companies, good balance sheets, good free cash flow. that doesn't mean they won't go down they may not go down as much as some of the high flyers. you have to be careful and selective. i have a bit of extra cash on hand, buy on the dips. >> okay. and people lose their pets on july 4th, so i don't know what to do with that either xanax or something i just read that thanks, stephanie. right? >> earplugs. >> join us tomorrow. see ya "squawk on the street" is next >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with paula creamer live at post 9 of the new york stock exchange. david faber has the morning off. a bit of a back-and-forth on futures this morning, a cooler than expected s ed german infla. but final gdp consumption gets cut in half here

both bed bath and pinterest shake up their leadership teams. fedex holding its first investor day under its new chief. then the cruise stocks getting crushed in the premarket morgan stanley cuts its target on carnival and lays out a bear case of zero dollars we'll start with the markets following another failed attempt at a bounce. the s&p is a day away from its worst first half of the year since 1970 earlier this morning cleveland fed president mester said she backs 75 in july if conditions remain the same. >> if conditions were exactly the way they were today going into that meeting, like if the meeting were today, i would be advocating 75 because i haven't seen the kind of numbers on the inflation side that i need to see in order to, you know, think we can go back to a 50 increase. i think getting interest rates up to that 3% to 3.5% is really important that we do that and do

it expeditiously and do it consistently as we go forward. so it's after that point where i think there's more uncertainty about how far we'll need to go in order to rein in inflation. >> jim, she said it was not a precipitating event. >> i have to tell you, one of those mornings where you see the dow futures up then you read the research everything's horrendous. you have people saying, listen, here's 27 internet stocks down, 22 semiconductors down bitcoin, we can't profit up any more but the bed bath was benchmark it may be the new brass standard bed, bath & beyond had central sales down 27% i will say this, there are very few companies in retail that

have ever recovered from down 27% that have made it. that's something you have to watch. they have a new ceo, and i wish her the best of luck, but it's almost never able to come back from that kind of same-store sa sales. >> comps low, big miss sharp fluctuations in purchasin patterns led to dislocations in sales and inventory. at least the q1 revision to consumption, jim, we were at 3.1, went to one-eighth. >> how can we -- look, i have to tell you, i know that i really like mester, and i've called for 100 basis points things are happening faster than i thought here in terms of things falling a part. >> you said it yesterday >> micron i think will report a bad number and they'll take down all the semis because people feel they should be the same they're not. there are many semis doing different things

i'm not saying this is a wildfire i am saying that there's no positive research except for maybe the banks, and even there there's worries about credit risks. we could be whistling past the grav graveyard. these are just really bad notes out today. >> jim's referring to a note out of jpmorgan. cutting numbers on 26 internet companies. you know them all, airbnb, meta, google, netflix, 83% chance of recession in three years he says all the companies are at risk >> the research had all been like cutting my price target too but keeping it as buy. now we're starting to get the nitty-gritty where people want a downgrade. that will be part of a bottoming process. like i would love to see someone downgrade the home builders. that's what you need you need these analysts to put up the flag. it's kind of happened before we

get a bottom they're not going to be right. they're not going to, like, cut -- not going to downgrade at the bottom they're at a downgrade now i've got to tell you, that was smart, the semi calls were smart, chris stanley, whom i like very much, citi, he is saying things about micron that basically say if you're long semiconductor in the next 48 hours, good luck >> right >> i just think these are very powerful calls >> yeah. jim's right. citi takes micron to 85. bofa takes nvidia to 220 the street is catching up. >> it is >> net positive? >> that's a net positive we needed to see that. it's so brutal when you see it, but you need to see it when you see bed bath making the change at the top. i have ben on tonight. you see is that and couple it with mccormikcormack missing th numbers. it's a spice company

that was unbelievable. thank heavens for general mills. >> i know. >> oh, my got. it's like thank heavens for che cheerios >> general mills beat base 1 -- beats by 11. but a classic defensive staple >> i have them on all the time it is a fantastic company. everyone has supply chain. look at that thing that's going to be hurt. i'm saying for every one positive i have three negatives. i don't want to get ahead of that and say that's why you're at the bottom. it's part of the bottoming process, but it's so painful you have the commodity stocks rolled over first. now you're having tech people are still hiding in finance and health care. health care, some of the stocks were down badly yesterday off of inflation. i see the futures and say what do they know i'm thinking maybe they're going in >> i want your take on yesterday's price action because

we came into the week talking about rebalancing and quarter end. mark newton, a well-known tech technician, said it was the reversal on nike that could lead to new lows. he said this rally looks complete for you do do you agree >> williams says don't write off the rally. i'm with you the cycle positive is right here let's talk about nike. we spent a lot of time on that last night there was a moment in the nike call when the cfo said these supply problems, they could last for years. and i so much want a do-over i want him to come on and say remember when superman, set the world back eight seconds >> spun the world around. >> one of my favorite segments we need to take that back. you can't hear that everything that went wrong is going to go wrong for a long time. it's funny bed bath used to be largely american sourced, but the ne ceo came in and said we're going to source it from overseas and

save money it seems like in the middle of the pacific is just a gigantic amount of inventory for everything and it's just not the right time maybe ollie's. i'm a member of the ollie's army it's the only army i feel is secure at this moment. ollie's is going to get so much stuff from target, from bed -- bed bath is a disaster the conference calls one of those -- i used to work with larry kudlow he does work for another network. when i was his partner, if he wanted to eviscerate someone, he'd say "with all due respect," and boy you had a lot of those in that conference call. it was like homelander >> by the way, you mentioned bed bath we might as well mention shake-ups. bed bath replacing dollar tree mark tritton, interim ceo. you have pinterest, ben silverman stepping down,

positioning to the newly created post of executive chair. replaced by bill ready >> that's great. >> by the way, new cfos at mcdonald's, at otis. is there an army of executives who have no interest in -- >> otis and mcdonald's are doing well dollar tree looks like a coup. top four officers. mcdonald's is doing so well. we have an upgrade today >> atlanta today >> this is the stable character in this period very interesting that pinterest is up because i could not believe we got that person from google very high level. ben's a founder, ben silberman, a founder, nebraska guy, really terrific gets into a business that is really kind of a happy business. and then you get into the pandemic and it's got great recipes.

i made something once from pinterest. i made -- i boiled an egg. it was incredible. you put the water in a little salt. i knew everything after that but now people are going out again. it is the travel section of pinterest, but the -- no one has any hobbies with this covid. >> bed bath's market cap is half a billion dollars. >> then they bought back stock again. they have $88 million, goes to $79 million. negative remaining cash flow they don't have -- they have a credit line, but they don't have enough money >> at what point do they mean less right? at what point are they less of an overall sale because they're small? >> well, did you know that last week david faber said i don't want you talking about it, it's too small. >> yeah. >> it's kind of like, frankly, it's little bit irrelevant but that said, it was a big chain. and it's going to resonate if

something really goes wrong. terrific store at 18th street. you can't have this go on. sales are small, but the fact is that it's very visible and, you know, you're starting to put together some thing where is people are say saying, you kw what, the carnival call, when you see that bear case zero -- >> a morgan stanley hallmark >> bear case minus 5 i say one of the great things about stocks is they stop at zero that piece was so bad talking about the big increase in interest costs so, i mean, we have some calls that are really negative former ceo of golf smith, 2008

to 2014, she was not affiliated with the bankruptcy. >> on carnival, though, you're not disputing there are companies that even with all the age of covid got overleveraged >> yes but frank del rio has a cruise from reykjavik to amsterdam. it is going to be something. i even approached my wife with it because it is going to be -- we're talking about [ inaudible ]. >> really. >> my wyche isife is interested. >> katie has a lot to say. >> i think frank del rio has the best balance sheet my daughter went on a fantastic norwegian cruise a few years ago. there is -- they have younger demo, which is why i shouldn't go i don't want to ruin the demo of anybody. >> we talked about the cramer cruise >> i wanted to go on this one

but not enough august. it's ahead of garden season. >> you have to tend to the guarden. >> yeah. >> barclays initiates at least rcl overweight >> thank heavens that was good. some cheerios. i need that. who else they got besides cheerios honey nut. >> lucky charms. >> i always ate the charms and left the rest of the stuff none of that was good for you. >> a big kid >> do you remember we were so poor we had to eat the fruit cocktail and you would eat the maraschino cherries and your mom would say tell kids at the school it was good enough for the astronauts >> pop-tarts, tang and hungry man >> and hungry man. and how about those pizzas on saturday night for celebration my mom had me fooled, thinking we were like, i don't know, like

hedge fund billionaires. jim, you're a hedge fund billionaire. here's a slice of helio's. >> we'll talk to fedex, holding ils first investor day in a whe. futures have hung in there and are maintaining action to the upside back in a moment

europe is in worst shape and the geopolitical issues there. the u.s. is somewhere in the middle on the u.s. side, you know, the consumers are spending but they're spending more on services versus goods. so we've factored these things into our calculus. the good news for fedex is our network is so vast that we're able to flex up or down depending on the volume levels >> the ceo of fedex, the company holding its first investor day in a decade. fiscal 25, 14%, 9% >> he did a fantastic job. i said here's a company in

control. he created something fabulous, but this gem right now where they've got europe -- you know, i've got to tell you he left them so europe is good with at&t they can switch the services i was with amazon web services and they clearly did overbill. that was their mistake but e-commerce is still strong so it's one of the few things that is strong right now, and i think fedex is going to have a great year >> so is it a bet on global growth, reaccelerating >> it's a bet on them being in charge of their destiny. i've always felt they weren't. i always felt they would get beaten by whatever was thrown at them now i think they know how to regulate, the cost structure will go down this is one of the few stocks during this period that i can say i like it because they've

gotten very good >> so can it take over the action versus u.p.s. >> u.p.s. has a very good contract with the union. now, the last quarter wasn't nearly as bad as people think it was. i happen to think this idea that everybody is down to services, that's a summer thing. by the end of the summer they'll run out of money. phil lebeau. if i have to listen to one more airline with prices so jacked up, eventually people are going to start taking a car. who doesn't know someone whols flight wasn't canceled >> delta made it easier to change your flight because things will be tight on the holiday weekend. >> people are tired of overpaying and not getting i had spirit on last night you think it's bad now if jetblue buys spirit, they'll shut down planes the only cheap air fares in the whole country is new york to

west palm. that's because there's so much competition. i am adamant that jetblue could win on this. it's almost laughable. >> we'll talk more about the airlines, especially, you know, wholesale gas, 50 cents off the highs. do we start getting some relief by the summer? >> we have to have commodity relief and then soft landing jay is the man >> powell is making some remarks right now. >> does jerome powell not look like ten years older i have to send some of that hair care for men i love this guy, okay. but this thing is getting to him. it's getting to him. he needs our support >> we have a big back half of the year ahead we'll get cramer's "mad dash" and countdown to the opening bell hold for peyton. they'd huddle....

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remarks from jay powell. he says there are pathways to get back to 2.5% inflation but they are narrower. he says households overall in a strong state and the same is true for business, but the economy would wti stand some of these policy moves we'll see how that moves the markets. opening bell in about six minutes.

cramer's "mad dash." he's watching goldman. >> thank heavens this is a very big call. bank of america upgrade to buy goldman for protection against the to coming storm.

goldman has always done well in this level of volatility last quarter goldman said if businesses close, we will take action when i was at goldman, they closed a division because it did poorly those people were suddenly out it looks like that goldman will take care of whatever business is bad i really like this call because in this moment where goldman trades at a ridiculously low price to earnings multiple -- >> buy goldman, at 300 here. >> i'd like to see where it was back to 280, but we're seeing every semi trade down and drug stocks trade down. this gold goldman piece is very good >> dip about 25% >> morgan stanley, nobody talked about the buyback that was gigantic i like what goldman did. david solomon is doing quite well i think he's underrated.

i think people don't understand that he can -- that he's a good operator i think people will be very impressed with this quarter. >> is it necessary to make moves on the consumer business i mean -- >> oh, they got -- i made comments about that because i think it's time to say fish or cut bait but they think the losses aren't that big but i just say, listen, goldman, go back to being goldman >> we'll keep an eye on it, yeah obviously quite a week for the banks. >> amazing everyone is so negative. that group is a keystone group and i really like it i've been struggling not to be too negative >> there's a lot of, as you said, a lot of the research today is on the cutting mode >> yeah. >> cutting numbers and targets >> i have bed, bath & beyond on tonight and i'm going to buy like 400,000 cows. we did get one upgrade of ulta >> i know.

i was at ulta last week. they're great. look, they have really good mac. spouses out there, you can surprise people. the prices for estee lauder stuff, it's killer ulta beauty is killer. i don't need the beauty parlor because i can just -- >> just like -- >> yeah. i give myself a $20 tip when i'm finished >> jim, we're going to the keep our eye on as you said a lot of chips, not just the micron call today but watching qualcomm, the news yesterday about whether or not you supply apple for a little longer. >> i went right to the ceo, and i said, listen, what do you think? i'm obviously not going to get into the information, but nothing, crickets. and if they get -- if they can maintain that contract, then someone will say, well, apple doesn't have as much business. that's wrong

and dannizeman -- >> on chips? >> is it really on >> i don't know. it would surprise me, but -- >> i think apple is going to be knockered, but i think i have to be one of 337 million people in america who know that. >> it's going to open flat, at least according to the big market the opening bell on the cnbc exchange at the big board, ibm celebrating its finance internship program with west basis point. at the nasdaq,e centers for line lgbtq. >> let's understand brought down amd. i know pat pretty well,

gelsinger, this is not as important but two weeks ago she said if you think this control most of our business, you're dead wrong xilinx has helped them single digits now. by the way, i've been working with nvidia on interesting stuff on the internet of things. if you're selling all these things on intel, you'll end up getting hit upside the head. they'll give you the business. there is no way that the smh should control every single semi and nvidia is down here -- at 300. >> jpm wrote a note saying a lot of questions for people about amd weakness they say from a positioning standpoint, intel would be down more if anyone owned it but alas, they don't it's gotten to be -- >> that's interesting. pat gelsinger busy with secretary raimondo from commerce

he's busy trying to get more plants in ohio but he is trying to introduce the mobile ipo that's ready to go but of course the ipo market is completely closed. i bridle at the amd linkage. marvell linkage is quite wrong it's 5g and this is not 5g marvell is high-performance commuting, a note from andy jassy telling adam yesterday, these should not trade together. they do. mark murphy from marvell, when he was on, his business has got nothing to do with intel nothing. but, wow, marvell's charge is really horrible. but i just think that the idea that all these companies trade together is ludicrous, but the etfs are very powerful >> overall the opening action is sort of an echo of recent days, a lot of energy and a lot of

defense, right >> right >> defensive consumer names, general mills, kroger, but exxon, pepsi, hormel -- >> hormel not a great quarter. very interesting i have to hand it to general mills. i mean, you know, they were down and out and they've made a comeback and mccormick is only down three. they are getting the respect of people the defensive stocks are winning today. kroger and cisco are doing so well cisco, which is the company that provides restaurants with food, they've got a fantastic ceo, and i just think that they are doing everything right and the restaurant businesses are surprisingly doing much better than i would have thought. they have ken. go back to when jamie dimon invoked the hurricane, you wish he invoked that storm.

storm front. >> the weather metaphors t-5, hurricane >> i'll have to get to him he has to drop those he has to switch more to sports metaphors. >> the market is not rewarding paychex's beat pretty strong guide. >> you know, look, i'm going to have marty on tonight. we'll change that entire narrative. those who are selling this, listen to the show tonight see what they say because maybe the guide is not as strong as i'd like look how it's done over a three-year period, not a six-month period i think you'd see it's rather rema remarkable we have to hear what they say about small business things are going very fast web services could save us

anything retail that has something else cooking is good anything just flatout retail not so good. >> i don't know if you noticed in the f.t., the reets because of a likes of a microsoft, google, when they want to design their new center it's to their own specifications. >> amazon has way too many prologis the best in the group there are too many data centers. >> color centers >> what is that? >> that's his point. although the overall pie is growing, it's their enemy. >> amazon was so abject about how terrible their quarter was, they said it, listen, we

overbilled what happens to america if this pandemic continues so let's build out for that. and adam said to me, look, we're doing it again, doing it very patriotically. i know people are thinking amazon -- but they were. they were concerned about our country. and i continue to believe that's a buy. my travel trust -- we bought it when president trump said that the postal service contract was bogus. >> oh, yes >> yeah. that was a good time to buy it in retrospect. >> bitcoin trying to recover 20k today. saiylor says they bought an additional -- average price of 30,000-6 >> like titanic. >> stubborn.

>> he's kind of a dead weight, maybe a dead-weight situation. >> and then we're reporting that three euros b ha asked to liquidate. >> how do you like that? >> blocked withdrawals celsius. >> yet they hold it at 20. is that sam? is he holding it there it's like atlas, you know? or prometheus. we don't know whether it's this -- we don't know. >> it's funny, we had scott on" yesterday. >> you were on nine hours. >> the larger point was about the fed and the degree to which they may or may not break something. i don't know if we have that sound. take a listen. >> the bottom line is until we maithreyi seetharaman some amount of panic here or something that gets the central bankers concerned, they are

just, excuse the expression, hellbent to get inflation under control. >> such a great interview. we were spellbound that was a really strong point he made. such a great interview, carl i thought maybe we need that level of panic and we haven't had it that said, to see it happening when micron reports a bad quarter and everybody who didn't realize that the semis are week goes to town and hammers them. after that, we want to look at this if they get inflation under control, we seem to have forgotten that china opened up shanghai disney. we haven't talked about bob chapek yet >> they're going to open museums, movie theaters, indoor sports beginning friday. china is at a three-month high >> china is coming back.

we don't have anything definitive, you know, russo-ukraine. we know they had a soft quarter which surprises me because they have the switchblade drone, but they had supply chain problems and weaker orders. but china, i mean, i reiterate that sbux seems interesting here >> maersk said the ports are operating well labor secretary walsh says the port workers deal appears to be coming along >> walsh doing that, you have secretary raimondo maybe getting the $52 billion, the semi -- there are some things going right, and i don't want to overlook the fact that china is going right. it's a big change. let's not forget it. >> let's dig into chapek just a bit. was it a surprise, this morning's report >> amd is down so much

those who are close to this would say absolutely not there are some huge -- big shareholder on the board, there are a lot of people sick of the sniping, people who don't like what chapek is doing i think that chapek runs the most important -- theme parks. the iconic version let's get away from viewing this thing as disney plus if they reinstate the dividend, we're all going to say why didn't we buy the stock? chapek from becky quick's hometown. >> is that true? >> not necessarily a reason to buy it there was nothing about my texas to mexico theme park >> all in good time. >> christy mccarthy likes him. i've met chapek several times, and i think people don't realize

is you don't want to get into the business of owning a theme park the moment that a giant pandemic comes along where you can't be with other people i think he's done a remarkable job. i think you should give him the benefit of the doubt three years seems right to me. >> you've long talked about it as maybe the only name if you had to pick one to buy for your kids >> my kids can't own stock well, now my kids aren't kids. they can do whatever they want >> exactly >> they know i have a show, thank heavens, unlike everybody, my wife, others who were with me for quite a long time, but i do think that disney is the kind of thing that -- disney and mcdonald's were the two, and then mcdonald's kind of discovered it wasn't that good for you, but i still like it disney is not going away it's not these people keep selling it as if it doesn't matter >> jim, tesla, i think down about 3.

we have these reports of they're closing the san mateo office, some layoffs in the autopilot unit goldman does reiterate a buy today. as the car business, jim, toyota just missed their production target for the third straight month. >> goldman had negative things to say about autos this is part and parcel how you get a bottom now everybody thinks that musk is not doing that well, saying some bad things about gm can we just admit for one moment that gm is an inexpensive stock at four times earnings obviously not going to make the numbers. amd had an analyst meeting two weeks ago, well, now three weeks ago where they reiterated guidance now down 20 points so, i mean, the negativity is really building, carl. really building. and that's important for a bottom, but we don't have it >> yeah, well, because investors are trying to do the calculus of at least household balance sheet support. your friend doug katz thinks

there's so much uncapped equity in homes that there's balance for any further weakness in the economy later this year. >> the consumer is strong but they have the 401(k) and i'm glad he's saying that. i think the consumer is the strongest part of the economy, but i'm worried about enterprise and europe do some work with interprice later with nvidia, but i think when you see that the general mills is the strongest, that's not necessarily a sign of a great economy. >> right we remember the darkest days of the pandemic, hershey, kroger, general mills. >> it's still done great i think, you know, really the only company is hershey, then m&m mars, which is private that's really it the chocolate business is -- yeah, cadbury, but that's an outlier. i'm watching this market like a hawk i see apple up today i'm saying who is buying apple given the fact that everything we hear is negative.

i think somebody would want to get ahead of what could be a -- the crescendo. that's a mistake wait for the crescendo just wait for it >> and you don't think that -- i mean, when people talk about 3,500 sort of medium drawdowns in bear markets, you don't discount that entirely either, do you >> i can't because you have mester saying, look, we can go 75 and yet we have deflation in so many different places i'm not saying it's a perilous moment i am saying it's not a bullish moment people are kind of -- like, the nasdaq could be down 3% and no one would say a thing. >> our 14th two-percent drop of the year >> i really want to come back to marvel they had an amazing quarter, great numbers across the board, high-performance xurting, web services, 5g selling well, and the stock goes down almost every day. >> it reminds me -- we'll see

bob pisani in a second, but it reminds me of ackman's tweets that the reason confidence is so week is not because of the economy. it's because of inflation. like you, arguing for the fed to just put the hammer on inflation. >> do it >> and you get confidence back >> get it done i don't want this to be led by good chocolates and general mills and hershey's. we don't want that leadership. >> let's get to bob pisani good morning, bob. >> just in positive territory barely on the dow jones industrial average, carl, s&p down 17 points same thing as yesterday. do you really want energy to be leading? oil at 113 oil is a proxy for inflation so if you're hoping for some amelioration on inflation, the answer is no consumer staples, health care, doichs groups and the semis getting hit hard, nvidia,

paradigm all on the weak side. a lot of discussion about cost issues on the earnings reports you'll hear this a lot when the earnings come in in the second half mccormick cut their ooh outlook but higher costs and supply chain issues general mills had a pretty good report but they talked about double-digit inflation bed, bath & beyond was a complete disaster. that's down big. they talked about steep inflation and used the phrase fluk chew wagss in purchasing patterns you'll hear this a lot about cost issues. we'll have second half, going into the second half in the next couple days. there's two big trends in earnings that are very obvious to me. one is the s&p earnings estimates are up 10% this year there is no recession built into the earnings models right now of most of these analysts two is a lot of this profit growth we're hearing about this year is actually emanating from one sector and that's oil companies. it's good to be an oil company is it a lot? you are going to go a whole career without seeing earnings

estimates this high or oil estimates this high. exxon is going to have almost a 100% increase in earnings estimates here the important thing is today, january 1st, estimates were up 8%, now it's up 10%. so why is this important because in a typical recession, earnings decline about 20%, so the analysts are not pricing in any recession at all in their earnings estimates that would be typical to see here. meantime, i want to mention this oil company's numbers. you'll go your whole career without seeing numbers like this year over-year estimates, they're gushing cash and profits. exxon 100% 2022 numbers, not the quarter. occidental 300%. eog almost 100%. this is what's pushing up the overall estimates for the s&p 500. this is not true of a lot of companies. sectors are declining from the beginning of the year like

consumer discretionary and communication services look at some big names out there like amazon. these are '22 overall estimates right now for the analysts for these companies, down 77%, meta down 16%, starbucks down 11%, netflix down 3%. these are in two specific sectors, consumer discretionary and the communication services but you to get the point it's oil companies and other companies on the far end like amazon and meta seeing rather significant declines in earnings estimates. it's not a smooth picture we're seeing meantime, and i agree with you, jim, about this, it's really good, finally somebody like jpmorgan comes up and says we're cutting our estimates. that's what we need to start happening, not necessarily they're imminently pricing in a recession, but get a little more realistic on the numbers jim and carl were talking about jpmorgan cutting estimates on 26 internet names here. they're modestly down here right now. the important thing is that

process has started and, carl, i think you'll see it accelerate in the next couple months. how about you? >> absolutely right. >> bob, appreciate that. bob pisani as we go to break, let's look at bonds. yields are down across the board. see how treasuries are faring. an interesting question to powell about whether or not he might overtighten? is he right to worry about that? is there a risk we would go to far? there is but the bigger risk is we would fail to restore price stability.

carnival is going to lead the s&p lower. we mentioned the note from morgan stanley reiterating an underweight and zero dollar, saying the $20 billion in debt would imply the need for an equity raise

that said, a bit of a whipsaw here we were down tess open the dow is now up 0 in. 20pots>> incredible. we'll have stop trading with jim in a minute.

it's time for jim to stop trading. >> i will say it's nike. nike bounced off of 101, now it's up. it had again, if they had not dropped that bomb that there could be multiyear problems, the stock would not be down like it was yesterday. given what we heard, i'm more optimistic >> unfortunately there's only three real carriers. i sense they all kind of talk to each other >> yeah, don't tell the white house. >> no, no, no, or the department of justice or antitrust. i don't think we would be in love with that sprint tie-up the body of work his's done, saying he would quash any deal like that. tonight sounds like a great show. >> i have paychex, and then ben

silverman handing off to bill ready -- i love ben. i think he created a site that's wholesome and terrific >> we look forward to that, jim. >> thank you so much. good work this morning. >> thank. we're going to stay on top of the markets, swirls down a 'rstl t wee ilinhe low 3800s don't go anywhere.

good wednesday morning welcome to another hour of "squawk on the street. i'm karl with leslie picker and mike santoli a bit of a chop here this wednesday. a lot of crosscurrents got powell and mestrom on. tape >> all before the holiday weekend. here are the three big movers we are watching today, starting with carnival. morgan stanley say it could

potentially go to zero, that's the bear case, given the dead levels carnival also falling on that call plus mccormick under pressure as well, after missing estimates. inflation and supply chain pressures hitting sales for the quarter. bed back and be-- bed bath and beyond, with the ceo stepping down from his role immediately >> as we said, stocks pivoting around the flat line as the street attempts to regain its footing, cleveland's oop calling for -- >> if conditions were exactly the way they were today, going into that meeting, like if the meeting were today, i would be advocating 75, because i haven't seen the kind of numbers on the

inflation side that i need to do in order to think we can go back to a 50 increase i think getting interest rates up to the 3% to 3.5% is really important we do that and do it expeditiously, consistently as we go forward. it's after that point where i think there's ncertainty how far we need to go in order to rein in inflation. >> joining us to discuss is jonathan glib, and ali mccartney, both on set today great to have you here ali, what do you make of mester and powell today >> last week was an interesting week with a bounce we had. you had xhots yes, i did down, inflation expectations down, and obviously the market lined that. what it was in response to was that a really, sustainable part

of the market, or was it a flip of the coin we seal every morning? we had a great week with great data wet very mixed or negative data come on this week, you know, where we are at ubs is pretty simple we have four scenarios, reflation, a slump and, you know, and a soft landing basically that -- to 50% chance of getting to an up equity market so it's going to be continue it's going to be a rough summer. as i said in my note, my kids always ask me, are we there yet? my clients ask me, are we there jet? we're not there yet. >> so far the the numbers getting cut, are they late to the game, or is this a sign --

>> everybody is talking about the numbers being cut. we tracked the numbers they're not being cut. here is what happens every sing the quarter. the quarter end, the company's preannounce only the bad news. if they have good news, they hold it off. the estimates on average fall by about 4% going into earnings season surprise surprise, you get a 4% beat and you're back to where you started. is the surprise is that in ago re gatt the numbers keep sliding incrementally higher this last quarter we had a positive surprise by almost 7%, the prior quarter was 5.5. i can't imagine we'll not have something in the ballpark of a 4% to 6% positive surprise

all indications are that this is going to be a healthy earnings season, not the opposite are the numbers weakening? absolutely, but there's a difference from going from really strong to moderately strong, and we're not in the recession camp yet. >> i'm interested in this idea of clients want to know if we're there yet. even in the prior decade, people who served clients had to force them to take more risk for a long period of time. now are you saying they're essentially eager to either find out their risky bets will pay off again, or they want to get more exposeius to equities right now? it seems as if households are the one area that have not really unwound -- >> i would say on the left of private wealth management, the answer is both

people desperately want to know that things are okay with what they have right now and they can jump mind you, for my client we're not talking about a time horizon of a day, week or month. we're talking truly long term. clients have forgotten, to your point, they're not entitled to a portfolio return every year. stocks and bonds can go down at the same time. so there is this sense of anxiety, a sense of having too much liquidity, which i think is -- but when -- thank goodness you have money market deals, but when inflation is 8.5%, it still doesn't feel that great. i think people are trying to figure out should i be stays in my macro hedge funds, or can i do what work in the past?

>> when you have more inflation -- earnings are measured in nominal dollars. think about going into your hardware store, they're marking the costs of lumber every single day. a gas station makes more moan when oil prices are higher, when transportation costs go up, airlines make more, because they pass it on to consumers. so when you think of a margin squeeze, that's not necessarily what happens the real risk here frankly is the economy slows, the inflation falls off and then you get the margin squeeze >> alli, i'm going back to the four scenarios that you have for investors right now, is

there a way to make sure your down side is protected >> well, look, portfolios in general, there's no place to high, right? you've already been impaired to a certain extent going forward, the answer is old-schooled diversification there are -- there's an area in that hedge space, macro, these kind of things, you know, that people almost got rid of almost the last decade, but now 3%, 4%, 5% of those now, and those are protecting clients have to remember commodities, and you haven't for decades. i think we'll see a super cycle there. even though we've had 30% in oil. >> you know, when i'm talking to hedge funds, who have the ability to go between stocks and bonds, some do, some don't,

they're seeing corporate bonds, in many cases, where they can get 4%, 5%, and many of them are saying that's not such a bad down side. to your point, do you keep up with inflation no, but it's still -- are you seeing clients moving in that direction? i am seeing hedge funds talk about it a lot. >> absolutely. the risk is if we get into a stagflationary environment, then you do have a problem. that means you need the hedge or those uncorrelated assets, but absolutely bounds are back we're going -- this has been a lot of pain, but we're going into a new regime of what portfolios look like >> great to have you both on the set, thank you so much jonathan and alli. seema mody has more for us

what do you make of this note and what are your industry sources telling you? >> so, leslie, what morgan stanley is doing is highlights the worth-case scenario in which the high-yield market closes or there's a demand shock that could raise the likelihood of raising even more dead or issues equity. carnival 'cfo defended the decision to raise interest to 10.5%, and detailed plans to refinance about 2 billion. the company has about $7.5 billion in liquidity to service the debt obligations the ceo last friday said he's open to selling certainly brands saying our job is to always keep an open mind we would evaluate any and all options. we will only do what makes sense

to shareholders. i got an update from my sources, that they are still in discussions with the saudis, but that discussions are moving notoriously slow the current c.o.o., john weinstein would takele helm in august, and one of the challenges is instilling confidence in investors, keeping costs down as oil prices rise. carnival currently versus 90% of the ships at sea they consume a lot of fuel just to put the stock in perspective which, of course, is down this year the all-time high in '17 was around $18 a share >> seema, thank you very much. president biden meantime, along with the other nato

leaders meeting in madrid to confront what they see as the increasing threat posed by russia kayla tausche is live in madrid. >> reporter: hi, mike. the alliance is distilling the threat into a summit declaration, nato calling the russian federation the most significant and direct threat to allied security, peace and stability in the euro-atlantic it's a marked change in a its approach it comes as ukraine's president this morning told nato leaders, their countries could be next. allies have or have planned to deliver. he also asked for security guarantees where allies so far have wavered insurgent stoltenberg speaking here earlier in madrid, saying nailo is prepared for a long-haul war, and it's up to ukraine to secure its

independence. >> our focus now is to support ukraine. this war will, as most other wars, at some stage end at the negotiating table, but it is important that ukraine is able to get an agreement on their terms, which is acceptable for ukraine. later today, president biden will meet with the president of turkey, a nato ally, who still maintains ties to moscow and has urged the fast-trach sale of jets and software. the assistant secretary of defense for international security affairs said the united states supports turkey's modernization of the fighter fleet, because that's a contribution to nato security and therefore american security. already today the u.s. announced it would send more jets to the united kingdom and more guided missile destroyers to southern spain, all of this as the u.s. is also announcing the first

perm northwestern forces on nato's eastern flank those will be in eastern poland. >> what a historic amount of announcements for this summit. out with the old, in with the new. the latest a c-suite changes today. don't miss a check on the chip we have wall street's key winners and losers. finally fedex kicking off its first investor day in a decade we have a big show ahead, the s&p is up about 0.3% don't go away.

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two tickets to nascar! yes! find rewards like these and so many more in the xfinity app. fedex is holds its first investor day in over a decade. >> the new ceo laying out new financial targets to increase shareholders return here at the first investor day in a decade, in a room right here behind me fedex shares have rallied since june 13th, after their announcement we spoke exclusive with the ceo earlier today. >> it's signals a confidence in

where we think or business in and where we are going forward then there's enough cash flow for us to drive back to shareholders and dividends. >> here's the details of that plan fedex is targeting at least 25% above the previous goal of above 20%. eps growth of 14% to 19% annually, also market expansion. missed margin forecast last quarter, he says the wage pressure is lessening. >> at this point the labor market is strong, but it's, so weapon to make junior we have pricing above inflation and improve productivity in our operations

as well as growing their small and medium-sized business space. back over to you. >> frank, thank you so much. fedex not the only company shaping up its c-suite bed, bath and beyond is replacing its ceo. pinterest co-founder ben silverman is also stepping down, transitioning to the newly created post of executive chairman he'll be replaced by bill ready. clearly tonight a lot of movement as frank was discuss. also, at bed, bath and beyond, notching a settlement, adding three directors to the board

to get a sense of what is going on behind the scenes a source said he had actively been pushing for tristan's ouster he believe that he was overpaid, ineffective. he disgrad eat strategic side, but cohen declined to comment on the recent moves clearly, as we reach the second half of the year, some of these active activist situations are really shaping up tox moment on you material assets. >> i guess you could argue, too, probably through whatever pandemic slump and rebound we're in, a we're cyclical spot, obviously different situation. bed, bath and beyond really hand

taken hold pinterest, another tech founder moving on. we've seen that in the last year, but it does seemed to make sense to be the time to reevaluate the annual tenure of a tech ceo, the average is about five years. retailers tend to be in the neighborhood of exist inchally risks, to be frank. >> the debt of beth bath now trades -- there's a very big risk out there, trading 13% to 32% yields now, some of that is very long-term debt it doesn't seem like a near-term crisis point, but that seems to be distressed retailers, yeah. meanwhile, after the break, another tough month for the semis, on pace for a first quarter since 2008

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it is markdown season. the amplify etf ticker ibuy down, back to its inception in 2016 also with names like threatup, all of them down 70% iismgts another sector is chips, continues to way on the sector >> it's down once again, and on pay for the worst first half of the year every constituent in this etf is down in june.

>> you can see a screen of red on your -- what is the big concern? chips are cyclical in nature we've seen this with pcs, and 5g smartphones, and then gaming cards, too, they're also weakening falling in tandem. bank of america analysts question, what is next then, the gp pricing have been declining for the last little while. specifically you're seeing it that's hurting nvidia as well as amd, wall street is pretty downbeat on this company barclays lowering the price target qualcomm did rise yesterday, down about over 2% today, but an analyst predicting apple to use

the mod manies for the '23 iphone so it seems like investor strength is looking -- >> potentially, thank you, kristina, for that thank you very much for being here, matt do you think that there is further to go in terms of weakness in these names? what kristina laid out is exactly correct, that there are concerns that the weakness on the consumer side, and surge i have run into some data points that suggest not so much cloud,

but that enterprise demand is going to fall off. fundamentally, i think there's still room for conditions to worden when you look at valuation of some of these stocks, though, something like a micron, where -- you can certainly make the case that the down side is limited here are there certainly areas where you see some bright spots? >> yeah, we also have a backdrop where you have a bunch of larger trends in semiconductors, that are causing share shift that are creating long-term opportunities. so certainly on the service side of things, easy i'd of thing, i think the story is all about cher cake. the actual market matters less

than how much share they can take from intel. i seen them as well positioned to they are a beneficiary of some of these larger trends. in fact, like the growth in a.i., where there's support in nvidia, so i certainly think there are share gainers keen to outperform, even in a market downturn. >> you mentioned nvidia. i just wonder how that is looking at this point in terms of this big reckoning, down more than 50% from the highs. the valuation really starts to look more reasonable compared to how towering -- but so much focus on price cuts in some product areas, and maybe just a loss of momentum in some of the key end markets. what is your take currently?

>> i think it's still well positioned where they have been short product. i think they're still short product. that the getting to be about half the revenues. the big concern right now is gaming it's not so much the price cuts. those cuts are at -- rather, it's simply volume the currency demand falling off, and they're combining to determine how much of the product was gaming i think that is a concern under wall street gets a clearer understanding of exactly how much of that revenue stream is at risk. i think it's going to be hard for the stock to work. >> and there's little historical precedence for how all these aspects will place a role. thank you, match. >> thank you so much. time for a news update

contessa brewer has that for us. >> we're expecting the searchesing any moment of r&b singer r. kelly. he was found guilty in september on nine charges, including racketeering and violating the mann act which bars the transportation of women and girls across state lines for immoral purposes airlines are allowing travelers to change their tickets for free delta travelers booked july 1st through the 4th can rebook their trips with no change fee or difference in fare, as long as they keep the same origin and destination, with a new trip by july 8th mortgage rates rose steadily for three weeks, and last week slight activity, with mortgage demand flat basically from the

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a bit of a range here. an hour into trading, the dow is up, still hovering around 3830 on the s&p interesting numbers whether it was the revisions to consumption, a crude inventory drop or -- >> yeah, the market is apprehensive in the face of all of it. very family pressure points. jay powell reiterating today in europe, a path to a soft landing is narrower. it's not as clear as even as it was a few months ago, but that's the reality the markets having living with. yields are down, that's a net pork, but you look at things like comp bonds, they are not really cooperating with the bull case just now.

the price is going down, you look at the investment grade levels again, it's not at, you know, excessively wide levels where you worry about solvency and systemic risks, but the fed wants to tighten, they are not going to be alarmed by this until it gets to a critical point. s&p, 3810 or so was the may low, so think about may 20th intraday low, we've kind of gone back to it so that to me is why the market -- over though all of these rallies have sputtered, even though we haven't seen clearing toward a real sustainable rail really, there's no real alarm. we've been here as long as five or six weeks ago so there's investor fatigue, but not investor panic >> i remember when 4114 was the low. so many critical levels did not

turn out to be floors. >> they think there is pathway to say achieve that. while sustains a strong lane market that is our aim. there's no guarantee we can do that it's obviously going to be quite challenging. powell also comment on worries that the fed might tighten too much >> is there a risk we could go too far? certainly, but i wouldn't agree it's the biggest risk to the economy. the bigger mistake to make, let's put it that way, would be to fail first to price stability. frederick, always to get your take on the news of the day. good morning. >> good morning.

this theme that's been evolving in recent appearances. that is that the lane is getting narrower is there any doubt about that right now? >> no, i think the lane has gotten extremely narrow. this is something i've been saying the last six months, that the fed basically got behind a rock and a hard place, very much due to some of the mistakes they made, and also very bad luck the ukraine war is very bad luck the odds are really against them i think they realize that. the good news is that what jay is saying is absolutely right. the fed has to control inflation. it's the most important thing they have to do now. they're going to need to keep on doing that, and they're trying to turn the boat around in the

right direction, but unfortunately it was a bit too late that means it's unlikely for the soft landing the realate is that it's very unlikely to happen. >> there's been a bit more eating crow today, saying they tried to get smarter about supply dynamics, out of the big, he said, of giving congress fiscal policy advice and now this distress index, to track the $8 trillion in corporate bonds, do you think the fed is on watch for something to break, quote, unquote? >> they really change the way -- they actually created a whole new division at the board of governors in order to monitor exactly these issues when you're in a situation where ear tightening, there's a lot more risk to -- the bottom like

is they still -- if there's other emergency measures, they've to be ready to bring them about quickly, so this is exactly the right way to proceed. >> fred, there was a quote by bill ackman this morning, about basically saying the fed needs to act decisively to kill inflation and inflationary expectations i know you said you believed the fed should be prioritizing this even over the potential for a more different recession pi picture, do you think the fed is doing a give enough job to commute indicate to the market that it does have the tools at its dispose at >> i think they've done a hell of a lot better recently i think they failed in that job earlier on i think they had a very flawed policy framework, which i

discussed in an op-ed about six months ago they finally are actually getting with the program unfortunately, it's better to get with the program when you have to, but it's not great in you basically waited too long. it means you're behind the curve and it will be most costly to solve the problem. is when this was a po taemplgal for a soft landing, i do believe that has disappeared the good news is they're now talking the right talk the biden administration has also been supported. so all of that is good the ukraine war is a very bad shock.

that's just reality, and sometimes life doesn't work out the way you would like it to >> for sure. one of the results where the fed feels like it has to hustle a bit so you have chair powell citing things like sentiment measures of projected inflation, which never tended to be necessarily in the policy factor mix before where does that leave us at this point, except to say that the fed wants to get to the right place on rates and hope the infl inflation cooperates >> i think -- when you have a supply -- that's not a huge deal

however, where they keep on saying it was a supply shock that -- they again factor in a serious demand shock which would create problems. the difficulty now is that the new york at scenario and they basically did not spokened when they needed to so it's getting more out of line with what the fed want that's one of the reasons they have to be much more aggressive even several months ago, you know, this is -- this is what i thought was mugged by reality. they were a bit slow they started to see the right thing, but it is swan too late

>> that's the way it is sometimes. >> definitely true >> the slowdowns continues to hit the ports. we'll get an update with the n'gowaxtthe l.a., ne dot ay.

welcome back west coast ports racing to reach a deal before the current deal expires on friday. any breakdown in talks could sent costs higher. gene sirocca, thank you very much the union's 22,000 workers, they're all across the ports on

the west coast we have two more days for these talk to continue i know you said they wouldn't strike, but what do you think the rest of the economy should brace for, if there isn't some sort of agreement by friday? >> good morning, leslie. there's nothing to brace for, both sides have seasoned negotiators at the table each understands the impact of economy of these 30 west coast ports they represents. >> the president has met with the president twice, and secretary of labor marty walsh is keeping a close eye on the negotiations both sides are po pushing through. let's give them the room and the rest of us will move all this freight. >> doesn't that give the upper hand to the union workers to say

you really, really need us now, and here's what we need from you? >> i would argue that labor always have the upper hand we count on these men and women southern the longshore workers have been on average working six days a week these are the true transportation american heroes. >> i want to turn now to what you see as the supply chain challenges shipping prices have abated somewhat recently, but still up drama dramatically i think it's 444% up above before what it was before the pandemic should we expect to see these elevated levels, or do you think the recent declines are in indicative of a future trend >> well, as a longtime participant, it's about the supply/demand curve. there's more cargo than ship

space generally speaking we had our best first quarter ever, second best april. may was our second best month -- third best month overall in the history of the report. the june numbers will rival the all-time record we set for june just last year the supply/demand curve on the vessel space, compared to the amount of cargo coming in, will continue to be a pinch point. >> so there's no even long-term movement on the supply side of things i guess that's the question, whether during this whole period there's been any clear avenues to try to expand capacity? >> yeah, mike, the order book is the largest it's been in recent memory, probably more than 550 ships on order, some of which will start hitting the water next summer time in 2023 between this peak season and beginning of next we're still going to be pretty tight, but

the new built ships will be coming in. there will be some attrition of existing capacity, but dollar for dollar you'll see an uptick over the next year and beyond. >> given the more recent consumer shift toward services versus goods, is that shift tows versus goods, is that providing any kind of relief is that why you're seeing pricing come down a little bit >> not really. we're still spending more money on goods than we are on services exports had a nice up tick for the month of may the import will be strong for the back half of the year. some of the retailers have been talking about heightened levels ofinventory. the cargo that will be coming in

for the second half of the year looks different. it's your seasonal products like back to school, fall fashion and the important retail year holiday that's landing right now a little bit earlier than normal the retail push continues to be strong >> finally, the market loves to zero in on the price of shipping a 40-foot box of shanghai to lchl a it's come way off the highs but still around south of $8,000 do you think that rises on ch china's reopening? >> what's been interesting is we never saw the precipitice drop the ports and central government really focused on this long haul war cargo coming our way

a will the of it is west of shanghai city. they had the opportunity to push more cargo down to neighbors the province the port is up 25% over these past 13, 14 weeks of the lockdown not every factory was closed not every land transport company had to stop work cargo remain flowing even the deep sea port is been operating at about 85 to 90% capacity we'll continue to see that constant flow. little bit of an up tick now we'll break down that straight d athat might mean for the chips, coming up in a few moments. dow is up 187. stay with us plap

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. welcome back stocks are moving between positive and negative territory. consumer staples are a bright spot that's thanks in large part to general mills which lead the s&p

after beating estimates on the top and bottom line. however, the food producer did miss expectations on guidance as it sees rising cost and shifting consumer preferences toward cheapebrd. e ochiinr anthstk ttg a fresh a time high in today's trading and that means we'll be right back after this break there's more squawk on the street

the recent collapse in crypto currency have reportedly explored bankruptcy options but what about the potential systemic risk for the broader financial system for now, analysts and fed officials believe the challenges are contained and in a recent note said across the universe of large and small publicly traded bank stocks, analysts have found no concerning exposures that would result in anything beyond some deposits over time public mark inverstors have bee

much more jittery. the biggest risk to any banks is deposit outglow as a result of lower crypto prices and contagion risk is extremely limited at this stage. do you agree with that >> i guess 2 trillion is a lot of money but it's not a lot come papered to banking system. >> it is and the banking system is regulated and much of the crypto system isn't. >> for now, ins lulated thanks tech check begins right now. good wednesday morning welcome to "tech check." today put a pin in it. a leadership change at pinterest. investors applauding that decision at first but shares are off to highs is now the time to buy or is there a greater issue with the business model. could tik tok be banned from u.s. app