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 speaker

mccarthy have set some talks ibm forecasting 30% of jobs being disrupted. in hollywood, writers also seeking some limits on its use, and they go on strike. we'll begin with the markets and the fed today, jim, as we discuss some of the inflationary scares we were expecting an extended pause in australia. >> look, things are still red hot. i think we're probably the best of all -- the reason why we're the best is because we've been raising rates so furiously that we don't even know if we're going to start getting problems with the regional banks, all the growth is in regional banks. david, i don't know what those guys are saying out there. i have to presume that people think, one, we'll get tightening and two, republicans have everything to gain if they default. >> well, i don't think there's an expectation of default. that has not come up that often. i did speak to joe manchin

yesterday, part of a panel i did with him and darren woods. i asked senator manchin, obviously an important democratic vote in the senate. he was straightforwardly saying no way we're defaulting. not going to happen. he's also a hawk when it comes to the budget. he believes they'll get back to the table and figure something out. whether or not they punt it to or extend it to the fall, guys, in terms of the budget process and incorporate it all, i think that remains unclear at least hearing from him, jim, he's like, no, it's not going to happen obviously other people are perhaps a bit less sanguin what happens if mccar think is reasonable and other people are saying this is our chance to elect trump. if biden doesn't make a deal, we can go on other news outlets that seem to be inclined to hate biden and talk about how everybody wanted their social security and medicare except for

biden, that he was asleep at the wheel. that's a decent narrative for republicans. why don't they go for it >> i don't know. i can't answer that question you're expressing a narrative that you're concerned about. how real and significant are your concerns given what you said >> carl, 2011, we went down 19%. a lot of people felt we were in a bear market. the s&p downgraded our debt and nothing happened i remember tim geidner telling me it just doesn't work like that i keep coming up with scenarios, as bad as things were in 2011 -- i don't want to say bad, as contentious as they were, i'm trying to think about why the gop wouldn't play the card of default, thinking that the american people are so out of touch that they'll just blame whomever is present. >> pimco has done good vote crunching, looking at the number of voeft es that never voted for a debt ceiling raise, even under trump. it's more than a dozens.

the polling data says americans are more in favor of a clean raise. they argue there's no incentive to take this to the hit. >> tit doesn't have to be, if you're in the stock market a default in order for the market to get hammered. david, we know the market got hammered and we avoided a default in 2011. we just got the date when yellen can have maneuverability, it's much earlier if you look at the calendar in congress, they can't work that fast. >> for two weeks they're not even there. >> i know. they have the luxury of that i work they don't david, can you get their schedule it's really amazing -- can you call them back and tell them they have to work and get this deal i mean honestly. >> i don't have that kind of convening power. maybe michael milken can do it he gets 4,000 people to show up here.

>> it would be a good headline "faber convenes congress." >> i like it. >> it's hard to make a deal when you're not here. >> it's true. >> not enough time on the calendar >> now, listen, treasury can do a lot of different things. i remember 2011 they were trying to figure things out remember they were selling spectrum in wireless auctions. when is the money going to come in from that you're going to get down to things of that nature. jim, there is the possibility they can still continue to pay the interest and just not pay a lot of other things, at least for some period of time, right >> what bothers me, carl, we know people sell when this stuff happens. everyone knew it was a done deal in 2011. they had to do a deal. in the interim peemd sold, sold, sold they sold because they felt things were too crazy. we have the same crazy situation. why shouldn't we have a repeat of 2011 >> that's why the june t-bill last knight -- even before yellen's comments, the ten-year

up 16 basis points, biggest one-day since september. >> we can look at insurance that says maybe it won't happen all i care about is what happened in 2011 where everyone told me that it wouldn't matter, and i listened to some of that non nonsense i regret that i did. i don't know >> it's going to be interesting, the confluence of this on going discussion on the hill and the fed meeting. >> it's a gauntlet it's too much like the gauntlet. listen, david, you've got to get through the fed meeting, get through apple, get through the employment meeting and the debt ceiling. don't you think one of those four blows up? >> the vixx is barely old enough to drive. >> because the vixx is wrong it's just wrong. i think we could be -- i'm not calling for the vixx in 2011 we felt it was all going to work out. suddenly the s&p downgraded

because of use of the wrong formula. we should be watching the rating agencies to see if they're doing something stupid i said that because tim geithner had the numbers. carl, i don't know i think you're going to get scared i remember i was at the philadelphia eagles -- at the training camp. really terrific lineman, hey, we have j.j. watt a terrific lineman said -- i said, what are you worried about? they said, look, this debt ceiling. it's killing me. wow, you shouldn't worry he said, what do you know? you're right the guy could have killed me if he just touched me. >> i tell you something people are worried about here -- >> and chat gpt? >> we'll talk chat gpt worried, yes it's part of every conversation. but just tightening and blending standards. obviously we spend a lot of time talking a about first republic

some people very resentful of the fact that it went to the biggest bank in the country. that said, there's a continued chorus that lending is going to continue to get tighten. mike has another piece out saying banks across the board continue to tighten lending standards. that applies across the board to a lot of different transactions. i spoke to orlando bravo, and we'll hear more from that interview later. let me quickly share what he had to say in terms of the cost of financing. you can imagine when you're trying to buy a company and the rate that you're borrowing up has gone up sharply, you have to get a far lower price if you're going to make a deal work. >> expensive really, really expensive software has stood really tall because private lenders, where the financing market is now, they're readily there to finance software deals the depth of that market, you can probably borrow up to $5 billion from private credit if you bring these people together,

and these groups together. the problem is the average rate you'll be paying is 13%. when you put that into your model, it has pretty big implications as to what price you can pay for the asset. >> yeah. down about 25% is kind of what you're talking about, jim, if you're going to make it work. >> he's the put. he's been buying at maybe cheap prices, all the enter plies software companies that have come up. a lot of people feel don't worry, bravo could come to the rescue that doesn't sound like coming to the rescue. >> no, no, not this year not yet. >> when i speak to people, they're most concerned that once again a big new york bank got this all the banks in cleveland, cincinnati, omaha, all the heartland banks, they don't know what the standards are they don't know when to lend if you don't know, you're going

to do nothing. there's a lot of business done in this country where you just need access to credit and you're not going to get the kind of credit that a lot of big companies get. >> that's why we'll have our eyes peeled on the loan officer survey. >> doesn't the fed have to say, listen, we've got to see what we've done to this country. >> uber up sharply after a narrow-than-expected revenue loss bookings up 19 earlier dara did talk about whether freight rates are beginning to settle out. >> as many goes towards services, people are buying less in retail. freight essentially ships retail so we're seeing prices come down from the historically elevated levels we saw two years ago. it looks like those prices might be settling out. >> so they do guide ahead on q2 ebitda >> we'll bring up marriott

the marriott numbers are great uber numbers are great. >> mgm. >> mgm is great. people are going places and doing things the one thing they're not doing is shopping. the shopping numbers are not so great. you look at what's going on with the community banks. i don't know how long car sales can hold up. a lot of the loans for cars are from the local banks. >> 90% of all autos are financed >> look, i saw a lot of companies that didn't need debt borrow because maybe they think the market is going to close i'm worried about that >> we'll get to a lot of the travel names as well as industrials, dupont, itw is out today. we'll talk about the impact of ai chegg getting punished as the shares plummet fierce by hollywood writers. mixed action in futures. rfsdaq among the best peorming we'll talk more about that when "squawk on the street" continues.

whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. this is ge vernova, helping generate and move the energy that our world needs. ♪ welcome to a new era of energy.

shares of chegg down 46% plummeting on the revenue warning. the education tech firm says it sees students turning to chat gpt for study helps. jefferies argues whatever they have to counteract that is probably several quarters away. >> i think it was an existential crisis he talked about how it hit the

last few weeks of march. i thought it was a little aggressive because people didn't believe it could happen so fast, that chat gpt could wreck them, chat mate versus chegg mate. it was very disappointing. previously we thought the reason why the stock wasn't doing well is because school was president as hard. dan has some good businesses, but the fact is, carl, we don't like excuses in this business and we don't want to hear the excuses that people are talking to chat gpt and not paying for chegg. chat gpt is obviously a big issue. there are people that go do their homework on it i wasn't comfortable with the explanation. >> meantime, david, ibm putting on hold the hiring of some 7,800 jobs that ai can potentially do. more discussion today at the world economic forum about how it's really people who have 20 years of experience in their businesses that are going to be affected the most because that's what ai can do overnight

>> i mean, that is one of the key questions. what i've heard here for the most part are more hopeful prognostications that productivity will increase greatly, but jobs will not disappear, at least for now. you wonder at what point you bend that and then say, well, what do we need you for at all the conversation has been more around productivity enhancements from chat gpt. i did speak to rosenweig getting back to chat he said students were using but not necessarily not choosing to subscribe to chegg when ford came along, they saw a pickup in usage as of march. there is a certain percent of students who chose not to subscribe that they expected would have as you point out, jim, choosing chat gpt for right now for their

homework and for their ability to study in some fashion as opposed to chegg chegg is going to be introducing a new product. beta testing and then bringing it out they're in a difficult position given the school year is ending as well in terms of predicting how things are going to go so rosenzweig said it's too hard to tell. he believes he's the tip of the spear for a lot of other industries that are going to face different but similar kinds of disruptions as chat gpt in some way competes with whatever product they're offering. >> david, it's so important for people to recognize that in a conference call, dan is talking about this chegg-made product. that that's going to alleviate the issues it's only in beta. it's summer, nothing is going to go on. i come back and say, wait a second, what will happen if things are bad in march, what will happen in april what will happen in may? i see there's the possibility of the cadence getting worse and

worse here as more and more kids realize, wait a second, i don't need to pay. i've got chat gpt, it doesn't cost me anything david, i don't know. a lot of people are saying, look, i want to know about the spanish-american war tell me in 500 words what it is. i don't know i know chegg is more industrious, more disciplined. david, i don't know. it's college it's not like the old days as he told us, college is easy so why do we need a hard program if it's easy. >> he would say and he did to me, their new product is going to use the best of gtp in terms of communication and natural language but incorporate all the technology from chegg that actually teaches their own data will be completely walled off. their expectation, the combination will enhance the product and bring people back. right now the market is saying we'll wait and see whether that will be true

to your point, it's gtp for now. what will it be in the fall? i hear guys are already working on seven the one beneficiary right now, they've got so many users, 150 million? i don't know i hear different numbers for open ai and chat gpt for a profit part of it. there are a lot of people paying the 20-plus bucks a month for it it bears watching to say the least. >> the writers are certainly worried, the writers strike. holy cow. >> they've got a few different things there's revenue description that they're asking for part is asking for assurances that ai is not going to be used to either source or rewrite material. >> if you're disney and you're pressed for money, why don't you say, hey, look, we're going to make all animated chat animated is not exactly getting

a degree in computer science at stanford. >> you saw the news yesterday about jeffrey hinton, the so-called godfather of ai who quit his job at google because he's worried about the effects his line was it's hard to see how you can prevent bad actors from using it for bad things. >> the guardrails aren't in place. it's very unclear what the government's role is i think it's a free-for-all. david, you know, because you've been saying from day one, it's going to be very hard to so-called control, particularly i think when the chinese have it, because the chinese are able to duplicate us and have us say things >> when it comes to defense, there's an expectation that they may be ahead of us many of the leaders in ai in this country are calling for guardrails, some even saying let's pause entirely of course, our adversaries won't. it's a very difficult thing to say. i will say i have tried to put my gig guest fears to many people i met here who are more

expert very few of them share those overall fears for the species, at least not yet i think some people differ on that, including elon musk who i'm happy to listen to when it comes to this stuff because he's got a pretty good perspective, not to mention he was the founder of open ai, gave more money than anyone else a little disappointed with what's happened now. >> david was write about first republic, trading at 5 and went to zero. he's been calling skynet all along. do you see john connor anywhere? i'll google john connor. >> we'll get the terminator back. >> we have the terminator. he's coming on j.j. watt. >> we are going to talk to j.j. watt about his post football career getting into a different kind of football. >> most don't have a plan. this man has a ten-year plan. >> we'll get to cramer's mad dash and opening bell in about 8.5 minutes.

don't go anywhere. f. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire (cecily) you're looking pleased with yourself. (seth) not to brag, matching your job description. but i just switched to verizon. (cecily) so you got an awesome network... (seth) and when i switched, i got to choose the phone i wanted. for free. not bragging. (cecily) you're bragging. (neighbor) oh, he's bragging. (seth) who, me? never. oh, excuse me. hello, your royal highness, sir... (cecily) okay, that's a brag. (seth) hey, mom. i gotta call you back. (vo) switch and choose the phone you want, like the incredible iphone 14, on us. (cecily) on the network worth bragging about. verizon if you have this... and you get this... you could end up with this... unexpected out-of-pocket costs. so if you're on medicare, or soon to be, consider this. an aarp medicare supplement insurance plan

from unitedhealthcare. medicare alone doesn't pay for everything. and what it doesn't pay for, like deductibles and copays, could add up to thousands of dollars. medicare supplement plans help by paying some of what medicare doesn't... and making your out-of-pocket costs a lot more predictable. call unitedhealthcare now and ask for your free decision guide. medicare supplement plans also let you see any doctor. any specialist. anywhere in the u.s. who accepts medicare patients. take charge of your health care today. consider adding this. call unitedhealthcare today about an aarp medicare supplement plan.

watching xp, auto up 17. and they guide above on june quarter revenue. we'll talk about what that might mean for both autos and semis today. opening bell in a few minutes. you can catch us any time anywhere listen to and follow the "squawk on the street" opening bell podcast. we don't have time for lag or buffering. who doesn't want internet that helps a.i. do your homework even faster. come again. -sorry, what was that? the next generation 10g network, only from xfinity.

new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.

time for cramer's mad dash as we count down to the opening bell. >> you correctly pointed out before this that the nxp quarter was very good that's great about that, while there's a lot of industrial in nxp, it is about auto.

it's about fast time to market, innovation power what's great is ads, assisted driving. info tainment. you basically surrender your auto to nxp. for them to have good numbers and have what i regard as being forward looking view of autos, they were not that cautious, makes me feel a little better about a group i'm worried about which are the autos. >> autos >> autos or the chips or both? >> nxp is a very forward company. within a car they're taking share. they do better within a car than actual -- they need to have big numbers. go back to regional banks. when i bought my first car, the key thing was getting a loan from capital savings in tallahassee. in the end i had to have my dad back it. they didn't trust me at all which was very right, i was

living in the car soon and needed homeowners. nxp has a very good portfolio, very strong. >> speaking of some of this, it was interesting to see more gan stanley get positive on hps. >> too far from the conclusion of this. they think it's three months away they say hp, that hewlett packard is a good buy here i don't think hp turns until the fourth quarter they recommend dell, i don't think dell turns until the fourth quarter you should be buying the chip stocks, micron right now, on the idea that the inventory is finished, the dep plletion i know we're close to micron after this weekend [ cheers and applause ]. >> let's get to the opening bell in the cnbc realtime exchange.

on the big board, atlantic union bank shares celebrating the recent transfer at the nas gold house, a non-profit empowering asian pacific communities. >> they don't sound like too many bankers in town i hope paypal isn't watching he may say, what the hell -- i do want jay powell to recognize they do have to wait to see what happens. they tightened and tightened and tightened. let that bank be the last one that falls jpmorgan got a deal of all deals. i think america is going to get angry at a certain point i don't want my regional bank to go -- jpmorgan has more than 10% and the only ones that seem to have the ability to soar. >> there is fodder for him to be dovish tomorrow if he wants. there was work done over the weekend looking at core services x housing. if it does another .3 next

month, will be mid threes year on year. >> you tighten, the 20-year goes up in price down in yield, then you even further the housing bonanza which is the worst part of the inflation food trade right now. i just think they understand that when you saw mortgage rates go down, the home builders soared that's not supposed to happen. the fed has to be conscious of the fact that -- david, i don't know how many people talk about it but the 20-year is not doing what people think, unless they believe we're going to have a serious ecession is the 20-year right >> i don't know. you're really asking me that question how am i supposed to know? >> are the knicks going to win >> yes, they're going to win a game at least. >> decisive answer. >> a guy that knows that and

maxi stole the ball. all i'm saying, david. >> didn't they win it without embiid >> yeah. i think his heart is very strong i know that's where we're supposed to go at the opening because it's really pertinent. >> we want to talk about the nba results. why not? >> i think when i look at the jpmorgan deal, look at the pressure the fed is under if they do raise rates and housing stays strong because mortgage rates stay down, i think they're their own worst enemy right now. all they have to do is say, listen, we're going to keep watching what's happening. use the word vigilant. vigilant gets people excited. >> jim, i will say and you brought this up a couple times there are any number of senior executives who attend this conference they all believe jpmorgan got a really good deal and they're not that happy about it. they'd love more transparency to see why it happened and why you

ended up with the biggest bank in the country owning first republic which they're downplaying what will be a lot more of the positives there. i assume and we know most likely they got the highest bid that seemed to be the only motivating factor for the government at this point >> i'm so glad you mentioned that, david. >> judging from what i heard you say this morning. >> it was not counted that you were not a huge bank i think a lot of people would have said, wait a second, maybe there should have been an assumption of frc debtor maybe preferred, two cents on the dollar maybe there should have been a sense that the internal rate of return was plus 20% or more here there's a two-point -- you know there's a 2.6 billion gain at closing offset by 2 billion restructuring costs. >> 2 billion restructuring, yeah. >> this was a good deal, right >> it was a good deal. i made the point as well that

jpmorgan at 10, 11% to begin with of the fdi insurance fund, in other words, any assessments coming at them, if they don't buy it's's money going out the door if they do, it will make it more worthwhile they're in a position where they can pay the highest price t. question then becomes is there a reason to not allow that, more benefit to the system from having another regional buy. then there's this larger question, mark rowan from apollo brought it up, there is the potential for a second wave that we haven't fully dealt with that existential crisis of $42 billion, leaving a banking institution in four hours and what you do if you're a regional and how you approach that and whether or not there's going to need to be more consolidation to create a super regional or frankly, more bigger banks that aren't just jpmorgan, bank of

america, citi orr wells. >> the fdic has to say -- like football, they would have to say, you know what we're going to give the points in gambling -- give the points to the weaker player you're never going to get anybody to beat jpmorgan there's never going to be a win by u.s. bank over jpmorgan they have to spot them they have to spot them some points and we need regional banks. >> right we don't know the process -- your point is an important one if they're just looking to minimize the impact on taxpayers or get the highest price, maybe there's a benefit to strengthening the system from another deal in another way, but we're not going to know. is there any real transparency in the way the fed does anything >> no. i also worry there could be a populous backlash. gees, how many times does jpmorgan get to win here

>> there's a couple of good pieces on the tape today arguing that they're acting like a public utility, saving us from spending a lot of public dollars. >> well, they are. i do think there should be something said that there are some banks in the country that should do well we need -- we need lending besides in new york. i think that -- carl, i honestly feel -- i think jpmorgan is a great bank and it's terrific they they won because they are stable i would like to have the other guys be able to work out a deal with the fdic, too this is such a good deal for jpmorgan you've got to buy the stock here even into this tsunami of selling that i'm predicting. >> we mentioned some of the travel names, not all trading in tandem marriott up 4, avis and mgm down on these results. >> i think hertz is catching up to avis. you've got a situation where the industry is showing discipline which is really good avis is doing a good job, but they have a very big fleet and

they're not beating hertz by that much. basically not winning at all. >> meantime, some of the guidance on marriott is crazy. the guide rev par up -- up 10-13. they were prior up 6-11. international they guide up 20-25. >> this is what jay powell is worried about. it costs a fortune to go overseas people keep spending costs a fortune to travel. airbnb is not going up but they won't factor that in all the things they're worried about going into this meeting are worse than they were last meeting. that's not good. >> fits with what visa told us last week about outbound travel. >> exactly tony is a great person for his company. if you're the fed, you want the company to go, you know what, things are cooler. they're not. >> maybe cooling in industrials. dupont is down, itw is down,

striker is down. >> itw, i put in cautionary comments otherwise i thought it was very good dupont, ed green, admittedly missed on the short, but he made the acquisition and will make the money back at the end of the year i swear, itw boosts the forecast but puts in a little bit of caution and it skills the stock because people recognize what i'm talking about. people do not want to buy industrials ahead of a fed that tightens they just don't. it's not good. it's okay. look at the rails. they're all down why? because they move goods and goods are out of favor they want to move people marriott is so good it worries me what, david? >> jim, you like the industrials. >> i do like industrials itw blew away the numbers, but

they gave you caution. that's the problem, david. when you have a company that does terrific numbers and give you caution, then you start worrying that, if they're cautious, mash i should pull in my horns that's all i'm saying. they're cautious that's what i'm worried about. their commentary is not what i wanted here. >> okay. >> okay. >> it's not going to impact your view of caterpillar, right >> no. it's going to dip and you buy. we'll get through the gauntlet i talked to mitch landry -- we have an infrastructure czar. this guy is saying the money is coming and it's just going to be a giant wave of money and cat is going to get a lot of it let's stop being so negative near term, carl, yeah, getting a little cautious, near term. >> yeah. there are still a lot of

consternation about the backlog at cat >> well, i know. look, there's three bearish analysts, all on the call all basically saying this is the worst -- it's over, cat. i don't know, with $1.2 trillion coming to cat, i don't think it's over. i was listening to mitch landrieu the amount of money at cat, go ahead, short it. and what invite me -- >> invite me to your funeral >> david, we haven't mentioned the countersuit regarding disney florida. a couple notes on our parent again today, calls this like disney but without the florida hangover and deutsche goes to 55 they do argue -- >> david, do we work for comcast? >> yeah, we do. >> we work for comcast >> where were they all at 35 >> i don't know. i asked the same question to my

w wife where the heck were they >> the end is near at 35 but now 30 -- >> now on the bandwagon, jokers. >> now they're on the bandwagon. it's funny keep it coming if it helps the stock, we're all for it. >> super march wroe is worth taking to 45 from 41 that and my relentless watching of peacock, we're there. relentless. >> you're the relentless watcher of peacock, huh? >> around the clock. i like all those old shows >> mrs. davis is making a statement, you've seen a lot of that. >> absolutely. don't laugh at the gross margins. once mike cavanaugh comes in -- i told you yesterday -- >> he's in already >> imagine that meeting, $3 billion. no. >> just got to make everybody like you, an endless watcher of

peacock, and then we're all good can we move on >> i guess so. go ahead what do you have there >> pfizer, can we talk pfizer? we saw merck, a rapid decline. paxlovid sales still $8 billion. >> i couldn't believe the size of that. they have so much money to do what they want. >> well, they have been doing it remember they've been doing a lot of deals, as you well know the biggest of which, c gen. the stock has not performed that well over these last -- >> nurtec, this thing is a billion dollar drug. chief spokesman for the american migraine association this could be one of the biggest drugs in the portfolio they have to do awareness, international and domestic. >> they leave the full-year guide unchanged.

but some talk that they we're working with eu to sell a bunch of covid later in the year. >> that was an amazing number. people think anything covid is one and done. >> still to come this morning, j.j. watt is going to join us, hear what the former nfl star has to say about his new investment take a look at the bond report we'll watch closely, get factory orders and more importantly jolts in about 17 minutes. >> oh, no.

energy. >> bp going to 60. >> a story about declining

demand form diesel and what that says about the u.s. economy. >> but we like br. t is doing okay we're back after a break ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪ opportunity is setting a goal... ...and charting a course to get there.

sometimes the only thing standing between you and opportunity... ...is someone who can make the connection. at ice, we connect people to opportunity. 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.

we've got a treat here anybody who watches football knows someone who is full of joy. on the field full of joy talking about five-time pro bowler j.j. watt making the move from american to english football which wrexham, from t"ted lasso" is where to be, buying the burnley club, which is fantastic this is so exciting. just got promoted to the premier league we know from "ted lasso" and relegated and promoted looks like you think the future is soccer. >> it's such a global sport. my wife is a professional soccer player, but the world cup, everything that surrounds it is an international sport the premier league has done an incredible job with what nbc done and fans are coming into the sport. i came in 2011 and had to figure

out who will be my team and i support. i think there's a lot of fans in that category, they love the premier league and trying to find their team. burnley is your team. >> how about if you got your team to have a game in america, i don't know if the players would go for it, or ever do games in different time zones. >> they're on right before you guys just watch in the morning and lead right into you guys. >> bloody mary at 6:00 a.m. >> why not. >> we are certainly looking into the future to bring games to america. i think you see wrexham, this offseason, will be doing work here ryan and rob have done an unbelievable job with wrexham and i think that appetite for soccer over here is only going to bring more football clubs. >> do you think they will be sort of a halo echo with mls i mean, we've talked for years why all of our kids play soccer and yet it hasn't cracked in the professional sense it seems like generationally, now would be the time when it would. >> i think it's starting to pick up and the nwsl has done a job

with the women's game, our women have been incredible for a long period of time, it's been a blast to watch them. i think the men's success in making it further along in the world cup and the olympics coming to america, that will only help. i mean, i think the premier league is the premier league in the world and i think that people love watching the absolute best of the best and there's more people getting involved there. >> i made some references to wrexham and, of course, "ted lasso" but these are popular shows to the point where at one point in wrexham, they said i always want to know what howie is up to they're colloquial about our football, but these two shows, have brought it home i think we just are craving it. >> people love it, and it's fun to watch and see people start to understand promotion and relegation in the past you had to explain, the bottom three teams drop, the top go up. people are asking, you guys got promoted up to the premier league, going to play chelsea and man city and arsenal

it's fun to have those conversations and not have to explain fully -- >> i remember in "ted lasso" they're going to liverpool and i say okay, for vacation, let me go to a place that's liverpool this has become pop culture and happening. if you have the contracts you're going to make a lot of money. >> 100%. vacation in burnley next time, jim. we may have not have beaches, not your normal yachts that you're on, but we will put you up in a nice spot. >> a nice -- >> i have a 25-foot brunswick, you know i have -- never mind. >> you characterize not the largest in dollar size, but it's a massive emotional investment for you. it sounds like there's room for you to do more >> we're trying to bring global eyeballs to burnley. we've been over there and visited, going back on friday, we love the town we love -- we visited the food bank, their local charity, government officials it's a great town. the football club has been around since 1882 and an old mill town, hardworking town.

they face adversity throughout their lives. we want to tell that story of that love and passion that they have for their club. they truly live and die with their club it's a tribal feeling. >> it does remind me, i'm from philadelphia as you know because you watch the show, the old days, philadelphia is a rich team, the eagles, but what i looked at, this would remind me of pittsburgh, philadelphia, they got left behind, but they have this club, the charity work, it seems like it's the principal source of charity there. >> the club has engaged itself in that community and they live and die and spend their hard earned money at the club and they want to give back to the town and do anything they can to support the same people supporting them. that's kind of something that my wife and i have thought our whole careers is that i have a job, and i'm sitting here today because of nfl fans. they have given me the life i have i'm extremely grateful for that and trying to give back any time i can. >> speaking of the nfl, jim got back from hanging out with jerry jones. >> okay. were you making the draft picks?

>> well, no. he -- howie and i were doing it, but dave tepper -- >> insider trading, that's what you're doing. >> adam is a great friend so the answer is yes. >> and by the way, we had nielsen revise the viewership of the super bowl up a couple million to 115 million are you still watching nfl action >> of course. >> do you have business interest rates there. >> the nfl is an unbelievable entity look at last weekend the nfl draft, the commissioner is standing on stage reading names off of a card, 300,000 in person and millions at home what they have built is unbelievable i'm grateful for it. nfl fans are extremely loyal and it's -- it's a blast. >> some of it is because of people like you. you were so fan friendly you have done so much to be a great promoter of the game. >> what you did for houston in times of severe stress that's what makes players larger than life. >> i think there's so many

players in the nfl doing great things, and i don't think we highlight that part enough we try to put i think -- >> give it right back if you do it. >> so many guys doing so many positive things and i love when the positive stories come out because, obviously, it's easy to shine light on the negative ones, but guys doing great things. >> it's just a pure joy to have you. loved your career, loved the way you play it's just a great spokesman for all sports. >> i appreciate you having me on and love watching every morning. my wife and i tune in. >> very kind thank you. >> great to see you. >> how about tonight. >> i have a company not called burnley, it's called qsr people have to recognize, restaurant brands, patrick doyle, used to be dominos, fantastic, logitech, bracken darrell, little shortfall but maybe we get a call for a turn in pcs patty doyle, one of the best records of any ceo in history, i think he can do a lot with this. >> every major brand beat on comps. >> isn't that something. i have toll you that my wife is

a baconator eater. sh does like popeye's. stn e'll see you at 6:00 p.m. eaertime back to 4150 we're back after a break

good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with mike santoli, live at post nine of the new york stock exchange. david faber live in day two of the milken institute conference in beverly hills sara eisen will join us in a little bit market softening up. dow down 150, back to 4150 on the s&p on mixed corporate results today and some inflation hand wringing in both europe and australia. got some fresh data coming out le let's get to rick santelli. >> carl, interest rates started moving down a few minutes ago and they had it correct. if nervous investigaors tried to clear their numbers they might have done a good job jolt for march expected to be around 9.7 million, comes in

light, 9, 590, 000 keep in mind we had 9, 031000, lowest amount since may of 2001. 9,530, 000, and it is likely one of the reasons interest rates are moving lower in addition, our march read on factory orders is on the light side up 0.9, expected up 1.2 to 1.3% and a negative revision in the rearview mirror. february stands at minus 1.1, almost double the negative of originally reported down 0.7%. and if you strip out transportation, it is down 0.7 that was from a revised down 0.3 and down 0.7 last month. we are now both months down 0.7

in a row durable good orders, final reads, carl, we take the mid-month read and finalize it, 3.2 remains at 3.2% and that actually is the best reading of the year since december of last year when it was 5.1 if you take out transportation, you could see that plain orders had a huge positive effect drops down to -- up 0.2% still a positive number and last month remains at up 0.3. if you look at capital good orders, nondefense ex-aircraft, a proxy for capitol spending it's continuing to under perform at down 0.6% the mid-month read down 0.4% it's uglier than that. the last time we had down 0.6 or worse you would have to go back to may of '21 when down 1.6. swap out shipments for orders down 0.5%, that was down 0.4 on

the mid month read interest rates right now at the lows of the session in a 10-year at 3.48, 2-year was at 4.11, now at 4.06 and the equity markets they're a bit ladies on this not moving higher. they're slipping away a bit, but, of course, that probably has to do with the realization that just because things are sloer with less fed doesn't mean it's pave for the economy. back to you at the desk and back to carl. thanks, carl. >> appreciate that interesting reaction here, mike, bad news bad news? >> yeah. at first bunch with everything else we have piled on the market, i do think that even before the number, you had people clenching up a little bit, hedging, put option buying. the banks are too weak for comfort and the regional banks are not cooperating. not really for any particular acute reason it just seems like a continued

bleed in that direction. and then, yeah, rick is right, the yield did move down on that. the quit rate within the joltsz report, little changed that seems to be the number people are fixated on, the idea if the quit rate goes down, people are less confident in the job picture, seems like it's a slacking in the labor labor market, you didn't see a lot of movement, if you want a slightly kinder fed. >> david, softer industrial activity, softer labor activity. oil back almost to 73. that would be the lowest close since late march as we were talking with jim earlier in the last hour, the early effects of a.i. on employment are things we're just getting kernels of clues about right now. >> yeah. very early we've seen that reflected in shares we spoke about earlier almost cutting its market value in half due to an unexpected

blip in subscriber editions, cited by the ceo, the reason being, chatgpt and students who might otherwise go to the check platform, choosing perhaps, guys, to do their homework or studying using chatgpt 4 as opposed to getting a new subscription to cheg the question, is this just the tip of the spear, so to speak, the first instance of what may be many in terms of this new technology disrupting business models you can expect that in some way, certainly the way people talk about this being as, perhaps, important over time as the introduction really of the internet was 20 some odd years ago. >> for sure. you know, seems as if there's a little bit of a broader focus on potential negative impacts, as opposed to just it being an opportunity and really an investment boom for the likes of nvidia it also comes at a time, and carl, i think this is key, when all companies are in the mode of

signaling they want to get more efficient. there's definitely a more focus on margins, on the fact that they're no longer in a world where they have to overbid for labor. so i do think it's more of an effect on market psychology right now than anything else look, we go back to this time when voicemail replaced receptionists and, you know, quicken replaced bookkeepers it's not new it's the accelerated pace and maybe the higher level of capacity of this software that can do things that we didn't anticipate. >> maybe that it's taking aim at such a broad swath of occupations, both the lower skilled and high skilled. >> i don't think you can really o overestimate the impulse among management teams to seem as if we get the a.i. team and running full speed to implement it if ibm says we're going to stall on hiring some positions, they're going to put an a.i. overlay on any decision and

whether that's the case or not, you know, that feeds on itself over time. i don't know if it changes, you know, the macro. still a structurally tight labor market, mostly service type jobs where the tightness is and inflation is i think we have to, you know, both appreciate the huge potential impacts and not get carried away it's the only story in the economy. >> absolutely. all the same, dow down 250 the fed kicks off a two-day meeting on rates today the results of cnbc's latest fed survey are in. let's get to st. leve liesman. >> expecting the fed to hike by quarter, that would bring the funds rate above 5% for the first time since 2007 and then expect it to stay there up to eight months, however, 59% saying the fed should not be hiking rates because of potential fallout from troubles in the banking sector. the survey's gauge of systemic risk in the financial system, down from march, but remains

pretty high. you can see there, it was 41% saying that systemic risk was somewhat or very high, 44% back in january that bumped up to 72% in the wake of the failure of silicon valley bank. it's down by a little bit, 63% saying that systemic risk in the system is high or somewhat high. take a look, there's some but not much worry about the u.s. probability of the default, up 11% from 6%. wall street is not really focused on that as a major source of risk, at least not at this time. concerns about the banks is one of the factors leading to negative views of stocks among other 27 respondents relative to your earning and economic growth forecast, stock prices now are 65% say extremely or somewhat high they think this market is over valued just 23% saying about right. not many throughout thinking that there are bargains to be bad had. we do the risk-reward ratio and what's the chance of a 10%

increase or decrease in stocks in the next six months, minus 16 how do we get there? well, 47% say there's a chance of a 10% hike 3% -- sorry, 32% saying there's a higher than 10% decline now. the outlook for the s&p down more than 2% through year end, but up 7% next year. this group sees difficult times ahead through the end of the year but a bounceback next year built into the equity forecast. >> steve, appreciate it. as pessimistic in january and we got a bump that latter month and see how it goes from here. meanwhile, uber shares driving higher after strong result there's as ceo gets focused on probability here's his take thi month. >> we committed to be ebitda profitable two years ago, hit it ahead of schedule, free cash flow profitable, and we hit that head of schedule

$549 million in free cash flow and committing to be gap operating profitable this year. >> deirdre bosa joins us to break down the numbers further so clearly it's on the operating expense line free cash flow getting more attention here and the street is listening. >> and the top line numbers, they look good as well the revenue growth numbers are good for kind of any industry right now. ride sharing revenue grew 7 2%, delivery 23% as you were mentioning, dara knows how to deliver for wall street he's looking towards gap profitability, free cash flow, improving unit economics take a look at the stock up more than 7% today. it is almost $10 below that ipo price of $45 from nearly four years ago, and what gets it there and beyond, dara has done a good job of delivering around the edges, doing some acquisitions and delivery, building that business some features in ride sharing.

he talked about reserve being used to get to the airport more and more and that's higher margins for them but remember, uber used to be, you know, one of the most disruptive technology companies, and i think maybe at some point you wonder, are they going to get back to that is that going to push it above $45, that ipo price. all the promises that, you know, investors had and thought it could achieve during the ipo more progress, guys. what gets it to that point, i'm not sure, but certainly the street is liking that profitability drive that dara has been on for years and delivered. >> pretty interesting, yeah. a lot of comments about freight rates and whether lyft can make a stand here fascinating interview with an drou this morning as well. deirdre bosa on uber today the rest of the hour, orlando bravo talks to david at the milken conference. he says it's a phenomenal time to buy right now. >> we'll check in on travel

demand, as marriott we'll discuss with the ceo. >> these a.i. headwinds sending cheg shares to the lowest levels in six years more on some of the names at icy rey h the dow down ver quklhe, 300. don't go away. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back. ♪ imagine, a car that goes as far as it does fast. as sleek as it is spacious.

as smart as it is beautiful. introducing lucid air. experience the best. ♪ ♪

dow down 311 here as we just got the jolts number almost a record year on year drop in job postings, only three

dow components positive at the moment defensive stance, merck, j&j and microsoft. >> thank you, carl of course we are live from the milken institute global conference as we like to be every year yesterday i had the chance to sit down width orlando bravo, the founder and managing partner of thoma bravo, one of the largest buyout firms focused on namely software companies. $120 billion under management and i did ask him about the environment right now for the private markets, private credit, and, of course, deal making overall. >> i see it as a very fundamentally driven environment. if you look at the last year as values were coming down, they were really still in enterprise software, no bargains. it wasn't like it was extreme bargain hunting dur the outcome bubble burst but it was an

environment where you could buy quality. if you look at some of the deals that we did that you reported on last year, annaplan, salespoint, billion dollar companies we feel are market leaders that have the highest quality companies there are. it's interesting the environment now. you have two big factor, everybody is talking about profitable growth, private equity is about, that's ha we've been doing forever the valuations for unprofitable companies have crashed and i don't see them coming back any time soon. investors have lost too much money in on profitable growth. now if you look at the small part of the software index that's profitable, it trades at fair levels. it trades at p/e multiples of roughly 30 to 40 forward p/e which is a pretty decent environment for these companies. >> does that mean that private companies you're looking at are in your opinion, under valued given that >> the private companies that

are for sale are few and far between right now, right people don't -- you're a business owner and you own the entire business, you can hold it for a couple more years. you're not going to expose them where interest rates are high, cost of financing is high and the ipo market is not readily available. if you can buy public companies that are not profitable and they're very few groups that can do this, and transform them from what we call great innovators to great companies, it's been a phenomenal time to buy. >> your deal pace this year seems well off of what it's been in years past, at least four months into the year i would assume you that to continue, and this year bravo not done as many go privates as previously >> maybe the reason why it's not what's in front of us is that we have to make work what we just bought so last year, our flagship fund

invested roughly $15 billion of equity buying many companies that you reported on, and it does take a while to on board those companies into the private equity way into our way, to get them to 40% cash flow margins and monthly board meetings which is what we do and a lot of work that takes place. >> i wonder about another potential breaking mechanism, seems to be an antitrust focus on portfolio companies buying other companies and whether a thoma bravo and buys another, is representing a competitive threat is that a threat the ftc has been looking at some of these deals in a big way. >> that's a big challenge to the industry and to private equity. >> that's new. i don't recall that in the past. >> absolutely. it's certainly a big factor. it used to be that software is perceived as such a competitive and dynamic space that you would

have the freedom to do m&a competition comes from everywhere even internal development is competition. microsoft is in all these categories and it's a competitor, but now deals are being carefully looked at from an anti-competitive lens that's a bit newer than in the past you have to go in it eyes wide open and many cases you cannot pursue the targets that both the seller and buyer want to transact it's not even whether the deal will go through. it's that in many cases sellers, they do not want go through that exploratory process of waiting a year. >> i'm used to, obviously, seeing that amongst large public company deals, but not necessarily smaller or deals that are not on the big radar. so is it lessening the universe of potential targets for you >> it is it's making the discussions with those targets a lot more complicated. it's taking a lot longer

people have to be a lot more thoughtful about what they're engaging in. and if you do want to convince one of those sellers to join you, inn that process, it's a tall order for them to do that. >> what about the financing markets? how would you term them right now? >> expensive. >> yeah. >> really, really expensive. software has stood really tall because private lenders, where the financing market is now, they're readily there to finance software deals the depth of that market, you can probably borrow up to $5 billion from private credit if you bring these people and groups together. the problem is that the average rate you're going to be paying is 13% so when you put that into your model it has implications as to what price you can pay. >> the asset managers are happy to provide it now and compete with the banks, but the numbers are extraordinary for return for them. >> it's a great asset class for them private credit especially in

software, when you're sitting on top of so much equity, and you have recurring revenue protection and those recurring revenues are going to be good throughout a downturn if you bought the right asset, at those yields of 13% because base rates are high and spreads have widened it's a phenomenal class. >> we don't talk about it as often, the significant change that's taking place in the financing markets over five, seven years, not even that, in terms of private credit moving in so dramatically, and an area that used to be dominated by the big banks. >> it does make sense. because look what's going on in the banking industry now when you deposit your money in bank you want your money to be safe, you want to be able to transact you're not really thinking about your financial institution doing junk bonds or highly levered loans or making money in ways using your capital for that's not top of mind for the consumer or customer. when an individual or

institution gives money to a private credit lender they're expecting them to make these types of investments it's a good asset class. >> as it here to stay. this is the world you're going to be navigating in terms of private credit and availability. >> it is talking about the market instead of complaining about the issues in the market, maybe the banks not being there, once again, you have to do the best with what you're given and one of the things the market has given us is private credit we did so many years ago, a deal called click software. it was a billion dollar private credit it was reported as one of the biggest private credit deals at the time and since then we've never looked back and most of the work we've been doing has been with private lenders since then. >> our viewers know you've had a great track record of success, but we did focus on you when we talked about your name one of many well healed investors when you look at what you may have gotten wrong what do you think and how does a transaction like that inform your decision

making >> in all our deals we dot due diligence the same way we do quality of earnings, trial balances, background checks on management, we do it the same way. that is what we do and there are no exceptions to that now at times, like in this case, we made an error of judgment, and it informs our decision in this way our investor base is a phenomenal, conservative performance oriented investor base and our investor base does not like volatility. so it makes us even more attune to consistency of returns, consistency of judgment, and consistency of outposts. that is one of the ways it's affected us. >> there is a csense that -- do you remain committed to growth equity as a strategy >> we remain committed to growth equity as a strategy when you look at companies that have arr between $25 million and

150 million and seek to go public, they will not be going public at big revenue multipleses any time in the near future people have lost too much money in that momentum game. the companies that will succeed, the leaders of tomorrow, will go public on a levered cash flows showing profitability and have an opportunity to not buy growth but build a real business. that's what we're about and what we can help them on and that's the reason why we entered the growth equity market it is a lot more challenging because the market is easy when things are going up and up because you just buy them at a certain rate. >> boom, boom, boom. >> we call it -- a business model of buying high and selling higher is not a sustainable business model so we're really working with these companies to try to have them build real businesses and get profitable now so they can succeed as a public company. >> yeah. easy to be a winner in an ultra

easy monetary environment like the one we had the last ten plus years. carl, i think interesting, his comments in particular in terms of financing and the costs of financing right now and what that is doing to how you approach a deal, i would point out on the overall point of sort of this tightening in finance and financing, that we've been talking about, and that orlando talked about as well, i'm reading again this report from mike wilson this morning at jpmorgan talking about being dangerously insensitive to the misallocation of capital in the u.s. economy and that changing with what is the bank's new approach he does mention western alliance here, carl, and i mentioned it because western alliance shares and pac west as you know are both getting hit this morning, significantly in the stock market they both reported earnings some time ago but, you know, i'm just trying to figure out why now, obviously, after first republic

goes into receivership a couple days ago or yesterday, but wilson does talk about western alliance and their tech deposit exposure i don't know i'm grasping here, but now we're taking a look at this. it is notable. these are two banks we did talk about in that period of early march and out of that period they reported earnings and m expect we were through with a difficult period with first republic finally succumbing. >> regions today, david, other small names, but with large percentage declines here, home street, zions is down 11 as you say, western alliance and pac west i'm looking at down across the kre today. >> it's last of the banks we've known that have -- sitting on unrealized losses and upside down pac west when they did report

earnings they actually had an increase in deposits, deposit inflows in the prior few weeks the question is what they're paying for it. sophie had results yesterday that stock down significantly. web busch downgrading sofi because they believe they will have to take tougher marks on loans they're looking to sell. it's more the increased focus on the squeeze that these institutions are in when frc gets delisted and goes to zero, chances are if you own some of that, you might have owned some of the other ones. the what if scenario plays out and doesn't seem as if it's based on what they told us at last report in terms of their liquidity relative to their deposit flows. small equity caps now on these companies and that's part of the problem as well. >> well, yeah. mike, to your point, it's not about deposit outflows that's what causes a bank to fail

if you want to ascertain the earnings power of these banks some we've been talking about, given what they're paying for deposits and inability to make loans at a real spread if they want to make them at all, that's where it becomes a lot more difficult. so perhaps getting hammered home again and does get people's attention to your point as well when a stock goes to zero, preferred to zero and when, in fact, the debt of the company goes to zero as well, as was the case with first republic. >> and we're a day before the fed going to raise short-term again. it's not a game changer but moving in the direction of the yield on cash that's not a bank deposit is going to be that much higher it sort of ratchets up that relative yield pressure that some of the smaller regions have been in for a while. to the point about wilson, evaluate what customer base of these banks are. i mean, one of the lessons of svb and first republic is, the

wealthier more concentrated and sophisticated your depositors are, the faster they can move, the more they have a sense they should move as opposed to these very large banks with fragmented deposit bases and just sort of mom and pop mostly insured. >> that was the notion when we were through the first i think where barclays argued a generation of sleepy depositors that would wake up to the idea they weren't earning what they should but still a lot of first i think playing out. >> right. >> to your point about wealthy, sophisticated easy to leave. >> and, you know, again, it goes toward those that seem most exposed or vulnerable, even if it's not at a critical point we'll see how things trade we're getting a little bit tensed up ahead of the fed no matter what and the debt ceiling as well. still ahead, no sign of a consumer slowdown for the travel names at least we'll discuss that with the ceo ro marriott as shares rise on stng results that is next stay with us

what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

marriott popping on the q1 beat and raise their full-year guidance on what is strong global demand for travel let's get over to sara at milken with tony capuano. hey, sara. >> hi, good morning, carl. good morning, tony thank you for taking the time off the conference call. welcome. >> good to see you. >> clearly -- good to see you too. markets reacting strong quarter and guidance as well you're not seeing any evidence of a slowdown in the travel customer and appetite for spend? >> we're not we talked about 34% global improvement in the quarter and interestingly, all-time record quarterly ebitda in the first quarter, normally one of our softest quarters we saw improvement across all three demand segments, improvement in every region in the world and even in china as the borders are open in fact, we saw rev in mainland

china improve to prepandemic levels the only caveat i would give you is we're still dealing on trantent side with a relatively short booking window so those trends have the potential to change our forward numbers look really encouraging. >> so a lot there. you said in all the segments want to zero in on the business segment and what you're seeing on forward bookings for conferences and business travel. are we back to 2019 levels especially with certain industries like technology and now banking, starting to really focus on costs and pull back >> so group we are ahead of where we were in '19 and when we look at the back half of these year the bookings are up 26% year over year on the business transient side you almost have to go a layer down for small and medium-sized businesses which represent about 60% of total business transient

demand they are back above where we were prepandemic. for the larger multinationals, they've still got a way go, but even there we're seeing quarter over quarter steady recovery in aggregate total room nights in the u.s. and canada down about 1% compared to where we were in 2019. >> so you mentioned the 34% rev par growth that's the industry metric part of it is the pricing, the fact that you are able to charge so much more where does that go can prices increase even more from here? so in 2022, you and i talked about this the last time we were together, a lot of our revenue par growth last year was driven by this sort of extraordinary pricing power you describe what we've seen through the first quarter and our expectations through the balance of this year is that the growth will be a little more balanced between occupancy and average rate growth. in fact, one of the things we talked about on the call this

morning in the first quarter global occupancy was off a full 11 percentage points so we continue to have pricing pour, but remember, we're building on the remarkable progress we made last year so that pricing year over year increase is tempered but thankfully demand is growing and it's the combination of those metrics that's driving that 34% improvement. >> what about the pipeline we were talking about some of the stresses in the regional banks which are still there, and i'm curious, you know, what the -- what your owners, your franchisees are seeing when it comes to building and access to loans and whether that's having an impact on development >> so i think some good and concerning news. on the plus side, the pipeline at over 500,000 rooms, is up about 2.6% year over year and globally we've got about 200,000 rooms under construction so great news across the board

now with that said, regional banks have hisser toically been significant players in new construction loans here in the u.s. and we are seeing some real constriction in the debt availability for new construction we've got lots of shovel ready projects that are few quarters ago i would have told you they weren't falling out of the pipeline, in fact we're seeing historically low level of pipeline fallout but they weren't putting shovels in the ground because of concerns about construction cost, supply chain and interest rates today if there are delays in construction starts, it's because of the availability of construction finance. >> interesting distinction there. we're in jobs week trying to figure out whether the strength labor market can continue and has offset some of the weakness in spots like

goods. are you still hiring at the same pace as you say demand is holding up, or are you starting to look toward the future and feel some of the uncertainty and start to pull it back a little bit? >> yeah. we are still hiring. globally we hired over 200,000 new associates last year here in the u.s.r largest market the last time i looked, a week or so ago, we had 5,000 or 6,000 vacancies, which we will look to fill, but that's a level of vacancies that was sort of a typical run rate in a prepandemic world. a year or so ago, that number would have been more than double, so i think we're getting into a more normalized level of hiring. >> all right tony, great to get a snapshot of your company and what it means for the economy. thanks for taking the time on earnings we'll have you back on soon to talk about the deal for city express. >> tony capuano, ceo of marriott carl, i will see you at the top

of the 11:00 hour on "squawk on the street," we have a great lineup, we'll hear from the ceo of kroger, largest grosser in the country, levie straus, they had a tough quarter and downgraded their forecast, peter orzag from lazard, he advised first republic and the ceo of bridgewater about the investing environment and what to do with the fed meeting tomorrow and what she expects the fed to signal and how investors should position it will be a great lineup. looking forward to seeing you in a few minutes. >> we need to hear from as many voices as possible today on some of these stresses flaring up today. can't wait meantime programming note as we go to break, less than a week away from berkshire's annual shareholder meeting. go to cnbc and cnbc.com to watch it live this saturday, may 6th and join this year's woodstock capitalists with becky quick and

mike santoli in omaha at 10:00 a.m. eastern time on saturday. dow down 450 we're back almost to 4100, two-year below 4 back in a moment lily! welcomd bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

market under pressure before the break. 4180 at this time yesterday and now down back to 4110. some of that has spread to the money center banks, like bofa and wells, maybe i would argue two to three week lows to the million of april. >> yes the broader regional banks complex not off the lows at all. it definitely seems to be a batch of slower than expected economic data and further, you know, evidence of maybe some smaller bank stress coming, you know, 27 hours before the fed is going to hike rates again. seems as if there's a little bit of a preliminary or proactive tantrum thrown that maybe we're

again worried about the overtightening i don't think that economic numbers were that weak, but they were on the softer side. kind of the softer labor market conditions the bank stress is one of those situationings where i said yesterday, i didn't think we were back in the game of who's next but it appears we are not because we know anything but because we don't know things and know the general setup of pressure on funding costs because of deposit rates having to go higher into a softening credit environment as i mentioned yesterday too, sofi's numbers in a downgrade today, casting a spotlight on still how some of these balance sheets are tough to navigate around in the rate environment. >> as mike points out, larger macro signals. oil today below 73 as we said take you back to march. worries about just lower activity i guess some would argue jolts, we've halways had suspicions of

what it measures in terms of hiring preference and others would say earnings remain still a tailwind. >> without a doubt. >> in about a year. >> best upside price, an uptick in the estimates, actually on a 12 month basis or full-year basis so i think that's -- but we kind of used some of that last week i would argue and the top end of this trading range where that ceiling has seemed hard at 4200 a little bit of a buckling of that safety trade into the big growth stocks and we're down a little bit last week's low was like 4050 on the s&p. still kind of hashing around this same zone out there where, you know, people are unable to find the market to get cheap but the economy seems to hang in there. even the jolts numbers, look at the layoffs component of it, big sharp uptick, but at prepandemic levels prepandemic we didn't think we had a big layoff problem so every number you look at is, well, it's a lot slower than it's been for a couple years but at a loerpg term basis not

looking bad in terms of the nominal level of activity. >> right meanwhile, you know, some of the coverage of milken i'm looking at the ft piece quoting about talking about frc, a tendency to breathe a sigh of relief on mornings like yesterday. in actuality what we're looking at is the beginning of implications for the economy. >> we may be you know, in terms of that tightening we have talked about for quite some time now and what impact will be jerome powell has talked about it and many believed it would figure into the decision in terms of whether interest rates will go higher from here or higher at all. we seem to expect we're going to get 25 basis points. yes, that's come up many times i mean, listen, i think, carl, there was the hope with first republic, kind of dealt with some of the problems so to speak. the larger issue of how quickly deposits can disappear, is one

that's going to stay with us i would reference my interview with marc rowan from apollo, surprisingly he said he thinks there's going to be a second wave he didn't believe that would be any time soon, i don't think, but nonetheless, basically pointed to what is a flaw right now in some ways in the business model for some of these regional banks in terms of how quickly their deposits can go out the door and, therefore, what kind of position that puts them in terms of their ability to make loans and capture spreads. something we got to watch and do we get to a point where deposits are guaranteed and the banks truly have to become utilities i don't know but we're going to watch this closely because i think it's unexpected we would see this kind of weakness, although as mike has pointed out the fed raising rates some of it is not expected in terms of people adjusting their expectations >> let's bring in leslie picker

to talk about what she's hearing and to david's point about depositor protection policy, pact ground discussion about well, maybe we got to make business accounts at least covered to a wired wider degree which would be an act of congress. >> a lot of news about making more targeted policy which would require, most likely, banks to kind of pony up more to fill the fdic insurance fund, but it is remarkable seeing the price action here to the regional banking etf down 6%. specific names within there that have plummeted, been halted this morning, resumed trading pac west is a big one here western alliance a big one here. metropolitan bank has been down quite significantly as well. zions. i've been making calls to analysts and investors so far. i can't find anyone that can really pinpoint exactly what triggered these declines this

morning, and it appears to be largely a holdover from the news yesterday, potentially the fed tomorrow, potentially just some sort of prices of confidence among the minds of investors given all the news swirling on the regulatory front, consolidation front and then, obviously, first republic and what happened there and kind of looking at just the result of how that deal transpired, what happened with their balance sheets and the like. >> to your point about not really seeming as if there was a catalyst, there was a lot of comfort at the fact that, obviously, this process to some degree was run to take care of first republic and you got jpmorgan feeling as if they got a good deal, but i suppose you can rush to a point where you say how replicable is that and how many of those might you be able to do without some kind of broader relief, whether it's on, you know, the terms under which a larger bank can make an acquisition without recognizing losses or just, you know, some

further blanket deposit guarantee. before the fed is going to raise rates again, right when we've pulled forward the potential deadline date for the debt ceiling and all the rest of it, so it seems as if there's a bit of a tough psychological mix going on here too but figuring out what the fate of the smaller banks is when they don't seem to have an easy way out. >> something steve liesman brought up yesterday on air is the idea that jpmorgan did this deal there were clearly other bidders involved it was a competitive bidding process. if you look at the regional banks, it was a lot for them to absorb it would have been a much more complicated deal, carve outs, some sort of separation in order for a larger regional to take on first republic people are saying okay, well, potentially this is the process by which we have to have a larger bank absorb these, which would require a receivership first, the equity going to zero. that's the way it played out for first republic

so if it isn't a normal kind of private market solution for any kind of faltering bank, then does it look like first republic, which, of course, required that equity to go to zero before a deal was struck. i think it was gary cohn on our air yesterday talking about just the moral hazard that creates, e do something before the equity goes to zero when this was such a good deal, potentially, for one of the larger firms that can kind of get around those deposit cap requirements in order to grow their own deposit base. >> yeah. i mean, listen, it was only a week ago when i was reporting on the hopes for a private market solution for first republic. of course, those were the proponents of it believed it would not be in any way a bailout. if the white house or the fed put a strong hand on some of the banks and said, you need to buy

these assets off the balance sheet at a premium, it might have solved the problem and prevented receivership didn't happen. government didn't feel it was a political necessity, didn't feel there was systematic risk and, therefore, allowed the process to continue, by which they were put into receivership when they did the deal or they did the deal with jpmorgan you know, i do wonder, carl mentioned this, leslie, you're hearing -- i'm hearing it more often as well. we need to adjust deposit insurance somehow. maybe to protect businesses. you know, who are unaware, who have lots of money running through some of these regionals, who are local businesses, for example. not taking a look at nor should they what the maturity portfolio looks like or available for sale portfolio looks like, but should know their money's going to be safe because the ability to move it quickly is something that can crush these banks very quickly even a tweak, as we all know,

from somebody who's quite influential in the likes of peter thiel when it came to svb. it is worrisome because you wonder what confidence can be added to the marketplace to stop it from influencing psychology when it comes to moving deposits >> yeah, i think the regulatory cost is something that's front and center for investors as they look at, you know, changing the way that regionals or super regionals do their accounting for their books, you know, the potential changes with regard to fdic insurance, that would be costly for the banks as well everything that we're looking at to kind of remedy the issues we saw over the course of the last two months would result in potentially lower net interest income for the banks and then there are knock-on effects of that with regard to the availability of credit, the liquidity that's out there, and all of those things kind of

creates, you know, concerns, a psychological aspect, which, you know, with regard to this sector in particular, sometimes it doesn't have a trigger it's just that psychology. once things start moving downward, spiraling downward, that's really all it takes >> leslie, thanks for that stay close, obviously, an important day today. we will turn for the moment to shares -- to ai and shares of chegg, shares are plunging saying ai is influencing its business and then ibm ceo announcing the company will pause hiring, quote, back office functions for roles ai could do. saying, i could easily see 30% of the company's noncustomer-facing employees getting replaced by ai and automation over a five-year period david, we're talking about sort of incremental movements in labor market loosening today

what happens when we start folding this stuff on top of that >> there's hopes there will be huge productivity enhancement but that results in layoffs. milken is interesting from the perspective of hearing what a lot of people, as many as 4,000, or at least as many as i can talk to in a couple of days, are thinking about a year ago, a lot of conversation about crypto. i haven't heard a lot about that, but i have heard a lot about chatgpt and questions overall about ai i had the chance to sit down with founder and ceo of a startup with a decent value, scale ai alexander wang is the founder, an m.i.t. dropout. his company comes from the data side they help to power generative ai models such as chatgpt also worked with microsoft, meta they have contracts with the u.s. government. we did talk about the need for potentially guardrails around

the technology obviously you know the likes of elon musk who says, hey, we need to pause wang sees things a little differently. >> i think first and foremost, when you think about generative ai, the approach that is really necessary to have a human centric and responsible ai system really all boils down to responsible data strategies. that's really what is going to enable our future here when we talk about the guardrails when it comes to ai, i think there's two separate conversations. one of which is around national security where i think it's really critical to your point that we're -- as america we're continuing to build the best in class technology, ensuring the men and women who serve our nation have the best access to the tools and technology at the same time there's very real questions about the societal implications around technology i think we need to take a broad view and involve folks from academics, involve industry leaders, technologists and folks

from the government. last point i'll make is what you mentioned, our adversaries, russia and china are not going to pause because of regulation they're going to continue racing ahead. if anything, they're going to use this as an opportunity to tighten their grip >> yeah, tightening their grip of course, a huge topic of conversation here. that interview, by the way, carl, available on cnbc.com if people want to see the full interview as well. back to you. >> yeah. i mean, as we said, every ceo feels like they have to really get after this in a very urgent way. and we don't know how that plays out except it feels like oriented towards efficiencies, forced investment in software and capabilities, and disinflation ultimately long term but from here to there, so hard to figure out exactly how that matters in the moment. >> it's interesting. world economic forum today tweeted a video of a discussion

they had about ai. and two points were made one was that it's targeting not just those in service industries but those who have accumulated years and years of experience in their respective occupations, in law, in education. the other note is it's not ai that's going to take your job. it's someone using ai who takes your job. >> right >> so, you're hoping for that kind of graduation up in the labor force. >> that's right. you would hope it's graduation up, but also the person with the long tenure, they have the sort of establish know-how and ai already knows that, and that's the idea >> david, great stuff out of milken look forward to more. "squawk on the street" continues after this (vo) verizon small business days are back. april 27th through may 3rd. get a free tech check and special offers. like a free 5g phone. get started today with verizon business. it's your business. it's your verizon.

good tuesday morning i'm sara eisen live at the milken conference in beverly hills. carl quintanilla is at the new york stock exchange. another huge hour ahead. the ceos of levi's and kroger on the state of the consumer. first republic's lead banker on the deal before the deal and bridgewater's co-cio with us this morning >> sara, as you know, stocks lower across the board nasdaq, s&