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 the dow is on track for its

first loss in four days. and shareholder rebuke, jpmorgan investors rejecting jamie diamond's $56.2 million bonus. we'll start with target. brian cornell said to hold him accountable. >> 13 weeks ago, we had a very different outlook for the year i'll take complete accountability for the fact we didn't project properly the rising cost of transportation and freight. we didn't call the billion dollars back then. things moved rapidly we didn't expect them to shift we were looking at consumers getting back to normal we didn't expect this. and we certainly didn't project 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. >> sounds like you're more than willing to hold him accountable, jim. >> i have to

my trust fund owns target. to there was a bad miss by walmart versus projections from february this was again a very bad miss he came on, he could have been more abject about it they had the wrong merchandise month of april in this country is obviously a very weak month the things they did have, they had a lot of things they didn't need but they needed more toys for birthday parties, dresses for going out, luggage for travel they didn't have enough of that. higher fuel and freight, definitely wrong i do question as i did with miller, how could you be so wrong in april given what we see? do we come in here every day and say, gee, there's a big party going on home depot had one of the greatest quarters ever and there are low expectation, but home depot is made up of a large number of contractors. and the big projects are still

being done in people's homes and homes went up 40% in value in the last two years, so people are not expensing, they're so-called capitalizing what they're putting in but yes, brian did worse than doug, okay he did worse trying to figure out how they could be so wrong. now you can say well jassy was wrong and definitely cornell is wrong. i do not think that marvin ellison lewis was wrong. so then -- >> i was going the say, how can these two things be so similar without there being broader macro issues for all the industry >> right so i apologize to walmart they thought that walmart was the only one that got it wrong until

i see target at the same time, i think when you know you're going to be really wrong, it would have been a lot better to call, issue a statement, we most likely will not make expectations. that's what used to be done in the old days maybe i expected that. i expected a preannouncement that would have made so it when the stock started going down you yao didn't say to yourself, hmm, what's to going on >> sure. >> now i think these are very honest companies they're certainly not going to try to leak anything that's not their style but at the same time, when you're off this much, i think it's incumbent upon you not to wait until your report date. here's what i would have done if i were these people. the day that we got the last weekend in april, which would

have been kind of hopefully you want the weekend because a lot is gardening >> as the quarter was ending >> yes should have put out a release. we didn't make the numbers preannounce. why? because that's a better way to be able to do business, and it's the way it used to be done and i think we have to go back to it. >> as for the broader consumer and where we go from here in terms of spending, cornell did address whether or not the consumer in aggregate is in true danger take a listen. >> as i sit here today, i'm not seeing any sign of a consumer slowdown i can't project out six months from now, but just what we're seeing today and what we saw in the first quarter, it's still a consumer who's out shopping and enjoying getting back to normal life >> so that's about mix >> yes >> i guess it depends on whether or not this inventory now, 72 days worth of inventory at target, can be told off at a discount >> i don't know. the appliances they're talking about, certainly the appliances blowing through the doors at

home depot home depot said some things that i think really got me thinking that walmart was not that good first of all, they said, incredibly strong. twice they said business was incredibly strong. they had a thrilling performance of appliances. people wanted to trade up for innovation there has been a 40% increase in two years. then they said something that i thought was important. they were using it the numbers of the national association of builders they said the homeowner, this is incredible, has never had a balance sheet like this and home appreciation does fuel the work and that they said that in terms of optimism, it was the highest they've seen highest they've soon it's unheard of. typically they're asked if they're optimistic and they get the answer 50% this time 86%, 64% usually say

they wanted to do it that way. we've never seen it this good. i was thrown off home depot had an amazing quarter. amazing. but you could say, listen, that's rich people i don't know i think it's people associated with their home and target is not associated with their home it's associated with powell. now, another wrinkle could be that we're all trying to find things, you go to the your supermarket at target and your supermarket at walmart and maybe there was just not enough left because of the price of food but, again, what i -- >> money, not -- >> price right. i am saying for two things one, i'm surprised they were so wrong. two, these guys sat on this. it's may 17th. they sat on these bad numbers. may 18th they sat imagine coming in every day and saying you know what, we blew

the quarter. >> would two weeks make any difference, really >> it's the old way of looking at it. >> but the price depreciation would have been the same, don't you think? >> i just think everybody is owed equal information at the same time, and i also think that the sec used to say if you guys are outside of 5%, you've got to issue a release. >> right. >> that way people can say, okay, i see it, got a preliminary look, maybe there's hope for the month of may, but preliminary looks good >> what happened to the idea that the big guys had an edge on supply chain >> thank you okay one of the reasons again that i felt more critical than i usually -- these were the companies given the edge they were considered to be essential. they managed to be able to crush a lot of people because they were essential and this is what they had to show for it. now, i was talking with someone in one of these companies saying, look, why. couldn't you put the squeeze on

these companies? why don't you have better supply chain? the answer they got -- they gave me was put the squeeze on who? there is no one to put the squeeze on you can't just go to a trucking company and say, listen, we're big, here's where we're going to pay, because they'll say we're going to somebody else >> it makes you wonder if this is happening to the giants, how can mom and pop possibly be operating right now? >> well, i mean, it's interesting. tjx is up on a miss. as you said, 75% of inventory. but they can go to tjx but, again, mea culpa, i thought walmart was the only one but i do think target was that bad. >> becky this morning made the great point, what price gouging, right? the idea that somehow margins are getting inflated like they were say in oil at the retail level. it's hard to imagine given the collapse in target's margins >> home depot was amazing. lowe's, marvin ellison, he

didn't cut numbers he does say that do it yourself, they had more at lowe's than home depot he and i are looking for a big gardening weekend. this is it because april was -- did not -- and may so far has not been good for gardening. and remember, these companies are usually huge with gardening. lowe's and -- >> lowe's did affirm the guide and they said we're pleased with the recent trends because of that late spring >> i think marvin ellison did it as usual terrific job now this group is obviously not going to run here. >> right >> remember, there's etfs, targeting down walmart it's not where to look for bargains >> so where do we turn now how do you think the broader market is absorbing all of this? >> i think broader market is very much in a negative rotation

mode it hates this group. then it hates that group then this group. right now it doesn't hate semis. it hates retail. >> i was going to say adi not too bad. on semi. >> on semi, remember, it's auto. and it's in the catbird seat because they put that company together for auto. adi is just internet of things. >> we had that upgrade of nvidia a couple days ago. >> i've had that as long as i've had the trust. nvidia is going to report and everyone keeps saying, listen, gaming weaker. i had straus on the other day. he said gaming is stronger i had best buy on not that long ago. they said gaming stronger. but there's a belief that gaming was something people did during the lock todown it is bigger it's omni verse, a lot

industrial is this gaming when i was there, jen was teaching robots how to pick up jell-o >> jell-o? >> jell-o cubes. not the spiked ones they used to give away on halloween i'm talking about jell-o cubes he said, listen, if you teach them enough, you say good boy. i said you're insane he said no you tell them good boy, compliment them, they pick it up i said these are figments of our imagination. he said where do you think we're going? are we going to pin him to ethereum where he only use -- those cards are the ones he can't use for regular? digital win. nobody's taken him up on that yet, speaking 28 langs and ask you what you want. they should. remember chipotle, they came up with a machine to make chips >> well, speaking of all things omni verse and met verse what was ten years ago today was -- >> my daughter's prom.

sorry. >> the facebook ipo. >> was it really that's right. >> you and i remember. >> i was trying to work on my daughter's prom. she said dad, you have to put slate down all the girls have high heels. putting slate down i will tell you in no uncertain terms that company i believe in again. i was doing some reels last night. yeah, i can do reels they're better now. >> not about long-term reality labs >> he doesn't need all these people they hired too many. i think reels is going to pass tiktok i think they're now better >> more of a short-term goal >> reels is more fun than tiktok we were doing some reels videos and i just find them easier to do and funnier and we don't have the pull, but we will, because reels is really good >> you've been saying for a while second-half story. >> for certain

definitely >> getting close. >> yeah. target, home depot -- not home depot, target and walmart, i think they can come back think just had to have the right million dollars. >> you think they'll fill this gap we're seeing today >> i think these are great companies. i think that if we licked inflation, they'll want to come back to them, but that's not what i'm looking to own right now. >> right >> i'd rather get run over by union pacific. >> when we come back, we'll talk to jamie diamond joining pat gelsinger on the list. facing a big payout backlash >> in the meantime, futures continue to be weak. we are coming off several days of gains witths&alst back to 4,100. more ahead

jpmorgan board members voted down to a bonus package. it was designed to keep jamie diamond as ceo for another five years. a payout of almost $179 million for ceo pat gelsinger. given what's happened to valuations, what is deserved right now? >> i think the whole country is struggling in the present. struggling with this notion of

executive pay. this is something that senator warren talks a lot about versus executive pay versus line worker pay and how it's gotten so out of control pat gelsinger, intel stock price not that good. we used to think there should be some alignment i also think if i'm jamie diamond and my stock -- obviously jamie diamond is a very wealthy man -- my stock is at $121, i would say you know what, i am -- i don't need the money. let's distribute the money to people, the frontline workers who came in every day. i want my salary -- now, he can still do that. he can say, look, i want my v my salary that would be really great we say, you know what, why not do that? e i was down in palm beach recently people are so rich, if you ore

running one of these banks and you had a year where the stock was down and you had those people come in every day and their family members got sick or family members died, you know what, this may be the year to say it's time. i'm not taking that money. >> and you any that good will would get rewarded and more -- >> maybe they'd go to heaven going to heaven is better than hell i learned that early on. that was like in bible school. i do think there is an element which says there were people who showed up every day and it would be a gracious and honest thing to do to say, you know what, i'm not taking it this year. i'm thankful for the reward but i would like to give it to the people this is not dennis mullen berg, shouldn't take anything.

would i do it? i've done pit go home, your wife says can we redo the kitchen, no, not this year people want to put food on the table. the wood got warped because you let the water run? you shouldn't have pat, it would be great if he sat right here and said, you know what, i'm giving the money to frontline workers. we always hear that. how about we give our pay to frontline workers? >> we'll see how much public pressure comes to bear >> don't you think there should? >> it's hard to see how. >> why would that be bad it would be kind of like, yeah, how much money do you really need how much money do you really need >> when we come back, cramer's "mad dash" and the opening bell.

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time for cramer's "mad dash" as we count down to the opening bell you're watching block. >> i want to be positive we used to call it square. it has an analyst day tomorrow bear makes it a fresh pick the cfo is so fabulous, i think they have a decent story to tell, they've got afterpay, they've got the cash app, which a lot of kids use, and what they really have going for them is there's a couple companies, block, doordash, airbnb, that have been crushed. and maybe they don't deserve it. look at this down 80% for the year? this is a real company i'm looking for this company to be the tell for whether that

whole class of ipos has -- this is older than the class. >> sure. >> but the group of companies we used to love there's companies that used to be 100 billion, 50 billion, 20 billion. where do they stop, nobody knows. i could have done warby parker downgraded by goldman sachs. i think this will tell the tale of the high multiple stocks because there's been a place that's been decimated. >> where does it fit relative to the legacy credit card mastercard, visa with a buy. >> they have no credit risk. i like them. this has some credit risk but it's been very well handled by the way, extremely well. of those two, you know, i've had both mastercard and visa on. those are still cash to credit and remember, they don't have any risk they're amazing companies. the biggest risk they have is now people have signs, listen,

there's a 3.5% charge if you use mastercard and visa. but those are fabulous companies. they've been stuck in the mud. they did have great quarters they had great quarters. i would say you can hide in them, but this is kind of like a muhammad ali market. you can run, but you can't hide. >> it's going to rope-a-dope you somehow. >> it's 's rope-a-dope he gave my commencement speech in college there's like a few things in the world that just move you >> not just one of greats, the greatest >> the greatest. >> opening bell in a few moments. you can always catch us anytime or anywhere. just listen to the "squawk on the street" opening-bell dct.poas we're back in a moment i'm dan o'dowd and i approved this message.

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what we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down, and if we don't see that, then we'll have to consider we move more aggressively.

if we do see that, we can consider moving to a slower pace >> fed chair powell yesterday at the journal's future of everything festival with his take on combatting inflation transstory became a framework and clear and convincing will be a framework as well. >> no choice here. i say he needs to shock it when you go through the home depot conference call, it's very clear that some of the strength is they were able to put through a lot of price increase. this is the rap. if you don't put a price increase through, you're criticized by management so if i'm selling paint to you and i'm selling paint, it's $5 a can. now it's $7. unless you do that, then you're going to get upgraded by your boss so now we see this system where i'm not going to let you get away with paying the same price. and every sales person who says you know what, i'll give you a

break, those are let go. those people are let go. >> yes >> he's got to stop that [ applause ] he has to. >> when you say shock it, you're talk about 75, full point? >> yes he has to be able to say -- [ bell ] -- brian cornell has to be able to say to newell rubbermaid, we're not paying that price. you can try to put the price increase but it won't work we've got too much inventory so does -- everyone's got too much inventory cut your price that is what has to happen he has to create gluts throughout the system. that's the only way to do it is create gluts >> looks like apparel might be a start. oh, man. that's why tjx can go up >> opening bell and the cnbc realtime exchange at the big board. the etf celebrating its third listing anniversary.

so the breadth is weak here, jim. >> how about twitter >> you want to get to it, don't you. >> yeah. okay, so elon musk had a lot of time at the company. spent three days here apparently looking at things. there is a clause called specific performance where they can force him to take it and i don't know how he gets out of it. i don't know how he does not buy it, how they can't force it. >> at $54.20 >> well, maybe they could renegotiate something, but the contract is $54.20 he agreed to that. unless there's some sort of out-and-out fraud, which no one has found, to my understanding, he owns it and he's got to point to some fraud, some material adverse change, even in the period since he signed. and i think he's stuck i think he's hung.

some of the tweets are at odd hours if you notice. >> yes usually between midnight and 2:00 a.m. west coast >> stressful period for man. >> yep >> i think when i look at the clause and the contract, i think they could hold him to it. now, you know, he doesn't really care -- he's not a traditionalist when it comes to legal system but the legal system says that unless there's fraud, he owns it >> which is why a lot of the chat they are week has been if you're the board, keep your head down and just act as if the deal -- >> absolutely. >> that's part of what the statement was yesterday. we intend to close the transaction. >> absolutely. he did spend a lot of time on this issue remember, they said 5%, little more than 5%, could be bogus that's -- unless he -- maybe he's got evidence that it's 20%. i don't think so i mean, this stuff was vetted by the cfo. i don't know anyone who thinks

ned is other than incorruptible. and i just don't hear anything from musk which says that the numbers that siegle gave him and the company gave him were fraudulent >> especially since his original motivation apparently for the deal is to attack the box. >> right >> it wasn't an unfamiliar issue to him >> exactly if i were there -- in the interest of comity, not comedy, maybe they come back and say, look, we're willing to regosh but we want some sort of good faith because otherwise the company -- here's the keys and i don't know if there's anybody that's going to be there >> sounds like you think it's worth a nibbling at them from a partial birth abortion standpoint. >> they have a lot of things in the pipe that were very good that are -- will not be aborted if the people stay i worked with them on some things they have a lot of irons in the

fire it's obvious that, yes, it could be a better-run company, but you know who would tell you that first, they would. they have very little ego and they were trying and are always trying to do things and a lot of people feel it's an juundervalu asset. so, yeah, i think you could get hit for a couple here, but -- yeah, i think that twitter down here is okay look, i just i don't want everyone from twit or the leave. if you're twitter, you're saying what am i doing here, let me get my resume together you're not going to netflix. >> about 150 more layoffs yesterday. >> it's a new world. if you're jay powell, maybe $33 to the downside, if you're jay powell, you're beginning to see the cracks and the cracks are what you want it's getting harder to get a job out of college there's getting to be a glut in

some areas including engineers that you need to see that happen but you need to see prices stop going up, and there's what was so disconcerting about the home depot call, which is that they said if you've got new technology, people pay up. butthere's no dutt about it th sales that come from gluts are not there but people are clearly viewing it about to happen or else tjx would not be up on a miss right there, that is extra powell i go, i bother david answer lee, but the tjx across the street, there's a lot of bargains there, but they're going to have an immense number of bargains i got my ollie's bargain store, still not there yet, they still don't have what i want >> uh-huh. the consumers, i noticed today, all 50 states have retail gas

above $4 first time that's ever happened. >> right >> they have to make choices, don't they >> phil lebeau will tell you the average auto does not burn as much >> the whole economy is on energy >> oil is a bcombination of -- there's russia, saudi is not pumping as much as they thought they would, and the discipline of the u.s. companies. the rig count is actually going up now but it tends to be the private equity companies the big guys are still not drilling the way you would have thought they would with oil the way it is. they're just returning capital these are great stocks it used to be 12% of the s&p, 10%. it's about 7%. it's going to 10%. everybody has to own some oils when you come in the morning, you don't feel like -- it's good to have things that go up. >> yes to energy has been it, right >> well, energy is not that hard to figure out because the

guys -- these guys come on my show i have said that oil is uninvestable then i talk behind the scenes and people say how about more time on methane and carbon capture? they are all -- the ones that i deal with are all concerned that young people won't buy their stocks they care about the environment. when you go to the young people and mention the oils, they tend to say, oh, please but the oil companies i talk to are spending a lot of money trying to be better citizens there are a lot of people who say you can't be better citizens because you're in carbon, but i think they are doing their best and a lot of them are very thoughtful about it. they've made a lot of changes, these companies. i know because i had horrible conversations with them as recently as five years ago and the conversations were quite cordial because of all they're doing. >> the eu's efforts to change their mix of supply means they may do away with a lot of the environmental demands of doing

renewables >> well, you look at poland. they're taking their lng the europeans they had this thing with russia out of character with syriaened out of character with chechnya. there have been a lot of stories about how the russian army isn't that good, but the russian army is big, and i still can't believe that merkel made a deal with the devil, just basically said listen, we're going to decommission nuclear plants, not just coal. if coal makes a resurgence, which it seems to, you could buy norfolk southern i think the railroads were caught flat-footed but if you want to know a company that i think is the one to buy off this, it's caterpillar. they had an analyst meeting yesterday that was just stunning and they are both good for alternative energy and for carbon energy, for carbon capture. jim is doing an amazing job, returning a gigantic amount of

cash to the shareholder. deere reports this week and caterpillar. caterpillar could go higher than this people are saying how can you recommend them going into a recession, jim look at the mix of what they have it's geared toward energy. china is only about 5% now >> of cat? >> of cat. you always used to think, cat, i got to sell on that. cat is -- a lot of infrastructure but a lot of energy of all kinds. it's a very exciting company now. >> it's the top performing dow component at the moment. let's listen in to last night. >> demand is very strong around the world. we mentioned our sales would have been even higher if not for supply chain constraints but proud of our team. they were able to increase sale base more than 20% last year in 2021 despite the supply chain challenges in the first quarter of this year, we turned in double-digit sales growth despite the ongoing

challenges >> having covered them years and years ago, historically conservative guidance. >> true. >> right >> and umpleby it's just wrecking my whole lawn, and i sent him a picture he said you made my saturday great. huge fight between me and my wife you made my saturday this man lives and breathes this industry he is in touch with the customer, in touch with the dealer network, in touch with all the steel that you need to make and i would say this, this is a new cat. this is a caterpillar that is so disciplined that you would actually think about buying it going into recession, which is incredible it was the first -- you're supposed to short cat. >> that's the playbook >> by the way, in terms of ceos that you enjoy, who are cerebral and get it, umpleby. i enjoy his company. i think he's a remarkable man. >> you mentioned china carrier does get cut at bofa

today. >> i know. >> they argued they are the highest exposure relative to peers. >> i think dave i getland is doing a remarkable job i would not sell that stock. they are doing wonder of things in terms of fluid and refrigeration for the environment. yes, they have an hvac component but a huge industrial component. the stock is down 30% for the year he's a very, very smart man. i think if you sell the stock here, what, you have three down and the next thing you know you're in a new cycle and his cycle is about the environment he is so deeply committed to producing the kind of health experts vak that is good for the environment that his european else is will take off. people are just so shortsighted. he's one of those executives like judy marks at odus, people out of united technologies, they are outthinking the analysts when you sit down with these

people, you're conscious what they're trying to do is say we are going to stave environment with ours. because 40% of electricity is used by buildings and we are going to change that and make it great. i totally enjoy these people's company. >> that's interesting. two other calls. one is pennat. jeffries saying overbuy. >> draftkings starting to bottom go ahead i'm sorry. >> there's that one. then ubs, technology underweight to overweight. software spend is a percentage of gdp, is going above trend because of the labor issue, cost, quality. >> there is that what is wang really doing at nvidia trying to cut ot ways to make so it companies can expand on a factory floor without new people by looking at what a digital twin would say i think that you have to divide technology they tear companies that are not

making anything and i don't like them at all. then there are companies making a lot of money, and i think those are brought down by a lot of the companies that are not making any money that i think are just disastrous, though and will remain disastrous ayx, dean stecker, they're losing a lot of money, and last night i came home and i studied and i said how do i say a great company where they use software that saves you a lot of money and you can get rid of a lot of people, but losing money what's the value of it this market does not want companies that are losing money. they want companies to pivot and say you know what, we are now -- we have discipline and we're going the make money that's what i'm going to question i'll say, dean, what's your game plan to make money he may say the opportunity is so great, you don't want to do that

i'll say what's the prospects of make money because that's what the people want they don't want these unlimited loss companies anymore. >> that was david's point this morning on squawk. i'm sure you talked about buff bf and paramount yesterday >> oh, geez. the paramount people thought i shouldn't talk more about it they were, like, well, you know, it's not just dean, you know, we actually did well and maybe more than buffet doing great, maybe give them some credit. so i will give paramount some credit i think they're doing some great things i said paramount is not a big company anymore. but that doesn't mean i shouldn't have said -- they're doing well, doing a lot of very exciting things. i think the issue is the clicker. i remember brian robert, our boss, saying one day what you're going to do, say to the clicker,

put on "mad money" and lit come on, which means we don't know whose network anything is on that's where we are. i do that a lot. i find myself coming home and saying put on under the banner of whatever, and it comes up >> yes >> much better book than a show. >> that's david's point this morning was simplicity is what's going to matter for consumers. >> they have so much debt, the company every day is teetering, and you listen to zazov and say i don't want to be with him. >> lit come down in a hurry. >> this is me to him and everybody else when you see him, there's a joy to him that makes me always feel a little more comfortable. >> yes former colleague of ours dow is down almost 400 bob pisani >> good morning, carl. a brief two-day uptrend sort of being broken here.

this time it's on the consumer staples and discretionary side that hasn't happened in a while. look at the major sectors that are moving consumer discretionary is about target, bringing it down, but this group gets split up a lot the consumer staple group has walmart in it, so it's a different group. it's got kroger and costco in it that's the staples that group is weak as well as the consumer discretionary group. a little bit of discretion about whether target, walmart, where they should be here, but that's affecting it tech is also a little bit weak banks on the down side, energy holding up really well, $113 on oil there. that's a nice number for oil holding up exxon is at a new high, a four, five-year high for exxon, back on the new high list as well only a few stocks on the low list you shouldn't be surprised it's walmart and it's target and best buy put up the new low list. there it is. those are leading the market

down you can be cynical and say so much for defensive groups like consumer staples, walmart being the biggest one in that sector, that's been an issue it's very difficult to figure out what the narrative is right now around the consumer. we had brian cornell on this morning. i want to emphasize what he said-he said healthy overall spending leverages but spending -- the shift in spending is shismted in a different direction here he sees strength in food and beverage he says we're softer in tvs and apleenss the consumer is still spend bug maybe a slight shift in the mix. thab they're forced to spend more because of the higher costs for food and beverages but still a pretty healthy consumer overall here what's the retail trend? it seems tough to call right now, but generalry ly sales are still good the consumer is healthy. higher costs and some pressure in terms of lower profits and it's starting to show up in some company, particularly in target, with some margin compression,

particularly with target they were expecting 8%, 9%, now we're talk about 5% for the rest of the year. and then, yet, you get continue dp -- confused tjx seems like the opposite. their sales were light but beat on earnings, exact opposite of what everyone was talking about. they were trading up the margins were strong here and the guidance was not particularly good at all investing in america, you see tjx here holding the margins up, and that's important here's a company that did exactly the opposite of what everybody else was doing so it's very difficult to figure out what the overall narrative is right now just keep an eye on the health of the consumer and having to pay for higher cost. profit margins are lower and have been declining this quarter. there we have 12%. i mentioned this yesterday 12.1%. see last year, these are unusually high profit margin number, 13%. the historical numbers are 9%

10,% profit margins. these were much higher in the last few years they're starting to come down a little bit it's not surprising overall, and i think that's the trend the held of the sec istemping in the house appropriations committee in the next hour this is a routine budgetary hearing. he has to go and describe what the agency is doing. basically he'll ask for more money, saying he needs it. but he'll be likely questioned about this extraordinarily aggressive regulatory agenda he's got over 50 items are under consideration for new rules including controversial ones around climate change and board diversity and crypto and cybersecurity. carl, i've been covering the sec for 25 years i've never seen an agenda like this, and a lot of corporate america is getting uncomfortable with the mountain of potentially new regulations that are coming. i expect him to be questioned on that in the next hour. i'll let you know if we have anything interesting >> very important. i would try to get a hold of the commissioner because crypto,

too, he's doing everything i want to correct myself block, their meeting is today. square i do like that stock right here in terms of software one of the things that i think that gensler is very wise to is the stable point i'm not -- trying to chat with one of these companies to see how i get 9% on my money when i asked the commissioner about that, it was a caveat emptor situation oil did hit 115, backed off a couple bucks as well we're back in a minute

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here's a look at this year's

megatech market cap losses, based on yesterday's close amazon, apple, microsoft each down half a trillion throughout the day cnbc will have in-depth coverage of big tech, and do not miss an exclusive with chuck robbins tomorrow on this program, "squawk on the street," 9:00 a.m. eastern time. we look forward to talking with > 'rba ia nu >>wee ckn mite

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what's tonight >> it's and er son, and now skipworth, these are new ceos. i have to tell you that, you know, when you have michael skipworth and wingstop, that stock is down, and you have to take it seriously. >> some rumblings about going vertical as well >> yeah. my wife asked me to bring home dinner tonight >> we'll see you at 6:00 "mad money" at 6:00 p.m. target shares are getting

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good wednesday morning, i'm carl quintanilla withlessly picker here. morgan brennan and david faber are off today. the changing buying patterns throwing the bulls another wrench, as it's a repeat of sorts of walmart's results yesterday. >> we're 30 minutes into the trading session. here are three big movers were watching warby parker is down more than 50%, also carrier global also getting a downgrade, saying it's more bearish on the residential hvac market. and chip maker analog devices topping earnings expectations, reporting it was able to increase output, so a little

bright spot in the market. >> a relative winner this we're. we're going to turn to target, shares dropping more than 20 m% earnings miss. there's a crazy metric on the change in freight costs. good mortgage, cort. >> it is wild. the results are pretty surprising to investors, as you noted. down about 25% target's profitability took a huge hit from the ceo says from shush that the no anticipated. it led to excess inventory and subsequent markdowns and the cost of fuel and freight was significantly higher ceo brigan cornell doesn't expec

that pressure to abate soon. >> right now we project it's going to hit is about a billion of costs, a significant increase we didn't anticipate >> a billion dollars of incremental costs. that number just blows my mind he was asked why they didn't preannounce results or update at the march 1st meeting about what was going on cornell said at the time the leadership didn't anticipate the rapid changes in the last 60 days, including the change of what consumers are buying. food, household, but discretionary categories like tvs, kitchen appliances, bike, those didn't total comparable sales up more

than 3%, but certainly at a big cost with inventory up 43%, analysts expect markdown pressures will continue to way on margins truest downgraded, saying we doubt the stock will gullett support after today's results. >> it sounds like they didn't anticipate the last bit of the quarter, but based on his interview, people were more bullish about may, he talked about mother's day, things like t that any color from what the future looks like, whether they potentially see a bottom so far? >> that's a great question, leslie i think they were encouraged by some of the buys activity they saw in may, with people buys things they hadn't seen in the past so buys more toys because now

we're finally taking our kids to birthday parties again overall, brian cornell said the consumer is pretty healthy, but it's the things they're buying market compression, there till will be pressures there. so even if you have a consumer that's willing to spend on some categories, there's certainly things that are not going to abate here >> thank you, courtney. a day after the fed chair did talk about the economy and interest rates. >> right now with interest rates expeditiously to what we've been saying to a more normal level, something that will reach maybe we'll reach in the fourth quarter, but it's not a stopping point, it's not a looking-around

point. we don't know with any confidence where neutral is, or where tight is >> good morning, guys. mona, let me start with us obviously, the consumer does have money to spend, but are we beginning to see some cracks that the fed is clearly hope to introduce without too much pain? >> yeah, you know, i think it was interesting. target's report this morning highlighted the trends we've been seeing. the consumer started this year in a healthy position, saves still $2.5 trillion above, the labor market healthy where the pressure has been coming from is the supply side of the equation the supply side is a little less known, harder

to handicap. really with some of the labor supply as well, but even the target's ceo this morning alluded to the fact that hopefully we'll see some clearing in some of these. in our view, we do think from a market perspective, this market is really looking for not just one sign of lower headline inflation, but two, three, four lower prints in inflation to get a trend. once we see that, that's really where we think we can get a meaningful rebound in the market, perhaps even a fed that thinking about going at a mar gradual pace, but until then the demand equation and the supply equation, but really what we need to see in this market is a better inflation dynamic. >> that certainly describes the recent period. jeff, i do wonder, clear and convincing, those words were clearly said for a reason. what do you think it represents? what is clear and convincing

how many prints is it? and how does it need to be framed by the fed? >> i think it may even be how quickly it happens look, what we heard from target isn't just in a vacuum i've been talking about this shift from shortages to gluts. it happens so fast it can surprise everyone. gmc was talking about supplies being norm attized we're hearing this shift from tight supplies to abundant supplies it doesn't take long to go from work in progress to finished inventories, and products hitting store shelves. so i think this could turn around fairly quickly. just some dramatic moves to the down side in some of these pricing pressures, at least on the pipeline side. i'm not necessarily predicting that, but just looking at

september or beyond, and expecting rate hikes in this environment, it's probably expecting too much. >> jeff, then, if there is an inventory glut you see out there, just to follow up on the earlier commentary and what mona was saying about the supply-and-demand mechanics, is there an argument that the fed should take a pause, and things may come down on their own >> perhaps not yet we know the supply chains are vulnerable to any kind of shock. we're trying to head back into -- and shanghai could exacerbate a problem being stuck in the suez canal could create problems. so any shock could cause the problems to worsen that's why the fed should remain on its current path, but maybe

later it could ease more rapidly than expected. >> mona, you think investors should be investing in a barbell approach what does that entail? >> i think generally, in the near term, we are continues to see this defensive posturing in equities what has performed is not only energy, but staples, utilities, health care these are typical recession-proof sectors. so in some ways they're inflationary hedges as well. value parts of the market have held up well if we get to a point where we start to see the stabilization in inflation, perhaps we start to see a peak in yields. that's where we could see some of the most downtrodden markets. of course, in that space, we

continue to favor the quality parts of growth, including those with business models, free cash flow dynamics, better earnings trends generally when we look at earnings trends, the back half of the year, even early 2023, that's where we'll see tech and parts of growth start to value, and investors will seek growth over time we think it can shift. >> so, when you get the aknock d anecdotal stories, where companies are reversing hiring plans and such, do you think a likely scenario where the

ten-year reclaims -- >> it's possible one of the reasons wyms i'm still focused on short duration stocks is low price flows. those stocks have been outperforming in may and april all this year, in fact since rates began to rise. so continues to focus on low price to cash flow may continue to be a winner throughout the summer. >> appreciate you guys helping us start the hour. as we go to a break, here's the road map for the rest of the hour today we're honing in on apple and whether the recent weakness is a buying opportunity. and investors handing jamie dimon a rare rebuke. gas prices hitting $4 in every state for the first time ever a lot more "squawk on the

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market large lay in line with the s&p 500 it's not just dragging down -- it makes up over 12% of the qqq, not to mention all the pension funds, invest what's causing the drop there's also the uncertainty,ened keyeded lockdowns in the come will cost the company up to $8 billion in this quarter and they haven't fluctuated much the theory emerging is wait for apple to bottom as a signal the rest has bottomed as well.

later this year, new model, removing the last chips from mac computers. on the services sigh, there's some big ones. reportedly apple is working on a subscription plan, as a way to juice iphone upgrades as they shake off the super-cycle in iphone sales. >> thank you, steve. let's take a deeper dive first offal, i wanted to get a sense from you steve mentioned there isn't a do

you have a sense why there's been such a sentiment shift with regard to apple? >> one is, it's -- the tech sector is -- the second part, i think, is a growing fear that high inflation in different parts of the world end of affecting demand eventually. there's a lockdown in china and, you know, there's not enough to say it's going to happen, but i think the underlying fear is the inflation -- and apple has been a beneficiary of that for years. >> part of the discretionary spending, part of the equation there do you think that apple has indeed bottomed at these levels

you know, we don't seed a lot of down side, looking at -- you know, now tremendously there, but the flip side is, you know, this journey that apple has been on, to a consumer staple, manifests itself i think there's some down side, and i think the up side foreshadows that >> certainly when it go to lower levels, the selling would turn emotional, right it would become a true source of funds, a sign of capitulation, i get i'm wondering how you would

quantify that almost qualitative sense not that they want to, but they have to >> part of this is, if the markets continue to be in a risk-off dynamic, then apple is a big part of seeing risk over there. the flip side, in any normal year, this would be the time when you would be excited about apple, given the multiple new product launches that you have so it's a struggle over the next six months, and the second part is apple is probably one of the best allocation of capital returns out there, so i think it's a safer haven >> you know, there's a cloud of discussion about consumers trading down do you think about asps at this point? or have services built in this cushion, where we can afford a

downgrade on asps and have less of an effect than, say, ten years ago? >> it's a good question. historically fees have gone up about 3% for apple i think services would be a very big offset as we go forward for sure, but, you know, i always believe in the storefront. so i think the asp will matter a lot. the one caveat i would have is you can see carriers and cable companies starting to get more aggressive with the promotion. that could be a way to offset the pinch on the wallet for buying a new iphone. >> and you're also excited about the prospect for apple's advertising, saying it's an area they haven't necessarily penetrated to the extent their peers have what do you see, and how long is

the on-ramp for them to increase growth >> i think this is one of the under-appreciated stories that apple has and it's simple things from the app source becoming a better mechanism, and building their own network, but -- an amazon-like revenue stream in the next four years, so it's much larger than that. i think apple is just getting started here with their own apps >> well, as apple umaps user, i hope it doesn't affect my lack

of direction today we'll have a lot more on apple in "techcheck." as we go to a break, there's a range of names all suffering in this halo effect from target's response, though tjx is a bright spot. a pretty tight range the dow is down 465, close to session lows stay with us lemons. lemons. lemons. lemons. look how nice they are. the moment you become an expedia member, you can instantly start saving on your travels.

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welcome back jpmorgan shareholders rejecting a retention bonus at yesterday's annual meeting for jamie dimon 6 69% of investors voted down the bonus. it was grant to do dimon in an effort to keep him for another five years it comes in the form of 1.5 million options he can exercise in 2026.

it's nonbinding, meaning that he can keep the bonus if the board so chooses shares of jpmorgan, though, are down 23% this year, and there were several investors who wanted to know why performance was in the red they say there should be other factors offsetting headwinds, including inflation and labor dynamics next week jpmorgan is holding their first investor day we'll be there in person to cover it you can expect a lot of these themes to pop up next week as well. >> i'm trying to think back a precedence where an executive gave became. maybe ge as cramer was saying, you give it back to frontline workers, people coming in during covid,

something like that? >> yeah, it's rare you see these big rebewkes, especially for ceos of banks. there were proposals to bake le reject their say on proposals, but they did vote to approve them but obviously, investors start to look at it and get antsy. >> and a lot of these packages were written before now. we're going to take a break. some interesting levels of inventories are quickly turning from shortages into gluts. the dow is down almost 500 back in two.

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morning, lower discretionacy merch sales. here is ceo cornell earlier this morning on "squawk box." >> clearly the challenge for us was the back of house, from a transportation standpoint, things have changed significantly. we did not project -- i did not project the kind of significant increases we would see i think yet against, we talked about an all-time record with fuel and the costs. we saw great strength in beauty and households, but we

saw some softening in discretionary categories, including the big bulky categories, tvs, kitchen appliances, bikes, as the consumer started to shop differently. oliver, good to see you again this morning. >> good to be here good morning >> it's heart to pin it solely on execution, but how much do you fault them for executing poorly, or at least guiding poorly >> well, the consumer turned faster than expected, and the move away is a key factor, also thinking about inflation, supply chain pricing, and the stimulus as well. gross margins were impacted at both quite severely. this turn was faster than expected that being said, the guest experience, omnipickup, those

are all positives, but everyone is having to revisit that. value remains extremely important. that's why names like tjmaxx and planet fitness are names we like, but this environment has a lot of cross-currents, some of which have been very uncontrollable >> yeah, it's hard to understand how this can be going on, but various results were good. as you said, luxury holds in, but what do you expect there to be in the way of promotions and discounting, i guess specifically at target how do you think market share begins to shift? >> target will have a couple quarters working through we'll see more promotions in the marketplace. that being said, opening price

points, offering value, they'll have to invest in price there, too. but we're also monitoring inflation, so raising prices will be a fact to consider, too, and raising the right prices across the portfolio, such that you're still offering the consumer strong value. that will be important to measure and execute. that point-added risks, and this rapid shifting, thematically, carl, it's now about going out goods. beauty and apparel have been better categories, and they need to shift quickly both walmart and target stocked up and tried to offer the best service possible on inventory levels, but this turn happened much faster than expect. we had cooler weather in april that was a negative factor, too, for basic apparel. >> you mentioned so far they

have shunned the idea of raising prices, in order to be competitive. do you think that was the right move or should they have been raising prices all along >> the company will have to be very surgical about it the lower-end consumer is having their dollars taken away from gas and inflation, other factors, so opening price points, offering extremely strong value, that would be important. however, looking across the portfolio, making sure timing is right, measures elasticity and consumer response to price raises, that will be important, but you could abandon offering a great discount at the low end, too, because the consumer at the low end is under a lot of pressure, and a lot of dollars are going toward gas and energy.

>> i was just curious, it's rare to see such a big miss what do you think the street got wrong? what do you think you were overestimating relative to the results? >> i think it's been harder than expected also this relatively quick shift away from the big and bulky items, home, patio, outdoor, and the other categories faster than expected, too. the consumer is at a dichotomy, there's a confluence of factors, you have low unemployment, higher wages and dc costs. at the same time the consumers rapidly shifted how they're thinking about spending. retailers were not prepared and it is gross margin estimates across wall street did not incorporate the magnitude of these misses it's been hard for walmart and

target to pivot so, so quickly, and entering last year's stimulus was a very difficult calculation. both of these retailers made bets in terms of inventory investments. what we're seeing is the tail end of this, and now needing to work through it in various categories but there are bright spots consumers are going out again. we're optimistic with the reopening. we like retailer like ulta, luxury players like lvmh, but that's what happened the gross margin was worse than expected. >> i was going to ask about lvmh, canada goose and other names you cover, are they a safe place to hide? do you expect a big wealth effect on the high end's well. >> historically there's been a

correlation between that and s&p 500, bud a, this trend of going out, b, they have a lot of pricing power, and then restocking last night we covered lu lu's fashion lounge those are the areas that excite consumers, even apparel and beauty worked at target today. and lvmh is a global lid diversified model, with lots of growth globally, that diversification helps as help. innovation is happening here, too. what's more worrisome is the household income around 50k and what's happening with that consumer, so that's something we're watching s&p is clearly something to monitor as well as housing and consumer confidence as it

relates to luxury goods. >> a big week for europe universe, oliver good to check in with you. thanks very much. >> it's great being here. time for a nuts update kristina partsinevelos has it for us >> hi, leslie. good morning after a years-long fight, world cup price money for both men's and women's teams will be combined and split evenly among all the players. they will also share any money that u.s. soccer brings in commercially and at events the arrangements is unprecedented for national soccer teams. a russian soldier pleads guilty in ukraine's first war crimes trial the 21-year-old sergeant ad admitted he shot and killed a 62-year-old man who was riding a bicycle in a village east of kyiv, four days after the invasion began result of that invasion, representatives of finland and

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take a look at the markets here, it's down close to session lows, as the s&p is once again flirting with the 4k level we were expecting a build, but got a draw on inventories. >> the group ticker xle, up about 50% year to date one of the bright spots in the market this year, as prices at the pump hit at least $4 a gallon on average in every state for the first time ever. this marks the highest record price per gallon, $4.57, and the most expensive state to fill up a tank, california, topping $6.05. that is a lot. joining us now is john kilduff thank you so much for being here what's the price per gallon we should be looking at

are you seeing consumers change behavior at this threshold, or does it need to go higher from here >> good morning, leslie, it appears we need to go higher based on the information we got from the government ten minutes ago. the demand was a significant up tick from the previous week and what had been lackluster demand. regardless of the price here, two things at work obviously the pent-up demand and breakout of your house after the pandemic, but also, too, i'll tell you when you have a strong labor market like we're experiencing, the strong labor trends translate into what they have to to get to their jobs this morning's report was incredibly bullish across the

board on every factor. so this is going to be another element for this bull market in oil to feed off of >> mentally prepare us for how high gas prices can go >> i hate to be the bearer of bad news, but at this point i have to believe a $5 national average is in the cards. at least for a few weeks, as we get into the real crunch of the summer driving season, which is that period between memorial day and the fourth of july historically prices have always trailed off after the fourth of july let's keep our fingers crossed that that can happen we have this disruption event, you know, we're losing more and more russian supply as the days and weeks grind on here. it's irreplaceable we have a reluctant opec who won't or can't step up in some

cases, and our producers -- trying to move heaven and earth and capture the profits they're making the refiners are minting money here, incredible refining margins, upwards of $250 equivalent of crude oil a barrel they are operating at 95% of capacity on the gulf coast and here on the east coast let's not cast too many aspersions they are doing what they can to not only supply us, but also the world. our exports are also extraordinarily high. >> that's what's gone people's attention. it looked like the refined product was beginning to spread. a lot of that -- to what degree does that -- or doing their fiduciary duty >> well, you know, carl, the market sets the price. i know that's not always believed by folks, but that is

the case this is a situation where they are, quote, unquote benefiting from this war and the curtailment of russian supplies to the global market is that a windfall by definition potentially, but over the years when we've had these rallies to significant levels, there's always been investigation and there really has never been any collusion proved it's actually a very highly competitive business out there these corner gas stations, for example, they kill each other pricewise, getting people into their stores that's the big drive here. i have to keep bringing it back to an inability of the producing worth, both oil and refined products to respond to what is truly a crisis. >> right which makes you wonder, is it inability or just uncomfortableness with the long

end of the curve are you getting any signs that some of the prowess thinking that this market as longer legs, and we can turn on spigots >> they are, but they're scrambling with labor and other issues like every other industry again, i want to point out refiners on the gulf coast and east coast are operating at 95%, so you can't really put blame on them at the moment our producers, the esg pressures remain, but i believe they'll remain unshackled, and really put a licking on the u.s. economy potential. the consumer, as you saw with the target earnings, they're getting taxed to smithereens here, as they pay upwards of $5 a gallon they can't afford to go buy a

bathing suit at target, a lot of folks, now >> thank you, john really appreciate it. >> thank you earlier, it is big tech day here on cnbc. we'll dive deeper into what comes next for names like apple, microsoft, amazon and alphabet big show ahead on "techcheck." stay with us this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

welcome back to "squawk on the street." i'm dominic chu. stocks are mostly lower, we are just about near the lows of the session, down 2%, 4,900 the level for the s&p 500500 utilities outperforming. discretionary and staples are the real underperformers on the day. retail is understandably getting a lot of the attention we also want to bring your attention to weakness in another part of the consumer market, home building stocks

names like lennar, pulti group, seeing some of the renovations apply. also in the mix, look at whirlpool, mohawk industries on the flooring side of things. all these moves come as we see housing starts slip and a 12% drop in mortgage applications as higher interest rates weigh on demand consumers very much in focus, not just for the staples and discretionary but bigger stuff like housing keep an eye on that, carl. i'll send things back to you overality the stock exchange >> keep an eye on cisco as well. they are set to report after the bell chairman and ceo chuck robbins will join us tomorrow in an exclusive you don't want to miss at 9:00 a.m. eastern time. in the meantime, dow down 540. back in a moment stay with us

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welcome back sec chair gary gensler testifying before the house today. bob pisani has been monitoring and has the highlights for us. >> leslie, gary gensler is a very ambitious regulatory

agenda he needs more money to do it he's testifying in the house seeking more money for the sec, in particular for the sec's enforcement division saying in his testimony the additional staff would provide the division with more capacity to investigate misconduct and accelerate enforcement actions however, gensler's aggressive regulatory agenda is attracting the eyre of republicans and some in the business community alarmed at the potential avalanche of new regulations gensler is proposing gensler has over 50 separate new rule items under consideration including on climate change, board diversity, spacs the appropriation committee's ranking member, republican steve womack shot back at the agenda in the hearing here is what he had to say

>> i don't think we have that. womack basically questioned whether or not they should be actually going ahead and dealing with these kinds of issues and whether it was in the sec's purview to do that he also questioned gensler about complaints that the sec is not allowing companies time to respond to all the proposal regulations. gensler said they were allowing a minimum of two months to respond, and in the case of particular controversial issues like climate change, the response time was actually extended representative dane joyce in particular questioned gensler about his proposed climate risk disclosure rule. gensler said companies are already making disclosures around climate risk saying the sec was simply trying to bring standardization to the disclosures already which he says are going to help issuers and investors. the bottom line is the republicans are pushing back, saying the agenda too ambitious, too much, too fast, slow it

down i'll be monitoring and let you know if anything else happens. >> ambitious and expensive bob pisani thank you for monitoring that. that will do it for "squawk on the street" today. "techcheck" starts right now good wednesday morning welcome to "techcheck. i'm carl can't nia with deirdre bosa and jon fortt the nasdaq down almost 1% today, erasing all of yesterday's gains and losing a quarter of its value for the year today across cnbc we're doing a deep dive and focusing on a few things we talk about a lot, amazon, microsoft, alphabet. main holdings in nearly every retirement fund and 401(k) together the stocks make up more than $7 trillion in market cap and 17% of the s&p 500 it has not been an easy start to the year take a look at the market cap lost in