good friday morning. i'm sara eisen with carl quintanilla live on the floor of the new york stock exchange. a cnbc exclusive with cleveland fed president loretta mester is she ready to call an end to the fight against inflation or does the fed have work to do alli mccartney is with us. saying hope for the best, position for the worst, which might include selling tech. cummins joining the spinoff trend. its tech business going public at the nyc we'll speak with the ceo after successful pricing. >> we've been here before.

4200 s&p has acted as a ceiling for the bulls. not quite intraday for the highs, that would be 12 points higher the ai theme catching fire this week, decent ecodata, resilient consumer, some downtrends in inflation and freight costs, sara, adding to what -- i don't know, not quite goldilocks but going that way. >> we're on pins and needles for a debt ceiling deal. you take into account 72 hours lawmakers have to review the legislation, 24 hours to come back from memorial day recess and before the treasury's x date, which is june 1st, next week there is optimism that we'll get it done today. that's budding against this idea that rates for the fed may have to stay higher for longer or get even higher. getting that pce, the inflation print at 0.4%, which was a little higher than expected, was a surprise consumer spending strong, 4.5%,

adjusted for inflation strong start to the second quarter. all of that is good news for the economy but it also suggests the fed may have work to do and the economy's struggled when rates go higher. >> we're still wrestling with the implications of what ai may bring to productivity and technology long term our next guest worries the ai buzz could be flirting with bubble territory saying it's time to take profits in that tech trade as the top ten mega caps have collectively grown 48% so far this year versus 8% for the s&p. in fact, we would be down one if not for the top names in the s&p. a few moments ago nasdaq 100 did hit gains of 30% for the year. you can see that on the right side of your screen. joining us this morning, ubs private wealth managing director alli mccartney happy friday good to see you. >> happy friday. good morning >> 30%, i mean, it's a nice hedge against a recession call you would be taking some off the table?

>> yeah, look, i think it's time we have -- as you said, whether you call it 7 or 10 in stocks that have taken the s&p up and you see that reflected in the numbers of the nasdaq. we don't think that the trite past performance is not indicative of future performance. we think that's sort of where we are with the u.s. stock market full stop. we've had a remarkable resilient economy. we still have the credit provision and regulatory pressure that's out there. we don't think that's come through. the narrowness of this rally really makes it very precarious. global tech is trading at about 25% over its ten-year average. now, the ten years we're talking about have been an extraordinary ten years where growth has been on fire due to the ability to take risks with really low rates. so, we think it's probably time to take some of that off the table. it doesn't mean get rid of all tech but it means specifically

stay in tech that has more secular themes behind it ai, big data, for example. it's getting harder to parse what is ai, just like the last 15 years, anything that was not a retail company but a tech platform sort of touted that we think it's really time to capitulate a bit because at these levels we are pricing in, as you said, whether you call it goldilocks, this i immack landi. >> the debt ceiling, if we get a deal, what austerity looks like on the other side. qt, rate in the pipeline your general view, even though we appear to have fought it so far, eventually those things will come home to roost. >> look, they have to. as much as -- i had a gorgeous week getting to be with my mentor, bill mueller and he was talking about the way we dissect

the economy and we always like to think that the economy defines the markets, but it's really the other way around. and so when you think about that, though, you have to understand that, you know, things take time we've had so many conversations about the hyperbolic, you know, trajectory of money. and i have to tell you that whether we're talking about the public or the private markets, you know, i and my clients are terribly active in the private voen tour markets. there is a story of, you know, sort of a tug of war you're either ai or you're not right now. and i think that we really have to be ready to see if we don't get a perfect debt ceiling, if we don't get, you know, a perfect landing, what does that mean, because at these kind of levels, you know, we are definitely pricing in the u.s. sort of hitting the high note on everything that seems like a terribly precarious place to be given the risks out there. >> alli, if it's time to take

profits on mega cap tech, where do you go instead in this kind of environment >> yeah, so four really quick things there and these things are also very different than i think you've seen out of wall street firms for the last number of years a, if you're talking about staying in the equity market, then going to non-u.s. over u.s. and defensives over cyclical and growth again, that's very different than where people have been allocating and flows have been going, let's say, over the last cycle. the other thing is really bonds over stocks. we have a world right now where you can get 5% to almost 9% in bonds. if you stay short term, in a sense, just like we've seen with short-term rates in the treasury market, there's also a world in which if we're higher for longer or, god forbid, we go even higher, you see some appreciation in those bonds. and then safe havens i mean, gold has a lot -- we think gold is going to go higher we think commodities have really

been punished because of concerns over global growth as opposed to rewarded for a weakening u.s. dollar and interest rate differentials going down we think there is a world where in a really broad sense, the 60/40 portfolio is back. diversification between asset classes and between geographic locations, you know, that's the world that we're going into and that is where we see balanced portfolios and sort of concentrated growth between assets really being a ballast for the future. >> why do you say god forbid we go even higher we're about to hear from the fed president. and the market seems to be taking it quite well, pricing in expectations that the fed might have to go higher? >> you're right. one of the the things we've seen this week is a coming together of the feed speak and dot plots and a lot of financial professionals have said with expectations for the end of the year you know, we do not have a few

we go higher we think we have a pause in june, but we also think we retain the rate level we're at through the end of the year. i know you've had some very high-level, very impressive people talk about 6% or 7% i think we will have to see, again, the inflation numbers we got together were not overwhelming, not underwhelming, not pushing us one way or the other. i think before june, and certainly before july, we'll have much more data and we'll see if they continue to take the slightly hawkish and data-dependent tilt out of the retail lending and survey numbers. >> jobs next week and inflation before the next meeting. thank you. appreciate it. >> my pleasure good to see you. >> alli mccartney from ubs. our next guest remains

hawkish saying last week the u.s. central bank is not at a point where it can hold. let's get to our senior economics reporter steve liesman with fed president mester. >> we are joined by cleveland federal reserve president loretta mester president mester, thank you for joining us this morning. >> thanks for having me, steve >> well, you're here on a day, you're in the hot seat because i think you're the first fed official to comment on the fed's preferred inflation indicator. what was your reaction this morning when you saw those numbers come out >> yeah, i mean, i think it's just confirming that inflation's still too high and it's stubborn and the progress -- we have made some progress. inflation is down from where it was last summer, but the progress has been slow and in fits and starts. and i think the pc inflation report just underscored that core inflation, core services ex-housing, which is one of the indicators we've been watching, the monthly increases and year

over year increases moved up, not down, total pc inflation also moved up. again, you know, we have made progress inflation is down from where it was last summer, but it's very slow progress and it's concerning >> are you worried that you're starting to go the wrong way on this you said there have been some progress, but when i look at the fed's forecast for the end of the year, it looks like the core pce, the median forecast around 3.6% you're moving away from that are you concerned you're going the wrong way? >> well, i think there's still more of the 500-basis-point increase in fund rate is still going to have an effect on the economy going forward. we're going to get a new set of economic projections from fmoc participants at the next meeting. we'll see how people incorporate all the data that's come in in the intervening period into their forecast but you're right it's a slow progress

it may affect those forecasts going forward. i mean, i think that i may have to revise up my inflation forecast in the next sep, but we'll see. we have more data coming in. in particular, we'll get readings on the employment side of the mandate next week we'll get the jolts data, we'll get the employment data. that's going to be important information as well in figuring out sort of where we are and what the forecast going forward is going to be >> so, you raise the outlook the question about the outlook i want to ask you near term and longer term here do you think that you're done hiking here? is a pause still on the table, in your mind, for the june meeting? and if you're going to raise -- potentially raise, as you say, you are inflation forecast, does that mean you also have to raise your year-end forecast for the funds rate >> well, i mean, everything's on the table in june. we don't pre-commit to our meeting.

>> sure. >> so, i'm sure that's going to be part of the discussion as to what to do in june as important is sort of thinking about where we are relative to getting back to 2% inflation as you know, the fed is very committed to bringing inflation down to 2% we want to do that in a timely way. in the last set of forecasts, it took till 2025 to reach that goal and i think we just have to stay very diligent about that. and also be judicious in making sure we're looking at all the data that's coming in and factoring all that into our forecast and, therefore, what we think is the appropriate amount of monetary policy we still have more data that's going to come in we have 2 1/2 weeks to go. as i pointed out, some of that data will be very significant data we're going to get another inflation report, the cpi inflation report on the first day of the meeting i think it's not wise to preguess what that meeting's outcome will be. we're trying to get -- the way i

would do it, i would like to get to a point in the funds rate where i feel that whatever the next move is and whenever that is, it's about equally weighted between up move and a down move. given the date that we've had so far, i don't think we're at that level yet. in my last sep, i was a little above 5% i don't know what my new sep forecast will be because i haven't put pen to paper and we still have data coming in. that's the kind of place i'd like to be in terms of a holding rate and then i think we would be in a good position to hold and observe, you know, and see what's happening one of the other things we're monitoring very closely is what's happening with lending standards, bank lending standards. as you know, there were stress in the banking industry. the banks did begin to bring up -- or tighten their credit standards well before that march because they were doing that in

relationship to the fact that we were raising interest rates and monetary policy was tightening the real question is, is there going to be even more tightening and credit standards over and above that because of some of the stresses in the banking industry i haven't seen that yet. and talking to bankers in my interest, it really is the focus, you know, now is on, you know, tightening credit standards because of higher interest rates, not sort of extra tightening because of what happened in the stress -- in the banking industry in march. i think that's something we have to assess, both the magnitude of that and the timing of that. and that will be important for our monetary policy decisions upcoming >> thank you for answering a question that i had a little later on, but that worked out just perfectly as far as i can tell i do want to ask about your growth outlook you said you expected growth to slow this morning we heard about a consumer that, despite higher

inflation, did hire real spending at 0.5% i'm reading economist forecasts this morning and they're increasing their gdp outlook for the second quarter and it looks like it's back to trend. is the economy slow enough for you? >> well, this is the question, right? we're trying to make sure that we're setting our policy so that demand and supply get it back into better balance. you're right i think the economy -- and i do think the economy has slowed quite a bit from where it was last year. and i continue to think that's probably the right forecast. that we will see -- positive growth but well below trend. i don't really think i'm going to change my forecast on that. again, we're going to see the data that comes in but we need to have that slowing just so that we can get demand and supply in better balance that will alleviate some inflation pressure so, you know, yes, the data has underscored that this economy is

resilient. we saw that in the consumer data, as you pointed out we we saw that in other pockets as manufacturing has slowed. we talk to a lot of firms and they do say, you know, our orders have slowed, but it isn't off the cliff. they still have demand so, again, this is what we're doing in trying to guide the economy back to price stability. all of this information is what you use to evaluate whether we're at the right level in the funds rate to get there or not >> the loretta, my colleagues are going to have a question in just a second, and i'm going to use the opportunity i have to ask you a wonky, geeky questions in hopes my colleagues bring us back to earth in the discussion here i want you to tell me how you think about the real funds rate. by that i mean the funds -- the current funds rate minus inflation. what inflation do you use? really what i want to know is how tight do you as a policy maker believe the federal reserve to be right now?

if i use the one-year expected inflation rate, i have you about a percentage point, a little less if i use the current inflation rate, well, you're about half a point real how tight do you think the fed is when you think about the funds rate on a real or inflation-adjusted basis >> so, i'll give you a wonky answer in that i don't know exactly precisely how tight we are. as you say, there's different ways of measuring it we are restrictive, though the reason i say we're restrictive, we have seen the slowing. we have seen banks react to it in terms of tightening their credit standards we're seeing our policy impact the economy. we have seen inflation come down i don't think we're necessarily at that level that i'd like to see where we're balancing sort of ups and downs and the reason i think that's a good way to think about it is because we don't want to overtighten and tighten more than we have to, but at the same

time it's important that we don't undertighten because we already have had inflation above 2% it will have been four years if we get our forecast, which is getting back to price stability in 2025. and that undertightening and continued high inflation can be very detrimental not only to the short run economy as people have to spend more to live, but also to the long run economy because firms make decisions based on those, people make decisions about investment and, you know, education based on high inflation. it distorts a lot of decisions and that can have detrimental effects on the long run. that's why i'm very focused on inflation right now. and i think we will do whatever it takes to get inflation back down to 2% in a timely way my own personal view is that -- and even in the last sep, i had that funds rate going above where we are now we're closer to the end of

tightening than the beginning, for sure but right now is the hard part and the calibration part we're trying to balance those two risks, overtightening/undertightening, and the data that came in this morning suggests we have more work to do. >> president mester, it's sara eisen. a lot of people are scared that you are overtightening i don't have to tell you that. and that you're looking at backward data when it comes to inflation and that you're putting too much emphasis on that when you look at more forward-looking signals, the ppi, the wholesale number, it's come down a lot more than cpi, the real-time commodity prices, freight prices we hear it it from companies all the time the inflation expectations, all of that points to a bigger moderation and the argument there is that you should pause and wait for that to filter through into consumer prices and not overdo it. >> well, i agree totally, we shouldn't overdo it and we shouldn't underdo it that's what we're trying to do is balance those two

i would say, though, that we do look at a lot of forward-looking data it's not correct to say we only focus on the headline numbers that come out or the core numbers that come out. part of what we do also is talk to firms and business people and people within the district who are making these pricing decisions and hiring decisions and wage decisions as well as the people who are receiving wage decisions and how they're thinking about whether to change jobs or not. that's forward-looking evidence. that also suggests that price pressures remain pretty darn high and pretty stubborn and so i don't want to say that we're not only looking at backward we do look at forward. and you're right, you know, if you look at goods prices, they have been coming down. but we have to look overall. and the service prices have not come down as much. they're the stubborn piece we do think housing prices may come down because, you know, leases -- new leases are still

coming down and that takes a while to feed through. if you look at services ex-housing, that's been stubborn and remains stubborn and this morning, we just haven't been making very strong progress on inflation. we've kind of, you know, monthly reads have been sort of stable around these levels. we just have to get back to 2% so, you know, i don't disagree that we've done a lot and we're going to see that affecting the economy going forward, but we have to balance that with the fact that progress isn't -- hasn't been as fast and that's concerning as well. >> president mester, it's carl i do wonder how asset prices are figuring right now in your c calculus how does the fed think about at least what equity prices are doing at the moment? >> so, i'll tell you how i think about it that's an indication of -- that's one of the financial conditions we look at to gauge tightness or looseness in

financial conditions overall financial conditions, not just stock prices. it's the whole panaplay of those. has the fed tightened and has that affected -- there's a transition mechanism of what we're doing on policy. right now, when i look at the data and i look at what's happening with the inflation numbers, i do think we're going to have to tighten a bit more. as i said, you know, we're close to the end of tightening than we were in the beginning. remember, we started at zero and we started with inflation already being -- moving up again, we've made progress now it's this calibration exercise that's difficult you have the same people looking at the same data and coming to different judgments. that's what's great about the fmoc we are a group of people that come together from our districts and for the national economy and we come together and debate it and come up with a consensus

opinion and move forward but this is what we do this is kind of what we do we look at all the data and make a judgment call. >> do you think there's going to be more arguments at the next meeting? would you say you're more hawkish now than the sort of center of the fed and you're going to have to really fight for another hike >> well, we never fight. you know, we're very - >> a civilized fight >> we may have different opinions but it's a healthy discussion at those meetings and i think we'll all have different perspectives as they come in. i've always told steve liesman this i don't want to be known as a hawk or a dove i want to be known as an owl because that means i'm doing something wise i can't call myself an owl >> a hawkish owl. >> i've never heard of a pastry being thrown across the table at a fed meeting. president mester, let me ask you this question about risks to the economy here one thing we haven't spoken about is the debt ceiling.

let's say they don't raise the ceiling and we're facing default. what does the fed do something we talked about yesterday, president mester, this idea of doesn't this make it worse for the banks right now that had trouble with the securities on their portfolio? >> well, okay, as you know, right, the fiscal policy discussion around the debt ceiling is really up to congress and the administration. >> sure. >> it very much is essential they solve this problem and the debt ceiling is raised because it does have implications for the health of the economy and the health of the u.s. economy not just for the overall economy, but individual households, right, the average person that will feel pain from this so, whenever they're shaking confidence in the credit of the united states, that has implications that are very dire for the economy. so, it has to get solved and, you know, we have to have

hope that they'll solve it in a timely way so that the u.s. can pay all its bills. >> president mester, i'm just going to steal 20 seconds i don't have here because i wanted to follow up on a question when i asked you about the real rate what real rate are you pushing for? when i look at the median of fed officials, it looks like they're looking for a real rate this year of 1.5 to 1.7 what are you looking for >> well, i think we need to be around that level. probably a little bit tighter than that. and we hold there for a while. my path of the funds rate is not that we raise to some peak rate and then immediately start cutting. that we raise and be restrictive for a time in order to really be assured that inflation is on a sustainable path back to 2%. and that we can then be back at price stability. so, that's what i am meaning to do we'll get new information and that will guide us in sort of determining whether policy is sufficiently restricted to get

back to price stability or not that's what's going to guide our decisions going forward. >> all that sounds owl-like to me thank you for joining us, president mester. >> thanks for having me, steve have a great weekend. >> carl, sara, back to you. >> our thanks to you as well our steve liesman. we are awaiting the first trade of atmus filtration. another sign the ipo may be starting to thaw a touch. watching more retail results. gap up big after reporting a surprise profit. gross margin improvement, a big reason why management saying air freight costs and improved promotional activity helped boost those numbers. don't go anywhere. the dow is up nicely more than 260 points

your shipping manager left to “find themself.” leaving you lost. 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

welcome back, everybody. i'm contessa brewer with your cnbc update. a russian missile hit a clinic from the ukrainian city killing two and injuring at least 30 the country's defense ministry called that air strike a serious war crime under the geneva convention the russian defense ministry said it carried out an overnight strike but targeted ammunition depots moscow dismissed allegations that it deliberately targeted civilians. the vatican says pope francis skipped meetings today because he's sick with a fever no other details given about his illness. the pope is still scheduled to preside over a mass on sunday. and you think you had a bad flight on an airline flight in south korea, a guy on board opened the door midflight look at this south korean officials say all the passengers had their seat belts on because the plane was about to land. nobody got seriously hurt.

the airline says the man was sitting next to the emergency door when he just opened it about 650 feet above the ground. the plane did land safely, but, boy, that's a story that you tell when you sit around the dinner table. >> he didn't listen to the instructions when sitting in an exit row emergency exit row >> maybe he thought it was an emergency. it looks terrifying to me. >> glad everyone is all right. c xerox declaring a turn-around. the stock has been cut in half the past five years. the ceo joins us next right here at post 9. watching ulta beauty plunging from what was all-time highs. it takes you back to nemovber. dow up 275 don't go away.

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

what if we live to 100. i don't want to outlive our money. i keep eating all these chia seeds. i could live to be 100. we work with empower, even if we do live to 100 we don't have to worry. eh, not worried. take control of your financial future to empower what's next.

copy machine anymore xerox going all in on digital transformation with a new brand campaign leaning into the culture of hybrid working and looking to broaden awareness beyond the company's offerings of printers. joining us at post 9, we have xerox ceo steve bandrowczak. thank you for joining us you've been on the job for about a year how are you transforming a company where the overall industry is slowing? >> yeah, so, first of all, thanks for having me a couple different things. if you think about xerox, we have driven productivity in the office for years so, now we're looking at a

hybrid workplace and a distributed workforce. on top of that, you think about ai and chatgpt, the foundation of that is data. we have billions of paper, billions of documents to go through our infrastructure every year you think about redefining digital work flow, you think about redefining the way in which companies can drive value, client success through data, through ai and really reinventing ourselves as a service and software-driven company that's the tech giant we are. >> you package that data and sell it to >> it's not about packaging data, sara it's about taking customer data and now using it to drive productivity a simple example think about law firms and the amount of documents that they have and how do we think about robotics and ai in law firms that give lawyers back time to do their jobs. the administrative tasks we can do through, we can do work flow, robotics, ai on top of the data. we are unbelievable in terms of the way we secure data we understand the data, where it's coming from, origin,

destination, we put it in the cloud, we have the ability to put in intelligence on top of it you think about hospitals, you think about universities, law firms. very specific verticals. we're creating solutions and helping our customers to get more productivity and drive more value out of the data they have. >> every show we get paper scripts, paper notes i can't live without it. i wonder how sticky you think that human need to hold it in your hand is and what that means for legacy businesses? >> i did the ibm pc print out when they said pc was dead paper is not dead. it's around. it's declining for sure. we're seeing secular decline, 1%, 2% every year. the reality is data has information. it has intelligence, it has information. so, really what xerox is trying to do is how do we help you incorporate the physical data, your digital data, but more importantly, how do we put intelligence on top of it that allows you to drive productivity and success.

so, the big wrap around ai and chatgpt is exciting but it's only a tool. without the data, it doesn't do anything in terms of driving success and driving output we play that role. when you talk about how do you think about secure data, where is the origin, where is the destination? how do you redact not just digital but audiophiles, and we have a great opportunity to reinvent the workplace, this hybrid workplace and distributed workforce and we can create client success and value and reinvent the way office works today. >> i would expect return to office would be good for your business as people upgrade but you're going all in on the hybrid workplace >> yeah. if people come back to the office and use more of our infrastructure, that's a great thing. if they stay hybrid -- everybody went home two years ago and working in this hybrid workforce but we didn't change the way we work we didn't change the way process works.

yes, we use more video and tools but the reality is we never changed it you think about hospitals and doctors and nurses and all the amount of teleworkers we're seeing, but we haven't changed the way in which they work xerox has an opportunity to play in that role and be able to drive productivity in the hybrid environment as well as people coming back to the office. we're excited about the new opportunity. >> it's been a big week for ai themes, and nvidia was part of that one of the notions on the street is it's going to set an environment where you can't just say, oh, we're an ai you have to have a plan, you have to have numbers, it will have to be manifesting itself in your business. do you feel that pressure? do be demonstrable about it? >> we've been using ai internally for years this is nothing new to xerox you think about the service industry and really driving a new service experience virtual reality and artificial intelligence that gives us the opportunity to look at, how do we think about solving problems?

very simple example, today one of our devices gets a fault, it comes into data, we see back in our remote centers, use artificial intelligence, how do you solve that problem we then send our customer a text, augmented virtual reality text, and we solve over 40% of all of our remote solve now. we solve 50% on the first call that solves and helps us with three things one, labor challenges, inflationary challenges, more importantly, think about the green initiatives and how we can help improve the environment by not having more growth we're excited about ai in terms of how we use it, but more importantly, it has to drive definitive outcomes. ai is the buzz, but it has to be, where do we drive physical and value for corporations. >> i have to ask you, we've seen weakness in the stock lately there's been this drama around icon enterprises carl icahn is a big shareholder

of yours have you spoken with him there has to be speculation he's selling down his position? >> i talk with all investors, large, small, jpmorgan investor conference this week, potential investor in the future we just had our shareholder meeting. we had overwhelming support for myself, the team and the strategy yes, we talk to carl, we talked to all of our investors today. we have overwhelming support by our shareholders in terms of the strategy i just described. yeah, we're very supportive and we continue -- >> but you don't know if he's selling down the position? >> you have to ask that -- >> i tried >> steve, thank you very much. >> thank you, sara, thank you, carl. atmus filtration spun off from cummins, now open for trade, pricing at 9:50 up omont a to the ceo in colef mes.

your shipping manager left to “find themself.” leaving you lost. 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 corporate spinoffs have been a big theme all year long. we saw a spinoff from ge, johnson & johnson and atmus filtration spinning off from cummins. pricing in the midpoint of the range at $19.50. seema mody at post 9 with a special guest. >> i would like to bring in atmus ceo, steph disher. welcome to cnbc. >> thank you for having me >> your stock just opened for trade. you've been a part of the cummins umbrella for so long tell us why now you're looking to become a stand-alone company and the vision here.

>> yeah, we're really excited for the launch of atmus today. we've been working on this for some time. we see this, it gives us the opportunity to seek our growth opportunities beyond what we've had within cummins why now is we're a size that's large enough to be able to stand alone as an independent company. >> your filtration technology is used across so many different parts of the industrial world -- construction, agriculture, automation clients like john deere, volvo, among others what role is atmus trying to play as we see filtration push >> we are a global leader in mill trags solutions we serve customers all around the world. we have leading positions in united states, india and china with our joint venture partners. we're a technology leader and we have have very strong partnerships with our customers. we're looking to leverage that 65 years of strength and capability with a new company

now poised to unlock profitable growth >> how reliable is this business during economic downturns? is it cyclical at all or just you need filtration always >> well, you do need filtration always we are about an 80% after-market business so, as we see the trends through the cycles, our after-market business is very resilient and a strong recurring revenue flow. >> we've talked to cummins in recent weeks i remember we asked specifically about china and whether or not the reopening has matched expectations now there's some questions about european growth or at least german growth. how do you think about global growth ex-u.s. and whether or not it's matching what we thought was going to happen this year >> yeah. so, our global footprint gives us great diversification across many markets we saw china rebound very strongly back in 2020. we're seeing a softer recovery than that in china in the first quarter here and we'll continue to monitor that as we go forward. >> the role of artificial

intelligence, we're starting to see more industrial giants talk about it what does it mean for the technology that you're specializing in? does it change the type of product over the next five to seven years? >> yeah, digital technology is a really important part of our future we're committed to continuing to grow our business and focus on opportunities to grow. >> finally, you know, inflationary back drop right now starting to improve. when you look at metal and steel prices, the dramatic pullback we've seen there, does that help your business or not so much >> yeah, certainly we've had a challenging back drop with inflationary pressures over the past couple of years and we've been able to pass those prices through to the market. we're watching and monitoring those costs and hope to see some moderation as we go forward. >> looks like 80% of your stock is still held by cummins a lot of the proceeds will be used towards bringing down their debt what are you going to use the capital for at atmus >> we have a very bold aspiration to grow our business

and be a leading global filtration provider. we want to use our technology to win customers not only in our current core markets but beyond our current core markets to a broader filtration. >> ticker up 10% in early trade. thank you for joining us. >> thank you, seema. thank you for your time. >> thank you they have to be happy at the nyse to have another successful spinoff with good price action in a dearth of ipos. up next, ai is here. we're learning not only is it here, but it can also be profitable look at nvidia and marvel technologies who could benefit in the near term and who will have to spend to keep up we'll discuss that on the other side of this break

ai may still be in a hype cycle but companies are booking revenue and making forecasts now because of it. deirdre bosa, the week ai got real this is one we'll remember. >> this may be the week we remember, everything suddenly got real especially here in technology it's been here for years it's changed the way we certificate. and choose movies but what investors care about the market saw its impact in the hundreds of millions and billions of dollars. nvidia, bank of america writes nvidia pulled forward the substance of the theme and

raised the bar if your company is still randomly saying ai-owned conference calls with no actual users, revenue mode map, it will sniff you out. ai revenue is expected to double this year to $400 million, notes generative ai is driving multiyear, 27% pop now on the other side of that equation we are seeing artificial intelligence cost companies money, also. microsoft, amazon, google, the hyper scalers need to now upgrade servers and infrastructure on the back so that their customers can run their own generative ai models new opportunities for them but also increasing their capital expenditures, capex at a moment they're trying to be more profitable and disciplined and take part of the whole shift, also then the ai enablers, the snowflakes, the data bricks that specialize in data analytics they should be the new infrastructure allowing companies to make use of their

data the ceo told me this week the models are only as good as the data so perhaps emergency for them to show they are a real part of the story as we saw with snowflake's decline this week. investors still more interested in the short term. back to this chart i showed you yesterday. i'm going to show it many more times in the days and weeks ahead, these companies, the infrastructure plays, they may be recognized later on in the cycle. it took markets time in the shift. first it was the picks and shovels, the chip makesers and the infrastructure came later and the software and platforms after that >> some of us have been here long enough, dee, to remember, for example, crazy price targets on qualcomm back in the day. if you did stick around for the latter stages of the cycle that came into view

>> you have people saying this is going to be bigger than the internet, as big as electricity from sundar pichai if you think this is another cycle that will repeat itself, we talked about this yet, it actually looked cheap in a weird way because it even justified that runup more names will come out and i think a lot of them, too, we don't know who that will be. i spent time talking to companies in the private space and heard bill gates there's a 50 on 50 chance the biggest player will be a company that exists like a microsoft or a company we still haven't heard of >> it's hard to separate the hype from reality we were talking to the ceo of xerox. everyone is pivoting to ai and it's hard to figure out. >> that bofa note, it's no

longer good enough to say ai a bunch of times today there's a bit of cold water thrown on another wall street firm. they've said it but they haven't seen it yet. investors are getting extremely savvy in terms of looking at what's the real deal and what isn't. >> they've been burned before. dee, thanks. deirdre bosa coming up after the break, henry winkler on the hollywood writers' strike and the role ai is playing in their battle as barry on hbo winds up its final season ♪ ♪ every single day, businesses everywhere are asking the exact same question: is it possible? well...with comcast business...it is. is it possible to help keep our online platform

safe from cyberthreats? so we can better protect our customer data? aww-yeah. absolutely. what else you got? can we use predictive monitoring to address operations issues? before they even exist? we can help with that. - hmm. can we provide health care virtually anywhere? we can help with that, too. even out here. you, sir. something on your mind? is it possible to survey foot traffic across all of our locations? with wifi analytics? easy. order for nina! can i teleport our guests to their rooms? technically, no. or power thousands of mobile check-ins while thousands of other guests check out? now that we can do. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. rock stars. please! do you know what it takes to be a rock star? i've trashed hotel rooms in 43 countries. i was on the road since i was 16.

i've done my share of bad things. also your share of bad things. we know that using workday for finance and hr makes you great at your job. but that don't make you a rock star. ted! ted! ted! oh ted in finance. you're a rock star! hey liz in hr? can you do this? unless you work with an actual rock star. you are a rock star! thank you! who's the new guy? hi, i'm ozwald. hello ozwald. give it up for pam. pam, you are a rock- [silence] i wasn't going to say it. ♪♪ ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf

that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ the writers' strike is rippling through hollywood, as you know we talked to emmy award winning legend henry winkler about the strike and the impact of ai on negotiations ahead of the "barry" season finale on hbo >> there are people who think that they have to participate when they don't quite understand the process in the same way that

the creator writers do the writers striking, they are really the beginning, they're the heartbeat of every project that we do >> i wonder if you think ai is the real x factor in this particular round >> i will say that no matter how good ai is, it scares me more than it doesn't. we're telling you in stories when you connect with somebody it's because they identify with your humanness, with what they're seeing, what they're hearing and how that goes together >> you can watch the full piece on cnbc.com/binge right now and a live stream of the uncut interview after the show today at 12:15 p.m. eastern time it really is an amazing conversation between the creative community and the

business side which is trying to change the unit economics because it is so competitive and nobody knows what this technology is capable of >> i think streaming, for starters, not really unveiling the numbers there and the unfairness on pay but i thought it was a good answer he gave on ai and the importance. it reminded me when faber asked emanuel on earnings, you can't replace a larry david, for instance everyone makes fun of carl because he's the only person at cnbc who doesn't watch "succession" and gets right to "barry" afterwards there are a lot of theories. i don't follow "barry" but a lot of theories about what happens do you have one? >> it's been great to watch the show evolve and winkler is incredible we had a good time the market is trying to hug 4200 the best it can.

goldman today upping their tracker. >> a better day. are we going to get a debt ceiling deal the clock is ticking negotiations are ongoing. >> and you start talking ing counting votes have a great, long weekend let's get to the judge carl, thanks so much welcome to "the halftime report." i'm scott wapner front and center this hour the amazing move in chips this week, another name surges. we debate where that trade goes with the investment committee. joining me for the hour rob sechan, jenny harrington, jim lebenthal. we do have a big day shaping up for stocks the dow is on track to break its five-day losing streak we are focusing on this inkretable move in chips jenny, it's far beyond nvidia even though that's