interview with ceo ed bastien. all of that and more. it's wednesday, april 10th, 2024, and "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is out this week. we have been watchingthough. this is the big day. we've got cpi coming up. ahead of that, you're going to see the u.s. equity futures just a little bit higher this morning. dow futures are up by 7. the nasdaq is flat. marginal losses and declines for all the major averages the last couple of days. treasury market is where we've seen some action. you're talking yields relatively

high, a little bit lower than what we've seen in the last few days. but, again, all of these markets kind of waiting to see what the cpi signals today if inflation's getting worse or not. the first couple of years, we're in that seasonal one-off situation or you're in a situation where you have higher prices moving their way through the line once again. check out precious metals. commodities across the board have been higher. gold at another all-time high. you also had silver hitting its highest level since june of 2021. copper at its highest level since the beginning of january -- since 1/18. aluminum higher. all of these things reflecting commodities across the board. cpi is a little hotter. goods inflation is a little hotter. we'll see. we've had shares on the other

side of the vote, what they think's going to happen. >> i'm in the roger ferguson camp because i try to follow people who have been right. >> tom lee has been right too. that's the thing. he's been betting on the markets, and he thinks this is going to show lower this time. >> is tom lee in the three camp? >> i don't know if he put a number on how many cuts, but he thinks you're going to see inflation come down, that it was a seasonal issue, and then that's a signal to the markets it's kind of an all-clear. >> we shall see. 8:30's the time. inflation is the number one thing on the schedule. that will happen at 8:30 a.m. eastern time. we'll get the consumer price index eastern time. poll forecasters expecting an increase of 0.3%. that's the number to beat or be below. up 3.4% year over year. also on today's agenda, we've

got quarterly results. delta air lines, we'll bring you those numbers. and ed bastien coming up at the top of the hour and things happening. a longtime employee at boeing taking his public concerns yesterday. they say the plane took short cuts to ease production bottlenecks. he said manufacturers wrongly measured and filled gaps when air frames are joined together. that could cause fatigue in the teal that could short p the life of the plane. boeing disputes those allegations. it says concerns have been subject to rigorous examination on faa oversight. the faa said it will investigate those claims.

you can see share of boeing, which are up 30%. already down 31% year to date. then this morning the "associated press" is reporting that the ceo dave calhoun has been summoned to testify over the safety of his aircraft. in the next hour we'll be speaking with randy babbitt about this and much more. apple is reporting that some $14 billion worth of iphones have been assembled in india, now accounting for about one in seven of all new iphones locally. among the top companies, fox come at 67% followed by pegatron and wistron. the question is how quickly can that i do this?

apple is looking to expand in miami. the move follows expansions by amazon and microsoft in the area as well. >> there have been some opportunists. carnival las been looking at selling its headquarters there because the market has gotten so hot. ratcheting up those who have been ot. >> it's true. we're also watching shares of taiwan semiconductor. the company reporting a surge up 34% year over year. tsmc is the world's largest contract semi-conduction. and semi-conduction shares up. >> i don't know how to pronounce this. intel has introduced a new chip, a new ai chip.

is it goaudi. >> is it gaudi or gaudi? >> i don't know. >> it runs faster than the comparable chip. we're going to talk more about it with a chip stocks analyst from morgan stanley at the beginning of the hour. >> now i want to know. gaudi, gaudi? i don't know. i'll try to figure it out. the audience from monday's men's ncaa basketball championship rose from last year. it brought in an average of 14.8 million viewers. . the most watched game of the men's tournament wasn't even in the final four. it was the elite eight matchup between n.c. state and duke that brought in 15 million viewers.

everything was eclipsed by the women's title game, making it the most watched basketball game of any kind in five years. first of all, phenomenal to see the draw that women's sports has. i will also say it was on at an earlier hour. i tried to stay up for the championship game on uconn on monday night. that game didn't start until 9:00 eastern time. so i was able to watch the first half and a teeny tiny bit beyond that, but that is too late for us east coasters. >> they should move it. it would be better for them and everybody. >> on the west coast, i understand it's a big deal for them on the west coast. that starts at 6:00 p.m. that's early. but that's not when the super bowl airs. inflation could add fuel to the debate. we're going to hear from a hawk and a dove after the break. later we'll talk about the

big moves in recent weeks in gold and oil prices with jeff currie, our commodities guru. "squawk box" is coming right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. great job astro-persons. over. boring is the jumping off point for all the un-boring things we do. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. taking chances is for skateboarding... and gas station sushi. not banking. that's why pnc bank strives to be boring with your money. the pragmatic, calculated kind of boring. moving to boca? boooring. that was a dolphin, right? it's simple really, for nearly 160 years, pnc bank has had one goal:

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welcome back to "squawk box." bach tick is reiterating for one

rate, but he's hoping to change if the economic picture changes. that echoes his message on "squawk box" last week. he said he couldn't discount the possibility that the rate cuts ma i have to move further out because of a robust economy. today, of course, cpi readings could add fuel to this debate about a rate cut future, whether there's one in the future or maybe none. joining us right now, two folks on two sides of this debate, a dovish side, veronica clark, and on the hawkish side, tom s simmons. do you want to make your case? >> i don't think cpi data is going to change this much. we're expecting an on-point consensus change. i think what the market is getting a bit wrong is how dovish is fed reaction fund can be if we happen to get weaker labor market data or with cpi we

get a little bit of a downsized surprise. this is a chance for the fed to cut the economy, the labor market. >> and what is your base case right now? >> they're cutting in june and we're cutting every month after june. that's 125 basis points this year. >> so you're way -- >> we are, we are, yeah, but i really think it only takes one or two months of weaker labor market data, which i know we've had a string of very strong apparels readings, but some of the details of this labor market do not look very favorable. >> how weak of a jobs market would you have to see for them to do that? >> honestly, to cut more than we're expecting right now or more than the market is pricing right now, i don't think you need much, a 50 k increase in apparels, i think, would do it. we do see signs is that demand for labor is really slowing down. the unemployment rate has risen

from the lows. it's not going to take much for them to cut in that case. >> okay. tom is on the other side of the de debate. >> if we had had this conversation two or three weeks ago, we would have seen exactly the same fed path cut rate. we were going to cut at each meeting for the rest of the year as well. friday when we got the payroll data, i finally threw in the towel on the recession call. i've been one of these guys that's expecting the economy to roll over, we're going to get this big pullback in consumer demand, there's going to be in negative reinforcing cycle, layoffs because businesses aren't really prepared to preserve margin any other way than caughting costs through labor, but we keep talking about this resilience in the economy. you know, consumers have been able to maintain their demand profile with a low savings rate. businesses have been able to prereceive margins pretty well

in aroy we didn't expect that pricing power has come back, and now i'm thinking that you can say a thing is unsustainable over and over until you say, how long can i keep saying this? eventually it becomes unsustainable. i think what we're seeing right now -- >> it's a capitulation. >> yeah. there's only so many times you say i'm pushing out the recession call. >> what do you think when you're talking about one cut? >> from my perspective, they're very much in line with what he's been saying. >> how can you be in line with what he's saying if you're in line with veronica? >> you know, i'm starting to buy into the fact that the economy can continue to grow. in a holistic sense, it can still continue to grow. we're not heading into a recession immediately. i thought we would start to see

negative gdp by the third quarter. that's clearly not happening. there's still ammo-mentum amongst consumers, especially along the high end they can support the overall household sector. >> what was your call at the beginning of the year, i'm just curious. >> we had 100 basis point cuts. we started in july and then we had a dovish fed to start this year. we pulled forward in june with 125 and that's been the call since early january. >> so what is the metric that you look at? if tore's not the metric that you're looking at -- today is the day i assume is the big number you need to pay attention to. >> yeah. >> underneath all of this, are there numbers maybe you're not talking about? >> yeah. i think they're seeing the same signs of a weakening labor market we are. certainly, yes, you don't see it in apparels yet, but the higher rate that's fallen. temporary employment rate that's come down, hiring intentions of

small businesses and employment data, all of these are trending lower and close to 2010 kind of levels. you know, i think they're seeing that, and they really want to avoid a weaker labor market, and if you started to see that show up in your rising initial or continuing jobless claimings, continually trending higher for maybe four to six weeks, i think that's a concerning sign for them. >> when you talk to your equities guys and they ask you about your take on all this, what do you think your equity market to the extent you follow all of this is demonstrably baking into the cake, and what would be the real problem? is there a moment the market is too ahead of their skis? for example, if he's right, is there a demonstrable downward pressure at that point? >> yeah. we are expecting labor to be slowing. we've had retail sales down on

the year. we've already had auto sales fall in q1 this year, the largest decline since 2022. so we're already seeing signs consumption is slowing a bit. >> i think they've priced in some amount of cuts, but they have to see what's gone on in the markets for the pricing of the fed cuts for the year. it wasn't that long ago they were pricing in eight, nine, ten cuts from q3 of last year and 2024, right? now we've compressed it all into two or three cuts and the markets are doing pretty well, right? they can't be blind to the fact. there should be some recognition, okay, we don't need as many cuts. the economy has formed pretty well. maybe things aren't so bad. maybe that's what's really priced in. >> we will see at 8:30. hopefully we can have you back and continue this wild kind of nerdy debates.

>> be happy to. when we come back this morning, robert frank will join us. he's going to tell us about a trend among the ultra-wealthy, shopping around for dual citizenship. and squawk pod has been nominated for a webby award. you can help us. scan the qr code you see on the screen. you can follow us. the code will take you right to the page where you can show your support for us in the web bys which honors the best on the inrn eh teetacyear. voting is open until april 18th. "squawk box" will be right back.

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ultra-wealthy. shopping around for a dual citizenship. robert frank joins us right now. man, that is the ultimate luxury. >> a record number of americans are getting second passports to hedge their risks. that's according to henley & partners. the u.s. is now the largest market for applications for multiple passports and long-term visas. they're not giving up their american citizenship. they're just adding a second, sometimes a third or fourth. these are called passport portfolios. some of these folks are citing politics or social unrest. others like second passports for safer business travel,

especially countries that may be hostile to the u.s. >> the idea of diversification is very well understood by wealthy individuals. it makes no sense to have one country of citizenship when i have the ability to actually diversify. >> americans' favorite countries for a second passport are por portugal, malta, greece, and italy. a record number are expected to migrate mainly out of china, russ russia, and other hot spots. there will be an addition of 3,500 added millionaires. there's always a tax implication. we tax your global income matter where you live or whether you're a dual citizen. on the face of it, no. but it's easier to transfer assets of which you're a

resident or a citizen. >> if you could have a passport from anywhere, where would you get? >> i mean europe. malta is a possibility. you can travel anywhere in europe. >> the golden ticket. >> golden visa. >> portugal's famed in italy. >> you can travel through the whole region. >> to you like malta over part gal? >> portugal is great. t it's not expensive. you've got a new project. what is it? >> it's called inside wealth, a weekly newsletter. if you look at managing the wealthiest of the wealthy, it's exploded. 600,000 worth 30 million or more. this is hyperfocused on where wealthy investors are putting their money. so it's family office, it's

alternative investments, venture capital, private equity hedge funds. taxes is our favorite topic. it's the whole business of wealth management and next generation of wealth transfer. >> what amazes me is i can always ask you a craze yeftd question and you always have the answer. y uno the statistics. you are so deep in your knowledge. >> thank you. i appreciate that. i've been doing this for 20 years. this puts it all together and the riefocus is where are the real wealthy putting their money? >> i'm scanning that on the screen right now. put the code back up so i can do it. >> cnbc.com\insidewealth. >> i'll do it the old school way. >> subscribing as we speak. there we go. >> i can't think of a better person to put this project out and do, because, really, your

depth of knowledge, i throw questions at you all the time with no warning and you always have the answer. >> thank you. you guys have been covering the space for a long time as well. it's the new gold rush of wall street. they all want to be in the business of managing the wealthiest of the wealthy. managing offices has been huge. it's a space not really well covered or understood because they like to keep it private. so we're going to tell the story. >> robert, thank you. >> i'm a subscriber. i just agreed to the terms of service, by the way. didn't even read them. >> you'll be like everybody else. >> we won't sell your data, we promise. coming up on the other side of this, delta air lines, we'll bring you the latest. plus an exclusive ivg interview with ed bastian, ceo. as we head to a break, we'll look at yesterday's winners and losers.

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welcome back to "squawk box." delta air lines just reporting its quarterly numbers, and phil lebeau joins us now because he's got them. phil, in front of a delta plane, no less. >> reporter: proper backdrop for talking with ed bastian. let's go over the numbers from the first quarter. this is the beat on the line for the first quarter. revenue coming in just shy of estimates at 12.56 billion. the street was at 12.5 billion. the numbers within the numbers? passenger revenue versus seat mile, flat. domestic revenue per seat finally swung positive. it had been negative for a number of quarters. up 1.5%.

3.3 versus 3.89 in 2023. the company knows it saw stronger corporate travel demand as it exaccelerated. delta guiding for eps. revenue growth of 5% to 7% and it's reiterating its full earnings per share growth or total 6 to $7 of o'pi guidance. a lot is the same. we're going to be talking with delta air lines ceo ed bastian in terms of of what we're seeing for your the summer, early booking demands, jet fuel, which is rising. a lot of things to discuss today. >> phil, we're looking forward to that interview. a fascinating bellwether and signal about where counsel consumers are and the rest of the country. we'll see you in a little bit. home and auto rates are

surging, which adds to financial pressure for consumers. joining us right now to talk about why and what's happening is david samson. he's the president and ceo of the american property casualty insurance association. david, let's dig into this because i've talked to so many people who have gotten sticker shock when they reopened their bills for the year and see what the new premiums are going to be. massive, massive increases both on car insurance and on home insurance. what's driving that? >> the core driving factor is 40-year record-high inflation. cars are more expensive to repair. homes are more expensive to repair. after natural catastrophes. since the beginning of the pan pandemic, home construction material has increased 43%. construction labor has increased 33%. you're seeing increased storm

activity all over the country, con veeck active storms last week. severe tornados in the midwest, wildfires in the far west. all of this is contributing to the increases lossed they're experiencing. on top of that, you have social inflation compounding the economic inflation. the lawsuit abuse that is passed on in all of these major nuclear settlements that ares out there is having a real impact on insurance availability and affordability. >> some of those sound like issues that were one-offs, pretty big sticker shock items, but not necessarily things that are going to continue to climb. when you point to construction costs, construction labor, construction materials, those were things we knew came up pretty sharply, but we have seen inflation come down in those arenas. so are these things that you

think are going to last because some of the others that you point to, like more frequent storms, people suing more frequently or are committing fraud more frequently, which are going to tail off and which aren't? where do you see prices headed from here? >> the lost costs are increasing far faster than insurance rates have caught up, and so fundamentally, you're not going to see a stabilization in insurance rates until those rates end up matching the lost cost that we've experienced. the industry was -- the industry as a whole, the entire property and casualty industry of homeowners and auto was recently downgraded by a.best, the primary rating agency for insurance companies. first time in history that that has happened. so the outlook is pretty clear that we have a long way to go before insurance rates catch up to the rate of inflation. they have been lagging far

behind what we have experienced in losses over the last three years. >> i know some insurance companies that are still pretty profitability. is that still not the case for most insurers? >> well, insurance there are a number of companies that have reported good earnings, but what you see happening is insurers all across the country are having to rebalance their book of risk because there's simply no safe place. insurance is all about balancing your book of risks, and as i mentioned, you've got -- you've had consecutive years of record hurricane losses in the gulf and the coastal areas, severe con veeck active storms throughout the midwest, wildfires in the far west. and the other factor is you have more and more people moving to more catastrophe-prone areas, building more expensive houses

in those areas, and insurance is about -- all about the expected future losses that those demographic factors indicate. >> meaning what? that insurance companies are not going to insure places like the florida coast, places like california where you're dealing with wildfires? >> well, the last thing we want to do as an industry is pull back from the most important insurance markets in the country, and california's the largest insurance market. but for consecutive years now, the industry is losing money in california homeowners insurance, and the regulatory environment in california is antiquated. it's a 40-year-old regulated environment with prop 103. insurers are waiting up to a year from a rate filing request before that rate filing request is acted upon. there's no other business in the

country that can experience the kind of inflation that we've seen in recent years if they have to wait to jaufts adjust their prices. >> you have to go to each state and ask what they charge, which is why the huge sticker shock when people get their bills and open it up and say, wait a minute. these are years of gains catching up at once. the question for consumers may be how many more can they see? first of all, you need to understand, everyone needs to understand, the insurance is highly regulated at the state level, so insurers cannot just arbitrarily increase prices. they have to go through an extensive rate filing process, provide the act aerial data of recent losses and expected losses going forward for state insurance departments to approve

those rate increases. regulators have two primary responsibilities. one is to ensure the solvency of insurers so they're able to may future claims and the second is market conduct torsion make sure rates are adequate, not unfair, and not unfairly discriminatory. so there's a very extensive process that insurers have to go through to be able to get rate increases that reflect the risk on the ground. insurersare the canary in the coal mine. they reflect the risk profile of these markets all around the country. >> david, this is part of the reason we do have the cpi coming out today. auto insurance has picked up in the cpi. it's debatable whether home insurance has picked up. that could be part of the reason consumers are feeling much more

pinched than necessarily the headline numbers would explain. how big have the increases been in home insurance? >> well, the -- i don't have a specific answer because it depej depends on region of the country, the house, and the kind of car that you drive, but i can tell you that insurers have been experiencing t-- the rate increases have not kept pace with the losses, the insured losses that insurers have incurred over the last three years since the beginning of the pandemic and the inflationary environment. so this is why inflation is such a profound -- has such a profound impact on consumers, and i think it is why when you look at surveys out there, people do not respond that the

economy is as good as some of the headline numbers would indicate because inflation iowa cost is terrible on the economy. before we head to the break, a couple of headlines. you do send a lot of postage? the u.s. postal service is looking to raise the price of the stamp be i a nickel. it will be the fourth increase since the start of 2023 and bring the price of a first class stamp to 73 cents. they say it's necessary because of the rising cost in delivering mail. if it takes effect, it will be juul 14th. >> we had another one in january. this is part of the inflationary issues. if they're saying it costs much more to deliver, it's the same as insurers are saying.

it's costing them more to fix the cars, fix the homes. >> 73 cents is very cheap to move something across the country. >> i agree. i thought you were going to take the other side. it's why inflation is -- >> what do we think is a fair price for a birthday card to send to somebody? >> birthday card, 10 bucks. >> 10 bucks? i usually get a fatter one. >> these days you're going to spend 6 bucks on it. >> i'm all in on the card and the extra postage you're going to have to pay. it's probably a 10 buck thing to. i don't know a lots of people i send birthday cards to, but if i do, i want it to be very special. >> do you ever use the service? >> the biggest thing, it's got to have your handwriting on it. >> they'll put your handwriting

on it. i can tell. >> i'm going to send you a birthday card from the service and see what happens. mattel is adding a second side on the back side of the original board that's zliened for collaborative play instead of competitive play. players work together to complete gold cards. there are helper cards. i kind of like this version. mattel says the new version will make the game faster paced. it shows comprehensiveness is declining in younger generations. the new version will only be available in europe. so maybe we'll have to get it shipped from there. the game is licensed by rival hasbro in the u.s. i'm very cool with this. i like those games, but they are saying young kids are not to -- >> i have seen some examples of thereafter. if you look at sports, it's still extremely comprehensive.

>> but there are board games where no one really wins. this is a little bit of the over gets a trophy kind of thing. >> i think eventually you want to flip the board and say, okay, here's -- >> so i need this because i always losing so i would like to be with folks who can help me. coming up next, the clock is ticking for cons to sign off on a security bill. an update on that story next. at the top of the hour, don't miss the exclusive interview. we have delta air lines ceo ed bastian and talks of the airlines beating the estimates. "squawk box" continues right after this.

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welcome back to "squawk box." congress is nearing a deadline on a national security bill that pits some big tech companies against the intelligence community. emily wilkins joins us now with more on that story. good morning. >> reporter: good morning. congress has a little less than

two weeks to update a key government surveillance program that has come under criticism for past misuse. it helps u.s. intelligence agencies collect information on non-u.s. agents over terrorist concerns. the debate is pitting national security hawks over a unique coalition. there are also some tech giants who want to see more transparency and protections for their consumers. companies including google, meta, amazon, microsoft, and others have created a coalition to push for several changes. these include things like collecting data, communication, and allowing tech companies a little more about how many times the government asks if for informing and what kind of information the government has requested. the members of the house intelligence committee say while some reforms are meant to deal with future abuse, some feel the

changes could go too far and render the program ineffective. mike johnson said the bill needs to pass this week or, he says, the government will try to move the bill without further reforms. lawmakers will get a classified briefing on the topic today, and we're keeping an eye on the procedure real vote. usually democrats don't joint republicans in voting for these procedural matters. mike johnson can only lose two republicans and mike gates plans to vote against i. we'll see if they get a vote on this or not or if they end up tripping things up. >> by the way, why are the lawmakers pushing for more transparency in this case? >> you've got hardliners, andy biggs, members of congress.

the government needs to be more direct with folks if it wants to access some of this information. >> emily wilkins in this information. >> okay. emily wilkins, in rochester, thank you. good to see you. a pension fund is suing macy's, accusing of it putting its financial future at risk. the fund for municipal workers in pontiac, michigan, holds macy's stock. it says macy's has weaponized its debt agreements as part of the takeover defense in a proxy fight against ark house management and brigade capital. it says macy's directors are threatening to refuse to disable triggers which would accelerate the payment of more than $1.5 billion in debt. that would burden the company's finances and make it a much less attractive takeover target. macy's board rejected a $21 a share buyout offer which has been raised to $24 a share.

ark house has nominated nine candidates to overhaul macy's board. the shareholders are going to be voting at the annual meeting on may 17th and, again, those shares, if you're looking, are up for the year. when we come back, we're going to talk chip stocks ahead of the opening bell after some new announcements by google and intel. that's next. and later, an exclusive interview with delta airlines ceo ed bastian. that stock is up more than 4% after earnings beat expectations. "squawk box" will be right back.

welcome back to "squawk box." what a week for the chip sector, intel unveiling a new a.i. chip to compete with nvidia, and amd. that's a day after talon

received $6.6 billion from biden's chip act. joining us with more is joseph moore, good morning to you. help us make sense of all of this news, if you could, from 30,000 feet and then let's drill into each of these companies to try to figure out where you think the real opportunity is. but, given all that's going on, who is the big winner in this? >> well, ultimately i think, you know, we think that a.i., that nvidia has such a strong position that that's still our top pick in the compute space. microsoft, sorry, intel has done a good job of putting out new products. dowdy will have a niche role in the a.i. space, the product they came out with yesterday. but i think what intel really needs is to stabilize the foundation of servers. i think the products are coming

out, and i think the products will be critical to stabilizing that foundation. i think to the extent that you see the new a.i. products, you know, we're seeing companies benchmarking against nvidia's h 100, but blackwell will have new products next year. i think intel has a role i think they are an alternative to nvidia. but we see nvidia as the premiere win of play in the a.i. trends. >> do you see this as a winner take all business? is there an argument that intel is there for a value play or they're so far behind, it is not a meaningful player in this? >> it is not going to take all. i think there is a lot of opportunity for intel. you look at intel's recent segmentation, where they showed you how big the manufacturing losses are, i think that really shows you the value around the chip part of the business, away from manufacturing. we're all hopeful that they'll

be successful in terms of turning around the manufacturing. stabilizing the existing market share and servers, you know, significant incumbency value that goes to that business and they need to execute on product. there is value on that side of the business. i think the ambition they have is to compete with tsmc, nvidia more broadly and i see that as more of a stretch. but certainly we see potential value in intel and i think the key is going to be to fix the foundational business that they have and then use that as a basis for -- >> and where do you put amd in this whole situation? >> i favor nvidia. i like amd. i'm intrigued to see their product in a.i. they have become this sort of de facto alternative in nvidia in this merchant a.i. space. i think there is some expectations issues around that product. people looked at the supply chain as being revenue and the reality is the timing of

deployment could shift around. so i think the risk/reward is better for nvidia, but i'm excited to see what amd can do. and in the core business, i see amd as still sharing in servers and embedded other markets. i think i like it, but i think at this level i like nvidia more. >> i'm going to make this a little bit different from a typical analyst question. if you were advising the administration, gina raimondo who is giving out money and the biden administration about how to give out this money, they gave out 6 plus billion dollars, is that how you do it? is the taiwan semiconductor the only one with the skills to do this or would you give more money to typically american businesses or do we not know how to make this all happen? >> well, you know, judging industrial policy is a complex thing and i have a hard enough time trying to get stocks right.

that's sort of my focus. but i would say, you know, i think it certainly makes sense to do both, which is what is happening. you're subsidizing the current income, tsmc, in advancement and manufacturing. but we're all sitting here hoping that intel can be a viable competitor in the very high end of the market in the next couple of years and outline the process technology that should allow them to do that. there is promise in both areas. from the standpoint of stocks, though, you know, we're sitting in an environment, semiconductors, where there is at least adequate capacity. maybe too much capacity. and so no matter how much you subsidize on that spending, it doesn't necessarily help you from a stock standpoint as much because, you know, you're subsidizing spending and you're adding fixed business that has enough. for us we favor the companies that aren't necessarily

beneficiaries of that. >> final one for you, joseph, how scared are you that this whole thing is a bubble, we're living in 1998, '99 and all the valuations for the chipmakers at some point we're going to say we have overbuilt. >> well, semiconductors tend to work that way. i think you look at this as a situation where eventually where we overbuild the a.i. capacity. is it '98, '99, there can be a lot of stock price movement still to come. we're seeing a.i. plans being booked out through 2028. you see the -- some of the big hyperscale plans you see going forward. that visibility is building. the short-termvisibility is still getting better. so this has been a big move, for sure. and i think ultimately you have to worry about do we see a consolidation in the number of companies developing a.i. models. i think we're a year away from adding that as an imminent concern. >> okay. joseph, great to see you. we appreciate you helping us

through this very complex topic. thank you very much. >> appreciate it. thank you. it is just 7:00 a.m. now on the east coast. and you're watching "squawk box" on cnbc. i'm andrew ross sorkin with becky quick. joe is off today. want to show you the futures, we got inflation numbers coming in at 8:30 eastern time. all of this could very well change. the dow right now up about 62 points. nasdaq up 15 points. the s&p 500 up about 5 points. we got treasuries sitting just at about 10-year note at 4.358. the dtwo-year at 4.741%. oil and energy prices, that's had a big impact on a whole bunch of things we'll see later about that too. wti crude at 8570. to dom chu right now. he's got today's market movers. dom, what are you watching this morning? >> good morning, becky, andrew. we'll kick off our morning movers with a check on aerospace and defense giant boeing moving between gains and losses

premarket, just around 10,000 shares of volume, quarter percent downside right now. the dow component is in the news again because the u.s. federal aviation administration is investigating whistle-blower complaints that boeing overlooked safety and quality control concerns in the production process for its model 787 dreamliner and 777 jetliners. boeing says the claims are, quote, inaccurate and do not represent the comprehensive work boeing has done to ensure the quality and long-term safety of the aircraft. so boeing's statement there. keep an eye on boeing shares. we'll shift to another dow component, oil and gas giant chevron, higher by .1%. thinner premarket trading volumes. the stock could get a little help later on today as analysts at barclays initiate coverage of the company with an overweight rating. also a $203 target price. they think the stock looks attractive regardless whether the plan goes through or not and

they like the company's more balanced portfolio of assets so those chevron shares in focus on the oil and gas side and we'll cap it off with a check on tesla, up roughly .5%, following up on yesterday's 2% gain we're seeing a bit of a bounce in that stock, short-term. always one of the most popular and searched stocks on our cnbc.com website. new this morning, analysts at jeffries have cut their target price on the electric vehicle giant to 165 bucks. it was 185 before. they keep their hold rating. they're citing things like shifting production propeioriti. so keep an eye on tesla shares up .5%. for those and other calls, head over to cnbc.com/pro, subscribers can get more on those stories. keep an eye on those. back over to you. >> thank you, dom. we're less than 90 minutes from the release of the march consumer price index. steve liesman joining us now

with a preview. steve? >> yeah, the number of the week here, andrew. after two months of stubborn inflation data, some relief in the consumer price index that could put the fed more firmly on the track to cutting rates this year. equal concerns there, no progress, and the fed will have to stay higher for longer or think about raising rates further if it wants to hit the 2% target. looking for 0.3% on the headline, down from 0.4. that's the good news there. the core also seen coming down. the headline goes up because of basic, but the core down a tick, slow progress we have seen. forecasters see the cpi getting some help from falling auto prices and auto insurance costs along potentially with airfares. but commodity prices have also been surging, fed officials likely overlook this unless the price increases start to bleed into other areas of the economy. most of their focus is going to be on the service sector. year over year inflation has been stuck north of 5% and also

focusing on housing, a glimmer of hope last month when a key housing inflation gauge fell by .2%. we'll see if we get progress there this month. but the broader issue for the fed is that core inflation has been stuck in the high 3s after considerable progress last year. it declined just .3 of a point since september, you see it flatlining there. several fed officials noted stalled or slowing inflation progress and said, hey, they're reluctant to cut rates without further declines and further progress. tomorrow's ppi will be put together with today's cpi to get a better picture of the pce. that's the fed's preferred inflation indicator. but running a little lower, andrew, but it still has been showing that lack of progress or the stalled progress. >> so what is your bet? are we going to bet here? >> i don't really -- most of the indicators i've seen have suggested toward the high side. you got the cleveland fed number, it has been running

0.34. and then we have our price index that we run, our high frequency price index, that was up 0.5. look, andrew, i got to say, it is sort of amusing to think that the entire empire is based on whether or not this is a tenth hotter or tenth cooler. the -- >> did you see, steve, in the 6:00 hour, we had two economists on debating this hawkish and dovish view of this. the dovish view was that we were going to get rate cuts starting in june, every month for the rest of the year. and the hawkish side was that we were going to get, you know, two, maybe one, maybe none. how can there be such a dispersion on this issue? >> i mean, i think some people are not necessarily listening to the fed. if you guys put up that cpi chart, it has been stuck at 3, 3.8, 3.9. we have come down .3 since december of 2023. we made a lot of progress last

year. look at that. that's a flat line. that's the headline number. you look at the core, it is higher than that. so, if you have a fed with a 2% target, and they're not budging off that target, you can't bake in rate cuts. now, what powell said is we need to be on the way toward 2%. so, i don't know if a tenth every month qualifies. i think you got to be a little bit more hawkish on the fed here, just makes more sense. i think powell wants to cut, but he's got have the data to do it and if it doesn't come in that way, i think a 0.4 is not the end of the world here. i don't think it is as bad a situation. i think you start to dial back cuts and why do you dial back cuts, because we have a little bit higher inflation and we have a little bit higher growth, which is not the worst trade-off in the world. >> final question, a political question, we talked to lowell brainard about it yesterday. it goes to the greg ipp debate we were having earlier in the week.

the idea that for some americans, wages have not kept up with inflation over the last three and a half years, even if wage growth is outstripping inflation today on a trend line, on the totality -- my question is over the next six months, is that what we have left, before the election, how do you see this playing out on that score alone? that, to me, is going to have a huge implication on the politics of what happens in november. >> i think it is going to be very hard for the administration to put behind it the sense that people have that their wages are not keeping up with inflation. i think what we have learned as a person who has been running the all america poll for almost 17 years now, i have been very surprised at how inflation has colored almost every view of the economy. and then spilled over into politics. low unemployment doesn't matter as much. the growth numbers have not mattered as much. when we made the misery index back in reagan years, we added

together the cpi and unemployment. i think we underweighted the cpi. the cpi may be 2x to the misery index gauge here. it is hard for me to see them putting it behind them. i think the administration is going to try to change the conversation. i think the numbers are better. i think the economy is better. i think wages have caught up over time, but not caught up over the full three-year period and people will go to the polls with that view and make their bet either based on -- look at that, the misery index came up as i was talking and there it is stuck at 7.2. can you do a 30 or 40-year chart on that, that's what it would look like over time, it would remain at a very elevated level. that's key to the election. now, i will say this, andrew, i have queried the trump campaign and also looked at what he said. i am not exactly sure what the trump solution is to these higher inflation numbers. >> okay. steve liesman, we'll be talking

to you in just a little bit as we get the big number at 8:30 this morning. thank you. when we come back, delta airlines just reporting quarterly results that beat expectations. we will break down the quarter and take a look at future travel demand with ceo ed bastian. he will join us exclusively right after this break.

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welcome back to "squawk." delta reporting quarterly results in the last hour. phil lebeau joins us with a very

special guest. good morning, phil. >> good morning, andrew. ed bastian, you beat the street by nine cents for the first quarter. revenue just a tad bit shy of expectations. but when you look at the first quarter, what stands out in terms of where the industry is right now, in terms of demand, booking trends as we head into spring and summer? >> well, phil, great to see you. by the way, i understand this week's your 25th anniversary. >> yes, it is. >> at cnbc. you're the best in the business. thank you for the great work you do on behalf of all of us in the industry. we had a great quarter. the team really delivered a solid set of results demand is strong. set another record. and if you look at the forward view, which i know you're going to ask me about, we had this calendar year already, 11th highest sales day in our history, just this year alone. the operational results have been excellent. the performance levels are not just back to prepandemic levels. we're ahead of prepandemic levels. we had the best first quarter

reliability we have ever seen in our istory. and then when you do that, you have great demand and great operation, the financial results speak for themselves. if you believe the wall street analysts expectations will be the only major airline that is profitable this quarter, generated $1.4 billion of free cash. and a 14% return on invested capital, which places us in the top half of the s&p 500. so, you put that picture together, it looks great, exciting things, there is more opportunity ahead. >> you made a note in your earnings to say you're seeing an acceleration in terms of corporate travel, in certain industries. where do you seebusiness travel accelerating right now? >> we see it across the board. people are out. a lot of it is being driven by offices continuing to mandate the return. turning into three and four-day weeks. a lot of it is in the consultancies, the advisers and firms that have to go into client offices because there is clients to meet or sales folks

getting out on sales calls, we have seen it internationally. we have seen a 15 point acceleration since the start of the year in business travel. we're now back revenue-wise at or above prepandemic levels. the volumes are a little bit off, maybe 90%, but we're doing really, really well. >> let's talk about the part of the business you get a lot of questions about. some of these are not incidents we have seen reported in media, most of them are not delta-related incidents. i won't ask you to speakairline. do you understand what people say what's going on with the airlines, what's going on with the industry, because i'm not crazy about what i'm seeing? >> there is certainly the media headlines, you can't escape it. whether the challenges that boeing is having or other incidents. the only thing i tell people are two things. first, safety is job one. every hour of every day. u.s. aviation travel is the safest form of transportation in the world. it is safer than driving. safer than a train, safer than

walking. the reason why is that safety supersedes every operational move we make. we're all over it. we're also very transparent with our regulators, with the faa, within the industry. we don't compete on safety. every incident we learn from each other because it is our collective responsibility to keep our industry strong and safe and that's not something that is a competitive issue. that's something that we're all focused on and i'm proud of the work that the delta team does in that level as i mentioned. we had the best operational performance for first quarter results in our history, this current quarter, and i expect that will continue for the rest of the year. >> you mentioned boeing and this latest whistle-blower complaint around the manufacturing process for the dreamliner. you don't have any dreamliners in your fleet. but you have bogegeingboeings a max 10s. have you been able to reach out with board members to say, you've got to get this right? >> i think everyone has had

their chance to express their views to boeing, not just at my level, across our company. while we haven't had a new boeing delivery in a number of years, we're still predominantly a boeing shop. i know steve, he's a friend, i think he's a great choice for the board chair. he's going to bring a fresh set of eyes, engineering background, no nonsense style about him. i think the team that he's going to wind up putting around him is going to be a great team and i already expressed our support for him, for boeing company, and all that has to happen to make this -- these issues start to dissipate. >> still confident the max 10 order and that it will be delivered at least hopefully close to on schedule? >> i'm confident it will deliver at some point. whether it is two years, three years, four years from now, i don't think anybody knows. >> let me quickly ask you about international travel. europe has been the big story for the last couple of years. but asia pacific has become red hot for you guys. what are you seeing there? >> i think you're seeing the

same thing you've seen all around the world. by the way, transatlantic for this coming season was a thing we were cautious about entering the year. that looks like it will be another great year for transatlantic. prices are holding. the volumes are healthy. you see the same thing in asia. part of the reason why asia is another hot spot is china itself still really isn't open. it is open on a fairly restrictive basis. so, we take our planes and we're going auckland, we're going to tahiti, we're going more to seoul and to japan. >> and no sense on china, when that might free up? >> i think it is eventually opening up, but i think it will be a long -- first of all, the demand isn't there. there is not a lot of travel demand from customers going to china other than chinese nationals. secondly, i think from a geopolitical perspective, that's going to be managed by the state department. >> ed bastian, ceo of delta, on a day where they report better than expected earnings for the first quarter. guys, back to you. >> phil, that stock right now,

up by about 4.5%. phil, ed, thank you. when we come back, we're going to ask the question about whether march came in like a lamb and went out like a lion for consumer spending? bank of america's latest consumer checkpoint is out. we got the details right after this. and deputy treasury secretary wally adeyemo is warning congress that new regulations need to be approved to combat terrorist groups using digital currencies. he will lay out his case to us at 7:50 a.m. eastern time. "squawk box" will be right back. what, why? 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 and more prospectus at invesco.com.

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bank of america's latest consumer checkpoint is out, and it shows some soft consumer spending in the month of march. at least when you look at things on a seasonally adjusted basis. that total card spending per household was up 0.3% year over year. that was boosted by the early easter holiday that brought spending from april into march. for more on this, we want to bring in liz everett chrisburg. for people who haven't been playing along from home, you got 69 million consumer and small business accounts. this is based on real data and huge swaths of data and what it showed was pretty strong overall until you looked at it on a seasonally adjusted basis. >> exactly, exactly. i think one of the things that i think was the same this month when we looked at it, as you pointed out, there is a little bit of easter moving forward, a

little bit of leap year hangover sitting there, but overall the picture remains that the consumer is softer but still stable. one thing that was really different, though, was that services spending declined and dropped more than good spending, really for the first time in a long while. and in particular, lodging and restaurants, which have been two of the subcategories that really have boosted spending for a while, so something that we are paying attention to. >> does that mean yolo spending is coming down, all the things that people are doing coming out of the pandemic because their dollars are getting stretched a little? >> i think that's something we want to be paying attention to. and, again, that yolo, that experiences, that services really which had been a driver seems to be coming back a bit more. that being said, pace is coming down and declining. it is still significantly higher than it has been throughout. so, that's something to think about. the other thing that is the

paradox that we're looking at is while the consumer spending is softer, labor and wage growth, we get to look at the money that is actually coming in to deposit accounts. across all income categories this month, that has ticked up. so, you look at lower income households, that ticked up to almost 4% in terms of their wages that they're coming in. higher income households, which haven't had any wage growth actually had negative wage growth for the last three months is back up to positive, up .6%, the highest level since january of 2023. you've got this kind of dichotomy here of pulling back. >> that's really interesting. we had a debate earlier this morning about whether the labor market is going to get softer. what you're seeing doesn't necessarily reflect that. but i don't know if you would be a leading or lagging indicator of that? >> i think the other thing you have to think about in terms of our data is we're not just looking at what companies are

paying, we're looking at total income coming in. and one of the things that could be boosting that in march is tax refunds. that's money that is -- >> another seasonal factor. >> that's a seasonal factor that will boost how consumers are spending. one thing that you've got to remember is the irs didn't open their site for six days, six days later than they did last year. if we look at the amount of refunds that they issued, it is up about 1%, right? 186, whatever the number is. but the number of refunds that have been issued are down 3%, so actually the average tax refund that has come into an account is up about 5% and if you break that down by income level, for the lowest income households, it is actually up 9% based on our data. that could be a boost that is helping as well. >> you know, we have got cpi today and everybody is trying to figure out the inflation picture. one thing i saw in the data, we're looking at data to get our

heads around this, you think that rent prices are -- or rent pressures may be coming down little bit? >> one reason we looked at that today, in this month, you'll remember back in january, powell said when they took the march cut off the table, he said the fed wanted to see data and evidence of shelter price inflation coming down. and so what, you know, we know people are paying attention to that today. our data is showing that rental payment growth is coming down, it is coming down significantly to levels not seen since mid to late 2021. right? now, that's, of course, different cities are going to be looking at this somewhat differently. but across all of the urban areas that we looked at in the u.s., there were two that didn't see rental payment growth go down. chicago and l.a. those were the only two. and in the other urban areas we looked at, in most cases, it was

down by more than half, right? the three biggest ones were austin, phoenix and jacksonville. now, those were the sun belt states that a year ago everyone was moving to. so, a year ago they were at 12%, 14%, now they're 2% to 3%. but most cities were -- are down by more than half and we're sitting here in times square, new york, 6% to 3%. >> rental is how we measure housing costs. housing prices have gotten much more expensive if you're trying to buy a new home, trying to get into a mortgage, that's not taken into account and you also have things like insurance costs for homes that we haven't taken into account. >> absolutely. i think one thing that people talk about is, all right, well, 92% of homeowners that have a mortgage have a fixed rate mortgage, so they don't have any shelter inflation. that's not really true, right? because you've got insurance. and insurance is going up. and to your point, you got housing prices going up, so taxes are also going up.

so you are seeing more inflation for the homeowners with a mortgage as well. you can't just say this is a rental issue. even though most people do have fixed rate mortgages. >> thank you for joining us and sharing this with us. always interesting data and we really appreciate it. >> great to be here. >> okay. coming up, office vacancies reaching a new record high in the last quarter across the nation. some developers are now converting office space into residential apartments. these types of transitions come with very big challenges. we're going to talk about them. plus, time now for today's aflac trivia question. the rms "titanic" set sail on its maiden voyage on this date in 1912. how long did it take to build e l-teshthilfad ip? that is the question of the morning. we're going to bring you the answer when "squawk box" returns. - hip-hop! - limping! mmhmm! medical bills! uh-huh! - pancakes! - cash! who pays you cash when you have medical bills? grrr! no idea. [tapping] gap!

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and also send them away. rich is living life your way. and having someone who can help you get there. the key to being rich is knowing what counts. now for the answer to today's aflac trivia question. how long did it take to build the "titanic"? the answer, three years, with nearly 3,000 workers. as we might have discovered, maybe not long enough. we're going to talk now a lot about the downturn of the office market, and a lot about the housing shortage. it has been a big topic of conversation. so why not convert all those offices into apartments? a lot of people have been talking about it. it is a growing business, but it is not even close to fixing the problem for either sector.

diana olick joins us now from lower manhattan to explain why. what is going on here? >> reporter: well, good morning, andrew. i'm standing on top of pearl house, the largest office to apartment conversion to date. not every office building can be converted. around 5% to 8% of them only nationally. this was a half million square foot 1970s office tower. it is now a 30-story luxury apartment building, the van barton group purchased the building a decade ago, knowing that the single tenant would have moving out leaving the building entirely vacant. they could have bought it today at a much bigger discount, but the math still works. >> the way we really look at it is how will institutional investors value and ultimately pay for an almost 600 unit market rate apartment building such as this, and it far exceeds both the acquisition costs and

the construction costs to convert it into multifamily. >> now, the biggest roadblock to conversions like there is zoning laws, what can and cannot be converted depending on location and age of the building and basics, like most office buildings, windows don't open, but apartment windows must open. these were replace oden this building. but it can be a financial deal breaker. and you usually can't add to the actual building space. so, in this case, interesting, they carved out and closed off an interior section of the building that was far from the windows anyway, and then they took that extra eligible space and added this amenities floor and then they built several more floors on top. those are the pricey penthouses. the rents here go from roughly $3,000 a month for just a studio all the way up to $10,000 a month for those very pricey penthouses up there. but i will tell you, in the time that we have been here, shooting

this story, yesterday, we have seen a lot of people coming through to look. a lot of potential renters. back to you. >> what do you think the actual potential, you look at the total number of office buildings that are b or c class buildings that need to -- that need a reno of some sort that could be con converted, is given where the elevators are and the water lines are and could actually be converted in a meaningful way. what is the number there? >> reporter: 5% to 8%. the experts say 5% to 8%, which sounds very low. but, there are potential changes being made to these zoning laws. in new york city, the mayor, eric adams, proposed a number of changes to these zoning regulations, which would open up more buildings to be eligible for conversion. it is interesting in the financial district here, you have to -- you can't convert certain buildings, because they think you need to print paper in

the financial district. you can't convert the buildings. strange law. we don't print paper anymore. >> my understanding from just the architecture of some of the buildings is they don't always make sense to convert. >> reporter: they don't always make sense to convert, some of them make more sense to just tear down and rebuild. it depends on the financials of the buildings and on what those more zoning regulations than the actual tiype of building. >> diana olick, thank you, nice to see you downtown, in the big city. when we come back, boeing's production under scrutiny once again. this time, the faa is investigating claims by a whistle-blower about flaws in the 787 dreamliner. we'll talk to a former faa administrator randy babbitt about the latest issue with the boeing planes. that's next right here on "squawk box."

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welcome back to "squawk box." boeing nation an investigation by the faa into claims by an engineer turned whistle-blower now about flaws in the production of the 787 dreamliner. joining us now is former faa administrator randy babbitt. good morning, randy. just seems like this is like a steady parade of whistle-blowers, of new information that is coming to

light. does this change your view at all about how the faa deals with boeing? >> no. i think boeing's history is certainly coming under a great deal of scrutiny right now. they had a number of incidents, and, of course, once one begins, the spotlight gets on them. but the faa oversight continues. these aircraft have tested beyond belief in construction and design. and there is nothing wrong with somebody pointing out what they see to be a problem. and the correct response to that is to look into it. that's what they're doing. >> what do you think about what is happening with boeing from the governance perspective? they know they're going to be putting in a new ceo in place. do you think there is a culture problem there? >> i think there is a lot of changes that have been made in the recent years. the technology has changed somewhat, a lot more reliance on high tech and a lot of

integrated systems that require different testing. and i think that it is part of a growing curve. and but i think at its core, i think boeing is addressing the issue. they had some clearly in the public's eye some confidence loss and i think they're taking steps to fix that. at the same time, they need to, you know, having the change in the picture is one thing, but changing the reality behind the picture is even more important. they do address some of the culture, it has to be every day you go to work at boeing, you should be in there working to make the best safest aircraft possible and not be worried about putting a hand up and saying we're going too fast or something. that's part of a good trusting culture. i think they can make some good strides to move in that direction. >> randy, the issue that has been -- the charges against boeing from the whistle-blower

and from other arenas has been that they have put profits above safety. does that ring true to you? >> well, i don't -- i don't know enough of the inner workings to say that. obviously every corporation wants to make a profit. but sacrificing safety on the road to profit, that's not a good step for an airline or an airline or an aircraft manufacturer. safety is the top priority. now look back at history, we haven't lost an airplane in 13 years, that accident was caused by an appropriately trained pilot, not the aircraft. we're building remarkably safe aircraft. when they build them, if you go out and watch the test facilities, they test these airplanes it the point of failure. they put twice as much stress as they'll ever face in actual flight before they fail, and if they don't, they have to redesign the airplane. these aircraft have passed all the tests that are required,

and, you know, so we're moving forward in that direction. boeing clearly does have a spotlight on them, to the point that i think seat cushion slipped or something would probably be reported in the press, but i think they're taking -- i see the positive steps boeing is taking, some very good steps in the right direction. and the key is to continue it. not just for a week or two while it is in the news, but for years. >> the question i would ask, maybe slightly different, which is, you know, let's take boeing out of it, part of the role of the faa is not only to keep everybody safe, safe in actuality, but also for people to feel safe. there is more -- i don't know if you think there is more reporting about this today, more reporting about near misses and, look, as you said, the last 13 years have been remarkable. knock on wood, every day it stays that way. but, you know, we see these near misses at different airports and

the like, we have these issues with boeing, is there something that is missing? is it a budget issue around what the faa needs to be doing, a different approach to making sure that none of these -- none of these things even come close? >> mm-hmm. well, i think one of the underlying problems, go back to covid and everybody, whether it was an airline, a manufacturer, everybody suddenly had way too many employees and offered early retirements, bonuses to leave. and the airline, when covid recovered, we found ourselves with the traffic coming back much faster than anybody anticipated. so you have a lot of senior people with experience that were mentoring and so forth gone, retired, being replaced by people who have accelerated. doesn't matter whether you're an faa inspector or airline captain or senior flight attendant, doesn't matter. any of those people have certainly moved up more quickly

in seniority with less time in service than they would have in the past. i think that's a contributing factor. so i think the culture is not just at boeing, i think it is across the airline industry. the airlines themselves need to rethink and there is some good programs out there, you know. there is safety action programs where people are allowed to put their hand up, without fear of retribution, to point out things. we need to see more of that, people, you know, paying attention to the small things and reporting. >> we want to thank you for joining us this morning. i don't know if i feel better or worse right now since now it is not just boeing. but we do appreciate your perspective on all of it. we hope to talk to you soon. thanks. still to come, crude oil up, one of several commodities taking off in the last quarter. e 're going to get caught up on thprice surge right after this

with jeff currie the chief strategy officer of pathways at carlyle. "squawk box" will be right back. the future is not just going to happen.

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following golo, and taking release, i was able to lose weight gradually and keep it off. i wish i'd started sooner. don't wait, go straight to golo.com. we are less than 45 minutes away from the morning's big economic report. we have the march consumer price index coming, among the biggest factors to the inflation story right now, you got commodity prices. that's front and center. joining us right now is jeff currie, chief strategy officer of energy pathways at carlyle. what do you think?

you're making a pretty big call here. you think the inflation trade is back on. why? >> well, we look at commodities and they're the best performing asset. bitcoin, oil and commodities, commodities is up 14% year to date. this is your classic late cycle rally in commodities. we're looking at economic growth around the world, industrial production has bottomed, it is starting to become expansionary. that's against low inventories, not a lot of spare capacity and even in oil, it is isolated in places like opec. and then you put that in the context of, you know, evidence of supply disruptions in oil. floods in russia, mexican production, fields on fire, opec production cuts, in copper, you have environmental shut-ins of mines in panama or grains or you have el nino weather shocks. so you put it together, tight markets, very broad-based rally across the entire commodity

complex, and you put that against, you know, heightened macro progress being priced in gold, you know, the situation on commodities i think is, you know, more room to the upside. >> you're calling this late cycle, though, this is potentially indicative of a stronger economy. you >> we look at the business cycle and you go through a mid cycle pause. the system consolidates under the higher rates, higher energy prices. and in the case of the recent environment. that consolidation in manufacturing has occurred. we're in the second leg of the cycle. in commodity prices, see a rally at the beginning. coming off in the mid cycle pause. and you rally into the second-. this is when you most want to own commodities is this type of environment. >> more broadly, just because we have the cpi coming out today.

inflation in the pipeline, suggests that would be the worst time to cut rates. >> yeah. with commodities, they line up. if they don't cut rates, because of commodities are higher. from a commodity perspective, it's a win-win. commodities are always the best play at this point in the business cycle, for that exact reason. >> you don't know or think this should advise the fed on any of the directions? you're looking for an investors' point of view? >> if you take expectations, the bar is high to come in hot and make a shift in expectations. the key point here, what we're seeing in commodities, is not a one-off. very broad based.

the forward curve is an indication of tightness. we know inventories are low. xas icapacity is strained the ol has capacity. you take that out, the rest of the system is capacity constrained, as if metals, aluminum, grain. the point is the breadth of this rally. never dismiss a broad commodity rally. when you can point across the space, oil, copper, alloy, coffee, sugar, on the breadth of that rally, you don't dismiss it. >> you have a call on where the major classes might be headed next? maybe oil because it's important to the global economy. it's strength and demand, against tight supplies.

gold, on the other hand, is probably beginning to price that in. gold tells you, with macro tail lists right now. all of the valuatation they are not at play here. very mysteriousous. what can we observe? there's a large otc buyer. it's not price sensitive. it ends up being an e morjing market central bank. what gold is illustrating here, is that the macro tail risks are not priced in right now. you're looking in the middle east, venezvenezuela, russia, j there's a lot of supply risk there.

i'm going to go back to late cycle, expansion road, the cyclical strength there, underpinned against inventories in tight employs. >> wells forgo said that costco is selling $200 million in gold bars monthly. that's a bit of a shocker. xwoeld is making new highs. that's not giving the markets a lot of credence. you are around these concerns of higher oil prices, food prices. that's a shift on how gold is responding to interest rates, inflationary pressures. if you go back -- not saying we're going into the 70s or anything like that. in the '70s, that's the way gold

traded. the more recent period, real rates go down. dlor weakens. gold goes up. we're in an environment, that we're seeing the opposite. it has to be a combination of inflation mare concerns, combined with guy owe political concerns. >> glad to hear you say you're not anticipating those again. but the nature doesn't make us feel good. the potential is high right now. >> jeff, it's been too long. great to see you. >> great to see you. when we come back, the treasury department wants more tools to combat terrorist groups. wally adeyemo will be warning congress that new regulations need to be approved. "squawk box" comes right back.

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box." wally adeyemo is warning about the fire of digital currency, unless there's new rules. wally adeyemo joins us this morning. help us understand. we heard from your boss, secretary yellen, about her worries about crypto currencies for quite some time. what are the regulations you think need to be put in place to prevent the illicit use of crypto currency? >> thanks for having me. it's great to be with you. part of what we do is update the regulatory authorities they've given us over the last 30 years. when they design things, we didn't have digital currency or assets. we need to make sure they are captured and the other legislation that we use to regulate. and after go after bad actors. they need a tool to go after the

bad actors to claim direction back. a great example that will matter to the viewers, if you're a ceo of a company or investing in a company, one of the things you're most worried about, they're doing them in crypto currency. what the data is showing, it's almost doubled the amount of money they received using crypto currency from 2022 to 2023. that's one of the reasons we need the new tools. >> i wonder what the shift in terms of the s.e.c. is approached to things like bitcoin, how that's changed your view, or if it changes your view, about bitcoin or the like, now it has become mainstream? i would argue, has reached escape velocity. whether regulators are catching

up, or not. >> i think what we need from congress, is additional cools to make sure to build the right environment, that allows those people that want to transact safely with the e ecosystem to so. and catch the bad actors. the terrorists or bad actors or drug dealers to use the ecosystem to move money, as well. >> this is a bloomberg law piece. the instances of crypto related funding are less prevalent than those involving assets. the pressurery points out that u.s. banks is one of the primary avenues by which terrorist groups move funds in or throughout the united states. and laws are using the sophisticated monitoring tools to help the banks identify the suspicious activity.

c crypto bulls say, why are you worried about this? the real problem is in the actual banking system. u.s. dollars being used for illicit purposes. >> andrew, that's true. we're signaling to congress that that risk is growing. what you know of because you covered these for a long time is people go to less regular lated spaces because that's where they think they can hang out. when we go after the terrorist groups, they will use other vehicles like crypto currency to move their money illicitly. and this remains when it comes to ransomwear attacks. those are being done using crypto currency. we don't want that to happen when it comes to terrorism. we don't want that to happen when it comes to the illegal drug trade. >> what kind of help are you

getting or not from the coin bases and circles of the world? >> we talk to them on a regular basis. they told us they want a regulatory environment where they can use to develop an industry that is creating the laws they created. they want to make sure they are plying on a level playing field. that's why we have the ability to go after firms that may be claiming to be dollar-backed. also trying jurisdiction, to make sure that firms that follow the rules are competing on a level playing field. one of the challenges we have in the crypto ecosystem, is that many of the firms are flclaimin to have in a jurisdiction, when they are taking advantage of everything from the dollar to the financial system. >> we have to run. we have a big number at 8:30. the inflation number. curious whether you think it's hot or cold. do you know, by the way?

maybe you know. >> i don't get a preview of the number. what i can tell you, i tell you after the number comes out, what matters is the trend line. we are committed to doing everything we can from the white house and the treasury department, that continues to press to supply chains and make sure things work as well as possible, so supply and demand can meet fundamentally. the fed is responsible in terms of dealing with inflation. our goal is to do everything we can on our end. we continue to see the trend lines come down and the economy continues to grow. the secretary is on her way back from china. one of the things she is able to do there is talk about this trend on the united states economy. that's true after you see this number, as well. inflation will continue to come down. thanks for having me. >> wally adeyemo, thank you. it is just after 8:00 a.m.

on the east coast. you with watching "squawk box" here on cnbc. i'm becky quick, along with andrew ross sorkin. joe is out today. let's look at the news this morning. in the deadlines, delta shares are higher after earnings beat expectation. the faa is investigating a whistleblower complaint from boeing after the production issues with the 787 dreamliner. march headline inflation is expected to decrease slightly on an annual basis. the futures this morning are looking higher ahead of dow futures are almost triple digits. 96 points. the nasdaq up 37. we want to get to mike santoli. he is standing by at the new york stock exchange. what should we think about this number? >> one thing to think is that the market is approaching this number on something of neutral

footing. there is a two-way risk. more suspense built up than we've seen in a year. simply because it seems if we need the verdict on whether the january, february heating of inflation was something to be concerned about. i say we are in neutral footing. i want to point out this baited early march. march 7th, march 8th. jay powell in the senate, market loved it. very reassuring jobs report. market said we could have a good economy, a strong jobs market. the fed is going to cut and the momentum trade is working. it was the moment of maximum cooled off since then. not really giving that much back. traded plus or minus at that level for most of the market.

it's 1%for today. we'll see how that goes. nvidia, i talked about cooling off with the momentum trade. this is exhibit "a" right here. in appreciable cpullback here. about 15%. it's not much to speak of on the longer term chart. it's not up huge. we have harvesting of profits and a lot of the big winners. that was a theme yesterday. the best performers here to date, weresome of the biggest losers, part of that. you're looking at home builders v versus semis. this is limited fly, demo demographic. that's your march 8th, 7th pop. that was the moment of maximum confidence. we're seeing if it can carry through after today's number. >> mike, thank you. we'll be watching. we'll see you in a little bit.

we have a lot more coming up on "squawk box." 8:30 is the time to be watching. we have a big inflation mark of the week. instant reaction. and we have big news ahead of it, as well. you don't want to miss. we will bring you a big exclusive interview with andy jassy. it will happen from seattle tomorrow morning. we'll discuss everything. amazon's investments in artificial intelligence. aws and so much more. a rare opportunity to talk to the leader of one of the most important and influential companies in america. "squawk box" coming back after this.

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today's big number, cpi, at 8:30 eastern time. joining us to talk about the market implications, sara malick, chief investment officer of nuveen. does the number come in hot or cold? what is just right, sara? >> markets are anxious over two

events. one is cpi and the second is earnings. we saw momentum stocks unwinding. month-over-month, for headline and core. above that, markets will rally. and the preprint rally will decline. we'll watch airfares and shelter and autos. those are the areas that have been hot and sticky with inflation. hope to see those decline going forward. switching to earnings, which would be a positive for the markets. looking for revenue and earnings growth of 3% for the first quarter. i think we want to see broadening out. earnings will be with tech stocks. we want to see broadening out in material sectors and emergency sectors, which have been laggers in downward revisions. if we see that, that will be the catalyst that takes the market above 5,200, which has been a struggle and a line for the market, as we see if inflation will moderate.

>> are you in the comp of two rate cuts? three rate cuts? no rate cuts? >> we've been in the camp of three rate cuts. we haven't changed that. i come in under when it comes to that. inflation is not showing signs of hitting target. and the other side of this is the economy is strong. it's been driven by strong employment markets and the consumer that continues to spend. and manufacturing data that recently moved into expansion territory. i don't see the fed having any risk to rush here. june cuts are less than 50% chance of happening. if we don't see one in july, the fed does less. >> if you are right, a bullish call on equities, is that also right? this market is based on three rate cuts. and there's bullish sentiment

that the fed is going to lower rates. >> it's interesting. we came in and the market was bullish on seven rate cuts. that's very well. the key for this bullish market is can the index market participation broaden? to do that, we need the economy to remain strong. can tech lead this higher? sure, it can. i want to see other areas that are more sensitive. that's the leg that drives this market higher. i think 3% is on the con servetive side. i think companies may be able to beat there. that's the key that tells us if the market can move higher. i think cpi is a data point that makes the fed not change its mind and three rate cuts would be the maximum. >> we're coming up on 15 minutes until we hit that number. want to thank you ahead of it.

when we come back, we'll talk about the number of the morning. march cpi data and inflation data at 8:30 eastern time. that's 15 minutes away. next, will the senate follow the house's lead and move to restrict tiktok and america. we'll speak with west virginia senator shelly moore caputo about that. engineered to minimize noise. and built for adventure. which can also be your own quiet cabin in the woods. the fully electric q8 e-tron. an electric vehicle that recharges you. how we get there matters.

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welcome back, everybody. profit at tiktok owner bytedance to more than $40 million. that's according to a bloomberg report. today marks four weeks since the house bill was passed that could lead to a nationwide ban of tiktok. the senate hasn't acted on it yet. joining us right now is west virginia republican senator, shelly moore caputo. we heard strong words from mitch mcconnell, why this should not be allowed to continue as is. why do you think tiktok is a threat? >> i think it's obvious that the structure of tiktok is constructed with bytedance being the owner, to comply with the chinese intelligence laws. it means you are required as a company, to share your data, with the ccp.

i think in this case of tiktok, it's so widely used. it has created a great vulnerability, not just for young people but for everybody. all we are asking is that the ownership be changed and moved to domestic and move forward with the good things that tiktok does. i'm concerned with the long-term effect and the short-term effect. and what data is already in the hands of the chinese communist party. >> you can say you're not in favor of banning it. but effectively, if the chinese government does not allow for the sale, this could get shut down as a result. there's millions of americans that use this every day. do you think the information is being shared with the ccp right now? do you think this is more dangerous than other sites in the united states today? >> i think because of the ownership structure and the competition and the will of the chinese government itself, to

become the most powerful economy in the world, causing a great threat to us. absolutely the threat is there. when i talk about this publicly, i got a lot of parents who are concerned about the direction that tiktok is taking their children. in my own senate office, hundreds of calls from 11-year-olds, 12-year-olds. they are being channeled by tiktok into the senate office they know where you live. they're telling me -- calling my office. they live in my state. they're saying, please don't ban tiktok. innovation is a great thing. it may not be called tiktok. you can't tell me today that somebody is not already developing an alternative to tiktok that will be better, that will be safer, and will be much more secure for the american people. >> here's the thing i can't understand. i hear lots of reasons for why

people might not like tiktok or want tiktok around their children or what i think you're talking about, what i would say, prospective threat to the american public. you could argue reasonably, that if you believe that the chinese could one day want to use tiktok in an inappropriate fashion to influence our election, democracy, something like that, you think that's a threat. and transfer, tiktok should not be here. and we should have rules if foreign owners can own tv networks and the like. that makes sense to me. what opportunity make sense the we have so many folks in washington they believe the chinese government is taking data today and misappropriating that data of american users. i have yet to see that evidence.

have you seen that evidence? >> i think we've seen reports that that's moving forward. i'm not naive enough to think that's not what they're doing. we have to guard against the possible. that's not just a small possibility but a large possibility. we have election coming up. all these geopolitical things going on that the chinese would like to sway the thought process. if they have our data, which i am certain they do -- let's get real here. sta data never dies. i don't think you can believe what they say. i'm in a category of a skeptical person that thinks that china has goals in mind, that would fit nicely with capturing as much data in this country as they possibly could. >> will this bill pass the

senate? >> i don't understand why schumer is not taking it up. i thought leader mcconnell was for forceleful on it. i expect it to come before the floor. the president says he would sign it. >> thank you. >> thank you. when we come back, it is the day, the moment, the number. we're all paying attention to. march cpi, plus instant market reaction. we're going to bring it to you. we're seven minutes away. a little less than that. then, we talk about what the new inflation number means for the federal reserve's rate path. what that may mean for the equity markets. fredric mishkin. who live and breathe trading.

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they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities. when we come back, the breaking inflation data for march. don't go anywhere. take a look at it. 3:30 to go. "squawk box" will be right back. the future is not just going to happen. you have to make it.

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welcome back to "squawk box" everybody. this is cnbc. we're a minute away from the march cpi inflation report. ahead of that, let's check where the markets are. dow futures are up. not as high as earlier. still up 60 points. s&p 500 up by 8.5. and the nasdaq up by 30 points. we're watching the treasuries, as well. looks like the treasury yield is a little weaker. the ten-year is yielding 4.34. the two-year, 4.72. watching closely. this number is a big one. the inflation number for the month of march. expectations right now, for the headline number, month-over-month, up 0.3%. that's the same for core. year-over-year, you're looking for 3.4%, for headline numbers.

core strips out the food and emergency prices, is seeing being up 3.7%. a lot riding on this. it will help determine if the fed can cut rates. and if so, how quickly. you're seeing pops before the numbers comes out. rick santoli is standing by at the cme. take it away. >> looking at yields popping up. very close to the number. they should be populating on the screen, as becky pointed out. march consumer price index. the headline number, up 0.4%. that equals our last look. to look for a higher number, august of last year. we're as low as 0.1 in october of last year. this doesn't seem like it's cooling quickly. back-to-back 0.4s.

we're expecting 0.3. you find a higher number, go to april last year, 0.5. and between, the number was two-tenths several times last year. year-over-year cpi, expecting 3.4, hotter-than-expected. 3.5. this is 0.3 hotter than we looked at in the rear-view mirror. to find a bigger number than 3.5, you go back to may of last year -- excuse me, i'm wrong. september of last year, when it was 3.7. finally, what many consider the most important number, year-over-year, cpi core. 3.8. hotter than expected. equals the rear-view mirror. january was 3.9. what's the lowest? 3.8. the last look is the lowest

since 3.0, in april of '21. it's still running hot. many don't cover the indexes. this is enlightening. if you look at the adjusted headline cpi index, started in 1913. it's coming out at 312.332. that's an all-time high. if you go to 1913, you won't find a higher number. on the cpi core number, it's 3.16.7. that's the highest ever. this series was started in 1957. interest rates are playing with 4.5% on a ten-year. preopening eqequities, dow futures, 350 points. i'm sure that the percentages are moving and probably steve leashman will point that out.

june, it popped above a 50% chance. i'm sure he'll give us updates. back to you. stay right there. we're going to jump in. we want to bring in betsy stevenson, professor of economics at the university of michigan. rich antonie. and joe davis, vanguard's head of the company's investment strategy group. and our own senior economics reporter, steve liesman. what were you seeing? >> rick teed me up. the market threw me a softball. i'm going to hit it. it's 28%, a massive drop in the probability for the june rate cut. falling the just 28%. july in play. we talked about this now. july is under 50%. if you give me one second, i'll tee you up. put up the january 2025 funds contract, mine will have to

adjust for a second. we were looking for -- now, at 483. we're just looking at two rate cuts this year, about, would be the bet. we've gotten rid of one and we're toying with getting rid of two of them this year. i told you it would be a hot number. we got inflation relief where it was predicted. all of that was as expected, which makes this number a bit worrisome to me. you didn't have it in food. and motorcycle insurance, that was a big part of it. you were consistent when it came to owners rent. that was last month to 0.4 again. have to probe a little deeper to see what the underlying inflation problem is here.

this is a number towards the high side. i think that's correct. >> let's follow up market view. what are you seeing? is the market reaction justified when you have a number that's higher? we were looking for confirmation it was a seasonal issue. a one off. three months in a row does not suggest that. >> our theme has been, we would make progress on inflation but it would be sticky. and the federal reserve is not as restrictive as they would think. i've been used why to rush the cut. the data coming in on the labor market and the inflation, says be careful. there's embers of inflation in the economy. >> betsy, i jump to you on this.

we had an interview talking about where you see the gains. and commodities have been up across the board. jeff curry said, he thinks this is typical of a late stage situation. where you have commodities running. how can we be convinced that the inflation will come down the rest of this year? >> i think i want to put it in perspective. we did the big fight. we got inflation down below 4%. i think everyone has known that the last bit is the most challenging bit. getting inflation down to the target 2%. if you go back and listen to what powell has said, he said, i'm going to hold rates longer than people expect. we're seeing the market realizing, they have to hold rates longer than we were

expecting. that's because we did anticipate this stickiness we're seeing. i'm not seeing anything in the report that's telling me why on the initial look. what's going on here that it's higher than expected? everything seems to be going in the directions we expect. but maybe not as fast as we were expecting. that's why we're going to have to hold steady a little longer. on the upside, the labor market is strong. the economy is strong. that's why the fed is keeping their eye on the inflation prize. >> let's talk about that. we may be facing higher for longer. there's questions whether inflation is a harder last mile problem or whether inflation is bubbling up in other areas. commodities to increases in food prices and higher core inflation down the road.

>> certainly. i'm not aware why anyone was surprised by this number. 3.5 was in line with my expectations. i looked at the data coming out of the bond market. it was clear we were going to get a hot print today. first, inflation was transitory, then towards 2 .. if you look at monthly data since 2022, we were never trending towards 2%. there's no indication we're going lower. look at what's happening with the money supply, it is growing too fast. as long as we have the pattern out of the government, we're going to have hot inflation prints. high rates were like, it's

seasonal adjustment. core is running hotter than headline. and the mean and median cpi are h hotter than core. it's the dollar that's losing value. not one commodity or service increasing in price. it looks like we're off by about 430 points. futures were up by 450 for the dow futures. you can see with the s&p at 67, nasdaq off by 250. and a big jump we've seen in the pre treasury yields, too. the ten-year is a jump of ten basis points. >> we're how hovering under 4.5%. it's a big jump.

the two-year is at 490. not only are these yields high. but well in me territory for fresh, high-yield closes. not only 2024, but going back towards october of last year. the curve is not steepening, it's getting more inverted, by the tune of three basis points. what does that mean? that means the drop in the short-term rate is more aggressive. that means it's the fed implications. that's what steve talked about, under review in the marketplace. having a bigger push in the short-term yields. the fed does not like to see that. i don't understand. i think it was e.j.

i don't understand how all of the economists, smart people, say we are making progress. we're not making progress on inflation. it's really comfy, based on cpi readings right h here. >> pbetsy, you want to take tha on? this is not one data point. this is a number of points. you're right. we've seen a stronger jobs market. but the inflation issue is persistent. >> i think that most economists. >> if you've been listening, saying bringing down inflation in goods was going to be easier than bringing down inflation in services. service incontemplation is going to lag. it's labor costs.

and people realizing, prices have gone up. i need you to make me whole. i need you to give me a raise. we're seeing that in services. i don't think we're at a wage/price spiral. but at the same time, getting that down. getting that all the way from the last mile problem. i know this is an unpopular thing to say. inflation in the 3s is not that bad. i think we have to, you know, take it -- >> i'm sorry to interrupt. inflation in 3s is not that bad unless you stack it on the inflation we saw for couple years leading into this. not that prices not only don't come down. they continue to build on 40-year highs in terms of

inflation. >> i understand that people are unhappy about the level prices. having a history of higher inflation recently, after a many-decade history of people not being used to inflation. has left people incredibly unhappy. we need to be careful how hard we go trying to bring inflation down. i think the fed is doing what they need to do. a lot of people have been screaming they should tut for a while. they are holding. we need patience to get this done. >> you're not paying attention to thedata. the annualized inflation rate was 15.5%. 15.5%. >> e.j., here's the problem. just because inflation is stalled, doesn't mean you were right before.

we've made progress in bringing down the inflation rate. the bottom line right now, inflation has stalled. a federal reserve with a hard 2% target cannot cut into this environment. it's locked in by rhetoric and policy because stalled at this level for whatever reason. it could be a matter of money supply. i'm not sure why motorcycle insurance is going up by 2.5%. >> that's a rolling impact. state-by-state, month-by-month, the rate will go up. >> that's a one-off effect. >> one-off effect over the course of the year. >> in some point, the states

will come in towards the beginning of the year. the commodity prices are higher. that's a filter into core measures of inflation. >> we could get in the wage/price spiral. >> i don't see wages pushing inflation at this point. you are seeing the effects of a hotter economy. the u.s. economy has gotten away with bringing down inflation, with growth being relatively high and unemployment remaining low. that's counter to the theories how inflation can and does come down. the fed views that they have to slow the economy. we can't get it below 4% to get back to target. >> if you look at the dual

mandate. you take care of the employment picture to take care of inflation first. that was necessitate that. this is not on a track to get this down the road. >> what are you thinking as we watch above 4%. and the two-year at 5%. >> we have a ten-year note option today. and we have learned in the last 48 hours, that the budget deficit is back to 1$1.1 trillion. i believe the last check we've written for half a year, was approaching $500 billion to service our debt. that's all we need to say. inflation is stalled. interest rates go higher. deficits are going higher.

>> i can tell you, most likely, we're going to see 5% in a ten-year this year. >> i heard somebody saying you see 5% versus 3.5%. it doesn't seem as plausible. let's tell you what's happened to the u.s. equity futures. dow futures are down 400 points. that's a swing of 450 points since 17 minutes. the nasdaq is down about 229. let's look at a traders' perspective. is this a knee-jerk reaction? is this an overhaul of how you look at things? we're looking at a strong economy in a lot of areas. does inflation eclipse all of that? >> you have to keep it in consideration.

hearing all of the perspectives the last few minutes, we'll see a reorr yen station in the financial markets and policymakers that rates will be higher for longer. this is from vanguard, that we've done research two years, arguing that rates would not test the global financial crisis era. those days are behind us for a number of reasons. that's good for fixed income investors. the commodities craves lower interest rates. we're seeing that adverse reaction to that. when you zoom out, rates are going to be higher. and the federal reserve is not as restrictive as they think. they are restrictive. what we'll see is a reorientation of the data of cuts being continued to be priced out. that may not be a horrible thing

for the economy but a reflection that growth is going up. inflation, there's room for improvement. that leads to what we're seeing in the bond market today. >> okay. joe, rick, steve, betsy, e.j., want to thank you for being with us. a pretty wild ride. we look at the hotter-than-anticipated numbers for cpi. year over year and headline over core. when we come back, we'll get you back up to speed that all of this has moved around, on some of the top stocks that are moving in the premarket. a large part, a function of this. we'll ask former federal reserve governor, rich mishkin, how the fed members may look at the new cpi numbers. and what maneuvers they may make. and what we got tomorrow on tap. we have a big exclusive interview with amazon ceo, andy

jassy. we discuss the state of the consumer, amazon's investments in artificial intelligence, aws and so much more. a rare interview of the ceo of one of the mosinueiat flntl companies in america. "squawk box" coming a.m. back after this.

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just a little more than a half hour to go until the opening bell on wall street, and things have gotten decidedly more interesting in the mao-ist sense of the thing. down for the dow futures, down by 60 points for s&p 500. the nasdaq, off by 230. dom chu joins us right now. he's got more of the market reaction to that inflation data. where is this playing out? where are the stocks that are getting hit hardest, dom? >> to your point, even with those downside moves that you were talking about, that's off the premarket lows, so there's a little bit of volatility happening right now. as for the front lines of where people are going to see this

most in the marketplace right now, given that sharp jump in yields, we are seeing the ripple effects, of course, in the most consequential parts of the stock market, which are those mega cap technology oriented names. let's show you the biggest stocks by market cap in both the nasdaq and the s&p 500, and that's microsoft, apple, nvidia, alphabet, and amazon. each of those stocks is down roughly about 1% or so. again, nvidia has been maybe a focal point, just given the fact that we've seen it pulled back by more than 10% off its recent record highs, but this is where you're going to see a lot of underperformance play out right now. also, some of the more interest rate sensitive parts outside of mega cap technology from a valuation perspective are in the home builder names. one's tied towards maybe the health of the mortgage market. dr horton, lennar, pulte group. home depot is down about 2%, and

that's driving the downside force in the dow right now, and the dow jones, u.s. home construction etf ticker itb is also off roughly 3.5%, so keep an eye on the home builders. also now, watching another key part of the market, rate sensitive as well. check out what's happening with big banks reporting earnings throughout the course of the week. you've got jpmorgan off 1%. bank of america, citigroup, wells fargo, pnc financial, some of the more traditional lenders that have more money center operations. and by the way, andrew, if you want to look further, check out what's happening with gold prices and bitcoin as well. they're showing signs of volatility on that inflation print as well. >> thank you for that. meantime, joining us right now for a deeper look at how the fed will be looking at the new cpi data, former fed governor for michigan, now a cnbc contributor. i'm going to read you this. this is jason faturman.

he says, "overall, it's a mystery to me why anyone thinks the fed will cut rates in june. the labor market is screaming a cut isn't needed, and the price data is screaming they could be dangerous for the other side of the mandate." are you in agreement or disagreement? >> i wouldn't use the screaming. but clearly, the fed has made a commitment to keep inflation low and get it back to its 2% level, and i think that's absolutely the right thing for them to do, and the path was looking pretty good for a while because inflation was coming down. there was actually some progress on tightness in the labor market. it's not seen in the unemployment rate, but when you look at vacancies relative to unemployment, which is a measure that seems to work a lot better in recent years, they made a lot of progress, but the problem is now that the economy's been very strong, and basically, the decline in inflation is stalling. now, also, most of the decline

inflation was from theremoval of the supply shots and supply chain problems. >> so, rick, though -- >> still a lot of work to do. >> take us inside the federal reserve right now. i imagine they're having a party inside mar-a-lago right now. i want to know what's happening inside the federal reserve right now, besides a pity party, which is to say, what do they do when they see numbers like this? >> well, i think the answer is, they stay the course. they basically have a moderately tight policy, which was very effective in helping bring inflation down, and also, very effective in containing inflation expectations from rising, which is one of the reasons why outcomes have been so good, but the inflation numbers are stalling now, and the economy's strong. so, the fed just has to keep staying the course. i don't think they need to raise rates, because i think that they're sufficiently tight in terms of the current policy stance. but they have to stay the course and indicate to the markets that that's their job. >> what does that mean?

we've been on this idea that there's a three rates cuts going. we had somebody on, by the way, who said there was going to be a rate cut starting in june and was going to happen every month for the rest of year, which now is completely disbelievable. >> little bit nutty in the sense that that would mean we basically have a depression or another financial crisis. but i don't think that's in the cards. we still do have a very strong economy. >> and so, therefore, you think now, in this calendar year, as we get into a presidential election, come november, that the fed is going to do what? we're also watching the markets, by the way, we should mention, fall off. we got the dow off over 400 points right now. bitcoin has fallen to the extent that that's an indicator of speculations coming down to $67,917. >> so, you know, the bottom line here is that the economy's hit a point where, in fact, it's good

news in some sense, but the fed has to do its job. the fed has always said it would risk a recession in order to get inflation under control. that's the right thing to do. they have to be tough. unfortunately, the progress that was being made has seemed to stall, and sometimes you got to say, tough noogies. that's the way life sometimes is. i don't think this is unusual for the fed to deal with these issues. when i was there, there were always tough decisions to make. the bottom line is, they got to stay the course, signal they're going to stay the course. >> thank you for jumping in with this breaking news and helping us through it. thank you. >> my pleasure. >> i like what rick had to say. tough noogies. it is what it is. >> that is true. it is what it is. what you can do about is, well, we'll see. let's take a final check on the markets before we hand it over to our friends on "squawk on the street." right now, the dow off about 430 points. the nasdaq, now down about 250 points. thank god it's not down 450

points yet. treasurys, because those are moving in a big way as well, the ten-year note at 4.495%. creeping up to almost 5%. >> you're talking big, big jumps. >> bitcoin has fallen on the back of this news with the idea that maybe rate cuts may not be coming any time soon, and well, we'll talk about the value of the dollar maybe tomorrow. right now, it's about $67,000. join us tomorrow. "squawk on the street" bins right now. ♪ good wednesday morning, and welcome to "squawk on the street," i'm david faber with jim cramer. we are live from post nine at the new york stock exchange. carl's on assignment this morning. let's give you a look at futures, of course. as an drew just told you, we ar looking for a lower open. our road map begins with that inflation surprise, consumer prices rising more than expected for marc