still the market doesn't believe everything and then, you know, saudi arabia needs to go back to the drawing board. $68 now, and we can't fill the svr until when >> we can't do it now, not with the debt ceiling >> what? oh, not with the debt ceiling. we need to get that done thanks for being here. >> pleasure. >> make sure you join us tomorrow "squawk on the street" is next ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange premarket's had a lot thrown at it this morning, weak guidance in semis, and a big ipo today. ten-year, 3.34% is about a one-month low. road map begins with the banks, though first horizon plunging after this deal to be acquired by td was scrapped >> shares of pac west also down sharply, that regional bank

weighing strategic options, including a possible sale. and the fed implements its tenth consecutive rate increase. rates are now higher than they've been in 16 years, opening the door to a pause, though, in its tightening cycle. first up, we'll begin with td bank and first horizon ending their $13.4 billion merger agreement, citing a lack of clarity on when they would get some of these regulatory approvals. on a call to investors this morning, first horizon's ceo said his company tried everything to get the deal done. >> i'd like to be very clear the fact that regulatory approvals were unable to be obtained by may 27th did not relate in any way to first horizon. we're informed by td that they could not provide an updated timeline for an extension, and they could not provide assurance of regulatory approval in 2023 or 2024. let me assure you, we pursued every possible path to complete this transaction without

success. >> lot of discussion this morning, guys, about if this deal is running into friction, sl is there unnecessary pressure being put on banks by regulators >> so many different things here that at least i can share from having spoken to people familiar with the situation, let's call it first horizon was never head aware of what the regulatory matters really were. never. there's something called capital journal that's reported on the possibility it was a fair lending problem at td, but my understanding is they were never told, that td was uncommunicative when it came to sharing the specifics of this regulatory impedestriaiment. number two should be more concerning for the overall market i'm told the fed said, we have confidence in you, first horizon. you'll be okay if we don't let this deal happen and that does lead one to wonder whether they fully appreciate the depth of this turbulence

right now and what it could mean it seems hard to imagine they can't, but you would, again, imagine in an environment like this where you have an opportunity to put a regional bank in the hands of a very safe acquirer, that you would actually do so that you would bend over backwards as a regulator to make sure that happened and instead, they send a different sign, saying, hey, we're confident you'll be fine we can't let this deal happen, and as is, at least, at this point. and that's where we stand. >> i think you -- really great point. you know i've been a big fan of jay powell, but they seem to not understand the depths of the problems here, because first horizon, they were regulated they came on every quarter they were a good, solid regional, and considered to be one of the best and most conservative regionals, and if this is what's happening to first horizon, then if you look at the rest of the regionals, i

think you would say they're in far more trouble than we realize. i just can't overemphasize that first horizon is far better than many of the banks that are in the key indexes that are really crushing us. this is the -- you have an s&p etf, you have another etf. and first horizon is the star. >> yeah. >> and so, if first horizon's in trouble, then i really think we have to kind of rethink how suboptimal the situation is for every other bank >> to be fair, the environment has changed dramatically since this deal was first announced, so with it breaking, the stock was going to come off no matter what >> first horizon, every growth area in the country, bryan jordan is one of the best lenders, he's as good as it gets and the growth there was excellent, and they were a very conservative bank. >> one reason why the fed may feel like they'll be fine. what's unclear in this market is who will be fine and who won't somebody said to me, jim, and this goes to all those people

who are shorting these stocks, there is a lot of dry tinder, and there are some arsonists out there. >> arsonists well, i mean -- >> those who are shorting the stocks in part to try to create -- to try to create the very instability that then would get them to an end >> the indexes that are being shorted, for instance, the s&p one, it's a new york community bank, and then m&t these are all in the red-hot griddle. regions rf, citizens, truist, huntington bank, ewbc. now, there are two indexes one has pnc at 14. these are the percentages that if you short, this is what you're shorting. >> you're talking about the percentage they represent of the -- >> yeah, the two indexes >> of the etf? >> these red are the indexes be used to break these banks. 50% of their positions are short. so, it's very easy to break these banks, and i thought that the fed did not -- it focused on

march. it didn't focus on what's happening right now, and that was distressing to me, because carl, it's not -- like 2008, it's not hard to take these banks down >> and we should make clear to viewers why this matters for macro, because so many of these businesses, small and medium-sized, count on region regionals and community banks and that's why we're hearing bill ackman and necesslson peltz suggest these need to be raised. >> if the fdic doesn't get in a room and says, temporarily, we have to raise to a million, if you have your money in any of these banks, if you have -- i mean, i have run at various times charities, and i can't keep more than $250,000 in any of these banks that would be -- that wouldn't be a fiduciary >> remember, if you were going to go to universal deposit insurance, you need an act of congress to do that. that's legislation that's a long time >> could you have a temporary

levy on banks in order to be able to get through this >> the other thing i'm told, you know, that fed program that was unveiled, maybe it was a week after svb, or even less, where the banks were able to pledge collateral to the fed, told that has been fairly stringent and there are a lot of ways that could have been -- whether it's duration, rate, or collateral, that things could be toggled there. >> there were people who said, this is -- >> there were banks that would like to take advantage of it that have not been able to because of -- because of the way that they're looking at it, whether it's duration rate or the nature of the collateral it could be changed to make it more available, and it hasn't been by the fed. >> that's very distressing, because i had felt that if you had credit, good paper, agency paper or treasuries, then that was the way out of this. so, if it's not the way out of is this, then only deposit insurance being increased is the way out. >> but it goes back to the idea

that how seriously is the fed taking this, as we called it, mini-crisis? many had thought once first republic was taken into receivership on monday or sunday night, that we would be through this, including the likes of jamie dimon and many others. we may not be. it may be being created by those who are shorting the stocks, the very panic that then would lead to some of the outcomes that we're talking about, but nonetheless, here we are >> but david, you're talking about really fine institutions that are key to the fabric of our country, m&t, region, citizen, truist. we can't not have huntington bank if you're the congressman right now, and you have the depth of what your community is about, i think you would say that, did jay powell read the papers >> what do you mean? jay powell raised rates 25 basis points without seemingly a necessary concern about what the tightening is going to be like that comes from all these banks that aren't going to be lending anymore. >> his point yesterday in the

presser was that when he was in government, there are many more banks than there are today >> if we want consolidation, we could have, i would say, some real midnight or 3:00 a.m. consolidation going on the problem is, david, pnc is in one of these indexes that's in the second index people are so busy breaking pnc, how do they have the ability to be the consolidator? >> pac west would like to be consolidated >> i really appreciate when insiders buy stock, but this thing's happening so fast that i don't sit there and say, you know what, geez, there's some insider stock bought what i say is, okay, everybody, did they not realize when they put jpmorgan together with these others that they left the door open the fdic left the door open for comerica, which is an extraordinarily good bank, in the '30s, comerica was an extremely good bank. comerica could be broken by these indexes. i think the notion of breaking a stock is so alien to what the

fdic is, they were somewhat like bambi. bambi did not -- not bambi's mom. there's a thumper notice here. >> you're talking about naivete. >> yeah, i just think that, like, when i look at a pac west, it was almost instantaneous with the press conference being over, when you realized, david, you realized, he didn't address what's happening but he doesn't favor national -- >> you mean powell >> jay powell does not want national -- >> he did argue yesterday, and this was one of the elements that made some people feel he was dovish, was that the credit tightening now is not a theory it's a fact. and suggested that the loan officer survey we're going to see is going to reflect that >> well, right now, they're lucky. i've not found anyone other than auto companies who say that there's been any sort of strict lending. but fagain, i want to go over te need of this country to have a key bank chris gorman, who is an

excellent banker, a cleveland bank, key, if we decide it's not an imperative -- this is what i went over sunday night -- if we decide it's not an imperative to save key, which is by no means in trouble, then what do we do >> really quick, this gallup poll that shows that nearly half of u.s. adults are worried about the safety of their deposits it's a higher number than '08. do you think that is reasonable? >> yes, i think that if you're a fiduciary, you don't have any choice, because i don't know how you would face the police athletically and you may have $300,000, and they lose $50,000 because they didn't take it out. >> i mean, again, though, every time we're going to have a failure, if we have any more, there's going to be a systemic exemption, and all the deposits will be covered, or it's going to be sold to a bank that takes them over, a la what happened with first republic and jpmorgan, so i don't know how concerned you really should be >> there's no concern except for

the fact that these are the fabric of america. >> i know, but -- >> have you ever tried to raise money? >> i guess my point is -- >> go to jpmorgan. >> when it comes to it, you're not actually going to lose your money. so, don't move your money, because you won't lose your money. >> but you want to see a consolidation and a radical decline in lending >> that's a larger issue >> well, some would point to the russell this morning and why it's underperformed for so long now. >> what's happened is you could argue that the reason why the treasury's long-term are really facing a recession is because we have a wholesale wipeout for no particular reason. no credit reason remember, none of these banks -- we did have some issues. the banks that went under, i could argue, had credit issues >> some of them were very unique in terms of their clientele and therefore their lending to some extent, and we do obviously have outflow of deposits not because of fear but because of the desire for higher rates.

so, there's that and then there's the larger question of the banks' ability to continue to lend, given their cost of funds and what may certainly be a pullback on their part but the idea that everybody should pull their money because they're not going to get it insured has not been proved out. >> no, i mean, if you're on the conference calls for the regional banks, for the really good regionals, say, in ohio, which are very good banks, they had very sticky deposits, there's no one pulling out, but this is a shoot first, ask questions later because these indexes are bringing these down. now, if i were -- i was once with the ceo who said, listen, i've got to get out of an index because the index is pushing my company down these people should be petitioning to get out of the index. that's not something that's out of the realm when i see the -- i'm going to pick on comerica for one second, because it's a great bank. when i see their percentage of uninsured share of customer

deposits, percent above fdic guaranteed threshold, you're in a "good luck" situation and i don't think they deserve that. i'm a defender of these banks. these are the fabric of our country, and if you let them go and decide the only bank we should have is jpmorgan, then take us back to 1907, which i am now putting in the, david, a disgrace what they're doing. it's a disgrace what the fdic and the fed, and no one has backed jay powell more than i have >> now you do sound like what peltz said to the "ft" this morning. we'll get to paramount, getting crushed on these latest quarterly results. we'll get to semis, qualcomm and qorvo, shopify, itsy, and the big ipo today.

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shares of paramount global sliding this morning, maybe down as much as 18% overall on just, you know, worse than expected quarter weighing on that first quarter were a number of macroeconomic issues, perhaps, as well as a dividend cut, and a significant one of course, when it comes to the dividend, it's a question i've asked bob bakish numerous times. bakish telling investors, by the way, on the earnings call that occurred earlier, the uncertain and challenging macroenvironment did impact the financials. as for that dividend, 24 cents

to 5 cents paramount plus did well. 4.1 million subs, but the losses pile up. $511 million essentially loss there as they continue to try and scale that service they do have or have gotten over -- to over 60 million subs. dividend cut finally happened. many would argue it should have happened quite some time ago, this when your company is free cash flow negative of $544 million in a quarter. yeah you might want to cut a dividend that's costing you half a billion dollars. tv media revenue, by the way, also down about 8% studio even lost about almost 100 million bucks. this is with the great year there with tom cruise and everything else, and yet you had a loss there so, that does raise some questions as well. and of course, then, the larger question will be, can this company ever get to the scale

that it needs to in its current incarnation, or does it at some point need to find a partner and by the way, does it have enough runway to get to that point where it would find a partner? who would that partner be? we always come back to our company as a possibility, but again the regulatory questions there are significant. the structural things that would have to happen in terms of just dealing with cbs and/or nbc to allow for a deal it gets complicated quickly, jim. >> yes >> but you know, there had been a trade on for some time given warren buffett's -- berkshire owns a good amount of paramount, 15% plus buy paramount, short warner bros. discovery. that's unwinding >> warner bros. discovery is -- >> it's reporting tomorrow morning, i think >> david, they directly talk about softness in tv advertising. it's so -- is there anything that is working for them >> well, you know, i will say, ads were not as bad as many had

expected and so, while it's weaker, it wasn't something that is a surprise i just think overall, sort of the losses piling up, what you're spending on dtc, what you have to, to continue to grow subs, is an issue. warner bros. discovery, tomorrow, we'll see what those numbers look like especially when it comes to their dtv product. they're talking about a lot of the free cash flow being weighted toward the end of the year they did $3 billion in last year's fourth quarter. $800 million in interest payments for the first quarter you can see why. >> they have a decent bond structure. they manage to do that but david -- >> this will pressure warner bros. discovery shares too >> let's talk unscripted for a second the notion had been that shari redstone did not want this dividend cut >> i'm sorry, what >> she did not want the dividend to be cut. >> well, the dividend helps support her. >> well, yeah. >> you know, when you're getting paid as a percent of that

$500 million, it's not an insignificant amount that goes to national amusement. yeah but you could argue that, you know, from a governance perspective, why this board didn't move more quickly to potentially say, hey, it's time to sort of cut back, i think it's an issue. >> he does come -- bakish comments on the strike, says there's a pretty big gap in terms of the two sides coming together on an agreement adds, although slightly dilutive to revenue, accretive to cash on hand the "x" factor there is really the text streamers that are new to this kind of negotiation. >> look, i got to come back to this gaining of subs was the way to promote your stock. david, gaining of subs meant nothing, almost as if when you gain a sub, you don't make money. is that possible >> well, it changed. it's no longer about adding subs it's about actually doing it profitably, and every one of the streamers is much more focused on that. warner bros. discovery, fairly early there.

disney is certainly focused on it peacock is going to be losing $3 billion a year at this point. you see what the loss is at paramount plus, but that's the new world, and to carl's point, they may save some money by not having to pay writers, but the question becomes, is it going to be enough programming? >> are you speaking check mate is that what you're saying >> you mean a.i. taking over the writing function >> it's already in the mix >> we're seeing this happen right now. and i mean, a lot of companies just feel like -- zillow talked about it i feel like i have to work it in every day with you >> need the physical touch just to be sure >> want to be sure >> we'll get cramer's "mad dash," countdown to the opening bell, plenty more earnings to get to as well we'll work our way through pizza and shaq and peloton, moderna when we come back.

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take a look at some s&p laggards we worked our way through paramount and some of the banks, obviously. qualcomm is the other story that we'll get to on this june quarter guidance and what qorvo also means for semis working our eng llomg ifiummer. opinbe cinupn ve minutes. our customers don't do what they do for likes or followers. their path isn't for the casually curious. and that's what makes it matter the most when they find it. the exact thing that can change the world. some say it's what they were born to do...

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the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's get to a "mad dash." you can hear them already. starting to scream, kenvue coming public, first ipo we've seen in a while. >> it's a big one too. there's a company called shopify, and everyone likes it because it's the alternative to amazon small, medium-size business. one of the problems they had is they had to do logistics, and logistics is very hard so, what they've done is off load logistics to flex port.

originally gso, flexport can do it they cut 20% of their workforce, and they now have become the de facto amazon for small, but they don't have to do the nitty-gritty stuff, which is ship, and i think it's incredibly bullish i will have them on tonight, and it's remarkable company, but the one thing they couldn't do on the scale of amazon was get it to you they can process they can have a front -- they have the front of the store, but they no longer have to have the back of the store, so it's very good >> is that what the stock is reacting to? >> it's probably not done, because this is a remarkable canadian company that was burdened by the part that they couldn't compete with amazon >> there's also the 20% head count reduction. >> yeah, the head count reduction. they just don't need as many, so it's like a clean -- it's lean amazon without the parts that are really expensive >> is that kind of head count cut what you think amazon also needs to do? 20% after doing some last year >> frankly, i cannot hear you.

>> enormous number of employees. >> are you saying that amazon is over -- has too many people? i don't think that andy jassy would agree with you it's going to hurt your same-day >> there's the opening bell and the cnbc realtime exchange, at the big board, it is kenvue, celebrating its initial public offering, and we are going to talk to the ceo of the j&j spinoff in a bit at the nasdaq, first responders children's foundation. >> do you think this is why they were able to do -- it was very loud, and they couldn't hear each other that might be. i happen to like kenvue very much because it happens to be a little cheaper than the other companies in the same game this is up against another spinoff that's been quite good

they're going to have 3.5% yield. >> so, you kind of -- you like it coming out of the gate here, kenvue >> do i like it out of the gate? i think it's a steady eddie company in an area that people versus, say, huntington bank >> yeah. >> i mean, unfortunately hu huntington bank, a company i know well. national imperative to save that bank our federal reserve chairman didn't even indicate there was a problem. >> by even putting it in the perspective of, save that bank, don't you think you scare people by saying that. >> i hope so i say they know nothing if they don't do something right now, the fdic, because i don't mean to scare anyone. the -- it's in an index. that index will be pushed down today, and then it can break anything you could break anything with that index this is not 2008 these companies haven't done

anything wrong what'd they do they brought treasuries. >> they did nothing wrong. >> huntington bank is the most conservative when it comes to the insurance. i pick them because they're so conservative, they have no problems, except for the fact that they're in an index >> all true, jim all true >> why is that allowed >> we thought this was kind of over and done with let's remember the deposit outflows were not as significant in many of these banks as were feared we saw that when they reported earnings what's going on now is just fear being created by those who are shorting the stocks and successfully looking at their balance sheets or their mark to market and saying, well, there could be an issue here there could be an issue there. of course there could be >> but if the fdic were to come out today and just say, listen, we have emergency procedures this is over we're not going to have a situation where people would pull out because of this, because these companies have done nothing wrong, then you would have -- i'm not trying to call a short squeeze, but you would have the pressure off a bank like key.

key is an amazingly good bank. comerica survived the depression, for heaven's sake. how can we let this happen how can the fdic let this happen >> again, the stocks are not down that much let's not forget -- >> it's early. >> -- their ability to make money is somewhat impaired right now, jim >> yes, but i just think we have to take viability off the abtab. these are excellent banks. >> all right, but i mean, to be fair, they're still in the 30s and 40s and 50s. >> you want us to buy the hell out of them? i can't do that. when these indexes -- when they start getting the kre open again, the shorts smell blood, and these banks are doing everything right they haven't done anything wrong with their balance sheets. this is not first republic this is certainly not, david, silicon valley bank. >> first republic didn't do that much wrong with its balance sheet. >> but these are good, respectable banks that are being crushed. first horizon, we don't know what happened. >> are the broader indexes -- i mean, we're down 11 points on the s&p.

is that because these are the large companies for whom a credit crunch won't be an issue? >> i think that getting a loan at a bank that is worried about preserving its deposits might be harder today than it's been in a long time. i mean, what i'm saying, david's right. am i fomenting something no i'm seeing a juggernaut happen, a freight train that is headed toward another freight train that could be easily avoided right now if the fdic said, we will extend insurance if you want it, and this ends this crisis ends and that would be good for america. >> all right, here's a positive note for you this morning. arconic is getting bought at a decent premium it's a deal people were aware was in process but perhaps last sight of because the stock is up a lot. 30 bucks a share, cash, apollo talk to marc rowan, who runs apollo, just a few days ago.

it's worth about $2 billion total enterprise value market cap's below that, but there is some debt here. take a look at that move this is not your old arconic this is just what's left of that company. >> right >> we talked about the expense -- i mean, we talked a lot with him, and i talked with tomo bravo about the cost of. >> announcer:ing financing >> what do they like about this? i like the business. >> the helmet business got split off. >> there was a lot of value, the aircraft business that i liked so much. is there anything in particular that they see in arconic >> i do not know, jim. all i can read to you is a quote from the press release in which they say, "their talented management and employees serve markets that are growing, and they're committed to investing significant capital in the

company to secure its competitive position and world-class product offering to continue building on arconic's journey. >> the journey >> the journey >> i like journey. i saw journey get inducted into the hall of fame >> yeah. that's apollo. >> they have parts for automotive that are good they have parts for industrial it's a pastiche of industrials that is actually doing quite well and is upndervalued >> some of the industrial numbers today aren't too bad take a look at ir up 3%. that's going to be close to at least a multiyear high >> i have cummins on they had a remarkable quarter. eton had a remarkable quarter. the industrials are shining here, some because of china, some, china iffy i happen to think these companies are -- it's very oddly -- illinois toolworks being the exception -- doing really well. >> stanley black & decker not too bad. we want to get to qualcomm, though, on some of this guidance

for the june quarter they talked about the backdrop take a listen. >> the evolving macroeconomic backdrop has resulted in further demand deterioration, particularly in henson at a magnitude greater than we previously forecasted. as a result, we're operating under the assumption that inventory drawdown dynamics remain a significant factor for at least the next couple quarters additionally, while expectations are for a rebound in china demand in the second half of the calendar year, we have not seen evidence of meaningful roecover and are not incorporating improvements into our planning assumptions. >> that's interesting, because china manufacturing pmi did miss last night >> i think china has become a conundrum for a lot of people. for some heavy machinery, it's

been very good for some sales, lvmh, it's extraordinary. but for other companies, including qualcomm and handsets, it just sounds weak. i think cristiano amon has been inconsistent, but i also think he has been too optimistic about his business >> too optimistic? >> too optimistic. >> do you think he's now moderating that optimism it sounded like it >> he's throttle it back dramatically, and if you spoke with him a few months ago, he was quick to tell you how well he was doing in auto mmotive cristiano walked back a lot of his optimism, and i think his optimism at the 130 and 140 level would have been a much more appropriate level to roll back >> what does that comment on handsets mean? specifically, apple's going to be reporting and apple shares are down about 1.5%. >> look, apple's running into the quarter, which historically

has not been great we don't know whether apple's modems are still being made for qualcomm apple's moving away from qualcomm whether they had someone who was making the -- making the particular portion, qualcomm's particular portion, whether they had to add a substitute, that's very good. the modem market, though, i want to make sure people understand, is opaque and apple is always quick to tell you, we are not going to reveal who made this. so, i think that cristiano is no friend of apple. he did not say apple is excluded he did not say apple is included he just simply admitted what a lot of us felt, which is business was far worse than he thought. there were a lot of people who felt that he was too bullish i am trying so hard to be a gentleman here i just am running out -- we should switch right now to black

& decker >> qorvo is up 4%. and maybe because not as much as cristiano did. >> qorvo is a company that has apple, and it's done quite well. looks -- skyworks solutions is a company that's done quite well, but apple does not play by the rules. apple says, listen, it's a flight club situation. first rule of fight club is you don't talk about fight club. that's apple cristiano amon had been -- he had been willing to break the rules because his relationship is so frayed, but i think that black & decker -- stanley black & decker was excellent >> another name, guys, on earnings that's worth a look, things -- first quarter out of the deck for harvey schwartz, not so good. >> early >> carlyle is down 12% >> early >> it's early. yeah but it's not exactly the way you want to start things off you take a look at carlyle group shares distributable earnings, 63 cents. that was below, i think, many of the analysts -- i think

consensus was 68 do we have cg, guys? we can show it and we're talking about lower than expected realized performance fees they did have a lower tax rate >> you want to contrast that with -- >> performance levels. i'm seeing from one research report, modestly positive for private equity, flat for real estate and infrastructure, but overall, not a good quarter, not being well received. >> he just got there >> yes, he just got there. that's true. you're being kind. i don't know the man >> i am in such a kind mood today that that makes me want to go to kenvue, having used a lot of neutrogena products this very morning, including the one when you shave and clean it off, it's excellent. if you look at my -- if my almost entirely my bathroom, all cabinets have your product, and i think most people do, which is why it's a great pleasure, and i am going to get this name right. we are thrilled to have you on our set, and congratulations for what looks to be going to be a

very successful spinoff of j&j >> thank you, jim. good morning it's great to be here. it's definitely a great day for kenvue and for all of 22,000 team members around the world. we are listing kenvue today, and you said it. millions of consumers around the world this morning wake up with a kenvue product in their home think about brands like tylenol, listerine, band-aid. we probably give you your first bath with johnson's beaby, and i hope you used some of our products this morning. we are bringing to life the largest pure play consumer health company in the world. >> i think a lot of people are realizing just now that they are using j&j with aveeno. we know band-aid, but we know there's much more than you're doing. which brings me to something that j&j once told me which is they were not able to spend as much time with you because they have been so pharma and medical

device what can you do to accelerate growth now that you'll be on your own will it be new products? acquisitions or just a greater focus than you were allowed to have as part of j&j? >> you're absolutely right, jim. we do this from a position of strength kenvue is a healthy business, and we are ready to embark on this new chapter, definitely we will be more focused with our 22,000 kenvuers, focused on serving one consumer, one way to win in this industry, more end-to-end opportunities to work as one team, and so we are excited about today, but also what lies ahead. >> a big part of our discussions lately have involved worries about macro growth in the u.s. and ex-u.s., does that mean that growth comes from value or more innovation and premium products >> it comes from both. at kenvue, we really stay close to consumers we innovate every day to make sure that we bring to consumers products and solutions that help them take care of their health

summer is coming the -- it's time for neutrogena sunscreen. our team has innovated again this year with a strong product that doesn't leave any white residue, which we give access to sunscreen to more people in the united states and around the world. >> what's the trajectory right now of marketing spend, for example? >> we are really focused on making sure that we are in the homes of the consumers we serve, and so we invest in making sure that our brands are relevant with consumers so that as relevant today as they have been for the 135 years we have been in this business >> i think it's important for people to understand you're three different divisions. you've got self-care, you've got this skin/beauty, and you have essential health all three are doing incredibly well, but if you could just explain how you came up with the rubrics of those, i think it would help more people at home to understand what you're doing. >> yes, you're right, jim. we are a pure play in consumer health, so we are the only

company of size really focused on covering all aspects of consumer health. and it's -- it does include self-care, skin health and beauty and essential health. this is really the power of our portfolio with so many iconic brands that have been part of people's homes for decades, passed from generation to generation that's what makes kenvue special. >> roughly 8% of the companies being sold today by j&j, meaning they'll own 92% still, still control the board, what is the plan for distributing the remainder of those shares until later this year and therefore then when it's no longer a controlled company, the changes that may take place in the board of directors >> yeah, johnson & johnson has been very clear that j&j intends to complete the separation this year today is the first step, and so we are going to start trading as independent company with our own board, starting today. >> and then, when is that going to be? those shares will be distributed to existing j&j shareholders later in the year?

>> j&j has been very clear that they intend the separation to be complete in 2023 >> now, i do want to be sure that people understand there is some talc litigation. the plaintiffs say talc is connected with asbestos. j&j says that's not the case you are saddled with the international portion, but america's quite different when it comes to litigation as the international. are you able to think -- to make it so that this is more of an asterisk than front and center right now where j&j is putting up almost $9 billion to try to get a settlement with plaintiffs >> this liability in the u.s. and canada stays with johnson & johnson, so at kenvue, we are laser focused on what we do best, serving our consumers across our portfolio with the brands that we mentioned and that's what we are going to continue to be focused on. >> how did you arrive at the leverage $8 billion is rather low versus other companies that have done

similar spinoffs >> it's a first step on our journey to separate. and so we are so far on track with our plan to separate from johnson & johnson. >> that would mean that you have far more ability to be able to buy top tier acquisitions without worrying about your balance sheet whatsoever >> we will -- we have a healthy business with strong revenue, momentum, healthy margin, and a solid cash flow. so, we'll certainly employ all of these strengths for the benefit of kenvue. >> and then, i want everyone to understand that you are, in terms of where you are, dividend versus your peers, you have a higher level of dividend, and obviously, if the stock soars, your yield will be lower, but again, were you conscious of what the other companies are offering as a dividend in this space and decided to make it bigger >> yeah, every company is unique we have a strong j&j heritage, and you know how j&j is very

well known for its dividend policy and we generate solid durable cash flow. our first priority is to invest it in our business, to make sure that we are as strong today as we have been for more than a century now. but an attractive dividend policy will be a way for us to give value back to shareholders. >> well, i hope -- my travel trust owns it, and we are anxious to get the shares as soon as j&j gives them to us i want to thank thibaut for coming on. congratulations on an excellent offer. >> thank you very exciting. time for the bond report this morning as we're at session lows pretty early year 4,060, by the way. the s&p is just about five points above the april closing low, and you got yields down across the board the two-year, back to 3.82%. ten-year, 3.35%. and earlier this morning hit 3.34%. that's the lowest since april 6. back in a moment

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here is a look at first horizon. overall, the s&p regional bank is back to fresh lows going back to october 202 . usb is down six and interest is down four. don't miss the cea later on in the hour is it your dream of retirement? is this a little more your style? retiring wealth is it a guarantee, but a goal. it is easy when markets are going up, but what about when they are not? call for the retiring survival kit. our stock market outlook, plus the difference.

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there is a little bit of misinformation of what happened to costco. they report monthly and this was a very first good quarter. the headlines, these are all chats gpt headlines. they realize that it is a very positive situation, but it's all automated and the machines are down right now and one day they will be smarter than us. this was a good month and not bad. last month, i didn't like it. >> we didn't touch on at c and wayfarer had a good market. >> there are issues with etsy, because they don't have --

they lost their way for months. again, there is a permanent play . they didn't emphasize a i like everyone else did. the ai travesty is here. >> the travesty? what is it? >> your stock goes up three if you say ai. statement or down 40. >> exactly. >> i think the regional banks ought to get together. >> you get together and do an ai bank? i have shopper fire which got out of a very difficult position, which is their infrastructure business where they sift logistics and i've got the secret to having a clean engine. kellogg's is spreading. if you want what's really doing well it is rocks.

what is amazing is that they have a higher ai, because they are so stupid and can only one. >> dumb as a rock? no. smart as a rock. if we have an infrastructure boom that is supported by the government, then that is remarkable. where do you want to be? >> infrastructure. >> got it. mad money is at 6:00 eastern time. when we come back, don't miss nick williams on all of this regional bank volatility. back below 20 and don't go away.

and this is ready to go online. any questions? -yeah, i got one. how about the best network imaginable? let's invent that. we don't have time for lag or buffering. who doesn't want internet that helps a.i. do your homework even faster. come again. -sorry, what was that? the next generation 10g network, only from xfinity. good thursday morning and welcome to another hour of squawk on the street. i am transfer with david faber. losing some ground here at the open as we have had to process a lot and not just the fed yesterday, but the ipo here at the exchange, more banking stretch and a rate hike in the europe.

>> there is a lot to digest. we are 30 minutes into the trading session. here are big three movers. moderna is posting a surprisingly profit with maintaining its guidance of $5 billion in revenue from the covid vaccine, despite a drop in demand for the products, so shares are up 3.6%. paramount is plummeting after a miss on the top and bottom line. the company also flashing its dividend to five cents a share and we will have more on that later this hour, but you can see shares down 23%. we are keeping an eye on those regional banks. that is where we will begin. telling reporters at the press conference that it is sound and resilient. that said, a few hours later, they announced that it is exploring strategic options going forward, including a potential sale. western alliance is another big ladder. reassure that the are stable.

toronto dominion calling off the field to first horizon. as we sat with jim earlier, it was a deal that was considered relatively anodyne in the spectrum of deals and baking. >> without a doubt. it was not called out as a result of the turmoil going on amongst the regional banks right now. it was called off, because for some reason that remains unexplained, they were unable to get the necessary regulatory approvals and as i reported in the last hour, according to people familiar with the situation, they have been relatively uncommunicative to first horizon, so it still remains something of a mystery as to exec what the regulatory concerns were that they were dealing with and was unable to actually get past. there are some recordings -- i think it was the capital form that talks

about lending problems, but i am told that it was never made clear as to exactly what those regulatory issues were. in this turmoil and environment, there was an expectation that the fed would say that it's okay to take them, because why wouldn't you want to see more consolidation to a certain extent or one other regional bank put into the hands of a super acquirer? i am told that in the fed's opinion, it will be fine. they were told that we have confidence in you and -- i don't know why we are -- therefore, we are not worried. that is worrisome. >> the market seems to somewhat disagree with that with shares down 34%. obviously, rewriting those multiple on what to transpire, since the deal was first announced. i heard the same thing with regards to the communication gap between td and first

horizon. also, i heard that it seems like there is a canadian regulator on the holdup as opposed to u.s. there could be a combination, but it does seem like this has to do more with our neighbors. >> interesting. >> as opposed to the u.s. there has been some -- as the turmoil transpired in march, there were some investors that reportedly were pushing td to consider renegotiating and taking into consideration what it would mean relative --. >> $200 million break. and 25 million that has already changed. >> $225 million and it's my understanding that they did not come to the table to renegotiate. this was based on this regulatory concern. that said, potentially convenient and giving them the difference in how much the terminal will has played a role and highlighted the risk that

buying a bank right now can create. >> from td's perspective, they may have gotten away from a deal that they did not want to complete that the price originally contemplated. >> what does it do to the narrative that you began to spin earlier in the week? there is a question on the street about why some of these regionals exist and how they exist if there is going to be lack of marginal buyers? have them expand on why he is soured on financials. >> if you look at the stock price of pacwest, that is your answer, because normally when david breaks a story about a deal taking place and there is news out there that company could be up for sale, you see the stock price go up. with pacwest, it is down 42%, because people are looking at precedents at first republic

and j.p. morgan equity holders, debtholders and they are all wiped out in those deals. it is created in a sense as to why would a otential buyer come in? let's say there are conversations taking place, but if it has the potential -- i'm not saying it is, but i heard from sources that the fdic is not involved as of late last night or this one yet. this is the question among bank investors, especially on the short side. there is a potential to go into receivership, so why not just wait? >> was the case with first republic over the many weeks. 6+ weeks between signature bank and first republic. the problem that many potential acquirers faced may be the same for pac west, which is that you do need to mark all the assets if and when you buy the bank, which does take a hit for the book value of the acquiring bank.

in this case, there are not many assets, but it would be a markdown of some significance, so to your point, why not just step back? it makes it much more difficult for these banks to get sold and it also creates a sign of desperation as a point to the stock being done. in this market -- i appreciate you quoting me on twitter and talking about a lot of dry amber and arsonists out there. dry timber being one of those regional banks in a precarious position and sellers trying to take advantage of that by shorting the heck out of them and creating fear in the marketplace. >> i thought that was a perfect quote and really helps exemplify what is going on, because you look at these banks and you have pacwest reiterate their deposits and you saw the same thing with western alliance. there were coming out and saying that the fundamentals on the ground haven't really shifted. our deposits represent the vast

majority of our deposits. there isn't necessarily anything fundamental that has changed. what has changed is that there is a technical situation where there is a lot of short pressure in the case of pacwest and there is a host of options expiring tomorrow , so there is technical assets that play. that brings up the derivative question, hich is -- in talking with the original bank ceo who stocks has been very much under pressure and who requested to remain nameless, he said, why is the ftc not doing on short sales as they did in 2008? what happened as opposed to shortselling a widget company, when you short sell and put pressure on a bank, it creates crisis of confidence, which affects counterparties, depositors and it creates this cycle that you can't really risk coming back from. >> we are not the ones who got into a huge duration mismatch.

>> it is a perfect situation. i don't think you ever have to return your borrows, so it is a beautiful situation. there are plenty of people who made a lot of money and only putting up 5% and you never have to return them. >> first republic, as well. source familiar with the thinking says that this moratorium is not something they are considering right now and trying to get clarity as to what the threshold is. when does that change. i haven't been able to get an answer on that. as of right there, the decline in original bank stock is not enough to enact some sort of there. >> said share spoke about the need for tougher bank regulations during his news conference yesterday. >> the run on silicon valley bank was out of keeping with

the speed of runs through history and that needs to reflect did in some way in regulation and supervision. now that we know it is possible, i am not aware of anybody thinking that this could happen so quick and so quickly. it is pretty clear that we need to strengthen supervision and regulations for banks of this size. >> armor fdic chair nick williams joins us. it is good to have you. that $42 billion that left us is still something a lot of bank executives can't get out of their minds. have we and are we going to effectively adjust to this new environment? >> we will have two. we will absolutely have to adjust, because nobody anticipated that you could have deposits flow in a matter of hours and with the speed of the

technology and how quick the money moves, we need to adjust our supervisory regime to correspond with that. with the regulatory lacking more than anyone else's real time data. >> all right. speaking of real-time, i've got western alliance bank down 25% right now and pacwest and a small bank . a lot of fear out there. are they moving fast enough? >> the regulators are doing -- i am hopeful they are using the tools in their hands. what we have is a loss of confidence. banking is about confidence and risk management. the events of the past month have created a crisis of confidence more so than anything else and in the crisis of confidence, it will be really difficult, which is what you are saying. some of these should not have been affected, but they are because of the loss of the investor. >> what can fdic or if they do

it right now to instill confidence? >> i think one of the crucial things to do is basically a sure the system that the deposits are safe. during the deposit outflow and we are concerned that a lot of folks are doing their job because of the government mandated shutdown do the pandemic. we have a drop on one third of an annual basis. we have a lot of coordination among the regulatory agencies. every 10 minutes, you would be calling the head of another agency and asking what you are doing and seeing. it was coordination with the fcc, occ, for the reserve and you would talk to the regional banks and officers. you are trying to get the sense of one of the positions are on this round. i am hoping the level of

coordination is going on and i do hope that they will basically use the mantle they have two tell the public that the system is not in bad shape. that is something that powell was trying to say this morning and over the past couple of days. i would like to have seen others step up and do the same thing before we lost a sense of -- that we know and when you are uncertain, you will doubt information you get. >> one of the ways that regulators could ensure the public that deposits are safe and has been talked about his potentially lifting the cap on uninsured deposits. i see that you believe this could be a moral hazard or more costly to the system. i am curious why you think that is. >> there is no magical formula as to when we just like congress sets the deposit limits.

from 100,000 to 250,000. you could change the limit to whatever number you want and it does not prevent what happened at some of these banks. it would have provided more confidence in the banking system , but the truth of the matter is wherever you set the limit, there are going to be deposits above and beyond. talking about increasing the limits perpetually to whatever level is something for congress to decide. the reason i think there is moral hazard and cost is because there are more formulas. deposit assessments are not cheap. they are more expensive to insure deposits. the cost will be by somebody, which is the bank and it will be borne by its customers. more than anything else, i am not setting a limit as to what the deposit should be and more so warning lawmakers and

policymakers that whatever they do, there will be costs associated with that and before they make any changes, they should understand those costs. >> one of the immediate reactions to the deal was that it would theoretically bring an end to the chapter in which banks were sold because of deposit flight. i wonder if you think the structure of the deal was creative or not to overall confidence. >> i hope it was a creative to overall confidence, because we have seen that there are multiple weeks of the run on deposits. i do applaud -- the regulars were finally reaching a deal and i think we will be able to manage the acquisition properly and account for the depositors and having said that, i think that precipitating the deal has undermined confidence in the

banking system, which is simply i don't know how you turn to. some of these things, you are seeing a lot of movement in the stock prices. there have been good banks for a long time and we can stop the flow of deposits and a lot of them have stopped, but if we can stop the loss of confidence, then that is something that they should be working on more so than anything else at this point. we need stability. >> do you think we need massive consolidation among some of these banks to create super regionals or even bigger? >> i don't know that you need mass: validation, but that may be where we end up in the economy scale and operation of the marketplace. i know for a fact that and things are all tied in different tiers and provide incredibly valuable services in their communities. they do small business lending,

consumer lending, market lending, car loans, credit cards at hetero and they know more than anything else. it would be a great loss to move some of these companies, especially if we didn't have to move them, because the system was volatile and unstable at the time when they were challenged. >> i appreciate you taking the time and sharing your insight. thank you. as we head to a break, let's give you a road map for the rest of the hour. possible pause after 10th consecutive rate hike. my vice chairs as the chair powell should keep his options open for june and he will tell us why. continued regional bank volatility as a next possible domino and we will talk about that. investors are focused on one mega cap reporting after arabt , and you have probably hed ouitbut maybe getting some early signals on demand from another name. more on what they tell us about apple. apple. don't go anywhere.

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paramount chairs are under a lot of pressure and they have been done as much as 25%. winding losses and directs consumer business. the company also slashes with quarterly dividend and is now five cents a share. the ceo has wrapped up the earnings call in the last hour telling analysts that paramount is focused on driving streaming

growth in the top environment and he says undermines people yet again that this company is to return the positive cash flow in 2024. that may help the stock price, but today it is not being helped at all. there has been a trade there for a while and people -- long per month based on buffett, although frankly when asked about it and very much unclear even -- when becky asked him that a few weeks ago -- get more on that at the annual meeting. as for paramount's results, let's get to some of the keys. 4.1 million subs added. they're having success adding subscribers to paramount, but it costs a lot of money, so they lost over $500 million there. they did cut the dividend and it is now five cents instead of

$.24. half is going out there to pay the dividend. it was a question i asked numerous times in our interviews . why not cut the dividend given you are going to be negative lexi 554 cash flow loss if you want to call it that. tv media revenue fell and in a strong position. advertising is weak, but that was expected. overall, those different types of concerns probably raises the question as to, is there an upscale? do they need to sale? to whom? will there be enough runway for them to get to a sale? this is hard to imagine any of the regulators. the biden administration approving a deal. >> fascinating. today's stock price reaction and potential buyers looking at this asset may seem, as well.

>> it is not a lot of potential buyers, but sometimes we will wonder if netflix would be interested in the studio, but it is all up and there has been an unwillingness to really consider a sale. that may be the case, but the stock price. >> it doesn't really fit with the portfolio. >> i still don't know why they own it. maybe they thought there would be a deal in the near term or sometime. it is complicated structurally. that stock is under pressure. they took the action and significantly cutting expenses.

that is a free cash flow story. that is all on delivering free cash flow. >> about the stretching that aside from late-night, might not notice this for a while. they have got many levers to pull and the sides are pretty far apart. 40 and 55 is the closing low for the month of april. in the meantime, we are watching the element of ai and we will go to kayla stylesheet. >> artificial intelligence meeting that is getting underway next hour. our producers and going under the door. the ceo of open i is sam altman who is well known to our

viewers. this is the first meeting of ceos, but president biden and artificial intelligence. his conclusion was that before any company releases a product, it must be ensured that it is safe for that release. we also have the top national security economic. there is going to be a slew of deliverables that will come out of this. for instance, the government has announced that it will be investing $140 million in new research institutes for artificial intelligence. that will bring the total number 225 of these research institutes being funded by the government. the office of management and budget is going to be releasing guidance for how the government

should be essentially using ai and where it is safe for agencies to be using it and how they can harness the capabilities of it and which government officials have said that they believe autonomous vehicles in cybersecurity a lot of value. they want to make sure they are troubleshooting that. as for the international component, there is a race around the globe to figure out how to regulate and harness ai and white house officials have said that they will be focusing on coordination specifically with european allies. there is a long way to go, especially for international standards. >> a lot of these leaders come to ask for guardrails. they're asking for government to get involved in some extent,

but there is defense establishment think that we are way behind china and need to keep moving forward as fast as possible. not to mention our adversaries are not going to be putting up any guardrails anytime soon. >> the executive's argument is that it's much easier to drive when rules are set in place ahead of time and not necessarily to be retroactively regulating after all of this innovation and advancement has taken place, which is what a lot of those executives have proposed a six month moratorium on tech logical advancement and to take a pause and say, where do we stand and how can regulation catch-up? and i talked to officials, i interviewed alan david, assistant secretary of the department of congress -- commerce, rather. he says, you don't need a moratorium that regulation can catch up, but they are trying to do work very quickly. >> we will watch for this particular chapter with your help. kayla in washington. still to come, in the red

and pretty much bring back the holding of last year on some of this june quarter guidance. what these numbers could mean for apple as they report tonight. stay with us

apple is getting ready to board earnings in just a few hours with some early signals and steve kovach and tracking both companies. we are going to start with you, steve. >> the headline here is we are going to see revenue declined year-over-year and second quarter in a row that it's happened. it happened in the holiday quarter and a lot of that is due to the fall in demand are and ipads and we have seen this across the industry. china is reopening and part of that is that they missed so many sales in the holiday quarter due to production problems. there is hope that the demand carries over into the next quarter. on top of that, services growth is still expected to decelerate just a couple percentage points and a lot of that is due to

weak sales, especially in gaming and weakness in the advertising market. when you talk about looking forward, everyone is hitting on in the guidance. what are they going to say about the future quarter does my current quarter, rather and down 45 and if it's any worse than that, then that's a huge sign that even the apple consumer is showing weakening demand. everything is really going to depend on guidance. >> in the meantime, qualcomm and a longtime apple beneficiary dropping on the back of its results and outlook. >> the outlook for the near future could be a sign for apple's earnings. they posted that they fell well below expectations, which is you see the stock at 7%. this is a whale chip maker that

has two factors. software demand for smart phones and especially the lack of recovery in china, which they spoke about. this is important for apple's upcoming earnings. second, the fact that it's customer continues to make in- house modems, which means a loss of business for qualcomm. i am converting it to a divorce. apple buys qualcomm for its mike pence, but apple wants to go out on its own. they want to build its own modem. qualcomm will feel the brunt of the pain from june through september quarter and making qualcomm's push into vehicle and modems all the more important. managements new comments from yesterday said that they are getting lower orders from a modem only customer, which is presumably apple. is apple really by its chips in advance, which means lower demand or is qualcomm's negative iphone 15 and indicator , especially in the coming months as they have launched in september. it is hard to do.

>> thanks. let's take on the market as we go to break. we are at session lows. done at 400 and all sectors are red and popped once again. this time, 21. trend trackers sponsored by group. c and e group, where risk meets opportunity.

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the exact thing that can change the world. some say it's what they were born to do... it's what they live to do... trinet serves small and medium sized businesses... so they can do more of what matters. benefits. payroll. compliance. trinet. people matter. welcome back. here is your cnbc news upstate update at this hour. russian claims on ukrainian drone attacks. all russian spokesman said that the u.s. and mastermind behind the attack, but white house national security council spokesman swiftly dismissed the claim. there was no involvement by the u.s. and added that the u.s. did not encourage or enable

ukraine to strike russia. as russia throws accusations around, ukrainian president volodymyr zelensky is in the netherlands appealing to the international criminal part. the ukrainian leader said that russian president vladimir putin deserves to be punished in front of a war crime court for his invasion of ukraine. outstanding warrant already for prudent for alleged war crime, but it is unlikely he will ever stand trial in the hague. white house announcing a $140 million investment to further research the impact of artificial intelligence. this comes ahead of a vice president kamala harris is meeting with tech executives today and release of new guidelines for ai use by government agencies. david. >> thank you. just over an hour into trading day. there is a lot going on today, bob. what you got? >> weenie tylenol.

i have the right product for you. finally, a big ipo. it is like the old days. we've got people down here on the floor and you don't know can view, but you know the products. this is what they sell. band-aids, zyrtec, aveeno, neosporin, benadryl and tylenol. they are passing out tylenol. we need this for the condition right now. the important thing is 172 million shares are sold and we have $22 and 3.8 billion. this is the big ipo since 2021. everybody is excited about it. do you hear this guy screaming? he runs the whole business down here. what can you tell us? >> we are at 25 .4 and 24.5. dealing with brokers and robust opening. >> this in indicative price and this is not the price. you are building a book and i want to explain what's going on here.

you are working with goldman and jp morgan, the two lead underwriters and there are other ones, but there is the two leads. what does the building book process look like? >> it is about transparency of what we are seeing and making sure that everybody knows where there is demand and supply and giving the underwriters the ability to communicate that to their customers off the floor and have them react based on the allocations they got less than or did not get. it gives them an opportunity to transact on the opening again. >> this is an auction. they hold 172 million to the public and they are now with you going around saying, who wants to sell and who wants to buy? it is an auction. mr. smith at xyz mutual fund and i want 10,000 shares of the following price and you put down those prices and have an early indication, then you keep building. >> this will change and tie in overtime. you can see that we have an indication. as we get a better idea of price volumes and where people have a better interest, we will tie in the interest over time, so people out have an idea to

know that we are getting closer to an opening by tightening the range. >> how close would it be? when is it a reasonable time? >> the real process is to make sure we get the opening price correct and i think on the new york stock exchange, we have the ability with new intervention to take a thoughtful approach and i wouldn't be concerned about the time, but that the price is right. >> i will be here and we will cover the whole thing when it opens and what it will be. back to you. >> thank you very much. we are getting more arrivals of executives at the white house as they are holding their first meeting about ai and about arriving now and the administration to tell executives that the ai products need to be safe before they are released. we will see if we get any kind of granularity about the meeting itself. our next guest agrees with the decision to raise rates and keep options open for june.

joining us is former fed vice chair donald cohen and currently a senior fellow at brookings. it is great to have you and thank you for coming back. >> it to be with you again. >> walked me through what you thought of the decision and statement and whether or not you think financial stability or inflation is on the front burner. >> as you said, i did think they made the right decision. i think there is a huge amount of uncertainty going forward about how tight financial conditions are going to become as regional banks tighten up. growth has moderated some and labor markets hold a few preliminary signs of moderating pressures and moderating vacancies, but labor markets are still very tight. core inflation has shown no sign of coming back for coming down from very elevated levels, so i think it is too early to call a pause on rates.

you don't know what's going to happen, whether you need more or they are sufficiently tight. that depends on what happens in the banking sector and since it is uncertain, they cannot promise raising rates again. they are in the right place to deal with. >> what do you tell those who fall back on the classic called yourself in the shower argument? the water will get hot and by the time you keep the faucet open, it can burn you. is that a legitimate narrative? >> it is in the sense that we know that there are lags effects of monetary policy and tightening financial conditions on the economy, but we don't know exactly what they are and we don't know how tight financial conditions have to become in order to accomplish the federal reserve's object in getting inflation down to 2%. the situation is very different

from a one in 495 or even 2000 -- 2006 at 2007. when you are really type. here, we have inflation in the 4 to 5% range on inflation. we have a lot of room and you need to get down. i do think they are right to be very cautious about signaling a pause or even more cautious and rule out lowering rates. they need to see more progress on the demand side and on the price side before they can declare the water to be too hot. >> it sounds like you think that the fed is putting inflation more on the rather than stability. i want to share you a headline that crossed a short while ago,

which is saying that western alliance is now exploring a sale and they say that people familiar with the matter haven't been able to confirm those headlines yet, but shares in western alliance, pacwest and other regional names are down sharply on the week amidst the turmoil. what do you think the feds should be doing in terms of regulation, supervision? do you think they are doing enough as the turmoil unfolds? >> to answer your question, there is not a conflict between financial stability and monetary policy, because the threat is to financial stability and causing banks to tighten credit, which is what they need in order to get inflation down. could that arise in the future? yes, but it will arise in the context of financial stability undermining the economy, which

will be a situation in which the fed should be lowering interest rates if the economy freezes up and if the unemployment rate rises rapidly because businesses and households can't get credit. i don't see a conflict right now. what is going to be very difficult is to judge how much affect the pullback in credit by regional banks will have on the economy. they need to be alert to that and to the possibility that there could be a sudden stop in credit for small and medium- sized businesses in particular depending on regional banks. i think it is something they have to keep monitoring and reacting with policy, because it will have effects on inflation. i don't think it is an either or that they need to choose. >> one of the more interesting parts is that he did give us the idea that the present wage growth would be consistent with

2% inflation. people were surprised he was that specific. what does it imply about productivity on a day where q1 productivity was amidst? >> if he thought it was about one or one and a half percent over the long run, then over the big very long run, you need 3% or 3 1/2% wage increases to get the 2% inflation. i also think he was careful to amend to say that he didn't think wages were causing inflation and i think they do need to be cautious. real wages have declined and for many people, they declined over the last couple of years. some catch up in that regard wouldn't be surprising and it should be something they can live with provided that it was consistent with inflation coming down, so the three or 3 1/2% is a long-term under the assumption of 1% productivity. to your point, carl, those

productivity numbers show increases in unit labor costs, which is 6% over the last quarter and over the last year. that is going to put a lot of pressure on businesses and pressure them to raise prices, so that doesn't seem consistent with 2% inflation. hopefully the productivity numbers are short run and sensitive to the -- exactly what's happening in the economy and long-running trend is down. >> as if the tape needed more. thank you for being with us. we will talk soon. >> good to talk with you. the ceo of first horizon will be joining us in the next hour. those shares are bouncing up very extended low levels and down 300. another quick programming note as we take you to a quick break. we are two days away from the meeting with hathaway.

that is where they were both be alive in the scene in omaha, which will start at 10 a clock a.m. eastern. if you want to watch, had to cnbc or cnbc.com on saturday wl.we will have full coverage, asel the day after or whenever, but we will have full coverage of this during the entire day. i will go now and we will be back after this. narrator: right now, a child is being diagnosed with cancer. pinta manullang-pangabean: we cannot save the world alone.

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watching these arrivals at the white house of ai executives meeting with administration officials. >> reporter: cnbc here what are you looking forward to today? >> i'm excited to have a discussion i think it's important and a good time for it. >> reporter: do you think the white house -- >> i am super late >> reporter: is the white house moving quickly enough on regulation, do you think >> hard to say before the meeting. but i think they're seriously engaged and want to get to the right place on this. >> reporter: how concerned are you about ai >> i think we can manage this

for sure i think we need to take it seriously. now is a good time to be doing this and get ahead of this it's going to be a challenge but one i'm sure we can handle. >> reporter: what's your administration today >> we'll find out. >> that was sam altman talking about the need for regulation for ai and the challenge in front of regulators. salesforce throwing their hat into the ai ring this morning, building new generative features into slack. frank holland on the heels of a new sitdown with the ceo of slack. frank? >> reporter: salesforce executives say the company has its mojo back at their second biggest annual event and today is the launch of slack chatgpt slack one of the biggest players in collaborative platform enterprising market, a $20 billion market throughout the

globe. when you look at slack chatgpt, they say the ai is layered in there. i sat down for an exclusive sitdown with new ceo of slack who took over after slack co-founder stewart butterfield left the company i asked her, is slack chatgpt ready for enterprise use or does it have some of the issues we've seen with chatgpt? >> slackgpt is leaning on customer data from crm and slack's context to help the technology use business guardrails for us to not get beyond context that doesn't make sense. and the other big thing for us, frank, is that salesforce has an ethical and humane office to help us develop products that will be trusted. >> reporter: so, slack is used by a weighed range of big enterprises including verizon, ford, and ibm.

ibm announcing it's pausing hiring for thousands of jobs that could be replaced by ai jones says she's having similar conversations with other customers about ai and their workforce. >> it's absolutely top of mind for every executive that i've had a chance to meet, but i think it's early i think a lot of companies are still going to determine what jobs, what fectionz are going to evolve, how to equip their own employees with the learning. it's moving quickly, which is exciting as well >> reporter: so, salesforce leaves in customer relationship management, or crm, the ticker of the company when it comes to collaboration for enterprising and messaging software for enterprises, it has half the share that microsoft has with teams jones is emphasizing that slackgpt is part of a broader generative portfolio, using strength in crm to give others a boost in slack >> i'll take it, because we are continuing to watch arrivals at

the white house from tech techtives at the white house. >> reporter: can you tell us what you hope to get out of the meeting today? do you think the white house is moving quickly enough on regulation >> it's widely considered that microsoft's in the pole position on some of this stuff. he said in, nardella, making some giant rivals dance because of the investments they've made and the timing in which they've chosen to unroll some of this stuff. >> primarily alphabet, of course, brad gerstner on, sharply critical of alphabet having bought deep mind in 2012 and now really putting their search product at some risk. really calling for sundar to be removed. there's a lot of questions around the decision-making that's gone on and larger question of what the

development of ai will mean for civilization elon musk, for example, in a recent interview saying it has the potential for civilization's destruction. not insignificant, potential he says the power is in the data center, not the actual robots that are controlled by the data center i'm going out a few years here, let me be clear. >> not many. >> but those are some of the things that will be discussed in this meeting today obviously, as well, what it will mean for jobs, deep fakes and all of the things they're dealing with in that realm as well. >> it's funny how we're talking about even the constructive uses of it being disruptive in many ways for labor markets and employees. but then there's the bad actor case as well, as david suggests, cyberattacks, scams, national security i mean, it depends on how far you want to roll it out, nuclear weapons. if it's good news, it's not always good news when it's bad news, it's obviously bad. >> and obviously the velocity by which this technology has been created and permeated throughout our economy. you know, regulators aren't

known for keeping up with the speed of technology innovation, so especially as it pertains to ai, which has such tremendous potential, as you mentioned, to be so destructive. it will be interesting to see kind of that transpire and the line of questioning, how various regulators look at this and whether they can actually keep pace with the level of innovation and its risk there. >> will humanity control its destiny. quk t see cou with that "sawonhetrt"ontinues after this stay with us

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good thursday morning. i'm carl quintanilla with morgan brennan. setting the agenda, you can get, regional banks, pacwest, and others tanking the ceo of first horizon is going to join us this hour as its merger collapses. plus, a trio of earnings ceos ahead nat gas, hyatt off its best quarter ever, and the commercial real estate crisis with jll. later on, what to expect from apple tonight and the public debut today that could spark the return of ipos. markets are deep in the red right now with