>> it is >> meanwhile, let's show you where things stand right now, the dow off 85 points after a whole bunch of earnings reports. the nasdaq off 51 points, s&p 500 off about 18 points. we've got a lot more coming up the earnings parade continues. make sure you join us tomorrow we'll hand it over to our got friends on "squawk on the street" which is next. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm krintd with jim cramer and david faber. got beats from gm, ge, mep circumstance mcdonald's, raytheon it's first republic's results weighing in. the roadmap including ups, mcdonald's crossing the tape mcdonald's ceo will join us in the next hour.

>> shares at first republic saying deposits dropped 40%. they say they've since stabilized. >> ceo jim fitter ling will join us and talk about the quarter. >> let's begin with the busy earnings parade. jim, you highlighted ge, gm and pepsi. >> yeah. i think sometimes you have these standout quarters. gm, you saw their beat it was a clear beat. it was just on be manned what i'm focused on, and david, i think you can comment on these, too this is an economics class today. the demand for gm, for their internal combustion engine, was quite strong that's how yoe you get the stock doing okay pepsico, they were able to raise price. like coca-cola, it didn't matter they told a lot, particularly in snacks i look to ge and i think to

myself, it's so back, it's incredible david, he did it he did it in a way you really want which is that aerospace was growing. power and renewables will be good next year for the first time i feel like i wanted to own. >> you get so accustomed to not believing in a way that when there finally is a reason to believe, you still doubt yourself >> yes, that's a great way to put it the stock now is sporting a very high multiple. it seems to be deserved given the growth rate they've got going at ge. again, you say it and you're like really? can that really be >> raytheon technologies, they did have a terrific commercial so i know that's fine. carl, i think what david is saying, and i feel the same way, which is that we've come to look at ge as a company that reports earnings crazily each time this looked like what raytheon looked like. it looked like an industrial it made me feel that it's not

just that it's back, because it's clearly back. it's a high-class, high-growth industrial that people should like except for they started liking it at 60. >> right first positive free cash flow for q1 in about ten years as they raise the free cash flow value. >> gm and ge are great stories today. this is a story of store ied companies doing well, but still having supply chain problems in the case of ge with raytheon, less supply chain but more wage issues this is what happened with the airlines yesterday people were asking what would you do if you were the fed the answer is you don't feel great. you see companies having to raise price again. you talk to pepsico, i thought pepsico was going to see the second half, like coca-cola, a moderation of price increase, moderation of their cost

no, definitely not that's worrisome. >> at the same time there's always a ups you mentioned verizon. there's packaging corp last night. >> i hesitate on ups i've not been a big fan of the company lately which is not -- i'm just looking at the stock. i don't have any great insight except for the fact that federal express -- >> federal express, to use the term of art, is getting it together you think fedex -- >> that's a new one. taking out $5 billion in cost. the fact that there were $5 billion in cost -- >> kind of an indictment of management. >> well, i was more thinking of it's a -- i can draw a conclusion that it was not as good as i thought. look, fred smith created a mode. you can't go against him that's why i want to go against ups --

>> is momentum shifting? >> i think fedex has so much earnings to gain, the leverage there. ups did guide lower revenues made me feel like e-commerce is not going to be great in a week where we better hope e-commerce is great because we've got a lot of it later on. >> meantime, if you're looking for economic bellwethers, 3m used to be thought of in those terms. they're going to cut 6,000 jobs, focus on auto electrification and home improvement that's an eye-opener management changes in there. >> 6,000 people laid off in the 3m health care division. the health care division is good what i'm most concerned about with 3m is the lawsuits, the combat arms, the vets are fighting -- exactly what the people are fighting when it comes to j&j. >> right you've still got p fas 2

>> by the way, i'm not saying a combat arms problem -- >> you're talking about the ear plugs that 3m made a very large lawsuit. >> right what i like about -- >> about loss of hearing. >> he's not in denial. he knows he has to do something. >> he hasn't joined us in a while. there was a period when he was a frequent guest >> i think he'll come back i do i do think they need to have -- the companies that face these giant class actions have to have some method to be able to make it so they can put a pool of capital in and pay off the plaintiffs without the endless lawsuits 3m is trying and j&j is trying so far the courts are kind of neutral on it. >> verizon another one that you could also argue is reflective of the consumer economy. after tt's terrible quarter reported last week where there was free cash flow was below at

least what analysts anticipated. a lot of focus on this what can i tell you? consumer post paid phone losses seem to be in line with what the analysts were looking for. they lost 127,000 post paid phones, 263,000 were offset by adding business lines. free cash flow actually was okay. >> yes >> but there's a question as to timing there it was better than expected, better working capital maybe timing of device payments a bit different. they did reiterate guidance for 2023 not a great quarter, but not any worse than feared. >> you didn't have the situation like you had with at&t where they said, listen, as we said, we did a billion in cash flow. no street was looking for 3 billion. >> at&t is still sicking with $16 billion free cash flow guidance

huns was a guest on "squawk box. >> what's more important for us is the service revenue because that's what's correcting our man injury and the good cash flow we have in the quarter. we have seen a got momentum on the first quarter on the consumer side. we had gross ads increasing with 11% increasing year-over-year. >> wireless service revenue was 18.9 billion people were looking for 19 billion. hans comes on and tells you again like at&t it's what you expected it's not if you talk to mike brohm, he'll say, listen, we had to lay off people why? we're not doing as well in some of the divisions the wireless companies, it's always good for them it's not what the street is looking for. i want people to understand, ceos can say that things are what people are looking for, but then immediate pushback from key which has very good coverage,

listen it wasn't enough now people are very worried about the dividend again. >> they are? >> yeah. >> okay. i mean it's not a first republic that's another -- whoa >> how do all the upside results that we got, and we'll get to more, compete with that deposit flow last night? >> no bank has ever survived losing more than half of its deposits in history. so we've got that. i think the question here, david, is simply how much is going to be lost by the banks -- >> i don't know that anything is going to be lost than the $30 billion in deposits made by the banks. >> might be a haircut. >> i don't know that that will be the case. i don't know, jim. what i can tell you now, the next few days for first republic will be crucial given the loss of deposits. by the way, the fact they didn't include the 30 billion coming in -- they did lose 100 billion,

not 70 billion in deposits a lot of people can read through that and wonder why aren't you being fully transparent with us. let me tell you what is my understanding of what is going on right now in terms of first republic, there have been efforts made over the last few weeks. there continue to be many conversations is my understanding, white house, treasury and fed in terms of what should happen here. what plan is there to do potentially what they could call an open bank scenario? in other words, a way to rescue the bank without it going into fdi receivership that remains unclear what plan would be to create a special purpose vehicle where you get the same banks that were part of the consortiums that put the deposits in, roughly $30 billion, and get them to buy many of the bad loans or under water loans on first republic's balance sheet above where they'd be marked. you'd be paying a premium of them, perhaps below where they

were made but above where they were marked. maybe get warrants referred to those banks as well. then the bank is able to go out and raise new equity i'm told it could do that were it to do the first part of that, and maybe it is in a position to become a profitable bank again right now, given what it's paying for its deposit base and given where its loan portfolio is, it's in no position to do much of anything meanwhile, it continues to lose wealth advisers, for example, leaving for other banks, as the clients are saying i don't want you there, move. time is of the essence again given the report from first republic will treasury put real pressure on these banks, jim, to step up in some way, whether it is the plan i just shared to a certain extent, to buy the loans at a premium to where their value would be in the market and, therefore, free up space in the balance sheet for a ree reequi reequitization would it be forcing them to take $15 billion of the deposits you

took out and put it back in as an equity investment >> yes. >> i don't know that that would happen but the question is why would they do it why would any of these banks feel the need to actually do something here there is not a belief as it currently stands, as i understand it, in the government and in the fed that this is a systemic risk should this bank go into receivership. >> i totally agree with you. let me ask you a question. wouldn't these banks have to pay for it anyway with the fdic? >> the counterargument is you're going to get assessments that are going to result in you having to pay more why nould prevent it from going to receivership and prevent a risk that would arise from any other banks going into receivership i'm hearing that the governor of california is saying, please, figure out a way to save this thing. >> market cap here is $2.5

billion. impact on the markets, impact on the banking industry, it bears watching. >> from what i understand after a number of conversations this morning with people who are involved, it is something where days -- this is the moment, these next few days. >> so i like your idea about focusing on how forthcoming they are. here they are, deposit activity began to stabilize during the week of march 27th to me i'm not getting that from my sources this may have been a couple of days they were in the good. >> you had 30 billion that went in from the all the banks. >> why would you keep your money with them? why? how come they lose money on everything >> because they made a lot of loans at a certain point -- it's no fault of theirs really. it's not bad intend here, they made a lot of mortgage loans in the hamptons. >> i agree with you about the next few days being crucial. some people feel it's the next

few months. >> no, i don't think so. not from the conversations i had. >> i agree with you. >> they would like to get something done and done soon the question is how much pressure can you really put on these banks. how heavy is your hand if you're the treasurer or the white house. >> both janney and citi going to sell janney needs to pull off the mother of all pivots to survive. >> yeah. i thought that was true. when we come back, lower costs helping dow cost the quarterly beat stocks are lower we'll talk with the ceo. weighing on futures despite several corporate beats and raising guides today we're back in a moment meets bold new thinking. ♪♪ partnering to unlock new ideas, to create new legacies, to transform a company, industry,

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for 2 lines of unlimited. just $30 a line per month. i should get paid more for this. you get paid when you win. from xfinity. home of the 10g network. shares off the lows this morning. that follows first quarter results. the giant chemical company did beat estimates did see declines across operating segments, citing slower global macroeconomic activity joining us is dow's chairman and ceo jim fitter ling. let's begin with your characterization of the global economy. it's an important one for people to hear. are things picking up in your opinion? >> good morning, david nice to be with you. we saw some sequential improvement first quarter over fourth quarter

fourth quarter was a quarter that really slowed at the end of the year we saw the demand increase through the first quarter, especially a strong march. we've also seen some positive signs in areas that had been a constraint in 2022 such as marine pack cargo for exports. china is opening up. we started to see china really move into the market from february into march, you would start to see an increase there north america is holding up relatively well. we talk about the consumer strength there we see it in most sectors. i'd say the biggest weight in our business is in the housing and construction area, and the knock-on effect on durable goods, things like consumer electronics and appliances europe is also a bit of a weight i'd say the most negative outlook on gdp is in the european region. and also europe has moved into a high cost position region in our industry which has not

historically been that case. but overall, i do feel like things are starting to move in the positive direction we got a little bit of pricing back in plastics in the month of march. we got some pricing nominations out in april we're starting to see our input costs come down. of course, we've got a billion dollars' worth of self-help that we're going to deliver this year >> specific to the chinese market, i'm just curious what are your expectations there as it sort of opens up -- what are you seeing on the ground if you can bring us up to date right now in terms of the last few weeks even >> i would say the consumer is going to drive it. i haven't seen much move in china to stimulate the housing market which we have seen in the past whenever they're trying to get the economy going. they have a very similar profile to what we see here in terms of year-over-year housing starts reduction, whether it's multifamily homes.

that's most of what's built in china, single family homes you're seeing year-over-year 30, 40% reduction. so i don't see that coming back yet. but i do see on the consumer side of things, obviously in the luxury items, they've been relatively strong. but day-to-day items they continue to be strong as well. think personal goods for your everyday use, items at the grocery store. apparel is starting to pick up a little bit, so polyester demand and clothing demand starting to pick up again off of some low operating rates. and evs have been growing pretty dramatically in china. i'd say that's the biggest ticket item that is showing great growth we see some of that here as well >> jim, it's great to see you, as always. jim cramer here. i struggle here, jim, because the uneven nature of the supply and demand is hard to grasp,

packaging, specifically plastic, improving domestic demand which is good. then you get to performance -- and demand for consumer electronics and industrials is softening. can you give us a view about overall supply and demand, just the basic way we would if we were back in f10 >> well, if you think about performance materials and coa coatings, if you think about consumer electronics, not that that's the biggest driver for that segment if you think about semiconductor chips, the biggest falloff has been on memory chips you think about what drives that it's gaming devices, tvs, those kind of devices. those have become long of course, the consumer now is spending more money on travel. they're taking they're elective dollars, what they're not spending at the grocery store, they're spending it on travel. they might be spending it on an ev so there's less to go around i would say until we start to

see interest rates soften a little bit and start to see people get back into the housing market, you're not going to see the durable goods side pick up i would say durable goods is what's dragging the industrial economy down but on everyday items, those parts of our business are continuing to look good. industrial intermediates, polyurethanes goes into home insulation, it goes into appliances it goes into refrigerated storage and refridge rated trucking those are all a little bit soft compared to last year. i think it's going to take a while before the housing market picks up. >> one of the things, jim, you mentioned, that there is self-help. can you explain what you're doing? the cost side here, a little bigger than i thought over the course of the last -- since you came in. what was left to cut out >> well, we have to adjust

obviously to the lower demand rates which means we've got to bring operating rates down in some regions primarily that has meant europe. europe operating rates are running about ten percentage points lower than they are the rest of the world in our cost advantage regions in canada, the united states, argentina, the middle east, we're running at pretty high operating rates. some adjustment needs to be made for that we're taking about $500 million out of structural costs, and then we're looking at obviously operational efficiency improvements in the rest some of that will be working capital as wellment we've been doing a great job managing inventories and keeping working capital in check i think we'll continue to keep pressure on that until we saw strong demand signals come through. >> we'll be watching closely jim, we've got to leave it there for today. good to see you. thank you for staking the time. >> always good to see you. take care.

still to come this morning, an exclusive with mcdonald's chris kem chin ski in the next hour higher price lgs contributing to the company's quarterly beat in the meantime, futures sub dated as wre ie'n day two of the earnings season. earnings season. we're back in a moment our customers don't do what they do for likes or followers. their path isn't for the casually curious. and that's what makes it matter the most when they find it. the exact thing that can change the world. some say it's what they were born to do... it's what they live to do... trinet serves small and medium sized businesses... so they can do more of what matters. benefits. payroll. compliance. trinet. people matter.

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let's get to "mad dash" and opening bell about three minutes from now continued fallout from bed bath and beyond's liquidation. >> there's a very thoughtful piece by bernstein, the fact that peter lynch talked about buying tjx target has so many stores, $6 billion up for grabs. >> $6 billion up for grabs in sales based on the fact that bed both will no longer be operating. >> this piece says don't be so quick to drive them. we saw sports authority liquidate. you saw a down draft in dick's then you had an upward trajectory you had to buy the downdraft

why tjx can be down even though you think they're the biggest beneficiary, it's because you'll have the softness because the stuff is being dumped in the channel. i'm excited about tjx. i'm tampering expectations i have a call today with club members. i think it's a great opportunity. it can't go up immediately you think it would after its competitor dumps a lot of stuff to them, too. >> i always think it's worth mentioning, tjx is far larger than target market cap, 90 billion to 75 billion. it's a bigger company, tjx than people perhaps realize the profile relatively low. >> you know why? they're the least promotional. you never hear them other than the conference call. the conference call is very tight. do they do themselves a disservice look at the numbers is what they say. look at the numbers. the numbers aren't good. short term i understand now, i

was puzzled about how they could not be a huge winner they will be a winner. right now the liquidation sucks oxygen out of the market according to bernstein i hate that term. >> you don't want oxygen being sucked out of anything. >> no. >> keep the oxygen >> it's toto. >> what? >> turn off the oxygen toto. >> overall, jim, we had about 60 earnings this morning. eps beat rates about 87. that's relatively five five raising guidance, two lowering guidance. still waiting for any kind of earnings apocalypse? >> i'm not seeing it i think the market is regarding things too negatively. gm up. i listened to phil lebeau's interview. i don't know if i want to sell that a lot of people trying to

straddle, internal combustion engine verizon was not good david told the story better than anyone could it's the overhang. >> let's get to the opening bell kovitz at the nasdaq -- a guide dog for people with vision loss. around 4,137 dow up 21, let's say, down down 36 you mentioned gm adam jonas with his reaction that's q1 aniz annual ising. pepsico up 3.5 then i went through the conference call. what the company has to say is very strong. only up $1.30. that's strictly because of the

market pepsico did good was it as good as coca-cola? i don't know i could argue these companies raise prices and nobody stops eating snacks. hugh johnson told me something very interesting he said there are some people who might have gone to walmart who are now going to the dollar stores we've got a strong economy that is a little surprising to me as long as employment goes up, you would think walmart is the winner i see things that people want to be more negative than they should be. >> check out kmb they beat by a penny they raised the adjusted eps good gross margins up 340 basis points, right? input inflation is slowing faster than consumer inflation. >> that's what proctor said. i think you could listen to what jim fitterling said, put it all together and realized they've been raising price, raising price. finally they raised prices and the raw costs arenot going up. kimberly hit a 52-week high even

though it's so hated by the analysts it's just incredible whirlpool, same thing. i know last night was a year ago. look, i think that bixter is going to be on tonight. >> phm, asp up 9, a billion to the buyback. jim, this is the anti-recession chart. >> housing is supposed to go down here. david, the reason why i a lot of people confused, the best group of portfolios would be housing starts when interest rates are soaring. >> tell me what that is. >> it's a housing shortage i had lennar on ten days ago at 102. invitation homes send me an invitation to your funeral if you're short these stocks the great jim fisk said it.

>> i've got one that we haven't mentioned at all, up 10%. >> what? >> spotify >> well, the signups are dramatically better. >> their engagement was -- it's never been higher. >> 545 million versus 501 expectations. >> in terms of monthly average users. >> it's gigantic they're also raising the prospect of future price increases which is encouraging people because, of course, that's what they set up. not necessarily in the u.s., but other parts because the average price is still in the 4s that people pay i pay 15 bucks a month, but i guess a lot of people don't. so very much encouraging advertising obviously not as strong perhaps but strong -- not a strong market, but an important component for them still in terms of percent of revenue, right around where it has been >> let's say you have a command of a lot of people, winning four of ten nights of tv and suddenly you don't have a show?

would you think about -- spotify? >> i don't know. i don't know. >> good answer >> i was leading the witness >> especially when you're still getting paid on your old deal. you can sort of test the waters. >> and you renewed in '21. >> i think the platform is bigger than people realize. >> i'm out of here i'll admit it. >> tucker carlson, i think if you do go, he's not a fan of my work, but that's okay. >> do people pay enough for podcasts anymore i'm not sure they are. >> if you're joe rogan. >> joe rogan is one of the most powerful people in the media when he does a bone yard story, i'm listening. mark zuckerberg goes on joe rogan. >> elon musk has as well. >> these mau numbers, by the way, biggest ever q1 growth.

second biggest quarterly growth ever that's amazing. >> i think everyone is scared of media. maybe you out to be thinking of this as a very disruptive force. we thought of it when it became public then it lost its way now it's back. very impressive. >> jim, you mentioned mcd, 12-6 globally, 12-6 u.s >> i felt with 40% digital that margins would be better. look at this stock this stock has been a halo it's drawn money, drawn money, drawn money. i think this is classic selloff profit taking. i know that term gets used too much this thing has been a horse. what they did deliver was a little better than expected. i'll take that better any day of the week ge was up 3, then 2, then 1. now it looks unchanged

give me a break. i think the most exciting story in terms of just pure yacht interest is not the spotify. i like that. it's raytheon. you've got a company where the ceo can't go to china, but the chinese orders are good. by the way, in terms of air cover of ukraine, i was told the russians will have air spear yot with luck. the patriot missiles are there, four batteries they can take care of the airspace between crimea -- >> greg hayes has not allowed china. >> no, himself. >> that's a fairly recent ban, right, in terms of the back and forth with our competition. >> lockheed as well. >> yes i think what's interesting is take what was delivered, a monster good quarter. >> at lockheed >> yeah. should raytheon be down? it's better than expected.

we're seeing a lot of companies whose stocks were reflecting better than expected and then you're getting a ups where you did kind of hope that there would be good e-commerce then it looks like e-commerce has slowed i question that. i just didn't see e-commerce slow we'll know from amazon. >> i was going to ask you about microsoft tonight, which is off ten bucks in the last six sessions or so. >> i think it's reflecting the fact that a lot of people got very excited about ai. by the way, nvidia put up guard rail rules today >> people should get excited about ai it's a real moment. >> when you leap through a possible data center slowdown and as your slowdown to be in ai >> right but ai is going to require an enormous amount of computing power. so if they reverse what you're talking about, the slowdowns you're talking about may not

occur. >> a long-term investor is going to be very excited and look through any azure slowdown if azure slows down -- >> we know amazon slows, the growth slows i think people might say, i can't look through it's too hard for me look, i just think that -- i think ai is incredibly exciting. you should look right through it if this thing gets clobbered, just buy it. >> speaking of it, we should get commentary from alphabet when it reports the quarter. >> that i'm worried about. >> perhaps for good reason >> they're still living in la-la land >> what does that mean >> how is fit bit doing? how about wamo. >> wamo apparently have a lot of cars driving around san francisco without drivers which is starting to get on poem's nerves. >> that's like the u.s. government, what are they doing with this program, that program. >> we made the point before. they've spent an enormous amount of money and it's not clear what

return they've gotten. meanwhile, their monopoly in search seems to be now under threat. >> they got the football package, right they have so much going on, they don't even hear about it they have to challenge themselves they have to say, you know what, we are not a health care company and a fit bit company. we're something. we're going to beat -- they are right now a bloated overhired covid company versus chainsaw. >> and also not run by their founder who is driven like a zuckerberg or musk who just will stop at nothing potentially. >> that's why i'm calling him chainsaw >> chainsaw? >> zuckerberg. >> there was a guy we used to call chainsaw. >> zuckerberg is incredible in terms of transparency and honesty. >> is that a new nickname for

him? >> i don't know. band saw i don't know hatchet. >> yesterday bofa, the desk was asking whether or not the opex lay-off trade is getting old or getting thin you think there's more there. >> today when you have a great quarter and the stocks are going down, i would say don't count on it the winner today is one i think david will find hilarious, t-mobile. >> t-mobile, yeah. >> it's just incredible. >> at&t is in the green now, too. >> are they shared owners now at this point >> at&t and verizon? >> yeah. >> possibly, possibly. verizon shares are not down very much, .38% right now, down a little over 6% for the year. at&t down 4.3% for the year after what was a horrendous week last week. take a look. it is up this morning.

to your point, t-mobile once again the winner, $180 billion market value, well above the corresponding market value verizon at $155 billion or at&t at $125 billion. i want to point that out because over time these things happen, these enormous shifts occur. sometimes we can lose sight of them. >> what about mike vroom >> the stock is up. >> i sound like a warner brothers. >> you did hit a very high note there. >> i want 3m to do better. it's a great american company. i want them to be able to put the groundwater -- put combat arms in the past. >> i'm sure they would like to as well. >> first crack above the 50 today since january. >> yes i think it's worth noting. that's a dividend aristocrat a lot of people still own it, yields 5.6 wouldn't that be good if it went

up >> it would be, and it is up right now. but it hasn't been over time at all. >> cathie wood this morning looks at 3m's organic local currency, down 5, 6. asia is a big part of that she uses it to say when will the fed and economists start responding to the real world >> it's an interesting question. if you're any of the companies i spoke with this morning, the answer is they still have tremendous wage inflation. until you don't have wage inflation -- it's hard to find engineers, very hard to find pilots, hard to find skilled players because so manypeople between the age of 58 and 62 sold it. there was more to life when you have jim fitterling on from dow chemical and saying his numbers weren't as good, david, because of travel. >> yeah. people aren't spending as much on devices that require silicone for their chips. >> they're not buying things because they've got to see the

world before they die. there, i said it. >> yeah, you did. >> we did get jetblue. you had love last night. >> i came out thinking southwest -- i know it's very challenged, very challenged. it's not done going down necessarily. they have so many -- they're still going point to point, they think it's good. they have had so many issues, they're adding more and more to spending on tech but they need pilots they need everybody. they need everyone >> they need everyone. >> a couple of things i want to quickly hit. endeavor group up about 2.5% rick nick ol' img economy, sold it for $1.25 billion to a private equity firm, all-cash deal the big deal was a few weeks ago when they announced their intent to obviously spin out ufc into

wwe creating a new company of which endeavor will be the control holder, 51%. there's a lot of other value if you're talking r.a. manual, he would tell you that. >> he would tell you that? >> you think he'd tell you that in about seven different ways? >> they are my arthel. there are phone calls with an area code. >> you think he would call or text or send a carrier pigeon with a message >> i think all those and above if i had a house phone, hey -- ari is on the line. >> okay. i'll be right there. >> the market is responding, up a little over 3% guys, we should come back to -- >> we should come back to first republic stock down about 29% as we discussed earlier and has been made clear to me at least by people who are involved -- these next few days could be crucial for the bank as it tries to get

itself on sounder footing. the effort under way, it's unclear exactly how much momentum is behind it. it is led by treasury, white house, fed involved as well, sort of trying to put together a plan under which those big banks that came to its aid with that deposit back on the 16th of march remember of $30 billion would now yet again come in some fashion to take loans off its balance sheet, pay a premium for them, at least where they would be marked in the marketplace, allowing the balance sheet to repair to a certain extent and allow first republic to go out and raise additional equity. will that plan come together or put the balance sheet? a better place very much unclear. unclear what motivates those banks to do that other than the longhand of the government and unclear how heavy the government wants to be on putting the hand on the shoulder of the big banks in order for them to step up we'll simply have to wait and see. we'll be covering it and sharing any details we get along the

way. >> what does it say that they didn't have something lined up before they reported this quarter? were they relying on the idea they had deposit inflows -- how many days in march 30 days has september, april, june and november. so they've got four days they said march 27th >> i do think that there have been -- they have been trying to sort of pursue this effort in some way >> tom barrett making a lot of phone calls. >> they've got bankers working for them the government is paying attention. again, i'll come back to you if this were to go into receivership with the fdic, assessments might go up from the big banks. there obviously would be a risk. you bring it back to the marketplace psychology, but is it systemic? >> no, no. it's small i think it's very easy for treasury to say, listen, we're going to guarantee your deposit.

>> we've been talking about the possibility now, jim, for a month and a half. >> i know. what is the haircut they're going to have? i don't know we could sit here and say this is a run at the bank and we should all be scared or we could say no kidding how about most of them reported they had sticky deposits we just had a week of bank earnings and i just feel like it went through okay not a lot of growth. the fed should be looking at the lack of growth in loans versus the inflationary scenario. it might be even it might be a push so they could push us over if they did more than one -- >> sure. we've already got goldman trying to quantify how many points it will take away from gdp, any kind of contraction in ending because of that. >> interesting, because that's the right thing. commercial real estate -- the first thing they say is hi, my name is "i don't do any

commercial real estate." >> first republic had a great business you would expect some of the banks this might be asked to come to its aid would be very happy to take some of that business and have been, wealth advisers and the like as well. it's not just them making mortgages. they have a wealth advisory unit with some very high earners and a lot of assets that have been moving out of the bank as well. >> it's just -- no franchise can survive with positive out flow like that. >> unfortunate situation not of their own making. >> very good good analysis. >> i hear you. >> always good to get a good. >> fabulous. >> even better to get a fabulous the eco data taking a back seat to corporate results. t look at bonds today. you'll see the two-year trying

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jim, what's on mad tonight >> two stocks that are down. palo alto. and then whirlpool honestly, it's a good quarter. look, i think you have to make soda or tissue to be up in this market >> definitely not reward something clean beats. >> no. >> we'll see you tonight. >> thank you. >> "mad money" at 6:00 p.m.

eastern time when we come back, an exclusive with the ceo of mcdonald's chris kempczinski when we return ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

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morning. welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, live for you at post nine of the new york stock exchange. take a look at stocks under a little pressure here this morning down half a percent. very busy day of earnings, very strong rally in the bond market where we're seeing yields moving south. 30 minutes into the trading session. three big movers we are watching right now. it's earnings related. we'll start with ups falling after reporting a miss on earnings the ceo citing a deceleration in u.s. retail sales resulting in lower than anticipated volumes that stock down 9% 3m top estimates but the company announces it would cut around 6,000 positions globally in an

effort to focus on high growth markets such as automotive, electrification and home improvement. that stock is up a bit and mcdonald's reporting a beat, same-store sales rising in the u.s. and abroad. shares hit a new high but have bo backed after after the conference call. we'll have an interview with mcdonald's ceo in a few minutes during this hour meantime been a busy morning for ecodata. philly fed with a bit of disappointment and consumer confidence and housing data crossing the tape. rick >> yes, carl, indeed philly fed nonmanufacturing was weakest since december of 2020 it put the bid in pushing yields down new home sales for the month of march a beat for a change, 683,000 seasonally adjusted annualized units it's about 50,000 better than expected and 683,000 is the best month over month pace since, let's

see, 683,000, we're going to have to go back to march of last year when it was over 700,000. that makes up nearly 10% from the still unrevised 640,000 in the rearview mirror. consumer confidence for the month of april expected to be at 104.0 and this is a big miss 101.3. that's the lightest level since july of last year. present situation, 151.1 that equals what's in the rearview mirror but that was revised to 148.9 148.9 last month was the lightest all year until december of last year and finally what lies ahead are expectations, 68.1, 73 last time gets moved up to 74, 68.1 is on the light side the lightest since july of last year so now let's turn to diana to

discuss that up almost 10% march new home sales what did you think, diana? >> rick, for sure it was a beat, and i'm a little surprised actually because these are based on signed contracts in march so people out shopping during the month putting the money down and that was when mortgage rates went over 7% to start the month and really stayed pretty high throughout most of march we're hearing from the builders they're using incentives, those mortgage rate buy downs. that's probably why you saw demand come in high. march was revised down to 623,000 and the price still up 3% year over year. builders are giving incentives but not lowering prices. what i am seeing is that the supply of new homes for sell is dropping and had been over an eight-month supply and the existing home supply 2 1/2 months why the builders say they're benefitting so much from the lack of supply on the existing home side we saw it in pulte homes, they reported better than expected earnings after d.r. horton did the same last week and what they

continue to say they're seeing strong demand from buyers coming in because there's nothing for sale on the existing home market this is a nice beat. more than i expected because of those higher mortgage rates but incentives it you're wondering why i'm standing in front of a construction site because we are going to do a story about the largest geothermal multifamily apartment complex in the nation. we'll tell you about it coming up later in the hour back to you. >> see you then. diana olick, later this hour start with the banks, first republic shares are tanking, the regional bank saying deposits were down nearly 41% in the first quarter. we knew it would be bad. the ceo saying the situation has stabilized a bit lately. have a listen from the call. >> as the industry event unfolded in march we experienced unprecedented deposit outflows beginning the week of march 27th our deposits stabilized and they have remained stable since that

time. >> not giving a lot of relief to shareholders today, the stock down another 27% the deposit numbers at $104.5 billion, david, missed the $137 billion expectation with the $30 billion that the big banks had to put in terms of deposits to help bridge this bank. >> yeah. march 16th when they had that infusion of the $30 billion. of course take that out of the mix and they lost $100 billion in deposits during that time i've been reporting on the current situation and i guess the headline is the next few days seem to be crucial given the number of people i've spoken to who are involved in trying to fashion a plan in some way that would save the bank, so to speak. how would that be done well, there's a hope, at least, that you could get together that same consortium of banks or at least many of those who chose to make those deposits back in -- on march 16th and get them to capitalize, a special purpose vehicle, that would then go and

buy the loans and securities off of the balance sheet of first republic above where they would be marked in the marketplace, so a premium to that, but below where they were originally purchased. nonetheless at that premium would allow the bank to take in money and allow it to rid itself of many of the assets troubling it right now creating a hole i've report as much as $25 billion and were to be taken into receivership could be higher than that and then allow the bank to go out and raise new equity so that's the plan that is the hope for treasury, the white house, the fed, certainly involved if those conversations. and that's been going on for a few weeks, is my understanding what is unclear is whether or not the banks are willing to actually play ball, whether they feel a real need to step up here, how heavy the hand from treasury or others will be on the shoulder of those banks in terms of saying you must do this many of them, perhaps, would be

beneficiaries of this company -- this bank going into receivership and taking parts of its business perhaps after that or even during this period there does not appear, at least in the opinion of those i've spoken to who are advising treasury and the like, to be systemic risk and there is a question to the lack of will on the public sector basis for what we would call the open bank rescue as opposed to what would be a closed rescue, the fdic takes night receivership, and i'm told gavin newsom, the california governor, anxious to not see another bank in his state go that route. these next few days could be crucial. >> the important part is, it doesn't appear to be systemic right now. yes, we're seeing a big decline in that stock, but it's not spilling over. the financials are down, but also yields are under pressure you're not seeing the kind of contagion risk we saw early march. i don't think you can argue that a further point on that, overnight we got this joint statement by the fed and the

bank of japan and the ecb and they all came out together and said they're going to change the dollar liquidity lines to a more regular schedule of weekly instead of daily and perfectly said in a sign that some of the stresses have been alleviated in the system and u.s. markets are functioning more properly. that was a really positive sign because we weren't there a few weeks ago. >> we weren't. there is a question if first republic were taken into receivership what the impact would be always hard to gauge, but to your point there is a belief it's not systemic at this point. the marketplace in many ways has been anticipating that possibility for weeks now. i have referred to the bank in the past, as many have told me, as a zombie in the sense of it doesn't need to die, but it's going to have a hard time sort of living in terms of actually making money, given the cost of its deposit base at this point and the loans and securities it has on its balance sheet that are not paying it nearly enough.

that continues to be the question there is this hope for this plan, but it's very much unclear whether it can come together you know, one of the propositions for the banks would be if you don't do this, your assessments will go up by the fdic maybe consider it because of that do you really want to have this whole question again about fdic insurance and where that really stands and what it's really for. do you really want to take the risk of another bank failure so that's sort of the proposition of the banks, but it's unclear how it's received. >> meantime we mentioned some of the sell ratings on the equity but they like a fair value of 8 below these levels and they argue need to raise capital to offset potential losses, haven't had a return on assets greater than 1% since 2016 so this growth at all costs market, they argue to pivot away from that is asking a lot. >> the analyst notes are dire on this name. the only good thing, treasury and fdic had a few weeks to

figure out what they will do with first republic. they saw this coming because it was next domino and they've had a few weeks to figure out questions like are we going to bail out the uninsured deposits which includes jpmorgan and wells fargo. >> and other banks in the country. >> i don't know that we've gotten an answer. >> there's an expectation that there will be. but you're right and this plan, again, listen f the banks would agree to it, they would do it i mean, why not. right? get first republic to live on and an opportunity to sort of repair its balance sheet and grow over time it's just unclear how much influence, again, the government is willing to actually try to push these banks. >> with all the banking drama in the mode of watching these nerdy releases today at 1:00 we get from the fed the m-2 which is really important. if you don't know what m-2 is, it's all the money in our economy and bank deposits and currency in circulation, liquidity out there, and in

december it shrank for the first time in history going back to 1959 it will tell us something, i think, about the banking system because we know that deposits have come out. look on the plus side, when the money in our system shrinks, that should be good securing our inflation problem because all that money out there is part of what caused the inflation. but on the bad side it's recessionary when it contracts and a lot of people think it's a headwind for the stock market which loves liquidity. we're still a lot higher than we were prepandemic with the stimulus that's gone through the system, but with the fed raising rates, with the fed trimming its balance sheet and now with these bank failures and deposits out of the system, this is going to be key to watch especially if there's a sharp decline. >> haven't mentioned the debt ceiling, sara. ten minutes into the show. >> anything new? >> yeah. june 6th, wasn't that -- what did yellen say >> we'll have treasury going to update - >> we don't have the official. >> in about one to two weeks mccarthy argues that he still

has a clear shot at the vote this week, maybe make revisions to get the holdouts, but that's a key political vote to watch. >> we don't know if the vote is going go through and we don't know -- we're waiting for the official treasury on tax receipts which usually comes early may. we'll see if that comes. but i don't see a path here. i don't see a lot of market nervousness about except in the short-term treasury market we'll update the nonprogress, sure not a lot of progress there. that's news. >> thanks for the update. >> yeah. you're worried about it no relief here today. >> as we go to break, here's the road map for the rest of the hour including a rare exclusive with the ceo of mcdonald's. >> we'll hit general motors that raised guidance on the back of its first quarter beat of expectations and did end production on one of its ev cars. >> and coinbase, clawing back, suing the sec and demanding clarity on concerns around crypto big show still ahead

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mcdonald's shares eyeing a third straight record up 11% this year. quarterly comps jumping more than 12% shares pairing some gains as executives on the call still point to a macro environment that remains challenging as well as some signs of pricing

resistance president and ceo of mcdonald's chris kempczinski joins us to break down the quarter in a cnbc exclusive. chris, great to have you back. thanks for the time. >> thanks, carl. good to be here. >> we don't usually start every ceo with discussion about the share price, but it's been on such a run i got to ask you what you think the market has been responding to, or at least trying to anticipate, whether that's a china reopening or a pivot to more unit growth what do you think has been at work >> i think for us fortunately our business has been performing really well for the last several years, and i think what has been playing out is essentially continued optimism about mcdonald's performance, the ability for this business to succeed, whether it's a challenging macro economic environment or benign economic environment. i think it's overall enthusiasm and optimism about our strategy, the state of the business, and the outlook going forward. >> we mentioned the discussion

of inflation crimping margins and the analysts did have notes about margins this morning can you frame that and is the picture getting better u.s. than it is say in europe? >> yeah. we've been facing quite a bit of inflation. last year we faced double-digit inflation globally and even in q1, q1 we are still experiencing double-digit inflation our outlook for the balance of the year, we do expect it to get more favorable, but net-net, still by the end of the year we're going to be looking at i think probably high single digit it inflation on a full year, which is much elevated than what we've been used to over the last, you know, kind of prior period where we typically would be in the low single digits. that is pressuring margins we're trying to be thoughtful about how quickly we pass on this pricing to consumers. we understand the role mcdonald's plays from a value

standpoint and i have been proud about how our franchisees and system have been judicious about how we've done it. it has, as you pointed out, put pressure on margin in the short term i expect we'll work our way through that over time. >> where is it coming from specifically is it the stubbornly high food costs, labor costs what is moderating and what is not? >> yeah. good to hear from you again, sara and for us it's broad-based. we're seeing it across the board. labor inflation is mid to single digits some of our input costs, price of grain is quite elevated right now. that actually flows through to the proteins because a lot of the feed stock that's used for chicken, beef, et cetera is grain based. we're seeing it across almost the entire basket of goods that we're experiencing inflation, in

addition to the labor inflation that i talked about. >> so on the other side, you've been doing this restructuring, you mentioned the layoffs, which we reported on what's the earnings benefit overall to what you're doing >> the way we looked at the restructuring, it was not about trying to get a g and a savings. it was for us about changing our ways of working and one of the things that i wanted towns able to do is we need to be able to be faster as an organization we need to be more innovative. we need to be more efficient i saw things with how we were organized and working that we're going to get -- that were going to get in the way of that. one of the things we took a look at with the senior team over the last six months, how do we change our ways of working we need to stop working in silos and need to stop having every market try to invent its own light bulb so to speak, and do a better job of digitizing the organization so that was the impetus for

taking a look at the organization and, unfortunately, as you noted it did result in some people leaving us, but it came from a place about how do we actually get better as an organization, as opposed to trying to hit, you know, a specific savings number. >> chris, you know, that leads to another question, which we've been asking a lot of ceos lately when it comes to efficiency that you're discussing. are you incorporating a.i., chatgpt, or things of that nature in the way that you do business, or do you expect that you will over time >> there is a number of things that we're looking at in that. you start with the app the fact that 40% of our sales now are digital sales, you can almost think about we've taken the ordering function, which for years and years was done by a human, and now essentially 40% of our orders globally are being taken by some sort of digital input. so that's a very basic way that

it's starting to play out. we are also out there piloting automated order taking which would be through voice recognition. that's something and us like everybody else, we're certainly very attentive to what's happening in generative a.i. and it's very early days thinking about the implications on that, but i'm sure there are going to be places where that is certainly going to be able to work its way into the business. we're just learning like everybody else there. >> well, that coupled with digital ordering we might have photos built of the design testing you've done in texas regarding order ahead lanes, smallerfootprints. can you kind of describe what we're looking at here and give view ears sense of how it will change the face of mcdonald's, the consumer facing front of the business >> sure. one of the things that we're thinking about is, is different formats at mcdonald's with

delivery being such a large part of the business, with so much of the business going through mobile, where someone might come to the restaurant and they want curbside, they don't want to walk in, all of those things when you play those out, they have an impact on how big of a restaurant do you need, how much into our seating -- indoor seating do you need to have. what we're testing in dallas is a restaurant that has no indoor seating an is geared much more for pick-up through dual lane drive-through, much more geared for delivery only. we're doing a lot of testing in other markets around the world i think the mcdonald's restaurant as you know it is going to evolve over time. we're certainly going to still have a lot of the restaurants that are traditional restaurants, but i think there's also an opportunity for us to think about new innovation and how we change the physical layout of our restaurants for a much more digital world. >> chris, what about the consumer i know you're considered kind of

defensive in a tough recessionary environment, but what are you seeing in reaction to the higher inflation rates and cost increases you've had to put through? are you seeing any kind of recessionary behavior of higher end consumers trading down or whatever it looks like during a recessionary period? >> yeah. overall, the demand for our business is very strong, so we feel great about that. you do on the margins start to see things that show there's pressure on the consumer one of them is units per transaction. so simple things like are they adding fries to their order? we're seeing when you look at the units per transaction, how much stuff does someone have in their bag when they're actually leaving the restaurant, that's decreasing it's decreasing low single digits which i take as a sign that consumers are coming in with an absolute price point in many cases, that they're thinking i'm going to spend $5, $8, and so they gear their order

to that and that does effect units per transaction. that's one thing the other thing that we're seeing is, we have to be disciplined about where we take pricing. the pace of how we take pricing and when we have all sorts of models that help us think through that when we execute, where we know we have pricing power, we do quite well but we do find that as we try to take pricing in areas that maybe are a little more sensitive the consumer pushes back those are things we watch and look at that just tell us that there's some sensitivity there we also trook two metrics, affordability and value per money. i would say industry wide, you're seeing consumers are rating the industry lower on affordability, lower for value for money. we still lead but far on both of those metrics, but consumers are paying attention to it no doubt. >> is that why you've been making tweaks to recipes or at least order prep

we've talks about onions and buns and the ways you're changing the way burgers are made >> that i would put more to kind of the mcdonald's restless ambition we're always trying to tweak things and make things a little bit better you're reference something changes that we're making to our burger here in the u.s we've already done it in 50 other markets around the world and it's all the little things that we love to kind of play around with in the restaurants everything from the buns and we have fluffier buns and how we're handling produce so it's crispier produce, tempering the cheese differently so it's meltier cheese we're getting the burger so it's hotter this is the stuff we love to do is tinker around the restaurant. wear doing that as part of our natural dna. that's not anything driven by the macro environment or some of the value questions that you were talking about. >> we've been asking a lot of global ceos about china and whether the reopening there is

sturdy or durable. ceo of dow had comments on the call maybe it's happening slower than some might have expected. how are you feeling about that >> we're seeing our china business starting to come back well we had several years where the business was declining we're still down versus where we were in 2019 but ask me in a week because i'm headed to china in a week, and i'll have a much better sense after that, but overall, when you look at the numbers, clearly there's a bounceback happening in china and we're benefitting from that. >> all right good he just booked you for a week. chris -- >> i didn't mean -- i think i blocked myself in. >> joking. hearty beef. -- cardi b. how much strong growth this

quarter, sales increases due to them in light of reporting that franchises were -- franchisees were upset about the partnership and what they symbolize? i know travis scott was huge for you too. >> yeah. we've -- we're having growth across a number of levers. marketing has been a growth lever to focus on core men knew, digital delivery, drive-through. all of those things are contributing to our growth when we think about our famous order campaigns cardi b and offset most recently came from the inside, we have fans throughout who love mcdonald's and we wanted to find authentic fans and showcase when they come to mcdonald's, what are they ordering so that was the genesis for the idea it started with travis scott we've had bts and many others, most recently cardi b and offset i think what you're referencing

in terms of, you know, some franchisees aren't cardi b and offset fans, maybe bts fans, why we have multiple famous orders the thing about leading a brand like mcdonald's, is it's such a beloved brand, so many people that come to mcdonald's, so we love from a marketing standpoint, to just showcase all the peoples that are fans of mcdonald's and love coming in and that helps us from a business standpoint as well. >> leads to one last question about marketing. i mean, you're, obviously, taking some share. is it time to get more or less aggressive on the marketing front? >> our mindset is it's time to get more aggressive. on everything that we're doing, when you're in a position of strength like we are, we have the benefit of having a fully modernized -- that's not something that others in the industry have. we have tailwind in the business our franchisees are in a great

shape, flipped back to cash flow positive this quarter. when you have those working in your favor it's time to get aggressive, not time to get complacent. >> we love turning to you, just the radar on culture and the economy and macro and the consumer safe travels and i look forward to talking to you again soon. >> all right. >> thanks, chris. >> thanks for having me on, guys i don't know how anyone wouldn't be a cardi b fan. still to come, coinbase take a look, stock is up a little the company suing the sec. we'll explain why and what it means for crypto when we're back in two minutes with the dow down about 8 7 points

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(vo) switch and choose the phone you want, like the incredible iphone 14, on us. (cecily) on the network worth bragging about. (vo) verizon pepsico beating on the top and bottom lines and boosting its full year guidance as they see steady demand for both of its businesses, soda and snacks, while maintaining very strong pricing power. as we've seen the story in a lot of these food beverage and household product makers it's all about pricing. 16% growth from pricing. volumes were down too. which they see is a big positive in other words, they're able to

pass on the higher prices, consumers are paying for it and volumes barely slipped in another important sign of confidence from pepsi, unlike coke and most companies this quarter, they raised guidance in the first quarter, which is early to do. pepsi doesn't usually do that. they usually wait until the second quarter to get more clarity, but they felt so good they did raise the guidance. i spoke to the cfo, about share, how many more quarters can you do double digit pricing and not have them fall off the cliff and they're not seeing signs it will change inflation, this is bad news for the fed and consumer, he doesn't see it coming down for the rest of 2023. >> we're in this period where input costs accelerating and steady demand holding up but he did reiterate last quarter that pricing that they're going to take for the year to match inputs they've largely taken care of. like a nine-month lead time.

>> they buy early, right, to plan the costs locked in early, which are why prices are not going to come down as the cost comes down over time we'll see less positive growth but less positive inflation growth, not deflation. which if you're the fed worried about food and beverage inflation, not so encouraging. a shareholder at pepsico very encouraging because they're seeing growth and it was broad across the geographies and category and even in the soda category, where they have not necessarily been as strongly growing as coca-cola, they saw 60% growth in pepsi zero for the quarter in the united states they launch the new drink, their fifth attempt to compete with sprite, their fifth lemon lime soda, which says is going to be the winner. >> it's going to work. it's an interesting contrast with mcdonald's. you guys just speaking to the ceo, but they're talking about, you know, resistance to price

increases in certain regions they were seeing and being seemingly very mindful of that as opposed to pepsi which has been able to as you say, raise prices consistently for quite some time now. >> so a part of it is the strength of the brand and the category and i talked to hugh about this they're seeing a little bit of growth in private label which is the trade down, step down from the stronger price, stronger brands like pepsi, but not much. people are still spending and prioritizing on these indulgences. the common thread is they both don't see inflation coming down sharply. >> fascinating to hear chris reference grain, right, and not just on stanrches. bitcoin down 10% from 30 k highs. coinbase, meantime with upside the crypto exchange filing a suit against the sec pushing regulators to create rules for digital assets, building upon its existing legal battle with that agency. in the meantime long-time bull,

sflag a podcast that regulators have killed the crypto industry. take a listen. >> crypto is dead in america now you have gensler -- you had gensler blaming the banking crisis on crypto they've -- the united states authorities have firmly pointed their guns at crypto >> says crypto is, quote, dead in america david, at -- after a time he once said the price would go to as much as 200 k on bitcoin. >> got it. thank you, carl. >> you're not paying much attention there? i've be -- been wrong about a lot of stuff. >> he's very eloquent. he is. still to come a ton of moving earners ahead, how about a lot, gm, spotify, we're back in two

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about an hour into trading weakness in the major indices. the dow down 120 s&p down to 4100 let's get to bob pisani and see what's moving. >> lots of beats but not a lot of earnings raises that's disconcerting and we're back to a defensive posture. we've been trading down the last five days. take a look at the sectors the support coming from defensive groups from consumer staples and health care. we're losing semiconductors trending down the last week and banks also are trading towards the lower end. two important leadership groups. you are talking about some of the big earnings beats we guided new highs but they're consumer names kimberly clark was great they raised full-year guidance higher prices. you saw the ceo of mcdonald's here 13% surge in comp store sales. pulte had strong demand there. lack of existing homes out there

is helping them. there's a flu high you talked about pepsi, prices up 16% good numbers there but they only mod list raised their guidance this is a trend we've been seeing sherwin williams, the stock on a tear same-store sales up 14%. but only afirm their full guidance a lack of visibility the ceo said this, take a look at what they said on visibility. visibility remains limited we continue to expect a challenging demand environment in the back half of 2023 against difficult comparison that's the issue the lack of visibility here. here's where we are. a quarter of the s&p, 125 companies so far, 79% are beating, about average the average beat 6.8%. nobody is raising the system that's the problem only 29% are raising the numbers here finally want to quickly note, kenvue is coming, the johnson & johnson spinoff, we've been waiting for this for a long

time, and it's, of course, one of a number of spin-offs we've seen in the last year, and sara, the bottom line, and the real problem here is, the ipo market is still essentially shut, even with these numbers, we would only be raising about $7 billion so far and that's far short of the normal number. still waiting for the ipo market to open. sara, back to you. >> $55 billion ten-year average. bob pisani it's the busiest week of earnings and we have you covered. phil lebeau is watching the auto space. julia boorstin covering spotify and seema watching 3m and ge. >> let's start with phil on gm. >> to an extent what bob was talking about a case where they beat on the bottom and top line, doesn't matter with investors right now. shares of general motors trading lower after the company reported better and revenue above expectations this is driven by the strength of the internal combustion

engine its market 10.9%, an increase f the first quarter last year from the strength and demand of vehicles throughout. here's the cfo on "squawk box" this morning. >> we're still lapping a lot of last year's wholesale price increases we had to put through for higher material costs, higher logistic costs. the consumer remains strong and when you look at the new vehicle launches we have this year couple days with the high quality vehicles we have, couples are demanding that. >> the focus with general motors is on ev development the goal is to have 400,000 evs produced by the end of the first half of next year and they're going to ramp up production in the second half of the year. it's not going to include the chevy bolt they are moving to the new platform in terms of battery cells and production and that's not going to include the bolt so mary barra said during the conference call today they will

end that production. take a look at shares of general motors keep in mind this is a company that raised its full-year profit guidance today and yet, stock is down almost 3% back to you. >> thank you. want to turn to julia now on spotify. those shares are moving higher off the highs of the session so far. julia, strong results, particularly engagement. >> yeah. especially when commit to the user numbers now those spotify shares are surging despite the fact that company swung to a loss and reported revenue that did fall short of expectations. the stock is up about 6%, 6.5% now, better than expected gross margin and user numbers. spotify exceeded expectations with 515 million monthly active users and 210 premium subscribers and guided to better second quarter growth on both of those key metrics. add supported revenue fell but did grow 17% from the year aig

quarter. the company saying the quarter was choppy, incrementally throughout the quarter, it got a little better. we feel like we have momentum heading into q2. specifically commenting on advertising there. ceo daniel eck out performed in the markets where they raised prices and feel good about the ability to raise prices over time atlantic equities writing with the u.s. price increase waiting in the wings investors are likely to look past the average miss and focus instead on the strong volume performance and outlook. so now we're watching to see how that ad momentum plays out from meta tomorrow and pinterest and snap on thursday and whether the media giants also see pricing power for their subscription services carl >> julia, thanks. >> seema moody is back at hq with more on the industrials having just spoken with ge's larry culp. >> carl, ge's ceo larry culp optimistic about the rebound in

jet engine orders. aerospace and organic sales up 25% in line with system but the margins of 19% better than what wall street had modelled culp telling me leaner supply chain and efforts to reduce cost playing a role here. he expects outbound travel from china to reach prepandemic levels this year renewables, orders up big year over year led by the onshore wind business. losses are narrowing and culp expects the business to turn a profit in 22024. the pivot to 3m which did see an increase in aerospace orders the stock is up fractionally on an eps beat, the stock really responding to those actions to reduce costs by 7 to $900 million, cutting 6,000 jobs. 3m is not only struggling with a softening economy but two potentially legal costs, military ear plug lawsuits that jpmorgan says it's a 10 to $20

billion risk and the pfas chemicals a bellwether trial for that set for june. >> thanks. seema moody. we're going to check the with the ceo of novartis stock moving higher on the q results. multiyear highs today. we're back in three.

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results beating on the top and bottom line, the pharma giant raising its full-year outlook as well joining us ceo vasant narasimhan. >> great to see you, sara. >> what is fueling better sales? we're a few years out of covid does this mean we're back to normal >> a couple things happening we're seeing a strong performance across the

portfolio. our key growth drivers in cardiovascular drugs, cancer, multiple sclerosis are coming back with double digit performances benefitting from the normalization of the health care system the medicines are starting to take share and deliver on their clinical promise that's one big part of the story. the other, we announced a large transformation to become a pure play innovative medicine company. we announced the spinoff of sandos, restructured, got more focused and lean and that's also starting to come through on the bottom line and that allows us to raise top and bottom line guidance for the full year. >> investors are looking for an update on the sans do spinoff, if that's on track by the end of the year and what else might be on the chopping block? reports of the ophthalmology unit >> we're on track for a decision with our board and investors we hope later this summer we're on track for a spinoff of the second half of the year. that's all on track. we're working hard to set the business up to be successful as

a standalone company so we exit that spinoff with the largest generics company in the world and the largest pure play innovative medicines company in the world by revenue two leading businesses post the spinoff. as for the rest of the novartis portfolio, we're continuing to look at where we can optimize. right now we're committed to our inline op business nothing imminent at the moment >> the stock's at an all-time high i'm told part of the reason there's some excitement over the breast cancer treatment, which i guess was meant more for late stage and is now being looked at with good results for early stage. can you talk about the potential and what you're sneeing? sfwhoo we launched it a couple years ago in metastatic breast cancer so patients that have are the tumor spread around their bodies, women who have had the tumor spread around the body and the medicine works extremely

well we had a lot of positive data. we expect the medicine to be a multibillion dollar drug it's got the strong support of guidelines what we announced earlier this month was the initial top line readout of our data in what's called the early breast cancer setting. these are patients where we're trying to prevent the recurrence of the breast cancer this was the broadest study done to date in both stage 2 and stage 3 patients and that allows us, we hope with the ultimate presentation of the data and regulatory filings, to have the broadest indication in our label and allow us to impact these patients all around the world to prevent the breast cancer recurrence. that would add another multibillion indication. i think that's got the attention of investors as we continue to expand that position in cancer care. >> this isn't specific to novartis, but there's been a lot of discussion the last couple of weeks about the judiciary's role in either changing availability

or the approval process for big pharma how is that being talked about at novartis and amongst your peers? >> i can say on novartis, and i'm the chair of the industry body in the u.s. for this year, it's very concerning i mean, the fda is arguably the best scientifically driven regulator in the world they make their decisions based on science and the safety and efficacy decisions based on the best possible data we can't have courts overruling the scientists and outstanding people at the fda. so, it's very, very concerning i'm hopeful that better minds prevail here and we really ensure that we support the fda's primacy in regulating medicines in the united states it's critical for our industry, but more importantly, critical for public health in the country. >> finally, you know, a number of your competitors use acquisitions to help fuel their pipelines, buying companies that

have drugs through phase 2 or even phase 3 trials. i'm curious, particularly post-separation, how you view acquisitions as well from your perspective in terms of fueling your own pipeline? >> you know, when you look at our profile right now, we don't have a challenged balance sheet. we certainly have the opportunity to do both on m&a. the great position we're in, we're coming off three positive phase 3 readouts for prostate cancer drushgs a rare disease medicine, and breast cancer, which we already talked about, which gives us a lot of confidence in our midterm growth we'll continue to look at m&a more to bolster the pipeline in therapeutic areas but it's not something we need to reach for we're focused on strategic fit, therapeutic area fit and valuations where we can deliver value to our shareholders in the company. we don't want to overpay for these assets we'll keep streaming the landscape. we hope there are opportunities where we find a strong fit for

the company. >> appreciate the update thanks for joining us on earnings day. >> take care, sara >> ceo of novartis i want to turn to housing now. new york is breaking ground on the city's largest geothermal residential apartment complex. our diana olick is live in brooklyn with more for us on the story. diana. >> reporter: david, geothermal heating and cooling has been around for a while, but generally just on single houses or small buildings an australian-based developer is now testing this on a massive scale here in brooklyn 320 bore holes are being drilled nearly 500 feet into the ground, creating a complex loop of piping that will eventually result in the largest geothermal apartment dmrecomplex in the u. >> what we're looking at, i akin this to your heart and veins and arteries in your body.

>> reporter: water below the frost line is at a constant temperature. by drilling down to it and creating a loop system of pipes, the water is brought up through heat pumps, which can heat or cool the building all year long. it's approximately 55 degrees once you get below the frost line we are using that constant temperature to cool in the summer and to be warmer in the winter. >> reporter: the project, which takes up a full city block on the edge of the east river, will have 834 rental units across five buildings, including a 37-story tower using geothermal will reduce its greenhouse gas emissions by an estimated 53%, but it will cost about 6% more to build walsh says he will make that up in energy savings over the next couple of decades. not to mention they got a $4 million grant for energy savings from the state of new york this is really a template for the rest of the city and for other cities like boston and d.c., which are putting in very strict new emissions standards

for large-scale buildings. david? >> diana, what about on a smaller scale. i've had people mention it to me even for homes, for example, the ability to actually, perhaps even more efficiently than solar, use it for the same uses you just outlined. >> reporter: yeah, actually, we did a story in arizona recently about a very large-scale housing complex of many single-family homes and geothermal on a large scale. that's easier to do because you have so much land and can spread out the systems. in a city like this it's pretty difficult, but if you find the right lot with the right kind of water and you can dig down these bore holes like they're doing here, you can do it for a large-scale, multi-family building if they can do that in other cities, that will create really big savings. it's a test pilot for all cities and for geothermal across the country, because that's how you're going to reduce the emissions. > thank you for the story. diana olick in brooklyn this morning for us before we wrap up here in

this hour of "squawk on the street," certainly we'll be looking closely at alphabet after the bell i want to watch that, microsoft as well set to report. the conference calls should be fascinating in terms of the questions about ai, chatgpt and/or alphabet's bard, what they're going to do, whether they're being challenged in search in a significant way, not to mention getting a sense of the ad market as well, which continues to be an important component overall of google's earnings i should say, alphabet's earnings "squawk on the street" continues right after this stay with us

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setting the agenda for us today, mark lehman setting his earnings beat we'll break down the winners and losers like u.p.s. this hour. >> two more ceos on earnings the chief executive of pfizer and cleveland cliffs are with us james poterba on diffusing the debt ceiling time bomb. and cvs ceo, with that stock