microsoft, followed by alphabet. >> okay. paul, thanks a lot it's good to talk to you today >> best wishes >> you too let's take a very quick look at the markets before we hand things over. you see the dow futures now indicated up by about 70 points. nasdaq up by 146 the s&p, up by close to 13 that does it for us today. make sure you join us tomorrow right now, it's time for "squawk on the street. bye-bye. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. premarket is stabilizing after tuesday's selloff. lot of moving pieces today mega cap tech, ukraine, first republic, potential house vote on the debt limit, brent back below $80. our road map begins with big tech, though, nasdaq futures rallying after those better-than-expected results from alphabet and microsoft, but in this major blow to microsoft, the uk blocking the acquisition of activision blizzard

david is working the phones. we'll get his report coming up we'll also talk a bit about first republic that stock continues its dramatic slide of course, as that regional bank looks for what is an increasingly unlikely rescue deal shares of boeing are rallying it is planning to boost its max production, despite an ongoing manufacturing snag ceo dave calhoun is going to be with us in just a few minutes. let's begin with uk regulators blocking the microsoft-activision deal. the country's cma saying such a combination would substantially reduce competition in this new cloud gaming market. both companies say they'll appeal that decision activision stating "the uk is clearly closed for business," david and then brad smith with a strongly worded statement of his own. >> they can say what they said activision is being good here, making sure it's going to secure its $3 billion break-up fee, so it's being a true partner here by saying a lot of things as well and going along with this

idea of appealing the cma decision when the cma originally came out a couple months back, early february, with a negative potential review here, it looked like they were going to say, "no," because they were also looking at the console market, and we said the deal was mostly dead. then, they reversed themselves, and said, no, we're okay with the console, just looking at cloud, and the market rallied, and everybody said -- and we, included, said, this thing is no longer dead. now you're much closer to all dead the likelihood of an appeal here of the cma's decision is exceedingly slim, something i tweeted earlier. you can take a look at past efforts there. they won't get there, most likely, and certainly within -- not within any sort of time frame that anybody would care about. it could take as long as a year. there is no statutory timeline for review they have to make that appeal within four weeks.

they said they're going to do it that's fine. and then the average review period, ubs, five and a half months, but none have been successful not one appeal has been successful, and so, guys, it does look highly unlikely that microsoft and activision will prevail here even though there are many who say, what are they doing in the uk they're basing this on a market that doesn't even fully exist at this point so, their conclusion about it being the most powerful operator in a fast-developing market for cloud gaming, well, yeah, but it hasn't even developed yet. how can you go there but it puts them in line, jim, with our own ftc >> i'm so glad you mentioned that, because the ftc, khan wrote a seminal article about how -- i know this is going to sound very communist, and i don't mean it too, but the idea that rich people are the only people who benefit from mergers, and poor people don't benefit. it was a doctrinal article

in other words, it said, there's a big mistake in the way we handle antitrust in this country. we must block anything, because the only people who gain are the ones who don't need anything i'm wondering, is this the doctrine that's now prevailing in the uk? >> you know, you have to wonder that, because this is a very curious decision based, at least, on the facts as we know them and it even is more surprising in the sense that microsoft seemed to be winning the argument over time from the initial review, remember, that looked so negative, to where they seem to be. the body language, by the way, from microsoft, as best we can tell, was very positive. i mean, they had meetings on friday at the cma. many people took that to sort of look as a very optimistic point. why would you be meeting with them if you weren't hammering out any details about sort of an agreement, so to speak market was wrong >> but was there a premonition

nadella talked about a great product, did not mention activision blizzard. almost as if he had an inkling i think he was saying, either way, i do well >> the point has to be, they're not moving on as of yet, and activision needs to wait until microsoft finally pulls the plug, but as we've said many times, this was the most important decision of all the regulatory reviews, in part because the appeals product itself is so long, so complicated, and so difficult to win. we haven't seen a win in a very, very, very long time, as long as the reviews have gone back >> and we will be talking to dave from carrier. this would be a german review, but if it's similar as this uk is propounding, that deal is not going to happen. >> the deal that people are now wondering about is vmware, that deal, because that's in front of the cma as well. there were going to be positive vibes for vmware if, in fact,

the cma approved the transaction. let's talk a little bit about activision's stock price, though, because there are those who say, listen, the downside should not be that great, and it, frankly, 9% is not remember, the stock was not even trading here that long ago it only moved up past this point when the cma seemed to reverse itself a few weeks back. if you put ea multiple on it and you get as much as, jim, what, four bucks in earnings, you get close to $80 not to mention they're taking in $3 billion in a break-up fee, most likely, and that won't be until july when the merger agreement finally runs out unless microsoft pulls the plug prior to that. they're going to have $10 billion in cash. >> are there people who sell because they don't know the difference between a blizzard that you get at dairy queen and this activision thing? >> arbiters are fine they're the ones who were talking about, given the hurt

they've taken today, there wasn't that much downside, because they believe the fundamental value of activision has increased lately, and the company is in a much better place than it was prior to this deal being announced >> 78 bid for mil. right here kind of like trillium. >> for getty images? yeah we knew this was an important day. we expected it was going to go differently for microsoft, and now the question simply is, despite they're saying that they're going to appeal, frankly, most people say when they're going to choose to move on >> time to move on to boeing >> before we finish that, though, the stock's not moving a whole lot, relative to what it did after the call and i wonder, is it trading this morning on activision or this idea that costs are going to be, quote, low in fiscal '24 >> microsoft was incredible. you know what it reminded me of?

last night, there's a great basketball game, ice tray, three-pointer at the end this is microsoft. >> look at this. >> oh, wow, we've got this >> holy cow. what's happening here? >> i don't know. i don't know what we're watching there it is. >> oh my god ice tray >> that's microsoft's quarter. >> that's microsoft. andy hood. just ice tray. >> i think one of the titles this morning, and maybe it was wolf, softy saves software is that saying too much? >> no, i mean, microsoft was, like, okay, everybody thinks that tech is done. zuckerberg's the only guy. we're not only efficient, but we're going to raise numbers for things that you never even thought were doing well. pcs. david. >> and this is before the benefit from chatgpt, before any real benefit in the enterprise that we're seeing from artificial intelligence. >> a.i. was mentioned 50 times another 20 times, and i think the stock would be up 25 >> you do boeing, we'll get back to microsoft and alphabet in a little bit >> we're not done here >> no, we're not done.

>> we should kill the break. >> i think we're going to. >> thank you before we do, let's get to boeing rising in the premarket, wider than expected loss, the guidance on the 737 max is lifting the stock. let's get to phil lebeau, who has a very special guest >> dave calhoun, we'll talk about the guidance on the max deliveries and production in just a bit, but i have to ask you about the wider-than-expected loss a lot of this has to do with the supply chain and the challenges and the fact that your costs are a little bit higher because you still have to work extensively with your suppliers. where's the status as far as that system improving? >> well, the gross loss that we have been experiencing over the last couple of years and continuing into this year are still related to a very large pile of rework costs associated with the finished airplanes that we have had in our possession ever since >> the ones in inventory >> so, we started with 450 we're now down in the low 200s we work our way through that

it won't be until those shadow factories that do the rework on those airplanes are shut down toward the end of next year. so, we will continue to make progress, progress, but the gross loss is what we have to contend with, and we have to reflect every notice of defect from a supplier in those numbers, because we've got to meet the conformance standards the faa has. >> why don't the analysts take this into consideration a little bit more is it hard for them to game this out? >> i think they do their models all understand this progress, and so i give them credit for doing that. we also had, not to be lost on this, another charge in the first quarter related to the tanker, $200 million it's a supplier disclosure we made in about the middle of the first quarter, and we're working our way through that and just about through. >> let's talk about the max delivery guidance. you keep it at 4 to 450, one reason why the stock is moving higher yet, we've heard from united,

other airlines, who have said, we're not going to be getting the full compliment of maxes we thought we would be getting this year how can you maintain that delivery guidance, even as some of your customers are saying, we're going to have to push out when we get certain maxes? >> phil, first and foremost, the worst part of the notice of defect that we got is the timing it hits them right in the center of their summer schedules at their busiest moment, and we have to defer deliveries through that period of time. it costs real money. so, apologies to everyone. we're working very closely with them, and i think most of what we have had to deal with has already shown up in their scheduling changes with respect to our annual deliveries, when we gave our guidance, we didn't just assume the supply chain was 100% better on day one quite the opposite we knew we would have to contend with issues over the course of the year, if they're getting smaller, more contained, but that's what happened in this case so, we still believe we're within that guidance

we are clearly going to defer some things from the second quarter and a little bit of the third quarter into the fourth, but on balance, we think we're in pretty good shape to make that guidance. >> dave, jim's got a question for you. >> now, dave, this seems to be the quarter where people are saying, you know what? they have these problems, but i think that their demand is so strong that we have to stick with it no matter what can you talk about, rather than, say, a five-day outlook, how about a five-year outlook on demand >> well, jim, it's -- you know, it is the right question we're -- we are living in a demand-crazy moment. i think part of it is simply the return of traffic now, the return of china, international traffic continues to accelerate at a fast pace, and the rightful concerns on the part of our airline customers that the supply chain has been constrained and will stay that way. the orders now are actually, in many cases, exceeding five years of demand. so, it is a very robust moment

our job is to make sure that we're transparent about the constraints that we face and that we don't get too far ahead of ourselves but yes, it is a -- it's a very robust market. >> let's talk about the most recent spirit incident look, these happen, but i thought that the resolution of it and the faa's agreement that you did do the right thing were done in a way that seems that it's no longer punitive. three days, faa said, fine so, tell me about the process. seems like it's a little more smooth >> well, this is a great subject, because it's -- we hate every one of these, and we hate it for our customers on the other hand, we have a supply chain that now has been trained to raise their hand when they see anything that looks abnormal somebody raised their hand within three days, everyone had assessed when that issue began, when it had occurred, we had contained the issue, and we immediately started working with our partner, spirit, on the remedies that is the way a system is supposed to work, and so i'm not

going to find fault with any of that we are in the process now of doing the rework at larger and larger scale so that we can work our way through this we have been transparent with everybody. sadly, transparency's a double-edged sword with respect to regulators and customers, it's critically important that we do it so they know how to adjust, and with investors, there's always a moment of speculation that's difficult, and i understand that so, our job is to try to contain that as quickly as we can, and therefore, we give this guidance today as a testament to that >> dave, let me ask you about 737 max production you're at 31 a month now today, you're saying, confirming publicly, you're going up to 38 per month by the end of this year at some point, and then the target is 50 in '25 to '26 time frame. if china starts to accept deliveries again of the maxes, does that production schedule get increased from there, in your opinion or is china sort of an outlier like, not gravy, but you're not

factoring in anticipation of any deliveries it will happen again at some point, but it's not in your planning at some point >> first of all, with respect to our guidance, we have left it out of our guidance so that our investors could understand what boeing looks like without it we continue to work very closely with our chinese customers we are making progress every operator is flying their max today. more than half of the airplanes that they had parked are now flying so, we're in a pretty good place there, and yeah, i do believe that the prospect of the deliveries could happen. that won't change our production rates. our production rates, as i look forward all the way out to '50, are still a function of supply constraints. they are not a function of demand the demand part of this one is the longer anyone takes the place holders, unfortunately, those orders are likely to be satisfied in further and further out years. >> and as you look at china, i know you're not going to put a time frame for when deliveries begin, but paint a picture of the demand that is there right now. i'm not sure we understand in

this country what it looks like as it opens up and what the airlines are facing. >> they're back to business. domestic travel is already back to that pre-covid moment and they're going to continue to grow, and the international traffic is probably a little over half of what it used to be, and it will grow and i just talked to a carrier yesterday who talked about increasing their international flights in and out of china tenfold, so this is what is going on, and it's a big part of the demand bump that's out there. again, for our investors, if this happens and if we're fortunate enough to support china, and we want to support china in every way, if we're fortunate enough, it will simply take some risk out of our forward schedules and our cost curves, because we can get back to delivering these airplanes to their intended customers >> thank you very much dave calhoun, ceo of boeing, on a day, guys, wider than expected loss, but it's all about the guidance on max deliveries this year and max rate productions over the next couple years >> thank you so much, phil

lebeau a lot to get to today, including a closer look at quarterly results from microsoft and alphabet we'll talk some first republic, extending losses after yesterday's nearly 50% plunge, latest on the beleaguered regional bank. we'll talk about some other companies that affirmed or lt, st puidance today, humana, hionboonroperties, when we come back am days are here. come in now and experience the intense thrills and incredible offers on any of five mercedes-benz electric vehicles. including two years complimentary charging and pre-paid maintenance. the vehicles are all electric. the feeling is all mercedes. the choice is all yours. but hurry, these dream days are only here until june 5th.

welcome back we're keeping a close eye on shares of first republic, at

least as a reflection of investors' beliefs about the ability of that bank to continue as a going concern, essentially. seven bucks a share, not much equity value left. yesterday, of course, we first reported about a plan that first republic was pursuing, hoping to get the government's help as well and pressuring a number of the nation's biggest banks to step up and buy loans and securities from its balance sheet at a higher price than they otherwise would get in the market, and therefore, help it to clean up that said balance sheet in order for it to go out and raise equity problem is, at this point, as best as i can tell, and as our sources close to cnbc can tell, there does not appear to be a willingness on the part of, for example, the white house or treasury to really pressure those banks to try to come to this table to -- to the table to formulate this plan, this asset sale plan from first republic that would essentially help it

to heal its balance sheet. and so, the clock is ticking and we simply don't know at this point what that will mean, whether the bank will be successful in navigating the days ahead or whether the fdic, jim, will have to simply say, you're done. which, of course, then results in a $30 billion hit to the fdic's fund, most likely assessments on those same very banks that would potentially have been asked to come to its assistance, that already did to a certain extent on march 16th when they deposited $30 billion at the bank to try to bolster confidence you know, jpmorgan alone is about 11% of the fdic insurance fund, so if there's an assessment, it gets assessed 11% of whatever that is. >> david, how about the, let's say, flailing offer that first republic's giving these banks to -- you can get some equity, maybe get something going on, if

you give us more money is that just good after bad? >> their feeling is, listen, you don't get the assessment you otherwise will if we're actually taking over. you don't deal with the risk of another bank failure and what that will mean to the system by the way, you're a depositor here, and it is going to require the fdic to essentially change, you know, its definition in terms of -- it's going to require them to make a systemic exemption to allow all deposits to be covered. i mean, will they actually say, no, they won't unlikely >> set a precedent for these guys how about the loans, which nobody would want, i imagine, because they're offering mortgages at terrible rates for the bank and great rates for the rich >> well, the bank -- that's other side many of these large banks will say, we're getting the customers anyway the wealth advisors are already moving over to our platforms

the assets are already moving. we're going to be able to move in on your mortgage business and your high net worth client base over time, so why are we going to put anything up to save you to be able to compete against us in the future? >> when jamie dimon puts a deposit in, doesn't he expect that the bank itself will start discussions, finding some deep-pocket investors, making some moves what did they do they brought tom barrack in. >> the problem all along has been that finding a buyer, as we said, was virtually impossible without government assistance of some kind, because you would take such a big hit to your own book value, given the writedowns that would have to take place on their assets $25 billion is the number i've been using for quite some time, so it's getting close now. we've got to stay focused on it. that said, and again, the reason the government may be very reluctant to get involved is it's not seen as a systemic

risk it's weeks since the mini-banking crisis occurred, and they've given the market time to adjust >> look at pac-w today, which is -- the desk commentary argues is more western alliance than frc. >> well, look, i do blame frc. i do think that they, at certain points, should have been flagged for what they were doing we did know they were lending against pre-ipo. when you but what i really didn't care for -- david, you can attest to this -- is their, actually, i would say, arrogant attitude >> first republic's? >> yeah, rich people love us >> you don't feel they have the necessary focus and attention in terms of where they were, really after -- it was right after signature bank i mean, we've been talking about this for months now. >> well, because when you get -- >> you don't think they shared that concern >> no, it's just when they get that money, they were like -- >> what money? >> the deposit money >> it's deposits it wasn't equity >> i just think they handled it as if -- well, problem solved. >> no, nobody thought -- i don't

think -- it clearly wasn't it was a hope that it would change the psychology around the bank >> psychology. >> yeah. but it did stem the deposit flows. >> i saw a lot of hedge funds come on and say, you got to buy it at $15. go back to the tape. go back to the tape. there were a lot of sellings >> they thought they'd outrun this >> some of the downgrades yesterday were more like $8 as a fair value >> i remember everyone saying, this is it this is your chance. david, the train was leaving the station. >> yeah. it didn't leave the station. hasn't made it out >> turned out to be too early. by the way, 7:00 too early. >> regional is a big piece of ens rng.le thimoin oping bell is coming up.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we saw the lower-income consumer, so, households earning less than $70,000, slow down probably about a year ago now,

and fortunately, we've seen a little bit of an uptick in that consumer with us, still below where we were about a year ago with that consumer, and then we continue to see a lot of strain in the higher-income groups, so those earning more than $70,000 of income continue to come to chipotle with greater frequency. >> and that takes us to today's "mad dash. i guess i know where we're headed >> i want to be clear, that was probably the only even slightly negative on what was an amazing call now, david, i don't know where you are on the el pastor you know what that is? it's fantastic but this is the first time that i actually heard, on a call, saying, listen, we have some meals that people love, and maybe we'll continue i immediately called jack hartung and said, we need the el pastor this was an actual, we have really good food, people love us, avocados are down in price, we have a new clam shell that

makes chicken much faster. this thing is -- this thing's going to 2,000 do not -- do not pass go all right? this was $2,000. one of the great calls i've heard. and every time, listen, it's working. you've got to listen to the call you've got to. chipotle, in love with the food. i want everybody who eats this is going to order right now. putting up -- i love it. there was a little throwaway line, which is, hey, we have to put up a lot of stores because there's so much demand remember those days? >> it's nice nice to have a lot of demand >> no ftc, no shade down, no commercial real estate there you go >> i heard every other word, but i'm sure it was good >> it was. >> he really likes chipotle, carl >> margins were good >> oh my god, it was -- >> he like eating there. he likes sleeping there.

he likes the stock >> i never had to sleep in their lot because they didn't exist. i slept in mcdonald's lots we didn't even get to boston properties >>first, opening bell, the reason it's so loud, it's room to read joining us, ringing the bell, supporting girls education and literacy at the nasdaq, it's the fresh air fund providing outdoor experiences to new york city's underserved children jim, we were mentioning the number of companies that had upward guidance, and you're right, vxp is one of them. >> it's not supposed to. boston property is a huge reit, skyscraper reit, and david, you're on the call, and it's good, and you're saying, nobody's going to stop it. don't say those good things. you've got to be negative. and then judy marks from otis, it's good. you said, no, come on man. you can't say good things. >> the reason we're talking about this is not because of the -- the size of these companies is small

it's because of the -- it's because of what it means for commercial real estate >> i'm just saying -- right, right. >> the takeaway is more positive than perhaps a lot of what we hear, because every day in the marketplace, all you hear is, it's bad and getting worse >> yeah. tech and life sciences buildings are good modest guidance beat but remember, they've been saying this, boston properties they spoke about a month ago, and they said, things are good, and they taulked about the salesforce tower and all the demand i guess what i'm saying is the reports of commercial real estate being dead are premature. >> i wouldn't want to own an office building in a major metropolitan area. >> you can't afford that >> somebody might be willing to give it to me. >> the land is worth 40% of the building, so if you knock down the building, you have 40% to convert is a level of square footage that costs so much that you need whatever -- whatever happened with this -- people should come to new york and see the bankers trust building next door to us, because they turned it -- one wall and also the old aig building.

>> yeah, down the street there >> those cost a fortune. >> it's really nice. >> there's 40,000 different offices that could be used but anyway, i just felt a little better about commercial real estate after i read bxp and after i talked to judy marks >> let's talk about a mega cap we haven't even mentioned alphabet >> how is it we haven't mentioned that >> because we had boeing at the top. we had to talk about microsoft obviously, growth at azure was 27%, i think, was the lowest growth they've seen, but -- right? >> i thought azure was 31% >> sorry, i'm getting -- >> they have an amalgam. >> i'll defer to carl on the numbers because i may have misrem misremembered. >> google cloud broke out. i heard some naysayers saying, they put apples and oranges. give me a break. >> they made money >> thomas is killing it, and i thought this conference call was fantastic. i thought ruth was finally

listening to those critics >> does that mean that alphabet is going to cut more jobs? >> well, i think that -- >> when you say, listening >> that would be a hard job to get, and by the way -- >> microsoft shares are up dramatically take a look at alphabet. >> this is the beginning of what i regard as the google cloud, youtube era. youtube, they finally started talking about the nfl. i was trying to say, did you guys know it's the greatest property in the world? they bought the nfl package. >> i know, but youtube revenue is down. >> this is about to change with the nfl package. i think people -- everybody's scrambling to get it >> that's brand advertising. that goes away early it's not as resilient as search advertising. i don't know why that's going to improve. >> they did better they had more users. i'm sorry. i'm not buying into the narrative. i have been negative on google i have been ripping them i thought ruth, the cfo,

answered on many issues in terms of trying to get -- rein costs in >> well, ray jay goes to 130 from 119 morgan stanley goes to $140. i guess the question is, would it be higher if ruth hadn't said that capex will be modestly higher this year >> that was terrific a buyback matter david, if you want to know what really matters, how about this we talk about cloud. we are the -- i'm over here. i don't know what you're looking at >> i'm looking for my earnings reports, but i don't have them >> okay, well, how about this? this is sundar saying this he goes, we are the only cloud provider to announce availability of nvidia's new l4 tensor core. the only better was satya said they, too, are on nvidia ho powered by nvidia. that's what this conference call was about. alphabet's google cloud, powered by nvidia. i like it. >> all right, so, you come out of this quarter more positive on alphabet >> absolutely. you can. i'm screaming at ruth, do this, do that.

she sees me, raises me am i supposed to say, it's not enough >> what was overall revenue? did they have revenue growth 2% 2.6% maybe. >> revenue up 2.6% the fourth lightest in company history. >> yeah. >> look, the -- i mean, they took -- >> what am i paying for a 2.6% grower there >> you're just seeing the beginning of what i call a significant multiyear effort under way to create savings. >> so, i shouldn't be looking at the revenue number i should be looking at the earnings number? because it's going to continue to go up, even if revenues don't. >> costs were out of control they admitted the costs were out of ontrol. i think amazon is going to admit -- i think, david, this is the year of efficiency, not just for zuckerberg others have heard the call, and alphabet's talking about efficiency, which is not something i have ever heard from them i've heard of inefficiency i've heard of reckless spending. i've heard of, i don't care about wall street. i've heard of arrogance.

>> aren't investors going to be very much focused on their franchise and search, their monopoly in search, whether it's under siege, whether microsoft has and will continue to have a lead on them as they really start to deploy chatgpt in the enterprise >> that's all the negatives, absolutely and i know that -- but i thought that a.i. could be meaningful for them >> it may be that they -- >> they had better-than-expected operating margin, which matters. they had strong cash flows ruth announces a $70 billion share purchase look, when you just sit there and say, i used to believe in ruth, but she has to do this, this, and this, and she does more than that, i'm not going to say, well, she didn't do it. i'm not one of those move the goal post kind of people >> where do you think it would be trading if not for the buyback? >> right i still think it's going to go higher from here, so i would say this is the level where people are still too bearish. it was up three last night i like the call. i hear all the things that everybody's saying, but i thought that google had gotten to the point where they were

completely out of touch, and i have just said to them over and over again, you got to fire some of the people that you hired you hired so many people last year but $2.6 billion charged to make things more rational, i don't think you can get a job that -- i bet you two people leave for every one they hire. >> and they're rationalizing a lot of real estate ruth did talk about how cloudy the outlook is in the back half. take a listen to this. >> in terms of the operating environment, our results in the first quarter reflected ongoing headwinds due to a challenging economic environment and the outlook remains uncertain. the appointment we're trying to underscore is there's uncertainty in the economic environment, and so we saw some headwind from slower growth of consumption with customers really looking to optimize their costs, given that macro climate. >> she's not ebullient >> no, and microsoft was, because they had these business lines that should have been hurt by the fact that there's been

unrelenting cost takeout by people who -- companies that use their basic service software i felt this was more boilerplate than people realize. i've heard this from a lot of people nikesh -- wasn't his earnings call, but this is palo alto -- saying the same thing. it's very difficult and dangerous, even, to say that things are not -- you got to use the word "uncertain" at least four or five times, david. >> you do. >> uncertain they used uncertain. >> things are uncertain. >> they weren't uncertain at microsoft. >> i find they're almost always uncertain. you know what really is uncertain? the future the future tepds nd ton be unce. >> well, the real visionaries don't say that and the crazy people >> i have found through experience that the future is uncertain. i can share that with you. >> it's going to be a good call one day if the ceo says, the future is quite certain. >> the future is now >> by the way, can i go to a name that we don't talk about that often but somehow you're

going to know? >> go ahead. give me something here >> do you want the envelope? >> it was one of the first semiconductor companies in the world. >> texas instruments is so arrogant i love it. there are moments in that call where it was belichick it was like, basically, well, you go figure it out, joker. i will say that at one point the stock was down $11 and why because they said we're cycling through, even industrial may be getting weaker, but the ultimate thing that they said, david, it was like a "jeopardy!" show. what is -- you had to answer in the form of a question someone said, is industrial good well, what do you think? everything was in the form of a question i absolutely loved the texas instruments guys, because they basically have -- if you're going to do a conference call just a little better than first republic at the end where it said, you may disconnect, and i said, wait a second, you're just losing all your money. texas instruments is like, we're doing really well, to heck with you, pcs might be bottoming. don't forget we are part of a

cycle. the cycle the different. and i love them. they have a great balance sheet. they have a -- boy, the future is certain for those guys. >> yeah, that's almost the lows for the year they did say all end markets are weaker, maybe, except for auto the midpoint on the june quarter guidance is below the street >> but at the same time, they did talk about, look, it cycles, we're going to cycle through, and pcs were bad but it's been four quarters and then servers and datacenters. they gave you at least some sense that, look, it is business as usual for us. we've seen it. this cycle's a little elongated. you have to go read them just in terms of, like, telling analysts, basically, what did we just say did you listen that kind of thing >> is there a read-through from texas instruments for the broader chip market? some way >> yes, there is it confirms that the chip market is not trading in sync this time that pcs were well ahead of when

servers -- >> pcs bottomed? >> they said four quarters, and they basically implied that pcs are going to bottom. i hear that from others. from microsoft but you're still in the server and datacenter downturn. industrials, yes, first quarter downturn, perhaps. automotive, could it be next they certainly left it open. >> server, i mean, that server and datacenter downturn with the advent of chatgpt and the computing power that it's going to need -- >> i'm so glad you mentioned that, because what i think is there could be re-acceleration that's something that i heard nikesh say from palo alto. there's going to be a re-acceleration of the need. they're going to burn through all the -- all they have and then have to add, and i think you're right that was -- i mean, if you step back, you have to say to yourself, listen, a.i. -- carl, a.i. is going to be huge it just wasn't huge yet. although alphabet did talk it up, and microsoft did think the future is now for a.i. it's a big spur to growth, and

it was mentioned several times, subtly, that it is as big as when you first got a new cell phone, first got a cell phone. it is big. we don't want to underestimate it by any means. >> take a look at first republic, by the way halted here. >> oh, come on really >> that's just imbalances. >> all right >> not news. not news >> jim, it does raise the question, then, whether yesterday's selloff was just last-minute hand-wringing in front of google-microsoft? are we back on track >> i thought that there were a lot of good quarters yesterday, and nobody cared about them, because people are starting to read into how big first republic is david has been saying, literally for two months, that no matter what you think, this is not systemic but there's feel wpeople who ju don't hear it, and they were surprised and shocked to see what happened, and then we're right back into the silicon valley bank world. silicon valley wbank, by the way turned out to be far more important than we thought, and i think this bank, while a lot of

people are on the hook to it, is just not as big. >> there are always things that we're perhaps unaware of until we're made aware of them basically saying, we don't know what we don't know i have a lot of them today you want me to just keep going >> i'm ready >> but we'll just -- we'll wait. >> it's not mongodb. they're on fire. >> they are. >> they're analogs to a lot of the stuff we're hearing. boeing is on fire. >> we should mention visa and hilton the comments out of visa, outbound u.s. travel to all geographies, still running 150% of 2019. >> this was better than -- this was -- i felt that -- you go back to 2019, and you just wanted to own visa, which david always mentions is a huge company. it was up $2.50. a great clean quarter. i felt like i was transported to pre-covid. i tried to remember what life was like >> they say, "we think the

consumer's still in good shape." hilton raising guidance. >> hilton was a trae young quarter. like, raising -- david, don't stay at a hotel, okay? oh my god, look at this. >> why do we -- do we have the rights to keep showing this? >> i checked the rights for you. >> 24 hours? >> you checked them, jim >> i wanted trae young this is just -- >> i'm sure in the middle of reading all your conference calls, you're checking with the lawyers about the rights to use the atlanta hawks footage. >> we don't need the ice trae. he does the thing. ice trae hilton was incredible, carl. no resistance to room rates going up >> does adp here now at a ten-month low give you worries about employment >> i don't know. pay chex, small, medium size is pretty good. the large cap, they're just not hiring they're in the ruth porat field. why do i talk about ruth porat i think adp is worrisome in

itself, because they -- this is big cap. but it's big cap, people just -- those are not hiring and the reason why -- ruth was the cfo who a lot of people think saved morgan stanley she gets in, david, she is not talking about cost control until last night >> right so, you think it is a seminal moment >> well, because i think that google cloud -- she said over and over again, jim, when this inflects, look out meanwhile, it inflected. >> meta and amazon both up nicely this morning. >> that's wrong. >> in anticipation, perhaps, of their quarters >> that ruins everything >> we'll see meta is tonight. >> i wish david were here to tell what the story is >> who >> carrier >> david gitlin. >> we're going to talk to carrier. >> they call him trae. >> david gitlin will join us to talk about the deal. as we go to break, watch bonds today. durables with a nice beat, but

not by as much, 0.3% after a negative 0.2% estimate back in a moment zbliefrmts

carrier global announcing a deal to buy climate solutions. it's worth around 13.2 billion u.s. dollars, at least the enterprise value joining us to discuss is dave gitlin good to have you back. >> thanks for having me. >> on the heels of what you're calling a game changing opportunity for acquiring europe's game changing company why is this game changing? >> it's a new chapter for carrier and the single best asset in the single best market in the world the best market because if you look at the energy transition happening in europe, it's like any other place in the world, accelerated before the russian invasion of ukraine and only

accelerated more since t they're transitioning to heat pumps and renewables and when you transition from a wall hung in europe, you take that down, put a heat pump up, you're charging 4x has much. so you in a replacement market have to mix up the market is growing. the difficulty is it's hard to break in because all throughout europe for residential heating these are multifamily generational owned viessmann's climate solutions as the best brand, the best channel, best technology and solar pv and batteries so they offer a complete solution it's a great day for caribbeanier, a great day for viessmann and together we're a global -- >> you say families that control

it it takes money to depart them, it's p 700 million in euro ebitda why is that a number your shareholders say can we accept that >> we're playing 13x 2023 ebitda numbers. we think the valuation makes sense, especially when you look at the top and bottom line growth their top and bottom line is growing mid teen we look at the valuation we could have waited a few years and paid more. we're getting it at the absolute perfect time at what we think is a fair valuation. >> also doing other things with the rest of the company. in fact, you're divesting commercial refrigeration, fire and security these are not insignificant parts of your company. why are you looking to part with them >> strategic fit i think every company has to define its strategic focus and ours is to be the global leader for intelligent energy and climate solutions.

when we looked at it we said we have a great portfolio of businesses and our commercial refrigeration it's a great business but it doesn't fit with our strategic north star so we are going to exit those businesses over the course of the next year or so, use those proceeds, pay down further debt, do the buyback as shares we issue in part of the deal and further invest inmate the core. we're going to further focus the entity >> thank you very being here first of all, i had logically, europe seems to be rebelling against the notion of great companies getting together i'm wondering whether in germany someone might say wait, why can't gitlin develop his own heat system. why do we have to have our crown jewel sold to american company are you worried about the

ideology >> i'm not the reason is this is a great deal for europe, for germany, for europe, because this is a deal that's all about growth it's growth growth growth. so when we come in and meet with the german government officials what they're going to see is the 11,000 viessmann family members employees they have we're investing in this. it's all procurement and insourcing we're investing in the factories, the growth. and together we can create opportunities for them outside of here. it's great for germany. >> if it's all about growth your former colleague judy marks said there's definitive weakness everywhere other than spain and italy and had been bullish on all of europe. she's worried about germany, france you're not >> i'm not i'll tell you why. in a world -- you guys are on air every day talking about global economic concerns and recessions people are looking for reliable,

sustainable growth if there is any market in our space where you can go to bed at night knowing there's growth it's european residential heating it's the most attractive market and a market we're not in because it's 90% replacement business when your heating fails in germany in the middle of winter you're going to replace it and you're replacing it with something you spent 4xal as much on as the boiler the mixed growth itself has to drive growth i'm not worried about what's going to happen in the various companies in europe at a macro economic growth. >> where are we on heat pumps in this country >> we're growing 40% of our sales are heat pumps today in the united states it's ubiquitous when you get into the south we have to make it so as it has an equal coalition of performance in the north and then it'll be there. but we're growing here, 20 to 30% a year in europe you're replacing a

boiler you're selling for 3x as much, we don't get that mix up but we get a mix up. >> i have to check on china really quick and their reopening. >> yes absolutely we saw our orders at a macro level for carrier, our orders were down in the first quarter i can tell you the demand is going to be very strong in china. we think we're growing five to ten percent here. >> april is a good month in china. >> yeah. >> i keep hearing it we didn't get to the quarterly results as well but happy for the update dave and appreciate you coming here to join us thank you. >> thank you for having me. we'll see you tonight jim? >> tonight i'm hosting the commitment to cures dinner i did a lot with the american brain foundation, i am the masters of ceremonies they've been great to me and helped a lot of other people >> when we come back, more reaction to the uk blocking the

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good wednesday morning and welcome to another hour of "squawk on the street" i'm sara eisen here with carl quintanilla and david faber from post nine of the new york stock exchange. only up .2% for the s&p. the nasdaq is up a full percent, thank you microsoft. amd, nvidia, micron at the top of the list, keep in mind it dom gs off yesterday's big selloff especially in the nasdaq down 2% for the week still down 1.35% on the s&p 500. 30 minutes into the trading session. watching chipotle.

store sales rising 10% from last year, despite price hikes. hilton narrowly in the green the company raising guidance with revenue per available room up 30% from last year. regulators in the uk blocking microsoft's purchase of activision blizzard. shares falling hard on the news. down about 9%. microsoft was already up on earnings, david. but i don't know, maybe investors see this as a positive as well, they won't have to spend $70 billion if this deal doesn't go through. >> i don't think they see it as a positive i think there was a positive view of microsoft's ability to grow with the acquisition of activision and it a p a cash deal it's not as if there's any transfer of microsoft stock involved here. it was $95 a share, remember and it's been a long time since it was announced and it may not

be nearly as long a time as they have to abandon the transaction. they're not saying that. they're fully prepared to appeal the decision by the regulatory body in the uk, we've been focused on this for quite some time because it's an important decision why? because the appeals process here is so difficult. the competition appealed tribunal which they will go to and have to go through in the next four weeks. basically never says anybody who comes to them and says please reconsider it just doesn't seem to happen and by the way, the process itself on average takes five and a half month can take as long as a year this this deal needs to be extended past the termination date in the middle of july this year activision seems on board with the appeal but they're doing everything they have to make sure they can secure and no basis for microsoft to argue

with the $3 billion break free that will go activision's way. so what you really have going on right now is people trying to assess the overall value of activision let's look there bobby still all in it would seem a memo to employees. we're going to contest it, they don't understand what we're doing. he might be right in saying we don't understand what the cma is doing here, basing this decision on a market that doesn't fully exist yet saying it's going to hurt future competition, talking cloud, in terms of streaming, gaming, because they abandoned the console market where there might be at least the argument made they would be too dominant even though that would be a key argument he's doing that. but really the focus of investors when it comes to activision is what's the right price here they're nowhere near the same difficult position they were

prior to the deal itself the company is on much firmer footing. and the multiple as much as 4 bucks perhaps could get you close to 80 bucks. you could have $10 billion in cash in the company once they complete the taking in on the 3 billion breaking fee which is likely i think given how close they are to dead without being dead. >> after microsoft's quarter last night it is fun to think about what they could do with $70 billion. not spending on activision when it comes to a.i., what did they spend on chatgpt 10 billion and that was more exciting than this overall forv investors. >> there's an argument to be made with chatgpt and in the enterprise it's going to fuel future growth that may be reflected to some extent in microsoft stock which we've seen move up sharply over the course

of the year. more than alphabet, we'll talk about the earnings there yes, i think this was overall thought of as a positive an enormous company even 70 billion doesn't necessarily move the needle they can invest whatever they need to, and how they choose to do it. they may have 67 billion, remember sending 3 billion to them >> buy back more stock they can do that anyway. >> they can do that as well. we'll see how long it comes for them to come to the realization there is no path forward here. unless a lot of people are very wrong and somehow history no way plays out the way it has. >> i think it's also interesting for the uk because activision, even leading up to this, i remember bobby on our air in february saying if they don't approve this, the uk is not going the way of silicone valley, they're death valley and painting the uk as closed for business ands the probably right, one of the most high profile deals they blocked in a post brexit world

not secondary to the eu regulator anymore. they used to be. they're making it clear they're not going to attract deals in technology at all costs. >> you're right. i think this is in that way sort of a broader anti-trust issue for companies. it is without a doubt an important moment again, another reason why we've been so focused on it. and recall initially the cma came out very much negative on the deal for a broad set of reasons, including the console market then they reversed it and activision stock moved closer to the $95 price target a price that microsoft is paying because there was a lot more belief that the cma would approve it so this ended up being a surprise because it didn't appear they were in line to actually say no given they were focussing only on the cloud market which again doesn't really fully exist at this point. >> expect a lot of attacks on the uk for saying no to innovation >> i know, but it's very similar, sara, to what many

criticize our own ftc for as well. >> the microsoft numbers, carl, are being celebrated especially azure which is the crown jewel and the 31% growth we saw there, the analysts are effusive in their commentary today. trying to figure out if it bodes well for enterprise spending and cloud growth overall amazon is getting a boost or if microsoft is taking a share and executing well. >> azure at 31, pcs better than expected bookings up 12 we were looking for a goose egg on that. it's the notion expense growth in fiscal '24 will be below the prior year which caught people's attention in an era looking for tech to have discipline. so after a day in which there were some very real jitters

about software, microsoft is seen as a bit of a savior today. >> i thought of all the bullish notes bernstein may have been the most bullish because they were talking a.i. and said the azure guidance has a 1% tailwind to growth from a.i. which is a bigger number than they expected and perhaps opens the market for azure in a bigger way in the future they said, look, google and microsoft both on the calls talked about a.i. and only one of them, this is according to bernstein, can claim that a.i. is boosting growth and profitability. >> right alphabet of course shares have reversed as well are now up 2% after being down earlier. you can see that their cloud business did earn money, or at least it was profitable for the first time. its growth rate like all the others is decelerating but it's still significant. the ad market is not great right now for either youtube, search

is perhaps stronger than some anticipated but the top line is only growing t2.6% year over year >> a relief we're seeing alphabet shares higher looked like that move was going to be faded overnight, came back this morning meta is up next this afternoon we wonder what it means for the broader economy. visa is one to talk about as well it's headed higher payment volumes rising 10% from last year while cross border volumes excludeing year up a measure of the revenue from international transactions, that was up 32% for the quarter and listen to what the cfo had to say about the u.s. consumer right now. >> we think the consumer is still in good shape. as we said, spending across most categories, other than a couple i d like fuel and some retail good price cutting strong

acrossnt strong in nondiscretionary, so yes, that's how we feel. >> also a relief on the consumer at a time we're wondering how much the consumer is slowing and we're trying to get the macro read throughs from companies that's not straightforward i think what visa said jibes with what we've heard from companies like pepsi, coca-cola, the only caveat is those are staple companies which do well i would throw in mcdonald's and microsoft, too >> yeah. transaction growth still in line with q1 of eight ticket size is coming down but visa's explanation is that's because inflation is coming down travel, outbound travel out of the u.s. into other countries running 150% of 2019 people cannot get enough of international vacations. >> look at hilton raising

guidance today we'll talk to chris next hour, looking forward to that interview. again we're in a services versus non-services spending environment. the durable goods numbers came in today very strong on the headline number a lot of that was boeing aircraft orders. if you go into x defense, x aircraft it was a miss feeding into gdp. >> and another signal of the long term demand for travel and how constrained the industry is, in this case getting airplanes, metal. >> good for boeing, i guess. what is the true economic bell weather earnings result. >> kathy wood said it shows we're in recession and everything is falling apart. if you go to 3m's portfolio, a lot of tape and dental products, i'm not sure it's the best representative of the economy. tools. >> tools, come on. >> the argument has been 80,000

sku. medical, construction, adhesives they're in everything. >> but office is down. people aren't back in the office, they sell a lot of office supplies. is that the best measure of the economy? >> they're back today. it was crowded out there, downtown crowded. >> that's your subway report we know you take the subway. >> yes i like to share that every day. >> new york strong. >> we're trying to get you down there. >> one day i'll go with you. >> a miracle will occur. you'll hold my hand. >> yes, i will watch out for you. we're keeping a close eye on shares of first republic, the stock is down another 25%. reporting earlier, following on reporting from yesterday, this is a bank that's been trying to find a path forward, it reported earnings a couple days ago during which it say -- no q&a on the call -- but it presented a

rough outline of a plan to shrink assets and expenses in response to what was a massive outflow of deposits. it also said, and this didn't get as much attention in its filing, there can be no assurance in terms of certainty in a time frame acceptable to the markets and regulators that's an important sentence at this moment. as i reported yesterday the bank was hoping to execute on a plan under which it would sell assets at an inflated price to their market value, loans and securities, for example, to the same group of banks that put in deposits back on march 16th. set up a special purpose vehicle capitalized by those banks, bring them over, maybe the banks get preferred of some kind and then you have cleansed the balance sheet of first republic so it can go out and raise equity dilute existing shareholders but

it gets back to the path of being a bank, making loans, for example, and other things and reassure the marketplace that doesn't seem likely at this point. why? they were hoping they would get the government to put a strong hand on the shoulder of these banks and say you need to do this that hasn't happened the government doesn't seem willing to do that so it does raise the possibility, stronger with each passing hour, that the fdic will be forced, sara, to take the company into receivership. nothing said that is the conclusion we don't want to in any way say that is going to happen but certainly it is a fear in the marketplace and a growing likelihood that the fdic has to be considering that if, in fact, you don't get the government saying to these banks and there doesn't seem to be a willingness for them voluntarily to step up for the plan to say you have to go do this buy the assets at a bit of a premium, give these guys a lifeline.

>> while first republic looks unique here versus the rest of the regional banks nobody else reported anything like that in terms of the magnitude of deposit outflows it did spook the market. people i talked to said first republic is nathat what we're worried about? we're still expecting a may hike whatever was priced in for june came off the table hard to know if that's the cause of it but it's a reminder the stresses are not taken care of to your reporting they're rewriting the precedence here on what's going to happen and there are similarities between svb and first republic they were locked in mortgages instead of treasuries that's the problem. they had sophisticated wealthy investors who knew when trouble hit it was time to pull deposits. >> what they offered to their high net worth clients was mortgages at an attractive rate,

huge jumbo mortgages and you keep a balance here. that was fine when interest rates were near zero, no one cared. but giving up the opportunity to earn 3, 4, 5%. that's a different story their cost of funds has skyrocketed at first republic and to your point they're sitting on many loans made at a different time not yielding anywhere near what can generate a return for them. that's the basics of the problem they've been dealing with. and we've been talking about the bank since the svb, signature bank weekend because it was seen as a weak link but it managed to survive past that 37 and there's been enough at this point that many believe there's no systemic risk and that seems to be what the regulators seem to think or the treasury, white house as well and that, therefore, if it were to be put into receivership as expensive as that is for the

fdic, a 25, $30 billion hole here, none the less it's not a real threat to the system. >> pack west is up 30% first republic is different here pack west had a good update on their deposits i think the big takeaway of all of this, guys, is that between what happened to first republic yesterday we got the data i mentioned on money in circulation, it was a sharp drop sharpest ever on record. it shows that we have not fully felt the effects of the fed tightening super aggressive, very fast. long and variable lags it's still playing out and still has room to disrupt things there's the drop in just money circulating around this liquidity that usually goes to assets and into bank accounts. >> first on record. >> record. >> just starting to feel the pressure here --

>> ruh-roh. >> yes that's what i think the fed is going to do a wuone and done and signal a hold. >> we'll see the impact if first republic is in receivership. they would need to vote for exemption for all depositors that would include the banks that put in $30 billion because they're uninsured deposits. >> how could they not. >> how could that the not is right. what is the cost it's not free. >> it's not free it's not a bailout they don't want to do a bailout but this is what cost the tax payers money they pay the fdic fees but they could be the beneficiaries once this is a clean bank. >> our road map for the rest of the hour analysts weighing in on the microsoft activision decision. and the latest round of tech earnings boeings shares are flying

high on the back of its latest guidance and meta getting ready to report after theel g bl,et you set for their results. stay with us get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free

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welcome back to "squawk on the street." a uk regulator blocking the $69 billion buyout of activision blizzard saying it would weaken competition in the video game gaming industries. let's bring in jeffrey's tech

research analyst i want to talk about the quarter but first brent give me your take i want seems highly unlikely microsoft is going to succeed in buying activisn. that having fid these things for many years. what does that mean for the coany? is it seen as a negative or at this point not that big of a deal >> david, not really that big of a deal we don't get questions about activision we get more questions about the a.i. and cloud strategy for microsoft. so really has not been focus for many of our clients on the core story on gaming. gaming seemed to take a backseat to their enterprise business which is riding shotgun. >> let's get to that, then, because we were talking about a.i. and the opportunity there particularly the enterprise business sarah mentioned they seem to be including some growth of azure already from the growth in a.i what did you hear on the call that's giving you a sense of

what the prospects are for that part of the business >> so microsoft is so far ahead of a.i. relative to the other technology vendors they have done a phenomenal job not only of the p.r. but embracing the technology this is going to have a multiyear effect to numbers. we haven't seen it show up in a big way. they'll see it in azure, their cloud business and shift to their application business with a product called co-pilot which will help developers write software code faster you see in outlook an ability to do your job, make suggestions easier inside emails, make your tasks easier we think a.i. is going to be infused across all of their portfolio, power point, word, excel. imagine opening a power point and saying create this with these characteristics.

you don't have to type anything, say it and it prepop lates so the pricing power is bigger than we thought. they're already pricing double the pricing per month per user so this is going to have a huge tailwind it hasn't started. it will start. so we said the numbers didn't matter this quarter but they will matter now going forward and a.i. is going to help them along the way. >> what did we learn, brent, about where we are in the cloud cycle and investors' worries about a slow down on enterprise spending and the economy is microsoft unique here because of its edge with a.i. and the execution we've seen >> things are slowing across the board. the difference is investors were so negative. i was on at a dinner on monday with institutional investors they're like everything is going to single digit growth, it's

terrible, awful. everyone's expectations i think guil got reset so negative. things were slowing and expectation was so bad weer at a point expectations are getting beat and you're seeing the names, valuations coming in, expectations have come in and we're seeing a sector rotation back from banking energy back to tech and i think that is helping when you have low expectations. again, two, three years ago we were living in expectations these companies couldn't hit so now we have reversed and that's a broader trend for tech. >> and what do we make of competition in the cloud and alphabet results out as well and seeing what their growth rate looks like in that division for them >> so i'd say it's a two-horse race, it's aws and microsoft google is doing okay but microsoft is bigger and growing faster and has more

capabilities has a broader suite. we talked about not only the infrastructure cloud for moat but the applications that are going to run on top of that infrastructure so in our opinion it's really a two-horse race many companies, big enterprises are going to embrace two clouds but right now we see it as aws as the dominant leader if you combine microsoft and google share, they're still a multibillion dollar delta get to a aws that's how dominant aws is so they're expecting the numbers in microsoft and cloud to be a positive for amazon. we believe there's room for multiple clouds but right now the best way to play it is through aws and amazon and microsoft. i think from the cloud perspective we're still going through an optimization phase. many companies stay in that

phase through '23 as we come ou in '24 and '25 things will look better i don't want to see that we're not seeing a contraction we are but i think a.i. fuels the next wave of growth that probably has a bigger impact in 2024. >> yeah. requires a lot of computing power. amazon shares are up 2.7%. brent, thank you >> thank you >> dow down 160 here session lows we'd be almost double the losses if not for microsoft and boeing. we'll talk about that outlook when we come back.

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watching first republic this morning amid the multiple trading halts for volatility market cap though has fallen below a billion, as you can see, 916 million. i'm trying to remember what the

high water mark was for frc. any recollection >> $171 is the 52 week high to put it in perspective. >> so almost $40 billion. >> yeah. >> a long way away. >> watch that huge implications as we try to read through on the credit contraction effective on the economy later in the year. boeing is higher amid positive news on the production front and phil lebeau talked to ceo dave calhoun in the last hour and has highlights. phil >> when you look at boeing it is the 737 production in terms of deliveries this year and production we'll talk about that in a little bit the q1 results a wider than expected loss though not huge compared to what analysts were expecting. but they are having issues with the can supply chain there was a charge in there for the tanker program they have reaffirmed the delivery guidance for the 737 max and more importantly

probably another reason why the stock is moving higher today look at the guy idance when it comes to production, many expected them to raise it to 38 a month, from 31 a month currently. the projection is 50 per month here's dave calhoun talking about the demand out there for the 737 max right now. >> orders now are actually in many cases exceeding five years of demand. so it is a very robust moment. our job is to make sure that we're transparent about the constraints that we face and we don't get too far ahead of ourselves. >> two other pieces of news, it's reaffirming its guidance for free cash flow this year between 3 and $5 billion much comes in the second half because they had negative free cash flow for the first quarter and then 25 to 26, the expectation is $10 billion in free cash flow. that's the guidance.

that's the reaffirmation of what they have said for some time the call is beginning for boeing we'll hop on that. if there's any headlines we'll let you know. >> please do p still to come, the term a.i. was mentioned 50 times on alphabet's earnings call we have the high lights and more on what it means for the stock after the break. stay with us we have seen the dow and s&p negative the s&p holds about a .8% of a gain we'll be right back. since we, we don't have to worry about planning for a third kid. you can still play golf... sometimes. take control of your financial future to empower what's next. your shipping manager left to “find themself.” leaving you lost. you need to hire.

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welcome back to "squawk on the street." here's your cnbc news update at this hour. ukrainian president, volodymyr zelenskyy, spoke by phone with china's leader, xi jinping for the first time since russia's invasion began chinese state media reports that xi's government plans to send a special represent tiative to

ukraine. china has atried to appear neutral in the war south korea's president arriving at the white house moments ago for a state visit with president biden they're expected to announce plans to deploy nuclear submarines to south korea to defend against rises threats from the north the officials say the plans would improve joint training, information sharing and military exercises. and electric car sales increased by 55% last year that's according to new sales figures from the international energy agency. the report said over 10 million new evs were sold in 2022 and over half were sold in china back to you. >> thank you we're an hour into the trading day, an hour and six minutes, in fact, let 's get to bob. >> we had a choppy open and last

hour the sectors, the problem is the cyclical sectors, materials, industrials, all were a little weaker, energy stocks also kind of vibrated, moved to the down side a little bit. tech has been holding up well. banks have been stable despite what's going on with first republic, the leadership board on the s&p 500 is the earners. microsoft, new high, chipotle new high they're all the leadership board. banks are at least stable. first republic has had four limit up tlimt downs in the first hour, that's a lot folks you see pnc, fifth third, the regional banks stable here today. sara mentioned visa. i want to emphasize not only the

consumer being strzok, ticket size was lower march 1st but it was lower because inflation was lower and singled out fuel prices down 20% year over year and said retailers were discounting. and mentioned the tax returns were lower than estimated. he thought that was going to change so overall lower inflation, consumer still strong, that's a good sign here the earnings so far we have 163 companies beating 80%. and here's the one thing, sarah, i think is unusual only 29% are raising estimates that's well below the typical numbers we're seeing here. the bottom line they're not dropping the numbers it's stable. $219 for the year and that's about where we started in the first -- april 14th when j.p. morgan started the bottom line, earnings typically dropped 10 to 20% during a recession there's no sign of any earnings

recession occurring and that's why people are still holding onto the soft land hypothesis. >> it's meta's turn tonight. and our next guest said big tech is working out of the hole slow hi let's bring in david fisher. great to have you. the meta story, i wonder if it's more important to get on the cost side, whether that's operating expenses, cap x head count or if we want to see ad volume increase. what's the driver? >> i think there's a few things to look for in the earnings call later today. one as you said is cost cutting. they've obviously come out and said a lot on that, not just the down sizing in terms of layoffs but reduction in the number of projects i think a better focus in prioritization and as difficult as the period is of cost cutting

that will be healthy in some ways the second one is around ad revenue. one thing to look for there is whether there are signs that some of the big hit that the company took when apple made some of the changes to ios a year or two ago, whether they're actually starting to capture those back so i think that comes in in the commentary, are they seeing rebounding there and as always, looking to see any guidance around the metaverse and are they going to continue to pour billions into that per year? i think everyone's expectation based on what they said so far is yes but you want to hear and understand if it's still the case. >> the journal reported on what zuckerberg told employees saying we shouldn't expect 1 to 2% head count growth at this point on. and it's new technologies, that's probably the right model.

i wonder whether you think the street understands the new chapter we're in sort of efficiency regarding head count? >> well, i think -- my guess from the reaction we're seeing from the street is there's certainly a lot of focus on this but this is really an evolution. these are new stages certainly for meta and a lot of these companies that they're going through. and all the focus on efficiency, it's not that it was never there before, but i think in some ways it's a return to roots of a lot of startup companies when they start and when they're successful in the ways that the types of names that we're talking about today have been. it's usually by relentless focus and prioritization what happened the last few years, especially meta with the low interest environment and growth something i might call corporate fomo, it's yes, and should we do this other project? take a flyer on something else and over time, you know, i think that caused some bloating and

investment in a bunch of products that may not have been good for the business. so i think the focussing that we're seeing now, the tightening, i expect to continue for some period of time, but these things tend to go in cycles >> david, i'd love to get your take on a.i., chatgpt. there are many who fear its continued development in certain ways and want the government, for example, to at least provide guardrails, as hard as that may seem to imagine in some instances. what's your take in terms of the risks and/or rewards and the likelihood that we'll get some sort of framework from the government >> one of the things that's exciting about what's going on with the type of generative a.i., chatgpt is probably the best example of right now, is just how fast it's developing. the pace of change and so in that sense, i think

the mood that was in silicon valley a decade or two ago, certainly my time there which is we're here to make the world a better place and if left to our devices good things will happen. it's hard to have that point of view right now and i have two takeaways from that one is you really can't anticipate where we might be, you know, a year, two years down the road it's incredibly exciting and we know it's probably going to be hard to predict. and two, there are going to be mixed results. there's going to be a lot of great stuff that comes with this, and problems that come out of it. so i think the type of conversations being raised in the public sector and private sector are healthy and i hope that the private sector can find some balance in working with the government to find some sort of sensible whether it's self-regulation or other form of regulation. >> david a personal question for

me you were one of the highestr ranking executives at metal. i'm curious why you left cheryl sandberg left, there was speculation around that. i'm curious why is the time for you? >> i left ant 18 months ago, it was a different time in the company's history. for me i had been there well over a decade and been through a lot of growth and i was ready for a change i think change is often healthy. for me it's meant to move into venture and i'm enjoying that. obviously with what's going on right now, change is probably the word of the day and i -- you know, i'm hoping that the company can work through those difficult times and continue what has been a remarkable path. >> david we'll see what the print does tonight appreciate your guidance going into it. david fisher. >> thank you. as we head to break, a check on the biggest gainers on the s&p 500 this morning

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welcome back to "squawk on the street." house speaker kevin mccarthy says lawmakers will vote today on a bill to raise the debt ceiling. our next guest sees the debt c ceiling as the catalyst for the s&p to move down to 3800 julian emmanuel joins us at post nine what do you think is going to happen >> if you go back and think about the contentiousness of politics right now it seems very similar to us as the set up in 2011, and interestingly enough, leading into that original major debt ceiling debate the market was

almost dead silent for several months same way it is now. from our point of view, washington politicians don't look at credit default swap prices, t bill yield spreads, both of which are flashing yellow or red and what's to come they will look at stocks but stocks need to go down first. >> they should look at cnbc because we mention t bills every morning at the top of the hour and they can see the panic is starting to build in corners of the market. >> right. >> so you think stocks, start paying attention when? >> i think you can argue the last couple of days. clearly the bank stress has been certainly a catalyst for the weakness we saw yesterday and the back and forth we're seeing today. but again next week we get to may and these sayings in the financial business are trite sometimes but when you think about the debt ceiling scatalyst

it starts to ring true particularly again given the stress in the banks. >> what happens to the treasury market if we default i'm curious what your thoughts are if it actually so we have hf conversations on that, david and we have done a lot of thinking on that and i think the honest answer is, no one really has a very firm idea. i think, ultimately, what will happen is, if you had that kind of disruption, the reality of it hitting would cause that disruption to be very, very short, ie, sort of like in line with the government closures we have had from time to time, where there is more risk felt. so that would be redressed very quickly. but the fact is that the confidence loss that you would get from that, particularly with regard to international investors who have been looking for sources of diversification,

gold among them, in recent months, that would be a major issue. >> larry summers is on the tape today, asked about the odds of a true technical default he said 2 to 3%. would you take the over or the under? >> i think that's probably a good market. because, again, the way this works, the way it has always worked is that they cannot afford to let it happen and hopefully congress will come together somehow and some way to craft a solution, i'm sure that there will be a meeting of the minds. but again, not before there's volatility in asset markets. >> so i'm a retail investor. what do you do you have this risk on the horizon. people are worried about recession, there's still banking stress out there what should i do >> so this is one of those times where again, we had a very good run off the bottom in october. no question about it and particularly, if you look the last couple of months, very

good for large-cap growth, which the public in our view still owns a lot of, which is a great thing. you have to sit back and think to yourself, if we go back and test those october lows, am i a buyer or am i a seller, emotionally? and those emotional sellers are the ones that actually make the bottom so if you think you're going to be a seller, but you should be a buyer, because you should be a buyer of dips, it's worked for 40 years now, you need to avail yourself of a little bit more cash, which is paying upwards of 4% this is the first time -- >> wait, wait, wait, buying the dip worked for 40 years, but it hasn't worked in the last. >> it's worked since going back to october it worked for the stocks that got cremated -- >> didn't work all of last year, though >> well, it worked a couple of times -- >> really short-term >> you're right about that, but again, we should be talking in terms of years instead of months or quarters, as long-term investors, and that to us is the

tried and true strategy. and again, remember, you are getting paid to wait for the first time in a generation take advantage of it >> all right, julian, thank you. good to see you. love the passion julian emanuel >> still ahead this morning, hilton's christopher nasseta, that's coming up next hour don't go anywhere. . get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity.

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a number of companies raising their guidance over the last 24 hours. let's get to dom chu who has more on the names that we're keeping an eye on here >> they're on the move some of the bigger stocks moved in response to those reports, voicing more optimism about the months ahead the biggest gainer in the s&p 500 right now is one of those stocks it's fast casual mexican restaurant chain chipotle is up about 14.5% right now. expectations beat for this past quarter, it thinks that current quarter and full-year sales growth at established restaurant locations will be in the mid-to-high i believe digits customers will continue to shrug off some of those menu price hikes. that's a big gainer there. microsoft, the tech giant, second best performer in the s&p 500. second best performer beat expectations last quarter. also current quarter revenue guidance topping consensus as well a lot of optimism about cloud

commuting. and of course, artificial intelligence and there's hilton worldwide, which has now swung from a gain earlier to a loss now, despite a bullish earnings report and a raise to its full-year outlook really, really kind of kicked things off there so, apparently, david, people still want to travel, but hilton is now down 1.75%. >> tom, thank you. visa shares are also down fractionally that's going to do it for this hour of "squawk on the street. a lot more coming your way on the next hour. don't go anywhere. you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning.

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good wednesday morning i'm carl quintanilla with sara eisen live on the floor of the new york stock exchange. on the agenda today, hilton ceo christopher nassetta is with us. big earnings beat and they hiked their full-year guidance why that stock is signaling continued strong travel demand >> cme grew terry duffy also with us. another earnings beat there on the top and bottom lines, plus his take on a broken nickel market among other things. >> later on, vincent reinhart is with us. his warning on persistent inflation as these five-year credit default swaps hit a