in another location so no more. so free cash flow as they make the change at boeing. not hurting the stock today but you can see what it's done so far this year. we're back after this.

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cigna jewelers slumping over 11% over a weaker than expected q4 sales number falling 6.4%, and issuing revenue guidance that came below street's estimates. here to discuss is signet ceo, jenna. it's great to have you back on. >> it's great to be here. the profitability numbers look good, but it's those revenue numbers. particularly, the outlook, when the street was expecting positive comps this year and you still expect negative, i think that has people concerned. what is driving that? >> well, first of all, sara, thanks to our team, we delivered

on our financial commitments again in the fourth quarter. we had eps over the high end of our guidance, and it's the fourth consecutive year that we've delivered free cash flow over $600 million, so a great testament to the flexible operating model that we've put in place. what i think we're seeing and we saw through holiday and valentine's day is a reasonably weak customer, very value-oriented. we're seeing low-price jewelry really do well. but on the positive side, we are predicting the return to engagements s s this year. all of the milestones we track, and it's important for us to track it, since engagement is about half of our business, all of those milestones are coming back exactly like we thought we would. some puts and calls on the year ahead, but we're bullish and expect to return to comp sales growth on our core in the back half of the year. >> so on the engagements, which you mentioned, such an important part of the business, you did predict that it would come back. talk to me a little bit about

what you're seeing on that front, and just how long that tail wind can last. is that a multi-year story? >> it is a multi-year story. going all the way back to covid, we knew that when couples were in lockdown, they weren't able to start dating, we would see a lull in engagements. several years later, we predicted that lull would happen in our fourth quarter, which it did. and now we've begun, starting in december, to see engagements begin a gradual and incremental return to pre-covid levels, which will last about three years. for signet, that's a nice tail wind on our business. >> so what are they spending? you said value-oriented consumer. you said they're making trade-offs, they're in a weaker spot. what kind of categories, price points, what have you learned about your consumer and where they're going? >> sure, it's mostly an impact on the fashion jewelry category. customers might trade down and instead of buying a $300 pair of earrings, choose a $200 pair.

for engagements, it's not as much a factor. people usually come in with a budget. they want to spend $3,000 or $5,000 and look for the best value they can get. that's where signet actually really signs. we have sourcing advantages, given our scale in that category. we're fully vertically integrated, buying rough diamonds all the way back to the mine, and we work with our vendors to value engineer products. one of the great things that we saw over the holiday season is that we're super in touch with customers and so our new items sold through 700% faster than they did the year before. 700 basis points faster. >> speaking of integration, on the call, you discussed the integration of james allen and blue nile and some operational issues related to the re-platforming of the business. can you explain to our viewers what happened there and what you've done to fix it and whether it has been fixed? >> yes, absolutely. so, as part of the integration

of blue nile, we've been re-platforming that business to overcome some previous tech debt, and we didn't get all the pipes connected the way that he wanted to. so we had some operational issue over the holiday. the team is all over it, and we expect to get that fixed within this fiscal year. although we've still assumed a drag on our fiscal year guidance as a result of the digital banners. now, over the long-term, we're very excited about the blue nile acquisition. it is mostly an engagement ring business, very strong brand equity. distinct from our other banners, so we would expect to be able to see growth on blue nile in the future. >> and just on the profitability front, the margins, obviously a bright spot. you have been embarking in cost-cutting. i know you said that you have a good grip on the supply chain, which has helped insulate you from some of the cost increases. how much more is there to do on that front. >> we think we've still got room to continue to grow our operating margin. we announced today a $350

million cost savings effort. this really builds on a muscle that we have already in our company to drive out costs that customers don't see or care about. we were pleased to see a significant operating margin expansion in the fourth quarter, driven by our gross margin improvements. and haas the kind of savings through sourcing, through our scale, through the contracts that we do, our ability to group those together. we're expecting that we should see about 150 of that $350 million costsavings in the first year. in our fiscal year '25. >> and you mentioned the return to growth and the improvement that you've seen since february. any change in the promotional environment which is very high in this category? >> the promotional environment was very high. they didn't predict the profit engagements as well as we did, and were over-inventoried all

year, so they had significant price reductions over the holiday season, which we've seen continue into q1. the great news for signet is that with our newness and the high appeal of that and with our pa ability to value engineer products to offer customers a great value without deep discounting, we were able to maintain our average transaction value in the fourth quarter, and we will continue to, you know, to really support the value of natural diamonds in the category. they're rare, they're special, and they signify love. >> and what about the balance between ecommerce and traffic that you're seeing in stores and how that's evolving in a post-covid world? >> yeah, ecommerce has been a great story for us. we got, you know, after digital and ecommerce even before covid, every jewelry consultant with an ipad and that really allowed us to come through. you know, that, you know, otherwise difficult period pretty well.

and with some momentum. we have quadrupled our ecommerce business since the beginning of our transformation. but while still only about 20% of customers buy their jewelry products online, almost 80% search and browse online before they buy. >> got it! jenna, thank you very much. it's really good color. really appreciate you joining us here. on the earnings. >> thank you, sara. thanks to our team. >> jenna grosos of signet. stocks still down -- >> stock's not doing well. >> that's a big mover on earnings, always. >> i've noticed that. all right, a lot more of sara, coming up in the next hour. >> also, the ceo of esterra labs, the new ipo. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten,

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♪♪ good wednesday morning. welcome to "money movers." i'm sara eisen live with mike santoli. former fed governor randy kroszner with us on what investors should be listening for this afternoon during the fed decision and news conference. >> and then intel awarded $8.5 billion in chips acts grants with billions more in incentives. stock off its early highs. we are live on the ground in arizona this hour. plus, some are calling it 2024's first a