target and bridge you an exclusive interview with target's ceo elon musk tweeting again about fake accounts on twitter but they say twitter's board plans to fix the merge agreement. >> plus, a rebuke for jamie drk imon it's wednesday, may 18th, 2022, and squawk box begins right now. good morning, everybody. welcome to squawk box here on cnbc we're live from the market side in times square. andrew, what do you have going on today >> we've got a lot going on.

we are in kiowa at the moment. can you see the beach here can you hear the ocean >> sun's coming up it's pretty. >> this is becoming almost the mini drk avos of the sports business world sports business leaders from all across the country convening here the commissioners getting in last night, the head of formula one along with investors, bankers, check pifs and the like, and we're going to have a big lineup throughout the program to talk about all things sport business but even beyond that, what's happening in the marketplace, lots of conversation last night about what's happening with the media land skaep and netflix and all the other consolidation that's taking place and lots of gossip about e lop musk and twitter. we're going to be talking sports business and tech with george

pyne, the host of this event, and then we have geoff yang and an exclusive interview with david soloman. >> we are looking forward to in, andrew interesting to hear what his thoughts are on this market pull back. >> what's his connection to sports he's a disk jockey is that -- i wondered about that yep. so that's good for whatever reason, and jeoff's a golfer i but you he gets out on the ocean course there while he's there. it's a great course. >> beautiful sunrise too. >> lot of wind down there. it's a similar spot to my favorite spot sea island it's like we had to choose and

make a decision. we did that years ago. it was very close. amazing place. amazing place. as you know. are you att sanctuary? >> well, are we suppose today disclose our hidden location >> it's too late it's too late. i meant figuratively, are you at the sanctuary that is -- i wasn't -- why? is there a place called the sanctuary? i wasn't even talking about that the entire area provide sanctuary. >> the only place there, i think. any way, a lot coming up today. plus we have some big interviews back in new york as well the target ceo after the company reports earnings, he'll be on set with us. also warner brothers ceo david zaslav will be joining us on set. >> mr. hollywood that's going to be good. >>let get a check on the markets

today. yesterday, a strong day, the dow was up even though you saw a big drop from walmart, it was down by 11%. that's the biggest decline since 1987 in a single day the s&p was up by 2% and the nasdaq was up by 2.75% the dow indicated off by 20, the s&p off by #, the nasdaq down by 4. and treasury yields started picking up yesterday jay was talking about how the fed is going to do anything and everything to make sure it counter inflation. a lot more talk about how inflation could be more stubborn because of what's happening in ukraine. you're looking at the ten-year this morning at 2.9% 30 years at 3.14%. again, something we'll be

watching very closely. andrew. meantime, you can't go anywhere without people talking about elon musk. he was active early this morning. this is elon responding to a sweet linking -- i should say liking a news week article that said half of joe biden's twitter followers are fake musk responded, interesting, and then said, that would be ten times more than 5% of course musk yesterday said the twitter deal wouldn't move forward until twitter clarified its claims that fake spam accounts make upless than its daily active users he suggested they should look into twitter's claim meantime, i can ton firm reports that twitter's board say it plans to enforce the agreement to be bought by musk, going on the offense if you will saying this deal is the deal we had, we made this agreement, and we plan

to keep it that way. of course, we'll see whether it stays that way effectively, if they say they're going to enforce it, how long you're willing to go and be in court for. 38.40. >> i figured -- let's see. 3 types 16 is 54 and -- not quite for a while, i thought it was going to be exactly 33%. it's nowhere near the price. that doesn't look anything like a deal that's getting done, does it >> a big spread. >> unless it's a lot less. >> here's the question i have. if you're running twit we are b if you're running twitter, would you take a lower deal just to get this over with, or would you say, you know what i'm going to go to court i'll try to get $44 billion for this thing if i can, but it will

take me two years. think about what happens to that company during those two years that will be a lot of noise. we'll be talking about it all the type i can't figure out what the right answer is. >> you mean the board. not running it, the people that are actually run it. so you mean with the board -- i don't know. >> total prisoner's dilemma of all sorts. i also wonder what impact this has on elon musk in the future to be able to do any other kind of deal. would he offer this price before, everybody said it would be very hard for them to say no. i would think given all the -- >> i think he's in the driver's seat. >> given all this mess. >> i think he's just -- his position has just been strengthened as it has become clear that -- do you believe 5 (% i think 5% is probably lower by a factor of two or three.

>> the truth is the 5% doesn't matter. >> i wouldn't buy it for that. >> when you read through the contract, he basically waived all due diligence. his purpose of buying this was to get rid of the bots that argument in court is not a viable argument. >> even if they stated in filings that -- >> it's like buying a house, but you waived your right to inspection if you get with some of these thing, so that's just -- >> it's just good to be the richest man in the world you can say what you want, do what you want, weigh in on anything, send out pop emoji where do you find a pop emoji? >> it's on there. >> what else is in there am i missing out on a lot of fun stuff? >> hey, we should talk about lowe's earnings being out right now too. >> bad too >> just looking through trying to figure out the numbers on

some of this stuff earnings share 351, which is better than expectations of 322, but their sales dropped by more than expected. down by 4% street was only looking for a drop of 2.5% that's an issue. that's not what we heard from home depot the bottom line beating. maybe they did pass at a higher one. >> that's not a trade either. >> they did pass on some of their higher costs potentially to some of their employers they said americans hunkered down during lockdowns and that pushed some of the do it yourself projects. their quarter sales were impacted by the cooler spring temperatures cooler temperatures impacted all the retailers. yesterday we heard from walmart talking about how pate owe furniture didn't sell as much. i don't know what the trade is

going to be on this. they are saying they're reaffirming their fiscal 2022 outlock. walmart raised their outlook yesterday based on what they had seen but the same store sales dropped maybe the one concern. home depot traffic maybe on the higher end than anything that came in. >> it's probably been with sympathy like any of the others. i thought home depot gave back -- >> they gave it back by the end of the session. >> i mean, andrew, did you -- i ramped up the home projects. there's not a lightbulb that doesn't work in the entire house. i do have a toilet that i have to, every single time you flush it, i have to open it and put the rod back in it so it's flushable again. that gets ol the toilet is okay, right? >> that doesn't circulate from the -- >> it still kind of steves me out either way your house, like, there's

nothing that doesn't work, right? i mean, you fixed everything. >> everything works perfectly. >> did you put in any molding or spac ling or anything in the bathroom no put in one of the -- i see people that put in new bathrooms. >> i got the whole -- i just -- >> impressive. >> the houseman jer did a really good job he keeps everything together, ask staff makes sure everything -- if there's ever a nick, they paint it up and spac l it. >> people are going to believe you. >> we don't have to be aware of what's happening. >> you just move to the other sound proof rooms. >> pretty much you think -- the audience may not believe this, i hope. >> hopefully they can tell that we're -- but it is true about -- we're not really the diyers i don't think.

let's bring in our senior analyst. see what kind of jacket he's wearing today. it's a good one. big couch. so brian, how about this, the comps, is that going to be an issue? where do you expect the stock to open >> so just like you said, that's going to be the -- as we're initially evaluating this report from lowe's, yesterday we got a better than expected comps gam from home depot. here, lowes is talking about down essentially 4%. that's what the market is going to focus on. i don't think it's that big of a deal i think what's happened here is lowes is more focused on more skewed, if you will, to the diy category and particularly the outdoor category home depot was clear to say there's been a slower start to spring in many markets across

the united states, but as the spring weather has finally come, these sales have picked up i think lowes will say that same thing. but nonetheless, the market is going to look at this as a weaker than planned report >> the high is 263 so 194 -- what do you think at 1 or 2% down or what do you think when we finally get a trade? >> well, i think that's probably a pretty good guess. i think it's good to keep in contact with what's happening with these names most all investors are to some extent concerned about a looming recession. names like lowes and home depot have been hit hard with that as a backdrop i think they're trading at depressed levels there may be a trade lower, 1-2% is probably a good guess on lowe's today but i think the stock is quite cheaper. >> worried about a recession and

really talking about inflation which encapsulates the entire worry that we all have and that the overall market has that's like the worst two things when they're happening at the same time, it's like it hasn't happened in a long time. but that's the worst case scenario, we even have a name for it that's obviously the big concern everyone has at this point thank you. >> thank you. >> have you -- any of that handywork behind you, you responsible for any of that? >> absolutely not. i would mess it up. >> you follow this -- this is, you know, what you do as an analyst, you don't have any experience with your hands doing negotiate? >> through the pandemic, i became an expert in lightbulbs. >> that's not easy either. because i have at least 20 different kinds of lightbulbs, which have to be found at home

depot, right i changed some of the fluorescent ones in the garage. >> you looking for applause? good job, joe. >> thanks, brian when we come back, powell out on inflation we have the details. and later this hour, target is set to report we will bring you those numbers and an exclusive ierewntvi with the ceo brian cornell. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.

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bring on today with unbeatable business solutions from comcast business. powering possibilities™. fed chair jay powell said the central bank has the resolve to bring town inflation. he said restoring price stability is an unconditional need even if there is pain involved the he did say in hindsight, it would have been better to raise rates earlier. he said inflation is way too high and it looks like ukrainian war effects may be longer lasting than expected. same thing for the china lock jon. he said all of that is going to make it harder for inflag to come do you happen, and it's going to be a very channeling task to try and tame inflation there could be some pain involved they are going to push ahead with rate increases, that the markets have been processing

things pretty well can be and there is a risk we could have labor shortages. it feels like the natural rate is well above 3% as he was saying all of that, you did see the ten-year continue to take higher on the yield. we'll continue to watch that today. that conversation from jay powell this week at least so far, we have been watching in the meantime, in the uk, inflation soared to a 40-year high led by food prices, a recent survey showed that a quarter of britains have reported to skipping meals amidst scarcity concerns. >> coming up, we have a rare shareholder rebuke for jamie dimon. we're going to bring you the details from that. later, a huge lineup this

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welcome back to squawk box we're live this morning. but some news back on wall street today jpmorgan shareholders objected to a $10 million retention bonus. only 10% voted in favor of pay plans. that vote isn't binding, and

dimon isn't likely to give that money back, which we should say is in the form of restricted stock options that requires shares to trade above certain levels and him to remain ceo until 2026 dimon's compensation was $84 million, making him one of the highest paid krrk eos in the s&p 500. that comes as intel voters voted against that package it appears there's a little more push back on these pay packages, but not binding. it might change sort of how these boards are starting to think about comp in the future we'll see. >> maybe so. apple has paused plans to bring back workers to the office an extra day each week their current plan is for workers to come into the office two days a week.

that was set to increase to three days, but now that's put on hold. apple paused the plan because of an increase of covid cases in the area and complaints from some workers. coming up, target's set to report we'll bring you the numbers and an exclusive interview from w the ceo. and during may, we are celebrating asian american and pacific islander heritage, and here's fundstrat's manage partner, tom lee. >> i grew up in michigan my parents immigrated to the u.s. my father was a doctor my mother was a business owner one of the things i'm so proud of them is how hard they worked not only to overcome the language barriers and learn english, but also the work ethic. that stuck with my wleho life

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we have been doing okay for kind of a bounce from thursday so we'll see could be just an intermediate kind of a stop on what's what goes on, or i'm still just hoping that the way some of the biggest names and the -- what would you call it -- car ninl in some of the biggest names, maybe that's enough. maybe you don't need an overall

capitulation meanwhile, this should be interesting. target results in lieg of what we saw recently. >> target results are out, and they are well below expectations the street was looking for $3.07. they do tack about comps being up 3.3%. stores were up 3.4%, digital up 3.2% and 95% of the first quarter sales were by stores the headline here is this is a much lower earnings number because of expenses coming in with this the. company says that's well below their expect takes driven by growth market pressures to reduce higher inventory. so this tells that you what we heard from walmart yesterday is a very similar story sales number being up. locks like the traffic numbers are good and people are shopping and buying, but this is an

inflationary environment, and a lot of those costs may be beyond target's reach at this point the feeling yesterday was that maybe this was just a situation where -- >> with walmart. >> where walmart had been doing that sorry. just looking through the numbers on some of this now. if you add this to wa we saw from amazon too, this was a situation where costs were very hefty. this was transpor take, lo gist ibs, and we thought the amazons and targets of the world all had really good logistics on these things looks like this is a situation where all these companies got caught up in this. >> i was going to say this goes to the point we made at the end of the program yesterday when we were talking to jim. i think there was a bit of a head fake because of how

successful what was happening at home depot but i think we're seeing the by if you are kag of that market where we're talking about people redoing their homes. some of the wealthiest families in america are still redoing their homes. when it comes to day to day buying and the cost of that business, you're seeing it flow through in a much broader way. >> going back to the traffic growth, they say that they continued to see strong traffic growth up nearly 4% on top of last year's 17%, which they believe is one of the best indicators of relevance and strength in retail it means consumers are still shopping >> so the inflation we have right no is with a will the of companies eating it and -- and you saw the journal, the lead story that retail sales climbed despite inflation.

if these companies did what was necessary to mane tan margins where they were, what do those inflation numbers look like? >> these companies are taking the mar general. the conversation in washington is looking for anybody that' price gouging at this point. looking at oil companies and blaming them for higher prices at the pump. when you're looking at higher wti and a lack of refinery, you're going to be looking at higher prices. >> that looks like -- >> let me give you some more commentary on this our quarter growth was resulting in profitability well below our expectations there are two main factor driving these cost factors these costs are unavoidable and are being driven by global macro factors. we also speerped a more dramatic change in our sales as guests

slowed spending on bullky items. the timing of shipments include both early and late product also impacted the supply chain capacity and this resulted in impacting gross margins. that tells you the consumer trends changed very quickly too. i think this is a consumer that has been fickle and has been changing maybe they're buying some different things we will hear more about that from the target ceo at the top of the hour. he's going to talk us through what consumers are doing, what the company is doeng to try to address some of these issues but consumers are still shopping retail landscape look good on traffic perspective on every one of these reports lowe's is the only one that's reported a drop. >> what happens when they focus on not even getting back to previous profitability, but let's say they cut it in half.

let's say, we're going to eat half of it and raise prices for the other half what happens to consumers then >> that's the big question facing the economy back now about how they're going to be fighting inflation is there. >> now it's down 17%. >> that's a little shocking. remember walmart closed down 11% yesterday. that was the biggest decline in their shares we have seen all the way back to 1987 coming as a surprise, i suppose, but you could also say target and walmart have been pretty focused on trying to keep lower costs for customers and keep those customers. amazon, maybe some of this is explained in the big drop we saw in amazon shares too hard to say all these managers were off on this maybe this is a rapidly changing retail environment. >> but should either company have flagged this? >> yeah.

maybe let them know. >> oh, you think they should have preannounced? >> someone seems to think that i don't know it can happen fairly quickly i don't -- i don't know whether we should be quite as surprised as we are when we've seen all the macro numbers and what's really happening ooum a little surprised that you want to maintain the traffic to the extent of where you would be so hesitant to pass along the price increases. >> except for that if all of your competitors are not raising prices. >> and all the markets or gapes they have made, they didn't want to give those back target has done very well in terms of market gains. >> anyway, we will continue to look through these numbers and watch the stock reaction we will be getting it straight from brian cornel copping up later this morning for the guidance, the company

looking for operating center margin rate of 5.3%. for the full year, the company continues to expect low to mid single digit revenue growth. the company now expects the full year operation growth is going to be around 6%. a little better than what they reported now at 5.3% i guess they anticipate it improving later in the year. >> when we come back, we're going to get back to andrew in kiawah with a big lineup. and a reminder you can watch or listen to us live any time on the cnbc app

the latest reading on coe confidence shows business leaders are nowhere near as confident they were a year ago it shows that ce confidence about a host of topics, everything from inflation to their own businesses declines for the fourth straight quarter and is now negative. that's the first time that's happened since the pandemic began. let bring in roger ferguson. former krrk eo of tiaa and former vice chairman of the federal reserve. the idea that ceos are feeling worse now is kind of hard to believe. this is worst times we're facing now than anything through the pandemic >> i think what's going on, becky, is just a building up of all these pressures, inflation,

obviously, and you have talked about that with respect to announcement that just came out. you talked about the fact that some major companies are rethinking when they will return to the office because of the pandemic i think what's happening is there's a building up of pressures, and the ceos are saying every time you look at it, things are becoming more and more difficult to manage through. by the way, that reading below 50 is consistent with slowing for sure, and a number of different met ribs so i think we have to watch this pretty closely when we look back historically, we have seen readings below 40 are when we start to get into much more challenging recessionary kind of territory so right now, the ceos are saying difficult times, we're really expecting slowing and this is a buildup of a number of

challenges we have been talk about for several quarters here. >> we just heard from target, heard from walmart yesterday, some similar concerns there. they're facing a lot of issues, whether it be logistics, higher rate costs, and higher input costs in general they have not been passing those costs along to the consumer yet. what should that tell you want what we should be anticipating from the economy >> i think it tells us several things one, inflationary pressure are still there. two, in our survey, 54% is far below 100% obviously we're not talking about it this moment, there are surveys of consumers showing they no longer think this is a good time to buy those big ticket items we have seen inflation pressures

changing consumer demand towards store brands as oppose today nationally known brands. so all of this i think is telling us that the come by naeg -- combination of inflation that is too high, wages that are increasing but not keeping up with inflation and the inability to pass all this along is creating a very challenging dynamic. marketing pressures increasing and supply chain issues. as jay powell said the other day, the combination of the war in ukraine, which looks like it's continuing for a period of time, and covid shutdowns in china and other places, all that suggests that this set of circumstances is not likely to get better any time soon and pressure on the middle line and bottom line for businesses, pressures on the household sector, and pressure on the federal reserve.

>> jay powell also said yesterday, we don't know where neutral is or where tight is, but if we have to go past neutral, we will not hesitate. market has been responding pretty proactively to this, at least if you're looking at the bond market. is there even more pain to come? >> well, i think chairman powell opened up the possibility that more pain might come he tacked about having paths towards a soft anding, but he' added the concept of a softish landing, and i think he has said the possibility of pain. also the fact that they are really prepared to go into restrictive territory i think was noticeable the final thing you said which i find interesting is the need to describe clear evidence that they are closing to their target for those trained as he is in t

law, that's a pretty high standard of uncertainty. i think we are, he is, they are, and we are all in a position where it's a very dynamic and challenging time. >> roger, thank you. we'll talk to you again soon. coming up, the intersection of sports and business and technology george pyne is going to be live with me in just a moment later, reaction to target's report the stock plunging, literally right now down close to 24%. an exclusive interview with the ceo brian cornell coming up right here on squawk box in just a bit.

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welcome back to squawk box

this morning all the ceos gathering here. joining me now is the host of i'm calling it the mini-davos of sports business. george, concert. and it's pretty amazing that you've gotten all of these commissioners from all over the world to show up here in the midst of all that's happening, the nba. adam just flew in. >> of course my favorite guy, mark robinson, the ceo from the all blacks we have people from africa, europe and the united states >> let's talk about the economy. we've been talking all morning about these target numbers which just came out which really reflect this idea that there are a lot of increased costs that seem to be getting passesedd on in a lot of these leagues, the

costs are not locked >> 50% of the costs are locked because it's the players' labor. i think the bigger thing to watch in sports is does it impact consumption higher costs do i buy merchandise do i do some of the answer larry activities as a consumer yes, there will be expense hits, but it's not the primary expense. >> the other conversation i'm already hearing, everybody was talking about netflix in terms of what's happening to the streaming business that for many in the sports industry was the future. is that still the future >> they need sports. 90 of the top 100 programs on are sport. sport sis a live event, live

media. >> i'm curious what you think about the media landscape and how it relates to the valuations of sports teams, giving in what's happening with unbundling with cable, what happens to all the regional sports networks >> it's going to be different with each sport. you think about the nfl. i think with the nfl i feel pretty good. if i have 162 games and regional sports networks, they're at the tip of the spear in terms of the transition, and that's going to have to be done carefully. because the real sports networks are going to look more and more to streaming >> as we've watched the valuation in the public market come down of media and tech companies which were in some ways considered the salvation for sports a lot of these guys are going to come and start buying up these rights do you think an environment in

which the stocks and their own businesses are becoming challenged does it make it harder for them to challenge these big bids >> these bids are staggered over time, and it's the most valuable asset in television. the other thing is the hive time value of the customer. that's new territory, data, technology that's a whole new revenue stream that wasn't there, along with gambling. i think sports is highly valuable on media. but it's also on the consumer, all right, i'm a season ticket holder >> what do you think about what's happened in the gambling space. you've seen it, all of thishas come down, but you're saying you don't feel it or see it yet in the businesses? >> you don't see it in the businesses and, again, you probably have too many people in the gambling space, that will probably shake out. you're 19 times more likely to

watch a game if you gambled on it that's new i think it will open up new revenue strains that don't exist tomorrow >> we saw formula 1, you had the head of formula 1 here is that sport something that you think changes the dynamic around the country? >> yes, i think formula 1 is hot right now. the netflix series, they had a great tv rating, amazing event in the right market. i think miami's a better market. southern california or las vegas. no disrespect to austin. but i think going to a different market and i think formula 1 has momentum it has a good feel to it right now >> final question. it really relates to this new resurgence of covid. there's a yolo moment. everybody wants to get out and watch sports live.

but i wonder if it shifts over time >> the attendance is fantastic and ratings are really high. it's almost counter intuitive. it was lower during the pandemic for whatever reason. and all sports have been strong. sport, again, is like hey, i want to get out with my life again. it's my passion point. let's go do it >> thank you for being with us >> thank you so much for coming. >> guys, i'm going to send it back to you. we didn't talk about it, live on streaming is the next component. >> 100%. coming up, two more newsmakers set to join us here in kiowa geoff yang will join us. plus, goldman sachs' ceo, david solomon in the 8:00 hour, but target shares are plunging, down more than 20%.

the company's ceo is going to be with us, brian cornell exclusively on "squawk box." we're coming right back. i could've delayed telling my doctor i was short of breath just reading a book... but i didn't wait. they told their doctors. and found out they had... atrial fibrillation. a condition which makes it about five times more likely to have a stroke. if you have one or more of these symptoms irregular heartbeat, heart racing, chest pain, shortness of breath, fatigue or lightheadedness, contact your doctor. this is no time to wait. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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creating billions in value. billions? plus, they have experts in global trade. this merger shall be a boon for our spice business. and set a course for growth. here, here! friars, send word at once. yes, m'lord. focus again this morning, target out with quarterly results just a short time ago, and it is not pretty the stock getting slammed this morning after disappointing results. ceo brian cornell is going to be joining us for an exclusive interview to discuss the supply

chain issues and the state of the consumer then warner bros.' david zaslav will be joining us jay powell making comments on his resolve to get inflation under control, as the second hour of "squawk box" begins right now. good morning, again. welcome back to "squawk box" on cnbc i'm becky quick. let's get a check on the futures right now. you can see this morning that we are looking at the dow indicated down by about 102 points that's a decline from where we were about an hour ago, in part from so. earnings coming out from retailers. s&p down by 19 points and nasdaq

off about 87 target missing the mark as cost rise for the retailer. the company announcing an adjusted $2.19 a share compare to the $3.07 the street was expecting. first quarter comps were up 3.3% and traffic was up by 4% joining us right now is target ceo brian cornell and brian, this has obviously been a difficult quarter what happened? >> first of all, becky, appreciate being here during a difficult report but it's a chance to talk about our business and where things stand. i frame it by looking at the front of our house business and then the back of the house when i think of the front of the house, the consumer, guest-facing component we saw really strong comps and importantly, it was driven by traffic traffic up 4% on top of 17% last year guests are shopping our stores they're enjoying our services. they're using drive-up

but clearly the challenge for us in this quarter was the back of house. from a freight and transportation standpoint, things have changed significantly from even 13 weeks ago. we did not project, i did not project the kind of significant increases we would see in freight and transportation costs. and you've been talking about it on cnbc almost every day yet again this morning you talked about all-time record fuel and diesel costs. right now we project that's going to hit us about a billion dollars in incremental costs had this fiscal year so a significant increase that we didn't anticipate the other change is in our category mix while our comps grew by 3.3%, pretty balanced between digital and stores, we had another billion dollars in incremental growth in the quarter. the mix of the categories look very different than we expected. we saw great strength in food and beverage and household essentials our beauty business grew by

double digits, but we started to see softening in discretionary categories, tvs, kitchen appliances, bikes, as the consumer started to shop differently. i'll talk about what we're seeing from a trend standpoint that certainly impacted our mix and margin mix but added complexity to the supply chain those big, bulky items are now in the supply chain, not moving at the rate we expected. we have inventory that we would have liked to have had last year that arrived late, and we pulled certain inventories early so we're ready for the back-to-school and back-to-college season we did not anticipate that kind of change as we were sitting here 13 weeks ago. so we own it but freight, transportation, a change in the mix and increase flexibilities in the supply chain have added pressure to our operating income

>> if those things were not anticipated 13 weeks ago, what are you seeing now for the month of may are you over it at all are any of these situations improving? how do you get your arms around it >> one, we've seen may off to a very strong start. american families celebrated mother's day we saw record sales in fresh flowers and plants and things like champagne and gifting mom was recognized and i really want to if back to some of those trend changes we've seen it's a shopping change in how they're spending their dollars but we're still seeing strong traffic and growth a year ago, during the pandemic, we were buying lots of tvs for our homes. as many americans were really the last two years were working and educating their families from home. well, they're shifting from buying tvs to buying luggage and our luggage business was up over 50% they're traveling again. t >> they were buying tvs when

there was something to watch on netflix, brian unfortunately, netflix has their own problem because there's nothing. that's not your fault. when you think about profitability versus maintaining market share, could you have raised prices? what would have happened if you raised prices to soften the margin hit that were you taking because of all the increased expenses would you have, did you feel at the time if you raised prices that you would have lost customers? they would have resisted it must be very difficult to set prices, and then the other thing is, when you hear all the rhetoric out of washington gouger, gouger, gouger, gouger, was that in the back of your mind that when they blame all the inflation on greedy u.s. corporations, is that in the back of your mind? i can't raise prices >> in the back of my mind, taking care of those guests and families that depend on us for value and affordability every tay. and during a time of inflation

support important than ever. and taking care of our times we've been really focussed on makin making sure we surgically pass on savings where we can. but value for our customers who are still shopping our stores and using our sigte it's a balance >> you won't get it this quarter. >> we had have certain challenges we expect those to balance over the year and we look at opportunities to improve efficiency, but we're going to continue to stay focussed on protecting the consumer and the guests who shop our stores, provide them great value, because they are still shopping our stores, and we're seeing great resilience with the consumer i talked about tvs exchanged for luggage. we saw those purchases in everyone's shopping basket,

consumers are shopping for more toys, because right now they're going to birthday parties for the first time in a couple years. they're still spending it's a consumer who comes to target to shop all our categories but we're seeing a shift in what they shop and how they're shopping right now >> the change in consumer trends is that a change in the perspective that it's lower-margin items or just a matter of keeping up to make sure you have the right stuff in store or you have inventory that they were buying four months ago. >> it's a combination of both. we see food and beverage accelerate household essentials in a decline and some of the discretionary categories like tvs and appliances we have big, bulky inventory tvs take up a lot of space in our warehouses small appliances, bikes that are not selling the way they did so we've had supply chain challenges we have to work

through, but i also want to make sure it's really clear even in categories like toys, small appliances and bikes, our sales are ahead this quarter versus where they were 2019 pre-pandemic it's not like consumers are not buying tvs or small appliances or bikes for their kids it's just in those categories that were so important to the consumer during the pandemic they're still shopping, but think started to spend dollars differently. >> people are looking through the results to try to find out what is happening with the consumer we hear that a recession is coming you would probably be one of the very first to see it if is impacted the consumer, have you seen anything along that sign right now? walmart talked about how some shoppers were trading down from national brands to house brands. have you seen that >> becky, in the first quarter we didn't see.

that obviously, we saw strong traffic and strong comps across our business, and may solve to a really solid start good traffic, strong comps i talked about mother's day. i would expect memorial day to be a big holiday season. as i sit here today i'm not seeing any sign of a consumer slow down. i can't project out six months from now, but just what we're seeing now and in the first quarter, it's still a consumer out shopping and enjoying getting back to normal life. >> you have a lot of stakeholders, that's the buzzword some of your shareholders are stakeholders maybe you need to think about profitability in addition to taking care of customers with low prices and the reason i'm returning to this is because if you do decide to raise prices to maintain, not full profitability, but get back closer to where you were, then we need to factor that in to everybody doing it and what the

cpi looks like over the next three months for jay powell and company. how much did you raise prices last quarter overall >> in our prices at retail increased less than our cost but we did have increases. >> how much? >> browe're always focussed on balancing what's right for the guest and our team and the shareholder. >> will you raise prices >> we will do the best we can to find efficiency and do the things we have to do behind the house. expect the second quarter to look a lot like the first quarter with marginal improvement in the back half of the year and we're committed to top-line growth, and high-single eps. we'll continue to spend capital in our business to make sure we're positioned for long-term success, but we always balance

what's right for the guest and our consumer, what's right to take care of our time and what's right for our shareholders i'm going on my ninth year in this job we had to invest before in taking care of the guest and our team it always pays back over time. >> do you feel confident that the fed and jay powell can orchestrate a soft landing and actually get inflation under control? because it obviously makes a big difference for your business >> joe, i'll leave that to other people to opine on what we have to do is be agile we have a business model that performs well in a number of different environments we have to make sure we're agile and flexed based on consumer needs and trends do i hope for a soft landing absolutely and i hope everything chairman powell is doing works well, but we have to be agile and make sureq we can adjust to any type of environment

>> should you have indicated through body language that things were not going to be up to speed walmart, same question for, you can't answer for walmart >> yeah. >> but three months from now, could the street be surprised? or would you maybe indicate mid quarter that things aren't, aren't proceeding as planned >> joe, i'll sit here today. 13 weeks ago we had a very different outlook for the year and i'll take complete accountability for the fact that we didn't project properly but rising costs of transportation and freight we didn't call the billion dollars back then. things moved pretty rapidly. we were certainly looking at consumers getting back to normal and changes in lifestyle and impact to stimulus we didn't expect to see this kind of mid shift. and we didn't expect the impact on our supply chain. so we own that, i own that we're working to turn that around we're confident we will. we have a great team and

capabilities, but i'll take full accountability for the fact that we have missed some of these factors, and that's on us to improve over time. starting with the second quarter and the back half of the year, but certainly as we go into 2023 >> brian, i want to thank you for coming on. you've come on, on good days you've come on, on tough days. last question, if things like freight costs that were going up, how far out can you see, measure something like that. is that something you see for six weeks out? something you can see for a couple months? >> i think we all saw this change really quickly. we were sitting here 13 weeks ago. it was the early days of the russia/ukraine war and things moved very quickly. i hope we'll see modification over time. but it's very hard at times for us to project all of these different variables, and we do our very best. but we have to stay close to the consumer, stay close to the team do the right thing for our business over time, and i've

seen time and time again when we take care of the guest and consumers, whether we n we take the team our shareholders are rewarded >> would you ever weigh in on whether we should spend any more money fiscally we've spent quite a bit. do you think that has anything to do with what we're dealing with now and should we maybe take a step back and try and look back a year from now about whether we do build back whatever it's called >> i spend a lot of time looking back, but right now we look forward. thinking about what's next to navigate >> i thought i'd give it a shot. >> i just want to thank you for coming on even when times are tough to answer these questions. >> thank you up next, a look at this morning's premarket movers and then later in the hour, warner bros. discovery ceo, i had a good one out in personal beach, but david zaslav is going to join us live. here's the futures

they're a little bit concerning at this point. and much worse than the beginning of the show. 174 down on the dow. "squawk box" will be right back. ♪♪ ♪♪ ♪♪ take the world by cloud. accenture let there be change.

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welcome back let's get a check on this morning's premarket movers dom chu, dom chu, i just got, somebody asked me who i got, who you got? can you tell me at the end for the pga. >> i will tell you at the end, and i don't think it's going to be a surprise. so as we talk about what's happening with the consumer focus, big interview in that last block but and ceo of target, brian cornell. other picture in focus this morning, we'll talk about the nation's second biggest home improvement retailer, lowe's is down the target results are probably going to weigh on the entire retail industry, but specifically, it was a more mixed report for lowe's.

t it fell by more than what analysts were printing predicting. mixed picture with that bigger picture macro head wind, given what happened with walmart yesterday and target this morning. maybe understandable why lowe's shares are underperforming g goodma goodman, goldman sachs looking at the payment they think that some of the performance of these payment stocks for visa and mastercard specifically, they will be able to weather the inflationary pressures because a lot of the

revenue streams are payment volume driven. watch visa and mastercard. and a check yesterday, some of the biggest moves in the s&p 500 were in technology, specifically within semi-conductors we know how badly beaten up they've been as of hate. but among the top performers in yesterday's trade, we seeing a little more temperance kla corp nvidia, all trying to find their footing. aga again, those semis were a big part of the story. they got a big bid yesterday, showing temperance or moderation yesterday. now as for joe, my pick, i still do hike, like, i think it's sou hills. i think a rory mcilroy comes

through or morikawa comes through. >> i had him through the masters column we didn't pick scottie scheffler. >> there's no doubt. scottie scheffler is the stop golfer in the world. but i kind of feel as if there's got to be some kind of a mien reversion. you have to put brooks koepka up there. he just wins majors. >> healthy >> i mean, that's the big question >> i don't floknow if he is healthy. what happened with rickie fowler he'd have to qualify he's dropped out of sight. >> i've been putting, i've been trying to kind of be a proponent of rickie fowler for years to get that first major. just get that one of them. he's a players champion. that's close but it would be awesome to see

him win heis first major when we come back, geoffrey yang joins us to talk all things tech let's take a look at today's aflac trivia question. what company topped the disrupter list in 2021 we'll have the answer on the other side of the break. "squawk box" will be right back. ohh, mark is about to become a living piñata. luckily, aflac will help cover his unexpected medical bills. aflac? - (whimpers) i don't think he has any candy in there. am i at least going to get hit hard enough to forget this? nobody is going to forget this, ever. (bat hitting) - ohhhh i'mma call his momma. aflac! aflac!

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welcome back, everybody. here's the answer to today's aflac trivia question. what company topped cnbc's disrupter list in 2021 the answer, robinhood. oops andrew >> still to come, we've got a big lineup this morning. up next, the red point venture partner, geoffrey yang talking about names to watch coming out of silicon valley, then warner bros.' david zaslav. ways and means ranking member kevin brady talking inflation, taxes the then david solomon will sound off on the market, the economy, washington. huge lineup ahead. take a look at futures, and

maybe take a look at the stock price of target. right now things are looking down squawk coming back from kiowa island in just a moment. shapes run throughout the natural world. and can now be found in the automotive one. the world's most aerodynamic production vehicle. the eqs sedan.

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welcome back to "squawk box. we're live from kiowa island shares of technology companies under pressure this morning of the and joining us red point founding ventures partner, geoff yang good morning to you. we've been trying to make sense of what's happening in the tech business but also in the private markets where you live relative to the public markets. we've seen the nasdaq get crushed. is everybody actually revaluing their private market stake these sd days? >> the things that are closest to being public are in a late-stage private or the ones that correct quickest. it slows down all the way to the earliest stages. right now everybody's still trying to figure out what's

going on my guess is that especially people who have to mark their portfolios on a regular basis, i'm hearing from a lot of late-stage private people that they may change their mark as much as 50%. especially looking at the sass sector multiples are down 70% we've had a pretty big correction >> and is this, are you feeling it in terms of when you look through your own portfolio, in terms of their own businesses? >> no. everybody i talk to says that, you know, business has still been good. it's just, you know, people are looking forward and the uncertainty right now is exceedingly high >> there also seems to be a complete and utter shift from growth at all costs. >> right >> we'll raise some more money later and actually worry about making profits, to we need to make profits now how is that changing the dynamic if at all? >> it definitely is.

what usually happens in this period of time is all of a sudden you get shock and disbelief. then you get kind of depression sets in. and then the bid ask spreads widen and the market starts clearing and people feel there is some stability. nobody wants to catch a falling knife. what happens is the deals just don't get done in this period of time as everybody tries to figure out where the world s. >> which stage of grief are you in >> i think the good news is revenue growth is still really good interest in investing and technology is still very high. but everybody see what is's coming down the pike and they're not really sure what it's going to look like. is it going to be short and shallow? or deep. and a lot of the problem is, these people who've just started, they haven't seen anything like this and those of us old enough to remember the internet crash.

i'm giving a lot of advice to the company. one is conserve cash you know, pretend like it's your lifeblood. the second is to try to improve your business model. look at ways to lower or break even and sharpen the focus on your product market bid and don't do anything outside of your core bid. the fourth is really and definitely in core ip, things that produce near-term revenue and the fifth is don't panic >> is this 1999? what is this what's this comparable to for you? >> i hope not. i hope it's not like '99 because we had a buyers strike for customers for technology for two to three years it wasn't really until 2006 when things started kind of improving. and you could kind of see it starting to improve in q4 '06, the beginning of, i'm sorry, of

'03. you started seeing it coming back and i don't think so because technology's become such a core part of all theis businesses you know, all the transformations and they're midway through, especially for companies. i don't really see it happening. >> do you see a big m&a wave coming who buys them? because also big tech can't anymore, given the regulatory rules, i don't think >> right i think the biggest issues is going to be companies that have high valuation marks and are they going to be able to live with, and there's a lot of complications in the cap structure when you take money into really high prices. i think that is an issue you know, all the big tech companies i talk to feel like they can't get stuff through anti-trust >> crypto, all the money pouring moo c into crypto, you think it stays

in crypto? >> one is on the purely speculative side, the other is crypto on infrastructure i think that money stays i think a lot of the money that's kind of come in, into crypto on a speculative nature washes out with the tide >> if you're on the board of twitter, what do you do? >> try to get the deal closed, if you can get the deal closed >> would you ever do a deal with elon musk after this whole situation? >> yeah, he's an extraordinary individual, but i have no idea what they're going through right now, but i can't imagine it's any fun. >> great to see you. >> thanks. >> guys? becky, back to you still to come this morning, our exclusive interview with warner bros. discovery ceo, david zaslav and later in the show, didav solomon had join us. "squawk box" will be right back.

welcome back to "squawk box. and the futures have definitely taken a look at the great retailer, i mean, target

if target mentions things like being surprised by just how bad supply chain, inflation and other factors were to miss its bottom line by that extent it just puts us back in that, that worry zone about stagflation. coming up, warner bros. discovery ceo david zaslav it kind of lks toohe same, but he's a big l.a. guy now. "squawk box" will be right back. when performance varies. invesco's s&p 500 equal weight etf, rsp, is spread equally across the s&p 500, which reduces potential concentration risk and helps keep your portfolio in balance. stay in balance with invesco's rsp.

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the newly-combined warner bros. discovery is about one month into its new era as a global entertainment company joining us now in his first major interview since the venture closed is david szaslav >> i got all dressed up for you and becky. >> you did you look good. >> i like your suit, too >> the less color is the thing don't you live out there now >> between new york and l.a. >> you do? so you came into this at a really interesting point, given what we've seen with streaming and netflix and across the board, disney, all these things that have happened when you came in but you, with that cnn, you

already seem to grasp sort of the changing landscape, is that fair to say, david >> i don't flow tknow that any really grasp it, trying to figure out what the consumers want whet when we kwon recconceived thist we thought that people going to multiple outlets was difficult we have the best in entertainment, lifestyle, sports and news and hakmake it all available to everyone in the family can enjoy the product we have great content. as we begin to maf navigate, whe we're right or wrong, we have the best content >> you've got some synergy and

some debt. but their nthis new bparadigm you may not be very nice on certain things that you need to do >> you know i'm nice >> you are not going to blow a lot of money >> no. we're very disciplined we invest what we think we can get returned this is business, and it's a great business one of the things that became quite clear in the last month and a half of market disruption is netflix is a fregreat, great company. it's all about streaming and streaming growth but we've always felt that it is about streaming and streaming growth, but it's also about business fundamentals. it's about free cash flow. it's about earnings. and when you look at the warner bros. discovery company, you

know, we're generating real earnings, real free cash flow. we're, you know, here in the u.s., sweet we have the up frong up today we're larger than any one of the broadcasters and their portfolios, and we go to the market with a real good business our traditional business here in the u.s. with the largest international business so i think as we look at ourselves, we're very diversified. >> if the, if this is back on your playing field, look, if everybody has to operate in a real business environment like you are doing, you're playing your game from a position of strength on that but you just said you're going to be disciplined. you're not going to spend the money on this. people have heard that loud and clear. ari emmanuel was here last week. and he said look, whatever they say, they still have to pay for content. this is a really big place for this if they don't pay up, they'll miss out on the best content how do you square up with what

he's saying in that we're going to be disciplined. >> first, i think ari's right. we're spending $22 billion on content. as you look at hbo and hbo max right now, casey's doing an amazing job. some of the best content out there. "euphoria", "gilded age. "the staircase", and the biggest tv and movie library and lifestyle library, how many series do you need at one particular time? and opposed to saying, you know, let me have ten new series this quarter, it may be that when you have, when you have "friends" and "big bang", and all of our movies and all of our lifestyle

that we only need four great series or five or six. we're going to look at how much do we need to nourish an audience, not just let's throw everything that we have at it. we have all the content that we can put in we can put news in, which we've done in europe >> i want to ask but that. is there a big market for news on streaming does it work >> i think there is. >> you do? >> first, we have cnn.com, which is the largest digital news business in america. so when people want to get what's happening in america. there was a shooting what happened with the election, there's more people to go to cnn online and the advertisers get the support. in europe, for instance, in poland, where we have a very big news business, we put it together with news, sports and entertainment in our offering, in our streaming product, and it reduced churn and increased subscribers. and it's because the churn goes

down and growth goes up when more people in the home use the product and when they use it more often and news just happens to be a product that people check in on like we check in with you every morning. >> do you remember the last time we saw you in pebble and you weren't able to really comment on cnn's highs and lows and what was going to happen now we know. can you tell us anymore about what happened? i guess you want to look forward. you don't want to look back. but that was a little bit, i don't flow whknow whether it wa surprising, but were you sending a message about how you're going to manage this company with that and why did they launch? were you able to say anything before then? did they rush it what really happened, david? can you tell us now that it's in the past >> well, i think it's appropriate that they were running their business under the laws until you run a business, the people who own it get to decide

what to do with it we're very focussed on cnn we believe cnn is a critical asset to us. it's a leader in news gathering around the world we're focussed on having, you have most of the cable news networks around the world and here in the u.s., they're advocacy networks. they're advocacy networks to the left, advocacy networks to the right. we think there's a real opportunity for cnn -- >> you remember john malone said hire some journalists, that might be the first idea. do you have the right journalists there right now to cover news that's not advocacy >> first, we have a great, we probably have -- we do have the largest number of journalists in the world. we have 81 people in poland, the ukraine and russia right now >> you keep going over there to tout the strength of cnn you have strengths here, right >> we have great strengths we have more journalists in the u.s. than anywhere else. what we're going to do, what chris is going to do, as there are networks advocating right and left, chris is going to be

advocating for truth, for facts. he's going to be advocating for journalism first and i think there's a big lane for cnn. i think people in america are, they're looking for a place where people aren't yelling and giving opinions, and they're looking for more news. that's what you'll see from cnn. on cnn plus, there was no message. it was a business decision we looked at it, and we looked at the data, the number of users. they had spent an enormous amount of money trying to sell an independent product the sub describescribers weren'e and when we looked at the data, the business wasn't there. >> did you fire mckenzie >> hmm >> those numbers were a little, they were a little pie in the sky would you say? what was possible? did you send a message by cutting your losses and saying that's just the way it's going to be for the rest of the business when i need to do something i'm going to do it

>> when we saw good numbers and there was a real market for an independent news service for $6, we have driven that as a real business philosophically we would have thought having been in business in europe now for the last ten years in direct to consumer that simple for consumers is easier so we tried independent sport. we tried independent products. and in the end we landed that putting it all together in one product with more value was what worked best. >> does that mean putting discovery plus and hbo max together >> we will we will come to market with one product. >> everything. cnn. >> we're going to decide what we do with cnn. but there will be some of cnn'snescnn's news product on there. there already is and we'll make announcement but we will have one product, and i think it's going to be really compelling, because netflix has a great product. disney has a terrific product.

but the diversity of content that we have, whether it's the great hbo content, the great library content "friends", "big bang theory. the great movies then food, hg, discovery oprah, chip and joanna gaines of the whgaines when we put that together we'll have something for everybody in the family hbo max has come in. huge audience. 20 million people. and discovery plus, we have very low churn. and we're still doing very nicely so together we think we're going to have a great product. >> andrew's got a question >> hey, david, as one of the great deal makers of our time, and i want to get your perspective on just what the rest of the chessboard looks like i'm at a conference where that was actually the conversation at

dinner last night in terms of further consolidation in this industry, as everybody was chasing or thought they were chasing a netflix-like multiple. now that that multiple's no longer there and prices have come down, how do you think the rest of it shakes down we saw berkshire hathaway buy a piece of paramount global. what you think regulators would allow, wouldn't allow at this point in the ball game >> well, thanks. good to see you, andrew. first, it's actually a year ago yesterday that we announced our deal, and we were able to get the deal done and approved in less than 11 months, and so for us, the process was quite effective. and it's exciting that we're going to get it done and be in a position to go to the advertising market now our number one focus is, how do the assets that we have work for us in the market place that we're facing today and we're the largest maker of content with warner bros.

television and warner bros. motion picture we have about 100 million subscribers between discovery and warner bros. and a great traditional business with free to air channels and cable channels and sports and news we're complete and probably the most complete and diversified media company in the world for us, we're going to be head down, let's drive this business, let's get a single product into the market let's show how much free cash flow that we can generate and show that we have a diversified real growth business that's real i do think that the world is changing if you look at the leader in our business as netflix, they were leading, and the policy was subscribers, not free cap cash flow it will have a real impact on

what people chase. from our perspective, we're not chasing anything we've always been very clear free cash at discovery free cash flow is king we're going to drive real growth, get more people spending time with our content on all platforms, and if we do that and make real money, ultimately, the market will give us substantial value. >> you're moving low now should adam aaron go full in on lithium mining or keep the theaters you were recently on the board of cinema tech does that mean you see the value of the big opening is that going to continue? >> i've said from the day that we announced this transaction, we have warner bros. motion pictures it's 100 years old in six months there's nothing like the big screen and you go with your friends the lights go down you look up at that big screen

>> popcorn >> it changes the way people see things changes the way people see themselves, and that's not going away >> but isn't that theatrical release window going to be shorter? >> it's going to be shorter. but what we've learned is when "batman" came back to hbo max after 45 days, it was a very strong driver. and the more research we see, this idea of going direct to streaming, i never thought it made sense why would you collapse a great business >> a shorter window. >> a shorter window works. if you market, which you do aggressively for these titles, and then you tell people that this is important, and they hear word of mouth. we're about to do this on "elvis", which we're about to launch soon. then when it hits the streaming service, the feeling is, it's something special. so i think you'll see someof the streaming companies say we got to get into the motion picture business

what's old is going to be new again. >> have you had a conversation, he's a friend of yours >> i love allan. >> have you had a conversation, he's 79. that doesn't mean anything anymore. >> the gift of the last 11 months is i haven't been able, i wasn't able to do anything until the deal closed, but i was able to talk to a lot of people there's a lot that i don't know. there's a lot that we as a company don't know so i spent a lot of time with allan. a lot of time with most of the old leadership at warner together with the industry i spent a lot of time with bob iger what did he do well? and had a real chance to get a sense of also what mistakes did they make. now we're going to have to make it happen. i'm very confident we've been in there for 30 days, and we see even more opportunity. it's messy, but we expected it to be messy. but the messier it is the more

cleanup we can do and the more we can build this business >> you've guided the street to leverage of 2.5 to 3 times in the 44 months. is that achievable is that tough to hit >> we have a lot of businesses that are generating value. we just got in, so we need to now kind of level set. we weren't able to see a lot it's probably going to take us a little longer as we get to our next quarter earnings. we're going to lay out a real plan here's how we're coming to market here's what we found it's better than we thought. some is worse than we thought. weal we'll do a full level set. >> you said it's going to be a little longer, you mean before you announce more plans or until you get to that leverage >> it's going to be a little longer until we have full

clarity on what we're going to do >> i can't brieelieve 35 years, what were you doing here >> i maid some good judgments. >> you were like signing up subscribers? >> i was signing you up. >> look at you look at you! how am i supposed to feel about myself not so great >> launching cnbc was a great journey. that was the first thing, when jack welch said we want to be in the cable business. >> congrats, and good luck and thanks for being here today and answering all theis great questions. >> great to see you again. >> great to see you. >> thank you so much >> thank you >> okay. we got a rotlot more coming up david solomon is going to join us from kiowa island we are down on the news from taetrg as folks try to digest

what's going on in the economy "squawk box" returns with a big hour ahead

good morning welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. andrew is reporting live from kiowa island, south carolina today. le let's look at the u.s. equity futures. we are down about 200 points for the dow. got bad news from a combination of retailers it was a miss on target's bottom line that made people wonder what's really starting to happen with the consumer, that news after the news from walmart yesterday. when and if it hwill eventually put pressure on u.s. consumers yesterday, you saw yields push higher on what we saw coming out from jay powell.

ten-year yielding at 3%. so you are looking at higher yields across the board. and the two-year at 2.713. andrew >> thank, becky. we've got a big final hour of the show right here live from kiowa island we're going to talk with david solomon, interest rates and so much more. he stopped by this morning as he was doing a little bit of a walk, seeing some of that target news, and i think that will probably be where we start our conversation he's g he's got his pulse on the economy in so many ways. lots of ceos calling him as we've seen this market contraction. >> let's talk a little more of the specifics with target. the shares of the retailer plunging on first quarter results. sales numbers beat expectations. sales up 3.3% by comps, but profit came in well below expectations

expenses weighing on the bottom line target's operating margin was 5.3% which the company says was well below its expectations. it says it was driven by gross margin pressures coming from actions to decrease inventory and higher freight and transportation costs ceo brian cornell joined us exclusively on the show last hour and talked about what he was seeing >> clearly the challenge for us in this quarter was the back of house. from a freight and transportation standpoint, things have changed significantly from even 13 weeks ago. we did not project, i did not project the kind of significant increases we would see in freight and transportation costs. and you've been talking about it on cnbc almost every day yet again this morning you talked about all-time record fuel and diesel costs. right now we project that's going to hit us about a billion dollars of incremental costs in this fiscal year

so a significant quinincrease t we didn't anticipate the other change is in our category mix the mix of the categories look very different than we expected. we we saw great strength in food and breeverage. our beauty business grew by double digits. but you're starting to see changes in big bulky categories, tvs, kitchen appliances, bikes as the consumer started shopping differently. >> consumers had been buying things like tvs in the past. now they're buying things like luggage pause peoplebecause peoe traveling again. toy sales took off, people are going to birthday parties and they're buying a lot of toys as a result trying to get there, the consumer, the consumer dropoff, but obviously, target is eating some of these big costs that have come in the same as walmart said yesterday, and there is a big

question of when those costs eventually get passed on to consumers and what that will mean for the health of the comply overall you got to give brian cornell credit for coming on and take being questions in this time >> that's $51. down 51 at 164 is more i think than what's specific to target and what they managed through in the last, i think it's a macro story. like walmart >> what happens. >> yeah. i don't know, because what were the choices? the choices were to raise prices to pass along from the cost increases which then hurts. >> by the way, that's why you see the overall averages down as well >> and then if, you know, i asked brian the question, and all you hear about is gouge, gouge, gouge from washington, and so they're probably reticent to try to raise prices, but if they finally do, then jay powell has to figure out thoushow to tt

at 9% instead of 8%. 9% nainflation. >> roger ferguson was with us earlier today, and you did see a big drop in business confidence from the ceos that were surveyed but he also said, when they asked him who's planning on moving prices, only 54% said think were considering raising prices, that means 46% are thinking of ways to eat the cost >> let's turn to the micro, dom. no personalcomments. or anything about you. but joining us with a look at other top premarket movers individual names, not overall. not macro, micro >> we're going to get kf specific because we're going to

continue the conversation that you and becky started. now lowe's was the other big report thois morning there's no doubt that part of the decline to almost 3% is due in large part to what happened with target and with walmart yesterday. but there were micro earnings and reports coming out lowe's came out with its results where we actually did see maybe earnings a little better than expectations, although revenues fell a little bit shy. the sales growth at established store locations pfor lowe's fel. so a mixed picture, but generally speaking, the health of the consumer weighing on that low story. those shares in focus. we'd be remiss if we didn't show you what was happening elsewhere in the sphere because of the ripple effects from walmart, home depot, target and lowe's

this morning walmart is furthering its decline to the 2% right now. home depot is down another 2%. and elsewhere in the s&p 500, some of the ambigbiggest declin. a lot of investors and traders are souring on that consumer trade. it's been weaker for six months now but getting exacerbated by walmart and target results if you're looking for a nice green speck out that's correct i'm not all about fear, uncertainty and doubt, check out a computer chip maker, analog, up it said it was able to increase its output and production despite the ongoing supply chain challenges facing the semi-conductor industry. keep an eye on analog devices.

a nice green, 2% rise there. i will send things back to andrew, kiowa island i have a lot of fond memories on the golf course. the ocean course is one of the most storied venues in the entire game. >> it is beautiful here. you know my, i'm not a great golfer i enjoy golfing, but i'm not a g great golfer just in the last few minutes the u.s. dosoccer federation ha reached an agreement to pay men's and women's teams equally. i imagine that will be a big topic of conversation right here in just a little bit whet when we come back, kevin brady,

and an exclusive interview with david solomon. you don't want to miss this one. we're live from kiowa island, south carolina don't go anywhere. more on squawk coming up after this i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones

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welcome back to "squawk box," everybody. the futures this morning have been under some pressure up yesterday for the markets but this morning dow futures off by about 186 points dow component walmart had reported very disappointing numbers. this morning it was target, not a dow component, but confirmation of what we heard from walmart about the higher cost and the impact they're having on companies and corporate margins. that may be what's putting a bigger bigger pall on things today. bitcoin at this point down but not by a whole lot down by 1.25%. all of the coins under a little bit of pressure. joe? >> the national average for gasoline hitting a record high of $4.56 a gallon. no state has an average below $4

a gallon at this point some areas were over $6. and this is a big piece of the nation's inflation puzzle. joining us to talk about solutions, texas' kevin brady. there are times i think, congressman, where you see people on either side of the aisle kind of struggle with concrete things we can actually do that could have an effect republicans can come one things we shouldn't do. like, i don't know, spend more money, but what really would you suggest if we were all together, we could all just get along, what should we decide to do as a country? >> yeah, thank you, so first for the record i'm kind of envious of andrew in kiowa. if he needs a congressman on set there, i'm certainly willing to pay that price secondly, look, i think there is

concern. so the arm in inflation the last three months is 9.9% and that tracks the wholesale prices that have been double digit now for five straight months so i think anyone who thinks inflation has peaked or is going to go away on its own, that's a dream that won't happen. but i think the answer lies first in the workforce as you know, our workforce shrunk by 350,000 workers last month. it's going the wrong direction there's been no concerted effort to reconnect those 24-54-year-old workers back to the workforce. i think they're critical to taming inflation, certainly on the supply chains as well. i would focus on that. secondly, as we've talked before, don't make this worse. and right now, the senate is still, with the white house, working on a 1.5 to $2 trillion build back better approach that would fuel inflation and with taxes drive more higher prices

in i think about half of the businesses in america. i think those are exactly the wrong things to pursue they helped get us into this pickle so i would focus first on workers. secondly on not taking any congressional action that fuels inflation further. >> we all want the fed to be firm in its resolve, at least we say that but we understand that their only recourse is counter productive to everything we're trying to do, to, i guess you'd say to increase supply you don't want interest rates higher with people startin business and trying to deploy capital. you don't want to slow down the economy or employment levels hurt employment levels by raising interest rates we're in a pickle. the solution actually hurts the patient. >> it does and we are exactly in a pickle i use that phrase often. because really, the delays i

thin th think. i don't think the fed can do what they feed to do to tame inflation. i think they're praying for some other type of price shock or economic shock that would, that couldn't be blamed on them, but right now it is going to be very tough. i still think the answer is still on the supply side we need more investment in the supply chain issues, more incentives to bring workers back and reconnect them i noted four other countries are lowering their business rates to fight inflation. america ought to continue to look at making permanent the lower tax cuts, tax rates both on small businesses and families, i think are very important. >> not only are you not hearing anything even close to that, congressman, you're hearing, you're hearing most democrats

doubling down on -- >> i know. >> the contention that we spend more to, let me see, how did it work we spend more to owe less or something. >> it's crazy. it is crazy, and the other day the president said the best way to fight inflation is to raise taxes on businesses. but the truth of the matter is the revenue from corporations is at a record high it's stunningly high it's a 22 or so percent gain alone. truth of the matter is, washington has all the revenue it needs from corporations, from small business and from individuals. it makes no economic sense >> the new press secretary, i heard a weird answer about what to do with inflation had something to do with, i think, for climate justice, companies need to pay more taxes and, and profits need to be hurt so that -- i don't know. did you hear that? did you hear that response

do you think we have a -- >> no. >> do you think we have a firm grasp or this administration really understands the solutions that are needed? maybe there aren't any solutions. >> yeah, i missed that great economic principle that was set out. if i were that press secretary i would be practicing the word "shrinking", because right now this president has a shrinking economy, shrinking paychecks, shrinking workforce and the poll numbers to go along with it. so they're going to have a challenge. >> congressman, i have a question maybe to pivot the conversation in a different direction, but it has to do with the state of texas. >> yes, sir. >> and a law that's on the books that has a lot of folks in silicon valley questioning it and maybe parts of america as well there was a shooting over the weekend that was carried on twitch, which is owned by amazon, briefly, and then taken down

all of the other big social media companies also tried to keep it off of their systems the law in texas effectively says that they can't do that, that that's actually illegal for them not to, for them to take anything hike that down. that it's not illegal to effectively publish, putting something like that on a social media site in texas has to stay up if you have more than 50 million viewers. they're going to the supreme court, the big tech companies on that do you believe that that law is the right law? >> so, andrew, to be honest, i'm not familiar with that law from the state legislature. and i'll be glad to check into it i do know beyond the shooting in buffalo, there is another mass shooting in california the exact same time. i know that's fallen off the radar, but i don't understand why, and we've seen a number of shootings in texas this past week as well i don't know why there's a focus on one, because i think all of these frankly deserve our attention and mental illness

continues to be, you know, that one common denominate iror in so many of these shootings, and i don't know why we don't count icounter it better. >> and elon musk is saying there should be no censorship. and that's the stance the texas all legislature has taken. >> i'm pretty sure the state legislature didn't have a pro-shooting bill that they passed i'm sure think were trying to address i think more of an open market within the social media companies and tech companies where there isn't as much censorship here. i think that's what e-ronlon mui trying to do i welcome that i'm eager to have social media that trusts you, the user of it

to determine if that information is accurate or substantial always there has to be safeguards, andrew, you and i know that in these areas, but i think right now what we have today is pretty discouraging, i think, on the tech side. in some areas. >> contrary to what we sometimes hear, i think, congressman, and i can't speak for all companies. but many, as we just heard the target ceo, brian cornell, they've been hesitant to pass along a lot of this input costs to consumers at this point as a result, i don't know whether you saw target today it's down about 25%. because the bottom line numbers missed estimates so widely do you think, what would you do as a ceo would you, would you be concerned about raising prices because you're going to immediately hear a backlash from politicians that you're gouging prices who should we, who should corporations be serving? should they be sacrificing

shareholders to keep prices low for the good of the rest of us >> you know, i think again at the end rt of the day, the strongest companies are in how think service their customers and clients has great benefit within the economy but you have to use common sense. it depends what industry you're in, and when you're in those stores as i am, you and i are, the boy that, the sense of rising prices is huge. >> if they do start passing them along and we get into the summer driving season and diesel is much more lucrative for the majors to produce, it's a perfect storm. >> it is and look -- >> we're going to be, we could be double digit inflation at that point >> no doubt, and i think companies are frankly trying to do their best to limit those price increases everywhere they can. in some places they simply can't. as wages continue to increase

and the prices to go along with it, we are in that wage-price spiral that i think is devastating on workers and businesses >> so the big worries are inflation and a recession. which just shouldn't be happening at the same time but when thinkey do, it's called stagflation. >> it is >> and most people who were born after, i don't know, they've never seen anything like it. you probably v cohave, congress. >> i have, and i don't want to be in it >> where do you fly into, andrew he wants to come down there. you want to drive down too expensive to drive flying to charleston >> how long's the drive? that's about 45 minutes. made it here in about 45 minutes. about an hour and a half from the city and 45 minutes. >> do you have -- >> you're welcome. >> do you have double beds or

one big king size? if he did come down, do you have room >> i have double beds. there you go you can bunk >> that sounds like an offer, congressman. an offer you can't refuse. >> an offer you can't refuse >> like the god fair >> when we come back, our exclusive interview with david solomon on the way in just a few minutes. we'll talk to him about the markets, what he's hearing from companies. but next, we are digging deep into the biggest tech stocks on wall street and trying to figure out what's next after the spring's intense market volatility after a break stay tuned squawk pox will be right back.

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it held up a little better than some of its big tech peers, alphabet has taken it on the chin during this year's tech selloff. dedra joins us how are you? >> hey, good morning, becky. when it comes to alphabet, this company is about as sturdy in tech more than $134 billion in cash $15 billion in free cash flow last quarter

this company has the sales and cash to keep investments and hiring plans on track. it was made clear to me. pichai said they need to be nimble remember in a down turn or recession, advertising is conti cont tipi typically the area that companies cut back on. wall street however believes that alphabet is probably the most insulated from those factors than other players like meta and pinterest they have more access to cookies. plus alphabet has a cloud business growing at more than 40% on a quarterly business. its share is a distant third to

amazon and microsoft it's still unprofitable by the way, but investors love cloud because of the long-term secular opportunity. we look at the stocks, guys, share are down about 20% year-to-date, and we should note it has a much smaller bounce >> that chart you showed that there are 50 buy recommendations on the street the one hold and zero sells that's kind of phenomenal. is that just because of the big selloff, the drop we've seen in prices? it's not very often that you see that unanimity >> for so long wall street has just seen alphabet go from strength to strength, diversify its business that's part of it. what you really need to look at is the price target. as you look at an amazon, apple and microsoft, and these are overwhelmingly rated buys as well in the case of amazon, that

price tart get hasbeen coming down since the last quarter, but alphabet has held more steady. analysts, the community still thinks that there is that upside for the reasons that i laid out. >> dee, thank you. we will see you a little later today. >> thanks. coming up in just a moment, the interview of the hour, goldman sachs' ceo joining us live from kiowa, south carolina. we're going to talk markets, the fed, rates, what's going on with target and walmart you're watching "squawk box" rate here live coming right back after this he? cvs can help you support your nutrition, sleep, immune system, energy ...even skin. so healthier can look a lot like...you. cvs. healthier happens together. okay season 6! aw... this'll take forev—or not. do i just focus on when things don't work, and not appreciate when they do?

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welcome back to "squawk box" this morning futures pointing to losses for the major averages one key earnings report we've got insofar that may be denting the sentiment is target plunging with inflation in focus. expenses and supply chain snags take a heavy toll. target off by 24% right now. here to talk about inflation, the fed, where we're all headed,

we want to welcome in goldman sachs' ceo, david solomon. we're here in kiowa island >> with the ocean in the background, you hlook pretty good >> you hooklook hooinice, too. where are we >> we're on a journey of progress in tightening economic conditions one of the things i just observed, there's no question the fed's taking action. monetary conditions are going to get tighter. fiscal conditions are getting tighter. i would say there's nothing that surprising about what's happened so far obviously, i can't predict, no one can predict how we kind of go through this journey and how we land the plane and settle

out. can we have a soft landing per se but i would aso fsay so far, wie real tightening of monetary conditions, this has been relatively predictable and not that volatile relative to other environments. >> why do you think that the market has missed it in some ways? >> well, i don't have a, i don't have a good sense of any individual place or any individual stock but generally speaking, when you tighten economic conditions, you have an impact on asset prices so a very, very easy monetary policy now that we're tightening monetary conditions, it shouldn't be surprising where people are focussed on the forward and what could be and what might be. but that's the first place where you see valuations and asset values contract. >> whetn clients call you, whats next 18 months look like, the

house view, the david solomon view are we in a recession? >> the house view is slowing economic activity. higher rates, and probably a 30% chance of recession. as you go forward over the next 12-24 months what i would say, that's research what i would say when i'm advising clients is we're going to tighten economic conditions it's going to have an impact on a number of things in your business that are hard to predict. you have to be thinking about your risk appetite, your planning, you have to think about the fact that we probably at some point, there's a reasonable chance at some point that we have a recession or very, very slow, sluggish growth, so start preparing for that the start thinking about that that doesn't mean it's certainly going to happen, but i think if you're running a significant enterprise you have to look through a lens with a lot more caution right now than you might have been when we were sitting here a year ago. >> how many calls are you getting about m&a?

>> i think consumer confidence and ceo confidence always has an influence on m&a you're not seeing the same velocity of activity that we saw 12-18 months ago the economic landscape is changing people thinking best about how to position themselves there are people who thought they had easy access to capital but now have a harder journey. so i would say the dialog level inside our organization of companies large and small is very, very robust. you're also seeing a significant increase in activism because of a reset in values, we're seeing more dialog around take privates. now the activity levels are still high the pace at which that comes to fruition you have to wait and see. >> that's why i was curious where this is headed it has a huge impact on

multiples. a huge impact on the decision boards will be making about whether their stock is fairly valued if there's takeover bid or looking back at what the stock was 12 monthsing a >> you had a high s&p value. i'm not smart enough to tell you exactly what the future holds, but an environment with higher rates, sluggish growth, the potential for recession, you know, people are going to get more focussed on profit margins and earnings capacity than on revenues and revenue growth. so you're starting to see that shift in the dialog. you're starting to see that shift in the way companies are valued if you're sitting in a boardroom, those are the things people are appropriately focussed on. there are a lot of businesses that have interesting plans and platforms, but generally, risk capital has been willing to give them a lot of latitude to invest in growing users, et cetera without being sure that theres

with a clear plan to profitability. and that's obviously shifting very quickly >> becky back in the studio who talked to brian cornell has a question for you >> if your advice to other companies right now is to operate in a more cautious environment, be prepared in case things take a very big turn south, how are you taking that advice and putting it to work at goldman itself what steps have you taken to get in hei in line with that advice >> it's nice to see you, becky, and i appreciate the question. we're always thinking carefully about our risk appetites our first priority is to serve our clients and provide capital, to raise capital for them, to operate in markets but given the way we operate, we're always thinking about risk capacities as we manplan and go forward. and certainly, our lens as we

rac look at some of these things has shifted. today as we look forward to risk in china than we might have had two years ago. so we continue to look and plan on a forward basis but we're always focussed on serving our clients and trying to strike the right balance. >> can you weigh in on the world of crypto? we've had that conversation a lot over the years and i know you've been somewhat skeptical of crypto as a currency, but you've been bullish in terms of on the blockchain there's been a lot of conversation about where goldman fits into the crypto landscape in the future. do you think this changes the dynamic in terms of the price coming down or how your competitors may think about crypto >> i continue to be a real bull on the digital disruption of the financial infrastructure that underpins everything that we and

others do on a daily basis the way money moves around the world, the way we keep track of things, big believer that blockchain and other technologies, some that exist, some that haven't been developed yet, give us great latitude to evolve that infrastructure, create less friction for end-users, more efficiency, cheaper products and services. we've been investing a lot in that with respect to cryptocurrencies, the regulatory concept does not let us do a lot. we try respond to inquiries from clients. we're trying to find interesting ways to use the brock clockchai. we've been involved in making loans that are secured, structurally secured with somebody with custody of

currency bitcoin up, down, sideways i'm more foecussed on the technology structure >> when you look at the valuation of a coinbase falling the way it has, does that change your thought on the business >> at the moment, we can't be in the custody business >> right >> to i think the custody business for certain digital assets could be interesting at some point in time sure but that doesn't mean, coinbase is a very interesting platform doing very interesting things. i don't have a point of view whether it's $60 a share or $200 a share. it's valued appropriately. i think the disruption to the infrastructure and the way we move money is an interesting play and coinbase is focussed on that it's one way to feed into that >> what about the retail side of goldman? when you think about the retail piece. we've often, i've also seen the valuation of robin hood and

others fall. do you think about acquisition opportunities in this space? do you think that the while, that whole this is going to be semi-permanent, it's a cycle >> we have a wealth business at gold plan sachs. we've always had a wealth business but there are lot of people who aspire to have more wealth that they can invest and manage, and we're trying to build digital platforms and using our relationships with corporations. one of the interesting trends is that corporations are taking a much bigger interest in helping their employees at all levels manage their financial affairs we have an interesting platform in goldman sachs aco that allows us to do that. digital ways to do that. and so we're trying to find ways to help people think about wealth with a longer-term context.

that's really where our focus is on that challenge. >> you just talked about employees. there was a report in the "wall street journal" about a new vacation policy at goldman sachs. nobody's keeping track anymore for the top guys, is that the deal >> i'm not sure that everybody's talking about this but we like our people whether when you look historically, people haven't taken vacation. we encourage people to take a vacation to recharge, it's a marathon, not a sprint we're trying to create best policies run competitive but take care of their families >> what does that look like? >> for senior people, most senior people have been at the firm a long time, they don't take their allocated vacations they can take the vacation they need when they need it i'm not concerned about how much vacation people working at gold

plan s goldman sachs are taking >> some are saying people should be masked, we saw apple push back some of its plans limiting their in-office, given what's happening. >> we continue first and foremost, obviously, to focus on the safety and security of our people, but our people want to be in the office we continue to see an increasing nud number of people in the office we've done a lot of testing around our business. so we're going to continue to bring our people back together so they can collaborate and serve our clients. it's where our people want to be >> are your people traveling >> our people are traveling n and is it your since that this is going to be -- when you talk to your people in terms of what that culture holooks like, how much of that is a hybrid thing you were one of the big advocates for being in the office >> i think andrew, what i'm an

advocate for is that goldman sachsa professional services business that is focussed on bringing people together with people it's focussed as you know on our finding ways to give advice and to help people and generally speaking, showing up and being present with them has a bigger impact with them. it doesn't mean it can't be done on a video at times, on a telephone at times there are a variety of ways it can be done. but our organization generally works collaboratively. it's a young organization. where 50% of the employees are in their 20s they're there to learn, meet people and we want to keep that ecosystem going. so we've always been flexible. we've always adjusted to what we need to do, but we generally come together, we show up for our clients, and by the way, our clients appreciate it. they say that they appreciate the fact that we come and sit with them and spend time with them so we're going to keep doing what we think is right for our

clients, our peeople, making sur goldman sachs is the guest can be >> you're working for twitter. what do you think? >> exactly what i said when you asked me the question before we came on tv i can't comment on a situation >> you can't comment >> you're on twitter >> i'm on twitter. i've never, ever tweeted >> you've never tweeted? >> i've never tweeted. i follow people like you and becky and joe. i get some of my news and some other things that i really don't need to get. but i follow a number of people on twitter it's a source of getting information with respect to what's going on, but i'm not a tweeter personally >> david, thank you, appreciate it >> thank you >> becky, back to you. >> that was a great interview. thank you, andrew, and it's great to see david, too. anyway, when we come back, we have jim cramer's first take on the trading day ahead. we are one hour to go until the

opening bell so far, not so great for the futures. dow down by 220 points the nasdaq off by 166. stay tuned you're watching "squawk box. and this is cnbc

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indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire feutures have been slowly sinking, 236 on the dow. jim cramer, i've seen people say, you know, for long-term

investors these companies should report twice a year, every six months, this quarterly stuff it's too bumpy, too many things are going on you wish companies would telegraph issues midquarter. is it incumbent upon a company to tell you things aren't going as well as we thought or, for example, i guess target surprised people today, should we have been given a heads up by target management? >> i think so, yes in the old days -- first of all, andy used to say -- who i thought was one of the greatest executives from intel, midquarter is a perfect opportunity for a company. if you put out numbers that are too bullish, it's important you tell us because the shareholders lose a great deal of money and some shareholders i would say don't mind but most of them would have liked to know, hey, wait a second, it was far worse than we thought. april is obviously a bad month brian cornell did a worse job

than doug mcmillan most definitely they were selling the wrong merchandise, had the wrong forecast i think that the old days, if you knew at the end of the second month that you were going to miss the quarter, it was incumbent upon you to put out a release. that's the way it used to work now, brian could say everything that was bad happened in april we didn't need to put out a release. but i think going forward, the sec has to go back and say, look, guys, you have to start doing what you used to do. when the estimates are way off, you've got to preannounce. and companies have gotten away from that because for the most part the estimates have been okay but brian cornell should have preannounced, certainly. that was not a good quarter at all. >> jim, people have been talking about the product mix and the inventory issues as if brian and management at target couldn't have simply raised prices

enough i thought, and brian sort of indicated, that the consumer and the customer is more important, maybe, than the bottom line at different times and maintaining market share you think there was more to it than just being resistant to raise, to pass along the increased costs? >> they had the wrong merchandise. it wasn't so much that they traded down is what walmart said, they traded around i mean, they went to luggage, they went to toys for birthday presents they didn't go to appliances but most of the appliances they sell at target are not like what they had at home depot i think the difficulty that i'm having is home depot had one of its best quarters in history, and they would tell you, that look, as long as the home is going up in value, up 40% over two year, and people are going to spend a lot of money on a home because it's not an expense, it's capital, target had incorrect merchandise. walmart had incorrect merchandise. i took walmart more personally

because i owned it for my trust because i think walmart is a great company. i think they still are a great company, but it would have been great to have a heads up from these companies saying, look, we made projections a few months ago. projections are not coming true. rather than wait till the end of the quarter. the old days, they didn't wait they put out releases. we have to go back to the old days to make a better judgment the decline in -- the decline in target is horrendous brian did come on and he took responsibility for it. but they did many things wrong, and the thing that is most difficult for me to understand is how could you be so wrong when we all knew if you watched our network what was going on with the consumer? we mince nod words we knew the consumer was completely baffled and troubled. home depot, a lot of it is contractor, and wealthy people are still contracting, making things get done. lowe's is more do it yourself so they didn't have as good a

quarter. walmart, i would tell you, by me, they weren't as bad as target but should have preannounced >> favorite steak house in philadelphia >> i like barclays prime >> the butcher you've been there. >> both good both very strong >> very good can i say -- maybe next time i'll say i'm making a reservation for jim cramer and maybe -- >> maybe you'll get a table? >> maybe i'll get a table. can i get a table near a witter and they just looked at me they didn't understand -- >> tell them that jim told you to go there. i wish i could say that's not true, but that's what would work >> jim, than see you in a couple mitenus. you're watching "squawk box" on cnbc develop their passion for learning through our grow up great initiative. and now, we're providing billions of dollars for affordable home lending programs...

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a final check on the markets this morning the numbers have gotten worse through the course of the morning. started out down but only by about 20 points for dow, but after the news from target piled on with the news from walmart yesterday, you see this big drop now looking at dow futures down by about 280 points. the s&p futures are off by 47.

and the nasdaq down by close to 200 points as well the sell-off, the pressure continues. in the meantime, the tough comments from jay powell yesterday about what the fed will do to contain inflation has been pushing up the 10-year yield up by 3% join us for tomorrow right now it's time for "squawk on the street. good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber is on assignment dow futures lower after three up days and a retail blowup is at the center as target collapses oil at $115. the vix close to 27. rising cost pressures weighing on target, their worst day since black monday the inflation challenge for investors, futures point to a lower open th