growth in the second halftime y half of the year. it's thursday, may 30th, 2024. "squawk box" begins right now. ♪ good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. welcome back, joe. >> thank you. happy monday. >> ha. >> happy thursday. >> the only saving grace. >> a short week? >> i'm here. if i can get this and tomorrow, it is a little bit of a shock. >> ease your way back in. >> it's okay. you know, it's not like politically anything happening that is divisive or anything with the stock market down 1,500 points in three days. >> here we are this morning with some more losses.

>> it's weird. the dow is going to be down. it's 50 points and 40 points in one stock. >> it is also if you are looking at the dow, it has been down, but 4% from the all-time high. >> it's been a good month. good month for everybody for may. 2% for the dow. >> we're on track for the nasdaq to break five-week winning streak. the s&p to break five weeks. >> nasdaq is up 6% for the month or something. >> the nasdaq month to date is up 8%. the nasdaq up to date is up 8%. >> bigly. >> you were talking about less than 1% from all-time highs from the nasdaq against new highs two days an ago before the losses yesterday. you are seeing significant declines with the dow off 325 points. s&p futures down 21. nasdaq off 68.

the other story in the background is salesforce. we will talk about that in a moment for the dow. the other story in the background is the pull back on the nasdaq is yields have been pushing higher. yesterday, you were looking at yields across the board at the highest level since may. this came after neel kashkari said yesterday on cnbc that he is looking at this and it will take several months of weaker inflation data before he would look to hike rates. we will keep an eye on that. yesterday, there was a se seven-year treasury that did not go well. they had to look at higher yoo yields across the board. those are the stories adding up. activist investor nelson peltz selling his entire stake in disney. scott wapner reported yesterday that the selling price was $120 per share and netting $1 billion on the exit. this exit came after trian

partners lost the proxy battle with disney. here's peltz on cnbc after that defeat. >> i hope bob can keep his promises. i hope they can do all the things they assured us they were going to do and we'll only watch and wait. if they do it, they won't hear from me again. if they don't, jim, you may be seeing me on your show next year doing this same thing again. >> so nelson is gone fornow. i still think if the price were to come down and he thought there was another entry point -- >> it has come down. >> he could come. the question is would he come back? >> he sold at 120. >> i know. >> how lucky he is he? >> he made $1 trillion. >> how many shares did he have

total? i'm trying to figure out the entry price. >> he didn't have a ton of them. it was like pearl -- >> if he bought at 100, i don't know if he would have made any money at all. the promise of all these things iger is doing running head long. >> you need to figure out how to make money on content. >> it is half that now. if he made money at 120, that's pretty good timing for him to get out at 120. 20% from here. >> he didn't sound like he was planning on selling all of it. here we go. an update on the annual meeting at exxon. shareholders voted in line with all board recommendations backing the re-election of the 12 directors. in the statement, the company said investors sent a powerful message that rules and value creation matter. the company said the vote

signals a belief that exxon is on the right track. yesterday, we had a series of people who were on talking about this. calpers head talking about this saying she was going to vote begins the directors as a complaint basically being lodged for what they're doing with continuing to sue the activist investors who kept bringing the proxy questions even when the questions were removed, exxon would like to see the law decide on new s.e.c. regulations from a couple of years ago. >> for the most part, managements usually win these situations. most shareholders go along, for better or worse, go along with management. i thought the big news out of the interview with calpers is they will vote against the elon musk pay package. going along with management and the pay package or more

dissenting voices. >> with the vote on exxon, they got more support from shareholders than the year before with some of the things that were brought. the report on plastics was not approved. about 21% voted for it. last year's support was 25%. the additional social impact report was voted down. only 7% voted in favor of it and last year was 17%. on the directors, it was roughly equal. on average, 95% of the votes cast to reelect the directors. last year, 96% on average. they did see the management win more support. i think this is this question with some of the political is issues brought forward and how do the voters see it? 3.6 billion shares were voted. that is 80% of outstanding shares. a lot of times people don't vote their shares. >> exxon is more institutional

money than most companies. we're going to talk about tesla where it is reverse. it is retail and it is more complicated. that is similar. tesla is closer to the disney situation in terms of retail. you see high numbers for votes on some of the big companies, there is not as much retail. it is more institutional. the proxy adviser firm looking to recommend the elon musk maypay package . another firm stated not to recommend it. calpers would not be supportive of reinstating it. not as of now. she is planning to take a meeting with the tesla team. we will see if they persuade her otherwise. >> big news on elon musk, i

guess, as a possible trump adviser. that has to do with nelson peltz as well. >> and pearlmutter. >> and peltz sis involved. it's going to be a long few months. i see things. >> that would be higher. >> it's pretty good. people don't want to talk about it at all. salesforce shares plunging after the report yesterday. a.i. eventually. not yet. steve kovach is joining us with more. the money is going out, but not necessarily coming in yet. it wasn't horrible. barely missed on the quarter revenue and for the year. that's enough with a fast grower to cause this big selloff.

>> the a.i. story as well. we're seeing shares tanking and dragging the dow down following the miss on revenue expectations and guidance for the second quarter. it was salesforce's first miss since 2006. $9.13 billion. the weak second quarter guidance where executives blaming a variety of vfactors with the tough macro environment, especially in europe, and the lingering artificial intelligence question. ceo marc benioff is talking about a.i., but not direct sales. benioff talked about the corporate data salesforce has. he said that is what companies will leverage. the companies are already commodities and don't matter as much. it is the corporate data that is more important for the a.i.

models to tap into. salesforce generates a ton of data. where do the a.i. sales come from? nowhere meaningful yet. on the call, executives talked about the data cloud which is the main a.i. product at the time. they said 25% of deals over 1 million din the quarter. no real meaningful in the quarter. that was the same stat they gave a year ago. it is not enough to talk about artificial intelligence, you have to show real sales, especially in software. >> it will take a while. >> probably next year. >> i have read a few things on it, andrew and steve and becky. anything that is really impressive, i push back. to me, it looks like an aggregate or of crap. garbage in, garbage out. doesn't do anything reasoning or

intuitive. all it does is search reddit. >> we had a venture capitalist here yesterday who said the same things. all of the tech companies. he has not made any direct investment in a.i. he says they are allove overrva. he does say nvidia and microsoft are making money. >> as they keep, you know, building out stuff. it still isn't that impressive. maybe it will be. i know. >> i think this stuff is impressive. >> you can write a pretty crappy college paper. >> you can do that. >> i pay someone. i admit that. i hated it. i got what i paid for, believe me. what is the statute of limitations on that? >> they cannot revoke your degree. >> upgrade to a felony. if they can find a way to do that -- when we come back, focus on the fed. new comments from atlanta's fed

president on rates, plus the cleveland fed picking a new chief to replace loretta mester. later, foot locker is set to report with the new ceo mary dillon. "squawk box" will be right back. '. dad: you wanna help me? dad: aim at the wall, but get closer. daughter: (gasps) what the?! daughter: alright. dad: side to side. when you work with someone who knows a lot and cares even more... you can do this. ...you're unstoppable. (♪♪) wow... are you kidding me? you can do this. at truist, we believe the same is true for banking.

the federal reserve bank of cleveland confirmed beth

hammack. loretta mester will be stepping d down. hammack will be put in office starting the september meeting. mester will vote at the next policy meeting in june. austan goolsbee will be attending the july meeting. raphael bostic told investors last night he is looking at the fourth quarter as the time when the fed actually may start thinking about reducing interest rates. fourth quarter. bostic said many measures of inflation on his dashboard, are in his view, moving back into the target range. tomorrow at 8:30, we get the latest read on core pce. that's the fed's preferred measure of inflation. uncertain about the rate path driven to the yields at the high elf level. for more, let's bring in mark at

bank of america securities. it is interesting, mark, there is a lot of factors right now. auctions. that should be the bottom line is whether we can sell the stuff at certain yields. i guess that's where the rubber meets the road a lot of the time. then we get economic numbers and we get inflation numbers. it looks like we're slowing a little. like gdp is not supposed to be rip roeraring. that looks to get an inflation cut, but not until presumed a downward trajectory. >> we have seen th basis points up for the year. we think this is due to a combination of factors. it is due to some better than expected recent economic data

including consumer confidence. it is due to positioning where we have seen asset managers get quite long and have limited capacity against the rate move. it is due to some of those underwhelming auctions we had recently. this week, we had two-year and f five-year and seven-year auctions. they came in at slightly higher rates than what the market was previously anticipating going into the auctions. all of those have contributed to rates moving higher. the market is really asking itself now what's the next move from year. our forecasts have rates going down slightly through the end of the year. that is due to what we think will be a slight moderation in the u.s. economic activity and inflation that comes back down and a labor market that moves into better balance. the path to get there will be somewhat bumpy. >> mark, what if just the first thing happened that you said and

the economy slows a little bit, but inflation stays sticky, that last mile and that is much harder than we thought. can the fed assume it will lag and inflation will come down or can we not assume that? i'm wourried about stagflation. we could have the worst of both. >> sure. that is the concern for many in the market. some need con ifi the market. some need con idence that inflation will move lower over time. the factor to give them that confidence is a moderation of growth and re-balance of the labor market. the pace of job growth between 100,000 to 150,000 payroll per month. they will have confidence wage will decelerate with that.

as long as that happens, the fed will believe it will be successful and the last mile against inflation. if it doesn't see that demand destruction, it will not have that confidence and it needs to keep rates higher for longer. >> what we see in commodities, mark, i wonder a super spike in oil and i don't know what would cause it -- fill in the blanks on what would cause a super spike in oil -- you could have a labor market re-balancing and all of the things you said. if you don't get -- you could have the inflation coming from something else totally unrelated to that. >> absolutely. that is the risk the fed always contends with. certainly there are a number of geopolitical flash points in the world today. there are a number of reasons to believe if there is some miscalculation, you could see commodity prices higher. that not only matters for consumers and what's coming out of their pocket every month, but it really matters for inflation expectations.

if the fed sees inflation expectations that start to move higher in a meaningful way, and very stable of late, but if they see expectations move higher, then the fed will feel pressured to not just keep rates higher for longer, but, indeed, hike rates again. that, we think is arguably the biggest risk for markets broadly. if the fed were to start hiking again, it is not our base case, but it is a risk. we do think that would likely lead to a tightening of financial conditions broadly and we suspect the equity market would not necessarily view that too favorably. >> we will not have a recession in 2024. is that 100%? >> ah, it seems very unlikely right now. you never want to say 100% probability of one thing and zero percent of another because the economy can evolve in

different ways. based on the data we have in hand right now, it certainly doesn't look like a recession. the fed is grappling with demand being too strong and not too weak. that elevated demand is putting upward pressure on prices. >> a lot of stuff still. a lot of liquidity still around. a lot of fiscal and monetary and everything else. you know, what's gdp -- for the last six months of the year, what do you expect gdp to run? where will that run? >> we expect real gdp growth, our economists believe, 2% in real terms. >> okay. >> that's elevated in relation to pre-covid and elevated in relation to trend where it will settle over the long run. >> okay.

mark, thank you. >> thanks so much for having me. >> you're welcome. coming up, an executive from mcdonald's is speaking out about the menu pricing and what he saids imisinformation circulating on social media. we'll have details on that after the break. encore energy, america's clean energy company, now in production in south texas. energizing america with reliable and affordable uranium for nuclear energy fuel from our environmentally friendly extraction process. encore energy. new projects means new project managers.

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welcome back to "squawk box." mcdonald's has a message for con su assumers. our prices are not that high. in the letter yesterday, the ceo said the average price of the menu items is up 40% since 2019. he was refuting the claims on social media and some house republicans that the fast food

company had raised prices by more than 100%. he said it frustrates and worries him when he hears about an $18 big mac meal being sold. the average price of the big mac meal is $9.29. that is up 27% from 2019, but not up 100%. certainly not close to $20. >> we had a franchisee from california earlier this week who spoken with us a couple of months ago. california put in a new law for all fast food companies that raised by 25% overnight. it would not be shocking to see higher prices in those locations where they dealt with laws and regulations that have required them to raise prices. it is also why they are coming up with the $5 value meal that they will be offering on the menus later next month for about

a month's time. >> what is a big mac meal? >> big mac, fries and a drink. >> i think it is large everything. $9.99. >> less than $10. >> more than it was. >> definitely more than it was. >> up 27%. >> mcdonald's has suffered. they have seen traffic decline. that is why they're coming up with the value promotions to get traffic back in the door. coming up, we will talk about the flurry of the merger and acquisition activity in the energy sector. as we head to break, here is a look at the s&p 500 winners and losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. to start a business, you need an idea.

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good morning. welcome back to "squawk box" here on nbc. we are live on the nasdaq on

times square. nasdaq is the not as bad as the dow. the dow, in large part, due to the 30 or 40-point drop in the dow component salesforce, is due to that. we will talk more about the revenue that just missed, and the forecast which is weaker than expected. conoco phillips is buying marathon oil in a deal val ued t $17 billion. it is seeing a surge in m&a activity. we have josh young with us. josh, what do you think of this deal? >> honestly, i think it is a great deal. i tend to focus more on smaller publicly traded gas and oil companies at smaller valuations. thisdeal fits that theme where you have conoco trading over

ac seven times ebita. it makes a lot of strategic sense. >> does it make sense for marathon especially since it is an all-store ck deal? >> it helps. it is tough for marathon share h holders. conoco is buying back a lot of stock and buying back more after this deal. the buying back at seven times is more mixed. >> this is something we have seen so much activity in this industry, especially after the two big deals unleash ed last year with exxonmobil and pioneer and chevron going after hess. what do you expect? more consolidation? why is this happening? >> this is a history of shale

maturing. you have a proliferation of companies and as they mature, you see they consolidated materially. there are huge synergies on the conoco and marathon deal with estimates over $5 billion. you can use more people manage wells and optimize from the field. it makes sense as they had these fields more delineated and production growth slows to have larger fields managed by smaller number of operators. this means there is not going to be the same oil production growth that we saw from shale over the last decade which is quite bullish for oil over the coming years. >> that's an interesting point. do you see trouble coming from regulators trying to stop any of these deals? >> potentially,egregious becaus

talking 1% of oil buying 4% of the world's oil. you can think of google or microsoft or some other monopolistic company buying 70% of the world's stuff versus tiny fractions. i would hope regulators would not go after this. it seems where they pursue this on larger deals, they allow them after review. >> josh, thanks for your time. >> absolutely. thank you. in the meantime, when we come back, the jury in the former president's rush money trial will resume this morning. what that would mean for the november election and what it means for the markets next. as we head to break, here is a look at the majorcurrencies. "squawk box" is coming back ghafth. is

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welcome back to "squawk box." the jury in the former president's hush money trying heading into the second day of deliberations. we will bring in jonathan martin from axios. thank you for joining us. >> thanks, andrew. >> to the extent you can handicap anything at this point in the ball game based on the ♪ ♪ tnotes that came back from th jury, do you know where this ends and however it ends, how will it impact the election? >> i think there are two scenarios. return a guilty either of those suggestions what

the prosecution laid out especially with regard to david pecker's testimony. in terms of the campaign impact, i beta a lot of this is baked . the issue with president biden, many are desensitized. it is not a huge revelation. if you are the biden campaign, getting a guilty verdict here in this case is helpful because they can then call donald trump a felon, which they will, obviously, in every ad from now on. i think it is helpful in that sense. of the cases, this is the least serious of all of the charges that trump is facing. it is also the one that an appears like we will have a trial before the election. the biden folks will be tickle

ttickled. >> the idea describing the former president as a felon, does that swing -- at what percent of americans say i can't vote for a felon? >> that's precisely the issue is that there is some number of americans, mostly what i would call bush republicans or former republicans and now independents, who don't love the idea of voting for joe biden again, but can't stomach voting for donald trump, especially if he has that convicted felon tag. i don't think it is a ton of voters, but they're crucial voters. the few voters, andrew, that have not decided yet. >> is there any possibility that a felony conviction somehow helps him? >> i think it will rally sympathy among folks that are already for him, especially in this case.

i don't know if it gets him any new voters though. >> walk us through the hung jury scenario. is there any chance that he walks out of this scot free? >> i don't think he will be acquitted. w i think he will portray a hung jury tantamount to victory. he will even say in the deepest blue of american advecities tha jury of my peers did not find me guilty. he will spin a hung jury as a de facto acquittal. that is how donald trump operating. he will say this is a sham case from day one and they couldn't return a guilty verdict even in new york city. he will portray that as a win. i think the bigger issue is it is unlikely the more serious

cases on documents and january 6th are unlikely to come to trial before the election. this is probably the only trial that we'll see, andrew, before election day. >> it is hard for most people to truly understand. i'm not sure i understand. i think i do. obviously, you are allowed to do -- you are allowed -- we saw paula jones. people have been paid off since the beginning of time. it is really about not classifying it as a political expense rather than a legal expense. everybody knows that. everybody knows that the upgrade to a felony is nebulous at best. you are following this. you say in this city with that jury. i think this case would have been brought years ansd years ad years ago if it was a legitimate case. >> no question about it, joe.

that's why this is, by far, the least serious of the cases trump is facing. >> i don't know if it is -- we need a new word for it. >> oh, look -- >> what's the crime, andrew? tell me the crime. you describe the crime to me. tell me the felony. >> i think most of america is not actually following this trial. >> you don't care. >> i'm not saying that. i'm saying most americans do not follow this case. it is so convoluted and so hard to signifigure out where things. i don't think it is a trumped up case. >> why wasn't it brought up years ago? the guy ran on -- i will get trumpisms. you can call a duck a duck quac

everything else. the new york law is being honored the way this is being done. he had to be there every day. he has to do it. there's no way around it. it's been done by the justice department or whomever. that's the way it's going to be perceived. >> i think both of you guys can be right. i think joe's take is compelling in terms of the law. i think andrew is making the case on the polipolitics. regardless of the factors of the case, if the biden case gets the word felony, they will use that because politics is politics. >> he is already at the correspondents' dinner and he said stormy weather. he is already taunting and i don't know -- >> the biden campaign rally. >> he probably won't do it if hunter has issues. in this case, he may come out and crow about a conviction.

do you think that is a smart thing? i heard people say he should pardon trump immediately to have a fair fight. i'm going to have a fair election. i'm not going to let -- i want the people to have their choice. >> becky makes an important point. if there is any mystery the biden folks would hweaponize ths when they sent de niro. >> does it helptrump with some of his base? if he is serving time in prison, he is seen as a martyr. >> they are already for donald trump. if that is your mentality, you are already voting for donald trump. i think the folks on the fence right now, you know, maybe

they're moved if he is found guilty. for the most part, it is a marginal issue for the great swath of the american voter. andrew said they are following this, but just not following it. >> there are some people, dennis q quaid, we're talking actors. even elon musk. when people think you use the system to sway your political -- it may offset the ones that say i won't vote for a felon. you may anget some on the other side. >> i think there are some that don't love the idea of trump facing charges on this. i still think those voters have a problem with donald trump. it will be hard for them to vote for him. >> i think there are certain people who say i can't have a felon be president of the united states. >> there are. i don't know. >> there are more of those. >> right now, i don't think the

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foot locker is affirming the full-year outlook. they are looking for comp store sales to be positive for the year. up 1% to 3%. the street was watching this closely. waiting to see what would happen because they are going through a turn around here waiting to see if results of the turn around were evident. you see the stock up close to the 8%. we will speak with the ceo mary dillon in the next hour. when we come back, w (vo) what does it mean to be rich? maybe rich is less about e a magic number... and more about discovering magic. rich is being able to keep your loved ones close.

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is there something that i'm missing? which explains why people are taking your stock down 17%, 18%, when to me it looks like this is a rather just typical good salesforce quarter? >> jim, this has been an amazing year for us. we have completely transformed the financials of the company, and you can see that we're, you know, delivering as i said, this incredible cash flow and margin number. so, look, i can't predict what the stock market does, you know that. we have been through this how many times over a couple -- i guess i've been doing this 25 years, but what i can tell you is that the most important thing remains the customer success. >> that was salesforce ceo marc benioff speaking to jim cramer last night on "mad money," shares of the dow component are down 16% this morning. that's putting major pressure on

the dow. you see the dow indicated off by 335 points. joining us right now with a closer look at the quarter and the guidance that the company is giving for the current quarter is brian schwartz, he's senior analyst and managing director for oppenheimer. you're calling the results disappointing. i think the street's reaction is more than disappointing on this. i know you've got a 12 to 18-month price target of $280 and an outperform rating. what do you think when you see, a, the results, and, b, the market reaction? >> thank you for having me on your show, becky. starting with the market reaction, i covered salesforce for 20 years. this is one of the largest one-day drops that i've seen in my career following the name. i attribute the disappointment in the quarter to five things. you know, first is macro, the first three. salesforce is in a bad neighborhood right now. you know, the demand for front office software is not the priority.

it is really upon rationalizing your i.t. stack and cost. that's number one. number two, we have seen weakness in the s&b market, now it is penetrating the enterprise market. there has less hiring. you see that in the nonfarm payroll, less software investment. if you have less people. number four is internal with salesforce. i'm sure there was some distraction, there was rumors of them trying to fill holes in the data management products with informatics. and number five, the read through from this, it looks like investments in a.i. is crowding out investments in software these days. >> yeah, and that's an interesting and concerning point for lots of software companies, but salesforce is saying that they have got these a.i. offerings that are going to be on the way. maybe not until '25, '26. is that something that you think

will eventually help them or is it going to come too late? >> over time, it should help them. the size and depth of the data that is on salesforce's platform, eventually there should be a bigger monetization path. but right now, when i say that a.i. is crowding out investments in software, when we talk to customers, you don't hear about a new line-item in the budget for a.i. it is coming out of somewhere. and it looks like it is coming out of the software project. and if you're an investor, and what investors are trying to better understand right now in software is which software business modes are going to be defensible and which are not in a.i. and that's leading to a revaluation of the whole sector. and it is compressing -- >> it sounds like you are re-evaluating potentially your $280 price target, your outperform and not thinking this

is an overreaction from the street. >> that is correct. i mean, if i look at the bookings metrics for salesforce, it grew 2% in q1, that's the slowest i've seen since i've been following the company. i would have to go back to the great recession and guiding for only 6% bookings growth in next quarter. that, to me, indicates that salesforce is shedding market share right now. >> you call it disappointing. and the president of the company, marc benioff, but the president said, elongated deal cycles and high levels of budget scrutiny. it was disappointing, right? i just -- when ceos, i guess they're perennial cheerleaders, they say we mind our ps and qs, we don't know what the stock market is going to do, i have no idea why my stock -- he knows why it is down 16%, doesn't he? and maybe, right, long-term a.i.

might be the tailwind and they got to -- this is near term, you know, there will be great promise in the future, but i've heard -- i never hear a ceo who doesn't say that, the daily vest tuds of the market, i can't control that, but we're just -- would you prefer to hear, yeah, it is disappointing, we're working on it? >> yeah, i would. i agree with you, joe. we're seeing it on other software names, enterprise companies, we saw with workday, we saw with ui path, you're seeing it with salesforce. and, look, there is sill a bull case here, you know, for software this year. i think the biggest problem is not a.i., but the demand weakness somehow gets pushed out to the second half of the year and we get a seasonally strong second half and, you know, business and bookings can get back on track. but, yeah, investors are smarter than that. they can read through, they can see this low single digit bookings growth and know that,

you know, something is wrong with the deal activity and the spending environment with salesforce and likely with software in general. >> hey, brian, thank you. and when you do decide how you're re-evaluating this, let us know. >> will do, thanks again for having me on your show. >> thank you. it is 7:00 a.m. on the east coast. actually just past 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc. i'm andrew ross sorkin with joe kernen and becky quick. the full gang is in the house. among today's top stories, an update on yesterday's annual meeting at exxon, shareholders voting in line with the board recommendations, all of them, back in the re-election of 12 directors. investors send a powerful message rules and value creation matter. the company said the vote signals a belief that exxon is on the right track. meantime, today's the deadline for boeing to tell federal regulators how it plans to fix safety and quality problems that

plagued the aircraft manufacturer. the fda requiring boeing to produce a turn around plan following the blowout of a door panel on alaska airlines flight in january. if you paid for amazon prime, you're now getting an extra perk. free food delivery from grubhub. amazon is embedding grubhub into the website. prime members will pay no delivery fees on orders of $12 or more. they're also going to get lower service fees and 5% back on pickup orders and this is going to only increase the battle between the many players of doordash and uber and increasing the instacart situation going on here too. so, a number of players that could be impacted by this. >> all slamming into the weekly injection of ozempic. it is very strange, we're in strange times. >> yes. >> every positive -- with every

positive, in the background, i think -- >> though, maybe that's part of it. mcdonald's is seeing fewer people come into their stores. they have to find ways to lure more people back in. we're going to offer free delivery. it is more enticing. if you're seeing a drop in the demand for it, that's how you respond. >> there is commercials showing a guy, once a week, you lose 20% of your body weight. like -- >> including your muscle mass. >> but 20%. i'm doing the math, and -- >> that's a leg. >> people are going to think -- >> when are you going to start? >> i don't want to lose 20. people would think something was wrong if i lost 20. they would. they would. >> they would say you look great. >> no, they wouldn't. they would say you look like a ghost. a salsallow, are you okay? how about 5%? can i sign on for that? can i stop and do i get it back? >> you get it back, yeah. >> okay. >> let's look at the futures this morning. there is quite a bit of pressure. dow futures off by 330 points.

s&p futures down by 20. the nasdaq down by 50. over to dom chu to take a look at the morning's premarket movers and obviously things are really being pressured here by salesforce. there is other movers too. >> absolutely. salesforce, right now, it is accounting for the vast majority of the dow, moved to the downside and implied at the opening bell to your point. we'll kick things off with another big earnings mover to the downside, that's even worse if you can believe it or not than salesforce and that's uipath. shares down nearly 30% at this point premarket, 850,000 shares of volume. the business automation and artificial intelligence software company reported better than expected quarterly profits and revenues but has been the case for much of this earnings season, it lowered its full year outlook and that's the big whammy here. it said that the ceo is resigning effective june 1st and would be replaced by co-founder daniel dines. those shares, because of the outlook and the ceo shake-up down 30% right now.

another earnings mover but in the positive direction this is hp inc., higher by just about 6% right now. around 40,000 shares of volume. this is the personal comput computermaker, printermaker, computer accessoriesmaker, it reported revenues that topped expectations. hp helped by better demand recovery for pc devices and specifically from educational-based institutions like schools who spent on upgrading their equipment, so those shares up 5.5%. let's end with a check on dow component, and that's media and theme park giant disney. stable, we'll call it. this is all after activist investor nelson peltz has reportedly thrown in the towel on his campaign against disney. peltz exited his entire stake in the company, weeks after losing his proxy battle against the company's board. that's according to a source familiar with the matter who also said that the stake was sold for roughly 120 bucks a share, which netted trian $1

billion in profits on the position. those shares are $100.79 premarket. pretty decent move there. disney shares in focus. back over to you guys. >> dom, we will see you in a little bit. new in the past few minutes, am zonazon say ing the prime ai program can further expand drone deliveries and lay the foundation to scale drone operations to more locations in the united states. so, while folks may be looking up, seeing stuff drop down. coming up, what consumers say versus what they do. a look at some of the key indicators, economic indicators and the behavior of consumers next. later, foot locker ceo mary dillon joins us to discuss quarterly results and much more. "squawk box" will be right back.

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plus, ask how to get up to an $800 prepaid card. call today! now, less than 90 minutes to the latest gdp numbers expected to show that the u.s. economy grew at a rate of 1.2% last quarter. many economists, though, many americans see the economy slowing. a new poll by the guardian, by harris, shows 56% of americans wrongly believe the country is in a recession and 49% say unemployment is at a 50-year high, even though it is near 50-year low. cnbc senior economics reporter steve liesman joins us with now -- with more on what consumers are saying versus what they're actually doing. hey, steve. >> good morning, joe. while a majority of americans say the economy is in recession, they're acting and spending much more like it is an expansion. cnbc looked at several key consumer indicators and found

while there is some slowing out there, nearly all the indicators are much closer to expansion than they are contraction. take inflation adjusted consumer spending, the most obvious one. during recessions, we went back to 1980, it slows to 0.2%. expansion, 3.2% over the past year, averaged 2.29%. a slow expansion, but much closer to expansion. revolving credit, the willingness to take out and use credit, recession, 1.9%. expansion 7.9%. currently over the past year, averaged 7.6%. we found the same for vehicle sales, new home sales, air travel, and capital spending by businesses. none of this says many americans aren't struggling with high prices, but it shows on average, the actions are not necessarily matching the downbeat attitudes. i talked to jan knifert, he said it is a bad time to be a politician, but not so bad to be a retailer.

we're looking for a lslowdown this morning. it is coming down to 1.2, the markdown is coming from somewhat slower but still decent consumer spending and bigger trade deficit. the atlanta fed pegging q2 accelerated 3.5%. one of the best explanations for the downbeat attitude comes from rsme, for a normal persian mea s i have less discretionary income. and with gas and food prices up, it means less discretionary income and so for many it's a recession. an overlay of geopolitical turmoil, housing is very expensive and you have high interest rates. that may be the recipe for negative views on the economy. seems for the moment to have more impact on the political arena than they're having in the actual economy. joe? >> steve, are you going to -- are we going to say, wow, it is much -- the number is surprising

because it is stronger than we thought or could it be below 1%? you know what goes into it. so there's -- i'm sure you know the different components. you know it is probably totally unlikely given what we know that it would be under 1%. it is totally unlikely it would be 2%, steve? >> i don't think it is going to go to 2%, joe, because the data we have from the census bureau tells us that retail was softer than originally estimated. that said, that's all on the good side. we have just really lousy data on the service side and then, you know, there is a puzzle i'll throw at you. one of the reasons why we're going to have a slower consumption -- slower gdp number is because imports were up. does that tell you the economy is weak? or does it tell you it's strong? imports can be a sign of confidence on the part of retailers and other sellers that they're going to be able to sell those goods, so they bring more stuff into the country.

what we're going to look at this morning, joe, is the insides of the economy, what is happening to consumers and what is happening to businesses. and we're kind of going to put to the side the inventory and the trade numbers and really gauge the strength of the economy that way. >> is the economy downshifting, steve, in your view, finally? >> i think there is some slowing going on, joe. from what i'm seeing, you had slower jobs report, you had slower retail sales. i think there is some slowing going on. i'm curious about the atlanta fed gdp number. it is early days, they tend to be really hot out of the box and then they come down as the quarter goes on. so, we're watching that. we'll do our own wrap it update after there is a bit more data on the second quarter. you really want to -- most economists have looked through this q1 number because of the impact of inventory and trade. if we see consumption really slowing, if we see businesses really slowing, and i really

like that conversation, it is something, by the way, i mentioned a couple of months ago, you were talking about this idea that maybe there is this shift from other investment spending, software, into a.i., that a.i. is soaking up some of this, we might have seen some of that at some of the other data out there, which is something to watch, real specific corporate impact, and also potentially a macro impact. >> so we get a pce number too? is that going to be -- >> that's tomorrow. >> i know. >> we'll get the quarterly inflation -- >> what are you expecting? is it going to be -- this would be like the second, like, cooler reading after we had a series of hotter readings after a bunch of cooler readings. are we going to -- what is it going to be? >> cool but not cool enough. cool but not cool enough. we're looking at a hang on, i didn't get it, hang on, one second, i'll give you the estimate for tomorrow, it is 2.7. we're down -- on the core, goes

from 2.7 to 2.8, so down a tenth. it is cooling but not as fast as it was cooling last year. but i think the key here, joe, we know what this number is. what we want to see is whether or not the components that were kind of accelerated and may have been backing up this idea that we had these, you know, beginning of the year price hikes that have now worked their way through the system, if tlatlael that really was the case. >> okay. all right. all right, steve. i'm just constantly -- we're getting kind of -- i guess that's the way everything works. up 3, back 2. it never is a straight line. we'll be back to thinking we're okay tomorrow or will we be back to thinking we got -- >> i feel like you're very nervous, joe. i'm hearing it. >> i'm nervous about a hike. i'm worried the next thing could be a hike. i'm worried about the next could be a hike, not a cut. i don't know why they're so sure it's going to be a cut.

>> i think it is thursday, joe. we're on the verge of summer. i think you should relax a little bit, joe. >> okay. i just got done relaxing and even when i'm relaxing, i'm nervous. nervous relaxer. relaxed nervouser. >> cautiously optimistic. >> optimistically cautious, exactly. up next, the growing relationship between elon musk and former president donald trump. "the wall street journal" has reported that the two have discussed a possible advisory role for musk if the former president wins the white house. we'll discuss that next. "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. six flags opened its first amusement park in 1961 in which state? the answer when "squawbo rern tus.koh, charades! - okay! - love it! umm... first word. - tonsillitis! - nostril! uh-uh... bill! uh-huh... - hip-hop! - limping! mmhmm! medical bills! uh-huh! - pancakes! - cash! who pays you cash when you have medical bills? grrr! no idea. [tapping]

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emily glazer who co-authored that story. it has gone viral. everybody is talking about it. tell us what you know about what you think is really happening here in terms of this relationship and whether he's going to have this true special advisory role? how much of that is elon musk wanting that in your mind or how much of that is a donald trump and ike perlmutter and nelson peltz and carl icahn and that whole troop wanting that? >> well, andrew, it is an election year. that means alliances get reformed or come together when people want something. and so we know that donald trump has dangled this special advisory role to elon musk. it could be around the economy, it can be around border security, both issues that elon has been extremely vocal about. we know they talked about it. we know they talked about it at nelson peltz's ocean front in palm beach in march. and while it isn't fully hammered out yet, it is something that could happen should trump win. >> how much of this has been --

was a just thrown out idea, how much of this was discussed prior to the breakfast? i'm just trying to understand whether this was just a sort of random thought that donald trump threw out there, this was something that ike threw out there, this was something that nelson peltz said, hey, donald, you should make him the special adviser and that's what we're talking about or we're talking about something much more serious? >> so, obviously we can't reveal our sources. "the wall street journal" wouldn't write an article if we didn't think it was something legitimate that was there. with any of these things, like if a deal might be talked about, there is a sense it may not fully materialize and also donald has to win the presidency first. but, it was not just a random aside. this is something that they talked about, trump and musk. it wasn't just something someone else threw out there. they talked about where musk could have influence. that could be around border security. it wasn't just, like, oh, special adviser, go take this and let's all be happy and sing

kumbaya together. we know there were discussions about it. we know it is still out there as a possibility. >> what do we think from the elon musk side, so, i gather -- i can see why donald trump would like this to be out there. elon musk has been vociferous in his frustrations, let's say, with president biden. but has been unwilling so far to endorse a candidate, it is said he may not endorse a candidate, kind of reluctant to do that. this would be -- this unto itself is almost a stealth -- it reads like a stealth endorsement. >> he's not gone so far as endorsing donald trump, you're right. however, elon musk is part of this influence campaign that we heard about, where he is co-hosting along with nelson peltz, david saks. >> how much do you think this is driven by nelson peltz, david saks, and that troop that are having these dinners and elon, you know is being asked to come to them and how much of this is

being driven by elon musk saying, hey, david saks and nelson peltz, i want you to set up this dinner and i'm going to co-host it and you guys are going to show up to my dinner? do you see the -- there is a big difference. people need to understand what is going on here. >> i think that's a fair point if elon had not co-hosted the april dinner with david saks, atop the hollywood hills. if he were a random guest, to your point, that might have been the case that this march breakfast gathering in palm beach where he brought his son, barron trump was there, nelson peltz's son was there, the fact that elon co-hosted the april gathering to me shows a marked difference. >> i think he did say, i'm not going to vote for joe biden, did he not? >> he's saying he's not voting for biden. but he hasn't said he wants to -- he's not saying -- he has not said please go out and vote for trump. and he's had lots of issues with president trump over the years. >> absolutely. so, i was looking back, two

years ago was saying trump sail off into the sunset, they were trading barbs all the time, trump called him a bs artist, so, it is not like these two have been friendly all these years. and elon musk -- >> did you watch, i'm sure in your reporting for this article, you watched it, the interview with don lemon. >> yes. >> what is so interesting to me, this is why i was trying to understand what was really going on. >> yes. >> the interview with don lemon, he's asked about that breakfast. >> right. and he swung by -- >> he said, swung by, and then almost deriisively suggests this guy talks too much, i don't love trump to begin with. it was not i like this guy, i want to be his adviser. it was like he's a crazy person and i happened to be at the breakfast. >> so, agree with you. watch that interview, of course. but that's where i think there was this change to then elon

co-hosting this sort of secretive, what it was called an antibiden dinner and there we know that attendees talked about how can we financially give to donald trump without the public knowing. and so i think things are changing. and we know more dinners are planned going forward -- >> he didn't want to admit it? >> i think that everyone -- by everyone, i mean donald trump and elon musk -- both don't want to fully show their cards. they could both get a lot out of this potential alliance. trump needs voters, elon wants influence. >> how much do you believe that elon might be in the -- almost the bill ackman camp? and i think bill ackman has a view, i think it is a bit of a fever dream, but a view, that somehow if you criticize president biden enough, that maybe somehow magically biden -- joe biden will say, you know what, i'm not going to run for president anymore, and, by the way, maybe gavin newsom or somebody else should take my spot. it is not an endorsement of president trump, but it is this

idea that somehow some unicorn is going to emerge. >> the whole democratic party is leaving that as a possibility. that's why the debate is so early. the problem the democratic party has is you have to let kamala have her shot and they don't want to let kamala have her shot. >> i would say this on elon musk, i don't think he's waiting for that kind of pipe dream. he's made it very clear that he does not support democrats anymore. and that he's voting republican. he's not saying i'm voting for donald trump, but he's still saying he doesn't support democrats and his politics has really shifted over the years. and now he really has moved more right leaning. he's donated, you know, up to about 50,000 publicly, but he's donated smaller amounts to both democrats and republicans over the years. but in the last two years, he's really more of a republican and he said it. >> is there a way to track down how much people donate at this point? it is so complicated. >> so this is where we get in -- dark money is called dark money

for a reason. we looked at federal election commission filings, that's where it is public, you can see, okay, elon musk donated $5,000 to the nrcc, $3,000 to this democratic candidate. but super pacs, where billionaires usually play, is when it is not tracked. you can't really say you don't really know who is giving what and how much. >> right. emily, thank you for coming in. >> thank you. >> fascinating story. when we come back, the fda warning that synthetic nicotine sold in unapproved vaping devices may be more potent and addictive than tobacco-derived nicotine. dr. scott gottlieb will join us on the potential dangers. check out the futures. they are under quite a bit of pressure this morning. dow futures off 325 points. the nasdaq is down by nearly 50 points. s&p futures down by 18. "squawk box" will be right back.

mcdonald's has a new message for consumers. our prices aren't that high.

and in an open letter yesterday, mcdonald's usa president joe irlinger said the average price of mcdonald's menu items is up around 40% since 2019. he was refuting claims on social media and from some house republicans that the fast food company has raised prices by more than 100%. he said it frustrates him and worries him when he hears about an $18 big mac meal being sold, even if it was just at one location in the united states. irlinger said the average price of a big mac meal today is $9.29, which is up 27% from 2019. mcdonald's shares right now of $250 roughly. that's down about 12% for the year to date. >> okay. meantime, could nicotine alternatives be just as or even more addictive than nicotine itself? former fda commissioner dr. scott gottlieb is going to join us right after the break to discuss some fascinating new findings. and then later activist investors selling his entire stake in disney after losing his

proxy battle. analyst rich greenfield will join us to discuss what it mnsea for the stock and shareholders. "squawk box" coming right back. could've held me back. e but i'm staying focused. and doing more to prevent recurrence. verzenio is specifically for hr-positive, her2-negative, node-positive early breast cancer with a high chance of returning, as determined by your doctor when added to hormone therapy. verzenio reduces the risk of recurrence versus hormone therapy alone. diarrhea is common, may be severe, or cause dehydration or infection. at the first sign, call your doctor, start an antidiarrheal, and drink fluids. before taking verzenio, tell your doctor about any fever, chills, or other signs of infection. verzenio may cause low white blood cell counts, which may cause serious infection that can lead to death. life-threatening lung inflammation can occur. tell your doctor about any new or worsening trouble breathing, cough, or chest pain. serious liver problems can happen. symptoms include fatigue, appetite loss, stomach pain, and bleeding or bruising. blood clots that can lead to death have occurred. tell your doctor if you have pain or swelling in your arms or legs, shortness of breath, chest pain and rapid breathing or heart rate, or if you are nursing, pregnant, or plan to be.

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remains the customer success, which is why how are we going to make these customers totally transform themselves, more profitable, better customer success, using our incredible new a.i. technology? and that's what i'm really excited. >> salesforce ceo marc benioff last night. the stock down sharply after revenue missed estimates and guidance came in weaker than expected. the stock off 15% this morning. the fda says synthetic nicotine may be more potent than nicotine itself. the agency's responding to the rise of products like vapes, zin, zin pouches and snooze that use nicotine-like chemicals, created similar high. joining with us more on the risks and regulations surrounding these products, scott gottlieb, the former

commissioner of the fda, he's now a cnbc contributor and board member of illumina and pfizer. how prevalent are these things? i i haven't heard a couple of them? >> not prevalent yet. we're talking about synthetic an logs of nicotine. this isn't actually nicotine. it is six methyl nicotine, making its way into a handful of products coming into the market. used largely by youth. a lot of the products you mentioned at the top of the show are using either nicotine derived from tobacco or synthetically derived nicotine. nicotine derived from tobacco or synthetically derive ready both regulated by the fda. what these are analogues of nicotine that aren't nicotine but hit the receptor in a similar way, a more potent way. they skirt around fda regulations.

the regulations are very specific to nicotine, because they're not actually nicotine, right now they're not subject to fda regulation. and just one last point, i faced a similar issue like this when i was at fda as commissioner. the law at that time only covered nicotine that was derived from tobacco leaves. only gave fda jurisdiction over nicotine derived from tobacco leaves. at the time they wrote the law, they didn't envision it would be possible to synthesize nicotine. we went to congress and asked them for more authority to give us jurisdiction over those products, they did. i suspect that's what's going to happen here. congress is going to expand the law to give the agency jurisdiction. not just over nicotine, but nicotine analogues. >> what -- how advantageous is it to be able to skirt the regulations that we have right now for nicotine, doctor? it seems s like a pretty simple fix. it involves congress, but seems

like you could make synthetic analogues have -- producers of those live by the same rules as the ones that produce real nicotine. >> yeah, there wouldn't be -- it doesn't seem to be a big reason to try to skirt fda regulations since the fda isn't actively regulating in a space. it has a backlog of 500,000 applications it needs to work through. allowing the products into the market while it works through the applications. it has been taking enforcement actions. i think by trying to skirt fda regulations by synthesizing a new component, they actually probably put themselves into the cross hairs of fda's drug regulations. so they might have jumped out of the frying pan of tobacco regulation, but into the fire of drug regulation. i would expect to see fda try to take some action to say that these are illegal under the new drug regulations because nicotine as you know is also regulated as a drug and they're making claims about hitting the same receptor. make making dr

they're making drug-like claims. that would give the agency authority to direct customers and border protection to seize the products at the border. they're coming in largely through the mail. a lot of the chemicals are being made in china. there is four companies in china that have patents in china so this synthetically derived nicotine, the six methyl nicotine. >> all right. i'm bored talking about nicotine. can you tell me -- is there going to be -- not another pandemic staring us in the face, is there? >> i don't think so. this strain so far doesn't look like it has the capacity to spread efficiently with humans. i think what we don't know is how many people have been infected and recovered. so it would be better to have surveillance data on those dairy farms to get a better handle on how many people actually have been infected, have mild illnesses, recovered. that would be very important public health data to have. i also worry about the fact that we haven't been very aggressive of trying to control the spread on the farms.

the more this contains the spread to cows and this does have the potential to become an endemic virus in cows, that would be an unfortunate situation because the more that we allow this to spread in mammals, the more we tempt fate this eventually can jump into humans and that's what you worry about. >> what is the solution? to cull the cattle? >> no, but there is -- there is precautions you can take on dairy farms. it appears these -- the virus is spreading through milking equipment, localized in udder on the cows. you can take measures to sanitize equipment on milking. i'm not familiar with farming procedures. you can also offer vaccination to some of the dairy workers since they're exposed to this virus at a higher rate than certainly the general population. i think there will be low uptick, but some uptick. >> should we have any hesitancy about prescribing ozempic for

anybody that just wants to be thinner or one of these drugs, whatever, any of the class of drugs? i'm thinking about high school girls or -- that have, you now, that we read about, that have so many issues on social media, with their weight, i mean, do we just go head long into this? they become trillion dollar drugs, everybody is skinny? aren't there any concerns about the mechanisms at this point? it can do -- it just seems like -- i mean, i really -- i don't even think i necessarily am suitable for it, the way that it works. i don't -- i'm not obese. quite. >> i think we should be worried about inappropriate utilization of the drugs. they're high dose drugs. they have side effects. if you look at the bmi, i believe the average bmi of someone who is prescribed wegovy is 38, which is quite high. it looks like they're being appropriately used, the prescription drugs at least. i think there may be some inappropriate utilization is

with the compounders who -- telehealth providers who are marketing direct to consumers. i don't think the bar is very high to getting the prescription from some of the venues. i think there is some inappropriate or more inappropriate utilization in that segment. i think overall, the inappropriate utilization is lower than we surmise. simply because we're in a media market where we probably knee a handful of people who are using it more for a lifestyle type of indication. i think overall, if you look across the country at the utilization, as people who are appropriately indicate ready getting these drugs, but it is something we need to be concerned about as the bar to a prescription gets lower and more -- >> if i remember, you think that the -- i think it was you, who thought that the market for this was 10% at the height would be 10% of americans? >> i think certainly it could be. if you look at the wall street analyst estimates, i'm saying that by 2030, it could get higher than that over the long run. but some of the analyst estimates put it close to that.

if you think about statins, i think as these drugs, these glp-1 drugs demonstrate more benefits in a wider array of diseases, sleep apnea, cardiovascular disease, dementia, chronic kidney disease, that's going to drive a lot of utilization. there is a lot of excess morbidity in those different indications that people aren't being appropriately treated, this could be another tool. >> so many things come from being obese, like ten other things that you mentioned. you got to add it all up. dr. gottlieb, thank you. >> thanks a lot. >> okay. >> i was going to say, the jury is still out if these have broader benefits than just the weight reduction. that's still an open question. >> thanks. whether we come back, after weeks of colleges, the gateways to the workplace, can we agree that commencement speeches should avoid controversy? jon fortt is going to join us next to weigh in on both sides of this topic.

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welcome back to "squawk box." we're just 48 hours away from the end of the month of may, which means we're finally done with most college graduation addresses. while some are inspirational, others make headlines for other reasons, leading jon fortt to this following question, should commencement speeches avoid controversy? jon is here to weigh in. what to you think? >> well, andrew, yes. commencement addresses should avoid controversy, absolutely. the greatest of them have been unifying and inspiring, reflecting on the challenges of the moment and appealing to our better angels. and that was the issue with kansas city chiefs kicker harrison butker's speech at bendectin college earlier this month. the conservative catholic

athlete took swipes of women with career ambition, president biden's faith, the concept of gay pride and more. an uproar followed. others spoke out in support. every player onchief, that poses a problem in our culture. seems like, if you hand somebody a mic these days most everyone is trying to go viral with the hottest most tiktokable takes not to persuade but to get attention. the fix, quit trying to moralize to the entire world all the time. instead work towards bringing people together. andrew? >> we did just have a few years of campus controversy about the need for free expression on campuses. so the question about that is, should speeches be tamed? >> well, andrew, "on the other hand" -- controversial commencement address, great. 60er opportunity for schools to differentiate themselves whom

they invite to sbeek. for speakers, what they say. sometimes call for boldness and our academic institutions should be places they canonize discussion. that happened with but khis spe. he spoke at a catholic college commencement in kansas. okay. if a guy like him can't express traditional ideas about general rule there's, where can he? that exposes a problem in the culture. happy talk about diversity, equity and inclusion, but when something like but kker speaks , people want to silence him. more well-crafted speeches and talk about whether think good or not. for quickbait and a stronger community. >> what do you really think? >> as usual -- >> i'm going to -- third piece into this. so one of the things that

happened the past week is harvard said that the university itself. >> nueutral. >> a university of chicago-style, we're not standing up for different issues or anything like that. some say that means they stand for nothing. other people would say that that's the right decision to get away from the politics of it all. what do you say? >> i say no such thing as a neutral stance. that's just saying, on the things we think everybody agrees with, then, you know, like -- like, you know, racial access to higher education. right? nobody's neutral on that, but, you know, 60 years ago that might have been a more controversial take. so i mean, you can say that, oh, we're going to be neutral. really, it means we're going to try to stay away from this latest, i think, driving the culture to have to have an opinion on everything. then once you start you can't stop, and in the forefront of

that, and being -- heated center and have all the focus on you. >> a lot of ceos want to do that, too. some succeeding. brings us, of course, to the "on the other hand" newsletter, where you can really dive in. there's the qr code on the screen. if you like to use your fingers type in cnbc.com/otoh and get the full text of both arts and share. shares tumbling after reporting results of foot locker. expecting earnings of four cents. revenue $3.18 billion. kohl's cutting guidance also for sales and earnings. citing weaker than consumer demand for aar appelnd footwear. we're coming right back. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai.

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all right, sir. welcome back, everybody. shares of foot locker rooirzing on better than expected earnings and retail sales and offering an upbeat outlook for rest of the year. joining us, foot locker ceo mary dillon. saw shares up sharply since thins. mary, congratulations. i think the street looked closely to see signs of this

turnaround you've been working on pretty hard. what did you see over the course of the quarter? >> first of all, we're really pleased to have a solid start to the year. our gross margin's are in line with expectations and eps ahead of expectations. importantly, we went through the quarter and saw our comps start to improve, strengthen from february into april even moderating marketing. you want to see that. foot locker and kids foot locker was positive plus 1%. feel really good about that. to me signs our laceup plan is working. >> looking at shares, 14%. kohl's came in disappointing sales saying they really struggled with both clothing and footwear sales over the course. what did you see with the consumer that kohl's was missing? >> a couple things. laceup plan started. highlights, investing in our brand. foot locker is an iconic 50-year-old company and 50-year-old, and global brand. investing in our first-ever

global brand campaign. called "the heart of sneakers" celebrating our stripers, investing in nba sponsorship. program called "the clinic" part another vip with jordan brand. relevancy connection to basketball. secondly, our brand partnerships are really reinvigorated. excited about what our brands offer and co-marketing. thirdly, improving our customer journey in every step of the way. a better in-store experience. refreshing our fleet overtime. best expression is a store just opened a couple weeks ago here in wayne, new jersey. billowbrook mall. opened up a second one of these new stores in new concept in paris today, in time for the olympics and have three more coming. one on 34th street soon. we're trying to bring together across all dynamics the right product assortment, right marketing. investing in the right customer experience and it's working right now, no the long ago during the pandemic people

looked at it. thinking, okay. foot locker and other retailers are going to have serious struggles, because brands like nike are going direct to consumer's that's gawk toing to other stores are less and less rel vanlt. you've talked a lot about those brands. what do you do with those brands? see them as competitor, and as a friend and partner? >> the notion of shopping in-store and online is here to stay. especially for certain consumer categories. for sneakers, foot locker people love the in-store experience. trying on a shoe. advice from a striper. >> stripers? >> store employees. >> because they have striped shirts? >> you got t. referees. >> yes. really heart and soul of our brand. our stores, they understand and love this category and really looked at as experts. listen, nike is our largest brand partner. thrilled about our relationship. i'd say it's reinvigorated in a lot of ways. just in paris at an innovation summit. they have exciting things today

and coming in the future as we get into the olympics and into next year. wearing the new dn shoe, airmax dn in a beautiful color way. a wonderful shoe. >> i don't think we can get it unless you throw your foot up on the -- >> i could do that. done crazier things before. we are a house of brands. our customers care about having access to the best in the sneaker world. so nike, feel great about our partnership. the program called "the clinic," which is all about basketball. a lot of exciting innovation happening. adidas, a global trend happening around paris. call it the samba. nickname, tea toe. a program now really about showing people how to dress from the sneaker up. new balance is on fire. people really looking for that heritage lifestyle running kind of look. there's a lot of innovation, and our job, really, is to bring it forth for our brand partners in

the best way to our customers. we have a unique customer group. a young, diverse, trend-setting group. i think that matters for our brands. >> why are you so confident about what you see with the consumer for the rest of the year? there have been soing questions about the consumer. other places, we don't know if the consumer will hang in there. you are saying, you're going to have positive comps for the year? 3%? >> guiding positive 1 to 3%. customer has been under pressure. no question about that. prolonged inflation. interest rates that affects everything from house payment to student loan payment. less savings. right? all true. but people tend to have discretionary categories that care about. if you care about sneaksers, or job offer up the best in the best way. people who care about sneaksers, if you're into beauty you're into beauty. customers are willing to pay full price. picky when and how they spend their money.

right products, right time. mother's day, father's day, back-to-school holiday, seeing our customers respond and we have several things coming still we think help support why we believe we can grow in our control. we have our new, launching a loyalty program. flx. making it more broad other and more appeals. loyalty programs are important. launching a new mobile app making it easier to connect with us. going to continue refreshing stores and our brands have lots of innovation coming. we put that all together and feel good about the guidance and we'll watch the customer but think we have the right things at the right time for them. >> questions? >> no. you could -- i used to work, used to sell shoes. those are the shoes that you could put out on display and they fit on you, i see. in other words, they never put your shoes out. because it would be like, no one would buy those gondolas. if you put those -- what are those? size -- you're size --

>> okay. >> size 6, 7 and a half? >> 6 and a half men's. 8 in women. >> you don't want -- >> i'm 11 and a half, 12. depending. >> why you can go in. wow. like the looks. they bring it out for you and, oh, my god what a ski -- >> that's fine. i know you love sneakers. >> i love sneakers. different question. which is -- talking about nike, adidas, hoka. is there a different margin for each of those shoes? do some of those companies come to you and say, i'll sell you this shoe, but you have to take only x -- >> we don't disclose what our terms are with our brand partner, but, listen. we feel very good about it. obviously, a brrange of price paints. we manage that, make sure it's the right offering add price for guests and manage structure across the ---ants one brand. all of your children, friends,

your frenemies, whatever it is, anybody you like, okay. watch this space. these guys are doing something very interesting right now? >> i really do think a lot is happening across a lot of spaces. >> with all our kids. >> you know, nike really, and jordan brand and basketball, there's a lot happening there. basketball and culture of basketball. a.j., air force one, really marquee items for us. the booker, book 1 -- one i told you about coming in a couple weeks. colby -- >> do you think what i discovered that the fashion sneaker is going to, is going to be shifting? have we gotten out of -- everybody wearing the nike dunks. like a fashion thing. >> yeah. >> and my question is, does that last? or does fashion change? >> there's basketball and culture basketball. absolutely sneakers more about comfort and about fashion. so a couple good examples are adidas. a samba is a global trend now

really connected to fashion in a lot of ways. also connected to the heritage of soccer. new balance. 2000's running, heritage running coming back. there is honestly something for everybody, and what we're -- we're on a mission to unlock the inner sneaker head in everybody. this isn't just about, i know you love sneakers. probably have a collection at home, i'm guessing. that's great. we cater to those customer, and saying, how can we invite in more women. more different parts. i like to call it -- they're all great. >> you have a collection? >> i'm into sneakers. >> yeah. >> how many? >> how many do you have? >> i don't know. >> when they say, "noi don't kn" it's a lot. >> i have a lot of travis scott nikes. those are -- >> ten pair? >> ten pairs of sneakers? probably. >> that's very low. >> i would think -- >> they're light.

what's wrong with them? hoka. >> nothing wrong. they're not attractive but i love them. they're great. wear them all the time. >> they're worth it. >> you think they're attractive. >> doing great. hoka in some stores not all. >> and running around in hoka's. it's not a collector shoe. >> it's not a fashion statement. >> the utility of it. buy the hokas for your knees. >> i buy any of these to run on a treadmill. >> call you the active athlete. a category. >> overstating -- >> mary, love having you. thank you. >> thank you so much. it is just after 8:00 a.m. on the east coast. you are watching "squawk box" right here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. among today's top stories salesforce shares down sharply after revenue miss expectations and guidance for second quarter came in light of expectations.

ceo commenting on reaction last night on "mad money." >> i can't predict what the stock market does. you know that. we've been through this. >> right. >> how many times over a couple, i guess i've been doing this 25 years. i can tell you that the most important thing remains the customer's success. >> thank you. >> atlanta fed president bostic telling investnvestors he is lo at the time the fed may actually think about reducing interest rates. saying many measuresers of inflation on his dashboard are moving back into the target range, in his words. we have data on the way. second reading of the first quarter gdp report, plus weekly jobless claims. both numbers released at 8:30 a.m. eastern time. and putting pressure on futures. down to mike santoli this morning. new york stock exchange. what are you looking at, mike?

>> rising bond yields's in recent days taking its toll on various parts of the market. kind of narrowing out the leadership and bringing the s&p 500 actually back down at the open today. likely into its first quarter range. here's the s&p along with its 50-day moving average. it will open probably below 5250. last week's low. also the late march high before that little 5% pullback. essentially getting you back into that range. we've sort of fought it out with semis strong and other jeers strong including sdpreels weak. software in general a negative on the market. look here at the s&p relative to the dow jones industrial dow jones. now, this relationship waxes and wanes over the years. a wide spread of out performance of s&p recently relative to the dow. market area data area yesterday ran numbers. correlation between the two indexes 20-plus-year low. why?

nvidia is huge part of it. more than 6% of the s&p. second largest weighting in the s&p ahead of apple for technical reasons actually. one of the major reasons why the dow has not actually suffered and salesforce taking outsized impact on the dow today. core discreet stocks leaders recently and have also backed off. dow a more defensive index. not seeing defensive stocks. here airline, home builders, restaurants. see them rolling over recently. might be net good news for the macro. some of the sources of inflation that we've been wanting to come back into moderation. airline fares, shelter in general, then, of course, restaurants part of that. services, we'll see it heading into pce tomorrow, relief on inflation front. we'll see. >> great. mike, looking at something to talk to brian about. thank you, mike. appreciate it. into some of the big stories surrounding oil and gas right now. a virtual opec meeting sunday.

conoco and -- what i was looking at, brian. goldman sachs seeing stronger demand. tieit all together, brian sullivan. groundbreaking show on at 7:00 every night. looking at the goldman forecast. it's staggering. under no scenario will demand for oil in 2040 fall below current levels. that's -- i mean, when you look at that, brian what is that? that's 16 years. we have to, we have to figure out a way to replace what we're using. do we not? >> correct. and i guess the goldman note -- good morning, everybody -- titled like the pixar mother as demand. up. get to that in a second. quickly, opec disappointing all of us. flights, hotels booked. opec decided to meet virtually, not in-person.

meaning no change expected on output cuts. highly anticipated meeting, prices around 80. first meeting in opec in six months. again, because they're going virtual, kind of but not always, it's opec, a signal that no major change. their plan will happen, joe. current output cuts 2.2 million barrels a day, at least on paper, should continue. uae an official visit to saudi arabia. getting their ducks in a row to agree to stay the course. maybe a reason, no new oil putten the market also this. bloomberg reporting latest wednesday saudi aramco close to a huge $10 billion sale. into this goldman note, joe, you seem hot on. goldman sachs, two days ago, coming out long-term projection raising their global oil demand growth to 108.5 million barrels a day by the year 2030.

there we go. up 2.5 million barrels a day from the prior estimate, and goldman, pretty smart guys, see significant demand acceleration until 2034, but then, joe, this is it. a long plateau. meaning they don't see any drop in global oil demand for years to come. so goldman's right. demand is going to go up considerably for about 6 million barrels a day from where we are now and then stay there for years to come. part of that is they're slowing ev adoption theory, where they see kind of ev adoption spike. everybody, early adopters who wanted one maybe already has bun. they're growing slightly, but not enough to put a major dent in global oil demand long term, because, joe, as we know, oil and we're learning. a lot of people thought use oil for gasoline. that's kind of -- no!

oil demand is half of transportation for consumers. you got things calmed airplanes. got things called ships. you got plastics. you got resins. all of these things that oil -- by the way natural gas, also, go into. goldman very bullish long-term, joe. we will see if that kind of demand estimate impacts what opec does or does not do virtually on sunday. >> amazing. where were you -- you had airline tickets? where were you headed? to our spot? >> well, our spot, and we'll always have the cove but, yes, ready to go. happy to say that mrs. sullivan was underwhelmed by yet another weekend trip. so we will monitor the opec meeting. i shall be racing my car sunday but monitoring, burning some gasoline i guess. monitoring the opec meeting virtually. is any major change, joe, we

will cover that for you. i mean, bright and early on monday morning. >> what's a major oil producer supposed to think beof activist that own four shares stop drilling oil and do what we want you to do? they need to do what they need to do to run their business. don't they? >> well, exxon had a huge win at their proxy meeting -- >> leave this alone. leave us alone. 2040 -- plateauing until 2040. at least 2.5 million barrels aday above where we are right now. >> listen, joe, goldman could be wrong. >> i know, but -- >> the team changed. jeff curry used to run it. he's moved on. >> or maybe it gets even worse foreevs for the transition? could be a pendulum swing. >> i think we're going to find out. listen, again, people think that i'm some sort of anti- -- i own one. i bought one.

i've driven one for -- had one off and on. owned one. i don't anymore but have driven many. they're great cars. fast and fun to drive and i get it. but you look at gm. the new electric equinox just came out. it's 15 grand more expensive than the gas version, and i think that's just hard for a lot of people to afford. that's not -- >> yeah. be a new -- anyway, brian, thank you. see you later. when we come back, the future of the nation's tax policy will be in the hands of the winner of the november election. so what kind of changes can corporate america expect? we will jump into that when "squawk box" returns. - so this is pickleball? - pickle! ah, these guys are intense. with e*trade from morgan stanley, we're ready for whatever gets served up.

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the tax cuts and jobs act sig chently changed rules for corporate taxes making most proverbial others set to expire next year. find out what can be next for tax policy under a future biden or trump administration.

joining us now, principal and co-leader of pwc's national practices and deputy chief staff to republican senate leader mitch mcconnell and kimberly klossing, professor at ucla school of law served in biden administration as deputy assistant secretary for tax analysis at the treasury department. kimberly, start with you. is there a current thinking on globally, what's the most advantageous tax rate for the united states at this point? to make us as competitive as possible around the world and i know that we, you know, sometimes we talk about real tax rates. versus state tax rates. what do you think tax rates should be for corporations in the u.s.? >> yeah. if you look at the united states relative to our peer nations. immediately obvious we raise

much less revenue from the corporate tax than almost any nation we've seen recently. did a study of 115 countries. we were in the bottom 10% in terms of corporate revenue relative to gdp. this is despite the fact our corporate sector is one of the most successful corporate sectors in the world. so given u.s. revenue needs, i think the u.s. corporate rate needs to be higher. and i think there are ways one can do that that would both encourage investment at the same time, but also build a fairer and more efficient tax system. >> is that the way we want to do it, though, kimberly? i'm trying to figure out, what's the total amount of the, of what we raise, total revenue that comes from the corporate sector? we can't solve all of our problems with corporations and there's a way of having it, you know, be paid through shareholders or customers or -- >> sure. >> consumers. however you want to do it. there are other ways to do it,

and we all want our corporations to be able to redeploy us, for innovation and raises and hiring and for whatever reason. profits for shareholders? we'd like to find that sweet spot. >> absolutely. and a good tax system raises revenue from many sources. we happen to be not reliant on the corporate tax at present and reduced corporate tax revenues by about 40% due to the tax cuts and the jobs act, and one thing we saw in the wake of that legislation was that most of the benefits went to those at the top of the distribution. 80% benefits from corporate tax cuts accrued to those in the top 10% of the income distribution. it's more a matter of balance. it's not like it all has to come from the corporate sector but there's room to raise more money in the corporate sector to address some of our fiscal needs and i have written elsewhere about a lot of other taxes we

could rely on as well. i think the corporate tax has to be part of the picture. >> it looks -- if, depending on outcome of the election you corporate rates could go up. is that the right move, or was that a positive, when we cut corporate taxes in 2017? >> look, i think a positive. and what's not being said here, if you look at the seven or eight years before the 2017 act, revenues corporate revenues 4.7%. after, 1.4%. take out the covid year out, stays about 1.4%. this year 2% and highest kornt tax revenue ever collected. look, what's not stated is a lot of that corporate rate reduction was paid for broadening corporate broad base and taxing more income. we collect less from corporations relative to our peer countries, but that's not because our rates are so low. they're not. actually middle of the pack.

it's because more than half of business income in the united states doesn't show up on a c corporation return. it isn't subject to the corporate income tax. it's in partnerships shows up on individual returns. look, let's be honest. if you want to raise the amount of business taxes collected in this country you have to e go after a bunch of small and medium-sized is wbusinesses to get there to equal what our european counterparts do. that's a political question, but i suspect nobody is going to run around saying let's raise taxes on small and medium-sized businesses to pay for whatever it is you want to pay for. >> okay. somehow we got to run. we'll continue this. hopefully maybe have you two back and just have a part two at some point, but i want to thank you you both. >> thanks. >> thank you. coming up other side of this, cashing in at disney stake heading in about a billion

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insights on this story and more bring in rich greenfield. so, rich, is nelson gone? gone for good? what do you think? >> look i don't know. i think end of the day, the media industry is facing a lot of challenges, and you know, this is not just affecting disney. look, i think disney specifically, i think there's building fear about the theme park dis. why most investors own disney, because they viewed it as 50%, 60% of enterprise value, saw it um canning from theme park. nobody was buying this more espn. no one's really buying it for disney+. buying it because they saw stability of the theme park business and i think economic fears, you've seen a lot of companies cutting price. you've seen some of the travel-related companies like airlines. there is just fear. not that there's a collapse but a slowdown. i think that fear is infecting

disney and making it hard for the stock to surge. you know, in this environment. especially when you overlay the larger media meltdown you're seeing affect wve, paramount, et cetera. everywhere you look, there's pressure. >> shareholder question. a bunch of email this morning talking about the nelson peltz story. how is it possible peltz walked us into this told us how great disney was, sounded like staying in the stock and then got out before all of us knew, and we didn't get out when he got out. what do you think about that? >> you have to talk to nelson himself. sure he'll tell you. end of the day, look, there is a, the media industry is facing a real challenge. right? i mean, this -- how you convert from linear tv to streaming. andrew, you know peacock and all

the platforms. this is not easy. look at what netflix accomplished. replicating it is not easy, and look at sort of the world's sports. you know, disney's made a decision to be aggressive in sports. they didn't have to. right? they didn't have to spend $2.8 billion on nba rights. >> speaking of that, where are you now on warner brothers discovery. at this point a falling knife, let it keep falling? you say this is a fabulous value? what do you think? what are you thinking? >> look, david zaslav, it's clear, andrew, wbd will lose the nba rights. i don't think they're eving trying anymore, i don't think they'll match nbc. i think nbc will have the sunday night game of the week. the question's going to be, can zaslav and the wbd team keep distribution of the turner networks without the nba? is a couple of college football games up against the nfl, is

that enough? look, they have "march madness." if he can keep distribution at a reasonable fee, losing the nba is actually mathematically positive for the company. if they get dropped over the next five years, by any major distributor, meaning charter, comcast, directv, dish, not wree newing with the nba was a catastrophic mistake. we're not going to know today. i think that he's got enough other content to not get dropped. >> right. >> it's a big bet, and i think that's what investors in the near term, andrew, whether or not they bet works out well i think investors in the short term are going to be nervous, and that's going to put pressure on the stock. >> rich, a longer conversation. leave it there. breaking news hitting wires right now. thank you. >> thanks. let's get straight over to rick santelli. he's got data for us this morning. hey, rick. >> yes, becky. gdp secretary time around the block on the first quarter numbers. expected to be up 1.3. and it is up exactly 1.3.

so we sub stract0.3 from first look at 1.6. comps to the second quarter of '22 down 0.6 last time at these levelling of gdp activity. switch gears to consumption. 2%. expecting 2.2. it was 2.5. that's a rather large revision. 2% is the lightest since the second quarter of '23 when up 0.8. consumption's a big deal. consume's a big deal. going a long way to potentially assuage fears the next move might be a tightening. price index. 3%. 3%. expecting 3.1 and rearview mirror 3.1. still comps to 1.6. 1.6 lightest. the last quarter of last year. keep in mind, the third quarter of last year was 3.3. so we can see that, you know, it is a drop, but it's still well above the 2% target.

now, core pce. personal consumption price index. kwour over quarter. dropped from expectations and rearview mirror from 3.7, new read, 3.6. 3.6 still comps to the last quarter of last year, in terms of smaller inflationary pressures, when it was just 2%. now, let's go to initial jobless claims. 219,000. that's up 3,000 from a slightly revised 216,000. it continues to be rather tame, and we see continuing claims remain under 1.8 million at 1 million 791,000. haven't been above 1.8 since the last week in march. now, let's look at the trade balance, which is a deficit. expecting minus 92. it's bigger. minus 99.4 billion. that's the largest trade deficit going back to -- i ask to cipher on this one -- going back to -- that's taking

us back all the way to may of '22. may of '22 . call it two years. reversing a negative month over month change of minus 0.4 last month and finally, finally, retail inventories double expectations up 0.7. that is the biggest jump in those since it was up 0.8% in the last month of 2023. how did all of that affect the markets? well, we're a couple basis points lower at 4.56 a high yield close brack to april 30th. we look at 495-ish, which is down a couple of basis points and the two year and it looks as though the auction pressure is off. this is a new dynamic. had 2s, 5s, 7s and focused on those it certain seems as though long rates in particular, but

all rates more buoyant to the upside. after the auction ended yesterday, seven year, which wasn't spectacular by any means, we saw the market rally a little bit. very normal. so if it's not right in front of investors maybe not putting the link with the fiscal situation that we are in. joe, a lot of numbers. back to you. >> all right. >> rick i was going to say, a.i.'s got nothing on you. love to see any of those chatbots try and do what you just did with that. because i was barely keeping up as i was righting it down. well done. >> plus i really like it. i hoe viewers like it much as me. these are the ingredients that move the economy. >> they are. we're watching them to closely. rick, thank you. steve liesman joins us right now with more on this, and it steve, rick's right. these are the pieces that we have to figure out what's really happening. what's your take looking at all of these numbers? >> yeah. and you're right about rick. i do want to challenge the a.i. community to come up with

something that would resemble what he just did there. i think it would be interesting. anyway, the little bit of inflation improvement is what we were talking about with joe in the last hour. incrementally better than it was. nice to see down size, surprise, i guess in that number. consumption came down but still 2%. i was just looking at the corporate, at the investment numbers here. give awe number real quick. fixed investment up 1%. that's pretty good, too. and then the other thing we're looking at is an increase in imports. imports subtract from gdp. and so that may be a sign of positive outlook on the part of those headquarters looking to sell. could price in will as well should be a price-adjusted number. so, look. a bit come down from the prior quarter, but still we're looking at the incise of it, consumptions numbers from business and the consumer pretty

good. leave it there, except to say we have to watch now numbers coming in second quarter to see if what we're getting is a slowdown or just one that was anomalous because of the trade of the inventory numbers, becky. >> steve, one point. rick said that this takes some of the pressure off these concerns that the next fed move will be to rampant rates up. would you agree with that? >> yeah. and maybe even go a step further. it might keep the fed on track for a rate cut this year. because what's happened is we're kind of losing that fear that the numbers, the inflation number we saw in the first quarter were part of a reacceleration of inflation. that reacceleration or concern of that led to the possibility of guys sort of whispers about rate hikes. i don't think that's necessarily going to be on. the question now becomes, do we continue the improvement we saw. these 0.1, 0.2, everything will help along the way and get down.

remember, powell said they're going to cut before they get to 2%. they just need the confidence that they're getting there, and these incremental includers will help. >> and -- the next number we should watch very closely is -- >> well, got the pce index tomorrow morning that will give us a number. and then i'm really focused next week on the ecb cutting interest rates and jobs. no rest for the economic weary. i don't think they'll get that rick-bot together by next week. >> stephenve, see you later. you can outpace the a.i., too. and coming up, talking much more about the latest dataened-of-and what it means to the economy. talking to a panel, the fed's rate patand h so much more when "squawk box" comes right back after this.

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right now it is gdp numbers. bring in smbc u.s. securities commitment here. former chief commitment and ben harris brookings policy director and former secretary for economic policy at the treasury department. what do you think? jay powell. sees this number and he said --

what? >> it was weak. the gdp, take out housing services, which is up almost 4%. gdp down 9/10. big drop. big number. whether start of a new development, we'll see. i thought the report was weak. the inflation number still sticky. jay powell still on hold. >> stagflation? >> yeah. i've got a different -- >> i still worry about recession. the economy's propped up by rapid government spending. never run budget deficits of this magnitude with the economy allegedly at full employment. that's certainly keeping inflation higher. that's the reason why the fed isn't going to be cutting at least anytime soon. i think by end of the year the labor market softens, inflation resumes. a down trend. the fed cuts. i see it after the election. >> ben harris, sounds like you have a different view? >> yeah. got a different view. i think anytime you look at a

data release you have to ask, is this consistent with a soft landing? this one definitely is. seeing strength in consumption, services not as strong as we saw before. that's good news. downward revision in core pce on the quarter also good news. to me a soft landing footprint. >> yeah. i mean -- >> always -- >> could you see this as being a soft landing? >> could be. soft landings and hard landings always look the same initially. the question is what are the cyclical sides of the economy doing? housing still generally weak. manufacturing soft. consumption was good, but durable consumption, very cyclical. right? down 4%. so to meep the contours of slowing are there. see if we see it in the labor market. >> ben, what's your take how the fed plays this and whether we're sitting here and they're holding steady? obviously an idea in the marketplace maybe eve an hike e?

>> hike off the table for now. i think data we get tomorrow morning with pce prices out for april will be telling. certainly watching that closely. marginally good news on prices. saw the points end downturn. tomorrow's really the big release for the fed. a lot of investors have two cuts on the table for 2024. just happening later in the year. i think a reasonable point of view, but really a core pce move. >> what's, by the way, your forecast on that front? >> for core pce? >> no. but cuts on -- >> because i'm bearish on the economy i see the fed cutting but not until december. look, if it's -- here are the problem with the soft landing scenario. if there's a soft landing how does inflation get down close to 2%? absent an exogenous increase in productive growth. if that were the case,

productivity would be really surging and that much potential output, why hasn't inflation shot up in the last four months? you need a period feeling more like a recession, really weak growth to get inflation pressures down. otherwise, demand won't be weak. how can demand weaken if gdp stays strong? i don't see it. >> exactly the right question. this is exactly the right question. the answer to how does core inflation get down around 2 is housing. take housing out of the inflation equation we have kind of kissed 2%. close to there. now come back up a bit with the past three months, but the way the core inflation gets down without a big cyclical downturn is housing prices moderate. forecasters like the san francisco fed, boston fed, their expectations housing prices are going to come down over the next quarter or two. >> a fair point. i pushback pce health care more and research breaks down

cyclical and "cyclical, 2.5 drop is needed. housing will soften but generally don't get that kind of drop from where we are now to get overall inflation back to 2 absent a town tern. >> -- downturn. >> thanks, guy. rising debt levels coming up, back thao unt the markets and the economy that and more when "squawk box" returns.

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welcome back to "squawk box," everybody. futures this morning still under pressure. even after those numbers, economic numbers we showed saw a little bit weaker inflation. so maybe the fed's not going to be so quick to raise rates. maybe a possibility of a cut this year. that's what steve liesman is extrapolating out of it. still now looking at dow down 300 points. s&p off by 11. nasdaq down by 15. our next guest says the economy and the markets are in reasonareason able shape but dead issues are on the horizon. joining us, founder and chief investment officer of strategic global partners. a credit investment firm with about $18 billion in assets under management. thank you for being here. >> a pleasure. >> so tell us what you see.

before we get into the markets more deeply, talk about what you see just when it comes to debt potential offerings, or debt opportunities, because this is really where you're an expert in this. you see problems, you make money on these things. are we at the point where you see opportunities? >> absolutely. so what has happened is, look, the economy has, is in kind of reasonable shape in the u.s. so-so in europe. much more of a slog. right? and in a world which kind of looks like that, all of the new investments people are making today, the new vintage fund they're raising, probably more than likely it's going to work out reasonably well. problem. the 800-pound gorilla in the room is all the investments we have all made before the fed started to hike rates. can i give you a sense of that? how -- >> please. >> and, please, this is a

quarter of the market. it's not the broad markets. right? so private equity funds have $5 trillion invested in the ground. 26,000 companies today. >> uh-huh. >> there's $5 trillion of high-yield have 26,000 companies today, and there's $5 trillion of high yield debt in europe and the united states, and so you have got all this stuff, and a lot of it done in zero rate environment, right? now you have higher rates and mature tease coming at you. here, i am not here to tell you, oh, my god, there's going to be a collapse. i don't think so. but, my god, it's going to be a

slog that needs to be fixed. >> mark slag was here, and he said you cannot get the deals he's looking for. >> mark is a very smart guy, right? the only thing i can tell you is -- look, we have $18 billion. over the last year or so weigh have invested about $3.5 billion. what i'm describing, this is not like, oh, boy, it's going to happen next year or next year. it's happening right now. our pipeline of deals we look at -- and, look, we have a really big team, okay? we have about 100 investment professionals. our pipeline much deals is 200-plus billion, and 100 billion or so deals in the real

estate -- >> yeah, i was going to ask where are the sectors? commercial real estate is often mentioned. >> on the corporate side, and we are seeing private equity funds wiggle, right? do a lot of adventurous financings, and some are saying all yours. we just bought the largest garage in europe with 2 million parking slots. we are in the business of taking over a ferry business, and so the corporate side, it's starting to happen. on real estate, you are right in the center of the storm. it's the old-fashioned gfc, like

an office property, it's old-fashioned gfc-like. there's a tsunami coming through. we must have looked at 75,000 office deals in the last month. >> is it 50 cents on the dollar or60 cents, 70 cents? >> typically, real estate prices in the office in the public with rates are down 40%, and in the private market, transactions are taking place down 60%, 70%, before the -- 60 and 70% before the fed started to hike rates. >> wow. is your worst nightmare that the government will step in and give forgiveness to those that signed these deals? >> the government is not so forgiving, right?

they are not going to help real estate entrepreneurs, the ones that kind of bought these companies with high leverage. well proven in the united states, right? in the past, they helped banks and people with systemic risk issues, but it's been proven in the united states -- >> but are the banks in trouble, regional banks that could have so much on their books that could cause a problem. >> the $2 trillion and $3 trillion banks, modest exposures to kind of commercial real estate, of course, they are going to take that down. but they are strong, and it's a group of regional banks where 20%, 30% of their loan assets are vested in real estate, and 10%, 12%, sort of equity

cushions. every six months we wake up and suddenly there are a couple regionals that are, like, oh, my gosh, right? >> they are absorbed by the system, though, right? >> they are. >> the ebc could cut rates, and if you are looking at the u.s. and europe, does that offer relief in europe, and for the existing once, but not you. >> absolutely. >> the first time europe will cut -- >> before the u.s. and europe, the economy itself is in such a tough place that their inflation has gotten under better control, so they have the ability -- because the economy is in such tough shape, right, and as a result they have the flexibility with inflation down to be able to do some of those things which we don't quite have yet. >> victor, you are very upbeat and seem very happy.

is that how you are all the time or is that because you are finding all kinds of grave digger bargains? >> no, it's a really good environment for us. as credit cycles now, right, there has not been one long opportunity in credit since 2008. covid was three months long. you blinked and it was gone. >> because the government stepped in. >> yep. oil and gas crash, six months. there has not been a sustained workout. and, please, it's not like some huge drop in prices, system wide, don't think so but the sustained set of opportunities for us to work through, yeah, we feel good. >> victor, thank you. >> my plsueare. thank you for having me. we get ready for the opening bell on wall street. that's in red arrows ahead of this morning's opening bell. we're coming right back after this.

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final check of the market, and salesforce, that stock

worsened as the morning session has gone on, and it was 235 when we started and now it's down 40 points and i don't know what that says about the overall average. probably not much. >> make sure you join us tomorrow. >> no jobs report. that will be a week from tomorrow. "squawk on the street" is next. >> join us tomorrow anyway. >> it's up to you. good thursday morning. welcome to "squawk on the street." futures will be stung by salesforce today. and the gdp the lightest