help ibm will slow hiring for roles that could be replaced by a.i. it is tuesday, may 2nd, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. if you look at what has been happening with the u.s. equities, dow in the red down 63 points s&p is down 6.5. nasdaq is indicated higher up 10 this comes after the dow inched lower in yesterday's session down 46 points the s&p was essentially flat it was off 1.5%.

the nasdaq was lower by .10% that was happening as we continue to hear what was happening in the bank sector the market is hanging in there the treasury markets 10-year treasury yielding at 3.52 the 2-year treasury is back to 4.122%. the big warning from janet yellen coming yesterday. the u.s. may run out of measures to pay the debt obligations by june 1st the letter to house speaker mccarthy saying the department moved up the estimate because of weaker tax results the deadline had been late july giving them an extra two months. the race is on 30 days as of today. yesterday, president biden calling the big four congressional leaders to the white house on may 9th the congressional calendar shows eight legislative days this month when the house and senate

are in session at the same time. at 8:00 this morning, we will talk to economic adviser heather boushey about all of it. do you believe the calendar? 30 days. maybe 8 days. >> still claiming this negotiation is not tied to the debt ceiling >> right. >> it looks like something is happening. >> we have 30 days let's wait eight days and we can get together hello? >> things move slowly. when you hear about people in trouble and a trial and it is like may and the trial is set for february there's a backlog of everything. these guys have no excuse. they have eight days is there a better day than today? no >> they will talk to each other between now and then. >> good. finally. they had 80 days where they haven't talked

the board voted yesterday to sue disney the suit is in response to the the disney lawsuit alleging the campaign by the government the suit accuses the company of striking a back-room deal in the effort to preserve the built to essentially self govern the district >> right on every one of the counts of the accusations. >> that's pretty good. >> have you seen it? >> it's a pretty good deal if you can get it >> if you get it >> good deal if you get it the board and company are battling the district to allow disney to self govern the park opening ration the operations s. >> they have been doing this for a long time on their own you can go back and forth. the question is if it is a

higher tax burden for the residents. >> do the residents know that? >> i assume it is a democratic voting area. i'm not sure the republicans controlled legislature cares >> i like it the shares of bp are down this morning the british energy giant reported stronger than expected first quarter profit it faced comps from the prior year when the fuel prices surged with the russian invasion of ukraine. $1.576 billion buyback to be completed by august. that stock down 5.25%. there are shares of chegg which are plunging the company forecast for the quarter came in weaker than expected they cited unexpected revenue decline as students used chatgpt so they don't need chegg chegg makes money from subscriptions. they see revenue in danger if

students see a.i. as an al alternative of paying. and meantime, ibm expecting to pause hiring in roles it could replace with a.i the company will suspend or slow hiring in back office functions. he estimated 7,800 jobs could be lost they would not replace the roles vacated by attrition that will happen fast. the next 12 months if you played with it enough, you would know that we are probably three or four months away from being materially better and this was 18 months. clearly there are roles that don't need to exist. >> it is clear you can have it write an essay can you have it do engineering

stuff or is that more complicated? >> you can ask math problems. >> a calculator. >> you could give it word problems it will give you the answer. >> can it write an episode of "the diplomat" show? this is their last chance. >> one big issue >> they should be careful. >> that's part of the whole strike which is to say in a writers room for a tv show that might historically have seven or eight people, maybe you would have four. >> that is part of the reason they are asking for more money. >> not just asking for more money. part of the sticking point is they are asking for a guaranteed number of writers in the room. that is where this is an issue >> i don't know about something like that. that seems difficult i was kidding about the late night comedy i don't know if that can be done

by chatgpt i don't want to think about it a lot of times when we talk about earnings >> you can do it now done >> a company reported this is this worse than this? the forecast was this. >> already being done, joe already being done it is not in the future. it is now. it is a year ago >> we are not using it yet here. they could probably. >> they could. yeah it's all coming. shares of nxp semiconductors rising after they top wall street ex-estimates for the quarter. the company's ceo noting cautiously optimistic for the second half of the year as they n navigate through the cyclical downturn with the auto and core industrial business. >> can you tell you what this

occurs to me with this this is blue collar security those are the jobs that can't be done by a.i. >> that's true that is true >> and it -- >> it is revenge for blue collar workers. >> the revenge the blue collar workers out hearinh here doing things. and those at home with a.i turn it right out. >> somebody has to write the prompt no, no that i think will become a huge skill. being a good prompter. it is not -- the technology is not -- you cannot write a novel. it will write a crazy novel. >> it is not hard to be a prompt writer i know html. >> there are some people who i call them google ninjas. they actually can figure out and

find stuff in ways other people can't because they understand how to search and how it works different parameters it changes the outcome in a very big way. >> for blue collar workers, it would be -- >> revenge. >> it would be helpful to them if you have a problem, you are solving. you are trying to get a work around for auto mechanic. this is what is wrong with my car. what do i need to do >> it will not replace a human >> it can the not replace the one actually doing the work. >> the layoffs happening right now have been mostly white collar workers paying more to blue collar workers. they don't want to lose any of them this will further that trend >> the way we hit these things the whole singularity thing. the advances of time between them

remember watson after 1 billion years? we figured how the code worked then the next thing was this now a.i. and figuring out and the genetic code everything in a year, the whole world could be different from this you think it will. >> 18 months 18 months. i'll tell you why. >> that reminds me of the abs. you can't do it in a year. you need 18 months. >> i'll tell you why if you played with it, you know it is based on scraping only a number of 20 web sites that end, i believe, in 2021 or 2022 right now. it is not a real-time thing. to the extent there is a real-time functionality to search that doesn't work nearly as well it is only going to work the way you want it to

>> from the speed factor >> not just speed. you want to understand what is happening now. >> it takes longer they can learn on the old stuff. >> on the old stuff. the propcessing power will be done in real-time say 18 months from now that is when the whole thing is a meaningful game changer. >> you know, we were done at 6:04 now it is 6:11 i don't think anyone can do this except for us. >> i'm telling you, to the extent -- >> am i wrong? >> yes to the extent anybody wants to hear your voice, for example, they can do two things replicate the way you look and talk and crazy things that come out of your mouth. >> nope. i don't believe it >> you remember the letter i sent you >> i do. i still think i'm that unique. i do i think -- >> it knew that.

it knew that right? you remember that? >> i have a false sense of job security >> just saying coming up, hollywood writers on strike this morning we will talk about the daytime and late night talk shows seeing an impact as production comes to a screeching halt. that is next. uber is set to report. we will have the first on cnbc interview with ceo dara khosrowshahi you are watching "squawk box" and this is cnbc

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welcome back to "squawk box. hollywood writers heading for the picket line aftering negotiations with the trade association representing the studios failed as a result, production and an shows and films start to grind to a halt. those include late night talk shows expected to go dark this week and "saturday night live" could cancel this week joining us is ben smith from semafor and his book launching today. we will talk about that in a second how big a deal is this >> it is kind of amazing that they always do this. the industry where somebody said

it is like france. you know they will go on strike and they go on strike. it is bitter and divisive. >> it happened seven or eight times in the last 100 years. >> a lot of contracts get renewed without this level of acrimony so many changes in the industry right now and rules of the workplace are rewritten with streaming and netflix buys all of the rights to the show and no back end the writers have a lot of places that they feel there is an advantage or disadvantage to be had. >> when you talk about the timing of how this comes together or not, how long could it be? >> who knows i don't know >> what is the sense of this there is a view that the big media companies are actually quite happy about this with the exception of not having "snl" or the late night shows. the idea of not -- if you create a level playing field

effectively where nobody can buy or make new stuff and that will reduce costs if you can stretch that out two or three months in an environment where you believe the economy and advertising is already challenged, that is a bad thing. i don't know if it is a conspiracy theory, but that is a theory around hollywood. >> everybody is expecting an ad recession and holding very tight. on the other hand, incredibly competitive moment and each trying to get ahead of the other. i don't think these guys can afford it. >> can we talk about "traffic" here when did you write that? >> in 2020 during the pandemic. >> we are now in the moment where we have a lot of companies, media companies -- i'm curious. this started with the buzzfeed life now we are watching vice media

apparently on the brink of filing for bankruptcy. what is happening here by the way, a lot of the companies were companies that the old traditional media companies were the future and everybody was chasing. >> we thought we were the future the reason was 2020 where i started the book and i thought the era was ending and i wanted to see where it started in new york with the characters who hated each other and hated old media and wanted to blow it up they made bets in some sense, the big bet was the social media platforms were equal to cable in the way cable laid the new lines in the '80s. mtv and cnn. >> are the social media companies the new cable or not that is today's tucker carlson question which is to say, tucker

leaves fox and goes on twitter and some people look at that and say tens of millions of people watching him on twitter. is that the future of media or not? >> i think not i think it is disecisively not. this is the big bet the companies made a healthy business in distributed by the platforms as they competed with each other and paid for higher and higher quality content the way cable had. they never did that. they relied on gc. they will not stick around you are seeing twitter and facebook unravel the content. >> did the ad dollars never show up was the platform >> the platform mondayopolized them. >> they are not buying the cow and getting the milk for free? >> what happened with cable, they decided to pay a lot of

money to channels to get great content and have a healthy ecosystem. facebook, twitter, snap. they decided not to do that. >> was that a mistake? >> when you look at the apps and the culture and that is down maybe there were fads and would not last forever if you think of the relevance of the blue facebook app of twitter against five years ago and they are headed down. once they go down -- >> you think all of the companies. snap >> less relevant snap is still a messaging service people use >> is there a media company more ors less relevant? comcast and disney and how does that strikeout

>> it seems the folks who invested in high quality entertainment have their problems stocks are down. they are not going away. the problem with the social networks that you are there because you and your friends are there. when your friends leave, you can leave. >> do you wish you sold buzzfeed to disney? >> i wrote about this in the book i think widely viewed as the dumbest media decision of the 2010s that we turned down an offer from disney. you know, it is like hard to put your head back in the space where the wind was at our back we just started bill building something new. disney wanted us to modernize our presence that is not what we signed up for. >> you were smoking pot when you made that decision. >> we did loosen up to make the decision >> it is like walter all of the great things.

legacy is worth something. >> legacy is worth something the new book is "traffic." it is a great read thank you for coming in. ben smith from semafor >> you picked your favorite on air. >> it was. i was rolling reading it amazing details. >> tasty >> you were rolling? >> no, rolling laughing sd >> one of my friends had a prescription card in california. >> all right gnarly the world we live in people dress up as cats. coming up, data from the irs shows how much wealth left california and new york during the pandemic robert frank has that story next. later, we talk to two, not one, not three, former fed presidents for expectations on tomorrow's rate hike announcement

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new data from the irs shows covid doubled the flight of the wealthy out of new york and california in 2021 robert frank joins us with more. >> joe, stats show income migration accelerated during the pandemic from high tax to low tax states new york losing $25 billion in income from taxpayers who moved in 2021. that's up from $9 billion in 2019 california losing $29 billion.

that was triple the losses that s they saw before the pandemic if you combine 2020 and 2021, those two states lost more than $90 billion in income from out migration. many of those from high earners. the big surprise was lorida. florida gained $39 billion in income that is more than twice the pre-covid levels about $10 billion came from new york the rest from illinois, new jersey, california and other states texas was the distant second adding $11 billion more than half of that coming from california. all that income flight now finally starting to show up in tax revenue. california recently going from $100 billion surplus to a $23 billion deficit this year. new york's tax collections running $12 billion less than last year. the state now looking at a deficit of $6 billion next year.

joe, we saw bureau of labor numbers for the first time ever florida actually has more jobs than new york state. >> that's just the whole thing -- we felt it happening and then to see numbers put to it is interesting. robert, i'm trying so hard not to feel sad for them i'm not succeeding >> you are still here. >> yeah. exactly. you go crazy with spending and everything else. you need to raise taxes. you think it will work because people won't leave and just like night follows day, they end up leaving and you end up with less than you started with. politicians never learn. they never learn maybe it is different for the federal government because you're not where you can go to another eu state or eu country next door if you can do that here, you can't.

you have to leave. i still say that it is not a great idea just to keep zapping people 50% which are w-2 earners. it is not smart. robert, cut spending, please >> because we had the stimulus in the pandemic and huge stock markets going way up and low unemployment, all that papered over the problems of migration in the states. because of that, you had progressives saying let's raise taxes to combat taxes. it is now that it is starting to show up and we might see the cost of that in both states, you see a push by the legislature to raise taxes. it is the governors pushing back to prevent that from happening >> the state senator a month ago

said it has had no effect. no one has left. it is not happening. he is looking at us and saying up is down i'm telling you up is down left is right. it's just -- i don't know. are there -- is it not a controlled experiment where we are not taking account of other variables? correlation is not causation, obviously. it happened after the other stuff has happened can we attribute it to that or not, robert? >> we attribute to the huge asset boom in 2020 and 2021. the people who stayed in the states and did not move became we wealthier and income grew and it made up for the people who left. it is the strange period where it looked like it wasn't impacting the tax rolls, but now we see the tax rolls because the markets performed last year and

this year and the decline in capital gains is hurting both states. >> okay. otherwise, you know, if it did the not have an effect, why not do 100 there are people some of them are senators from vermont would like 100% marginal tax base they would over what pick a number. over 10 million? 100% tax rate? i guarantee you bernie would sign on to that. guarantee heit thank you, robert. when we come back, get ready for a busy trading day ahead had. the fed kicking off the two-day policy meeting and we'll get reports from pfizer, marriott and uber we'll bring you the first on cnbc interview with uber ceo right now as we head to break, let's look at yesterday's s&p 500 winners and losers norwegian cruise line and followed by on semiconductor

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good morning welcome back to "squawk box. live from the nasdaq market site in times square. checking the futures nasdaq in the green. not big moves in the dow jones industrial average or s&p. we are pulling back a little the kickoff of the two-day policy meeting for the fed whether the insight will influence the fed moves. we have mimi duff and robert with us. yesterday, mimi, we were hard pressed to find any effect or any -- once we saw the news over the weekend, you would expect someb something to happen in the 2-year or the 10-year.

are we immune to this or is that the last one >> rates did sell off a little bit yesterday, but i don't think it had anything to do with the the news over the weekend. i think on the margin, i would say the lack of effect in the markets as a positive. we are seeing market function which is what the fed and other regulators care about, smooth market function. in that regard, it was taken as a positive >> in terms of credit contraction, this is the third big bank, i don't know if it serves mom and pop operations, but are we seeing smaller banks pull in lending horns at this point, mimi? can the fed assume, if it does 25 today, can it assume 50 or 100 in there that is not there that it was planning to do

before >> a couple of things. yellen pointed out and we subscribe to this, too, to the extent there are credit tightening throughout banks that would probably dampen the need for fed rises. we expect a fed rise tomorrow to be clear the banks thus far haven't been the mom and pops we see stricter lending standards for all americans. one indication is the mortgage primary secondary spread it is very wide. above and beyond the primary rates from fannie mae and freddie mac offer. i think new loans being made now given where rates are and the credit situation are a little bit tougher to find to come by

than last year. >> robert, when the titanic hit the iceberg, it was a little bit above the water. is that what is happening now or is it just a little piece of ice? is there -- are we on the cusp of something much worse or is this it after first republic >> it is tough to say this is just it. things act with a littlie lag. we will see what happens this summer when the renewal. one dallas fed note was they are unlikely to get a line, but if it did, they would get higher prices it is difficult with the summertime and it is early innings until we see the full effect we will see the senior loan officers survey.

we got the picture from the fed in europe which was mixed. it is not like things were loose a year ago we will see if it shows up in the small businesses and then secondarily in the labor market if it happens. >> is there duration risk? a huge amount of that left in the system that will go up tomorrow another 25 basis points commercial real estate are people right now that do this for a living squcouring th balance sheets to find the next vulnerable institution t is that happening? do you expect more >> exactly the scouring of duration in banking has largely been done. that is why people other than a few small banks here and there largely feel this was the last

big problem put behind us. the commercial real estate question is a really good one with a lot of the issues people hear and they hear commercial office in big cities. the issue is most of the construction and construction is amazon warehouses or manufacturing. it is a little bit less of the classic big chicago, new york, l.a., san fran office buildings. people are scouring that when is the debt due when is the loan-to-value? that is where we are likely to see if there are problems and where that will come up. again, you look at some of the funds raised for some of the real estate entities and it is a classic raise a lot of money for distress and there is no distress because too much money is chasing it. we will see how it plays out the commercial real estate market and charlie munger spoke about it over the weekend which

may or may not be the big issue we think it is. >> mimi, trouble ahead or we can just focus our attention elsewhere? i have plenty to worry about should we move on or more shoeshoes to drop? >> i think most shoes will drop. we are in the camp of private credit and commercial real estate it will take a while to play out as those loans come due as rates are higher and credit standards are tougher for the borrowers. >> okay. we will end it there mimi duff, thank you robert dishner, thanks you are both at home you are both at home >> i'm in the office always in office >> always in office. >> or always at home set to come this morning, we are waiting for pfizer to report we bring you the numbers and reaction from wall street.

pfizer up 20 cents. and later, richard fisher will join us with everything from the fed decision and the sale of first republic we'll be right back. it's hard to run a business on your own. make it easier on yourself. with shopify, you have everything you need to sell online and in person. you can have your inventory, payments, and customers in sync across all the places you sell. it doesn't have to be lonely at the top. join the millions to finding success on their own terms. start your journey with a free trial today.

pfizer is up $1. up 3% after the company reported

$1.23. that was 25 cents ahead of estimates and a big beef p for revenue. $18.28 billion against $16.59 billion. pfizer is affirming full year guidance for 2023. this is the first quarter. if you beat first quarter number by 25 cents, you wonder whether the 3.36, which assume 98cents which is lower than the $1.23. wonder if you will see any type of bump or people should expect the full-year guidance should have been bumped up. it is early. pfizer indicated up 1% a lot of different factors going into pfizer results. obviously, this is the year that doesn't have the same contributions of any of the covid stuff. both the vaccine and the

thera therapeutics >> they kind of lead to that with paxlovid. you exclude from paxlovid. borla is announcing the launches for the second half of 2023. product and indication launches. they are showing they are going to be doing stuff outside of covid along those lines. joe mentioned the stock is up. gain of 54 cents. when we come back, it is jobs week in america head of the employment data on friday, we get numbers from paychex. you can watch us any time by checking out the cnbc app.

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small business actually seeing signs of slowing labor trends according to the latest data from paychecks. job gibson is the ceo of pay chex, and one of the concerns is the fed will continue to raise rates, and it's not that you want to root for a weaker job market, but what are you seeing at this point? what signs of weakness >> it's great to be with you during national small business

week, and about two-thirds of the jobs that we have been creating are in small businesses they tend to not get the headlines, but without them we don't have an economy. we are seeing the indexes and continuing to see wages slow, and relative to what you said, while the small index went down in april this is the first month in 2023 this is the first time the job index went down in small businesses >> you think this is a snap back to normal or is this something more is there a bigger concern over the economy based on what you have seen? >> look, i think there's no question small businesses continue to be concerned about inflation. certainly what the fed is doing is working, and we see that in the wage numbers here. i think you have a redistribution of jobs we read about the tech layoffs

i think there was a lot of irrational hiring, if you will, going on in the marketplace. those jobs are getting absorbed pretty well in the data we see while job openings are down overall, in the 1 to 9, the microsmall space, they are still at record levels small business owners are trying to hire up from the great resignation. >> what you said is interesting, that small businesses are still, i guess, from the data you have seen, inflation is still their number one issue, or are they -- you made it sound like they are happy about what the fed is doing. i would imagine they are concerned about higher interest rate and what that means for their borrowing costs? >> yeah, inflation is the number one issue, again, and small

businesses are competing for labor, and to your point, mostly on its heels is the cost of capital but now a lot of concerns about access to capital particularly with the disruptions we have seen in the regional banking system. i think that's a critical thing that policymakers need to address. there are a lot of people that want to start new businesses, particularly in jgen z, and without small businesses -- >> wage growth is slowing, too that's a key thing the fed keeps an eye on, too >> yeah, it's continued to slow

over time. what we see is that obviously the fed's actions is working we have not had the participation rate it's good we are seeing the critical working age of 25 to 54, that rate has gotten back to prepandemic levels we are starting to see immigration back to prepandemic levels seems to me the way policymakers need to think about reducing wage inflation is increasing the supply of high-quality labor, rather than just relying on the fed actions. >> gen z is 1997 to 2012, so you are talking about a lot of them that lost jobs during the

pandemic you said they are starting to come back? >> yeah, they were disproportionately help, particularly in the low end of hospitality. they just passed the baby boomers in terms of the percentage in workforce in small and medium sized businesses. they are seeing wage growth of over 10%, and that's double the national rate. another interesting thing, becky, we are seeing between the jen generations is that gen z is the one generation that does not have a gender wage gap it will be interesting to see as they continue to move their careers forward, we continue to see that gap close >> thank you for your time today. >> thank you, becky. great to be with you >> you, too. andrew we made our way downtown to uber's headquarters where they

are just reporting earnings. we have a big interview in a moment, and it came in at a loss the 8 cents, and it's better than the 9 cent loss they were expecting. we will bring you the highlights with uber's ceo to talk about the state of the business and consumer and so much more. we have two big hours of "squawk box" ahead after this.

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its two-day policy meeting today. uber quarterly results hitting the wires. we will bring you those results and an interview with uber ceo, dara khosrowshahi. ibm says it will stop hiring humans for jobs that a.i. can do those stock stories and much more, as the second hour of "squawk box" starts right now.

good morning welcome back to "squawk box" right here on cnbc i am andrew ross sorkin along with becky quick and joe kernen. i am down at uber's headquarters, and we will explain why in just a moment, because they have big earnings let's show you where things stand. nasdaq up about 7 points, and the s&p 500 off about 5.5 points we will show you where treasuries stand about now this is a big figure given -- we will talk to you about janet yellen's news about the debt ceiling. as i just mentioned, the reason we are down here at uber's

headquarters, the company reporting a loss of 8 cents. it's better than the 9-cent loss as expected. we have got other highlights for you. gross booking grew 19% year over year, and monthly active platform consumers reaching 130 million. that's up 13% year over year you are looking at the stock up on this news, about 7.5% we are at 35.17. and in half an hour, uber ceo, dara khosrowshahi, will be sitting next to me talking about the state of the business and consumer back to you, becky >> we are looking forward to

that just ahead of the fed's meeting that kicks off today, most respondents are expecting a hike and then hold, but the question is for how long steve liesman joins us with those results. good morning >> hike and hold, that's the message, an extended hold above 5% is the message. there's unusual opposition to the rate increase. here's the fed's expectations start. 100% said the fed will hike in may, and tkpwh59%, and many sayt will be on hold longer than june here's the outlook from the survey from the fed rate we are at 4.88%, and then we go to 5.13 tomorrow, and then some

think the cuts will hold until december bury knapp says for the banking system the current policy rate is over restricted it means the moving in and out of deposits from banks forcing more banks to shrink their assets >> berry is gone today >> i didn't know that. 96% say the fed -- the banks, by the way, will tighten their standards from here, by the way, which are already tight. it looks to be a major reason why forecasters lowered their

inflation rate and growth out look and we have a 54% probability of a recession that begins in september. i don't think this is a dovish group, really, over the years we have been doing this and they don't agree with the fed's rate hike >> i think chatgpt would have known -- >> if you were to replace me, joe -- >> not you, specifically >> i have been listening >> i am saying there's just know way that chatgpt could be as insane and come up with the stuff i come up with sometimes >> so that's your job security >> yes >> here's the one problem, it surprised so many people to hear from janet yellen, secretary of treasury, saying this is going to be june now, june 1st rather

than end of july when they run out of money because of lower tax receipts is that a sign of the recession already starting or a downturn in the economy >> it's a definite sign of slowing of the economy the treasury has a built-in look at inflation, and there could be some fall off in inflation as well as a slowdown in the economy that could be in there i will tell you that only 11% probability in the survey put on an actual default. the street is not, i don't think, taking it seriously >> is that higher than we have seen in the past >> 6% is the prior one some guy at the white house correspondent's dinner, one of our people that covers this came up and said you guys ought to be a lot more worried about this than you appear to be.

he was looking at how the market is trading this is a person that covers this every day, and you get concerned about it i don't want to be fooled again and worried and concerned about it -- >> i will take that over the alternative. >> which is what >> you get worried about it and then it happens. >> how many times have we done this, though >> well, they keep calling it a technical default, figuring if we do default it won't be for long >> they will pay up -- we're not going to default >> that's the attitude capture that that's the attitude! >> we are not going to pay our interest -- >> you don't -- you're not concerned about if we do end up reaching that point? >> right >> you are cool with that, and other people don't think it's going to happen.

>> i don't think it will much to his own -- well, the people around him -- as much as the people don't want him to negotiate, i think he probably will and something will get done back to the fed, what i finally decided yesterday was that 25 basis points is so inconsequential in terms of supposedly adding to a slowdown in demand, which then will filter through and help with inflation, and i don't know -- 25 basis points, but it could matter in terms of balance sheets and i don't like that the risk of you doing something is worst -- is much greater than the benefit you will get if you are going to do it, fine, do it, and then see what happens. you can always come back three months from now if inflation is still sticky 16-year highs on rates

>> i was going to talk about this at 8:30, but i maybe will tease it now the fed could do monetary policy over here and supervision over there. how did that work out with silicon valley bank? >> yeah. >> what you just said suggests that they should incorporate more of the banking concerns into the making of monetary policy -- >> if the fed had not raised rates 500 basis points, would any of those three have failed >> probably not. >> right so there's consequences. there are consequences >> or you can be japan and never raise anything and never -- >> and have a bunch of zombie -- >> i am just saying 250 basis points would not have done it, so where do you cross over to

where it actually was -- >> but how much is that responsible for the lowering of inflation, too it doesn't happen -- >> there are consequences. >> there was an important speech given by esther george, the former kansas city fed president, who we all know was one of the pre-eminent hawks, and she descended and she wanted to do 50 and she said because of her concern about the banking system, and a dove on the other side said slow down because of concern on the banks so it was out there. it's not ideal but if the fed had done what i think needed to be done, and i will talk about this at 8:30, it's the leadership at the fed, were they telling the supervisors go and sharpen your pencils when you do this >> my guess is no based on what

happened >> june '22, again in february, they presented us with this report there's a lot of blame on the supervisors in the report, and i am not sure it belongs there >> it had to go up that's not what i am saying. you see the duration risks is clear once it happens, and 25 basis points, does it push somebody else over i don't know let's bring in former dallas fed president, richer fisher, and he's a senior adviser to barkley's and a contributor to cnbc we are all humans and humans are running the fed and there's a saying about the convictionof the converted, and i don't know, i don't want them to stay about thinking at zero for too long so they have to make the same mistake on the other side of things is there anything to that? do we really psychologically

need to believe that they are going to keep going ala volker for it to work 25 basis points will not do all that much. do they need to do it to convince us they are serious >> joe, look, the north star for central bankers is 2% inflation and that's what they navigate to i think they are close i agree with you i don't think another quarter point is -- first of all, i think it's baked in the cake but it's not going to do that much damage >> can it do that much good? that's the point, richard. >> i think it does do good because you have to stick with your course. >> it's not that it actually somehow gives a little bit more dampening of demand and slow something somewhere, some kind of labor hiring or whatever, wage gains, and it's not going to have a positive affect like

that it's just a psychological -- that's why they have to do it to stay the course. why isn't full employment a better north star than that 2% >> we have full employment, joe. >> well, we are not going to >> almost in history, we have a very low unemployment rate it's a gradual citation, and they want to complete the course and i think they will move at the meeting, most likely, and likely will hold to see whether or not they are getting closer to their target. the north star is the 2% inflation. >> that's the course you are not saying they know what the terminal rate is to get to the 2%, and you are saying 2% is completing the course >> to go back to your point, these are human beings there's no mathematical

precision to -- >> oh, great euf >> there isn't, joe. >> that makes me feel good >> these are people who are smart and are delivering on their judgment >> like they did at zero for way too long >> yeah, they over did it and i would hate to see them not complete the course here, because then you let go of all kinds of spirits that can underline their battle against inflation, and it could do more damage long term we just have to make this adjustment as to steve's point, let's face it, the bank was poorly managed, period by the way, steve and i spent last wednesday at dinner and it

was pleasant, wasn't it, steve >> we were both involved in the effort to help teachers teach economics, and richard was gracious enough to come and visionary award winner >> how is the fed doing to separate monetary policy and supervision. do we say it's a risk or a failure because we have had three bank failures and the fed had to create a new fund in order to liquefy the banks >> i think they dropped the ball in san francisco, dropped the ball on the supervision by the board of governors there's a long history

alan greenspan just took his hands off the wheel and wanted the market to solve every problem, and we had a horrible decline in staff at the board of governors and the banks, and then we had dodd/frank on top of that there have been a lot of horses pugging and shoving at the regulators now it's the responsibility of mr. barr, the first vice chairman in charge of regulation he will have to tighten the screws i agree with the point made earlier, which is that this will lead the banks to pull in a little bit and they will be living in fear in the tighter restrictions on regulation if you are a bank of $100 billion or more -- even below that, 80 to 90 billion --

>> you don't know whether that gets us to 2 on its own, which it might number two, what is wrong with 3? this north star, that's crappy i don't buy that, richard? >> if you declared every central bank in the world just looking at 2% as the north star, if you give -- they will run with it. >> facts can change, richard >> i remember some talks were what about 4 we decided to 2, and that's pwur knacky's contribution. >> we may get there anyway >> you stick to 2, and the question is how you navigate to

that -- i am using a lot of analogies this morning why would you deviate from course when you are so close to the destination? >> because what looks like is a little piece of ice ahead and it's an iceberg, if you want to stick to analogies what if it's a big ocean liner where you can't turn quickly >> you will have eric on soon, and he's one of the best i served with, eric rosenberg. >> okay. king of the world. visionary. >> yeah, a visionary >> see you later >> you know the titanic song --

>> yeah, brings tears to my eyes i was glad when leo went under and didn't come back i was. dom chu will break down the results and the premarket reaction, but before we head to a break, let's check on the markets. s&p futures off by 4 the nasdaq indicated up by 11. "squawk box" will be rhtacig bk.

we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch.

time to check in with dom chu. he has a look at this morning's premarket movers what are you seeing today? >> good morning, becky we will kick things off with late-breaking headlines out in the last 15 minutes or so. shares of marriott higher, around 2,000 the lodging giant reporting better than expected revenues thanks in a large part to operating efficiency, and it raised its full year profit forecast, so it's up about 2.25%. and then pfizer around 85 shares

or so changed hands. it said it still expect to reach levels for the years' previous financial guidance pfizer shares are up 1.5%. we will cap things off with a check of what is happening with oil and gas. and bp down 5%, just around 125,000 shares of volume after profits came in better than expected but shares are weaker due in part to cash flows thanks to an increase in working capital, the money it needs to run its day to-day business. weaker and oil gas revenues

down >> did you once tell me you were a golden state fan did you tell me that >> i grew up not far -- i grew up not far from the coliseum out in oakland because that's where i was raised, in northern california from a basketball standpoint, i grew up with a portland fan. >> you do see the sort of the significance of these two teams, though >> i do. >> okay. >> i do. >> because i was never -- that's why draftkings changed my life lebron against steph curry in their own way, i love to not like either one of them that much and together it's interesting to watch i love davis -- not a big steve kerr fan but will be amazing to watch. >> a lot of my friends are hockey fans. i am not as huge of a hockey

fan -- >> i have not been following that >> won last night, the seventh game, and i stayed up to watch it 11:00 at night >> new jersey has a hockey game? >> i like the rangers? >> yeah. >> trader. wrong state. and then dara khosrowshahi joining us with how the company is looking to implement new technology into its business and then barry knapp "squawk box" will be right back.

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your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. still to come, an interview you do not want to miss. we have uber ceo, dara khosrowshahi, who will dig through the numbers first right here with us in just a moment. plus, president biden calling an emergency meeting with congressional leaders to talk about avoiding the debt

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welcome back to "squawk box. we are at uber's headquarters this morning stock up 8% on the back of the news, and it reported a 8-cent

loss joining us now is dara khosrowshahi, and just on the back of this news, what are you seeing and where did you see the strength and do you think it will hold up >> the good news is we are seeing strength across the board, andrew. remember, the consumer, while there are worries about the consumer, consumer sentiment has been strong, especially in the services sector. consumers are buying less stuff but they are going out to events and restaurants and et cetera and it showed in our numbers our gross bookings were up 22%, and our trip growth accelerated versus q4, q4 growth was 2%, and

ours accelerated to 24%. >> that means people are getting into -- that's the mobility side >> that's mobility and delivery combined >> the delivery piece is still strong and still up, but not up the way it was in the pandemic there was a period of time when people thought, my god, this thing could go to the moon >> yes i think if you look at parts of the business that benefited from the pandemic, delivery actually has been one of the most sticky -- businesses were down year over year, and if you look at our delivery business, we were up and the business accelerated, and we think the bookings will be more robust going forward. we are churning out profits effectively, and incremental for every dollar of gross bookings

we had >> in terms of being gap profitable this year >> it's happening. it's happening it will happen sometime this year, and we committed to being profitable and we hit it ahead of schedule. we have free cash flow in the quarter and we are committed to be gap operating profitable this year >> you had a three-year plan, and i don't know how long ago now, but you are ahead of it when do you upgrade the plan >> i think we are halfway through the plan at this point we had a target of $5 billion in aeb yoda --

>> are you seeing anything in regard to people who might have used the black service and they are downgrading to x or something like that? is that happening? >> we are not seeing that at all. we are seeing the opposite based on some of the innovations we are bringing out there for example, we built a new reserve product. the driver shows up and we will wait for you out front, et cetera >> this is old school. this is what people used to do, i need a car to show up at 7:00 a.m. -- >> exactly it shows up and you have time. 20% of our airport drop-offs are now reserved, and this was a product that did not exist 24 months ago so the innovation as we build products that connect riders to drivers more effectively, the driver has the reliability and everybody wins

>> just going to the airport in a post pandemic universe, what does that look like now? >> continues to grow travel is one of the fastest categories and is not slowing down at all. and we are seeing the same as airlines in our business travel, work day and commute, people are getting back to work and going back to offices -- not all of them, but all of those are strengths within our portfolio. >> lyft has a new ceo, and recently came out -- let me get the quote and put it on the screen says they will try and effectively make their prices identical to yours, and that means they may have to bring them down, it sounds like, at least in some cities, and in new york i think uber is higher than they are, but what does this do to the business? they want to be more competitive than they are? >> it sets it up for

composition, who has the most drivers, and pwbrand, and if lyt let's it up to have the same fees, then it's healthy competition. >> we have got scale advantages in terms of being global and scale advantages in terms of being a multibusiness. we build for delivery and -- i can't speak for lyft, but what often happens is margins are lower or capital costs are higher, and we are gaining share on mobility and delivery while

delivering outsized margin growth >> we talked about the good side of the story the freight side is more complicated to put it lightly. what is happening there? >> what is happening there is the opposite of what i talked about, as more money goes towards services people are buying less in retail, and freight ships retail, and we are seeing prices come down from historically elevated levels we saw two years ago. looks like those prices might be settling -- >> it's a growth story for you >> the cycle we have seen and fulfillment and shipping rates are hiding the fundamental advantages that the digital platform has we are patient and our profits and free cash flow continues to increase, and we can move forward in a disciplined way

>> separately, we want to try and better understand what is going to happen to some of your investments? i am speaking about didi in china? when did you try to monetize that situation >> we have to wait until it lists, essentially, in hong kong we don't know when that will happen, probably sometime next year we have been selectively monetizing our stakes, and in russia, we made multiples in our investment there, and ourselves and the cfo, we have been strong allocators of capital. >> we have been talking about a.i., and are you going to need less people? on the front end, am i going to type in what i want and there will be a chat box

expedia and others are trying to do that. and then the programmers you need to build things in the app or other parts of your service >> i think companies can make a choice they can either useless people to do the same amount of work, or they can use the same amount of people to do more work, and our focus is on the latter, how do we use the models to make sure the etas we offer you are accurate, and how do we use the global data set to match and price more effectively like you said, there are great products you can build i am looking for first-rate mexican for two people under 50 bucks company deliver within 45 minutes. those kinds of queries become much more easy in an a.i.-enabled world

>> long term, the number of people you have as employees, not contracted drivers and there's a debate about that, but what does that look like to you? >> we said we anticipate to be head count flat or down for this year and that will stretch into next year as the business is growing 20 plus percent. but it's too soon to tell because we are just starting to understand the capabilities of a.i., and i think we are a long way from understanding it's -- its potential. >> you are also looking at new pri pricing models >> yes >> if they are looking for a car, it will ask, do you want to pay more >> the idea here is we have offered drivers up front destination, so they know

exactly where they are going and what the price of that trip is there are certain circumstances where in the marketplace, the pricing may be variable, and we may not get that price right in those cases we allow the rider to essentially adjust the price so you can find that driver >> there's a big article in the "wall "wall street journal" about being a driver yourself. >> yes >> what was the big gest lesson? >> one, it's hard. dealing with and understanding how the app works, and determining -- choosing what trips to take and what not to take, et cetera. it's amazing how sophisticated you have to be to optimize your own earnings power >> how many stars did you get? >> i am a five-star driver >> how were your tips? >> you know, what is funny, the tips are pretty good but i have gotten cash tips a couple times and i want to say i am okay, but

then if they want to tip me, why not take it. >> news you can lose is tipping in the united states expected -- by the way, europe may be different >> europe is very different. >> what is the expectation on the tip? >> the standards in the u.s., there's no expectation drivers, first of ll, they lov getting tipped and i would encourage all riders to tip, and the minority of the eaters tip, and if you get a great service, should you tip of course you should >> does the tip impact the number of stars you get? >> it does not the driver will rate you before he or she knows whether or not you tipped because we want to create a fair marketplace. the rating is about you, and it's not about how much you pay. >> you can up your rating how? let's talk about it. >> you can up your rating by being a good person and polite

and do not slam the door >> being on time >> that's being a good person. >> joe, how many stars do you got? >> i have no -- i don't have my own -- i have four cars at my house, so a big carbon footprint, i guess i think i would be -- they would like me. i am very nice we are very nice when all of us do get into the uber we talk and want to know about them and everything. how about you? >> what do you tip what is your tip >> i don't have a application, so my kids do and they tip so maybe -- i actually do have an application they tip well because -- >> it's your money >> yeah, they have no idea where it goes.

i don't think they know if anybody pays it, it just kind of happens. thousands of people for positions that could be replaced by artificial intelligence in the coming years, and details after the break. >> thinking about your kids and your money -- >> yes >> stay tuned. this is realtime insights, i am here with janet bayless we are talking about a.i. and it's all over the headlines. why is it so important right

now? >> this is an incredibly exciting time. when we think about generative and conversational a.i., this is not about chatgpt helping kids with their homework. we can go to text to code and that transforms the speed to which we can help enterprise unlocked value it will change everything and nobody can afford to sit on the sidelines. >> is this a new business here to say >> the technology will keep evolving quickly, but this is not a fad. we are working with our clients to help them challenge every aspect of the business, from sales to marketing to e-commerce to supply chain to packaging everything has an opportunity to evolve with the value of a.i >> what sis it that companies need to keep top of mind >> they need to keep top of mind that data can help find customers more effectively and tell stories better and grow

revenue quickly and optimize decisions. >> janet, thank you for sharing your insights. >> thank you welcome back, everybody. morgan stanley is preparing for a new round of job cuts. bloomberg reports they plan to eliminate 3,000 jobs by the quarter, and many of the cuts would come from the banking and trading group. the first cut comes after they trimmed about 2% of their workforce. under writing has been subdued and did not expect a rebound by the second parted of this year or even 2024

>> the ibc ceo said the company is looking to pause hiring with roles. he said the company will suspend or slow hiring, and he said 7,800 jobs could be lost and a spokesperson clarified it didn't mean layoffs, it just meant the company would not replace the roles when they are vacated by attrition. speaking of a.i., shares of online education company, chegg, are plunging students are beginning to use chatgpt and it says revenue is in danger if students see a.i. chat bots as an alternative to

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intersectiesting take here our next guest says that the fed likely believes not raising rates by another 25 basis points could raise questions about the banking system, meaning that the fed may be knows something that the market doesn't and it would be worried about a small 25-basis point increase. here now with more is barry knapp, managing partner and director of research at ironside's macro economics if i would have written the spro, i would have said, you met me outside on my bathroom trip and said, i was absolutely correct of what i was saying to richard fisher, and he was

comp completely wrong >> 100%. >> skpibs, wow, you're really smart. in what way was i right? >> in i was still at barclays, i would probably be having a battle with him right now about this but listen, first of all, trying to do the math from what's going to happen to credit in terms of what will that mean for economic activity and inflation is a really fraught, dubious approach, right? you're talking about, okay, credit supply to small businesses right now, deposit growth is negative 5%. yesterday, mark on kelly's show said he thinks that bank deposits could drop to $1,200. while the relationship between bank credit loans and security purchases is really tight. it was almost identical pre-pandemic so what's his vision

deposits falling at an annualized 11% rate. and it's not a linear thing, right? once it starts falling, it could fall aggressively, in which case you could have something worse than just some gradual erosion of inflation you could have a real credit crunch on your hand. so, if you just think about it from a risk management perspective, and say, okay, we don't really know how this will filter through to the economy, but we do know, if credit drops that much, we've got a real huge economic problem on our hand the market is telling you, in terms of falling yield curves, that they expect the fed to make a mistake. we know that the banks portfolio and the fed portfolio carry negative so from a risk management perspective, which is what fisher's replacement, rob kaplan is saying, you shouldn't be doing anything here. >> deposits because people are -- >> people are going to government money funds, and there's two reasons they're

going to government money funds one is the stable net asset value rules they passed in 2016. and one was to give people a safe place to put their money. the problem is you can keep a stable dollar asset price in a government fund, but not a prime fund so now, you went from 1.4 in prime funds and $1 trillion in government funds to $4 high pressure 4 trillion in government funds and only $700 billion in prime funds and the second reason is that the reverse repo program the fed expanded, they were supposed to prevent rates from going negative now it's -- rates aren't anywhere near negative, obviously. so now it's just drawing money out of bank deposits so you've got this real flood going into government funds that do nothing that money just sits there it can't be re-lent. so it's potentially a big drag on the economy but if it causes a real acceleration of those deposit growth and credit contracts very sharply, you've got a huge problem. so to think that, gee, 25 more,

you have to do because the market will think you know something they don't know. >> or just stay the course to the north star, which is -- >> which is ridiculous and i also agree that the whole 2% target is an absolute trap. >> a eight-minute ads. >> we have 3.5% in the '90s, but the standard deviation of that was really low, and we have the biggest capital spending boom this country has ever seen >> as if 25 is what we -- >> that will definitely do it to demand >> it will be a dream in june. >> right >> you know, so, we're on our way there. >> and the hippocratic oath -- hypocritical oath. why not just wait to see if this does your job for us unless everybody's duration risk will be worsened by this. and as you say, so is the deposit outflow. >> absolutely. and i also agree with the discussion you had with steve a

little bit earlier, about when they did the assessment -- >> with me again >> again >> are you a contribute yet? we should make you a cnbc -- >> you were talking about the study that they did on silicon valley bank. and steve was intimating, this had something to do with monetary policy. it had everything to do with monetary policy. that's 100% what was the cause of it. and by the way -- >> silicon valley. >> bill dudley wrote an editorial saying, yeah, this was monetary policy. >> well, it's monetary policy, but also stupidity for not seeing it coming >> believe me, there's complicity on the bank management part. >> and the part that these are really, really smart people. >> they are, but they make mistakes like they did staying at zero for so long. they're not invaluable >> i get it. they're really smart but my dad never managed money, either >> we decided you have an extra "r" and a "k" you don't need

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the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall. good morning the fed goes to work, as central bankers begin their latest policy meeting we will ask boston's former fed

president what he's expecting. and in the meantime, president biden calling congressional leaders to the white house to talk about the shortened debt ceiling timeline next week. and uber's stock is skyrocketing we will share what the ceo, dara khosrowshahi said about the first quarter. the final hour of "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm joe kernan, along with becky quick, andrew is -- he's around. he's around and he'll be back. he's just on his way from uber hq he'll be in his seat momentarily. u.s. equity futures at this hour are now all in the red, with the nasdaq just turning negative as well the dow down about 80 points or

so, as far as treasury yields, which, you know, this is the two days, the tuesday and wednesday meetings for the fed were another 25 basis point hike is pretty much baked into the cake. what would we do without those type things, metaphors, expressions. i don't think we could talk. another big earnings for mornings --morning for earnings uber share is jumping after the company reported a smaller than expected loss for the first quarter, better than expected revenue. the company also says second quarter core earnings are going to be above estimates. ceo dara khosrowshahi joined us last hour. >> consumers are buying less stuff, and you see it in the numbers, but they are going out to events, out to restaurants, et cetera. and it showed in our numbers our gross bookings were up 22% our trip growth accelerated versus q4. q4 growth was 19%. ours accelerated to 24%. you don't see that many large

companies accelerating actually in terms of growth >> and pfizer -- elsewhere, pfizer shares are higher on first quarter solid and revenue numbers. both, despite a decline in sales driven by lower covid vaccine demand and therapeutic, paxlovid as well. and so they actually told us what the revenue would have been if you weren't taking into account those two items, which obviously are nearly in our lives as much as they were the last couple of years and -- although i did take a test >> for what? >> for covid >> oh. >> again >> you had to? >> yeah. it's like, enough! and marriott shares are also higher on earnings the company raising its full-year adjusted profit forecast >> all right here's an interesting story for you. short seller hindenburg research is just out with a new report and the target of this one, icon

enterprises. hindenburg says it believes that icahn has made the mistake of taking on too much leverage in the face of sustained losses the research firm believes that icahn will eventually have to cut or eliminate the dividend entirely, barring a turnaround in investment performance. you can see it's down right now. and a little bit of movement on debt ceiling negotiations after treasury secretary janet yellen warn odd of a shorter timeline before a potential u.s. default. kayla tausche joins us right now with the latest. kayla, good morning. >> reporter: good morning, becky. secretary yellen said yesterday that the government could default on its debt as early as yuan 1st that's four days earlier than her previous update. secretary yellen writes, it is imperative that congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty. president biden has now invited the big four leaders to the

white house for a visit one week from today on may 9th to discuss a path to avert a default. a white house official says mr. biden will continue to stress separate processes to raise the debt limit and separately negotiate spending levels for the 2024 fiscal year senator schumer will also try to pass quickly a clean debt limit raise to prove democrats' position, after house republicans passed their own spending cuts last week, but 60 votes there on a clean debt ceiling race is no sure thing. the house and senate, meanwhile, are only in session for two weeks this month and president biden is traveling in asia in the middle of the month, so that's led three separate policy analysts to suggest a short-term extension is now a more likely scenario. the question is what the deadline would then become, and what, of course, happens after that becky? >> kayla, thank you very much. joining us right now to talk more about the looming debt ceiling deadline is hearth bucher she's a member of the pres

president's counsel of economic advisers and i think the new deadline that came from the treasury secretary yesterday caught a lot of people offguard it seems like the economy is worsening to some extent tax receipts coming in weaker than expected. what happened here >> well, we have been watching this closely and certainly waiting for the news in terms of what tax receipts would look like and janet yellen -- secretary yellen's letter yesterday indicated that this deadline is more -- is more urgent than we had thought but certainly, the deadline was already urgent we know that this is congress' constitutional responsibility to make sure to increase the debt limit so that the u.s. does not default on the bills that we have already incurred. the bills that we owe, so that we don't become a deadbeat nation so we already knew that this was urgent and that the economic consequences could be dire if we get too close to this or go past this deadline. >> if we already knew this was urgent, and i have to say this new urgency is a little concerning from a lot of

different perspectives, it feels like there isn't much progress that's been made the idea that we're finally going to get everybody together to sit down and alk, but it's not going to happen for a week, which is one weekend of the four weeks we have left before the deadline, how is this going to really be going? are there talks that are happening behind the scenes already? >> well, certainly, there are ongoing conversations, but let's be very clear. raising the debt ceiling limit is something that congresses do in regular order, regularly. year after year, time after time in fact, in the previous administration, speaker mccarthy voted three times for a clean debt ceiling increase. this is something that happens as a matter of course. and so this is something that congress could just do it's something that the president has asked them to do, to increase the debt ceiling, give it a clean increase limit, so we can move on and focus on the other pressing economic issues facing the nation >> again, if this comes down to it, are we just playing a big

game of chicken? and what do you think happens if we do default? >> well, certainly, there are two things here. first of all, default is certainly an extreme action that would have negative implications for the u.s. economy we're already seeing some of that start, and that will only likely get more urgent, more challenging, as we get closer to the deadline you know, the estimates that we have looked at from previous periods where we got close to the debt ceiling do show that they could be very dire economic consequences, this recovery has been quite robust and has been able to weather a variety of challenges that have been thrown at it, from, you know, repeated variance of the virus to the unprovoked war in ukraine that up ended global energy prices and all the rest i think their real concerns whether or not this economy would be able to withstand this. we think that this could lead to widespread unemployment and certainly challenges in financial markets. so that is why it is so urgent

that we just move forward on this you know, the other thing is that the proper place to have a conversation about future spending is through the budget senate appropriations process. the president has been clear on this from the get-go that is the regular course of order in the u.s. congress and the president put out his budget, the house has now put together their -- a piece of their spending plan. put out a vision for that. and so the president said, let's come together and have that conversation about that future spending but in terms of spending that congress has already approved, we need to just increase that debt ceiling limit >> hearther, there have been cases in the past when biden was a senator that the spending reduction reforms were enacted by congress, they were bipartisan, they were attached to legislation that raised the debt ceiling and senator biden voted for that four times himself >> well, certainly, and speaker mccarthy voted three times under the prior administration for a clean debt limit where this economy is right now and given where congress is, the

president continues to believe that that is the right course of action it is what he has called for he has said the u.s. should not become a deadbeat nation >> and if they don't agree to that, your answer is, we will go into default >> i'm certainly not saying that we will go into default. i'm saying these negotiations, the president has called everyone here to the white house, as you noted a week from now and these conversations are ongoing. >> heather, as you know, that was a big victory for mccarthy, but i've got two articles here, during the trump administration, pelosi knocks the white house fallback plan, putting pressure on late-stage budget talks with the administration for raising the debt ceiling, tied to budget talks. the u.s. government is running out of money here's how talks between pelosi and the administration are going. it happens all the time, to arbitrarily take 80 days and say, i'm not going to do anything with the debt limit,

there's polls that say that the american people want the president to negotiate at this point. and you're hoping, and i know you think that republicans are going to be blamed and that's sort of the -- i guess that's sort of the game plan, but i don't think you can guarantee that there's a bill out there now, and if the president doesn't negotiate now, the white house is going to have some of the default on its hands, as well. the blame. >> here's the thing. there's a few facts here first of all, the president has been very clear on his economic priorities he came out with a complete budget back in march speaker mccarthy said that was the first thing he did when he became speaker and it took him quite a while to come up with this vision that is embodied in the legislation that you just referred to that the house just passed we have very little time to deal with this debt ceiling increase. we have more time to deal with the budget talks and appropriation talks. and let's let those things happen in due course the president has been clear that he's willing to negotiate

he needed speaker mccarthy to come up with his plan and it took him quite a while to do that but the most important thing, i'm an economist who works here at the white house we get up every day making sure that this economy is delivering for working people all across the country. and the two outcomes that appear to be the ones that will lead to the most new unemployment in job losses would be to pass the debt ceiling limit and recent analysis from moody's analytics found that if we were to put in place the proposal, that could lead to a loss of 800,000 jobs in 2024. and so this is -- this also could have negative economic implications and that is something that the president is very concerned about. we do not want to see a rise -- >> is that why the tax receipts are below expectations >> there's a variety of -- i would refer you to the treasury department for exactly why the tax receipts came in the way that they did. but there are a variety of issues >> economic perspective, do you think the economy is turning

over >> well, certainly, we get a lot of economic data, and y'all follow it each and every day and what we've continued to see is robust employment numbers and we continue to see, is that the last jobs numbers? of course, we'll get new numbers this friday. the economy has been continuing to add jobs. we've seen continued strength in consumer spending when we got gdp last week. so there are signs of slowing. we are right to have an economy that's cooling down enough to reduce inflation but there's also a lot of signs of ongoing strength in the u.s. economy. >> heather bucher, thank you >> thank you all right. coming up, a hollywood writer set to begin after their first work stoppage. plus, we'll talk air travel demand heading into what by all accounts will be a busy summer in the skies with former united airline ceo, oscar munoz as we head to break, check out the shares of bp, down after the company revealed a slowing buyback program. but the oil giant did beat first

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unionized film and tv writers are heading for the picket line after last-minute contract negotiations with hollywood's leading studios failed the writer's guild of america, that strike expected to immediately impact late-night talk shows daytime soap operas, and "saturday night live." that would be not good joining us now, cynthia lipton, "variety's" co-editor in chief i have deja vu this happens occasional, cynthia, doesn't it? we were just talking about the debt ceiling i mean, we do all of those things over and over again how long was this -- what's going to happen here how long will it last? and, man, there is a lot of money to go around with streaming. i would want more of a piece of the pie, too, i think. >> well, yes, it's true. it does happen, that these contracts are negotiated every three years. and this is the first time in 15

years since the writer's guild of america last went on strike that hollywood will face a very broad strike, that if it goes on a long time, would really, really have an impact on hollywood supply chain >> yeah, i've seen in the past, and i don't know if that is the case this time, we've followed closely, but the way that studios and agents, and agencies dobusiness now, there's a lot of packaging and a lot of things that are linked depending on you do this, you do that, and sometimes i think the writers felt like as important as they are, that they've been getting short shrift for a number of years. has that all been coming to a head in this latest action that we're seeing that is very much the case it is all coming to a head it's also coming to a head for going on ten years there's been enormous structural changes in the way hollywood

produces content and the way hollywood makes money from and there is a lot of revenue in the system, there's not a lot of profits in the system. and that is one reason why we are here today >> so you would -- when the two sides are arguing, and pointing at each other, both sides are somewhat, they're both correct it's the reality of the current environment. so it seems like there's a lot of money to go around, so if it's not profits, so both sides need to understand sort of the facts of the matter. >> i mean, what you've got here is the studios are coming in saying, look at how much money we've been investing in streaming, aka losing on the building of these streaming platforms. and you have writers, particularly a big group, not the top echelon writers, but a big group of what they call the

middle class writers that have, there's no question, have been squeezed in every which way in and reassure getting the shorter end of the stick, again, through all of these massive structural changes in hollywood, there has been a group that has if not been left behind, has not prospered as much as others, but you've still got a situation where you've got labor asking f for, and you have negotiation at this time. >> so if it's not money that the writers are going to be able to extract from the negotiations, what do you want from the way things are structured now with the studios and agencies and what not >> well, what they definitely -- the changes they want will essentially boil down to money the writer's guild are asking

for some unusual things for, in the history of television, although in recent history, there's been such change that the writer's guild proposal actually has an element in their proposal to mandate a minimum number of writers that have to be hired to work on a television series, because, again, you've got the situation now where you -- sometimes -- the one person can write up to 10, 12, 13 episodes of a tv series very different model from the days of erin spelling where they prided themselves on having shows that ran for many seasons and multiple episodes. now it's a very different game and that's really pinching writers that have traditionally, their compensation has been in television has been factored by the episode. and that's become a real problem and exchanging that is not going to be easy for hollywood deal

makers >> and there are big-time writers and then there might be everybody else also that think they're getting short shrift i wonder about ai some day, not yet, cynthia, hopefully. i don't see any ai sitcoms yet, but some of them are pretty bad already. >> ai, you know, the threat and the potential of what ai can be in a year, in two years, in five years is also something that is also raising the tensions, because nobody knows what these bots, what this technology is going to be and making the writers very much, it very much feels like an existential threat and when you hear that and you know the signs are as far apart as they are, it seems like that that strike was unfortunately

inevitable >> yeah, like all these other people better worry about this maybe we all -- that's not for whom the bell tolls. all right, cynthia, good to have you on, thank you. >> thank you >> when we come back this morning, former boston fed president, eric rosengren is going to join us live on the economy and the fed meeting that begins today as we head to a break, let's take a look at shares of chegg that company getting slammed after it lowered guidance and cited chatgpt hitting new customer growth. maybe just the latest in the concerns about chatgpt that stock down more than 40%, and chegg ceo will appear later ermey on "closing bell" ovti stay tuned you're watching "squawk box" and this is cnbc

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welcome back to "squawk box. our next guest is a perfect one to talk about the looming travel summer season for airlines oscar munoz is here, the former executive chairman and ceo of united airlines. he led it through a massive transformation from 2015 to 2020 and the beginning of the pandemic he serves on the board of salesforce, univision, and archer innovation. he has a new book out this morning called "turnaround time: uniting an airline and its employees in the friendly skies. we congratulate you and welcome you to the table

>> thank you >> i want to talk about travel and what you're seeing but i want to start with the book, if we could. because i didn't realize, 37 days into your job, you had a heart attack and i thought -- you know, i -- even just thinking through what that meant, not just to you personally, but sort of how you even approached the rest of the job and the rest of your life, and i was hoping you would sort of speak to it >> heart transplant, right >> inevitably ended up in a heart transplant >> i blew that old heart up pretty well. and well documented, and you all spoke about it here and we had a proxy battle at the same time, and then we were still working, the contract negotiations. so it was quite the scene. and i speak about it, publicly, people say, you should write a book, which is why the genesis of the book, in addition to kind of a shout-out, probably the longest love letter to united employees ever and i'm proud to do that but the heart situation was, of course, not expected i don't recommend it

but the psa on that is, heart disease is the biggest killer in america. and people don't always recognize the symptoms i luckily had a friend who i ran and biked with who was a cardiologist who would always say, hey,, you know -- >> how do you think it changed how you operated the company, how you manage things, manage your life? >> replacing a heart, as you can imagine, is a daunting sort of emotional stage to go through. it didn't change me at all it's just an organ i know that and i can physically tell you that it had no difference i am who i am. >> but did you slow down at all? did you try to sleep more? did you do anything at all did you eat differently? nothing? >> i did eat differently -- >> i ask, because a lot of people are managing businesses and they're all trying to manage things and worried about their health the same time they're trying to worry about their job. >> preventative medicine is something we should discuss more broadly. but heart disease is one of those things that's internal plumbing and genetics. i didn't know. i was an avid runner and biker, afs vegan, because i did eat

differently. the doctors afterward said, that vegan stuff, i became what's called a flexitarian, mean i can eat whatever i want, because i needed to get my energy and weight back. my personal advice to folks is, if you have history of it in your family, you absolutely need to, almost demand that your doctors do more than just the ekg, the stress test on the treadmill is probably a good indicator. but you've just got to do that more importantly, if you ever feel anything weird or strange, call 911 and as my friend told me dramatically, and immediately when you call them, tell them where you are, because he added, you may not make it past the phone call that's where people die, they feel the symptoms, they lay down, take a shower, and of course, they don't get up from that >> you talk about the book as a love letter to united. when you look at the space today, how do you think these airlines stack up? >> well, an interesting

juxtaposition to the low-cost carriers that had a little trajectory and growth, it's kind of flipped around from a profitability perspective. the bigs, certainly united and delta and possibly american, are just doing a lot better. they have the capacity constraints that the smaller ones and the costs associated with police station i think are affecting. so it's a weird sort of balance, which i'm happy to see, just because our folks put a lot of hard work into it. and the ability to expand, you know, united has started so many incredible flights, so many great locations. that is strategic decisions we made to invest in our business, maintain our wide bodies, and keep our contracts as positive as possible during covid and so we are but a komd of the situation that is positive i think the team is doing a great job and it's wonderful the see. >> people have a sort of love/hate relationship with airlines, as you know. >> yes >> the gao has a report out

recently effectively blaming the airlines for amount of cancellations that we're skpeeg t skpeeg the like. how do you think that gets resolved and does it get fixed and is that a function of the fact that the airlines have too much power that there's not enough competition. that that's why we're having this situation >> having run one, i can tell you the concept of power is -- i don't know what that means, because it is a tough business it's not a high-margin business. everything in the world affects you. with regards to, you know, cancellation and the concerns, the broader issues that we have raised for a long period of time, air traffic control systems and modernization, like the rest of the world, is something that is critical to the infrastructure of this nation >> you think that's the problem, even though the gao is saying it's the airlines' fault >> i'm not going to get into debate of the gao and their analysis and research. i can tell you from a factual perspective, the things that slow us down, the things that decrease the flow of traffic hha nothing to do with anything other than the fact that we have an air traffic control system --

>> this could be a government problem, not a private sector problem? i've never heard of that the government affecting >> i didn't say that, joe. >> that's a whole new concept. >> oscar, some of the airlines do better than others, though. we've watched what's happened with southwest recently. >> sure, sure. and back to this concept of investing in your business and seeing around the corner, the migration to cloud from a software perspective has been -- it's pretty omnipresent in most industries the fact that southwest didn't do that for a long time, now they'll have to catch up and spend the money that we've all spent. >> i have a labor question for you. i know this is a love letter to your labor united's a unionized airline >> yes, it is. >> delta is not. >> their pilots are. >> their pilots are, but the rest of it isn't delta gets the highest ratings for on-time performance and for customer satisfaction. i wonder whether you think that is related to unions and the reason i say that is because when it comes to on-time performance, if a union worker, mechanic is having lunch from

12:00 to 1:00 and they need to replace the seat belt, the plane is getting pushed to 2:00. at delta, at least the conversation goes that, you know what, they're going to stop having lunch, fix the seat belt, go back and have lunch afterwards >> i will definitely not attribute it to the union versus non-union issue. there's certainly a cost differential and work rules concept that affect us, but just think about it, how well united has done over the years to catch up in all of those metrics, the concept of turnaround time is a good one, despite those union restrictions and rules that is true, i think, the pride and professionalism of our folks. but there is, of course, differences in what people -- delta employees can do versus united, american, and others but i wouldn't attribute the performance in that regard, necessarily. >> would you be a long-term investor in airlines there was a period of time where warren buffett said, onwant to invest in airlines then he said, i actually think i should invest in airlines. they're like the railroad. they have so much power. then the pandemic happened, and he said, i don't want to invest

in airlines. >> warren buffett's investment in this industry came on my watch, as it did when i was in the railroad sector. i've had a nice history with that and they were doing amazing until covid it if you remember, january 2020, the industry was doing as best as it's ever done. and we were -- we had delivered ro our results a year ahead of time, there was much in question when we first announced it and so i think the investment there would have been a good one. the issue with investment is the volatility, which is why, forgetting the politics of green, it's just a beautiful economic solution, if you can find sustainable aviation fuel and fix the volatility of price, which is what drives the equity. >> that was a good deployment of government resources to save the airlines, obviously, during covid. >> and i was a big part of that, to spend a lot of time in d.c. over the course of the day and, you know, the administration and all of the people understanding that this was ant bailout or a handout it was, indeed, in order to keep an economic part of the economic

engine viable and working. >> oscar munoz, the book is called turnaround time >> thank you thanks for having me >> nice to see you >> appreciate it coming up next, former boston fed president eric rosengren on the big decision ekcing u.s. central bankers this we stay tuned, you're watching "squawk box" on cnbc

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check out shares of jpmorgan a little more than 24 hours since we learned that the megabank would be taking over first republic since that institution was seized by the fdic steve liesman joins us with a look at the fed and whether the fed board should share some of the blame for the recent bank failures what do you think? >> something not discussed very much the federal reserve's postmortem, andrew, on the failure of silicon valley bank took a critical look of its own supervisors, but stopped short of one critical assessment the action of the board and its share and vice chair of supervision. a february 14th staff presentation to the fed's board said svb, quote, has significant interest rate risks and banks with large, unrealized losses face significant safety and soundness risks.

we don't know from the report how they responded that the fed was going conduct a review the review said, a special report in june of 2022 warned of, quote, risks associated with unrealized losses on investment securities that report came in june of 2022, while the fed was just beginning a series of historically aggressive 75 basis points rate hikes. that would raise the funds rate by nearly 5 percentage points in a year the question is whether the fed from a policy perspective, did it pay enough attention to the policy from rate hikes designed to battle inflation. did fed leadership tell supervisors, sharpen your pencils, diane swann, chief economist of kpmg writing in response to our fed survey, the fed has of attempted to divorce its battle frefrts to stabilize financial markets. breaking up is hard to do. rapid rate hikes are

destabilize. inflation is set to fall further, but the u.s. has two of the biggest bank failures in its history, and the fed had to create a special fund to provide banks with liquidity at best, the jury is still out on this idea of separating monetary policy and supervision. at worst, maybe additional banks are in danger, and the lesson is that the fed should have paid more attention to banks than making monetary policy andrew >> do you think -- well, i have two questions. one, i want to talk about what's going to happen tomorrow in a second but do you think that by allowing jpmorgan to win this bid, that it creates its own moral hazard in the system, so the next time a bank fails, that the regionals, the pentncs the others won't even be able to be in the contest clearly, jpmorgan was willing and able to pay more than everybody else you see what i mean? >> i kind of get it. i mean, look, first of all, we both know jamie doesn't really care about expanding when things are good jamie likes to expand when things are bad, because it's

much cheaper appears to have gotten a good -- i'm more worried, andrew and maybe this is not responding to your question, that we used jpmorgan too early >> that's sort of where i'm going with this. >> do you ever play bridge where you want to -- >> yep >> if the king is there, you don't place the ace until you've seen the king! all right, you keep it out there. i'm a little worried we might have used that gun in our holster, bullet in our gun a little too early here. >> bazooka in your pocket. from hank paulson's -- >> is anyone going to be able to sell him more banks if that becomes the issues >> it's not more banks, but bigger banks one of the things in the fed's defense, i think it was looking at the biggest banks and it's that second tier of banks, when there's a really murky, unclear supervisory regime, it's not the fed supervisors of san francisco, there are these horizontal review committees that are set up, that are designed to make

sure that banks get treated the same way and so it kind of gums up the process of, hey, there's a bank with a problem we've got to bring it to the horizontal review committee. >> right >> steve, why don't you stay with us. we've got another voice we want to bring into this conversation on this and today's fed meeting kickoff. former boston fed president, eric rosengren joins us right now. he is now a visiting scholar at m.i.t.'s gollum center thank you so much for being here i know you think that the fed is going likely going to raise by 25 basis points and then kind of say they'll wait and see what happens. but that's not what you would vote for if you were voting today. what would you do? >> well, my own view is that i do have concerns about the banking turmoil that we've just witnessed and while i don't think there's likely to be any immediate failures, i do think the banking sector is under stress so there are a number of reasons for that deposit outflows are continuing

and that's in part because of interest spreads, not just because of the banking turmoil i think there are looming problems in the office space and so the commercial real estate portfolio of some banks that are overweighted in the office space is likely to experience more losses than have been reflected so far. and clearly, there's going to be enhanced regulatory and supervisory focus on large regionals. i expect the loan officer survey to indicate further tightening of credit conditions they already were tightening prior to the march turmoil and on top of that, we have the debt ceiling and the uncertainty that's going to happen, as we get into june. so my own view is that the economy is quite likely to slow down in the second half of the year, and that it's not necessary at this point to be raising rates until we get a better view of what the second half of the year looks like.

>> all of those are factors that your former fed colleagues probably very well aware of. why would they then choose to go ahead and raise anyway what's the argument for doing that >> i mean, i think the challenge is that if you look at the core pc inflation number is 4.6%. if they want to get down, ideally to the low 3s by the end of the year, the path is on a slower trajectory. so i think for the people that have a more hawkish stance they're going to argue that the labor market is still tight. inflation is still higher than they would like to see, even though there has been significant progress and that they think that they want to see more evidence that inflation is continuing to come down, before they -- and they're not as certain as i might be that the banking turmoil and the challenges facing the banking industry are going to be as much as a head wind as i would attribute to it. >> and that 25 basis points,

that'll definitely do it, eric that will be the fine tune, exactly the amount of demand slowdown that we -- is it me or is this really a blunt tool? you don't know how much actually is effective in doing what you're trying to do. you've got your eye on inflation on one side. you're trying to get to it through some type of nebulous slowdown in overall demand that you're hoping works. and then people say, no, not really we just -- we need to show that we're going to stay the course so we really don't care if the 25 basis points does anything. we just need to show that we're staying the course and the north star, it all sounds like sort of voodoo to me, earthric. and the downside is what you're describing if the hippocratic oath really is do no harm, is it worth it? >> so they are very focused on models and models do have a pretty good way of sensing how higher short-term interest rates will affect the economy.

what's much less certain is how much credit availability will affect the economy credit crunch periods occur for various reasons and they don't happen that often. and as a result, the ability to predict how much the economy is going to slowdown and how much of a headwind there's going to be is quite difficult. so i think for somebody who wants to see evidence that inflation is clearly getting down to 2%, and is uncertain about the credit channel, they would be more willing to, you know, raise rates at least 25 basis points for somebody who puts more emphasis on the banking sector and the credit channel, which i do, i would be more willing to wait but there's always judgment involved in monetary policy. it's not a precise science >> but eric, just to follow up on joe's question. it sounds like what you're talking about is the fed essentially compounding the mistake that it already made, that led to failure of the banks

we're talking about now. that it's making monetary policy without due consideration to the financial stability effects. do you think that it should have done, i don't know, less or more stringent supervision to get in front of the problems. did the leadership fail here, or was it as the report suggested, a problem of bank management and the problem of supervisors >> well, it was clearly a problem with bank management, when a bank fails. the primary responsibility is for bank management to make sure that the institution is in a position that when interest rates rise, that they won't be severely impacted. that would be the primary place that i would look. i would say that supervision works slowly, and ideally, it does prevent the problems early on so, the time to tighten restrictions is not after the banking turmoil, it's to tighten it before. and i agree with your

observation that you can't view financial stability as completely independent of what's going on with monetary policy. they're integrally linked. and as we're hearing, the head winds that people are concerned about from the banking turmoil clearly affects the path that you would have for interest rates. so the idea that you can segment these two areas and not view them as interindependent never made much sense to me. >> hey, eric, stan miller gave a speech last night to usc students and in it he warned about the problems he sees with the fiscal outlook from today he blames irresponsible fiscal behavior, but also says a big part of it is what the fed has been doing for the last 15 years, by allowingpill billables to lift up and he's worried if something isn't done at this point, further delay in addressing the fiscal gap, that it threatens the end of the american dream. as you watch what's happening

with the budget negotiations and the debt ceiling, what would you say just from the fed's ability to do anything about this, or what they can or should be doing? >> i think this is primarily a fiscal issue, not a monetary issue. and there is a resolution to it that as one of your previous speakers highlighted, you could have a clean debt ceiling bill, and then deal with the budget that is going to have to be discussed in the september time frame anyway so, it's somewhat of a manufactured crisis with the debt ceiling nonetheless, there's no doubt that at a time of very tight labor markets, running very large deficits doesn't make sense. so having a different monetary fiscal mix at times of tight labor markets would be more appropriate policy so monetary policy does have to take fiscal policy into account.

but in terms of the debt ceiling itself, it's really a legislative and executive branch, not a monetary policy issue. >> eric rosengren, i want to thank you very much for your time >> thank you all right, coming up, jim cramer's first take on the trading day ahead. stay tuned you're watching "squawk box" on cnbc zero-commission trades for online u.s. stocks and etfs. and a commitment to get you the best price on every trade, which saved investors over $1.5 billion last year. that's decision tech. only from fidelity. from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small,

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let's get down to the new

york stock exchange. jim cramer joins us now. a writers oh strike, jim we have a couple things. it's the first day of the fed meeting. >> i don't like the market here. i don't. >> the equities market >> yeah. you've got to get through the fed, get through apple, get through unemployment, and you've got to get through the debt ceiling. i think the republicans may actually -- everyone presumes you can't default. i don't know why they defaulted in argentina. >> plus we're up near the high end of any recent range, almost 4,200. >> i'm telling people in my investment club, be careful. we've been selling pretty much every day for the last four days i just don't trust it here there's too many things that have to go right one of them is going to go wrong. i think let's be a little conservative. >> sell in may seasonally -- >> sell out of the debt ceiling. we had a 19% decline when we did this in 2011 why would the republicans

want -- if the republicans don't want to make a deal, it looks really bad for biden no one in america knows who congress is. >> right >> biden has got a lot more on the line than congress if they default -- >> here is an idea tie your paychecks to it say if you're going to stop paying things, make that the first thing you stop paying. >> there's a bill that raises it if they probably said just let us use the covid funds -- there is a deal to be had. it's not that hard. >> if i were a republican, i would say let's just let biden have it, even though biden would say let congress have it i don't think anyone in america understands the relationship between congress and the president. if you're trying to defeat the president in the election, why don't you just default i think defaulting is horrible but so what? who the hell am i? i'm a tv guy. >> all right, jim. thanks >> absolutely. >> we'll see you in a couple

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joining us is portfolio manager and cnbc contributor we can talk about the market i don't know if you heard what jim said and what i assume we'll hear from jay powell tomorrow. do you want to be in it right now? >> well, i'm not timing with the market if you're as invested as we are, you have to be positioned defensively, positioned in health care and staples. and there are other good companies doing well uber's earnings are doing well they've a show-me stock. march yot's numbers are good, too. i wouldn't sell and go away. i would position defensively and if we do get the debt ceiling pullback, the fed going too far or some companies being thrown out because the market has come down, i'd be careful, but i wouldn't just avoid the market we've seen these things through. if none of these bad things happen, you're not going to want to chase a market, especially if you have a long-term investing strategy. >> you get a 25 basis pointris tomorrow, and what happens to the market it's in the red?

>> i don't think much -- >> it's expected >> it is all expected. it is all built in it's what they're going to say if they're going to say, hey, 25 and we might do more, i think you ged red. if they say 25, we're pausing, at that point i think the questions will be, hey, why are you pausing and what are you seeing that we're not. we know credit is already tightened, we know labor is softening, the leading indicators are all coming down finally maybe the fed says all the rates we have already put in the system are taking effect the focus then, andrew, is going to be debt ceiling at that point and earnings at that point the fed is not going to be there unless they do something drastic or if something happens in the financial system after the first republic issue. >> okay. ser rat, we very much appreciate you joining us this morning. we will see what the fed does. >> thank you, andrew. >> we'll see where the markets land at the end of today dow down about 86 points

nasdaq off 2.5 points, s&p 500 off about nine points. show you the ten-year real quick, 3.553, the two-year now at 4.147 big day tomorrow make sure you join us. "squawk on the street" begins right now. good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. busy tuesday today plenty of big name corporate earnings a fed meeting begins, debt ceiling chatter. inflation running hot in europe. australia with a surprise hike as well. our roadmap begins with investors on fed watch as the may policy meeting gets under way. then there's yellen's warning saying the country could run out of cash by june 1. the white house and speake