plummeted, and congressman ro khanna has more. did i mention it's fed day i love those guys, wacky group "squawk box" begins right now. ♪ all right. good morning, everybody. welcome to "squawk box" here on cnbc we've light at the market site in time scare. i'm becky quick along with joe kernen and andrew ross sorkin. what were you saying, joe? >> if it's 500 basis points. >> sometimes they do it in half. >> how many times have we done it >> 16. >> i want to say, why didn't you do all five in one shot.

then i thought, no, we milk it, and it's better -- they should do 12.5. then we could have 50 of these days where we say, hey, you've got to watch cnbc. >> this one does feel pretty important. >> it does feel pretty important. there might be a one-and-done comment. >> maybe not a one-and-done, but maybe a pause and see what happens. >> a look around. >> or maybe there's an outside chance they do knowing and give a hawkish outlook saying we might do something down the road and we're going to pause it. >> i think if they don't raise it, that would be considering not a positive, but a negative. >> that means the fed is worried it could break something which means something is invariably breakable. >> he's more worried about the risk, and there are other people weighing in including former dallas fed chair kaplan who said he's worried about the banking

sector he's worried about what happens next with the credit issues. >> do the people that right now are skourling the ranks of the regionals for problems, are they good people? are we happy we have them? >> very. >> i think we are. they're short sellers, many of them, which gets a bad name. but there are people -- did you see the regional banks yesterday? >> not good, not good. >> the spdy epf, down 6%. >> you know they're looking. trying to find the next one. it can be self-fulfilling when they find it and it starts going down and depositors start saying what's going on. >> very quickly, look at the 2-year the 10-year back at 3.96 that's something to keep an eye on. >> this is awesome coming up it has -- we talked about it a

couple of days ago when eli lilly reported results, but this is positive results about a phase three study of that alzheimer's drug which we talked about with david the last time he was on. the study shows the study significantly slowed cognitive and functional decline with people early symptomatic alzheimer's disease. the drug targets the amyloid plaque in the brain. when you try to get rid of some of the plaque buildup you see results that are significant nearly half of the participants showed no clinical aggression of the decision after one year. eli lilly is going to seek regulatory approval as soon as possible david ricks will join us, ceo.

th there's another drug that has severe binding on the amyloid plaque and two others that have a better outcome a head-to-head clinical trial. it's a big societal problem. it's been a tough one to try to figure out you know, as we say again and again, causation is not correlation. so people with alzheimer's have these plaques, and we didn't know whether you get alzheimer's and get the plaque buildup or get the plaque buildup and then get alzheimer's. it looks more and more likely there's a cause and effect of this amyloid backup, which is not always elderly people. sometimes you see the anecdotes where people are 50 years old and get horrible alzheimer's. >> what's the difference between alzheimer's and dementia >> even when they say alzheimer's, they call it a

heterogenous diagnosis because it's so many things. dementia, senility, alzheimer's. i think it's sort of a wide -- covers a wide swath of things. this would be good. >> it would be great. meantime big news in tv land because major shows including late night show with jimmy fallon and jimmy kimmel and steven colbert third quarter went dark after the movie and tv writers went on strike members of the writers guild of america picketed outside entertainment companies in lachl and new york both sides say no future talks are currently scheduled. this could be a long and protracted battle. it feels that way already. >> most of these guys got their material directly from the white house. >> a-ha. >> or the dnc. >> where did you get your material writers are on strike.

oh, couldn't tell. >> speaker's messaging me. a group led by several prominent democratic lawmakers are calling on the federal reserve to halt rate hikes to avoid too much damage to the economy. that is led by elizabeth warn a and jayapal. they raise concerns about throwing millions of americans out of work in their words they argue more rate hikes would needlessly impact the progress made recently with consumer prices rising at the lowest level in nearly nine months. the fed is likely to hike the points this shows you how people on all sides are concerned about this you ask some people. they'll tell you about pushing at the banks and what would happen to unemployment if you pushed rates any higher.

>> i've been saying, you know, it's such a blunt instrument 25 basis points. are you sure this works with a little bit of tweaking demand and the global economy, it slows it enough to bring inflation down he said there are economic models which clearly show the effect of higher rates on growth and demand i hope they're not like some of the models that we watched, but i guess there is a racin ratione it's all they have there is a lag effect for what we've already done, and then there's this other issue, which as steve's been doing reports on trying to separate the banking system and the stability of the banking system from what the fed is doing, it's really hard to separate the two. >> rosengren said, look, he thinks they're going to raise

rates, but he doesn't think they should he stepped down not too long ago, 2021 maybe. same thing with kaplan who stepped down not too long ago. he said the very same thing, they shouldn't be doing this too. again, it's an easier thing to say once you've left. >> right it doesn't do much, and, therefore, maybe one more isn't going to be the end of the world, and if it's psychologically gratifying. >> they should come out and be very hawkish in their statement, be very hawkish and say we may well raise again and we'll wait and see roy happens, and, by the way, they're going to be higher for longer than anybody expected. >> or be dovish. >> you've got the two options. which would be better? >> let's talk about the regional banks. pacwest fell by nearly 28% in

yesterday's session, and it's indicated down again this morning. are they going to keep going until that one -- >> week to date, 43%. >> it was halted due to vola volatility western alliance was down 15% yesterday. today it's down another 7% and the kre regional bank etf is down -- you could call that the kre etf. >> it's the kreetf. >> the kreetf come you do an anagram with that? >> it seems like the mood at least on the street this morning is shoot first, ask questions later, once you ask questions about a bank when you see a d- decline like that. >> how does the set meant change close down 300 with the s&p at

4100 is it accomplishing what -- you know, is it enough to wring out some of the complacomplacency? >> you're seeing it coom out. >> 4100 is not bad to be doing it here, we're definitely -- there are people who say 3200 this guy who came out was so sure 3200 was going to happen. even mike wilson is sticking with 3200. >> it still could happen. >> this could be the beginning of the iceberg. >> yeah, very possible. >> silicon could be this underneath that's an unsinkable ship. it cannot happen what was that quote? that was so weird, wasn't it they said not even god could sink the titanic i think someone actually said that, the builder. so you knew that was happening. >> you had to have 12 of the 14 compartments flood. >> when you say that, you know's just a matter of time.

>> did you know the only reason that happened is they saw the iceberg and turned at the last minute instead of taking it head on because they turned, they ripped the whole compartment aside. >> we keep talking about it. >> you keep bringing it up. >> you're obsessed with the titanic. when we come back, we're going to take a look at this morning's stocks to watch including starbucks, for, and stellantis that's next. you can see all three of those stocks down today. starbucks off by about 5% even though china looked a lot better than it has for a while squloo also on a amming note, friday, "squawk box" will be live from omaha, nebraska, at the berkshire hathaway annual meeting. shareholders can email questions by emailing berkshirequestions@cnbc.com. this will be the only place to watch the live event which is

known as woodstock of the capitalists. we'll be right back. >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com

and this is ready to go online. any questions? -yeah, i got one. how about the best do here. quick survey. who wants the internet to work, pretty much everywhere. and it needs to smooth, like super, super, super, super smooth. hey, should you be drinking that? -it's decaf. because we're busy women. 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? introducing the next generation 10g network only from xfinity. the future starts now.

welcome back to "squawk box. shares of starbucks falling this morning. they beat estimates of 65 cents,

a revenue of $8.7 billion beat estimates. the results were fueled by better than expected international sales. so if you think of starbucks as a barometer for china, comp sales rose for the first time since 2021 as commerce returned to starbucks after the roll back of the covid policy. by the way, this was effectively howard shut's last quarter before handing the reins over at the end of march interestingly despite -- this really may be indicative of how the market thinks, the company reaffirmed the full year outlook, which you would have also thought was positive, except the market thought things would be even better it would just reaffirm the outlook but they would upgrade guidance for the rest of the year

you're looking at a stock that's been up 15% on the year, year to date, now down about 5% this morning. >> you don't even have to raise the rest of the year you just need to add in to the full year number what they beat in the first quarter by. >> what i don't know, look, we're dwoung to talk to the cfo of starks, the new ceo, but you do have the hand-off taking place. this was effectively howard shut's last quarter. >> is this being conservative? >> that's what we want to find out. i just got into the seat a month ago, not sure. >> because if they beat by 65 cents -- oh, okay. they only beat by 9 cents. that means the next three-quarters -- >> could be 9 cents light. we don't know what's happening with the economy it's been a weird situation with china. are they seeing anything or are

they just being conservative >> it's silly ford estimates aren't coming up i was going to do the math for ford ford, let's talk about it. ford reported earnings of 63 cents a share, estimates of 41 so figure that out what is that that's 22 cents. revenue of $39 billion, also above the $36 billion. and despite that, you know, being 22 cents ahead, they're maintaining 2023 guidance. it could beat it if they were -- if they just post what was already expected, you would figure the year would go up by 23 cents. they didn't do that. whether that really is significant, the stock is not down very much down a nickel. cfo john laller described it as a peak ford expects to lose from its

electrical vehicle unit as it ramps up its unit. it was offset by earnings of $2.6 billion for the traditional car business $1.4 billion the company gets from its fleet operations. right now it's time for some squawk picks our next guest at proctor & gamble, tjx companies, and u.p.s., joining us is stephanie link stephanie, is there any common ana>> that's kind of the theme s year it's stock picketings. it's trying to find opportunities in the midst of dislocation. you mentioned a couple of names i like u.p.s. is one of them. it's a recent pick for me.

it's down 14% from its highs it was down 10% last week alone after they reported earnings they definitely disappointed numbers definitely came down, but they only came down by about 5% i think the ceo is being conservative, just with what's happening around the world, right, and also the u.s. volumes are definitely slowing but this is a company with $100 billion in sales, so it's a -- it's got size, it's got scale, and the ceo is doing a great job in terms of technology innovation, and so i think margins have upside. it's blue chip on sale. >> except for procter & gamble, is that because they were able to get such strong pricing power, the margins they've been able to maintain >> i thought pretty much all of the consumer staple companies did really well in terms of growth procter & gamble grew growth at 7% they beat on revenue, earnings,

margins. they actually raised on guidance i think they're doing a really good job in terms of their markets prowess. the consumer's hanging in there. they're still buying the product. the problem with p&g, it's pretty excessive, but i like it as a balance to like u.p.s., which is more of a cyclical company. >> tjx, all we hear lately consumers are still willing to spend, but not on necessarily stuff. >> there's a ton of inventory in the system, right, from the department stores, and that actually helps tj. so i like that part of it. i also like the home side of it. home good, home sense. especially as -- you guys were talking earlier. interest rates are coming down, right? and so i think housing is actually going to -- i think --

well, i think mortgage rates are definitely coming down, and i think housing is really going to stay strong. i mean, look at all the housing stocks and how well they've done year to date that's because we've had 13 years of underproduction in the industry, and you have 5 million millennials just entering into the arena of buying a home and so while i know there are puts and takes in housing, i like the discounting and the off pricers with regard to the home side of the equation, and tj is one of the very best. >> steph, you own starbucks. we were just talking about what a great quarter it was, but the stock is down by about 5% this morning because the company didn't raise any guidance for the rest of the year despite the big beat they saw this quarter do they see something concerning coming are they being conservative? what's your guess? >> i think they're being conservative you have a new ceo at the helm, and there are uncertainties out there, but this was an

outstanding quarter, becky i think andrew mentioned it. the stock's up 16% year to day, but it's also up 60% from june of last year and it trades times estimates. it's rather expensive. you just got a 25% earnings growth year over year and 14% revenue growth year over year. you mentioned the comps and china at 3%. but they saw a 30% growth in the month of march that's one of the reasons why i really like starbucks because i think it is a reopening play in china, and we're just beginning to see that. i thought they did a pretty good job in terms of outlining the metric, again, on the conservative side. but i can see a clear path of 17ch to 18% operating margins, which is their goal, over the next couple of years, which i think is what people want to see. not only the top lines but the margins as well. >> hey, steph, given that this is shut's last quarter, it was a

great successful quarter, you start to think out further, why were think so strev if that's what they're doing we'll hear from the cfo in the 8:00 hour, so we'll get some more color on this. >> i think it's definitely the new cfo, andrew. he was very conservative yet his tenure at that company, the multiple went from 13 times to 16 times, and so i think over -- which just proves that he's a good on rate he can do a very good job if executing. you've got howard still on the board, right so i think that they're being conservative i just think this is a pause in the long-term story. they're doing heavy investments, which they should, right, to keep the growth. so i think this is a buying opportunity. >> stephanie, thank you very much great to see you. >> great good to see you. a lot more coming up on squawk this morning. npr saying elon musk threatening

to reassign its twitter handle. and later, quarterly results 'lbrg om cvs health wel inyou the numbers. don't go anywhere. squ "squawk box" rolls on right after this. >> announcer: squawk picks is sponsored by wisdomtree, the modern alpha pioneer (dr. king) if you have diabetes, getting on dexcom g7 is the single most important thing you can do. it eliminates painful fingersticks, helps lower a1c, and is covered by medicare. before using the dexcom g7, i was really frustrated. all of that finger-pricking, and my a1c was stuck. (donna) my diabetes was out of control. (female announcer) dexcom g7 sends your glucose numbers to your phone or dexcom receiver without painful fingersticks. the arrow shows the direction your glucose is heading-- up, down, or steady.

and because dexcom g7 is the most accurate cgm, you can make better decisions about food, medication, and activity in the moment. after using the dexcom g7, my a1c has never been lower. i lead line dancing three times a week, and i'm just living a great life now. (donna) it's so easy to use. dexcom g7 has given me confidence and control that everything i need is right there on my phone. (female announcer) now, more people than ever are covered by medicare. call now to get started on dexcom g7.

it's hard to run a business on your own. make it easier on yourself. with shopify, you can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we work together, the future is bright. it doesn't have to be lonely at the top. join the millions at finding success on their own terms. start your journey with a free trial today.

welcome back to "squawk box. npr saying elon musk has threatened to give the news organ organization's twitter handle to another company. they received a series of emails from musk saying he would transfer the main account at npr to another organization or

person last month npr quit twitter after musk supplied a label to the account suggesting it was a state controlled media company musk has since removed that label, but npr has not resumed public activity on twitter. the ceo of chegg reacting to the plunge in the company's stock price yesterday. the stock was down by 50%. in an interview with jon fortt, dan rosenswieg talked about it. >> i don't talk about the stock price much it's quite a move. people need to understand is students can't be wrong when they do homework or learn things chatgpt is often wrong, and it's not going to be right any time soon. >> chegg plans to offer its own platform this month. it will be trained on chegg's

trove of academic day data, but the question about it and the reason so many people are wondering, are there other stocks that can get chopped in half by the rise of ai students stopped paying. it's a subscription service. if you g with your homework, it's free. >> it plagiarizes it for you that's the problem. >> i have seen some stuff and you can tell once you start reading, you can tell what's been written by ai. >> i think it's true o chat gtp 3 and 3.5. i think once you get to 4.0 -- >> speaking of someone who rec received a report from one of the kids, i said, wait a minute, you used chhatgpt, didn't you

>> you look at the prompt. >> you can use the voice. >> if you know there's a thing. it's not going to matter for at least some amount of time. >> you might need to do like a deal book without telling anyone and see if anyone notices. >> i have played around with it just to see if i could get it close. >> what if they like it more >> people might. people might. >> i just -- i don't know. chegg is a billion dollar -- i never mentioned a billion dollar company more times in the last two days i guess because of the ai. it's a small cap that went to a micro cap. who's rosensweig >> he's been around for a really long time, big deal in silicon valley. >> not widely held couldn't be. >> that guy has a huge impact in the education market if you talk to kids who are in school, they know what chegg is.

it's like a thing. meantime, cvs, which people know as a thing as well, out with a quarterly report results. bertha coombs with the number. >> good morning, andrew. the first quarter results are well ahead of expectations across the board, posting adjusted $2.20 per share earnings versus $2.09 conservative estimate. on the top line, they came in at $85 billion, 5 billion more than what was estimated this is following the early close of the oak street acquisition yesterday. they're now guiding to $8.50 to $8.70 per share to reflect the impact of merger integration costs. they also closed signify during the quarter.

vcs has revised their estimates which reflects aetna. took in membership of $25.5 million, up $1.1 million here's what's new. health care services which now includes signify home care, minute clinic, caremark, and pharmacy benefits, oak street, revenue, 44.68 dollar. what used to be known as retail will now be known as pharmacy and consumer wellness. and that, apples to apples there, the comps are better than expected same store sales up 11.6%. pharmacy sales up 12.1%. that was driven by higher volumes and brand name drug inflation. and front of store sales were up 7.7% really considerable given you didn't have all of that covid testing volume, but cold and flu has offset that.

now, the new corporate sentiment is where they're going to be recording sentiment like the acquisition costs. the earnings call is slated to start at 8:00 a.m. this morning. as you can see, cvs shares up about 2% andrew >> bertha, thank you for that. we appreciate it. coming up, congressman ro khanna is going to join us on set, the golden state fan. he'll talk the debt ceiling an regal banks and a lot more as we head to break, here's a look at yesterday's winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure -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.

good morning and welcome back to "squawk box" live at the market sight on time square. the nasdaq looking to open 30 points higher. meanwhile that's on the upside

shares of amd, they're falling beat shares of 60 cents. here's what happened look at that stock down about 8% because current quarter guidance came in below expectations lisa su says the company sees growth in the second half of the year she said the company believes the first quarter was the bottom for its client processor business just this morning that stock downgraded by b.o.a. securities to neutral up from buy. >> there must be more to that. everything you said was pretty good, i guess, except the guidance. >> the guidance story. >> it's been a pretty good market cap compared to intel i never would have believed it $144 billion for amd that is $20 million above intel. >> i think the ceo also told analysts they need to really see a pc recovery to improve

margins. >> right as personal computer coming up, we're going to ask congressman rocca na about the plunge in regional bank stocks after jpmorgan reached a deal to buy first republic he joins us on set next.

as in personal computer. (cecily) you're looking pleased with yourself. (seth) well, not to brag, but i just switched my whole family to verizon. (cecily) oh, it's america's most reliable 5g network. (seth) and it's only $35 a line. (neighbor) i got that deal too. (seth) oh hey, bragging buddies! (neighbor) my man! (cecily) this i don't need. (seth) you should give me a call! (vo) with verizon, your family gets the network they can rely on and the disney bundle with disney+, hulu, and espn+ included. all for just $35 a line. that's a savings of $240 a year. the savings you want.

on the network worth bragging about. verizon your record label is taking off. 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

joining us now to talk standoff and banking and more, let's bring in representative ro khanna from silicon valley we have nothing new to announce today, the two of us. >> the warriors are still -- >> no, i've had somebody tell me anthony davis is going to be a big problem. >> he's had a great game you saw the warriors they overcame the kings. >> 50 points, steph curry. but like i said, we're not announcing anything about it. >> i've got to pass the interview. i've got to see. >> this is a test for you. this is a job interview to see if you're going to be on the ticket with me let's talk about the -- you'll see where i'm going with this. this is some serious stuff happening in the banking

industry do you attribute any of what's happening to inflation, which was engendered by all of this spending, $32 trillion in debt a lot of people think that's where inflation -- the root cause is there's a supply chain there's a lot of reasons for what we're seeing right now, the reopening. but do you attribute it -- if so, maybe we need to do something about the debt during these talks. >> obviously the banking crisis in part is related to inflation because the rates went up. >> because the fed had to go up 500 basis points >> individuals in these banks are saying i can get 5% in a money market account, so they're moving it. and these banks, some of them, didn't hedge against the long-term bonds. here's the situation with the regional banks if you're in the big four banks, you know the money is safe if you're in one of these regional banks, you're not that sure and the question the country needs to ask is do we want to be

like canada or france and have three or four banks, or do we want to have a bank in youngstown or in indiana that's why i said we need to cover -- we need to guarantee deposits in business accounts across the country and charge a small fee for that. >> we get a lot of -- i guess we have to ask you. it doesn't look like good times with first republic. i guess you have a blind trust that someone else handles. can you respond to that because people say ask ro khanna about his training. >> it's not my money it ice my wife's money it's in a blind trust. it ice diversified and they had some sales after the stock was already 80% down, and it was at a loss. >> do you think at this point from what you can tell that this is over? this is -- we're talking

basketball let's talk baseball. what inning are we in? is it a doubleheader are we in the eighth inning? the second inning? what do you think? is there more to come with this duration risk? >> i hope it's almost over but until we're guaranteed depositors or have something that we can be sure of, i think the crises could keep coming up. even the f dic said that yesterday. you've got all these accounts over $250,000. >> what do you do? >> my view, any account oeuf $250,000 we'll guarantee, but we're going to charge a small fee, 0.5%, 0.1%. and that fee goes to the fdic. >> is that enough if you put a fee on it? the fdic already is below what they're required to be holding in terms of capital. they're supposed to have something like 1.35ch of all

assets that they cover, and as of the end of the year, they only have 1.27%. that's how huge the deposits have become over the pandemic. but if you were to actually put those same standards on big accounts like that, i'm not sure that that level of a fee would raise it up because that's covered $250,000 if you're talking all deposits, trillions and trillions of dollars, i don't know if that's enough to meet up to the fdic sta standards. >> there's about $10 trillion that's insured, there's about $8 trillion uninsured, and 0.5, 0.1 would be quite a lot you know, we can figure out what the exact fee will be. the point is if you're in a bank and you have that money there, you should pay something now, here's what people say. they say if you guarantee all the deposits, you're going to take a moral hazard because these banks are going to take

more risk. the reality is, though, the shareholders still get wiped out, so the bank still isn't going to get wiped out. >> it's stopped any of the banks we've seen to date it seemed like they were reasonable banks until very recently maybe the regulators weren't looking at it as closely as they should have in a rising rate environmental. >> here's the philosophical question look, the bank of youngstown is never going to be as safe as jpmorgan they'll not have the same risk assessment or diversify in the same way do we want a thousand banks in america? i say yes. there's a higher risk if you have a thousand banks. >> you said something to me which is the beginning and end of the discussion, which is as long as you believe the youngstown bank is not as safe as jpmorgan, why would you bank there? >> higher rates. >> what? unless they're going to have -- there's two things they're going to give you a higher rate, better rate, and how are they going to given you

a better rate and pay for insurance at the same time, which is the other piece of it jpmorgan can actually afford to pay the insurance component, whereas, if you're a small banks it's a lot harder. >> jpmorgan is always going to have the advantage if you guaranteed those -- >> guaranteed because they're too big to fail. >> right if you guaranteed the local banks, at least they would be on a level playing field and then maybe someone like jpmorgan would want to buy them because they know it's a safe investment yes, it's a higher risk. i think we should be honest. having a thousand banks is a higher risk than having three banks. i read yesterday in north carolina there's a paper mill that shut down in this town 46789,000 people in that town. guess how many people work at that paper mill?

900. you're wiping out a town you have manufacturing leaving, resilience leaving, that we want to get rid of regal banks? it would be catastrophic. >> it's a big day. they tell me in studio we only have a minute left, which is very disappointing to me the reason i started with whether debt can cause problems is we have a debt ceiling coming up, and it's a big debate. we're at $32 trillion. i think unequivocally there is a debt issue, and that has something to to with this suit we're in, inflation and everything else. senator thune pointed out eight out of the last 11 times we've raised the debt ceiling, there have been fiscal and budgetary talks coinciding, and there have been initiatives, whether it was one party or the other, it was agreed upon negotiations there's a bill in the house right now that's being ignored, and senator schumer is not

bringing anything to the floor he has to raise the debt ceiling. he needs 60. he doesn't have 60 the president has got to engage here not afterward, not taking this off -- the only reason he's not in your view, do you agree, is because he wants to pin it on the gop, >> the president knows we can't default. that would be catastrophic at a time for the economy he's called all four leaders in to meet with him >> still says he won't talk about it in -- at the same time as the debt ceiling increase, though. >> here's what we're saying. pay the bills. >> we will but would it kill you to just do something? the covid, let some of the stuff that is unspent, use that to reduce the debt, negotiate, both sides get something that they want, but just do something about it why would that kill the president to talk about negotiations >> after we pay the debt, i'm open to -- we have to talk about lowering the deficit we do. bill clinton left with -- >> we're not getting anywhere, ro the brinksmanship is taking us

towards this precipice and as long as he's saying this, he's backing mccarthy into a place where he's not going to do a clean debt, he's already got something on the table that he passed he was able to pass. >> those weren't huge cuts on veterans, on k through 12 and -- >> let's talk about that you keep and what you don't with negotiations, with the senate and with the president. >> the president called them in. they're going to have a conversation but, look, let's -- most of the debt has been accumulated after bill clinton because of the trump tax cuts, bush tax cuts and -- >> now we're back to -- you spent a lot -- everybody is to blame. the last two years have not been the finest two years in terms of fiscal responsibility. >> whether we overspend or not, what about this point? we as a nation, both under trump and biden, had the best response to covid in the world. when people say government doesn't work, we spent $5 trillion, and we had low unemployment rate, we got the vaccines done, and frankly it is one moment actually that everyone should get some credit. whether we overshot, it was a

response that -- >> the house bill only takes us back to 2022 spending. it is a 1% -- not -- >> with inflation. >> okay. >> you can't say we have got -- you can't have mccarthy saying we have inflation, inflation, inflation and then let's say let's have 2020 levels for veterans on healthcare >> all right >> you guys really are on the same ticket? >> don't you see how it's going to work? don't you see how it's going to work >> not really. >> it is going to be joe/ro. >> i didn't want it to be joe/ro i didn't want to work that hard. >> i'll come up with all the ideas and you can do -- >> i have to sign off on it. >> i got to convince you. >> that's not happening. >> my goodness okay coming up on the other side of this, we'll talk to the ceo of the parent company of the sports betting giant fanduel. that is next good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars.

look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

back when i had a working circulatory system, you had to give your right arm to find great talent. but with upwork, there's highly skilled talent from all over the globe. right at your fingertips. ♪ this is how we work now ♪

welcome back to "squawk box. flutter entertainment, behind fanduel, releasing quarterly results today. contessa brewer joins with us a special guest. good morning >> flutter is an international company, i got to look at, it is the parent of fanduel, their u.s. revenue is up 9 2% peter jackson, the ceo of flutter joins us now from the uk where earnings have been happening or is it -- are you coming from ireland? i don't -- are you in ireland this morning >> i'm in the uk >> okay. >> yeah. >> so, peter, talk to me a little bit about the performance and what is remarkable is not just that your revenues keep going up, but your average monthly users are going up, that

your market share has increased almost 14% from last year to 50% market share in the united states at this point what is driving that incredible growth >> so the team are doing a terrific job in the u.s. and i'm really, really pleased with performance. as you said, we got 50% market share of the online sports betting market, up 15% on last year we got the best products in the market and that's really important. it is whatcustomers want to see. also we're getting good traction in casinos as well we're now up to 23% market share there. great product, a great brand, and it is a great positioning in the market. >> the vote came through from the shareholders last week and overwhelmingly approved a secondary listing here in the united states. when does that happen and what does flutter get out of listing publicly here? >> we were delighted with the

results of the vote last week. we had overwhelming support from our shareholders there is a lot of work to do, right? we need to put in place the u.s. gap reporting, switching, making sure the business is supply the as well. we believe we can get all of that done and show the business is ready to pick up that u.s. listing by the end of this year. and, of course it gives us access to the much bigger liquidity pools in the u.s. market when we look at the comparative volumes that traded on the u.s. exchanges compared with london, we see around 2.5 times the volumes. that's important for investors who want to come in and take a position in the business it is also important for all of our customers. you know, millions of customers across the u.s., with fanduel, and we're sure they would be like to be able to buy some stock in fanduel, they won't be able to, but they can buy some in the parent company flutter and have all the brilliant benefits of fanduel with our global business that makes us the world's biggest gaming business. >> and as you say, they get

exposure to your international business though you're seeing the most growth in the u.s., you are still seeing growth in the uk and in italy where you have an acquisition there that is really paying off for you talk a little bit about gambling regulations in europe. uk white paper has just come out with government proposals about new ways to limit gambling and to try and disrupt gambling addiction. i know that flutter has been ahead of the ball with some of these, and you've proactively put measures in place, but will that affect your bottom line, and are there lessons you're putting into effect here in the united states because of what you have experienced in europe >> well, we take responsibility of gambling very seriously and we have been very proactively globally around this, making sure we assess customers when they come on to the platform, monitor their behavior while gambling with us and have back stops to make sure people don't

get into trouble we got ahead of a lot of the changes coming in the uk if you look at the q1 results, you can see we're up 17% in revenue terms in the uk and at best the market is flat. so belatedly competitors are catching up with the good work that we have done in the uk market we are making sure we adopt a similar approach in the u.s. we have 100 compliance professionals. we were the first operators to bring the software into the u.s., we do great work with amanda sorano, terrific ambassador for us. we have been leveraging the expertise we have built up over decades and applying that into the u.s. market. >> peter jackson, ceo of flutter, thank you so much for joining us this morning and talking a little bit about your business interesting, guys, because kentucky derby kicks off saturday and fanduel has just announced a new content deal, they were talking this morning about how californians will be able to bet on fanduel, in california, where

sports betting is not legal, but horse racing is. and so that's a big new introduction for california for fanduel. >> they had to do something different for the derby in new jersey for some reason you have to go to, like, new jersey -- >> horse racing -- a horse racing app rather than just on your regular app, yeah but both draft kings and fanduel launched those. >> and mind you, the derby is on -- >> nbc. >> thank you very much >> yes >> thank you very much >> good point. it is 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc live from the nasdaq market site in times square. i'm andrew ross sorkin with becky quick and joe kernen u.s. equity futures at this hour, the dow up about 5 points now. nasdaq up about 20 points. the s&p 500 up about 4 points. we're just hours now away from the fed's decision on interest rates. want to get straight over to our good friend steve liesman who made his way down to what some people call the swamp,

washington, d.c. good morning, steve. >> built on a swamp. >> my feet are still dry, andrew good to wear boots the fed expected to hike for the tenth straight time amid unusual and strong opposition to this move from former fed officials, fed observers and palpable concern in markets over the health of regional banks former fed -- former boss and fed president eric rosengren telling us yesterday on "squawk box," it is not necessary at this point to raise rates until we get a better view of what the second half of the year looks like he pointed to current stress in the banking system and future concerns about credit losses from commercial office space loans. former dallas fed president robert kaplan telling evercore isi, i would not raise rates in this meeting, i wouldn't have raised rates in march either i would say the following. we're going to turn over a couple more cars on this banking situation to make sure we understand the impacts of it the fed hike which would bring the funds rate over 5% for the first time since 2007 comes

after minutes to the fed's march meeting said, quote, given their assessment of potential economic effects of the recent banking sector developments, the staff projection at the time of the march meeting included a mild recession, starting later this year 100% of those surveyed in the cnbc fed survey think the fed's going to hike, but 59% saying the fed should not do it because of problems in the banking sector if that were not enough, regional bank stocks down 8% since jpmorgan's purchase of the failed first republic raised questions about the underlying value of midsized banks. they're down 33% since february. a pause by the fed now would buy some time for banks to get their balance sheets back together and it would keep the situation from getting worse it would likely have little impact on inflation immediately because hikes take time to filter into the economy. the fed would still be reducing its balance sheet, it could always hike later if needed. major downside of a pause, it would suggest the fed sees the situation as worse than the markets believe.

the markets think it is pretty bad already. put it all together and there is a good case for the fed to pause. i think there is a chance they do it. a hike and a pause is more likely perhaps, guys, with some dissent today. andrew >> steve, thank you. >> they have two options they can either hike and sound dovish or pause and sound really hawkish. that's what kaplan had laid out too. >> yeah. i think the hawkish pause is the better thing to do here. look, the powell fed has already made a mistake on the front end of this by staying too loose for too long and i spent the evening talking to a lot of fed folks and what not who spend their time thinking about this the thinking was that this is pouring gas on the fire here there is a potential fire brewing and there is a point at which financial stability should trump concerns about inflation and there is a feeling that

given the uncertainty that we have reached that moment and i don't know, maybe i'm quoting paul mcculley out of turn, i had a long conversation, you know paul, he can be colorful in his language, he said to me, in what world after you had nine beers does the tenth beer make things better? >> it makes even less sense when you say can i have one for the road, i'm driving. >> that's what he said, joe. how do you know that he said exactly that he's calling this -- he's calling this one for the road, the one for the road hike. >> let me have one for the road. >> one for the road. that makes things better i don't know look -- >> it is 88%, steve. you're in the 12% now. >> i called up our boss last night, i said, dan, i think i need to go on in the morning and make the case why the fed shouldn't hike and i feel like i'm out on a limb here i feel like it is the right thing to do. >> kaplan says the right thing. >> i have never gone into a meeting like this with 59% of those surveyed in the fed survey saying the fed shouldn't be doing this

this group is geneticall inclined to think the fed is doing the right thing. rosengren and kaplan,by the way, who you know left in bad form from the fed, they were the two smartest guys on the banking system. >> they're the ones who regulated. i was saying the same thing to joe before rosengren and kaplan, the two guys -- >> smartest guys. >> two guys who have left are the ones who are saying they should stop right now. both of them said they don't think they will, but both think they should. >> there is one guy, goolsbee, who laid down a marker with a speech he gave about concern about the banking system, i'm a little -- i don't understand why lori logan, the president of the dallas fed, comes to the fed from the new york open market desk and had her fingers really on the pulse of the financial system i'm surprised she has not been more outspoken and then as somebody else said to me last night, the loss of lyle brainard is resonating

because she was inclined to be more dovish and had her concerns also, the loss of esther george who laid down a very important marker who said she was the one dissent in the whole ten beers of rate hikes we had here or nine beers of rate hikes we had here, she dissented because of her concern about the banking system >> let's bring in -- thanks steve -- kelce has been here, kelce vero, jpmorgan asset management i had -- here's how i'm going to start, which i was going to do before that great discussion, where you were nodding and listening. 16-year highs in interest rates. yet historically, i just -- 5% is not that high but we have seen what happens when you move from zero and in light of what steve just said, regional banks again yesterday, okay, go up another 25 basis points and all the -- if there is duration risk left, that just makes it worse if the deposits keep going out

and they have to sell some of this stuff they were going to hold the maturity, another 25 basis points marked makes it even worse does the fed take that into account or not >> so i think they are taking it into account, but there is always this debate about should they or will they. in this case, it doesn't really matter what they should do, it is what they will do and then markets have to deal with the consequences of that so, what they will do today is they're going to hike 25 basis points the market is priced for 80% probability of that. what theconsequences are is that growth, inflation, are going to continue to come down and banking stress is going to remain there is a disequilibrium now between deposit rates, they're still very low, and money market rates, which are at 5% so even though the fed has set up this back stop, there is going to continue to be this drip out of the deposit system into the money market funds that is going to continue to put pressure on the banks.

>> so, what is -- how many mandates does the fed have they got dollar stability. they got full employment i thought that in 1907 that it was -- it was created for banking stability. so there is at least three is dollar stability ie inflation really paramount right now should it be >> i think right now what they're focused on is financial stability, and then, of course, price stability. >> why would they go up 25 basis points if they're focused on financial stability? >> i think in their minds right now they set up the appropriate back stops in terms of liquidity. the banks are functioning to a certain extent but what we're concerned about is a credit crunch is credit being withdrawn from the system. it sdoesn't happen all overnight it happens quickly and then slowly it is this chronic problem that we expect. so, bottom line, you know, i'm a fixed income portfolio manager

here, what does all this is a to me you have the fed which is pausing, they should pause after this meeting, so one more hike and then they pause. we see all the signs that growth is rolling over, all the signs that inflation is growing over if yields are going to be rallying, core fixed income is going to perform very well in your portfolio under this environment. >> let me ask you, what happens today if they deal with the markets not expecting and they do pause now, what happens to fixed income immediately >> so i think knee jerk you get a rally. yields are going to move lower that would be a dovish surprise to the market. but there is going to be on the other hand this concern about what does the fed know that we don't know they talk to the banks every single day we get on a weekly basis the deposit data, right? the commercial bank deposit data they basically see that on a daily basis. so there is going to be this question about what do they see that we don't. now, there is something right now that they see that we don't. it is the senior loan officer opinion survey we get a copy of that may 8th.

they already have that on hand what i think that's going to show is that banks are really stepping back here i mean, nobody wants to be originating new loans, especially if your asset mix concentration was very focused on commercial real estate, these areas that the market -- >> you're saying what -- it sounds like you don't want them to 1913, but in response to 1907. of course i wasn't alive in 1907, but -- >> but 1913. >> exactly that's a joe biden joke. he said jimmy madison, good friend, wrote one of the amendments he said -- did you catch that? >> i did catch that. >> kelsey, thank you you don't think they should? okay like ro khanna, can't say what you really mean. thank you. when we come back, we have some new data just out on mortgages. that's coming up next. and later, former td ameritrade chairman joe moglia will join us

to talk about today's fed decision and his take on the markets now, what he thinks about the banks too. "squawk box" will be right back. i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights. what if we use ai-driven insights to pinpoint inefficiency? yep. and act on it. saving energy, money... ... and emissions. yup. that's a big one. now you've built something better for everyone. that's the sustainability solution ibm and a global real estate company created. what will you create? ibm. let's create.

welcome back to "squawk box. i'm diana olick with your weekly

read on mortgage demand. rates have been erratic to say the least lately and that's having an outsized influence on home buyers. in addition, jumbo mortgage rates are taking a hit from the banking crisis mortgage applications to purchase a home dropped 2% last week, compared with the previous week that according to the mortgage bankers association's seasonally adjusted index demand was 32% lower than the same week a year ago this despite the fact that the average rate on the t30-year fixed to 6.5% from 6.55% the rate was 5.36% a year ago. the average rate for jumbo loans, that is higher balance mortgages, was slightly lower at 6.37%. that has been shrinking as banks that hold the loans on their balance sheets had less of an appetite for risk, not to mention liquidity issues the spread was 13 basis points last week after being as wide as 64 basis points in november of last year. applications to refi a home loan increased 1% for the week, but

were 51% lower than the same week a year ago. there are very few borrowers who can still benefit from a refi at today's higher rates becky? >> so, diana, what does the fed decision today mean for mortgage rates in the immediate turn. if they were to raise by 25 basis points, it would mean what if they were to surprise the markets and not do anything, how would that play out? >> as i say, mortgage rates don't follow the fed exactly they do follow what the fed chairman has to say about the economy. so it is going to depend much more on his outlook for the future, as to whether or not investors head into bonds or out of bonds has nothing to do with whether or not they raise a quarter point or not. >> okay. diana, thank you when we come back, a business travel and summer vacation outlook from the ceo of wyndham resorts. the company recently reported strong quarterly results and raised its outlook for the full year and later, the ceo of eli lilly will join us to talk about the news that its alzheimer's drug

showed a slowdown of cognitive and ncon dlifutialecne that stock up by 4.6%. "squawk box" will be right back. the first time your sales reached 100k with godaddy was also the first time your profits left you speechless. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

i can't, you know, thank my parents enough for making sure that this connection is here. one of the things that my mother told me when she was in the hospital, she didn't tell me, actually, she couldn't speak at the time, but she wrote it down... "go see alicia." oh, my goodness. you know, and there was never a time that you were too busy. there was never a time you said i'll call you back, you know. i needed to be there to carry you through, just like, you know, some of my friends carried me through. all right, welcome back,

everybody. kraft heinz just reporting, adjusted earnings at 68 cents a share. that was much better than the 60 cents that the street was expecting. in terms of revenue, came in at $6.49 billion. that was also better than expected and it looks like the company is also raising its estimates for the full year. right now, kraft heinz shares up by 1.4%. travel showing no signs of cooling off this summer with demand expected to remain high joining us with a look at what to expect this season is geoffrey ballotti. did i pronounce that right president and ceo of wyndham hotels and resorts it seems like everything is still on a rocket ship, but where is the rainbow >> there are no signs to slowdown 93% of our middle income guests are telling us that they're going to take a vacation in the next six months. and that is the highest percentage, andrew, that we have seen surveyed since this pandemic began wanting to vacation and all of the indicators,

everything in terms of that rainbow that we're looking at, booking windows extending. so many people trying to find a vacation spot last summer unable to find it average length of stay continuing to lengthen you just look at travel booking searches on google now, up double digits, our web traffic is up 40% above where it was prepandemic. in 2019, it was the high water shed best year ever in this industry what is so unique about our business is that it is back, which is pretty incredible when you think about it, our business, we're the world's largest hotel franchising company, we had a better 2021. we were fully back in 2021 and the economy and midscale space than we were in '19. >> is this a yolo situation? are we still into this yolo kind of situation or something else going on the other piece is, we keep hearing from the banks that, you know, american families are going to run out -- start to run

out of cash and move on to the credit card in a big way and you're not seeing that how do you explain this? >> credit card spending for april was up 20% versus where it was last year. our middle income guests are more employed than they have ever been. and they're spending on vacation more than they have ever spent on vacations 70% of our business is leisure the 30% of our business, we're very unique, you know, we have been watching you talk all about who is back in the office and who is not in the office our guests -- our leisure guests are middle income family they're all back in the office five days a week their office is the front -- >> the front of the truck. >> the front of the construction vehicle. their office window is their windshield and when you look at the nation's infrastructure spending, the most historic bill this country has ever seen, we

have seen now 11 consecutive quarters of double digit spending from those construction workers, which is giving our small business owners -- >> how much do you benefit one of the pieces we keep hearing about, we had andy jassy on the program two or three weeks ago from amazon. he said there was -- he was seeing some stepdown people were going to buy, you know, very expensive tv, decide maybe i'll buy a marginally smaller tv that i would imagine actually would benefit you if that's actually happening in the lodging universe is it happening in the lodging universe >> it is not happening yet but were it to happen, you're absolutely positively right. our days inn brand, 1300 hotels in the united states of america, performing exceptionally well because it never had to close dure, the pandemic like so many hotels in new york city had to close. $80 average room our la quinta brand, $120 average rate, the differential to your point between an upper midscale and upper up scale

continues to widen so what was $75 before the pandemic hit in terms of the difference between the two rates is now over $100 so absolutely -- >> inflation in your space is crazy. can we agree on that >> it is but it is still, when you look in real terms, in the economy in the select service midscale rate, average daily rates are where they were in 2019. >> ev chargers >> we have ev chargers, yes. >> a lot of them >> we're building a new brand, eco suites by wyndham, playing into this demand for infrastructure workers we have awarded 200 eco suites by wyndham hotels and one of th requirements is that they have ev stations. >> and a vegan menu. >> and a vegan menu. >> now we know vegans need some meat. they do. thanks coming up, former td

ameritrade chairman joe moglia on the pressure on the regional banks, again this morning. he's going to join us in a couple of minutes. "squawk box" will be right back. time now for today's aflac trivia question. where did starbucks open its first store? the answer when cnbc's "squawk box" continues i'm telling you, coach staley, i could really get used to this retirement thing. ahhh! coach k, there's a goat here. the story of my life. no coach, there is a goat here! whaaa! what's this? a thousand dollar hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaap! get help with expenses health insurance doesn't cover at aflac.com

♪ (upbeat music) ♪ ( ♪♪ ) constant contact's advanced automation lets you send the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

lily! welcome to our third 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. now the answer to today's aflac trivia question.

where did starbucks open its first store? the answer, seattle's pike place market in 1971 and welcome back to "squawk box. i'm dominic chu. that pommelling that regional banks have been taking is not letting up this morning. it is probably the biggest story of the premarket so far. let's get a check on the more embattled names right now. the usual ones from the western united states, southern california based pacwest bancorp was at $11 five days ago and $30 stock earlier this year, it is currently trading at $6.32 premarket, down 10%. arizona-based western alliance, 3.3% premarket bank of hawaii and zions bancorp as well as etfs. by the way, some stats have the sp spider up in terms of shares

outstanding. we're watching shares of uber now moving between gains and losses premarket following up on a gain of nearly 12% yesterday on the heels of better than expected earnings. new today, analysts at susquehanna upgraded the ride sharing logistics giant to a positive from a neutral. they upped it up from 48 from 40 they cited continued growth mom momentum and we'll cap things off with a check on starbucks, which is down 5% or so, just around 25 to 30 or so shares of volume. the coffee giant reported better than expected profits and revenues after yesterday's close driven in large part to international sales including china, sales growth at established store locations go higher as the country gets out of its post covid lockdowns and reaffirmed guidance for the full year that doesn't appear to be helping the stock now. we'll have much more on that story later on when starbucks cfo rachel ruggeri joins "squawk

box" to go over all the details. coming up next, former td ameritrade chairman joe moglia joins joe, becky and andrew on the regional bank trade, the fed and much more. keep it right here

right now, looking at the fed's spending right decision might affect things, the recent banking turmoil and more, how it

is all impacting the markets, investors, we want to bring in joe moglia joe, you are somebody who knows markets incredibly well. you're somebody who understands banking incredibly well. how are the two worlds colliding right now? what is happening in banking how much more is there >> well, some news today that there are some other banks that may be having a problem. and i think we recognized a while ago, you have a problem you got to be able to address it you don't know what other problems might still exist the biggest issue for me is what is going on with congress. last time we were on, andrew was asking about what do you do? you're the czar of banking, what do you actually do and frankly, it is, like, this shouldn't be that difficult to be able to get together. you need depositors to have confidence in what is going on you need to have that. why don't we do something simple and raise the limit from 250 to 1 million and any bank and -- if you have more than the investor

depositors but if the bank wants more than -- wants to cover more than $1 million, they can take out insurance and pay -- and pay that themselves. >> okay. that almost seems like it is less confidence building than what exists now. what exists right now is we assume that all depositors are covered. that's kind of the whisper or the understanding, because that's what we have done to this point in this banking turmoil at this point we save everybody. >> i agree with that and that's what i think will happen if we have an issue right now, that's what is going to happen now. i believe that too but when powell -- powell was on -- powell was interviewed last time, he said my job is not that, my job is to worry about inflation and employment but we're going to take care of our people yellen said something different the day after that and that's what created some confusion. and the market went down pretty good because of that so until we figure out, until we're actually able to say we

are protecting all our deposits, we believe that's going to happen but unless we're able to say that's going to happen -- >> so people can keep testing this then. >> i think so, yeah, yeah. until congress gives us something that can make everybody feel confident. >> i've not seen any meaningful conversation about what we're talking about. we had meaningful conversation at this table, but not of washington. >> ro khanna was here earlier this morning, he said what he would like to have happen, is if you're maybe one of these companies that has big payroll or whatever, you can have additional insurance on top of that but you pay a small fee for it >> right i think that's okay. i think, again, there are a handful of ways you can handle this you just to agree on it and get moving we talked about this last time as well. >> from a political perspective, they can't pull together that's what concerns me. we never have been more divided in our country's history, pretty much. >> except for the civil war. >> except for the civil war. good point that wasn't that long ago. >> wasn't that long ago. >> it kind of was.

>> all part of the history of the country. do the math. that's a while ago, but ten years ago, you'll see. ten years ago is pretty fast we have been divided it is like it is -- it is like when you say it is different this time. it is really never different >> you would hope that over all of these years -- >> talking about different from the civil war? >> no, i'm talking about different -- >> baseline is the problem. >> no, the '60s, unbelievably divisive i'm saying -- i'm just saying this is not unprecedented in terms of being divided we ought to be able to figure something out. >> but you would think progress. you're saying there is no progress no progress? l >> why do you think the vix hasn't been higher why do you think that hasn't -- with all the concerns you're talking about and so many people pointing to these issues, how come we're not -- >> i think, becky, we have been in a range, you know, around 400, 410, 415, 390, we haven't

been under 400 for a while, so the market has been reasonably positive, not the last couple of days, but the market has been reasonably positive and we got down to -- so i think as long as the markets are still doing reasonably well, the vix is going to stay under control. if we crash from -- if spy crashes from 415 to 370, 375, the vix is closer to 30. the market has to go down for the vix to go up. >> would anything surprise you at this point, just because when things happened yesterday with the regional banks, some of them dropping pretty significantly, kind of felt like an oh, boy, here we go sort of moment. >> i think the -- no, i don't think anything would surprise any one of us. i also think, too, as people that are ceos and people that are responsible for the organizations, too much comment i think in terms of what every congress should do and what the fed should be doing. and reality today, our responsibility is to take care of the stuff we can control.

and what can we have major impact on? our clients, shareholders and employees. focus on what you need to do to take care of that group and be thoughtful as the market goes up and down don't sit on the sidelines and complain about it and complain later on, i had problems because the fed was raising interest rates. >> right, right. joe moglia, joe, thank you for being here today. >> thank you, becky. thanks, guys >> nice to see you. shares of yum brands down this morning take a look after reporting earnings of $1.06 per share, missed estimates, revenue at $1.7 billion that's just ahead of consensus quarterly same store sales, look at the stock, down now call it about 4 bucks to almost 3% coming up whether we return, eli lilly's ceo david ricks on the drug company's phase three study of its alzheimer's drug showing some very positive signs for patients exciting news. and then later, starbucks' cfo

will join us on the company's latest quarter how that stock is moving around mis morning as well souch to discuss with her. we're coming right back after this focus is to always support the people who live and work there. because you call these communities home, and we do too. pnc bank. (cecily) you're looking pleased with yourself. (seth) well, not to brag, but i just switched my whole family to verizon. (cecily) oh, it's america's most reliable 5g network. (seth) and it's only $35 a line. (neighbor) i got that deal too. (seth) oh hey, bragging buddies! (neighbor) my man! (cecily) this i don't need. (seth) you should give me a call! (vo) with verizon, your family gets the network they can rely on and the disney bundle with disney+, hulu, and espn+ included. all for just $35 a line. that's a savings of $240 a year.

the savings you want. on the network worth bragging about. verizon (female announcer) attention! medicare has expanded dexcom coverage -for people with diabetes. -if you have diabetes, getting on dexcom g7 is the single most important thing you can do. it eliminates painful fingersticks, helps lower a1c, and is covered by medicare. before using the dexcom g7, i was really frustrated. my a1c was stuck. (female announcer) dexcom g7 sends your glucose numbers to your phone or dexcom receiver without painful fingersticks. the arrow shows the direction your glucose is heading-- up, down, or steady. and because dexcom g7 is the most accurate cgm, you can make better decisions about food, medication, and activity in the moment. after using the dexcom g7, my a1c has never been lower. i lead line dancing three times a week, and i'm just living a great life now. (woman) it's so easy to use. dexcom g7 has given me confidence and control that everything i need is right there on my phone. (female announcer) now, millions more are covered by medicare.

take advantage of the expanded coverage by calling today. welcome back the real estate sector facing a myriad of challenges including a credit crunch and lackluster office demand. joining us right now with much more on what has been happening in this sector is cedric lesean, director of research at green street and cedric, thank you for being

with us today. we talk about commercial real estate just about every day at this point some very big concerns we have seen property owners walking away from loans as they come up for renewal. what do you think is happening right now? and where do you think we're headed >> yes, well, thanks for having me so the commercial real estate business is very wide. so office is just a piece of it. and you have a variety of sectors doing particularly well and a couple of sectors doing particularly not well. and so when you look at the fundamentals in the real estate business, you have sectors like industrial, like storage business, and manufactured homes that are doing particularly well, that have expectations for strong cash flow growth. then the other end of the spectrum, you have the office business what is occurring in the office business is a combination of things, of course, the work from home environment that has been the final straw. but realistically when you look at office, to us, it has been expensive for a long time.

negative on the office business for many years and we have seen it as expensive. if you think about the loans that have been made over the years, likely been made at -- against valuation, so somewhat higher than what we would have been comfortable with. if you think about where we're at on the office business, we're down about 25% in property values when you look at appraisals, they'll tell you it is something less than that, potentially much less than that you look at what is occurring in the market, you talk to bidders, folks that bid on assets that were withdrawn from the market, you end up with 25% decline. high quality institutional, and probably a 35% decline for more of a midrange quality, so-called b office building. and that, of course, varies a lot between what we see potentially on coast, where it has been a little bit more important, and in the sun belt market where the declines have been less market >> we have had companies that deal in commercial real estate

but come in and tell us this is something that needs help from the government, that the government in some way is going to have to get the bankers or somebody else to extend the loans as they exist because you have so many loans that are coming due in the next two to three years. a lot coming due this year too and there is not going to be a reasonable way to do that without getting government intervention do you think that's the case >> it is hard to tell. and i've heard some of those folks, we talked to some of those folks in the past as well. i think what is occurring in the office business for instance is the same as what occurred in the mall business a few years ago. and what you're facing is lenders are meeting with their borrowers and the conclusion is we have a problem. and it is not just borrowers that have a problem, not just the bank, so what we're trying to get to and what the banks will try to get to is a combination of things. one will be the so-called pretend and extend, which is loans will likely be extended in terms that remain favorable to

the borrower and in the hope, of course that there is a continued performance of the property and eventually a change in interest rate environment that leads to better valuations. the other thing that has occurred in the mall business, including here as well, is a series of haircuts on the loans. again, the banks may work with the borrowers and say, look, we loan you $100, we know the property is probably worth around that mark, maybe a little bit less, and we can create a haircut on the loan, so you're down to $80, we'll shave it by $20, 20%, but you also have to promise to invest in the property and the office business, these investments are critical because that's what attracts tenants we need both to make ongoing investment in terms of keeping the building presentable to be leased, and the second thing you need to do is very important is to provide capital in one way or another to the tenants as an inducement to come into the building so it can be support in improvements or rent free

periods. those supports, this inducement can be as much as 20% of the value of the normal lease. >> very quickly, you said 20, 25% haircuts you think that gets deals done as the private money comes in? or do you think the haircut will be even bigger if you try to market these things to market right now? >> i think office value should be down 50% rather than 25%. it is a business that remains troubled, remains flawed and i think it will take some time to get there. the public market, however, is already there. so if you look at the public recent investment office, they're already discounting 55% decrease on asset values >> sure. >> so the public market is there. and it is intriguing what you can do in the public market. >> thank you >> thank you very much whether we come back, eli lilly's ceo david ricks and the programming note for you on friday, "squawk box" will be live from omaha, nebraska, at the berkshire hathaway annual

meeting. you can submit questions for warren buffett and charlie munger on saturday, you can watch the meeting, cnbc and cnbc.com are the only places you'll be able to watch live coverage of the all day event. stick around 'lbeig bk.wel rhtac this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. i was having relationship issues with my old bank. next to no interest, the fees... it was just take, take, take. so i broke up with bad banking and moved to sofi checking and savings. now i get higher interest, pay no account fees,

and get my paycheck two days early. get up to 4.20% apy, pay no account fees, and up to $2m in fdic insurance. download the sofi app and earn up to $250 when you set up direct deposit. sofi get your money right. give your small business one tech solution when you set up direct deposit. that checks all the boxes. it's all here with the comcast business complete connectivity solution. peace of mind with cyberthreat security. the power of the largest, fastest reliable network. plus, save up to 75% a year with comcast business mobile. the complete connectivity solution. from the company powered by the next generation 10g network. get started for just $49 a month. and ask about an $800 prepaid card. comcast business. powering possibilities™. as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network,

with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities™. looking at a ten-year chart, we should bring one of those up. this is pretty staggering. not just the news today, but eli lilly's stock. eli lilly announcing positive results from its phase three study of its early alzheimer's treatment. donanemab, donanemab, studies found nearly half the participants showed no clinical progression of the disease after one year joining us is david ricks, ely lilly chair and ceo. as an aside, you're almost at j&j now, david, very close

you're close to $400 billion because you closed -- the stock closed at 383, up 5% today i think j&j is 430 so you're solidly second biggest pharmaceutical company in the world. quite staggering let's talk about the news today with the news today with alzheimer's and what it actually means, proof of concept. 47% of the participants on this drug in a phase 3 trial had no clinical progression at one year sounds great but the placebo was 29%. that's much better in people that weren't treated there is definitely signs of efficacy this has been one of the hardest things to tackle but do we know now that attacking beta amaloids is the answer? >> thank you very much

it's been over 30 years investing in this area to answer your question, it's not a cure but it is a significant step forward today with the efficacy results, which significantly slows the disease down in our study. almost half have no signs of decay after one year and half the patients were also off the drug at one year that's another feature of this drug is it's a treat for a short period of time, get the benefit for a longer period of time. it's a big step forward. you mentioned proof of concept this is not proof of concept it's proof we had a proof of concept study two and a half years ago, this replicates it with incredibly strong statistical significance. it's not the only thing to do but we have a new tool today and we're going to rush it to the fda and hopefully get full

approval by the end of the year. >> there's a competing monoclonal so this is good for you but if your monoclonal can work better than this other one, is there another next stage monoclonal that will bind even more tightly to beta amyloid and work even better or is there something else going on, some other mechanism we're going to have to address? >> we think both we've got another molecule behind this one that works even faster and removes more plaque than this. it's being studied in phase three right now. we have a follow under our own product. it's got an even harder to say name, ramturnatug. and another drug is also being studied in a pre-symptomatic

alzheimer's population or people who have the underlying plaque accumulation but no symptoms yet. we're a few years out from those results but that we think will be key in our study the earlier in the disease you receive the drug, the better you do. so it just is by extension presymptoms might be having a bigger impact with this amyloid mechanism. >> i hate to talk pricing but given the cms and medicare and everything else and the bad experience with not covering this, i'm not sure, not this one but another alzheimer's treatment, what does the government want? what's at play here? it's obviously a debilitating disease that the clinical costs can be exorbitant for families and whom ever. it seems like it would be a slam dunk for medicare to cover something that is such a big societal problem

what will you charge for this eventually and do you think that the government and medicare can be persuaded finally to reimburse these drugs? >> well, we certainly hope so. i'm pretty confused about what they're doing right now myself as you point out, the cost of late stage alzheimer's treatment can be 70, $100,000 a year in clinical costs so slowing that down is good for the health care budget, but even in human terms as well, restoring or preventing memory loss and having self-care and having people be able to live independently longer seems like a pretty good goal for people who paid into medicare all their life and with the hope that if they got sick they would get the treatments they need only in alzheimer's right now is cms denying treatments there's no other disease that that's true. we're working on pricing i can say here it's going to be in the range of other therapies like this. it's not going to be out of

range. they need to change their position that's the bottom line this data today is compelling evidence they've asked for compelling evidence that's what this study is. >> so that's what -- that would be their excuse in the past, i guess, that there's not enough proof that you pay all this money and it might not even work so you show them this and you're optimistic that that could change the cms's stance? >> i certainly hope so, speaking as someone who has had members of my family with alzheimer's and knowing families in this condition of watching their parents decay, why not i don't understand it at all there has been controversy about amyloid removal and whether that does any good. even from our own studies we've had failures and missed the mark but we've had to improve the drugs and improve how we study the drugs. that's how science works here today, it really is a step change in both confidence that this mechanism does something

and the magnitude of this confidence >> do we have a genetic test is it a simple marker for someone who is going to develop alzheimer's? because you said it would be very helpful to start even earlier. so why don't you combine, do some research there and find out when people are in their 30s and 40s whether they have a predisposition to alzheimer's and start it then. >> we've been trail blazing there as well. we have a pretty big diagnostic efforts. most are from lilly. we have pet scanning now looking to amyloid that can be expensive if you're the hospital to get that done. our scientists have also developed recently a blood-paced biomarker. we're using that in the preclinical alzheimer's study i mentioned earlier, the prevention study that's a simple blood test like to measure your cholesterol or any other blood test that would be cheap and readily available so we've developed that as well

there is a genetic subtype that's more at risk and people can find that out already today. those tools are coming >> the blood test is widely available now or it will be? >> it's not. we're hoping to get that about the time we launch, get that available in the u.s. broadly. it's a clinical research tool now. there's different steps in the fda process for these kinds of tests but we'll make that available hopefully early next year >> all right, david. thanks we've got to stop meeting like this when did you report earnings, last week? >> i think i'm free next week, joe, if you are. >> i'm good. we got a spot for you. >> take care >> thanks. >> when we come back, starbucks shares falling overnight they beat estimate but failed to increase its full-year outlook, even though it beat by a big number for the quarter a lot of people wondering what this means there is a lot happening at the

company. are they being conservative? we'll talk to the company's cfo. it's an interview you don't want to miss. starbucks down by about 6% we'll be right 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. ♪ ♪

lily! welcome to our third 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. good morning it is fed day. investors expecting the central bank to raise interest rates again. the big question, though, is this the last hike ahead of that decision, we'll get new employment data. adp april payrolls out in

minutes. and starbucks shares are slump this morning ahead of the opening bell investors wanted better guidance from the coffee giant following what was a fabulous earnings report howard schultz's last. we'll speak to the cfo as the final hour of "squawk box" begins right now good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin we're seeing a little bit of a bounce this morning, the nasdaq up 35 or so. in addition to all these earnings, we also have the fed we're going to get a decision.

and is it friday >> yes, yes! >> what a week what a week. there can be quiet weeks where nothing happens in the general news we've got this every three months, we get the earnings. the fed, we know they'll be around meddling. a 10-year at 3.39. that yield dropped again yesterday on slowdown, below 4% again on the 2-year. >> officials saying ukraine tried to attack the kremlin with two drones last night. the kremlin saying it considers the attack an attempt on putin's life officials say he wasn't in the kremlin at the time and his work schedule continues as normal they say there was no material damage to the building talk about a risk in the market that's not often in the market, there's one. >> some breaking news from eli lilly as well. the drug company out with a clinical trial with the data

from that showing that its alzheimer's treatment -- i practiced this, too. >> you could tell how much david had practiced it >> then i can say it, denomanab, patients who took the treatment were 39% less like will to progress to the next stage of the disease. eli lilly up 5 1/2%. cvs stock off 2% and then there's kraft heinz the company raising its full-year guidance up 3.6%

>> it's the "n" and then the "m." >> let's get back to the markets and bring back our own mike santoli. >> the markets as a whole trying to assimilate everything going on still in this anxious churn mode right now. we're operating when it comes to fed policy somewhere around the border of enough tightening and too much on the two-year look you can see the range we've been in virtually unchanged over two years. if you draw the line, it takes you right through where we were a year ago same as where we were 12 and 24 months ago this has been both an unimpressive rally off the october lows it doesn't really look like one of those energetic, bold, broad market moves i think this activity is serving to try to drain the conviction out of bulls and bears the reason that we're still

supported at these levels is because the market's been playing defense. defensi defensive sector is working. they did keep things in tact on the other hand a lot of growth fears filtering through the bond yields in financials and energies take a look at the financial sector relative to the russell 2000 small cap we know these are correlated and smaller stocks are more credit dependent and trade in line with financial conditions over the last year it's been an unusually tight relationship the russell itself is kind of on the verge of perhaps another breakdown as well. a very split market right here again, it's not because banks make up so much of the actual russell 2000 there is a correlation between the companies that don't make money right now and will need financing and the conditions of the banking sector

take a look, we're getting the jobs number. this is adp and paychecks, really tells the story of all the macro. we surged off the covid lows to very, very tight labor market conditions, a very strong job market and we've come sharply off the best levels but still above the precovid loevelslevel. that's also what you see in the layoff numbers we're still at absolute basis, relatively robust levels of activity at the moment >> you said we worked off some of the overbought condition about 4,200 so a pretty good shake out but we're back to 4,200. if the fed would go 25 and then indicate a pause, i'm just

wondering whether this banking turmoil with dampen -- what that could do normally. they said that that could put us to 4,200 or not. or if they say the wrong thing, we could start heading back down to test some lows again. but this is an important point, i think, in time >> the thing about the market reaction to what the fed does and what the fed says is that it always tries it both ways. you almost always ge t the rall attempt, a little bit of a selloff attempt and then it's a matter of who really heard the core message sometimes it's the next day when you get a rethink of the message. historically a pause is -- >> but we are at higher levels that could take us through the old resistance points. could. >> of course >> or maybe it doesn't >> exactly maybe that's why we got to play the game >> okay. >> all right thanks, mike

>> meantime, the countdown is on to this afternoon's fed decision joining us, noah blackstein, senior port knolfolio manager. tell us what is going to happen and what you'd like to happen. i imagine they may be two different things >> what i would like to happen i could go on for an hour and a half in terms of what's going to happen, it sounds like it will probably be 25 basis points and a pause that seems to be consensus. i'm not sure whether they should or shouldn't do 25 basis points but that's sort of where we sit. there's obviously a lot of issues going on in terms of the regional banks you can see the kre breaking down to new lows, almost back to the lows of covid with all the turmoil with regional banks and commercial real estate and stuff. this tightening cycle is certainly coming to a pause. that's important for the overall markets. i think we've been in such a

macro-dominated market since november of '21 where everything has been trading very similarly that i think we can now move forward a little bit with a little business more dispersion and a little less correlation, focus a little bit more on individual companies i also agree with mike that it's been a very narrow market, especially year to date. i think top seven stocks in the s&p are up about 50% the rest of the market is kind of down. but i do think as the fed -- as we reach peakily -- peak peak illiquidity >> so you're not worried that

the banking sector is going to somehow go off a cliff later and that that's going to somehow impact the rest of it? >> well, the banking sector has gone off a cliff in a regional sector there's no doubt about it. i don't want to use the words too big to fail because i don't want to pay you a royalty i think, andrew. but if you look at those, those deposits haven't gone money bad and the banks haven't gone money bad. they've moved to the jpmorgan and there's a movement to another banking sectors, that's probably the like live outcome likely outcome of this over time whether that's a fast move or a slower move, it's probably going to be a move that's going to last for a little while. so deposit holders have been made whole there's a lot of negativity in the kre. it will certainly have an

impact, especially if you look at how much of resources were sourced from regional banks. on the other hand you have a lot more green shoots that we're hearing in residential housing a lot of things that we've heard over the last year in terms of inflation and tough labor markets really seem to be on the calls. we don't hear about the difficulty in finding people or having to pay out for people and certainly i've heard a lot about supply chain normalization we think those numbers come down and it's probably right norfor fed to pause there's a lot of resilience in corporations they've built up over the last three years. these are significant lly strone companies and it bodes well to higher companies on the market now you can focus in on those companies. >> i hope you're right we got to jump we're up against a hard deadline because we've got adp on the

other side of this break thanks again when we come back, thosedp a jobs numbers "squawk box" coming right back it's hard to run a business on your own. with shopify, you have everything you need to setup your online store, to connect with customers, and to bring your dream business to life. because when we work together, the future is bright. these days, your customers are not just down the hall. they're all over the world. so cute. 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.

♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

bridgett is here. constant contact. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small, and once-in-a-lifetime.

donanemab welcome back to "squawk box. we're just a few seconds away, ten seconds from the april adp employment data. kind of good to get this since we don't have friday's data yet. steve liesman has it 296,000. the market was looking for just 133,000. the good spector adding a strong 67,000, service sector powering in with 229,000 and this is quite above the forecast of 180,000 for both government and private sector of course adp doing just private payrolls before we go to the next screen, i want to give you background here adp has been missing the bls report by about 100,000 since it revised how it does it in august and it's been generally light.

so that's interesting. i don't know if they're playing catch up here or whether or not this bodes an even bigger number here but 296 is the number with small business doing 121,000, medium business 122, large business, they have not been hiring quite as much in recent months, up 47,000. by industry, these are the trends leisure and hospitality 154,000, construction a bit of a surprise and we have had layoffs in the financial activity centers, and manufacturing down 38,000. good news for the fed here at least had it comes to wage growth adp does have very strong, robust data on wage growth up 6.7%, one of the lower numbers and job changers up 13.2%, down a full percentage point from last month. we have been following ukg's high frequency data. they say this month saw a moderate surprise as workforce

activity nearly fully recovered from the steeper declines of march. still strong job growth. i thought there might be a bigger decline in the data we got yesterday, down to 9.5 from 9.9. so sounds like the jobs market is still pretty strong >> dow didn't move i want to look at the 10-year and 2-year, see if that -- if you think yields might rise. >> the 10-year is back above 3.4 and this morning it was below that >> still nothing gang busters. even though it's been light up to this point, maybe it's setting us up for being a hundred over >> i don't know. >> we don't know >> can i tell you one thing that was in kaplan's interview? kaplan arguing that what's happening in the regional banks

could potentially be inflationary from the following way. he says big banks fund big companies, that's your s&p 500 they're not going to be affected by this. it mid-size, small companies that will be affected by a credit crunch and they're the ones that provide competitive pricing pressure to the big companies, keep prices down. if those companies go out of business or can't compete because they have no -- >> what in the world are they supposed to do, raise rates or low are rates? >> that's a supply-side argument, steve, that raising rates is -- raising rates by the feds is inflationary for small businesses that need to borrow >> but that's one degree, joe. but like the tenth degree or the hundredth degree on all this is when they can't get loans at all. that's the bigger story, they can't finance their inventories and that's what kaplan and others see coming. the fed's own staff seems to see

some of that coming with a credit crunch. i think they should pause here i think there is some danger here of a bigger problem in the banking system i hope it doesn't happen everybody i've talked to said, you know, it won't make things worse, which is the same as saying another quarter point hike does make things worse. i'm moved by joe's argument yesterday who said what do you get from inflation in the fight against inflation by waiting six weeks? >> i have to agree i've been shifted by what i've heard over the last week, too. >> now i'm scared about all the marks, too, steve, at the regional banks, all the duration risk marks go 25 basis points worse and people are already -- they're already so skittish about the regional banks if they lose more deposits and have to sell stuff and then we see -- because they don't mark it >> if you mark any of it, you have to mark all of it and then you're in big trouble.

>> piece number one is they already have problems on their books from the fixed income stuff they bought. some have more than others obviously. the other piece is deposit flight and the third piece of this which hasn't happened yet but could happen is the marks that happen to the commercial office loans they've given out there. i think the residential side is okay this is going to be bank by bank but overall the big story here is what happened yesterday the recognition -- and i'm going to exaggerate so take this with grain of salt. you know that store money for nothing and your chicks for free it was your stocks are worth nothing and your assets are free people looked at this and said, whoa, is that the receivership value of the bank i'm invested in and i think it changed the

dynamic. ♪ money for nothing, chicks for free ♪ >> i was putting it in another context, too pausing doesn't mean stopping. pausing means we're going to look around and see what's there. you can pause and have a very hawkish tone to things and decide in six weeks if you're going to raise again or in between if you think it's warranted. pausing doesn't mean stopping. buffett always says you can always tell the guy to go to hell tomorrow. >> people think the fed cares more about the stock market than i think they really do i think the fed depending what it's doing doesn't mind seeing it go down in the interest they're trying to pursue >> we're talking about what happens on main street, what happens with the banks and what happens in the economy as a result of a credit crunch if things -- if there are more problems that happen this is not about the market >> i point i want to make on that, becky, is that i think the

fed can and should care more about what happens to bank stocks because bank stocks are the third or bottom layer of the capital structure of the banking system when equity declines, it has an effect on the subdebt and an effect on the senior debt. it is a little ironic here powell kept rates low for a long time because he was considered about a fast shift and the impact on our financial system it interesting to think he keeps raising rates and has a negative result on the financial system as a result of that. >> great all right, steve, a lot of stuff. we got adp, check that one off now weep got the fed and friday coming up. >> also coming up, we've got starbucks' cfo who will break down the second quarter wrresul with us. and coming up, we have the

writer strike and berkshire hathaway will be live on saturday for five hours we'll be life in omaha, nebraska. this starts at 10 a.m. eastern time on saturday in our coverage stay tuned you're watching "squawk box" and this is cnbc here. aspercreme arthritis. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

are you still struggling with your bra? it's time for you to try knix. makers of the world's comfiest wireless bras. for revolutionary support without underwires, and in sizes up to h-cup. find your new favorite bra today at knix.com

rare comments on the financial markets from junk bond pioneer mike milken. he addressed the current climate. >> we shouldn't have borrowed short and lent long. i mean, finance 101. how many times, how many decades are we going to learn this lesson of borrowing overnight and lending long whether it was the 1970s, the 1980s, the 90s >> and milken said he believes that there will bea decrease i the percentage of loans that are owned by the banking system in the aftermath of the crisis and they will shift to pension funds that have long-term liabilities. >> abc, nbc and cbs news

late-night shows going dark because of the hollywood writers strike julia joins us with the latest good morning >> reporter: good morning to you, becky after the writers guild hit an impasse, picketing started yesterday at ten locations across los angeles the 11,500 writers impacted are looking for what they say is more fair compensation particularly when it comes to streaming. take a listen. >> netflix has frankly been one of our bad actors. we've had a lot of troubles with them and they are one of the streaming companies, among others, that have broken the model that we have always done television and screenwriting and all writing and they need to fix it >> now, the wga is demanding g residuals based on viewership, looking for a minimum number of writers per tv

show, guaranteed minimum duration of work per series and also regulation around the use of a.i netflix is drawing flame for changing the industry but it is also likely the most insulated from the impact of a writer's strike wga president saying, quote, we could probably serve our members better than most." paramount, which is less diversified and more reliant on scripted content will likely be the most impacted. two nights ago they said the member companies remain united in their desire to reach a deal that is mutually beneficial it the writers and health of longevity of the industry. and comcast which owns our company is represented >> that is a really long list of

demands that they haven't gotten to the table on yet or haven't figured any solution around. they want streaming residuals based on viewership. we kind of knew that would be a big deal they want a minimum number of writers per tv show. they want a guaranteed minimum duration of work for their series and regulation around the use of a.i that sounds like too long of a laundry list what is the one biggest, most important thing they'll have to resolve? >> i think it's the streaming. writers were paid on how many times their tv shows ran and how many people saw them there was this fundamental idea that if your content was really good and a lot of people saw it, you'd get paid more. the streaming business got away from that. you get a flat fee the writers have no idea how many times it's been viewed.

there's that disconnect. netflix would say you pay a flat fee, can you choose to sell your content to us or not as so much content has shifted over to the streaming model, the fundamentals of the business have changed so they're really trying to bring the streaming business more in line with the idea you should get compensated >> in terms of timeline, what do you think will be a tipping point in all this if the directors, their contract i think is up next month, it's actors after that. does that layer into this in any way? and is there an impetus for the entertainment companies to actually come to the table there's been an argument that we talked about at this table about the idea that, you know, in a challenged environment if there's a level playing field in terms of nobody being able to create content, that's a lot of saved money. >> it's a lot of saved money but remember there are a lot of other alternatives when it comes to content now, right? it's not just reality tv

are people going to be spending more time playing video games or watching content on tiktok it's a very different environment than we were in 15 years ago when we saw the last strike, which, by the way, lasted 100 days and cost the l.a. economy over $2 billion i think there's a lot of pressure for both sides to come to the table >> okay. julia, thank you when we come back on the other side of this, a can't miss interview with starbucks' cfo and another look at some of this u'rning's top earners. yore watching "squawk. this is cnbc

(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. you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

welcome back to "squawk box. e eli lilly back with clinical trial data showing the companies product slowed the disease >> it's not a cure but it is a significant step further beta amyloid removal is a key to slow down the disease.

it's not the only thing to do but we have a new tool today and we're going to rush it to the fda and hopefully get full approval by the end of the year. >> steady data showed patients who took the treatment were less likely to progress to the next stage of the disease becky? >> and vice president harris will meet with companies tomorrow to talk about the responsible development of artificial intelligence. on that topic, ftc chair l lina khan on with an op-ed today titled "we must regulate a.i. here's how." she says her agency is looking closely at how it can protect americans while at the same time promoting fair competition she said she can already see evolving risks, including that big tech firms will become even more dominant as they move into

a.i. he says generative a.i. could tus turbo charge consumer fraud. she really looks at this as what happened back in the early 2000s where you saw the rise of web 2.0 and all the big companies that built around that, how they shut out competition, and she says regulators should be taking some very stark regulatory moves to try and change that she pointed back to ibm when they forced them to separate hardware and software and looked at at&t and how they broke up at&t, too. if that's something that she is serious about or that she's able to get serious traction with, where do you look? microsoft and chat gpt do you look at google and what they're doing with a.i.? >> you could argue the chat gpt is almost an acquisition i think it's turbo charged --

>> but could they stop it? >> at this point i don't think they could stop it they could try to undo the deal if they so chose and argue it's actually an acquisition known it's structured as something that doesn't look like an acquisition, even though a lot of people would say that it is for me the question for her is how much does she care about the evolving progress of this and i think this microsoft deal super, super charged that, essentially in a good way, though people may think it's in a bad way. those are the big questions. i don't know >> we want to lead in this country. that's one -- but then she brought up some things front and center that are worrisome about a.i., whereas you know i'm worried way out here >> yes >> i am. i'm very worried because there would be -- do you think you can design humanity and feeling and

empathy and sympathy into a machine? >> you're so -- you know what, this is a discussion for later >> but near term i'm scared. she highlighted things that scare me near term but long term i'm petrified. i'm not the only one some big thinkers are worried about the long term. it would be nice to have human a hundred years from now >> it would be, drinking coffee. let's talk about starbucks humans are super charging themselves by drinking coffee. same-store sales increased in china for the first time since 2021 it was considered a very good report it was the last quarter under howard schultz' reign before he handed over the reins of the country. you can see the shares are down premarket. investors seem to be focusing on the fact that starbucks affirmed its fiscal year outlook and didn't raise it.

joining us, rachel, it's great to see you this morning. >> good morning. good to see you. >> it's fascinating to me. it was a pretty great report all around and yet investors i think are asking this question about, well, if it was so great, why is the next couple quarters not going to be even better? >> the way i would look at it is we did have an incredible quarter on every single measure. that was evidenced by growth across our portfolio we saw momentum in our reinvention, we're making great strides in operation an excellence and rigor and we had strong recovery in china, which speaks to the resiliency of our partners and loyalty of our customers there. that gave us the confidence to reaffirm our guidance, which we think reflects not only confidence but the momentum and the opportunity we have ahead. >> but is that reaffirmation confidence some people say, well look, look at where you jare just in this

past quarter are you being conservative you have a new ceo who just started in the past month. >> i would call it confidence. when you look at what that guidance is, it's 10 to 12% revenue growth, solid margin expansion and earnings growth at the low end of a 15 to 20% range. i would call that confidence >> right what kind of wiggle room do you have for what some people think going to be a recession come the next six months? >> i think definitely we are in an environment where there are a lot of head wounds and that impacts our customers. it's why we focus on creating a business that has a resilience we have a leading digital program. our members in the u.s. grew to 30.8 million, up 15% this quarter. and our rewards members are an indicator of a consistent demand so that's important. in addition to that, we have very purposeful product innovation, things like

refreshers, and espresso those are beverages hard to make at home so it gives people a reason to come to our stores i heard you talking about bots and a.i. we have human connection that gives customers a reason to come back to our stores. we have an evolving capability around convenience all of that gives us a business strength that we feel will give us resiliency despite the headwinds in the environment. >> are you seeing any step down in terms of price on total purchase >> we aren't i mean, we are always cognizant of the fact that, you know, the inflationary pressures and the environment puts pressures on our customers. so that's why we really focus on trying to create the very best experience and the products that we offer and the experience that we offer and the ways that they can connect. and so today we are not seeing our customers trading down

that was evidenced in the quarter. our north america business had a 17% growth to 6.4 billion in revenue. so today we're not seeing that >> a lot of people now look at starbucks at least as an investment as a play on the reopening of china >> yes. >> where do you think they really are and i also want to talk about what do you think are the risks of doing business in china now not only from the government of china but from the u.s. government and other governments in the west which may very well put pressure on you? >> i think it's important to note that we were incredibly proud of the recovery that we saw in the quarter in china. that was very deliberate i mean, our partners there, our leaders there have continued to invest in the business all throughout covid and they built an operational muscle that allowed us to be able to meet the demand. we have a market leading portfolio, we have an evolving omni channel capability which allows us to create new revenue and we have a strong connection

with our customers so we see a lot of opportunity that was even in the guidance. we talk about the fact that we will continue to see momentum in our average weekly sales as well as in our comps. so we expect to continue to recover and we are in a position of strength to be able to lead in this next phase of recovery when we think about the long term, we are unwavering in our commitment and our long-term growth opportunity in china. >> do you have any fear, as i said, less about maybe how china feels about starbucks but how the u.s. feels about starbucks doing business in china? >> yeah, for us it's really about we operate in over 80 different markets. it's important that we find that level of connection in every single community and every single market in which we operate. when you look at what our proposition at starbucks is that we nurture human connection. that's incredibly important and that resonates no matter where

we are or operate. >> this was the last quarter under howard schultz's rein reign. what's that transition like for you? >> obviously howard has the inoaf innovation, he has the intuition. and now they'll bring in a whole different perspective. when i look forward i see nothing but opportunity ahead and it's a great time to be at starbucks. >> okay. well, we're drinking starbucks here on the set this morning >> i know, i like to see that, i like to see that >> thanks again. >> thank you >> and coming up, jim cramer's first take on the trading day. you can get the best of "squawk box" in our daily podcast. we look hard and find the absolute best.

follow squawk pod on your vote podcast app and listen any time we'll be right back. the inspire implant to treat my sleep apnea, i'm sleeping much better. in fact, it's making me think of doing other things i've been putting off. like removing that tattoo of your first wife's name. but your mom's name is vicky too! that's even worse. ( ♪♪ ) inspire. sleep apnea innovation. learn more and view important safety information at inspiresleep.com. lily! welcome to our third 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.

need relief for tired, achy feet? or the energy to keep working? there's a dr. scholl's for that. dr. scholl's massaging gel insoles have patented gel waves that absorb shock to hard-working muscles and joints, for all-day energy. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

welcome back to "squawk box. the cpj ringing the opening bell at the nasdaq today.

it's 309th annth anniversary of press freedom day. 67 journalists and media workers were killed worldwide in 2022. that has been a sharp increase and we are happy to see this group celebrated today on behalf of all of our colleagues around the world. >> let's get down to the new york stock exchange and check in with jim cramer. we have so many things to talk about today. >> sure. >> but the story i keep kicking around and trying to get my head around is eli lilly, what happens with donanemab, just because the huge promise that can bring to a patient population that to this point has really had no other alternatives in. >> i think if we didn't have another miserable day on tap, the stock would be up much more because this is far better than what biogen has. there are some side effects that people can deal with once again, we do not have a

good market so nobody is going to pay up for something like this if you think through about the franchise and how much they have in the pipe and i do a lot of work with the american brain foundation, i'm going to have more stuff today >> good. >> but it's what we've wanted. and if you start early, as david said, and your parents have alzheimer's, you're going to have less of a chance of having alzheimer's. it's a very expensive way to have less of a chance. it might be one and a half years, two years so far you don't get it but for a lot of people that's a very important period of their lives. >> i did see a number, jim, and it starts with a "t" if you did try to treat everybody who could use it it is something to think about as far as how to do this obviously it would save a lot of money but it would be incredibly expensive. we need not just a hereditary marker, it would be great to have an actual marker. >> yes

>> we're getting close we can sequence everybody essentially. >> otherwise it wipes out medicare we didn't do that. >> you're looking at the cost of long-term care for people with alzheimer's who can live very y more than one and a half or two years here >> that's the difference you can stop after >> exactly right >> you're as good as david ricks now. you're getting it. you got it >> the stock was up $30 when it first came out it's just amazing. it's a question of how much can be paid for and how many months that you get that you don't get alzheimer's. but if your parents have alzheimer's, you want this drug, and you want it right now. you want to start taking it tomorrow >> jim, let's talk about all the doom and gloom, even in the good news of the adp beginning a stronger than expected number and the box that puts the fed in >> this is like 2008 where you want to break the banks.

people want to break huntington, good banks, and the banks are being broken by the etfs, and they're shorting them just like 2008 if the fdic doesn't step up and say, we're going to temporarily suspend or request more money or guarantee, we'll do it and then you see a sharp move up fdic really blew this weekend. they had no idea what to do. they were clueless, and they were uninformed, and they gave a very good bank to jpmorgan because they created a situation where only jpmorgan could win. if they continue to do that, then i think it's going to be the denouement of every single bank on your screen right now, and i think those banks have some power in congress and ability to defend themselves, but right now, they're lambs for the slaughter. >> all right jim, they're wrapping us, but it sounds like you've got a lot more to say, and i think you should stick around. see you then "squawk box" will be right back overnight means... the smoothing benefits of retinol. are now for your whole body. plus, fast-working crepe corrector diminishes wrinkled skin in just two days.

gold bond. champion your skin.

welcome back to "squawk," an update on the story we told you about earlier this hour, russian officials telling state media that ukraine tried to attack the kremlin with two drones last night in an attempt on putin's life officials in kyiv say ukraine

had nothing to do with the attack they say attacking the kremlin achieves nothing and would change nothing on the battlefield, and so the debate now continuing over what actually happened. all right, thanks, andrew. this afternoon, investors are going to pay close attention to what fed chair jay powell says about the outlook for interest rates right now. let's get to the chief fixed income strategist at danny montgomery scott, and jj kinahan, ceo of ign north america. i'll start with you. we'll get back to the fundamentals of the fed in a second, guy, but let's start with jj. how is the market set up is there anything you can discern from what you do about what's likely to happen or how traders are getting ready for this today it seems pretty important, jj. >> it is obviously very important, joe, and when you look at the probabilities, we're starting the morning with an 88% probability of a 25-basis-point hike, so i think that that, you know, anything over 75, you got

to figure is kind of baked in, if you will. i do think, though, that when chairman powell comes on speaks afterwards, that is what people are really concerned about is he going to give a hint at slowing down, et cetera? it's really interesting to me how so many people continue to say, oh, we're going to slow, we're going to stop, et cetera chairman powell, i think, has been pretty even-keeled the whole time on what he's going to do we're going to continue to fight until we see inflation cooling off. and you know, you guys had an interesting segment earlier about how we're at perhaps a tipping point in terms of what this means for regional banks, but the market continues like an im impetuous child. it's interesting to me from that point of view. we'll see if he gives any hint to slowing down, because that may be the catalyst we actually need to get above 4,200 on the s&p 500. >> were you watching earlier

that's what i was think, jj. what do you prefer now is that old guy in trouble or something, joe kinahan is jj better >> it's just more people call -- >> all right >> more people call me jj than joe. i'll say that. >> because we did get -- we got a pullback yesterday >> you're the only real joe, right? >> that's right. the other guy's name is charles. >> that's why i did it >> okay. but my point was, you know, we're pretty close to all-time highs, and i don't know, we've been waiting for the pivot for so long. if we actually got it, i wonder if that would do it. >> i think the federal reserve cares a lot less about the level of the equity markets than we think they do. fundamentally, what we've got on top today is as jj referenced, a very high probability of a rate cut and then likely the federal reserve, i suspect going forward, will signal greater

data dependence, so in the sense that, yeah, we're probably going to pause in our raising of interest rates, but we might consider resuming rate hikes part of the problem with this, of course, is that much of the inflation data that we're measuring and the fed is responding to on a month to month basis, a lot of this is lagging, and that's no surprise. and the federal reserve recognizes it. however, the framework or the lack thereof, of powell, is somewhat locked into, requires a response regardless of whether it is lagging or not >> so, you -- you think, guy, that -- has it been the speed to which we got here, or is it the absolute level of where rates are that is causing this stress in the bank -- i guess it's just the speed with which we got here >> i think it's mostly about speed, yeah. i think you're right on that point. so, the analogy i like to use is that systemic liquidity, are they measured by banking reserves or what have you, the level of that liquidity in the pool is very high, but the pipes

are really skinny, and getting that liquidity from one place to another, for example, out of bank balance sheets, regional bank balance sheets and into money market tufunds, when thos pipes are skinny, you tend to break stuff, and if the federal reserve chooses a more measured rate of rate hikes, or chose in 2020, you're unlikely to have that, to extend the metaphor, pressure build up in the pipes that causes problems >> okay, thanks, guy jj, you got 20 seconds to just summarize what we can expect here >> well, i would expect that the fed's going to come out, say the same thing they've been saying we're going to continue to measure the situation, and i think the good thing is going to be that some of the numbers coming out may actually cause them to slow down, but i don't think they're going to commit to today one way or the other so, we could see some volatility right around the move, only to sort of settle down as we head into the rest of the earnings season >> great perfect. thanks, jj

and guy, thank you >> y'all have a great day. >> we'll see final check on the markets then. now the dow has turned negative, just slightly. there's that -- i don't know if it's all important, but the s&p, right around 4,100 right now, and kind of wish it was -- i could see tomorrow, but i can't. we'll see what happens today after the fed. make sure you join us. you can see us tomorrow. "squawk on the street" is next ♪ good wednesday morning, everybody, welcome to "squawk on the street," i'm david faber along with jim cramer. we're live from post nine at the new york stock exchange. carl has this morning off. let's look at futures as we get ready to start trading a half hour from now. i don't know what you call that. not much >> inconsequential >> thank you inconsequential open, that's what we're going with right now. let's get to our road map. it does start with fed watch wall street