you can -- in your gut, you could tell we were getting close to the end so, gut feelings are important thank you, judy shelton, we appreciate having you on >> a pleasure. thanks, joe, becky, andrew, thank you. >> won't be long what time? 2:00 something like that? maybe a hawkish skippy pause or something. join us tomorrow "squawk on the street" is next ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber it is fed day. decision at 2:00 eastern, and for the moment, futures mixed as the dow notches six consecutive gains, longest streak since january. producer prices come in cool, up 1.1% that's the lowest since 2020 our road map begins with stocks. the s&p eyeing its highest open in about 14 months, investors banking on a fed rate hiking

pause later today. amd sets its sights on nvidia in the battle for a.i. dominance, but is the company's new chip too late to the game? that got a groan from jim. and a warning from united health it is weighing on all the -- many of the stocks in the overall health insurance sector hated of the open, the company saying it expects a spike in medical costs in the second quarter. let's begin, though, with producer prices and the fed. policymakers due to announce their decision, as we said, 2:00 eastern today, followed by the chair's news conference. jim, a lot of discussion on just how bad fed days have been for stocks, especially this year, but really under powell overall. >> what happens is you've got a two-part -- just a one-two punch. the statement comes out and immediately futures go down, and then they try to recover, and then the press coverage comes down david, i don't know, i was the editor of the high school "springfield chronicle," and a lot of high school representatives at this point

are taking questions from people like columbia journalism school people, but that's when the market really starts going down, because they ask the same questions which is mostly, when did you stop beating your wife? >> you're not a fan of the press conference >> excuse me, grateful dead, were you -- what were you doing there? what was that about? >> maybe he can answer that one. >> no, i mean, that -- >> a page in his notes on that >> they're otherworldly. but then causes the market to go down because the future traders think they know a great deal remember the one day the future traders got it completely wrong, had the wrong guy in the room? >> well, also, i can remember when they heard one thing at -- well, in the statement, and then at the actual press conference, things changed dramatically. >> data was late >> whatever, i just urge people to recognize that the conference is a separate affair, and what

really matters and the economy, and the economy is cooling and the fed is winning you can play hop, skip, jump, i don't care what you do you can play jacks for all i care, david. >> you want me to react to that? okay did you play jacks when you were young? >> no, i went to cava. certainly what's cooling is producer prices. down 0.3%. that's 11 straight months of annual declines. the high water mark, as santelli reminded was, was almost 12. now it's 1 and by the way, real average hourly earnings now positive >> i know. what's funny is people talk about the new bull market beginning. it began in october. and it started out with just a few large cap stocks it's now broadened yesterday, we had stocks going up, the likes of which i thought were dead. i mean, like, stocks -- david, like, the banks, although schwab put out some numbers today that are a little confusing but the banks were up, regional

banks. i mean, you know >> yeah, i know. the banks were up. you were actually saying one of them, first horizon, didn't deserve to be up, if i recall. >> didn't matter but people are saying that schwab's revenue decline was a little greater than people thought, so that could be questionable segment >> i'm curious about your tweet as well this morning, what happens if the ten-year goes above the two? >> i think that interest rates -- the longer term should be higher because we're discovering that there's a good soft landing the shorter term could level off. i wouldn't be surprised if we saw a 20-year at 5 that wouldn't be a big deal. then you'll go back to where the short rates will come down over time, not this year, and all these people who stayed out of the market because they looked at the inverted yield curve will be revealed as the frauds that they are, and we will put them on and congratulate them because they will have amnesia, but i have no amnesia.

i don't have amnesia, david. >> you don't >> no. >> okay. if you say so. >> i'm just saying that a lot of people just stayed out of the market because they saw the inverted yield curve, and those people are going to be wrong, because that -- >> you are getting more and more bullish by the minute. >> no, no, i'm not saying that i'm saying, long-term, bullish, yes. i am long-term bullish i think that because of the press conference, anything could happen, because the press conference is really -- it's like a nixon press conference. are you running for president? no, are you? you have a nixon press conference, which is, if anyone remembers those press conferences, it's leike, you know, why did you bomb hanoi on christmas day? >> you're referencing dan rather >> dan rather. >> i'm just saying that the press conferences are awful, and he has to stop them or do one every four months. he'll do this -- >> overcommunicating >> yes overcommunicating. right. and they have to -- everyone gets a chance.

it's a "hollywood squares" game. i mean, they should have pat sajak. he should run that >> moderate the fed pressers >> what do you think of that >> sure, why not >> well, i mean -- >> he's going to have time on his hands. >> it's amateur hour >> vanna white could do it >> i think that "jeopardy!" is more professional than the press conference >> it's a very professional show, not as professional add it would have been if i had been the host >> you had to go there >> you went there. i just followed. >> david, you wanted to talk about advanced micro >> i did i wanted to talk about nvidia hitting a trillion dollars, sure because we're at the six-minute mark and it's important. >> you know what, david? it actually is here's a company that is not easy to get into >> it did hit it intraday last week >> no, but you see, this is a monumental thing that people refuse to realize, which is that

this company has come out of nowhere, which is a gaming card company, and the chinese, we have let this out. the chinese are not allowed to buy the chips. >> no, their chips are advanced. gaming cards, as in chips that power games, not -- >> so, the chinese can do their candy crush all they want, but when it comes to nuclear weapons that are high-powered and can be targeted actually, jensen's not doing nuclear weapons, but the h-200, david -- >> when did they go from the h-100 to the h-200 >> you have to buy the grace hopper 200 that thing is so fast. take a look at the flops that it has. >> the flops >> that's a unit of measure. >> okay. i haven't taken a look at that do you want to elucidate us? inform us? >> you put them together you bundle them like what larry ellison did -- by the way, larry ellison does have the fastest super computer there's no doubt about it.

larry is close jensen built that, and it's oracle that is -- that conference call yesterday was real oracle gave up all of its gains. >> it is interesting we actually have a downgrade today of some of the semi-cap equipment makers they think that hyperscale budgets are still going to be constrained in the near term >> i didn't understand that. they talk about the hype i mean, i think that i had -- i had applied materials on, like, three weeks ago, and i have to tell you that the amount of business that they have just from jensen, gary diggerson was saying he talked to jensen, jensen huang, the ceo of nvidia. >> anybody listening to this show hopefully knows that at this point >> someone told me to cool it with nvidia. i said, you know what? i'd like to cool it with companies that go from $300 billion to a trillion, but turns out our viewers like it. >> there is a reason we talk about six or seven stocks consistently it's because their market cap adds up to more than, i don't

know, 20% of the -- >> apple alone is almost 8%. >> 25% of the s&p. >> from now on, i'm going to talk about jb hunt, medtronic and union pacific. would that be better would you like that? >> no, i wouldn't. >> i'm serious we have had an amazing thing here to have a company come out of nowhere and be a trillion dollars is important as the two and ten. you want to go there you want to go inside the yield curve? >> and now we're getting some interesting projections. mckenzie, this study they've done that looks at maybe 60, 70% of work hours could be automated in some way over the long-term >> benioff is saying only five hours and because of that, five hours saved by a.i that's a little different -- apples to apples, but there are a lot of people who didn't like benioff's reveal >> they just felt like it was a little less than they wohad hop for. >> marc's company, as opposed to

adobe, marc's company is about selling something to another company, okay? or, like, maybe you're doing a proposal for rbc wealth, and you want to go make the proposal faster because you have four different people you're going to see that day that's a.i that's not exactly solving the problem of nuclear waste it's good. it's a good product. >> right but i guess going into the meeting, there had been expectations somehow that it would blow people away, and during the course of the day, as you know, the crm stock -- this is two days ago already -- came down >> when you listened to it, it was very nuts and bolts about if you're att, believe me, you need that, because what happens is people call, they put you on hold, you don't know where it's going. from now on, it's like direct. i think when mike seifert at t-mobile starts to sit down with marc benioff, even more people are going to switch to t-mobile, and that's before they even give you the way of the visual pro.

>> i knew you were going to hit that >> why, because i may be right >> you're right about a lot of things but not all things >> nobody's perfect. >> no, nobody is >> while you're certainly right about amd over the long-term, and then lisa su did talk about the size of the addressable market >> a.i. has now kind of changed the way we perceive what we're doing in every industry and every market for all of our productivity and business applications so, yes, today, we believe it's about $30 billion market and we think it's going to grow over the next three or four years more than 50% a year, so we see $150 billion by the time we get to 2027 for just this incredible technology >> important thing was who she was aligned with there she was aligned with meta and amazon web services. meta, david -- >> you have to explain what you

mean by aligned. >> they were up there at the presentation >> meaning what? they're going to become big customers for amd? >> yes, and that's who you want as a big customer. i don't know if you noticed some of the things that meta's been doing. they'll push you stories now that are exactly what you like on your watch. this is part of what they're doing. you get your stories on your watch that you like. those are all pushed by meta using this kind of technology. >> but that doesn't exist yet, does it? >> they've already broken through, but this is what you need in volume this product doesn't come out until the fall >> and you think it will rival in any way what nvidia's doing >> no, it doesn't matter remember, jensen said the new kpaur computers are going to be 95% gpu and 5% cpu this is still cpu. it could be bundled. you could make it into something faster >> why are people getting excited about it >> because the demand is

unbelievable for high-performance computing just not unbelievable for low-performance computing. what am i going to do? >> are you sort of expanding on the view that a.i. will be cannibalistic in some ways to legacy spend >> absolutely. there's a trillion dollar legacy spend and it's going to be 3 to $4 trillion in a.i. spend and jensen says that $1 trillion is going to be obliterated. >> that's over a long period of time, right? >> four, five years. >> four to five years? 3 to $4 trillion >> things work really fast, david. no one understands i don't know how to explain breakthrough like, what, man on the moon? the iphone jensen strugglies with how to gt people like you to get how big it is. >> i don't think that's fair, first of all i do chatgpt i try to use it almost every day for something. i talk to people about this all the time i've been sitting here talking about the end of humanity.

what don't i get what don't i get >> if you ever watch my show, i echoed exactly what you said in reference to you last night >> i missed it >> last night. last night >> i got to -- >> he was watching "wheel of fortune. >> i don't blame you one bit >> these are the last days of sajak. >> look, i have to tell you, i said it. i said, i agree with david that this is the greatest threat to democracy. that's what i said because we can all, the night of the election, expect to see some mock president candidate saying things that won't be able to be corrected. >> no argument that this is a sem seminal moment and significant change the question is, who's it going to impact? what are the business models that are going to be basteed ont and how do we help people navigate it? >> why do you want slow when you can have fast? what do you want, slow and the furious? who wants the slow and furious he's living complacently again >> just an evolution of what

computers can do when we come back, it's been a rough morning for some of the health insurers. unh is warning about medical cost ratios dragging that group lower. we'll get to google and the eu tesla going for a longer streak take a lk ooat futures on this fed day. more "squawk on the street" in a minute it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. at stores everywhere without a prescription.

unh dragging fellow health insurers lower in the premarket. the company at the goldman conference yesterday did warn of higher medical costs in the

second quarter as seniors choose to undergo all the surgeries they delayed due to the pandemic rough for the insurers, jim, good for the device companies. >> yes, i think i have had all the device companies on. striker is doing well. by the way, the zimmer biomed, they're doing very well, david don't forget j&j and intuitive surgical is one that you want to look at they preannounced better than expected quarter on "mad money." this is the way people are -- they're back they're confident they're going to the hospital, and i think this is a great thing for so many of our terrific medical device companies that have been lagging, simply because of this. we are recommending ge health care for our travel trust. why? because a lot of the things you need to have an mri before you get operated on. and by the way, you need the mmr to be able to figure out if you have the markers for

alzheimer's. you can't just get the alzheimer's pill you have to prove the possibility that you can have dementia, and that means you need to have regular mris. >> that said, unh shares are going to be down rather sharply. i mean, $450 billion market cap company going into trading >> it's a great company. >> it is >> it's a great company. >> it is it's not a favorite of most americans, but yeah. >> well, all right in truth, right now, right here, at this very moment, we are issuing an alert saying buy humana for club members. down 40% i mean, this is down humana on june 1 reaffirmed -- now, it's entirely possible -- we're on flag day so it's possible in the last 13 days, huma h humana has fallen apart. >> what's cigna up to today? >> take a look, cvs is down.

humana is the one that would theoretically be the most impacted because they have the most senior and that's because they created an unbelievable senior package that is terrific to augment medicare, which you find often when you wigo to the doctor, they do not take >> heard cigna is telling all their employees, get back to the office by labor day or else you're out >> we got new york city back to 50% for the first time that hasn't happened since the pandemic >> i think sl green, i saw a price target boost yesterday >> the stocks of the reets that are largely populated by office buildings that are half occupied have come down a lot >> where are you on the they're just going to tell you you have to come back right now, finally, there are a lot of -- it's hard to get a job, so why don't you -- if you're jamie, he can now go down the hall and say, go try to get a job at morgan stanley. >> that's the key in terms of

leverage, why you have some companies saying, that's it, labor day, everybody back, four days a week. nobody comes in on friday, except us. but four days a week >> and first responders and garbagemen >> and everybody else out there. >> sometimes david is off on assignment on friday >> i just don't wear a tie i'm here >> we'll get cramer's "mad dash," countdown to the opening bell take a look at the futures here as we kick off the open and aithfed. don't go away. thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back. what if buildings could tell you how they could be more efficient? i'm listening.

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welcome back let's get in a "mad dash." we have the opening bell about six and a half minutes away. netflix got some research this morning. >> there's a -- i've been liking wolf research a lot lately

sharing is caring. saying, they're 6 million total net adds because of this whole share -- this password sharing was a monumental existential effort people who have been sharing and they are subscribing, and it's really working. >> cracking down on password sharing, so that people -- multiple people in a family can no longer be on the same plan or -- >> it's working. >> therefore, you get new subscriptions. >> and by the way, david, in terms of stocks that have been up, this one has been -- >> that's already happened >> name me a stock that is up 55% or $92 since a particular event. >> what's the event, jim >> "the princess bride" event. tesla. >> i didn't know you were going to tesla >> i just did that because if i had said tesla question beginning as "mad dash," you would have said -- >> so you're surprising me a little bit >> i did that totally out of

reverence to you because i feel lately you feel hurt by me >> interview with elon musk that we had of course, he's quoting "the princess bride." that's quite a move. >> that's since "princess bride. >> it's over 50% there it is. >> now, look, you put in the -- >> look at that. >> what i would say, this, what was "the princess bride" about it was, i'm no longer involved in the day-to-day at tesla, i'm back to work so, this is "the princess bride" move >> can it continue, jim? i think that's the larger question >> who is the woman star of "princess bride"? >> robin wright. >> you know everything >> come on i can get that one we got an opening bell about five minutes away. stay with us right here on "squawk on the street.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we mentioned tesla's win streak before the break. take a look at delta air, though, going for 14 straight wins today

>> wow >> that would be a 13-month high it already blew past the record set in 2008 of 10 on friday, jim. what's going on here >> look, i think that is that worldwide travel is more important than domestic. airbus today raises its rate of growth >> the 20-year delivery forecast >> american express stock has been rolling this is just people -- it's called revenge travel in the industry i obviously call it the, you know, "low on money, short on time," but it is an amazing travel boom, and it seems insatiable right now and congratulations to all these airlines for hanging in during a very difficult period. >> there has been some discussion that oil, although oil's rebounded some, but it does benefit carriers with lower operating power structures >> i was with a guy from darly ingredients who is making the biodiesel. the amount of jet fuel that's used the monumental, and people

underestimate how much versus, say, cars. so, yes, it does matter tremendously >> oil and labor two biggest expenses for airlines let's get the opening bell here and the cnbc realtime exchange at the big board, it's franklin templeton, celebrating the launch of the franklin income focus etf. at the nasdaq, it's indivior >> let's hope that goes well they've proven very intractable. >> i think only citi is looking for a 25-basis-point hike today. everybody else is on pause watch. >> maybe that's what you want to do to be able to make that claim. no one will remember that you got it wrong, but if you get it right, from now on, citi is the axe. david, i think that the numbers are giving a legitimate reason to skip. it's not like it's a fatuous reason the numbers are legit, but i don't like the day of the fed. >> i know you don't.

you're not taken with the press conference we know that as well >> no, because the press conference is -- >> so, just, what do you want to do today just hang out? >> well, i have my investment conference at 12:00. look at this zimmer bio, up 6% this stuff is just happening >> right well, yeah, that's -- both the medical loss ratio increase at unh and potentially for other insurers as seniors get more procedures done that they didn't do during the pandemic >> watch stryker >> positives for all these companies that basically make new parts, right >> there's been a -- >> you're all original parts, aren't you >> came right from the manufacturer but the mrsp for me is actually up it's like a 1994 land rover. >> you're vintage. >> yeah. but david, can we go back to the fed meeting? >> okay. if we have to. >> the ppi is pretty good, cpi is pretty good, trajectory is pretty good. why not halt

because, what, you're worried about the home builders and the toll brothers? should we continue to hike because of a million dollar house? is that what we should do? toll finally costs a million >> jim, you've been saying for a long time, it's about wages and labor, and that has not broken >> no. not yet. >> so, i'll just repeat you back to you >> it's not broken you're absolutely right. wages are still higher, but we're going to start seeing a break in wages when it comes to consulting and financial and tech because financial is about to have an outpouring of people we're seeing major cuts of almost every bank. wells fargo in a quiet way, morgan stanley in a more noisy way, jpmorgan, are they filling positions? we don't know. goldman-sachs, we know, from that long "knives out" piece, which i thought was disgraceful, by the way, because if you have a problem with david solomon,

pick up the phone and tell him do you really pick up the phone and call "the wall street journal" that's not the goldman way >> goldman posted this table of their ipo barometer, takes into account a bunch of different elements of the ipo market, basically back to a level that's typical of ipos, and they think the back half is going to bring some more activity >> i understand that they may not be that prominent in cava. >> they may not be, but maybe they're listening to you and the enthusiasm that you have been espousing lately for what the cava deal will bring in terms of an opening of the ipo market >> i told you it's opening the floodgates you refuse to believe it >> i still refuse. >> it's like the final scene if fast and furious ten >> i missed that one i also missed the first nine >> it's a comcast product. >> does that mean i have to watch it >> it made $300 million. you may not make that much for the network your whole life.

>> vin kediesel is in it, right >> and helen mirren and jason statham. >> i love him. >> how about disney pushing back a bunch of slates? >> i don't know this for sure because i have a difficult relationship with disney, but i believe that could help them have a dividend. if you push things back. >> what? what what are you talking about >> well, i mean, if you push production back, remember, the production up front costs money. they said they're going to have a dividend this may be one way they have a dividend >> i see in general, they're trying to bring down the cost of production iger said that to me in the interview we did earlier this year, and that obviously is a part of it as well just, hey, jon favreau, going to have to cut a little bit on t"te mandalorian. >> start monetizing some of this stuff. >> stark industries got out of

the military business. >> that's true, jim, and you said it was not a good move. >> i said, sell, sell, sell. what are you hearing about penn state's parker and getting a successor? >> at disney i'm not hearing much i can't say that i have anything really to share in terms of that that process is under way, as you would expect it has to be if iger sticks to the timetable in place. >> you're not hearing anything >> i'm not hearing real names. i mean -- i don't know that it is, because i haven't been asking have you >> to get the disney job >> no. who is in the running? >> i don't know. they tapped my phone who knows? >> who tapped your phone, jim? >> are they in the room with us right now? >> oh, you're talking about the texts. >> that hurt my feelings >> i don't blame you >> that hurt my feelings to see my texts in the "wall street journal. >> that was an invasion of your privacy. >> i said, it wasn't from me >> it was from that cfo.

>> david, there are sotocks moving as we talk, and we're not addressing them. >> let's do that, jim. >> people are talking about real estate and private equity stocks doing better i think that would be a function of the ipo market. >> private equity would be helped as a result of being able to have significant exits. but i mean, these alternative asset managers are so large that private equity is just, frankly, a small part of their overall business private credit is enormous infrastructure, real estate, you go through it. i mean, these are enormous firms that we frankly don't talk about enough, whether it be the big guys that trade, blackstone, apollo, kkr, ares, or names like brookfield that doesn't trade -- of course it does, but not in the same way >> i'm trying to broaden out our coverage everybody's asking me, why did you not mention that blackstone is moving up it's doing really well >> blackstone is a $109 billion

market cap company >> i like it >> we're not talking about breit anymore. they settled that thing down >> what happened to the bank mini-crisis? what happened to that? they're doing well and then, by the way, in terms of the worst group in the market, which are the dollar stores, matt boss pushes dollar gen, saying their on target. i thought that was pretty amazing. dollar general was my vote for the worst conference call of the year >> guys, in my continued coverage of -- i'm going to do one in a minute, faber report, but just on microsoft activision, worth mentioning, very unexpected move here. jacqueline scott corely is the u.s. district judge in northern california who's going to take the case, the antitrust litigation in federal court, of course, that was brought by the ftc. they got the temporary restraining order, but this is for, are you or are you not

violating any antitrust law? amazingly, she set the trial date for june 22nd so, ten days or whatever it is from now everybody's scratching their heads on that, because it's like a major antitrust -- by the way, two-day trial, which seems unlikely as well so, a lot of questions here. >> is that a rogue judge >> she's seriously expecting to conduct this antitrust trial over two days with virtually no notice to either of the parties, other than the fact they have been preparing for the administrative law judge proceeding that's taking place in august, or is there an expectation that this will simply be her punting it to the alj process? or i don't know, you know? is there going to be a change in scheduling some say, listen, if you're microsoft, maybe you're happy with this.

it gives you an opportunity to bring your case right to court, but you need more than two days. you probably need a little bit more time to prepare in some way with a full record needing to be developed. so, would you need a longer trial? very much unexpected, though, that we would get this in this truncated fashion. >> joe biden judge >> yes, appointed by joe biden >> interesting >> she's also presided over some previous gaming litigation that may have familiarized her with some of the issues at stake here but again, a big surprise. all that said, it's still about the cma and the uk and whether or not microsoft is going to be able, as many don't expect will be the case, but to overturn, on appeal, with this appeal tribunal, the decision of the cma to block this deal that's still the case. there's still an expectation they're going to have to extend the merger agreement how they're going to go about doing that, what form of

conveyance of additional money is going to take place to activision shareholders? it's still unclear, but that's still very much in play. still, we may get an important trial beginning very, very soon, guys >> incredible. it's incredible. but it's so out of sync with everything >> yeah, it's weird. it's really weird. i mean, i know that's not a term of science there it's just weird. >> very weird. hey, you want weird? i've got an upgrade of estee lauder >> i was going to mention that with your dollar general >> estee lauder is owned by my travel trust it's been a disaster >> their number goes to $243 >> says maybe he has something up his sleeve. this has been hurt by china. the last numbers were all terrible duty-free is a big outlet for him, and the numbers were terrible maybe he can make a comeback here >> by the way, jim, speaking of china, blinken is now officially

going to both beijing and the uk and state today expects a series of visits with china in both directions in the period ahead officials have expressed desire to stop the downward spiral in the u.s.-china relationship. >> well, china -- they're going to do an effective stimulus package. they're going to have to entice american companies to build there. >> i think first, you just want to stabilize things in some way. >> you want? why? >> because, as much as i know you discuss this, decoupling completely from china and/or real hostility would not be good >> we just need -- >> it would not be good. >> we need a division of troops on taiwan. >> oh, really? easily said. okay, sure, right, just a division of troops in taiwan right. because it's going to be the political will to send americans into taiwan. >> send a regiment -- well, yes. >> really? >> well, all -- taiwan semi -- >> which then puts us at war with the chinese >> if taiwan semi is more

important to defense than any other place in the country >> taiwan semi is important so we want to dissuade the chinese from ever thinking about invading taiwan. true >> taiwan semi is the most important company to the defense complex. >> what is the most important m&a situation going on right now that is focused on by so many people, jim? >> okay. that's a good question other than activision-blizzard, right? >> yes >> is it bigger than a bread box? >> it's a very small deal and a private deal it's the pga and liv >> what happened where is it? when you take that sudden departure, what does that mean >> the news is that jay monahan, of course, who runs the pga, informed its policy board he's recuperating from what they call a medical situation, and so he's not involved right now, day-to-day and of course, day-to-day is what's very important here in

taking what is a memorandum of understanding between these two parties, namely, the pif, liv golf, which is controlled by the pif or saudi arabia on the pga and turning that memorandum of understanding into a definitive agreement under which the two parties would merge and there would be a significant infusion of capital from the saudis into this combination, which also would include other tours, dp world tour as well, for example. few things i'm hearing, of course, well, first, let's just remember, it was only a little more than a week ago i sat down with mr. monahan and his unlikely counterpart who runs the pif, and mine was talking very boldly about getting this thing to a definitive agreement as quickly as possible take a listen. >> i think it's a matter of weeks. we have agreements on, you know, the framework, which is an

excellent first step and it all depends on, you know, just finalizing many things, including the valuation. once we get that, i think it's just a matter of weeks >> we're going to get that done. >> the question is whether or not it can possibly get done in a matter of weeks. the kwey situation, not just including mr. monahan's illness, but is dealing with the players, who want to share in the economic upside from this union, who want promises that are just not made verbally but are on paper, and it can get to a certain level of complexity. i'm hearing the players, for example, may be hiring their own investment bank to advise them i'm also told that patrick cantlay, one of the players

who's also a player director, whose sponsor includes goldman-sachs, is probably getting some good advice from the likes of goldman-sachs here and has been an important voice here in terms of, what are we going to get as players here for stepping up and saying yes to all of this, given that we were willing to accept a lot less to stay at the pga, so to speak, than go to liv golf. so, that's going to be a key issue here there's a lot of potential money on the table, and the question is, how are you going to guarantee equity or cash for these players? and are they going to align themselves -- it's going to become even more complex negotiation. there's one guy who also could probably step in here and help in monahan's absence, and that would be randall stephenson, you have to believe. >> what? >> well, he knows his way around an m&a deal, whether you like it or not he made a lot of them. >> oh, my. >> not all of them are that good, but he made a lot of them. did randall. and of course, randall is on the board of the pga

so, there's an update for you right now. of course, we wish the best for mr. monahan and for his health >> i will say that this is -- the scuttlebutt, this is all people want to talk about, carl, is -- it is an issue that d dovetails incredibly well with a lot of our viewers, and the fact that goldman-sachs may have been hired, david, that's verygood news if you have that. can you break that story >> i also have a statement from the pif that i just got, saying they are committed to working closely with the pga leadership and board to advance their previously announced transaction to invest significantly in the growth of golf for the benefit of players, fans, and the expansion of the game around the world. again, that is just sent to me from the pif, the saudi pif. so, there you go that's what we got we'll keep an eye on it, as it is, as jim just said, it's not a public deal, but it is certainly one that has a great deal of

interest >> yeah. definitely got the public's attention, no question and attention in congress as well >> yeah. >> looking at the impact of the saudi involvement in american sports and jyesterday, we talked about man u-qatar. that's happening at multiple levels >> i remember when the ceo of united arab emirates came here a decade ago and said, look, there's going to be a wave of commerce between our area of the world and your area of the world that is going to shock you, and i -- it's like they have a bar united arab emirates has a bar it's like casablanca back there. they've become a great trading partner, that region, and i think we have to continue to watch it because they want more deals. they've got a lot of capital it's very exciting, i think. very exciting. by the way, you want exciting? the fact that logitech is down 7% on the departure, the sudden

departure of darrell, which is rather shocking. just announced his resignation he's going to stay to the end of the month. this is a -- this man's been on the show many times. they make a lot of what you use in order -- peripherals for pcs. it's very important because this company is an amazing company. a lot of us use their devices. we've been the company he's the company so, we have to follow up >> yeah, citi also downgrades on that news. they go to neutral >> i don't blame them. >> s&p is managing a gain at the open of about six points the dow is going to be outsized affected by unh, which is responsible for all of the losses there and more. as for bonds, yields, a little bit elevated this morning, although ppi came in, as we said, a bit cool, but you got the two-year right around 4.63%. and the ten-year just south of 3.8% we'll be right back.

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with brian sullivan and shell as they move to keep the output steady hike the dividend about 15%. over all, oil getting a small bid today, even amid reports that the u.s. is quietly startinst starting talks with iran on potential prison releases and ing the nuclear program. the dow trying to recover from earlier losses, down 92. back in a minute hero! dad: was that necessary? unnecessary action hero: no. neither is missing this deal. with paycom, vacation is yours to manage. unnecessary action hero: not to mention benefits, scheduling, payroll. it's hr in the palm of your hand. dad: wow. unnecessary action hero: ask your employer about paycom. and make the unnecessary, unnecessary. dad: approved!

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it's time for jim and stop trading. >> not in the stock but modello has passed bud lite as number one beer in the country. obviously we know that bud lite is having controversy. modello is getting around it we'll talk about this in our cnbc investment club today why not just join already. this is a winner and i think it goes higher because of the modello.

it's an incredible seller. >> but bud is up today and target is up. >> target making a move. i think target is overly punished by this they've been a fair actor, they're worried about the people at the register, they should in home depot, talking about that but the idea that target should be somehow be brutalized because of what they've done it makes no sense to me because they didn't have any intent to do anything, i think. but brian cornell is a good merchant he wants to help all shoppers and shareholders that's his man tratra and it's a shame. >> indeed. what about tonight >> we have confluent the company that everyone loves and bowlero. my alert went out about humana the stock is down 58 points but i'm telling people who are members of the club down 58 is a

reasonable level even if they come out and say something >> we'll see you tonight important day, "mad money" 6:00 p.m. eastern. don't go anywhere. ♪ ♪ 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? ♪ ♪ this is cynthia suarez,

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good wednesday morning welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber live from post nine of the stock exchange. looking at stocks, mixed picture with the dow down 117, united health a big part of the story there. nasdaq up .2%. s&p up .1% we'll get chair powell's news conference at 2:30 and after cpi that showed moderated inflation. 30 minutes into the trading session, movers we're watching starting with health insurers they ared quarter. lodge tech shares are sliding as

well announcing the ceo will be leaving for another opportunity. it's downgraded as a buy and the eu charging google with anticompetitive practices in the ad business. the stock is down a little more than half a percent. guys, we have a lot to talk about today. let's start with cpi wholesale inflation, which had been tracking better than consumer inflation and continued to do so we have a negative number. a deflationary number down .3% on the month, a bigger drop than expected good news for the fed, the markets, if you're cheering for the soft landing idea. changes up 1.1%. the smallest increase since end of 2020. and you saw some big declines in food prices, not just energy

good prices down 1.6%. and services prices, which we know is the problem and what the fed is worried about, up 2% on the month so still up but lower than the 3% in april >> people call it pipeline inflation for a reason it's going to feed consumer inflation. this is down to 1.1. china we know ppi has been negative year on year. india down 3.5 year on year.pele effects which from last year and that whole thing a lot of the analysis overnight of yesterday's cpi number, there was a lot of good news in there and some moderation in services. my favorite take on it was david rosenberg. he's recession, fl

overreacting he was if if you replace the index with the way they calculate used car prices with manheim, you would get a much softer say 1 or 2% handle on cpi report yesterday so he's blaming a lot of the pure calculations. but the bottom line is we're going in the right direction, which is why the fed can pause today, which is the market's expectation. this is not a fed that likes to surprise the market. >> is it a pause is it a skip >> it's a skip if you look at the fed fund future expectations. >> so july expectations. >> the market thinks one more hike in july and then we're done. >> and then we're done. >> that's why today, the sort of drama going in is not what they do expect a pause it's a, what he says, as always. and we'll get the dot plot today, usually i hate it but it's a good indication where members expect the peak red, the

terminal rate, the highest we get. why it's important is we get it every three months in march it showed a level where we are now so the people expect the median, we look at the median of the dot plot will go up another 25 basis points or so and that will be an indication they think there's still work to do and i think it'll be super interesting to look at '24 where previously they expected three cuts the fed members next year. >> what do they think of employment at the end of the year is 4.5 too high >> it's too high. >> and gdp forecasting under 5% given where we are we'll look at the expectation and hear what the fed chair has to say we are monitoring for what they're saying about credit discu discussions, because they're still worried about it, access to credit, tightening standards and how that's going to weigh on

the overall economy. the new fed emergency lending facility that they set up went up and we didn't have any failures. >> it's used more. there are people saying it should widen what it accepts for collateral but over 100 billion right now >> over 100 billion. the point is do they see it as a risk and will it continue to shape views around lags. if i had one word, what's the word to watch in the news conference and count how many times he says it, lag is a good one. every time he says lag it shows they feel like they might have done enough and they want to see how it all settles out it's dovish. >> do we have precedence for what the lag will be as a result of tightening from banks pulling back from lending? >> it's not pulling back, it's lag nine to 12 months. we had four 75s in a row and you could see further deterioration.

the other big risk, i wonder if he'll talk about it is or get asked about it, the treasury issuance there was data i haven't parsed it, it looks like the market is exiting money market funds to buy the treasury issuance, that's a good sign for risk appetite because the worry was it would come out of bank reserves so you wanted to see that and we did according to the new york fed. >> 170 billion a week, aren't they something crazy like that. >> crazy they have to refill the cash coffers. >> yeah. it's going to go on for a while, too. >> the best chart is putting out the average intraday move on the s&p on fed days, during fed news conferences. market hasn't liked the hawkishness, you see stable stable stable, voluntary around the decision, and then he speaks the market doesn't like it. >> because he had to give the market a spanking every time

more interesting you look at fed chairmanship over time, powell is the worst given what he's delivered to the economy. >> the painful message. >> yes. >> if they pause it's a sign they're nearing the end. people think -- we talked to vince reinhart yesterday of melon, it's a higher bar to pause when you're in motion. that's a compromise when some of the fed members think he should be hiking today and a good case for him to be hiking today it doesn't feel with their communication that's where they're willing to go. >> why do you hate the dot plot? >> it's hard for them to make predictions that are accurate and hard to read into where fed members think they're going to be in a year from now on policy because they're supposed to be data dependent and nobody knew inflation would go this high and how fast it would come down. it is coming down really fast. ppi this time a year ago was 11%

w we're at 1% now. so they have no idea it's hard to determine the so-called reaction function looking at the dots. it's confusing but today it could send a message. let's continue the conversation. let's bring in david harrow. investor in lots of banks and companies abroad right now, david. how does the fed decision and forecast today fit into where you think the market is going? >> well, given the way we invest, long term value investors decision, i think you pretty well handicapped, it doesn't have an impact we look to buy businesses with good cash flow streams, good managements at low prices. and this type of news and activity alters short term pricing, it doesn't impact media and long term valuation. so if it creates some disturbances and might give us short term trims and adds but

generally speaking i think everyone realizes that yes the fed was extremely late and perhaps have now overdone it and as a result, they're going to start slowing down and pausing and what have you. but over this period of time, businesses have already adjusted to the higher cost of money. the days of free money are over. this is why it's a little perplexing that once again we have a new mania, the a.i. mania where people just blindly flood money into businesses that are concepts and barely earn money meanwhile, value stocks, companies that generate good cash flow streams, good yields, good cash flow yields are still a dispersion between value and growth has picked up again this is where the opportunities are in investing in businesses that generate good, healthy,

robust cash flow streams you can buy at low prices such as what we see over seas. >> you still like the banks. tesla, lloyds bank still heavily exposed there. the way the fed impacts you the ecb now seems more hawkish from the fed, they have a decision this week and i don't think there's mystery around what's going to happen there. they could send a signal that more is coming doesn't that matter for the valuations of europe versus u.s. >> this, in a way, may help us, because what is happened is, international equities have wildly underperformed u.s. stocks over the last 10 or 15 years, and it's two reasons. reason one is valuation,s&p 50 trades at 18, 19 times earnings european equities trade at 11, 12 times earnings. reason number two is the strength of the dollar this strong dollar, meaning the

undervaluation of european currencies now provides us an opportunity as an overseas investor to buy under valued equities using under valued currencies and when the ecb catches up a little bit with the fed in terms of rate increases you should start to see an impact on these currencies and what has been a headwind, weaker european currencies should become a tailwind. number two is the immatpact on banks in europe cannot be understated because for the last ten years the banks had to struggle with negative not real interest rates, negative nominal interest rates they deposited money at ecb and had to pay for the pleasure. now europe has positive interest rates and this too should enable the europeans' financials to do well so you're able to buy at low

prices, bnp trading at 65% of book value lloyd's bank probably enough cash in the next six years to equate to market cap these are good values and business franchises in an environment that's conducive to earnings you have done a good job outperforming the relative index when we look at oak mart international versus the msci. you're at 57%, the index 21% over -- i have it here a 13 year period it hasn't been a great place to be overall. you're doing much better but still not a great neighborhood >> that's a very, very good point, david because what is happening. you look at the 15-year number really explained by those two factors, you had the strong dollar in the face of international, and you have the valuation compression. part of it i would assert is the

low interest rates between 2010 and 2022 really was conducive to growth in tech stocks. which is not the bailiwick of the european equity markets. outside the u.s. equity markets. it has really helped, again, those companies which are very, very small cash flow streams and allowed the businesses to sell at high valuations which has caused a huge valuation dispersion and i believe -- this has been a long cycle and i think the cycle has come to an tend and at some point, similar to what we saw from 2000 to 2007, remember old economy versus new economy, there was a huge rush in the old economy. i think we're setting ourselves up for this again and international equities, especially value you get the double positive of being able to buy undervalued securities at low prizes

yes the rear view mirror looks terrible but i'd rather invest with that mirror than a regulatrear view mirror loaded up with euphoria that's the value of investing, buy low, sell high >> we'll leave it there, david harrow, appreciate it, from harris. >> thank you. amd is a big story today, unveiling the chip, kristina partsinevelos was at yesterday's event multiple firms raising the price target this morning. christina joins us now >> if i base it on the crowd, the star of the show was the mi-300x and the conversation around a.i especially when the company promised to go from $30 billion to over $150 billion in the next four years or so but investors were looking for two things, a.i. customer announcements, who signed on,

who's committed to buying the new chips. and secondly financial guidance, neither were discussed which contributed to the selloff we saw in the back half of yesterday. the rebound is positive reaction in the street and aws is considering using the cloud chip aws was at the event yesterday took to the stage to speak about another cpu product. so that relationship between both companies is already established. mizuho wedbush racing their targets saying amd is the next play td cowen likes how diverse it's become piper sandler liked the new open source software. that was new nvidia spent the last ten years developing their own version so this is a big step for amd to come forward with the product. one person said the time line feels delayed compared to

nvidia the actual product launch could come months after that, so his price target is 80 bucks in my interview yesterday i asked about the time line and was told new chips will be in production by the end of the year but wouldn't tell me the name of customers. we should hear that in the coming months. >> i it's an exciting time for your beat. >> yes. >> thank you kristina partsinevelos. as we head to break. the road map for the rest of the hour roku coming off the 12th straight day of gains now up 80% year-to-date plus the pulse of health insurers, united health, humanna all down this morning. >> and cautious consumer what new data is revealing about spending as wery t to work out of the red don't go anywhere. elling hot do, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso!

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sarah mentioned roku before the break, 12 consecutive days of gains sharing moving slightly lower this morning international expansion is fuelling part of that run and predicts a rebound in ad spend will benefit jason has a buy on the stock, 75 target great to see you back. >> thank you. >> what do you think the catalyst was is it the ad tier craze or something else >> i think the stock was one of the favorite shorts. so we're seeing more short

covering positioning more offensive into potentially a fed easing, call it flattening and then easing cycle. so i would say the movement in the stock isn't fundamental. it's technical but we think the set up is good >> how long do you stick with it >> you're just at the beginning. roku was early cyclical. therm one of the first -- they were one of the first to get hit when advertising slowed down so therefore should be one of the first to benefit when advertising rebounds streaming hours are up 20% so to the extent there's been a concern of a covid hangover we're not seeing it with this company. and, you know, the ad market is going to get better. just a matter of time. >> i'm trying to remember how early they were in adopting operating level discipline, cost discipline i know anthony would come on and talk about how they were

agnostic about original content and then that theme got muddied a bit. where are they on that front >> they cut back and saw the covid pull forward they leaned in, but then leaned in too hard and then cut back again. so we changed our timing for ebitda profitability multiple times we're thinking next year, meaningful profitability in '25. it's basically trading at five times growth profit next year mean mwhil meanwhile, netflix is 13 times this is a stock that used to be 450 and is now $75 so we think it's super early you know, they have a third of households for connected tv we think kind of globally and really there's no competitive threat this is a cyclical play at this point and execution. and a new executive we're

bullish on. >> isn't a cyclical play challenging in this moment the ad market hasn't rebounded. >> it hasn't but it's not getting worse. our bet is as the fed stops raising and eases you'll see tissing recover potentially the fourth quarter but next year >> netflix generates cash flow. >> true. >> when are these guys going to do that and get back to what you feel is a good multiple to be buying it. >> we're looking at a break even next year. and looking at 2026, so you have to go out. this is a model with tremendous leverage they can go from break even to 200 million of cash flow in a year so, you know, hard to know the timing could be off by six months, et cetera but the bottom line is the threat of google smart tvs, amazon smart tvs, it's not happening. it's between them and samsung

and then kind of every other operating system doesn't have scale in the game right now. >> apple doesn't, fire stick -- >> no. >> amazon losing share with operating system they have vizio but they're small subscale it's them, samsung and everyone else the main issue with the company is they did not accept third party demand so the ability like digitally instantly to book ads so when the ad market said people said i have to cut my roku budget because i'm not given the ability to manage it on the short term basis they hired a new president of advertising from fox we think he gets the whole third party mantra we bet they'll catch up to the rest of the industry from a technology standpoint by the end of the year. >> we've seen a budget of target increases on the idea they can add new subs is it overdone >> advertising is high margin,

100%, 90%. we've done survey work half of the accounts we surveyed said i will pay for the extra people in my family who don't live with me among the kind of people who probably get kicked off, a third of those said they would pay on their own. you saw the antenna data last week netflix looked at this for four or five years. >> which is why they were so stubborn about it for so long. >> in subscription businesses, it's the -- churn is the evil. they were doing everything to avoid churn. they didn't do it until they hit a brick wall they hit peak subs without ads to open up the market you have to have advertising they've shown outside the u.s., youtube has twice the viewership of netflix because it has ads that's what they're going for. >> fascinating space you're going in

a good call on roku see how that develops. >> thank you. as we head to break, check out the s&p laggards mostly health care it's the only sector in in the red off united health in particular utilities, energy, technology leading the charge on the market the nasdaq composite is up 5.25% so far for the month of june stay with us td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

the street." a number of health insurers, of course, we've shown you this sliding significantly today. bertha coombs will tell us why. >> united health cfo speaking at the goldman sachs conference said health care are surging higher this year and demand for surgical procedures is getting back to pre-pandemic levels. >> hips, knees, cardio, and it's very localized in medicare businesses where particularly we're seeing a trend there's some indication that

looks a little bit like a pent up demand, or delayed demand being satisfied. and some indications what we see. >> now rex emphasized they are seeing the move in outpatient settings rather than inhospital which gives a boost to united health's surgical outpatient center partners surging on the news, and the device makers are higher as you noted the medicare advantage players like humana, higher surgical costs are harder to offset and centene and cvs aetna which are already under pressure this year could see greater pressure under medical cost ratios. the timing could help for 2024 when they're submitting plans for next year and united's rex said they've already incorporated this trend into next year's plans. so they will have a sense that they'll have higher costs.

carl >> a huge impact on the market today suppressing the dow. appreciate that, bertha. after the break, jeffrey lacquer weighs in on the fed's next move with the decision and powell's news conference this afternoon. we're just a day away from cnbc's financial adviser summit. the top advisers and experts are breaking down where they see risk and reward ahead. scan the code to register or visit cn.c/fanalvir bcominciadse for more we're back in a minute listening more than talking, and a personalized plan ♪ to guide you through a changing world. ♪

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welcome back to "squawk on the street." i'm contessa brewer. belarus has nuclear weapons from russia according to its president. he said he would not hesitate to move them. reportedly this is the the first time moscow has moved nukes out

of russia since the fall of the soviet union. and more mourners lined up for the funeral of the italian prime minister italy declared a national day of mourning which drew criticism because of his controversial past and the nhl has a new champion the vegas golden knights won their first scatanley cup in thi sixth season as a team ice hockey winning in the desert you know what's remarkable here? i think what's remarkable is the fact that you have a rabid fan base so soon after setting up the franchise in las vegas that, of course, just the first of professional sports to take over the gambling capital of the

united states. >> contessa, thank you just want to mention target right now because the company is holding a shareholder meeting today. the stock has under performed since mid may when the backlash started around the pride collection, had to pull it, faced a boycott. look at what target has done, down 10% since mid may versus walmart, walmart is up 5% over that period the company hasn't addressed this yet but i'm told brian cornell, the ceo in his morning address this morning to shareholders did address the issue for the first time in his speech he highlighted the resilience of the business and the fundamental strength of the business said in a few years operating margins are going back to pre-pandemic levels but did talk about the recent threats to the safety and operating safety of their employees, including talked about the violent crime rings stealing merchandise from

the stores and talked about what happened, the backlash after introducing the pride collection which he said they have done every year the last ten years and had to pivot there he didn't go into what the impact has been of any potential boycotts or fallout from that. but did talk about the complexity of the issue they're facing says they're going to continue their commitment to the lgbtqia plus community and figure out some of the issues that he said aren't going to be solved by one retailer but acknowledging the elephant in the room for the first time in these remarks i'm told to shareholders today. >> this collection has existed for years,, correct? >> correct. >> this was not new. >> not new. >> but the first time they faced significant backlash i believe. >> yes that's correct and what i'm told is because of the threats to safety of their employees they had to pull the merchandise and then faced backlash from both sides about

why they did especially boycotts from the far right for supporting pride month in the right it's worse for rickbud light. >> it reinforces the idea when it comes to culture wars in in the country, companies have to be thoughtful about when they choose to engage, how they choose to do so whether through regular business or communicating as well. >> what their brand stands for and what their consumers understand their brand to be so there's a lot of learning, complexity, and that's acknowledged today. >> new york mag has an amazing story out this morning talking to target employees and their experiences of being harassed -- >> scary. >> yeah. hate shamed. at work from shoppers. >> what do you do as a company right. i think you try to minimize

that but at the same time what signal are you sending? it's -- these aren't things that are taught in communication courses. >> o, these are very difficult things to deal with. all right. one thing that's not that difficult now is saying the market is higher let's get to bob and find out what he's thinking about. >> a great day, a great ppi report inflation is dissipating but the market reaction is muted the problem is it's in the market now, lower inflation expectations are in the market where do you go from here? i want to show you the sectors the sectors that have been under represented as far as the market movers this month, kind of better today, utilities, real estate, staples, all under performed this month doing better industrials are at new highs, among the few at new highs that's interesting right now i want to point out how unusual this is with the s&p up and the dow down so much

as bertha mentioned this is because of what's going on with united health. the important thing is if you look at what's going on with the dow movers nike, we have four stocks down in the dow but united health is the biggest stock in the dow jones industrial average it was price weighted, almost $500 stock when you're down 35 points or so that's 240 points on the dow this is the problem with price-weighted indexes you get the stock moved suddenly and the index is under represented for what's going on. we're talking about the momentum in nvidia, tesla, apple. but big names that have almost tesla-like characteristics in the last few weeks netflix amazing. ibm was 128 a few weeks ago. american express has been up almost every day walmart has been moving rather aggressively it's just quite amazing. caterpillar was $208 a few weeks ago. and folks, all of this started

because the jobs report on june 2nd. the whole landscape started to change after the jobs report that reinforced the possibility of a soft landing. so we've been seeing things move up recently. the industrials, there are a whole bunch of big global names hitting new highs. one of the only groups only about 30 new highs on the s&p today, rather surprising but these are the big global names. paccar, parker-hannifin i ingersoll rand they get their profits from overseas global stock markets hitting 52 week highs as well not just the united states. and nikkei is a 33-year high so the issue here, guys, is what's going on. and with where we can go next. the s&p right now is trading for almost 19 times forward multiple

including the first half of 2024 that is not a recessionary multiple but that's an expassionary multiple and the market has been right so far so far the stock market is right about little or no recession back to you. >> one determining factor could be the fed this afternoon. investors are awaiting the decision, the news conference. our next guest said the fed has not done enough to throttle demand growth and that -- and that they are going to have to raise real interest rates to 16. sorry about that joining us is jeff lacquer good to see you, it's been a while. you would be in favor of hiking today? >> yeah. i think there's a strong case they're going to ultimately need to do more if you look at the historical relationships between the federal funds rate and the current on a four-quarter basis

and the average unemployment rate, the relationship suggests that where we are now, they're going to need rates over 7 whether they need to go that high or not remains to be scene. if inflation was 3.5% as they forecasted in march for the end of this year and the unemployment rate was 4.5%, 5 would be fine. and likely to do the job but inflation has proved more persistent over the last six ms. the headline numbers, the 12 month numbers look great all coming down. i see it there, the ppi and cpi on the screen. but if you look underneath, at the month-to-month core numbers, those have been steady at around 5% of an annual rate in the last six months we have substantial momentum baked into wage gains and those don't seem to be abating right now as well. so i think that, coupled with the strength of the labor market, and spending suggest they haven't done enough to

raise the real interest rate and give people an incentive to delay spending they haven't done enough to delay spending growth and that's what it's going to take to reduce inflation given that, why not pause now and get ahead with it. >> what you say about the real rate is interesting because it doesn't get a lot of attention and play can you explain why that's important and whether you think the fed is looking at that with these inflationary numbers the real rate is pretty low, right? >> they are looking at it. i know behind the scenes they must discuss it that way but in the public communications they're garbling the message and not getting it right so the inflation adjusted interest rate is the actual incentive that interest rates provide to people to delay spending to reduce outlays now in favor of outlays later same thing for businesses looking at capital investment, the incentive they have to

reduce capital outlays now and delay and spend later. and that's the lever the fed has. when the fed fund rate is at 5%, is that high or low. depends on what inflation is, and if inflation is going to be 5% over the next year. it's not very high just barely a smidge over zero of a real federal funds rate and that's the real lever they're acting on and the historical data is pretty clear, you have to get up above 1 or 2% in order to have a serious affect on inflation. >> i think if they start talking about that, the market would take it very poorly as a hawkish message which it doesn't sound like the fed wants to do more. they're worried about credit conditions, potentially worried about real estate. worried about lags i chose lag as the word of the day because we haven't seen the lagged impact of monetary policy right now. if you look at the trends on inflation i know you say we're too high, a lot of that is

things like shelter which we know lags, used cars, which are an anomaly, they need to raise rates to deal with used cars and car insurance costs? >> there's always something. there's always some category that's higher than others when you aggregate it all together that's what counts they deserve credit for moving so rapidly last year to make up for waiting so long from '21 to '22 before they got started tightening rates the last few months they've been signaling they might be willing to try and skate by with an interest rate above 5% hoping that inflation would come down on its own to make that a good, reasonable rate in terms of getting inflation down. but i think the evidence that's come in over the last several months, particularly since the beginning of the year, suggesting they're not getting the good luck that they hoped for. they're not going to get inflation down to 3.3% this

year, for example. i don't think. so i think they need to consider messaging that prepares markets for some more rate hikes going forward. that's's, of course, what everyone is going to be watching for in the press conference today. >> thank you, good to have your perspective. i'm sure there are those inside the fed that think like you. you've heard from a number of hawks lately jeff lacker appreciate it. >> thanks. set to price tonight ahead of the market debut tomorrow, we'll tell you what to expect, look at the health of the i.p.o. environment as this is considered maybe aell at bweher of what's to come. back in 3 minutes.

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fast, casual eatery cava is

set to make its debut at the market this year one of the most anticipated i.p.o.s this year. kate rogers is looking it. >> it's up to $19. the company is taking a unique path to expansion, it's been focussing on the suburbs, 80% of the locations are there. cava has some comparisons to the chipotle experience, drive through and second lines for digital orders it took zoe's kitchen private in 2018. while not profitable, sales are rising, same store sales for q1 up nearly 30%. foot traffic also much higher than the fast casual category. overall according to data from placer a.i. up 4.1% year over year comparable names are sweet green and chipotle, both have strong

performances for the year, up 23%, and nearly 50% for chipotle year-to-date chd which could give interest. sweet greens is off the i.p.o. levels pa nar preparation for an eventual ipo. and on the smaller side, twin peaks and jen restaurant have filed paperwork to go public timelines remain to be seen, but cava could give some indication on investor interest in this space. david, back over to you. >> kate, thank you i want to bring in leslie picker let's talk a bit about sort of the pricing mechanism here it's been a while since we had a, you know, an ipo, leslie, that we actually cared about and jim cramer has been talking about it potentially being a real opening for the ipo window overall. >> yeah. i've been talking with sources and it's unclear, as you look at the ipo window overall, tech is something that a lot of people look at as just saying, okay,

floodgates are open, there are a lot of tech ipos in talking with sources, it doesn't appear to be the case that those tech discussions are really kind of feeling that urgency to go public right now a big part of that is just because the multiples for their comps that are currently trading in the market haven't quite recovered from where they were, say, back in 2021. so that kind of pricing discussion will take some time to sort itself out consumer on the other hand, and this is where you've got a cava that is clearly getting a lot of interest i'm told in talking to sources that it's likely to price at the high end of the range or above, which is typically the case when you've seen a boosted range as this one has that interest is very hot right now. obviously, you've got these three anchor investors that are in the deal, that takes up a lot of the supply. and so you've got a scarcity supply and demand dynamic, which is one of the reasons why they may be able to price higher than they had initially come out of the gate and had discussions at a lower range than they may be looking at pricing

but this is, you know, a smaller part of the ipo market usually, when you have these big kind of open windows, it's thanks in part to some of the bigger tech deals that we've seen, say, in recent years, carl >> yeah, leslie. look forward to talking with you more for goldman lease in the back half of the year last night. let's maybe a topic for a different time our leslie picker, another busy hour ahead on "squawk on the street," including a first on cnbc interview with newly firmed jared bernstein. stn me coming up at 11:00 a.m. eaerti in just a few minutes. stay with us you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world.

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as we lock ahead to the fed this afternoon, some new cnbc data showing some cracks in the armor when it comes to the consumer this quarter. courtney reagan joins us now with more. >> the cautious spending trends that retailers called out in the first quarter are showing up in a new poll conducted over the weekend by cnbc and morning consult. nearly everyone, 92%, say they're cutting back in some way. inflation is a major overhang. 88% of both low and high-income groups are concerned about higher prices, though even more middle-incomed consumers expressed concern. it's like two-thirds to cut

spending on essentials, 979% to cut on nonessentials what's worrisome is consumers don't expect to change spending habits for the rest of the year. two-thirds still expect to cut on essentials and 77% expect to cut back on nonessentials. wall math and target called out weakness in apparel spending in the first quarter, and sure enough, clothing is number one on the nonessential list that consumers have cut back on, though followed closely at bars and restaurants and entertainment outside the home, including concerts a warning perhaps for what live nation may be seeing more than half of americans say they've cut back on major household-related spending, like renovations or appliances, echoing with what home depot and lowe's have been saying. troublesome for best buy and apple, nearly half of americans say they're spending less on electronics with two-thirds of low-income americans cutting back in that category specifically david? >> courtney, thank you courtney reagan there. of course, overall, i mean,

perhaps things that will be considered as well, sarah, when we hear from, well, the -- >> we'll get retail sales this week, also >> so we'll get more on the spending side. look, the consumer hasn't been the major source for concern, as long as unemployment is under 11%. it's interesting that intentions deteriorate, as courtney is reporting, and we've seen that in specific categories but overall, it hasn't felt like a consumer recession yet >> although demand does seem to be at least waning to a certain extent >> that does it for this hour of "squawk on the street. stay tuned for a lot more coming right back you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants.

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good wednesday morning i'm sara eisen with carl quintanilla from post nine of the new york stock exchange. setting the agenda, marathon asset managements bruce richards with us at post nine to weigh in on the fed, the credit cycle, and where the opportunity lies in this market >> hbe ceo antonio neri is with us and later, first on cnbc, the newly confirmed council of economic advisers chair, jared bernstein. he was just confirmed