the ten-year looks like it is yielding -- it's been just about 3.5% almost back to 3.6 the two-year at 4.192. that about does it. >> watch netflix after the bell. >> after the bell. >> i don't mean watch netflix. >> watch us for the netflix results is what he means sometime for "squawk on the street." we'll be back here tomorrow. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla along with jim cramer goldman, b of a, j&j rolls in. china's eco data is stronger than expected. we begin with a mixed picture for the banks.

b of a tops estimates. goldman delivers the revenue risk >> elon musk's ai warning, saying it has, quote, potential of civilization destruction. apple's big push for a new generation of iphone users beginning in india with its first store opening there. >> let's begin with market reaction to the earnings from b of a and goldman is it as ugly a beat on goldman as they say? >> no, it's not. it's a $66 million revenue miss when you back out these really difficult provisions, you have to take to the market loans versus selling the loans smaller investor loan package. some people are saying fixed income, trading is a big letdown. no, no last year at this time they had the best single quarter in history. up against very difficult compare -- actually a top des siel quarter

did they blow revenues away? absolutely not did they miss as much as people are saying >> down 17%. >> that's against a huge quarter. >> it was still down more than any of the analysts who follow the company anticipated. it was still down more certainly than jpmorgan saw or any of its peers. it's not being taken as a positive i'll tell you that. >> no. the stock is going to be down a lot. is it going to be down 12? i don't know i'm saying goldman -- this was not a great quarter for goldman. it's not -- every little line was not great. it's just that this stock is going to be down maybe 15. i'm treftd in it at that level >> because -- i tell you what, and this is apropos of what i feel about some of the stuff i'll say about brian moynihan.

i just don't think you can have as bad a quarter with the businesses that goldman has -- i think there's investment advisory, m&a, ipo, what i'll say are cycle lows i think they're in cycle lows. >> operating expenses up nine when your revenue is down five. >> efficiency ratio is not good because revenues are lower than they should be they have some room there. if you want efficiency, the one you should be looking at, watch wells. i like efficiency ratios wells' efficiency ratio is so innexting, it's perfect. i love that. >> faster than citi's? >> yeah. charlie sharp had a big bond offering last night. he's getting a little bit above the ten.

wells is good. >> you came out saying it was good the market kind of disagreed with you. >> yesterday, a labrador retriever -- >> we'll see over the next few days if goldman reverses the way you think it may people are saying the comp ratio is a little high >> nothing was great they had the reserve release because they did sell that significant portion of loans they made on the marcus portfolio, the marcus platform. >> they sold the loans for much better than people thought who the heck cares that's the thing about goldman sachs. if you think there's going to be more m&a, maybe an ipo -- >> you think capital markets are going to start to come back. you may want to own goldman. that's not me saying that. that's the thesis. >> i'm saying down 15, if you

think that, that's why you should buy it. if you want a great bank, bank of america -- >> you want to talk about b of a? >> consumer spend up nine year on year. they see credit card delinquencies returning to q 19 levels and brian moynihan on the call -- >> after slowing the back half of '22, we saw the pace of payments pick back up in quarter one, especially in the latter parts of the quarter consumers financial positions remains generally healthy, employed with generally higher wages, continue to have strong account balances and have good access to credit >> there you did have the best vic in about ten years. >> looking at my notes, i thought this was brian moynihan's best quarter ever. >> best quarter ever >> yeah, i do. >> why >> because every single line is

good versus what i thought they would do. consumer bank with a 53-year low in loan losses isn't that fantastic >> the ceo on the call, which is on going, talking commercial real estate, as our viewers know that has been -- continues to be and will be a focus for many investors given expected losses. he said we had a total of 66 million of commercial real estate losses in 2022. 70% of that was in office loans. that's very small. how much do they have? $73 billion in commercial real estate loans outstanding it's highly diversified by geography, no part of the

country represents more than 22% of the book. in the first quarter, office loan losses were $15 million it doesn't mean they aren't going to pick up, because they will. >> commercial real estate, best. mortgage portfolio for houses, beautiful shape. car sales -- car loans, fantastic. credit card, extraordinary what am i going to do? >> goldman had an impairment of $355 million related to consolidated real estate investments. that seems to be a bit of a concern as well. >> it is a 17-year portfolio it's been on their books for 17 years. some of the stuff is in development didn't work. they're leaning up that business, too. should never have been on their balance sheet. i don't know why it was on their balance sheet, off their balance sheet. going to get a very clean goldman sachs after we have this kind of hard rain that's going to fall.

>> bny mellon, better than state street wants you to believe. >> i know this sounds ridiculous, but not as bad as i thought. >> revenue up 11, average deposits down 3. >> yesterday we saw -- some of these banks, they're just not built for this market either were you on the schwab call? >> i did read the schwab call. it was taking place yesterday during our show, or parts of it. >> it didn't get enough press. no one is talking about it i'm going to talk about it. >> i felt like we didn't spend enough time on it yesterday. >> this was the most combative call after every single positive they then talked about an article, a journalist that got it wrong, a firm that planted this, a competitor that did this it was either the most paranoid psychotic call in history or

everyone was out to get schwab >> i think you tweeted that it was important for the bears -- >> when you go through it, and this was wrong and this was wrong. our competitor put this out, this was wrong i don't know how they could have gotten this. it was a litany of basically a raid people raided schwab >> that's their view. >> their view. they were under attack from their competitors and they were spreading lies >> i felt at the end -- first, i said, boy, these guys are paranoid by the end i said no, it's true. >> on these kinds of things it's important to fight back. >> i thought it was great the way they fought back look -- that was not the point the point was that everyone felt they had the wrong duration risk everyone felt they were reckless in the way they handled deposits they weren't at all. everyone thought the bank, the small bank could bring the big company down

they had a huge amount of money. all i can tell you is, if you're a believer that this raid period is over, and a bunch of ceos thinks it's over, that one is a coiled spring. >> hasn't recovered from the declines that took place in early march. didn't really move yesterday either. >> no. the call was like, here is all the lie -- the lies that have been told. >> there is a lot of concern about their earnings power, to come back to that, the ability to truly have growth we had an analyst on later in the show that was talking about that. >> they may not have the earnings power now, but the acquisition that they made. >> the ameritrade. >> we obviously saw jpmorgan take in more than what had been anticipated in any other period given the tumult that took place in early march, but b of a holding steady at about $1.9

trillion >> think about that. >> the number is staggering. it didn't take in the kind of money that jpmorgan did. >> might as well be 1906, okay >> b of a, $1.89 trillion. that's one institution we'll wrap up more banks later on in the meantime, a much-anticipated major courtroom showdown domain i don't know's defamation trial against fox news set to get under way after a one-day delay. our eamon javers is outside the courtroom. >> reporter: good morning, carl. this is day one of what we expect to be a five or six democratic week trial that will shape rupert murdock whose media empire has been badly damaged by revelations in this case so far

and faces the prospect of paying more than a billion in dlajs if this case goes wrong after a one-day delay we're set to get under way at 9:00 a.m. on the seventh floor of this court in delaware. the judge said it's crystal clear that none of the 20 disputed statements on fox were true the fox legal team has been forced to apologize for failing to provide accurate information about rupert murdock's exact role at fox, an apology the judge said last night that he will accept and considers the matter closed. fox shares were up a bit yesterday as investors may have been heartened by the idea swirling around out there that there might be a deal to avoid a lengthy trial. it looks like that didn't happen so far the case has revealed damaging internal fox emails and communications that appear to reveal how murdock was struggling to chart a path

through the post election period dealing with trump's defeat and managing a fox audience that id the pres didn't want to hear the bad news your dock emailed susan scott saying increasingly questionable rhetoric from former president trump was, quote, making it harder to straddle the issue we should talk through this he wrote, very difficult. today fox is beginning another very difficult period hoping now that dominion fails to persuade a jury here that the network acted with actual malice against them i'm told dominion lawyers will lay out exact rationale for the company's claim of $1.6 billion in damage. back to you guys from a very windy wilmington, delaware. >> no cameras, so we'll be relying on reporting from within there's the questions about murdock's legacy, the operating

model there. and liable law, future libel law. >> the people who watch fox are not going to be impacted people have to understand that the standard is so high here the standard is that you knew and you deliberately lied. >> it's got to be malice >> right if dominion wins, the standard is so difficult to ever meet that you really had to be out of your mind lying is what i'm saying. >> that's what the jury is going to be deciding, because the judge has already made a lot of those decisions, carl, as eamon indicated. but it's up to the jury to decide that very point. >> nobody can ever prove actual malice it's almost impossible. >> even with the email chain or text chain that we have? >> if you see that fox loses this, it's so egregious that you should be willing to go on

another network and say bad things about fox and not fear they're going to -- i've been writing -- i've been a professional journalist for many years. i've never seen more actual malice than those emails do you know how hard it is to get that through do you know what kind of chain of command you must have to lie with that level of impunity and think that it's good even kendall would never do this. >> never, i must say >> i worked for fox for a couple years. i got sued it was fabulous. the great late roger ailes, i don't think he would have gone there. i got sued by him. >> when i started cnbc, roger ailes three weeks later started at cnbc. >> you brought him in?

>> i was a 29-year-old who knew nothing. >> they lost, whatever no one will understand it's a polarized world people who are backing fox, you've got to realize this standard is almost impossible to meet you have to be so wrong and so bad and so engrained >> we're going to watch, obviously, a huge development. a lot of other media news including disney and netflix, our own parent comcast, we'll talk about ai. elon musk's take on the risks and the double upgrade for nvidia at hsbc we'll see if we can get clostoe the high close of the year, 4179 back in a moment that works inside the body. there's no reason to keep struggling. inspire. learn more and view important safety information at inspiresleep.com.

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i'm going to start something which you call truth gbt, truth seeking ai that tries to understand the nature of the universe this might be the best path to safety in the sense that an ai that cares about understanding the universe, it is unlikely to annihilate humans because we are an interesting part of the universe, hopefully. >> that's elon musk last night on fox with tucker carlson talking about ai, saying he plans to create an alternative to chat gpt called truth gpt jim, he says it's more dangerous in aggregate than bad aircraft,

badly designed cars -- >> yes i think anyone would say in the wrong hands this is incredibly dangerous because it could be the end of dissent. >> it's more than in the wrong hands. even in the right hands. there's a competition going on to continue to make ai and it will become more and more powerful the large language models will only continue to grow, the data available to them, the computing power and everything else. listen, i agree with him on this, and you know that. he's been the most concerned, right? he dropped out of open ai a few years ago after being one of the founders of it he's the most concerned. that last word, hopefully. >> i wanted to see if i could set up what he's doing so i enter into chat gpt with jeff march, my colleague how much would it cost for me to

set up an ai factory like this using the h-100 which are $20,000. those are the chips that cost so much that nvidia makes he came back and the data stopped in september 2021. first it gave me an answer and told me how much and was huge. then it corrected itself and said, look, i'm sorry, i don't have the current data. i think our reliance on this thing is being overblown. >> the data set does, if you go to it, you won't get much about 2022 2021 is where the data set ended. >> the world stood still >> of course not but it can be helpful with a lot of different things. >> i'm getting pushback from people saying, jim, you think this is going to be slotted in it's just not going to happen as fast maybe that gives the musks of the world a chance to catch their breath. >> it may. he's got a different approach in terms of truth -- >> what is he worried bout

that -- it will take over. >> the big thing that the human species will be eradicated by an ai that gains consciousness. >> you can't turn it off you won't be able to shut it off. >> skynet. >> it is we have plenty of guests saying we're way too focused, we're nowhere near that right now. that may well be the case. musk is not bad at thinking about things into the future i go back and forth. i disagree with him occasionally i tend to listen to him. i've always respected him from the point of view of a businessman. >> mr. davis from merck last night, talking about it, that this could be the way -- we're going to cure a lot of cancers. >> you didn't take it here this is where you should have taken it >> i'm saving that. >> we had a bet on how long it

would take you totally missed it. >> your brain is usually ai and nvidia you went off. >> i was trying to channel it into something more valuable. >> you'll get cramer's "mad dash" in a minute and we'll talk about the double up great for nvidia at hsbc take a look at futures as we kick off the sonecd trading day of the week. don't go away. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible. cdw makes it powerful.

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welcome back let's get to "mad dash." we talked ai in the last block of our show, but he didn't mention nvidia somehow i think you'll get to it here. >> i'm going to do something a little unexpected. we want people to say "what did he say?" when you have a guy who capitulates from sell to buy, i will grant you that it's more logical as ben stodo, my colleague from "mad money" that this was a top this was just some real bad thinking from a man -- the most disruptive technology in the world is nvidia and he had a sell on it what i find shocking, he's using revenue growth that they're not going to make. >> it's that high. >> the price of the chips they're providing for ai is

skyrocketing >> yes trying to get a list price $20,000 per card for the h-100 and you need a massive number of -- [ bell ringing ]. >> what i don't like about this piece, david, he's shocked about the price of it? why there's a listed price what happened here is he was thinking the data center was slowing so you don't want to be in the stock, and that's true. what i'm saying is two things. his proememise is right, the daa center is slow the second is no one thought they'd have the pricing power like they had in the h-100. >> he literally says we were shocked at the pricing power

talking $16 billion in incremental revenue in the next two years. >> he's using a $52 billion number when it was $40 billion two years ago. >> he really did reverse that, having a number well above the street. >> what the company has told me is this, if you want an h 100, there's a substantial number of people before you and we don't know we can get to you meanly the supply and demand ratio is the thing >> you know who has a lot of h 100s for his ai? musk >> yeah, musk. that's why i asked chat gpt. i would be like musk that's already wrong chat gpt is lying, oh, this idiot. the fact is that, yes, you need the power of the h 100 that's why it works. remember when i said i went to nvidia and he said go ahead,

jensen huang said go ahead book, it designed what cezanne might have done. i, too, thought it was a parlor game until i recognized the second time or third time, and no one was paying attention until this chat gpt. he had it for years. two years ago you could say silly things to it now you could say, okay, how many people do i need to do copyrighting at my ad agency seven. >> as apollo mentioned last night, new white paper about whether or not you can use it to beat the stock market. >> there's probably a lot of companies who have been trying to do that i'd like to see how it does with that. >> another piece about a month ago that i read said it was better at creating a diversified portfolio -- not about picking, but simply about the actual diversity than is typical.

>> the codes are not as good, could do better. >> unclear whether it would be successful, at least at this point. >> you know young people there's kind of an age thing going. i don't know a young person who would send a resume out without running it through chat gpt. >> really? >> yeah. it's kind of like you're supposed to do it now. the people who get resumes will look at it and know, wow, didn't they know anything about chat gpt? it's extraordinary how the younger people's adoption of this thing, now it's for lower-level things i think what's happened is that they are -- it's going to come from bottom up i know bank of america feels the same way you hire the young people and they'll tell you how to use it more than you know how to use it i'm getting this from ceos

we'll get young people in and we're going to figure out what to do, as opposed to them. this is a generational thing like you've never seen, david, like you've never seen. >> true. i'm trying to use it regularly to get a sense for it. you are. >> yeah, but not like that they're in the formative stage of their life, trying to figure out what they're going to do with their life. if you wanted to be a writer or copyrighter or be anything skill set that might involve trying to explain things to people, i think that you may think maybe there's going to be no job for me because the machine can do it better than i can. >> explaining things to people, that's hitting close to home. >> that's who we're really -- have you ever read any of the stories that come out within one minute about company's earnings? they're like 80% right cancer test survivability? >> i don't know where we are,

but that's pretty good. >> you see stories -- everyone at home should realize when you see a story about a complicated goldman sachs quarter and immediately says it's a horrible quarter, that's artificial intelligence it's not a person. >> speaking of earnings, we got to goldman bofa. j&j takes their sales number up from 4 to 5. >> it's really hard to believe i thought it was an excellent quarter. med tech was good, consumer was really good. the story is that people feel it's been boosted by the covid vaccine. i disagree with that the only thing you should be worried with with this company is whether the agreement with the plaintiff's lawyers about talk and cancer can be improved. >> that's the only thing i'm a buyer of j&j

>> lmt, i think that's at least a one-year high here jim double beat, affirmed the guidance on the year. >> just terrific there were brokers that downgraded the stock in the last few months worried about defense spend. but anybody who remembers him from american tower, he's just a winner he's terrific. the company is very good made it great. >> they have a lot of stuff you don't even know about. >> so much of defense now is really about ai. it's about artificial intelligence, competing with the chinese who are perhaps our equal when it comes to that, but obviously need and rely on those same advanced chips that we don't want them to have any longer they in a number of years could be designing their own chips the same way nvidia does.

>> yeah. that's what your worry is. the biggest thing about taiwan semi is somehow all the chinese can get it -- that's how everything is made. >> that's where everything is made. >> as we're talking, china's commerce ministry says they have banned executives from raytheon and lockheed from entering, working, staying in china since mid february. >> but raytheon, you're talking about major aerospace. raytheon is -- >> we are in a defense race with the chinese. we know that, and these are our main defense contractors. >> they do have a lot of airplanes and you need pat and whitney -- >> they're not banning those people, they would be out of their minds. >> i don't know, jim that's a good point. >> the service business, you give them the management and then serve it -- you can't afford to have safety people

from pratt and whitney -- >> given how many airplanes they have that have those engines. >> katy huberty this morning looking at asia economic growth compared to other markets by q4 will be the biggest delta since 2014. >> that's why you've got to buy starbucks. they're looking at train traffic and they're seeing mobility. you know what happens, david, when you're waiting for the subway, you know what you do >> you buy a cup of java or something very complicated drink. chinese gdp came in -- >> 4.5 >> consumer-led. the question becomes will it really be an engine for world economic growth if it's the consumer in china as opposed to obviously what is more typically the case for the chinese economy. >> i know where you're going. >> where am i going? >> are they late stage

capitalists like us? >> i don't know if i was going there. it's an interesting question you raise. >> we'll ask you during the commercial chat is two years behind these are late stage capitalists. it's hermes, louis vuitton. >> the old china, the five-year plan and produced a lot of bad steel. >> they're putting up a lot of coal plants, still doing that. >> and just pollute earth. that's okay because they sell a lot of -- >> how about lulu. we had calvin on the other day. >> mirror, mirror off the wall the stock went up when they announced the mirror accusation and now it goes down -- they haven't announced it lulu, calvin did say there were issues he did not say it was doing perfectly, but i think lulu is such a great stock here. >> should we explain what we're

talking about, carl? >> during the quarter, they had some metrics that looked at additional merch that they sold because you have a mirror client he said it was a creative in a sense. >> what happens is they have subscriptions. when you look at peloton, peloton is doing better than lulu at the hardware and subscription model i think pell tron is interesting. barry was one of the first to tell me that mirror was not selling well i think that the mirror -- people like to have their own -- they want it on their little device mirror is really big you can't take it with you. >> i've never used it. i've seen it. >> my daughter is on it every day. she loves the mirror she's not your test group, so to speak, but she likes the subscriptions. that's exactly what calvin said. it did promote subscriptions but now the hardware is too expensive. wow, they've got a great business of not having to go to

the best gyms in the world when you go to those gyms, everybody is so -- it's a very intimidating thing to go to som of the gyms they have in the subscription. >> it's intimidating because people are all in very good physical subscription? >> it went to a gym for a while. the patient right before me was scarlett johansson, and right after me was calvin klein. i'm like, i can't go to this place anymore. i'm not good looking enough to go to this gym. >> if you ask calvin, he would say, listen, these are the gyms that a lot of people feel -- they want to get the training. i'm not competing with scarlett johansson. >> in no way at all. >> i can't believe i'm right after her. i can't. i was lying down on the table she was lying down on. >> it's exciting >> the same table. >> i make sure to go to my gym and make sure nobody in there is

below the age of 70. makes me feel much better. >> that's what you want. >> yes. >> you want kind of a later stage -- >> late stage. >> late stage person. >> when i get in the pool, i feel like, my god, i'm spitz or phelps i'm dating myself. >> lulu was a major -- made a major mistake with mirror. it's not skipping a beat because lulu is a very powerful, strong company. >> guys, getting back to china and tesla and musk, tesla shares not down that much a fairly negative story in the journal about market share in china and the pressure they're under, the big chinese automaker, that domestic brands, ev are becoming stronger and they're not, carl, presenting at this auto show where they did a couple years ago. >> meanwhile, jonas is out today looking at the number of evs that will be eligible for the tax credit as of today i think it's ten you can sort of understand why they've been cutting price.

>> right americans doing well we're a union country. remember the president said i am a unionist it's good for ford >> phil lebeau did that yesterday for us about ten. quite a few will not be eligible for it at all. some will be eligible for half of the -- i think it's $7,200 >> something worth monitoring. ford is the one, this is their year this is just gravy they're looking for run rate they want to say point-blank we're number two to tesla on a run late of 600,000 that comes out this year. anything they make is going to help them so they realize the dream. right now the stock -- >> guys, coming off the call, the bank of america call, we talked about them and goldman at the top of the show. we're getting moynihan, always an important comment from him in terms of what they're saying in the economy given card spending,

so many other metrics they can look at in realtime data the first part of the quarter, first quarter being a little bit softer so far in april, still early probably a little lower than it was in the month of march. >> march was 9. >> a little softer in the first part of april. i'm going through this very long answer, those are basically the headlines for moynihan. >> march was a little strong, back down in april just let it -- >> you don't need to whisper to me you can tell everybody. >> good level. >> you're happy with this level. you want a little softer because you think the fed will back off. >> meantime, solomon is on the call saying the wours worst of banking volatility is behind us. there is a higher risk of credit contraction and we continue to be cautious of the economic outlook.

katia had a note looking at the debt ceiling, tax receipts, if they remain as weak as they've been, you might end up hitting the ceiling in the first part of june which would raise the prospect of can you get a short-term extension. >> oh, my god, it's going to kill the rally >> it will bring it into focus sooner perhaps than had been anticipated. >> again on goldman, the first quarter of 2022, their fik revenues were 79% larger than bank of america, now reverted to 50%. i'm saying 2022 was a bad compare. bank of america is really great. the market has suddenly taken an ugly turn here. >> has it? >> i'm saying the financials. >> oh, the financials, yeah. >> i think the financials are really -- they're all better than i thought >> let's wrap up some media, guys netflix tonight, deutsche goes 135 disney this incredible note out of

atlantic about our parent rolling in a wbd acquisition and spin >> that's david's world. i was going to take the disney. >> listen, we've had a number of upgrades of our parent company thank you so much, we'll take it it's the only stock we can own i'd like to point that out we'll see. i continue to -- on the other side -- video subs are not profitable particularly. but at the same time, it's not great when you have a bunch of cable networks to watch the universe of subscribers decline dramatically i continue to hear that the case of cord cutting has picked up. we'll see when we get the numbers. yeah, carl, they're taught -- listen, it's way early to talk about a potential acquisition of warner brothers discovery, but it's something that many think brian roberts, who runs comcast, would be interested in it would require a lot of maneuvering.

there's very much a question on the antitrust front or the fcc front, whether or not it would even be possible to happen they do talk about sum of the parts at 44. they say if there were an acquisition of wbd, you add eight bucks to that. they seem to give value to peacock saying losses are peaking this year, and there's going to be growth in broadband pricing business services as well 5% share -- account reduction. all of which gets to a higher rating of this company. >> maybe it's improving the housing sector as well which we kind of got today. finally, as for disney, jim, the desantis comments continue floating, new taxes, new tolls, building prisons nearby, not allowing them to inspect their own rides. >> it's baffling other networks doing 100% of the coverage of this all i can tell you is this deutsche bank piece says there's an inflection coming in the third quarter.

bob iger -- for both parks and for entertainment. i think the deutsche bank piece is going to be right this is not the quarter. this will not be a great quarter. the next quarter is when you expect a big break i think it's very smart business. >> it's interesting. iger in his time 100 interview suggested the florida issue -- what he said, is not a go-to-the-mattresses moment for us but that hasn't seemed to cool the rhetoric on the other side. >> no. desantis sees it as an opportunity, continuing to build his eputation. >> iger has tremendous command of how to talk about things. every time he says desantis is a bad businessman, that resonates with me. we want business people to be in politics, and we want governors to have business sense iger is saying this guy is a terrible businessman these aren't the kind of things

you'd say -- >> i'm going to put a prison next to you. is that good for the state >> no. >> i don't want to wipe out the biggest employer by putting a prison next to the magic kingdom. >> probably not going to happen, but yes. >> i'm saying, it's bad for business. take a look at bonds this morning as the dow has gone red here ten-year yield back to 3.57. not the busiest morning on the eco front. we'll hear from bowman at 1:00 this afternoon meantime, don't miss atlanta fed president bostick coming up at 11:00 a.m. eastern time. we'll be right back. i struggled with cpap every night. but now that i got the inspire implant

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while ago. these comments yesterday saying they have price pressure and inflation cost pressure and it's resulted in volatility the last 24 hours this morning up 1%

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time for jim and stop trading. >> last week i commented on companies making an obscene amount of money. this morning we got a memo from wells saying it's as good as it gets i like this reporting. when oil went down to 60, the spread was big for them. i love research that says it's a commodity business, don't get too kcocky. good call. >> how about tonight >> i have gina drosos and sean boyd people don't talk enough boyd. gold is so back. it's just so back it's

incredible american silver, i would like to have them on i'm putting every gold company on i can find because it's back. maybe bigger than never. >> it's back jim, we'll see you at 6:00 tonight. when we come back, more reactions out of the earnings from b of a and goldman. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

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good tuesday morning welcome to another hour of "squawk on the street. we're live for you at the new york stock exchange. look at stocks in the early going. s&p higher by .02. what's driving it? tech what's not working financials are under pressure on the back of some bank earnings health care at the bottom of the market now that's why the dow is underperforming. the nasdaq out performing. salesforce biggest contributor to the dow we're 30 minutes into the

trading session. here are three big movers. johnson & johnson in the red raising the full year out look after sales rose 5.6% from last year inv invidia raise their price target to 3.5% a share. the firm is calling shocking pricing power for that segment bank of america and goldman sachs both in the red, goldman down 3%. david, concerns about -- we knew investment banking was weak. the markets, they're unloading the consumer business at a loss. >> not all of it they have the deposits they got rid of a large portion of their loan portfolio for marcus that helped them do better than

analyste estimates also concerns about real estate writedowns a higher comp ratio and to your point the 17% year of year decline in fixed income currency and commodities. to be fair, they had a strong quarter a year ago nonetheless, it was weaker than their peers. >> we're figuring out what the ceos are saying. listen to david solomon. >> the recent events in the banking sector are lowing expectations the environment is limiting bank's appetites to extend credit businesses and consumers continue to adjust to higher interest rates we continue to be cautious about the economic outlook.

>> he's been cautious for a while, more than some of the other bank chiefs. summing up, what everybody was worried about which is credit contraction. >> their house view on the economics desk is a 35% chance of recession in 12 months which was much lower than 60% which is on the street. a lot is being made of the cautious commentary on the markets. yet, bullard is saying recession is not what you put together if you look at the data. >> he's for more hikes no question about that bank of america, consumers are still spending i looked through the bank of america credit card data credit card spending rose 6% from a year earlier. i look at some of the other data up 13% at jm morgan, 7% at city group and 17% at wells fargo

maybe the debt is rising, but spending is still happening. >> speaking of spending. we've been monitoring the bank of america call because they have a good sense for that given their credit card portfolio. listen to what moynihan had to say about consumer spending. >> we saw the first part of the first quarter being a little bit softer and then we saw it kick back up in march in april, still early, it's probably a little lower than it was for the month of march, but it's a couple weeks in we have to be careful about that due to vacations and things like that it's -- over the course of last year the total spending year over year increases have slowed down it's a pr

it's a precursor to the economy being slower and the consumers being more careful when using cash. >> when asked about recession outlook, moynihan said we don't see the activity on the consumer side slowing at a pace that would indicate that. we see commercial customers being more careful everything points to a mild recession due to the stimulus paid to people. >> that's been his line. interesting it hasn't changed since the bank failures. if we were to add it up and figure out -- for the smaller regional banks the worries were about deposits bank of new york mellon everybody was watching, they were better. they saw a rise in deposit if deposits are the concern for small banks, for the big bank it

was smaller loan demand, on recession. on that front there wasn't a ton of worries these banks communicated it wasn't all that different as a result of what we saw in march. >> no. i mean, you know, bank of america did not take in the number of deposits that jpmorgan did. they're sitting on 1.9 trillion and well more than frankly they need so to speak i mean, moynihan is saying they have 700 billion of excess deposits over loans generating that's a lot of excess deposits. >> goldman saks at the bottom of the list let's bring in mike santolli mike, what's your take >> reporter: it's overall messy. those deposits are great for

stability. the market wide story is interesting. it's been about an attempt to sequester the bank weakness off to the side and actually have the rest of the market remain relatively insulated if you're bullish on the market, you have to believe that's going to continue or the banks have capacity for relief. the banks down 18 or so percent. now it is important to keep in mind, almost all the pain in the banks happened in the three weeks following the failure of sbb. it's not been a sustained downside momentum. then even within finance, within the financial sector, it's core retail banks that are the problem. if you look at proxies for overall credit card activity and consumer health and investment banking, capital one, morgan stanley has proxies for those

areas. doing just fine. it shows you that we're making this bet that you can build this fire wall and even while the environment is not necessarily very profitable for core banking, it's not one right now of escalating distress or panic, at least not right now >> what happens if the fed keeps raising rates? what happens to the regional banks? >> reporter: to me the answer is what happens to the economy. if the fed is going to cause a recession and you have all the credit after effects of that, that's the issue to me it's not about really the yield pressures. right now you're already seeing an enormous flow into money market funds people going out of deposit funds and into money markets to chase those yields maybe we've seen the peak of that activity. if the fed keeps raising rates, it might continue to be wide

to me it's the economic front. >> mike, thank you meantime, china's economy rebounding strongly. first quarter gdp beating estimates. jm morgan updating their forecast for china here in new york, they're warning geopolitical risks between the u.s. and china c could -- she was talking about the complications and it raising inflation and china is booming the consumer is buying jewelry and apparel at double digit growth. >> retail sales up 10.6. they raised their 2023 gdp estimates for china.

you would expect some inflation from the rebound in economic activity more morgan stanley looking at asian and saying they'll be the biggest disparity in growth in about five years. >> the caution is this is well understood people have been bullish on this for a while. bank of america put out their fund manager survey. the most crowded positions, long tech, short banks and number three chinese equities, 13% there. that was higher than long u.s. dollar. >> sarah, some are questioning the impact that china's renewed growth will have on the world economy given it seems to be more consumer centric than expert led >> you want it to help commodities and commodity countries like australia and new

zealand. there's an expectation as long as the consumer is growing, you'll get the growth numbers that feed into global economic growth and they're not exporting inflation. they don't have an inflation problem. what we were talking about is a bigger debate -- we were talking about this with larry fink if u.s. and china continue to decouple and other counteries d friend sharing, you won't get as cheap labor in china and other places does that mean central banks will be okay if inflation is down to 4 or 3% instead of 2%? you have these structural problems >> interesting interview with michael delk where he says it's possible to outsource from china and he said that's important

because customers are asking for it they don't want exposure to the china supply chain. >> are customers shopping at china want their products at a higher price >> they may well not companies do not want part of a continuing regimen of u.s. regulations in terms of not buying chinese-related goods and not providing -- >> especially technology. >> we'll talk to for raphael bos bostic at 11:00 about these issues specifically. >> there are companies in china that are u.s. companies. tesla is now 1.5% because of

increasing competition for evs. >> it's going to be tricky for them if things worsen between the u.s. and china. >> without a doubt the latest all america economic service is out. let's get over to steve glliesm. >> reporter: this is different than other pessimism we've had 53% say it's a bad time to invest 24% say it's a bad time to invest that's the lowest number we've seen -- sorry. 53% say it's a good time it wasn't a bad idea to be negative in stocks in 2007

good idea to be positive in 2017 there's something else going on. what is that interest rates offering competition to stocks. we asked folks what are yo doing? 10% say they changed banks 9% moved money to a money market fund a smaller percentage are buying treasury bonds 21% of our 1,000 srespondents have done one of these things. who is it that's involved in doing this cnbc viewers those with $50,000 or more in the stock market and with high salaries, incomes over $100,000, they're looking for higher rates, also men aged 50 plus what about the living side and

how higher interest rates are affecting people 32% are more likely to pay off credit card debt 56% say less likely to buy a car. this is very interesting and makes it harder to buy a home because of higher rates. we have this issue of on the one hand positive side in terms of being able to earn higher interest rates right here makes it harder to do spen spe spending >> steve, thank you. as we head to break, apple bets big on india. will it pay off? >> plus, art cashin will give us his takes on the markets. finally, mcdonald's hitting record high after record high.

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spending

overall sales came in better than the market expected and profits came in a lot better 1% sales growth. eps up 3%. market to market was flat. i spoke with the cfo about these

results. he said the supply chain improved a little bit. lockheed martin was held back by delays to evngineengines now it's about to ship them. he called quarter in line. he called it a workman like quarter, that 1% quarter best way to describe it is a solid start to the year. it was his first opportunity to respond to the pentagon defendant budget he said that was in line, the $858 billion budget. it resulted in multiple contract wins for this company and others he said everything fell in as expected it has to go through the process, but early start they're happy. the whole conversation around lockheed and some other defense char char contractors is how are they only growing 1% if every country is

ramping up their defense expenses he says that's the disconnect with investors he said there was $150 billion order backlog at the end of last year and that's -- here's the quote. the disconnect, $150 billion backlog in the end of 2022 that was up 11% for the multi-year outlook they expect to resume more growth in 2024 they've been held back by supply chain, inflation, labor inflation. it all impacts the stock, but it's done well it was up more than 20% last year in 2022 which was a rough year for the market. >> right, but unfortunately significant hostilities between russia and ukraine helped that the worsening tensions between china and the u.s. and this gets

back to those high end chips we talk about, preventing the chinese from getting them. ai figures prominently into defense plans and things of that nature it's not just about building weapons per se that blow things up it's about so much precision and so many other things that go on in military theater that have to do with ai and the chips that power it. >> it's not just the u.s. gearing up look at the neighbors around china. australia said it would by 40 black hawk military helicopters. canada, everybody is placing their orders on some of this equipment. >> meantime, apple close to an eight-month high this morning. their overseas ambitions getting a fresh milestone. they opened their first store in india. tim cook visited the store to welcome the first customers. second store set to open on

thursday india is at a tipping point and apple says it feels great to be here you can see the feeling that anything is possible obviously the top performing name on the dow is -- there's additional commentary about how they'll benefit from the ongoing ai war as some of these players look to be default search engines. >> with all this excitement around india, i looked at the economic stats it's promising they're forecasts 6.1% growth this year which is better than china. 6.8% growth in 2024. their population is set to exceed china this year the demographics look good they still have high unemployment and there's investment rules and corruption issues

as far as the growth statistics, not hard to see why they're bullish. >> apple may be betting big on india, only a handful of companies have found success there. >> it's no doubt a market that so many countries are trying to invest in. you have 1.4 billion people. open ago couple stores doesn't guarantee success. apple has been trying to penetrate india for 25 years walmart has been trying to expand there for ten years there was huge anti-walmart sentiment on the ground in indiana india. they put $16 billion into the largest commerce company in india and they allowed them to penetrate that market.

there's been criticism that amazon is losing market share in india to flip card because they've taken their eye off the ball there's a competitiveness taking place across india that doesn't make it a quick win for any company. finding a local partner seems to be a big part of the success story. look at ge and cummins, they've found a good local partner that helps them navigate in a country. this is a country that has a prime minister that wants to attract foreign investment, but most protect his local guys. >> it's more about rivals than labor force. >> people think 1.4 billion people there must be so many to work only 5 million people in india

are employed by the i.t. industry when it comes to having that specification, that type of customized training to operate and to build an iphone, it takes a lot of time. something i reported was one of the ways apple was hoping to expand in india is bringing chinese professionals to india tensions between china and india have been very high. that's slowing down theability to train indians on the ground. >> i wonder about the gio politics about all this. india is a democracy they're buying russian oil and there's been hostility around that >> because india is so important to our foreign policy, the theme as an ally, so far we haven't seen strong statements from washington on india continuing

to buy what is cheap oil they have 1.4 billion people they need to be able to give them the energy they need. >> at affordable prices. still ahead, mcdonald's keeps hitting all-time highs can these stocks keep rallying we'll discuss. don't go away. if you have this... and you get this... you could end up with this... unexpected out-of-pocket costs. so if you're on medicare, or soon to be, consider this. an aarp medicare supplement insurance plan from unitedhealthcare. medicare alone doesn't pay for everything. and what it doesn't pay for, like deductibles and copays, could add up to thousands of dollars.

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dominion voting's lawsuit against fox news kicks off today. we're outside wilmington with the later. >> reporter: it's day one here and we're expecting to see both sides give opening statements. what we've seen this morning is

battalions of lawyers arriving for both sides we're expecting we'll see the process of juror selection under way inside the courthouse. 12 jurors have been sleelected. we'll get to the opening statements and then if there's time, we might move on to witnesses. the first witness we might here from on the dominion side is tony fratto. he's the head of communications for goldman sachs today. at the time he was the outside crisis communication expert for dominion he was reaching out to producers, anchors, reporters at fox news trying to explain to them that the statements that were being aired on fox at that time were not accurate he ultimately unsuccessful in his real time effort to persuade

fox to dial back their coverage of the dominion allegations. we might hear tony today on the witness stand explaining what it was dominion was trying to do in real time to convince fox not to do what it ended up doing and what has been brought us here today. we'll watch for opening statements and see where we land as the day goes on back to you. >> not a well-time day for tony given goldman sachs' earnings. >> reporter: it's a busy day for tony he's got the earnings and he's possibly testifying today in one of the biggest defamation cases in american history. >> goldman still down 2.5% important trial. still ahead, where to find yield in that market and a quick programming note we're over 24 hours away from our virtual summit scan the qr code on your screen

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welcome back to "squawk on the street." russian president vladimir putin visiting command forces fighting in ukraine as the war approaches its 14 month it's putin's second trip to russian occupied territory in ukraine. he was visiting the kherson region which russia claims to have annexed back in moscow "the wall street journal" reporter being held in russia is appearing in court today. he's appealing his detention on spying charges russia's federal security service detained him in march. the union representing screen writers in hollywood is

one step closer to going out on strike members of the writers guild of america voted to authorize a strike if a new contract deal cannot be reached. according to a report in "variety" 79% of members voted in favor of a strike once their contract expires may 1st that's something to watch. david, back to you >> thank you, bertha. just over an hour into trading. let's get over to bob who joins us here to fill us in on what's caught your attention. >> we're knocking on the door of new highs for the year 4979, we were 10 points away from that. having trouble getting over that now. the fact is we're in a modest uptrend right now. a lot of people don't want to believe that we started with the leadership

sectors, tech, industrials, metals and mining, consumer discre discretionary, that is not consistent with a belief in recession. a lot of people want to believe there's a recession and the markets not cooperating with that position. look at the highs. same situation we don't have a lot of new highs, but a bunch of tech names, salesforce set a new high home builders have been moving up we talked about lockheed, that's a new high at 504. if you look at people -- talk to people, bearish sentiment dominates everything steve was talking about the cnbc survey look at the b of a survey. this turned into the monthly suicide note every single month it gets higher this is the most bearish of 2023

highest allocation with bonds since the great financial crisis the most bearish on real estate. yet, the market is not cooperating with the bears this is what's remarkable. the bearish sentiment is high because of the banking crisis and yet the market is going up here's the point we keep bringing up, the pain trade. what would confound the greatest number of investors? it's for the market to go higher, which is what it's doing. the biggest problem, if you want to talk about this, the fact that the market -- a lot of participants refuse to believe the soft landing scenario. they don't want to believe it. inflation is failing the fed can ease in late '23 and this will absorb the shock of any recession which would be mild that is the soft landing scenario and, sarah, they don't want to believe it

that's why i think the markets got some many bombs. it's a split personality overall right now. >> bob, thanks let's bring in art cashin. art, to bob's point, was the banking stress in march a giant bear trap? >> well, i think -- let me digress a step and tell you i think the next two weeks could be absolutely critical to the markets. i think you saw in the goldman sachs report there's a little mark to market risk land mine that's hidden here now, in the next two weeks we'll be getting some of those high tech earnings. they've been the clydesdale pulling the rally. if they don't continue, we'll have to broaden the market out you have to look for it to increase greatly today is tax day by the end of the week we'll

know how the tax returns ran in. that will dominate the news because it will tell us when will be the critical debt ceiling debate will it be june, july or september october? if it's early there's more of a chance of a showdown if it's late, i think they'll all push it aside to go into a presidential year. we've got a ton of things coming up and we're going from one of the most bullish months into may and go away. these two weeks will be absolutely critical. as to the banking situation, as i say, it's all mark to market land mines that you don't know where they are. >> you really just assembled all the bear arguments the worries about earnings that's out of mark wilson. worries about the debt ceiling that's a big thing at goldman. why the squeeze? why are we running at the highs of the year?

>> i think some of it is the end of seasonality as i say, april is one of the two best months in the entire year for the bulls i think you're seeing this quarterly investment run in and i think the other thing we've seen, the market is enjoying a note of relative calm and that is the volume has been pretty light. the volatility -- the vicks traded below 17. it's astounding. it's like everyone's gone into a tr trance when the market is that calm, you trade on all the old axioms. that's what i think we're seeing here i don't think it's so much new money. i think it's cash on the

sideline saying what was i worried about? nothing is really that bad i would say the next few weeks may be critical. >> it's also -- isn't it sentiment and positioning? bob referenced the bank of america survey lowest equity to bond allocation since the global financial crisis isn't that a classic contraindicater, contrarian trade here >> yes, the bulk of the people on the wrong side of the boat. that's what you often see. what i think you have to be careful about is this idea of the relative calm getting everybody nursed into things part of what you're alluding to, sarah, is the fact that yields are now an alternative a lot of the people who were playing said, wait, i can move

money around that's why you're seeing the amount of money in stocks is coming down because there's a new alternative. i'm not sure it's all psychological. i think it might be rate of return available i hate to beat it to death give us two weeks and we'll know more >> your point about maybe earlier warnings than we thought on debt ceiling we'll watch as well art, appreciate it. >> one last thing, carl. these guys are playing with this debt ceiling at a time when -- for the first time ever china and others are looking to replace the u.s. dollar as an international reserve currency this is very dangerous territory. >> yeah. art, thanks soon we're watching shares of southwest dropping on news about tech issues.

let's get to phil. >> reporter: tech issues have caused southwest to have a nationwide ground stop to their flights. we don't have details about what's causing the airline to say hold on, we're not going to fly or we'll have a ground stop now. they have issued a statement saying technical errors are unexpected for all and you, meaning the customer, have our apologies. updates will be communicated hang in there with us. that's the statement from southwest. we reached out the the faa it's issued a statement saying southwest requested that we pause all of the airlines departures that's where we are. ground stop for southwest airlines it's weighing on shares of the airline. we're hoping to get more details and what this technical issue is and perhaps some guidance on how long they expect this to be in place. guys, back to you. >> phil, it's david.

i lose track of time when was the big problem that southwest had with its reservation system and keeping track of its crews that resulted in enormous delays >> reporter: that was the last week of december, david. that was -- you know, they called it a software issue with their scheduling software. bottom line, the system could not keep up with the initial cancellations and then the cascading effect of getting crews in place some of that was due to the way the airline is structured as a point to point airline as opposed to a hub we don't know if this issue is related to software with scheduling >> are they upgrading their computers? i guess they couldn't have done it in a few months seems like they need ai or something. >> reporter: we don't know what the technical issue is, where it

is within the computer system. they took heat, rightfully so, for admitting they didn't stay up to par in terms of investing as much as they should have over the years on the technical end of the business. they have committed to improving it bob jordan, the ceo, said we're making the investments necessary to make sure this doesn't happen again. again, at this point, we don't know what's causing this ground stop hopefully we get some clarity on that. >> let us know phil, thank you. don't miss evercore's top consumer picks we've reversed after an early rally. we've gone negative. still strengths in industrials, technology and meratials health care, communication and financial services are weighing us down. we'll be right back.

mcd continuing to trade innear all-time highs also starbucks has a tactical outperform joining us now is david palmer david, you're saying that valuations can run higher from here >> in some cases there's a lot of full multiples in restaurants you need to see sales beats and earnings upside. you'll probably see more of that in company-owned names, starbucks and chipotle mcdonald's is poisoed to rise higher as well young brands might have to wait more to get more of that sales relief and earnings upside

global is good again and it's good to have this cost coming down for some of the company operating names. >> if there's a macro takeaway to your call and the bullish action in these stocks, is it that they're fast food during recession or is it an inflation play because these restaurants have been hit so hard with inflation from labor to food >> a lot of the themes you just said there that are true when it comes to the fast casual names, the star bbucks and chipotle, it's good they have higher consumer while trading down within that consumer's diet pattern. in terms of the global side of things, it was going to be bad to be in europe for mcdonald's, for example, and of course china is turning the global side of things feels a little better today as well. but from a standpoint of food cost and some of the unkinking of the labor shortages and labor

productivity initiatives, having that as a tailwind as well is going to be good for starbucks and chipotle in addition to the food costs you're going to get the stickier top line with bottom line relief in names like starbucks and chipotle. >> on the china part, what part of the bull thesis is china? we talk a lot about how they sanctioned some defense companies and they're investigating micron is there just a clean slate of no danger at all they would lean on consumer brands as well >> starbucks and yum have significant china businesses and in the case of starbucks, it could easily be six or seven points of profit tailwind over the next 18 to 24 months as they recover in their margins and their sales. there are concerns out there, including what you mentioned about some sort of brand

backlash and country risk. in addition to that, there's competitive risk there's a lot of new china coffee offerings they ignited the crave for coffee in that country first things first traffic is out there you can see it in china rail data that there's a full recovery that's really happened in march into april. and that's about a quarter ahead of schedule. that's one of the reasons we may starbucks outperform for this quarter. >> david, thank you very much for joining us it's been a quiet rally for these names. coming up at the top of the hour, exclusive interview with the federal reserve of atlanta, raphael bostic market pricing in 25-point-basis interest rate in may

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places in the stock market that some investors have been turning towards for some of those bigger dividend payments with some perceived added safety here's what we're talking about. we decided to run a screen on s&p 500 stocks and which ones have had positive price performance over the last year believe it or not, that turns out to be 194 of those 500 companies. and how many of those have a 4% plus dividend yield to kind of outpace that apple savings rate? it turns out only seven stocks in the s&p have those attributes together if you take a look at those, here are three of the highlights check out, first of all, a name in oil and gas we're talking phillips 66, downstream refiner, up today but over the last seven years, of those stocks, it's up 19% and it's got a 4-plus percent yield. another name is a technology company, not the high-flying type it's ibm shares are down fractionally today but over the last year,

north of 4% yields, pushing towards five one other place to keep a close eye is the best dividend yield, that's at&t. those shares flat for the year, but yielding around 5% to 6% those are three of the stocks to keep a close eye that provide that 4% dividend yield keep an eye on those david, by the way, the other four i haven't mentioned, up on my twitter feed at the domino. >> i had at&t in my mind >> you know at&t, david. >> i have followed that company closely for a long time. dom, thank you that does it for us on "squawk on the street. ndarha t nt urexho right after this ♪ ♪

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