11%, so would be natural to start that process of bringing that lower >> coming down >> not just about hard landing, soft landing, but about margin pressure >> okay. >> but you can have multiple expansion before that. >> all right, gabriela, thank you. i'm ready for the recession. i want to get it over with >> waiting >> exactly >> thank you we're done make sure you join us. "squawk on the street" coming up right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. we'll watch for a month in rebalancing. futures in the red china data was quite weak. we are expecting a debt ceiling vote tonight republican leaders say it's likely to pass our road map begins with stocks, though, eyeing a lower open on this last trading day of may as we await progress on the debt deal plus a.i. mania helping to

drive what has been a strong month for certainly big cap tech, the latest read on that sector we'll also talk about results from hp and hpe. we're also watching china stocks there entering a bear market jamie dimon calls for increased washington-beijing engagement. let's start with the markets, though, on this final trading day of the month china kind of threw things for a loop >> china's such a bummer i'm beginning to think -- they won't use the word recession, because they're not allowed to but we're talking about, every article, severe slowdown, contraction. they love that word, contraction. david, the chinese economy is like a battle ship with the propellers shot. circling >> it's not moving forward >> exactly exactly. >> right it's like -- yeah. >> yeah. >> yeah. a relationship has to keep -- it's like a shark. >> it moves forward or it dies

>> what we have here is a dead shark. >> yes it's almost shark week time to buy the -- no. still too early. >> okay, we're moving ahead. let's get back to china and specific to what the data is that makes you say that it is a dead shark >> well, okay, so jamie dimon, president jamie dimon, says the -- i'm sorry, he's just the ceo of jpmorgan. i forgot the uncertainty of china is, get this, somewhat caused by the government somewhat how can he say that in china come on. think about that you can't just say -- blast the government you're in china. >> he can, because to a certain extent -- he's not jack ma >> but you have 48.8% pmi, you've got oil collapsing. again, everyone says it's china. how do they slow the decline over there do they have to do just still one more giant stimulus program? >> i don't know. i'm not sure what underlies it

all. >> yeah. i mean, citi today, risk of a double dip exporting ppi deflation, they think policy needs to change in a hurry. >> you have unemployment there they're u.s. circa 1977. they have unemployment that's -- what's the matter? they have unemployment that's gigantic gigantic 20% unemployment i mean, it's communists. don't communists just put peopl to work? >> they do that was not a number i was familiar with. 20%. >> youth unemployment. >> well, people looking for jobs don't they have any, like, prospects? >> and every day, there's another story in the "journal" or elsewhere about u.s. companies trying to diversify their supply chains, trying to figure out their manufacturing plan, should there be even greater hostility between our country and china? at the same time, you do have leaders, elon musk, obviously, other there and jamie dimon, trying in some way to speak more

positively about the relationship or at least encourage the relationship warning what decoupling could really look like >> well, i was reading fortune, jeffery sonnen feld, i didn't know moscow was 2% of trade. cut them off but he's saying, wouldn't be that hard to cut off or slow -- >> i mean, china is not russia >> no, he said china is harder, but -- >> harder? it's integrated in everything. look around. >> not a -- >> can i finish? sonnenfeld saying we're not as intertwined as people think. and he talked about the thomas freedman report where he said, we're never going to have two countries that have mcdonald's go to war. that was wrong with russia and ukraine. so, what he's saying is maybe china isn't as important as, say, canada and mexico, which are now bigger, if you put them together, as trade partners, than china reassure

>> what i would say is -- and i think almost every business leader would agree -- if there was a true decoupling or taking apart conjoined twins as musk said to me during our interview, it would be bad. really bad it would be a -- it would have a depressive effect on the economy worldwide. >> i'm not making value judgment i'm just saying that it's happening. it's happening and you may think it's not good. >> it may happen or not, but it would not be good, overall, for the economy for quite a long period of time >> but i think a lot of companies are afraid they're afraid afraid of the government and i think that you're going to see -- i think it's going to be like that every year >> that may be the case. is that what's pressuring it right now, though? or is it the failure in some way of the middle class to spend money there? >> i think it's that, but also the government is targeting our companies as part of, like, you know, look, we're not going to let america get away with things remember, they're not getting the h-100.

let them eat cpus from intel >> note the time 5:44 we got to the h-100. >> took a while, but we got there. >> they don't have the h-100 can you imagine? they're the only country without the h-100 and nvidia gpu they have the intel. what is it link >> they can't do anything for you, intel that's like 1980 version >> well, jeff probst to the chinese, got nothing for you >> there's a look at nvidia. as we saw some weakness creep in toward the end of the month, is that a surprise? >> there has to be some registering. we're seeing some pieces in the "wall street journal." maybe it's too hot but at the same time, the research -- >> 90 times revenue? what's the revenue multiple on this thing >> oh, god i have to work with you. it's incredible. i mean, a guy guides up -- he

guided up by $4 billion. no one's ever guided up by $4 billion in a quarter ever >> use any adjective you want. i'm just making the point, particularly as you did, because people are ringing the register, that it does get to a multiple to years of sales that is pretty extraordinary. >> well, people are saying, listen to the opportunities to jump into microsoft at 31 times earnings according to that. >> there was a -- >> bunch of target increases today. >> couple of them. yes. >> couple of positive pieces this morning >> nothing near the street high, but wells goes to 365. >> piper sandler says -- i'm sorry, yeah. credit suisse says that target price 420 and that it's a.i. and chatgpt-based product announcements. uplift base case, $57 billion of revenue, $2.90 of eps to microsoft. >> it's gigantic >> and they say office is still the primary driver of their long-term uplift assumptions on

microsoft. that's credit suisse and piper sandler also having a positive piece out. >> it's starting now we have the first backlash company called amberella great movie raquel welsh. they say it's disconcerting, finally, we're getting the backlash you have a company that doesn't have any business in a.i., and they're a.i.'ing and they say it's disconcerting. this is the beginning. because everybody can't be a.i last night, enrico, hp, a.i. hp a.i not hpe a.i., but hp so it's finally -- i think we're finally getting to the point -- and i happen to like the quarter because he said finally the pc cycle is bottoming, but david, not everybody can cloak in a.i >> right >> well, you tweeted that they called the bottom of the pc cycle and then you argued that nobody cared do we have the sound

this is what came about on "mad money" last night. >> i we don't even have it l let's go to bolero it's time. everybody is saying they have a.i., and i think that's fatuous, and it may be the beginning of a backlash where you can't just say you have a.i. if you have smart people using it to code we're getting a lot of headlines on research that i think are done by chatgpt. >> why what makes you think that? >> well, because they're kind of clever for instance, needham has a piece on the company that does the sauce and michelangelo, and needham says it's pfull of pasta-bility >> now you're calling out research that you believe has been created by chatgpt. >> there's no reason

it's not possible. >> what would be -- >> here is another one left behind without a cost >> what would be the prompt? give me good headline for research piece >> there's one guy that did a truist piece that was really brilliant. he put his stocks through rap g gpt. >> i don't know what that is >> it's like, you know -- and then microsoft is this >> it was a rap. not w r-a-p. okay thank you. >> like gift wrap? you are so painful i mean, do you ever read any research >> i'm painful i walk in the door of my house, everybody goes, pain there it is. >> do you like mester? he comes in and goes, i'm mester, i'm ruining this apartment. >> yep, mester and i, we both -- our forecast calls for pain, both of us >> i'm from cleveland, drop dead >> jim's referring obliquely to

mester here, "we don't see a compelling reason to pause." despite all the deflationary stuff we just talked about >> do you think the goldman layoffs will impress her >> that was another "ft. >> that was "journal." david, this is not rookies these are mds. these people don't realize that. these people are making $600,000 >> one person told "the journal," fewer than 250 >> it's going to help the bottom line >> again, goldman will always say, we got another class starting right now of people coming out of school you got to keep it going >> you think it's just that cut-throat there >> i do. >> really? it was convivial when i was there. >> i'm sure it was >> everyone looking out for each other. >> everybody worked until 11:00 friday night incredibly convivial the test i gave at 11:00 p.m.,

convivial. the people who finished in the bottom five right on the door? extremely convivial. >> i'm sure it was >> well, david solomon at our ceo council last week talked a lot about inflation being stickier >> well, i mean, yeah, he was a downer eddy cue was not a downer. talk about what people want, find out things they don't even know they like >> eddy cue loves that mls >> we can't pull one they're called socks no, it's the other >> i wonder if apple will go for the nba, what they'll be willing to spend on that you think they will? >> it's worldwide. a worldwide sport. people love the nba. >> you saw the 52-week high yesterday. i think all-time high would be somewhere around $183. >> now people say they have to do a.i., but a.i.'s a short-term peak here. let's have something we never dreamed of that we will all buy.

that's what i want >> okay. >> that's going to be a big story for next week. big story for today, though, is the debt ceiling deal going to a full house vote, having gotten out of rules we'll get details on that. take a look at the premarket here as q2 is now about two-thirds over d 'ranwee a month away from the second half. don't go away. lling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. [office sounds] ♪upbeat music♪ ♪♪

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the debt ceiling agreement

narrowly clearing a key procedural hurdle. the republican-led house rules committee voted 7-6 to advance the bill, thomas massey breaking with two conservatives to provide that swing vote. next vote is a vote expected tonight. patrick mchenry expressed some optimism about passing the bill. >> we have the votes to pass this today i think that that will project some level of confidence to the american people we can get things done. >> problem solvers caucus, jim, to the rescue to a degree. got the cbo score as well. >> maybe i think that they've managed to have a good narrative, the republicans, that they were tough on the president this is kind of like, you know, the 2011 time. this is what they had to do, they did to obama, so to speak, although biden did it to himself. kind of interesting that biden was the old biden, that's what people are saying. horse trader >> willing to negotiate. i think the markets are going to be very happy if this thing gets

done >> but it doesn't seem like it is >> i'm not sure you're going to see relief because we didn't sell off very much, at least in the equity markets, in anticipation if it was looking as bad today as it was a week ago, maybe today would be a very bad day. >> if you were to look at the average s&p stock, down for the year, you did the equal weight, down for the year, down almost 1%, so it really is just -- it's, you know, it's like ten stocks it's ten stocks. >> that have kept the -- yeah. i mean, mike santoli talks about that a good amount as well, and pisani does as well. >> it's incredible i had marvell tech last night. matt murphy. he's sensational that stock is up 40% from when they reported, and he was telling me, look, jim, some have it in tech most don't and many will claim, but they're not in the food chain. they don't talk to jensen. you have to -- like, jensen is

still in control of everything jensen huang from nvidia what by the way -- >> just, do you ever listen to -- he's still in control of everything >> look. i've never seen anything like it, okay i've never seen one person -- look, he is the keys to the kingdom. these cards are gold and no one else has them intel doesn't. nobody so, what do you do if you have a monopoly you get lina khan. it's a natural monopoly. it's like rockefeller. >> the conversation is broadening with huang's comments about intel and whether or not you can have intel compete with tsm to some degree >> could be. i mean, intel makes cpus remember, in the old configuration, 95%, the datacenter was cpu and 5% was gpu. and now it's flipped so, intel really doesn't need so much foundry space they're only 5% in the new world. >> yeah, although they're going

to be building a lot more of them >> why, because of gina raimundo chip act i proposed to jensen when i spoke to him last week, i need uses he said, stay tuned. and then, he has 12 different uses that are gigantic >> you're talking about the wpp examples and everything else >> yes do you know that today there's a recommendation of fiber, which is the largest call center, saying that the call centers are going to benefit i thought -- >> they're going to replace everybody with a.i >> no, but no. it said it's going to be, you know, simpatico. >> remember, we talked to motorola a few weeks ago you can have a.i. listen for keywords, shave the response time and save 10,000 lives a year from conjunction, not replacement. >> jensen is adamant this is going to be a gigantic wave of new jobs, just like every other party is saying the industrial

revolution i'm going to make you a convert. you are a skeptic, and i appreciate that. i appreciate that. every day, we're still here is an argument against david's existential gloom. >> true. that's true. >> when larry was my partner, you always knew that the round us was going to be -- with all due respect, which meant no respect. >> my good friend. >> i'm telling you, david, in the end, you will worship at the altar of nvidia. >> i'm not sure that sounds good either >> do you think it's a false idol the ten commandments do it. come on, do it >> where is your god now, moses? >> when we come back, cramer's "mad dash. we'll count down to the opening bell as this month of may wraps up take a look at futures back in a moment lcome to our thd bark-ery. oh, i can tell business is going through the “woof”.

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seven minutes before we get started with trading here at the new york stock exchange. "mad dash," twilio, that stock has been moving higher in recent sessions last week it was. >> i mentioned this because you're a skeptic, and i'm joining you in this. there's an activist firm they missed the deadline to nominate it's called legion partners. they have $40 million. now, david, why don't they just buy the company? because they don't have enough money. but they have -- there's a two-track being crushed in one track for jeff lawson. it doesn't matter that he has had two riffs. doesn't matter that he has a billion dollar buyback doesn't matter that he has put real profitability targets it's not enough. these guys are just not

satisfied. this is a company -- they taught me how to code really interesting company you get people's emails. >> they collapsed the voting structure, though. that's important >> they're going for it. but david, i mean, what more can you do maybe the dog won't hunt >> i don't know, what do you think of the fundamentals of this business? >> well, i think that right now, this part of the -- they deal with a lot of small, medium-sized businesses and they're not doing that well because of the fed and because of the cycle this is more cyclical than we realized when they kacame up wih it and i think jeff lawson is trying real hard, and i think they should go after somebody else who doesn't collapse this structure and do two riffs and a buyback and really have religion about profitability. i think lawson is innocent and should not be pursued. >> all right, so, you're the activist, you're questioning -- as i said, many times, these activists are looking for marketing more than anything else, and they got some. you mentioned their names. >> i didn't mention it positively >> no.

>> legionnaire's every man do his part, dead or alive. zendernuf it have got it >> you don't know beau guest >> carl doesn't know it either he's my arbiter. >> gary cooper >> if he knows, then i know i'm -- my education is off if he doesn't know -- >> all right, the opening bell is just a few minutes away and i'm not jesting about that you can catch us any time anywhere as well t see owkand follow the "squa onhetrt:pening bell" podcast. >> french legion

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. advance auto parts taking a hit in the premarket, the retailer has a big miss on earnings they cut guidance. they slashed the dividend, jim >> geez, i know. >> we wonder if this is now surpassed foot locker as the worst retail print of the quarter. >> i think this is horrible. free cash flow, $300 million, they had been at $400 million.

margins way lower than expected. full-year goes from $10.20 to $6 i know that used cars have come down in value, but we are seeing a degradation, david, in retail. we're seeing companies in retail just -- i don't know if you've seen some of the department stores how poorly they're trading >> yeah. >> i just don't know what to say. >> this was a -- people just any that's -- that retail, other than amazon, is getting killed >> it's actually -- it's a key part of this bernstein note on amazon today they go from $125 to $140. they talk about not just cloud accelerating but taking share from walmart, operating leverage coming into play now >> you know, jassy talked about the notion of not losing same-day or next-day and that's why you need all the people. i questioned that. i said, come on. how can you spend so much money?

well, the answer might be that he is taking it to everybody, and the endless uniformly are saying, this is the one to buy i'm seeing it over and over again. the trough, the trough, the trough, i don't know but if you look at the rest of retail, it's really awful. >> keep an eye on that as we look to hold 4,200 this morning. there's the opening bell and the cnbc realtime exchange at the big board, it's women's golf day and golf equipment company akushuna at the nasdaq, it's orchestra biomed doing the honors. dow is down 130 or so. >> there was a big goldman piece of paper, 5 billion, cvs, and i'm talking about there are companies like cvs, which is, i think, a very good company and a very well-run company. this stock is down 28% for the year 28%. >> okay.

why? >> well, a lot of people just feel you can't be brick and mortar, and by the way, continually underestimated is shrinkage. >> i knew you were going to mention that >> it's the untold story >> it's the untold story of retail, although we've been telling it a lot lately. >> it's got so -- i think shrinkage is the wrong way to look at it it's the incredible buzzer ringing to get the person to open the plastic when they can't hire enough people, so you get it the same time as you would get it >> you can sit in your apartment, hit amazon and it will be there in an hour and a half >> my wife just sits there over and over again i want to cut her finger off figuratively >> thanks for clarifying that you didn't actually mean -- >> that didn't come out right at all. we're talking about the desire to shop endlessly on amazon because it's so much easier than going to walgreens that's another one they closed the walgreens down

the block. that was the one that i said that i had stayed there all day pressing a button. nothing. >> yeah. >> same day. >> it's an issue >> but this is serious that's what this is about. yes, they moved into health care, but i just think that -- >> they moved aggressively into health care. not to mention they own aetna. let's not forget >> people don't like the health insurance at all now they're worried that the -- we're one year away from an election that is typically when you have to sell them i don't know, david. >> well, it's certainly not working nearly as well as travel today on the back of american's guidance for q2. >> that's terrific >> they up the adjusted eps target lower fuel, jim. then, the added demand is the sweet spot >> i thought the american express today -- up three cents. that's pathetic. we had american express upgrade. i thought it read very well.

the problems with possible debt won't be that much of an issue but it's -- the only place that extends to is the cruise lines royal caribbean is almost back >> we got wells on amex, avis today. deutsche upgrade >> i think hertz is cheap. they're flooded with teslas. they're $55 a day. that's pretty darn good. what's not to like david? >> i don't know, jim i don't have a lot to share there on -- i haven't rented a tesla from hertz >> i well, i thought the headline there was just great. that's the one left behind without a cause. no doubt sal mineo. james dean >> we're going there again we just had a look to find out beau geste was a 1939 movie with gary cooper. >> i'm trying to make it

irrelevant >> james dean at least was the '50% >> but avis, left behind without a cause. >> i know, "rebel without a cause. >> your point is that it's lagged behind its peers. >> hertz, by the way, is run by an ex-goldman alum who's doing a great job. no one cares >> the cfo, yep, goldman and a long-time bangker there too. >> it's a travel name that's not working. you want to get in on the travel stocks those two were attractive. lot of cash flow hertz is doing a lot trading cars now they're trading cars like, you know -- >> what you have wanted to be in on is the a.i. boom. that's really been the key to the market over the last few months >> did you take a look at -- >> a name like palantir. >> good quarter. >> down about 5% no >> palantir had a good quarter >> i know it did, but it was up 90% in like a month and a half >> but like for instance,

jacob's engineering, which was downgraded -- jacob's solution >> look at that move >> why don't you put up c3.ai if you want to go there >> both of them up dramatically on enthusiasm about generative a.i. we should make the point a.i. has been around for very long time. we're talking about generative a.i. >> generative a.i. is what's going to kill you. regular a.i. works with you. >> general intelligence a.i. when it reaches that yes. well, that's what's going to kill us. >> generative, just so everybody knows, it learns, so it gets smarter and smarter. i saw some generative a.i. years ago at alphabet where a robot learned to drink coffee, and when it was too hot, knew not to hurt its lips. >> it didn't have lips, because it was a robot >> that's for someone who's narrow-minded like you i saw it as the way of the

future do you know what they haven't figured out? those darn generatives they haven't figured out black ice. >> they haven't figured it out yet? >> i'll ask jensen >> they didn't really have the generative until more recently >> i want to explain to people that if you can -- there's some things they can't learn, and that it's tougher to learn it's like, you know, when you try to take high-energy physics. >> you saw the statement yesterday from all those concerned a.i. people. right? pandemic, nuclear war, a.i you saw it okay just keep doing that all right. >> you saw it. honestly this is progress >> there's a lot of news in the energy complex, jim. we mentioned oil by the way, on pace for the worst month since november of '21. you got xom, and actually, the final sell rating on chevron is gone now as jpmorgan goes to neutral. >> i saw that.

the valuations apparently are now more reasonable. my friend from rbn puts out the numbers every day. david, i have to tell you. we're flooded with oil from canada, the u.s., russia, and we don't have any -- you know, we're exporting a huge amount. there's no place for it to go. do you know that we're reporting -- do you know that -- this is a great one. we're sending it to london to sell brent back to us. we make it from west texas to brent, and then we send it back. >> i was just trying to remember what we're exporting over two million a day? >> more than that. >> four million barrels a day? >> we're going to have vlcc, the very large containers, we're going to be able to land them in two million, load them up, send them to britain, send it back marked up. >> that move down here is that china also -- >> it's breaking down. >> perhaps lack of demand. >> yes and by the way, natural gas,

holy cow it can't budge from $230 because even coal, we're -- i mean, this complex means nothing to mester, i know president of cleveland fed but this is like, why don't they ever factor this stuff in? this stuff is -- that affects deflation right there. no, that's -- it's over there. >> i agree with you, and i brought this up yesterday with sara eisen, who i like to go to with all my inflation questions. >> we haven't even touched on german cpi cooling a lot from the prior, now down, below the estimate >> they care about wages i get that but i was look at rich clan skooe's stuff, as sara was, the ceo of costco. every month, it goes down, but they don't care about that they care about the fact that people can get $19 an hour instead of $18 that's really their -- that's their warpath. people who have all their lives

made very little versus, say, the ceos of, like, cbs >> they think that inflation is more intransigent than you think, and they want to -- they're going to go up another $25 now. >> just wage inflation >> i know, but -- okay >> well, i'm just saying that eventually that will cool when people realize we're in a deflationary environment all this sticky stuff, that's what they say right at the top everyone's using sticky. >> if we do get another 25 in june, is the market going to react negatively to that >> i think the white-collar layoffs are much bigger than people realize most of them are not announced because they're not union jobs and a factory closing. i don't think there are that many people being hired coming out of college it would be very big >> we're going to get j.o.l.t.s. in about 20 minutes. i think the -- i think the line on friday is still around 200,000, which sounds all right, but it would be -- the average is lower >> let's say you're making -- i'm not saying that -- don't cry

for these people you're making a million dollars at goldman and you're laid off what are you going to do go across the street, make a million at jpmorgan? no >> no, although there is some hiring going on right now, interestingly. ubs is actually hiring fairly aggressively, as they kind of try to pick up the cs franchise, remember, or reinvigorate it to a certain extent so, you do have pockets of hiring on wall street, and you have certain decisions being made by firms -- >> but you have morgan stanley laid off a huge number of people i don't know i think that this is the white-collar -- this is now spreading. this white-collar recession is not -- >> from tech >> yeah. >> into finance? >> yeah. it's now spreading there's not a lot of ipos, other than corporate debt, there's not much to do >> no, but that window can open quickly. >> but there is a piece on the tape today about whether or not a.i. leads to more ipos eventually

>> exactly >> well, eventually, but you can't get a lot of ipos done we've got lina khan trying to stop every deal. >> if she gets to court. but it is having a chilling effect, the ftc, just the decisions they're making it's having a -- i think it's intended to have a chilling effect on those who have not decided whether or not to pursue a deal >> but i just think -- >> who say, well, i got this added potential impediment, even though i think we would be fine, it will add time it will add expense. it will add distraction. >> we don't have any retail takeovers, so retail, i think, we're going to see numbers down. white-collar, finance, down. tech down. and against that, there's -- i mean, look, i know that there's some industrial that's doing better but oil and gas, you see the texas -- the texas numbers >> the dallas fed yesterday? that was a mess. >> texas is supposed to be bigger than anything >> why do all these fed officials, like there's bowman this morning saying residential

real estate is working against us >> you can't build in most placed we had doug yearley on doug would build, the ceo of toll it's very difficult to build other than a couple of states that are really pro-growth i think we're -- see, toll is terrific but housing and wage -- that's it then, yeah, why don't you -- they need the long end to go to 8. i don't know doug yearley's -- there's a plurality that's being bought with cash. >> did you just say 8% >> i'm saying, how do you stop you see mortgages down 3%. big deal toll brothers, lennar, holton, okay wages at chipotle. >> that's it >> polty and chipotle. >> so, until we see that turn, the fed's not going to stop? >> that's what they care about because it's so-called sticky. look at copper see copper >> again, people would say,

that's china >> all right, so, what what's your plan >> no, i'm -- they're not mutually exclusive >> if lennar can put up all the homes it would like -- there's a big conference, and avalon bay got numbers up because that's rental because they do well in this environment. but you know, it's not the fed -- there's nothing you can do we have 7 million homes that we might be short 15 years of underinvestment. what are we supposed to do >> i don't know. maybe you're supposed to get into risk arbitrage, because that's what i'm going to talk about now, jim i'm talking about the changing fortunes of microsoft's potential acquisition of activision >> did you see what jensen says? >> do i have to talk about jensen having to do with microsoft activision >> i've seen what the video game is going to look like. >> oh. >> you're going to play them when you bow at the altar of nvidia >> when i bow at the altar of jensen >> go ahead, do your little

thing. >> is that what i get, a little hand gesture >> i'm looking at the crew >> you used to care about this >> i care. >> i think most microsoft shareholders could care less about the activision deal at this point >> activision blizzard is one of the great buys of our time, as is take two. >> activision shares have moved up again because, yes, the changing fortunes or at least perception of the likelihood of this transaction changing once again. not that much, perhaps, at this point, but nonetheless, you had yesterday, an important hearing in which they then set the date for the appeal of the cma in the uk, and that will be heard by the competition appeal tribunal, and it will take place from july 24th until august 4th, and that is after the expiration of the merger agreement, which expires july 18th, so it would require microsoft and activision to come

to a new deal in a sense to amend the merger agreement, extend the merger agreement. perhaps that will be in the form of an increased reverse termination fee, and maybe allowing activision to pay a dividend to its shareholders, perhaps five or ten bucks a share. and then you get that. but again, why i mention it is because given the political pressure we have been seeing, both overt and perhaps behind the scenes from the uk government, including its prime minister, and just a lot of overall chatter, there is this belief that perhaps microsoft's chances on appeal are stronger than had been thought. by the way, even if they win, it just gets remanded back to the cma and then the question is, would the cma change its decision don't forget, we have been through so much with this, originally thinking this deal would be fine. cma then saying, no. then, changing its approach and saying, we're only going to focus on the cloud business, believing they would say yes, only to say no

only to believe then that, well, this thing is dead, because the appeals process is almost impossible and now at least in hope so, worth mentioning we'll continue to follow it closely. activision blizzard shares back up to over $80, carl that's a $95 cash deal, so it's still a fairly large spread. the ftc is -- nobody thinks they have a case. >> it takes a big discount to take two, finally with ea. this is a much better company. >> incredible saga not over yet let's get chicago pmi from rick santelli. hey, rick. >> yields going down, folks. well, we know what that means. weaker chicago pmi $40.4. that's seven points below what we were expecting. that happens to be the ninth number under 50, contraction territory.

last time we were over 50 was august and it was 51.9 it's the weakest since november of last year when it had one of its rare occasions where it was under 40 yes, you can see interest rates slide. this isn't going to be good for the equity markets either, and of course, this will lead into the national numbers it gives us a good potential on manufacturing. many will say we want to watch service, but service seems to be slowing down as well ultimately, the speed of the economy has been so much better than anybody anticipated, but this certainly looks like the speedometer is starting to slow down even more don't touch that remote, though, because "squawk on the street" will return after just a short break.

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it's been a torrid month for the semis, some taking it off the table on the final day of may. you have nvidia, a and b, qualcomm and micro on the red. once of the best gainers on the dow with the exception o leorcef we'll get trading with jim in a moment 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

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let's get to jim and stock trading. >> one stock creeping up is sofi >> last week at the terrific conference, i'll tell you one thing, if they get the student loans, that's been the piece that is missing. if they get that, the stock can go hard. they have loans they kept on the books. nota went through it, hook, line and sinker, i was convinced, some of my friends were not. if you can't get what the company was, student loans, refinancing, wow, wow, but it is a spac, and spacs are so hated that, you know, remember him >> a lot of times warning people

about spacs. since 2021, i believe. >> he called the top on every one of them. >> you famously, nicola, you had that one. >> we did call him out eventually, yes. >> yes, you did. >> and we were going to slap him silly if he was lying to us. >> lucid. >> still a lot of personal profit made in a lot of those names. >> lawsuits galore about these guys, but i don't know. >> well, listen, you're talking, it's different some were completely above board. it's just the managers of the spac were obviously incented incredibly >> the disclosure is perfect on the ones people were complaining about. >> they came to the nuisance, as we say, in law school. >> when you move next to a quarry, i mean, hey, you're next to a quarry, something goes wrong. >> or if you didn't know, you

should have. >> you should have known. >> speaking of that, i have wes on tonight, who has the high speeding training. maybe you want to live next to him in florida he's really talking about this new fortrapeess is incredible, putting out hydrogen plants in a brilliant fashion. and wes is one of the, you know he's a must. >> always like listening to wes and having him as a guest. he's one of those people who speaks freely, which is nice. >> a musk. >> i noticed you had another gentlemen on as well. >> a good friend of davis, mark b benioff. >> he's told me, he said he thinks we are good friends now you know, david. >> that's kind of not bad. >> shoulder shrug. >> gary dickerson, hey, look, you know, semis are back

>> any thoughts on the salesforce quarter >> i want to venture to say it's a good year for salesforce they have something called einstein okay, einstein >> i will pass on kind of regards. >> good wishes. >> yeah. >> good wishes that's a lot it's not that kind of relationship. >> we'll see you tonight you've got a lot to work with. "mad money," down about 20 on the s&p. 4185 when we return, the ceo of hb enterprise, shares down 7. don't go away.

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good wednesday morning welcome to another hour of "squawk on the street," i'm sara eisen along with carl quintanilla and david faber. take a look at stocks, final trading day of the month of may. we're giving some back, down 1/2% on the s&p 500 nasdaq is down, again, less than the rest of the market the dow is down about 227. 30 minutes here into the trading session. here are three big movers we're watching right now advanced auto parts plunges after cutting its full year profit outlook

higher prices for raw materials, labor costs, freight loads all weighing on ruesult there is meta hovering around the flat line stocks up triple digits since the start of the year, 3% away from 52-week highs and hulewlett packard enterpris is in the red. ceo, antonio neri joins us to break down those numbers, also what the company is saying about ai in just a moment. >> early session lows here let's get to jolts with rick santelli hey, rick. >> yes, fields popping up, which means jolts popped up as well. that's correct if you're looking at the job openings and labor turnover for april, always two months in arrears, expecting a number around 9 1/2 million, it popped. instead of getting the fourth that was lower than the previous month, we moved higher to 10 million, 103,000, second best number of the year, the best

number of the year was in january at 10 1/2 million, and last month moves from 9 1/2 million. we're splitting hairs here, the fact that it moved higher is kind of like an inflation number when it moves higher same response in the market because of fed implications. it's giving us a view of a healthy jobs market and those openings translate into higher yields we move from 365 to 367. we're challenging the low yields now we're challenging the high yields satellite sara, back to you. >> thank you so much just the latest data point moving in the wrong direction for a fed that wants to slow the economy and bring down inflation fast enough. the final trading day of the month of may you know, the s&p is headed for another month in a row of gains, third month in a row, yet that doesn't tell the story, right because it's been such narrow leadership and such bad breath, and you can look at a number of

ways that show this. i thought the tony dwyer note was really good that says all of this is recessionary the top ten stocks as a percentage of the other market caps stands at 32.2% that's higher than the dot-com era peak in 2000, and late 2021. he also says the top ten stocks account for the entire year-to-date gain in the s&p 500 with 8 out of 11 sectors down on the year look at the bad breath, the treasury yield inversions, he says that's all recessionary, and strategists agree it's a dangerous place to be for stocks when you have narrow leadership. >> tony has been pessimistic for most of the year it's not going to keep the bulls from arguing that you've got a new secular growth story in ai you've got traction on disinflation you're getting earnings revision to go higher, not lower, those are things working in the bulls favor. >> working if the bear's favorite, fed expectations are

being recalibrated and hawkish fed speak. we've got loretta messner, cleveland fed president saying to the financial times, she doesn't see a reason for a pause, meaning wait until you get more evidence before you decide what to do. i would see a compelling case for bringing rates up and holding for a while until you get less uncertain about the economy. you had barkin on the tape as well, the richmond fed president. inflation is going to be more stubborn than people would hope. bowman in the hour, new leases make their way into the calculations but overall talked about a reacceleration in housing and the latest jolts data which the fed has been looking at as a sign the labor market is too tight, which we know they're targeting because wages will keep going up and feed the inflation story, and you have to wonder if the fed is going to take a pause. >> i assume they're not looking

at china and the lack of momentum out of their reopening and the fact that copper has come down, oil has come down a lot of commodities have been dropping i assume they're not looking at chicago pmi which was well below china's. you know, i mean, for everything you can cite, there's another side that seems to say, hey, there's some real weakness out there. >> they're looking at all of it, i'm sure they're not going to make policy because china's policy is coming in weak. they have not had an inflation problem, and it has not been correlated. >> to the extent they consume commodities, and commodities are coming down. >> it's not trickling to the u.s. data yet. i think the month-to-date prices on copper and oil prices, that tells the story. down 12% for wti on the month, 5 1/2% for the month on copper the china recovery story, it's not a consumer economy i mean, it's been led by

consumer and services, and that's even fizzling out a little bit, but it's not a consumer economy like the u.s. is >> it's almost an exact reverse of the percentages or used to be. >> they needed manufacturing and industrial sector to work. the property sector is a fifth of their economy they need that to come back. confidence issues there, wondering if we're going to get a stimulus in china, but overall, you know, it's been weak, and the chinese currency is down 3% for the u.s. dollar that's also notable because it means the chinese have sort of guided that lower. weaker china data, a little bit better u.s. data, and more hawkish federal reserve expectations a very narrow market where ai is leading. i think it's interesting to look at, carl, you have been doing some work on ai as a disinflationary force or even like does this bring this back to secular deflation it's something for economists to take us to and how long would

that take to happen, if it is going to create this productivity. >> you cited the goldman note in terms of ai, labor disruption. you had williams argue that we could well return to an era of pre-covid low rates. that's not necessarily gone forever. >> he didn't cite ai, but it could be ai that takes us there. goldman sachs noting if generative ai lives up to its promise, a fourth of u.s. jobs could be eliminated. that and 2/3 of jobs would have automation attached to that. they say that's going to create trillions of dollars because of increased product tivity. >> sitting right over there talking about that when they did the original report on the produ productivity enhancements. >> one way to get rid of a tight labor market, i guess. feels kind of depressing when it comes to jobs. >> i can get you more depressed if you want. >> you know i go there >> you can't make policy on that

now. >> on humanity, no. >> or on the productivity or job losses what the fed is going to see is a ten handle on yjob openings. >> that jolts number, that's key. that's reinforcing what mester is saying. >> employers have multiple listings for the same job. remote work is less relevant. >> it shouldn't be going up. it should be going down, given what the fed is doing. we have a jobs report on friday. labor market has socftened a bit we get a cpi number during may that comes during a fed blackout period we're not sure exactly how much weight they're going to put on it all of that will be important. you continue to watch these odds go up. we're now more than 65% that they hike in june. the question is does it matter for the markets. if we're in the five handle instead of the six on peak rates, i'm not sure it matters much for the markets we have to talk about chips. it's been the story of the

month. big winners. under pressure a little bit this morning. kristina partsinevelos has been tracking that this month. >> the ai excitement has spilled over from nvidia, up 170% year to date, to any name that could be rearchitectured to generative ai workloads, not all chip names are up today known for the silicon chip designs used in camera that stock is down, roughly 14% after guiding q2 revenue below consensus. they had the earnings call last night. management said they had not seen any indication that the inventory correction would end soon and their outlook is really dependent on the ramping up of new orders on different customers. another name trending lower this morning is memory maker micron, down last i checked 4% the ceo spoke at goldman sachs, there's a conference about the ban on chinese companies,

banning micron chips, the ball will impact revenue by high single digit percentage of total revenue. micron is an outlier of the group. month to date, it's about 7% most stock components are up double digits. amd is up 20 of the last 24 sessions marvel, up 60% in may, and broadcom, up 27% month to date the big debate is if ai spending is truly incremental, you know, that small continuous spending, versus a one-time sunk cost for new equipment, especially given, we know, this entire sector is cyclical, guys. christina, thank you >> the debt ceiling passing or at least the bill passing a major hurdle let's get over to kayla tausche. more on what is happening, i guess, right in the moment now, kayla. >> yeah, david, it was a narrow vote in the committee. all democrats and two republicans voting against the bill, but it had the necessary

seven republican votes to advance it, including the unlikely support of thomas massey who voted down all prior debt ceiling hikes for a decade. massey tweeting, this is the first real bill that cuts spending and just a few moments ago, we also got word that the bipartisan problem solvers caucus, that the 64 members on that group are also going to be supporting it. meanwhile, the nonpartisan congressional budget office released its score of the bill last night, estimating that capping spending will reduce discretionary spending by $1.3 trillion over the next decade with another roughly $200 $200 billion saved on interest payments, expanding snap eligibility, even with the new work requirements will end up costing the government $2.1 billion more. yesterday, i asked white house budget director shalanda young how close they were to securing the necessary votes. >> republicans had pledged 150

votes. is that still the case, and can democrats provide 70 >> i'll let them figure that part out all i know is when you enter into good faith negotiations, you don't negotiate to see a bill posted. you negotiate to make sure it gets to the president's desk, and we'll fulfill our part when it gets to the president's desk. >> suggesting that the reason why some of those elements of the bill ended up in the bill are specifically to garner those votes. as for when the vote will take place, we've just learned it will be about 8:30 p.m. tonight when the final consideration, the final voting will take place for that bill. the fiscal responsibility act, so it could be late this evening when we get that result, guys. >> thank you, kayla tausche, trucking the votes all day as we head to break, how to position as we head in the new month for stocks. >> one gaming stock that's beating its other casino rivals. it's up triple digits since january. and we'll get the read on retail

former chair and ceo of home depot are going to join us about the big problem facing many right now. when "squawk on the street" comes back right after this. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria.

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shares of hpe, hewlett packard enterprise falling after mixed results. alongside weaker than expected guidance the company remains bullish on ai opportunities antonio neri joins us now to discuss. good morning, it's great to have

you here market focused on the revenue miss and the guidance below estimates. are you seeing weaker demand for enterprise spending? >> well, good morning, sara, thanks for having me today i think we are navigating an uneven market, where there are pockets, obviously, which continue to struggle a little bit, particularly in general purpose compute. but we see tremendous, tremendous uptick in intelligent edge with the connective and digital transformation, as well as hybrid clouds, and obviously ai, where we saw an amazing uptick in just the last 20 weeks. just in the last 20 weeks, we record $800 million in large models the reality is that hp is in this growth market >> markets not fully buying the ai story, antonio.

explain where you fit in and what sort of services you're providing when it comes to ai demand what it comes to ramping up. >> yeah, well we have been and continue to be super computing technologies we last year deployed a lot of scale super computers ever built in history. >> antonio, sorry, we're having a little audio trouble we're going to try to work on that because we want to hear what you're saying, of course. apologies to everyone, we'll try to fix antonio neri's audio, the stock a little bit lower, talking about ai demand ramping u. we'll take a break here one gaming name beating out its peers, contessa brewer is live at the silver state with a look at what's ahead. contessa. >> that means don't give away what this mystery chart is, look, here in nevada we're seeing boomtown happening. all cylinders just working to have record profits, especially in las vegas, so the question is

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hpe ceo antonio neri back with us by phone apologies with that, having some audio issues, but do really want to hear what you're seeing in terms of demand from customers on ai, and what sort of services you provide and where you fit into this story. >> well, thank you and, again, sorry, what's going on with the mic, but, yeah, so as i was saying, hp has a market leadership position when it comes to ai and super computing capabilities we have deployed the largest skill system ever built in our industry, and we are on our way now to deploy four more as we speak. in fact, this quarter we start the deployment, which is another system for the department of energy, and to give a sense how big the systems are, these systems actually can provide 60,000 gpus at one time. and hp has the ability to build

it, to install it, to run it and the silicon and the software to present this as a coherent system, and one of the ip advantages that hp has is the fact that we have a networking fabric that allows us to present these large systems with a soft start to be able to run these large land wedge models that everybody's talking about it and that's why in q2, we got an incremental $800 million of orders just coming from large language models, including a large crowd provider, and the pipeline looks simply amazing, and we believe we have the right to compete in this market. >> that said, antonio, just, you know, when our viewers are looking up here, they're seeing the stock down about 7%. a lot of that does seem to have with a slow down in compute and storage. on the call, i think you noted particularly as a result of that mini banking crisis in march, there may have been a slow down from the financial services

sector can you explain sort of a little bit more to our viewers what was behind that and what your e expectations are for this quarter and the next one >> absolutely. i think what we saw in q2, the unevenness we start seeing in q1 got a little bit worse, and it was driven particularly north america and in the financial services vertical where, you know, large deals that we normally tend to get through the process even came through, and that was really inoculated just on the general purpose compute, versus the edge, we saw another amazing performance. you see the numbers, right, 56% growth in constant currency, and that was exceptional across the company board, so i think short term, we're going to have a little bit of unevenness in that compute business, driven by the digestion we saw last year during the supply chain challenges, which are not here anymore. and then the fact that obviously

as the financial sector goes through the recovery, there will be a little bit of, you know, elongated period of time for that specific type of customer, but there's another sort of opportunities that appear to be bullish around the edge, ai, and hp drives an amazing performance, and ultimately we continue to expand earnings. >> on a related note, antonio. there is a school of thought on the street that the crush of dollars chasing ai, generative and large language models is crowding out spending on sort of legacy tech, refreshes, things that would ordinarily happen at this point of the cycle. is that a real concern >> i think it's an opportunity obviously, you know, the ai space is super hot right now and, again, we participate there in a unique way. i think, you know, last year we drove in the core business

called storage and compute, a significant growth the compute business tends to be very cyclical in nature. you know, have periods of digestion, and periods of cost, you know, realignment in a commodity space. but in the long-term, it will continue to be a positive growth because of what we see with data, data explosion, and digital transformation i'm bullish about the net working pieces, our business continue to grow at an incredible pace. we expect our business to continue to grow double digits and everybody has to be connected and it's not just people, everything we do have to be connected in order to understand the data that we connect every single day. >> how do you convince the market who's focused on the hyper sc hyper cloud names like a microsoft, amazon and google as the ai winners, you are also building the foundation for more hardware and storage side. >> well, we are building the

right specialized foundation to process these large models and one of the things that came through the conversation to some of the customers in q2 is the fact that some of the environments that you name are not working for them because all in this environment, you need to have computing, the softer packages, the models, you need to compare the data and the like that's what hb has unique opportunity because we have all of these outfits in ways that we can bring it together on a massive scale. the other opportunity we have is the fact that, you know, you can actually provide that as a service, a model in the next three weeks, you're going to see interesting announcement for us, related to ai, and how to offer that other service. >> antonio neri, thank you very much 6 1/2% ceo of hewlett packard enterprise. draft kings posting nice gains in may the stock is up triple digits

this year. but can that hot streak continue let's get to contessa brewer she has more from, as you've seen, las vegas. >> well, actually, i'm in northern nevada. i'm in reno, nevada, this morning. just a hop, skip and a jump from las vegas. and david, you implglossed overe details. draft kings is up 6% this month. 20% this quarter this year up more than 100%. by comparison, look at caesar's, penn, bally's, they're all negative over the same period. why? draftkings got kicked to the curb in the pressure to produce a path to profitability. this year it has demonstrated how and where it will get there. u ubs gaming analyst wrote draftkings is penetrating faster, and the states where it's offered sports betting the longest, they are getting more gaming per player. sports book is offering more parlays, that is where you bet on a series of plays, and that

results in the sports book actually keeping more of the wagers farley upgraded the stock from neutral to buy, and raised the price target to $30. when it comes to sports betting, fanduel owned by flutter and draftkings dominate the market they are making huge strides in online casino games, which produces higher revenue and profit margins between the two of them, they have 80% market share. all the attention on digital gaming takes away from the block buster results from brick and mortar giants like caesar's, and mgm, which set records for profitability in the casino businesses, and especially in las vegas. there's a lot of bullish outlook there, but their stocks, just are not being rewarded in the same way david, sara? >> i'll take it. thank you, pretty interesting, of course. mccowen a big part of the equation as well it is the last trading day of the month, and bitcoin breaking

its win streak, on pace for the first negative month in five, and the worst month since november ether on pace for the worst month of the year. coinbase, the crypto exchange, rallying 13% for the month of may, on pace for the best month since january. while investors may be cashing out of crypto, some are arguing ai may be the first bubble to pop, with fresh analysis showing the google searches for ai and chatgpt have now eclipsed peak search activity for crypto back in 2017. although, a lot of folks argue tough to compare what's happening with ai and come putig to the crypto innovation. >> ai is here for good >> a broader set of use cases. closing the books on may and looking ahead to what's next for stocks in the economy in june and beyond and cnbc's virtual financial adviser summit, two

weeks ae, top advisers, market experts, technologists and more. where they see risks and opportunities. you can scan the qr code on your screen to register now or visit cnbcevents.com/financialadviser for more "squawk on the street" will be right back

welcome back to "squawk on the street," i'm leslie picker with your cnbc news update frequent cnbc guest, harvey pitt has died he served in the role from 2001 to 2003 under george w. bush he died monday at the age of 78. south korea recovered potential wreckage from the failed north korea spy satellite launch the spacecraft lost thrust from

the engine after the second stage of the launch at 5:30 local time on tuesday. it led both south korea and japan to urge residents to take shelter. north korea said it wanted the spy satellite to keep tabs on u.s. military drills with south korea. and chris christie is expected to join the republican presidential field today the former new jersey governor is set to make the snoannouncemt at a town hall in new hampshire. it is the second run for chris christie send it back to you. oil on pace for its worst month in two years let's get to pippa stevens with more on that. >> starting with energy stocks among the worst performing s&p sectors amid the decline in oil and gas prices the group down roughly 1 1/2%. with valero, slp, the biggest losers for may, the sector is down 10%, the worst month since june

wti is on the verge of posting its biggest monthly drop since november 2021. the contract has bounced off today's low of 67 bucks, but still down about 1% on disappointing data from china. factory activity contracted in may, fueling concerns about a drop in demand for the world's largest crude importer with few positive catalysts on the horizon, positioning in oil, is now the most bearish since the start of the pandemic. narc markets are on edge ahead of sunday's meeting with opec and its allies the group announced surprise production cuts in april, but done little to counter bearish head winds including russian production remaining resilient the country is now sending record amounts of oil to china and india at the expense of some other peck nations >> remarkable, pippa, thank you. an hour to trading stocks are lower in part because of what pippa has been talking

about. down down 285, back to 4170 watching for the anticipated debt ceiling vote tonight as kayla tausche told us probably around 8:30 eastern. joining us this morning, carol slice, and sarah howe. i wonder if you can address the weakness is an unmistakable signal about inflation or deflation going forward. >> i think it helps the inflationary outlook, where the fed and other central banks are trying to reduce the price pressure i think it points to the broader slow down we're seeing in global growth and also here in the united states. getting a little more down beat about the growth prospects ahead, as central banks continue to look restrictive. >> it makes us wonder whether or not market is shifting from concerns about what the fed may do and the impact of rates on things like equities to actual negative news that in itself is

negative for equities. are we graduating to that spot yet? >> i think we have made part of that shift for more bad news was good news, and now good news is good news or bad news is bad news, but i also think there's that shift in market expectation. even when the fed's meeting in a couple of weeks because you went from a pretty dramatic turn around a week ago where the expectation was for that next meeting to probably produce a pause. now you've got 2/3 of the markets as of yesterday, looking for perhaps another increase >> so what do you think it does right now to rotation? i mean, ordinarily going into this period, you might think you want to lean on staples or defensives, but so much money is being sucked into the tech sfpae and ai space, but it doesn't seem like the defense categories can get much traction. >> it's interesting watching the market expectation, and it's been a real interests flash back over the last couple of weeks, with anything with ai seems to

rally, and it's a lot like the late '90s when any company that added dot-kom to their name as well ai will be across the board in a lot of the different cases the notion is as a company do you have an ai strategy, not necessarily just ai itself it's been very interesting watching the leadership try to broaden out in here. >> we just got a big beat on job openings i don't know if you saw it, and it's leading to this question again, if inflation can come down in a meaningful way that is satisfying for the fed without seeing more weakness in the jobs market because even though we've seen job growth cool a little bit, still super strong, and wages are still high >> yeah, so of course that's the ideal is if we can continue to

see strength in the jobs market even as you get cooler inflationary pressures there's still a long way to go to bring inflation down to any rate the fed could be comfortable with we saw in last week's pc deflay t -- so unexpectedly increasing and you also saw layoffs come down by that measure we're still seeing clouds gather over the labor market more generally if you look at indy job postings, that's pointing to more of a deceleration in job openings and back to roughly the lowest levels we have seen since 2017 i think there's some cooling and softening to come, but thus far it's been gradual and incremental, sch iwhich i think fed has to be happy with at this stage. >> where do you think the terminal rate is does it have a 5 in front of it or a 6 i think psychologically for the market, the 6 is a bigger problem. >> i think a 5 is still much

more likely than a 6 but i think even the strength of the data that we've seen, so not just the labor market data in terms of the most recently jolts report, and the economic activity more broadly, everything we have seen in terms of spending, again, ongoing strength of consumer price inflation, not convinced that we're knonecessarily at the end the cycle. the data has continued to surprise to the up side, the biggest magnitude we have seen in about 18 months. >> finally, carol, there's some anecdotal evidence that used cars and trucks might be coming down in terms of values, and then also apartment rents, for example, i'm sorry, used cars and shelter were a big piece of the april cpi. if that comes in this month, and the fed does, in fact, pause for june, do you think the market is still in the mood to celebrate that >> i'm not sure the market celebrates as much as holds its breath trying to figure out what the data shows beyond that

i mean, actually, the combination of events with the strong labor market and inflation coming down is the soft landing everybody was looking for, but the market doesn't believe it, has been neigh saying it all along, so it's going to be really difficult and watchful and i'm afraid we're all confined to being very close data watchers for the next few months. >> it is a narrow path that is for sure carol, satellite and radar remarks thank -- sarah, thank you very much for the help michael arougheti on the state of the economy, the debt limit and where he's putting his firm's $360 billion in assets to work dow is down 285. we're at the lows of the day we're back in two.

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for a loss of inventory, organized they felt, home depot, target, dollar tree, others, citing it as a reason for lower profits and lower gross margins. the retail sector is facing a tsunami of challenges, and one of them is, of course, strength. former chairman and ceo of k chrysler, bob nerdeli. you talk to everyone in the retail sector, why is it getting worse? >> thank you for having me on today. it is getting worse. we had the issue when i was running home depot in 2000 and 2005, and we took all kinds of precautionary measures to try and reduce that. i just saw a number where in 2021 shrink at the retail level was $96 billion, target said they had a $500 million hit to profitability.

part of the reason, i think, is we're in a lawless society you see all of these clips on tv where people feel empowered to go in and do a grab and dash, and that's impacting, you know, the cost of operations some of them say, that's why we have insurance, but insurance then transfers to higher prices to the innocent consumers like you and i, so it is a little bit of this lawless society. you know, we don't want to create these optics out there of theft. we call it shrink, so i think that's one of the pressures. the other pressure we still have, of course, is inflation is still high we see consumer credit cards about a million dollars right now. and so all of those things are converging, as you said, i saw it a tsunami of challenges right now, the level of complexity in running a public company is as great as i have ever seen it i've been at this for 52 years

i think the challenges are as big and broad as i have ever seen. >> we'll talk about other challenges, just in terms of the theft problem, is it on the retai retails to spend more on their own security it sounds like a broader political sort of law enforcement issue, but in the meantime, they've got to protect their product and their customers and their employees. >> well, i would tell you that at least my awareness with retailers is arguing that. you know, they're putting in video surveillance they're putting in detectors so if someone walks out, it rings a bell, and the point here is just like, you know, we saw those young ladies who have been permeated now because people walk in, grab garments and walk out, and they tried to stop them, they lost their job, so, again, corporations are trying to dampen this now, and i would tell you, one of the comments we saw is, now we know we can go into those stores and we're not

going to be confronted we can walk in, walk out with whatever we want it's back to the lawless society and culture that we're allowing this kind of behavior at the retail level it's just extremely challenging and costly, and really, you know, an issue for the employees who are trying to protect their premises, and for their safety, i understand that, but there has to be something happening in here where we step in and take control of this again like we used to. >> yeah, bob, it's david i want to make it clear, though, and i know you know this it's not as though shrink didn't exist prior to these last couple of years it's gone up a bit as a percentage of overall retail sales. it was still a significant problem two years, three years ago, five years ago, even back to the days you were running home depot, wasn't it? >> yes i'm not trying to say we were pristine and we didn't have a shrink problem it was nothing of the magnitude, nothing of the magnitude that we're seeing today i mean, there was some, you

know, self-policing. there was some rule of law out there. you know, people didn't walk in and walk out with paint sprayers and hand tools it just wasn't accepted. you know, it wasn't part of the culture. today it's a dash and grab and people can walk in and take whatever they want, and they know they're not going to be confronted so it has gotten significantly worse, and significantly added cost to running retail operations and now we saw where old navy flagship was closed in san francisco, walgreens, starbucks, a number of stores folding their tent, going away because they can't control theft in those operations. >> isn't the difference the ability to sell goods once you have them, and isn't that almost entirely due to what social networks and online platforms have allowed people to do? it's much easier to get rid of it, as opposed to just geltting

rid of it on the street? >> there's no question you and i walked a lot of stores in our days back at home depot, and the ability to, you know, grab and dash, and then put it on one of the media outlets, you're exactly correct again, i think a part of this is culture, part of this is this lawlessness that we're accepting at the retail level, and we've got to change that we absolutely have to change that. >> you know, bob, you mentioned a litany of other problems right now. one thing people are just trying to figure out is what's going on with the u.s. consumer it really feels very category, income level specific right now. what is your estimation of where we're headed >> yeah, i think the consumer is very concerned, very concerned about the economy. i just saw one of the major banks came out and said they're projecting an 80% probability of a hard landing they're protecting gdp to be a

negative .6. i know you just talked about jobs, but they're projecting a million people laid off this year, and if you look at the job reports as i do very very carefully, you'll notice most of those are not in manufacturing you know, you see a lot of those in services like transportation, hospitality, services like, you know, one of the reports, the biggest jobs created a few months ago was in the hair-cutting industry. so we're not seeing those kind of high-paying jobs and jobs that are contributing to the gdp overall. and you talked about some of those earlier on the program so i think the consumer is very concerned that they are totally conflicted you know, there's shrinkflation is another term that i would use, and that if you go to the retail store, you'll see a few less ounces, you'll see a few less units in that package, you'll see smaller cookies so not only on price, but we're seeing actually shrinkflation in the products and services that we're buying out there

>> bob nardelli, good perspective. thank you for joining us and good to see you. >> good to see you, too. thank you very much. >> thank you close to session lows here with some pronounced weakness in the financials regional banks down about 3 to 4% stay with us

got some fresh headlines this morning around former jpmorgan executive, jess daly. eamon javers joins us. he has the details eamon? >> hey, david. this is a blockbuster new report from the "wall street journal," because it comes just days after jpmorgan's ceo jamie dimon was disposed in this jeffrey epstein case "the journal" reports that it has seen legal documents in which jess stehly says he communicated with jamie dimon for years about the bank's business with convicted sex offender, jeffrey epstein. cnbc has been unable to independently verify "the journal" report. but a jpmorgan spokesperson said on friday after dimon was

disposed that he, quote, never met with him, never e-mailed him, does not recall ever discussing his accounts internally and was not involved in any decisions about his account. there are over a million e-mails, other documents that have been produced in this case, and not one comes close to even suggesting that he had any role in decisions about epstein's accounts now, that puts the two men at odds in a high-stakes legal fight over the bank's relationship with the deceased sex offender according to the "wall street journal," staley said that dimon communicated with him when epstein was arrested in 2006 and in 2008 when he pleaded guilty and staley said dimon communicated with staley about whether to maintain epstein as a client all the way through 2012. in response to the new reporting, a jpmorgan spokesperson today said, we believe this is false. there is no evidence that any such communications ever occurred, nothing in the vol luminous number of documents reviewed and nothing in the nearly depositions taken, including that of our own ceo. the one person who claims this to be true is currently accused

of horrific acts and dishonesty and hasn't been deposed. that's a reference to jess staley, who the bank has sued and allege was responsible for any epstein-related wrongdoing inside the bank when he was an executive there. david, the timing of this story is just particularly tough for jpmorgan, because it comes at a time when j.pamie dimon is in china on a high-profile visit and just days after he gave his official testimony on the case, on friday, locking in his story there. it may come down to which man can produce evidence that the other one is lying, david. back over to you >> to try to judge the reporting of different organizations, you know, we would imagine "the journal" is relying on something other than just jess staley's word, but do we have any sense, perhaps, as to what evidence they might be using to make that statement in their reporting >> well, what "the journal" is citing here are legal documents that the journal has reviewed. we haven't seen those documents,

so we don't know exactly what they are maybe filings that are about to be filed in this case. we'll wait and see on the docket for that but i can tell you, david. i've talked to a lot of lawyers in this case this morning. they are all scrambling to get their hands on this same set of documents. this is a game changer in this case a lot of lawyers with a lot of billable hours invested in this case already don't have access to these documents they want to get copies of them, too, to see exactly what's in them >> all right, eamon, we will await your further reporting on this story eamon javers jni u > oings.>>all right, "squawk on street" will continue right after this don't go anywhere. etitive advan. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. at ice, we connect people to opportunity.

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good wednesday morning i'm sara eisen with carl quintanilla live at post nine of the new york stock exchange. setting the agenda for us today, mike air get ty with $360 billion under management on the state of private credit, the outlook for the economy, and expectations for the fed >> billionaire real estate titan rick caruso is with us as well, weighing on this debt limit deal, the economy, and california and what real estate might tell us about the state of the consumer >> speaking of real estate, later, one of the world's largest players in commercial real estate, ivanhoe cambridge ceo,