is it not friday really not friday. >> lot of data this week, lot of stuff we've waded through. >> final check on the markets. so, you want jon rahm, but you think it will be sco scottie scheffler? victor hovland "squawk on the street" is next that is a live shot of the scene outside the new york stock exchange as restaurant chain cava makes its market debut today. >> happy cava day. >> thank you so, potentially major test of the ipo market and obviously, a very important day for that particular company. nice little thing going on out there. you can't see it a lot of plants, greenery. we're going to talk with the ceo later this hour. >> that's fantastic. >> yeah. good thursday morning,

everybody, welcome to "squawk on the street." i'm david faber with jim cramer. we're live from post nine at the new york stock exchange. carl has the morning off let's give you a look at futures as we get ready 30 minutes from now to begin the trading day you can see we're going to have a lower open, and of course, a lot of that may be a result of what we heard yesterday from fed chair powell, and that is where our road map starts with the fed standing pat for now on interest rates, though it did signal that tightening could soon resume from the fed to the consumer, new data showing retail sales rose in may and that was something of a surprise >> yeah. >> and as we mentioned, cava, going public today you know, jim and i have different views of how big a test it is for the ipo market, but we'll certainly discuss that brett schulman is the ceo of what is a mediterranean fast casual chain, and he's going to join us to talk about this big change let's start with the fed

paused rate hikes for the first time in 15 months, but chair powell not ruling out more rate increases before year-end. >> nearly all committee participants expect it will be appropriate to raise interest rates somewhat further by the end of the year, but at this meeting, considering how far and how that's we've moved, we judged it prudent to hold the target range steady to allow the committee to assess additional information and its implications for monetary policy. >> all right what do you think? >> well, i think a lot of people were trying to figure out whether we were going to have a soft landing or a hard landing, but yesterday, we discovered there's a third choice, which is that the plane is still in the air and doesn't have any intention of landing, so how do you have a soft or hard landing? the reason is because of housing, and housing is controlled by wages. i think if you go -- you want to know the key to this go to the home depot conference call, the full-day analyst day, and you will hear why they have

to do it home depot is saying, this is an incredibly inflationary time there's inflation everywhere housing, by the way, $13 trillion in value has been created. home prices are up 40% since 2019 everything trickles down from housing, and housing, we're going to hear from lennar. same thing it is where the epicenter of inflation is, and it's rippling throughout the economy >> you've been saying that for quite some time. that said, there's not that much action in housing in terms of people selling and people buying as a result of interest rates. if you have a good mortgage, for example, you are less likely to want to leave and have to assume a new mortgage at a much higher rate, aren't you >> well, okay, so, literally 50% of people don't even have a mortgage of the other people who have mortgages -- 40% of owner occupied homes have no mortgage. 80% of those with mortgages are locked in at 5% or lower so, if you look at that, do the

algebra calculation, obviously, then there's almost no one to sell >> right i don't want to move i can afford my monthly now, and may not be able to afford it -- >> exactly >> or the person buying my home is not -- it's just that same issue. >> and you know, 68 million consumers have a lot more money than they did in 2018. that's the bank of america consumer, just bank of america loan, and here's some statistics that i got that i think are really indicative of where we are. vacant apartments are now filled in 38 days last year, they were 32. eight prospective are noters, down from 11 renters can't move up to new homes because there are so few new homes. we're building homes radically lower pace than we did last year at this time because the home builders listened to powell and thought we were going to have a recession. and you have -- what you really need are the -- this is a terrible scenario, but student loans have to come back to where you have to pay them, and people

have to go back to live with their parents in order for this cycle to be broken and i don't think -- i think the cycle is going to be very hard to break >> come back to the fed for me we've got any number of different opinions out there morgan stanley, we continue to think the fed is done here >> how -- it's based on nothing. >> based on nothing. maybe based on nothing but there are those who believe, well, listen, obviously, they are going to be data dependent, and even though he's indicated rates may stay where they are for another two years, right >> true. now, autos, i have fresh auto information. the auto information is compiled once a month, and autos were up very big, vehicles, and that's come down. used cars and trucks are going to surprise you, how much they've come down in the last four weeks my information is fresher than their information. >> i feel like you're telling me, on the one thing, you always share about housing is so strong and housing is strong and housing is strong, and then you're giving me everything else that's not that strong >> no, i think that's the conundrum that we're faced there's really only one thing

that is really strong. do you really think -- if you're loretta mester from the fourth fastest-growing city in the country, cleveland, do you really think that you can have home prices up 40% since 2019 and feel that we're not in an inflationary environment especially with lennar, which is being in the 10:00 hour, having unbelievable numbers, although the price -- some of their home prices went down david, i'm just pointing out that that's -- this is the metric that they're really upset about. >> and stuart miller will join us in the 10:00 hour >> if you were bank of america -- now, the mastercard spending numbers, david, are incredibly fast. now, there's a note -- citi's got a negative catalyst on american express i don't know all i can tell you is that mastercard spend was off the charts particularly for jewelry mother's day was amazingly strong >> gundlach yesterday joined wapner later in the day. take a listen to what he had to say. what did we used to call him

the bond king, i think and his reaction i want to get yours to his reaction of the powell presser >> i don't believe the fed's going to raise rates again i think jay powell has a really difficult job right now, because as steve is correctly pointing out, i think he realizes we're at a turning point, potentially, on the inflation situation, and on the economy, and yet there are people that are dedicated to these lagging indicators like employment, labor market, and certainly looking at core cpi, well, it lags. it just does >> okay. about 30 years ago, there was a development -- i'm sorry, 1983, there was a debate about how to make it so the cpi didn't look that high. so, they took homes out of it. i mean, i wish i were joking about this they took homes out of it, but they kept rents in if you put homes into the -- see, cpi is what i'm saying, they're not going by it. they're not. because homes aren't in the cpi.

i mean, that was sleight of hand to take homes out, but do you think loretta mester, who happens to be incredibly rigorous, is sitting here saying, you know what? let's just asterisk this homes, david, 66% of the people in the country, a very important indicator, and homes are out of control. they can't build them fast enough lennar can't build them fast enough, toll can't, kb homes can't, so the supply of homes is very limited new, used homes, very limited. rental, supply very limited, and we're supposed to say we're in a noninflationary environment. the home depot call was chilling and if the fed listened to that, they would say, we are so not done if gundlach would listen to the home depot day, you would just say, holy cow, are we in a jam >> all right so, how does it impact your view of the equity markets if at all? does it change anything, your assumptions yesterday versus today? >> you know there's a lot of people on the wrong side if you

look at the long range we're not going to be in a recession. we're not going to be in a recession. we have a very strong economy. it's not like people, david, in 2008 where they're walking away from their homes and giving washington mutual the keys to it who's walking away from a home when you have no mortgage? >> true. >> would that be stupid? i think it would be. i'm going to walk away you have incredible wealth being built in your home even right now. that's another part of the home depot. they said, listen, it's not an expensive to fix your house up it's capital you're capitalizing. homes are the thing to worry about, and wages control homes >> all right let's move on to the ipo of the morning. can we do that we have a certain amount of time each block >> i just gave you the key >> i heard you >> i know cava better than anyone in america. >> no, you don't why do you say things like that? "i know cava better than anyone in america"? why would you say that

>> because i'm given to hyperbole. >> our viewers know that >> these are my cava notes >> he's got more pockets than a magician >> david, it's $22 >> yes hold on. it's 22 bucks, above the previous range actually, here are the numbers i shared on twitter this morning, 30 times oversubscribed. >> you know what that says to me >> top 20 counts, long onlies, mostly, getting 80% of the allocation >> this is going to be the most important ipo of the year. >> why it's a restaurant chain. if you were saying instacart was the most important, i would believe you. that's technology-related in a way this is not. >> the question is, is this sq sweet green, which is a bocmb, r is this chipotle same-store sales are 14% accelerated to incredible 28.4% in the first quarter of 2023 comparison, chipotle, i mean,

kind of like chipotle, except for chipotle did not have that kind of growth when it started so, i mean, you can make a comparison here. the average unify, david, north of $2.5 million. that's fantastic but you say, jim, are they making money the answer is, no. >> they're not making any money. they're losing money >> if you look at adjusted ebitda, which i know you like. >> i do, well, you've got to be careful of adjusted ebitda everybody uses it, but we have to be aware of what it's adjusting for, and it may have the function broadly speaking of showing margins being more significant than they really are. >> this is a regional to national story that did lose money last year that is coming on very aggressive it did buy a lot of zoe's kitchens >> why do you feel this is such a key for the ipo market >> because jpmorgan is going to let this thing pop in a way that's going to say, i got to get back into stocks this is so exciting. let me have the next one this is how it all starts.

a recognizable name with 4 million people who are part of the loyalty plan it's healthy-ish it is loved. i don't know if you have been to the one down here. >> i have. >> good luck the line is out the door >> that depends on the day >> not mondays >> or fridays. >> right but that's because of that work from home nonsense you keep talking about, and i think it's going to be very hard to value because they are losing money. let's say annualize the company's first quarter adjusted ebitda of $6.7 million, david, to get a 2023 -- >> look at all those people. >> that's -- they're people who work there >> yeah. exciting >> so, i mean, chipotle has a market cap of $55.6 billion. >> well, cava's never getting anywhere near that, not in your lifetime >> but the ipo is going to be hot, hot, hot. it's going to change -- the public is going to listen to what happened to cava, and the public is going to be in, and david, all i can tell you is this is going to be one of the home gamers want to be in. >> as i have been consistently, i'm not convinced that you're

right on that one. >> your skepticism -- >> not specific to cava ipo. >> this is sky net >> simply that it is going to really open up the ipo market. we'll see. you've been right many times in fact, when i disagree with you, most of the time i end up being wrong. i don't like to admit that >> that's very positive for you. >> after the break, we're going to get breaking economic data. i just said, right you heard what i just said >> i appreciate that thank you, bill. plus later this hour, don't miss the ceo she watches. she's your biggest fan >> she knows i actually like him. my father thought we hated each other. >> we got ouabt 17 minutes before we get started with an opening bell d be the food i'm e. no artificials. or these toys that get my mind right. ♪ or maybe it's petco, keeping me healthy for less money. wait, what's money? better quality pet care for less human money. [tweet]

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♪ welcome back to "squawk on the street." rick santelli here live at cme hq with breaking news. industrial production capacity utilization for the month of may on production expecting up 0.1% but not meant to be. down 0.2%. that is the weakest number of the year you have to go back to december to find another negative number, and that was negative 1.55%. on utilization rates, about as expected, 79.6, and depending on how you round the number, that just about equals january, where we were 79.597 we see interest rates, ten-year note yields at 3.74% are down 4

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matching your job description. visit indeed.com/hire all right, it's 9:20, and not unquite 9:20, but about ten minutes before we get started. we have time for a "mad dash." we can even stand up for it. >> it's a very interesting note from morgan stanley today. t-mobile's been going down, and a lot of it is people believe that this dish-amazon alliance that i know you have questioned, they say today breaking through to $150. obviously, $129. patients should be awarded reinstating as top pick from morgan stanley david, they have got this $14 billion buyback.

they think there's -- it's -- it could be very active they're modestly increasing their estimates, but david, here's what i mention this for can you imagine att, verizon, and t-mobile, if t-mobile chooses to cut -- to make it so that give a pro visual away, you know, the new apple device, if they make it so they have more competitive offering right now, they do not, than verizon for the 14 david, can anyone really be in a price war with a company that is as lucrative as t-mobile >> they have a very strong network in 5g. >> yes >> and you know i think it's harder for verizon to make the claims that it did for many years and gave it the dominance that it had for a period of time that said, this is all about competition, really. >> yes, it is. >> whether you want to say amazon or what may happen there, but from the cable companies, this is competition. >> that's why i like the morgan stanley piece, because it basically says, okay, line in the sand it's not going lower it's bouncy. you and i both know mike seifert. mike seifert, even though he

wears those t-mobile sweaters that have that magenta thing, he is a vicious competitor. he is like a, you know, a velvet fist >> i believe that. >> he's so nice. and i think he's tired of the stock being like this. >> if we put up the others, verizon and at&t are also done if you go to any length other than a year, you'll see the stock has far outperformed >> i think this is an amazing call to line in the sand it, and simon flannery, whom i have liked for so long, he's a terrific analyst, this is a good call >> okay. and flannery's been doing it a long time. >> you know simon. >> i do. >> remember quest? he nailed quest. >> all right we got an opening bell, what, about eight and a half minutes from now quick programming note as well it isn't too late to sign up for cnbc's financial advisor summit. we're going to have some of the street's top investors and market expertsbr break down whe

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i see a.i. presenting transformational opportunities i've talked about how the collapse of productivity has been an essential issue in the global economies, and i believe it is an essential reason why we have such sticky inflation i believe that a.i. has a huge potential to increase productivity, increase knowledge base, transform margins across sectors. it may be the technology that can bring down the inflation >> that was larry fink predicting, of course, that a.i., at least, is presenting what he said is transformative opportunities that will have significant impact on productivity in a positive way, jim. you know, not the only one of course, we have had jan here, the whole team over there at goldman months ago put out a report talking about gdp going up by 1.5% over time as a result

of productivity gains. >> it's tough. i mean, i know that jensen huang, whom everyone is aware of in our club, at nvidia, the biggest thing we do in an economy worldwide, the biggest total addressable market is the building of factories, and he's saying that the building of factories is going to come down dramatically in price, and be able to beuild it faster because you'll do a digital twin >> you'll see what it is, but you'll be able to look at everything and then create efficiencies from what's working or not working on your digital representation >> i have adobe on tonight, and they actually have figured out some of the great productivity it's really rather amazing larry fink is right. if you wanted to make a dress and change a pattern, that would take two weeks you can do that in hours now >> it's also a lot of work in the office as well that is being dramatically improved or at least, i should say, the amount of time needed is being cut

dramatically as a result of the use of generative a.i. >> and salesforce has calculated to be that you get five additional hours of work out of an employee per week that is, again, on a 50-hour week -- >> that's 10%. that's not bad >> that's productivity it's just not interesting productivity to people because it's business-to-business. you don't see it but that's where i bet you bank -- if we had brian moynihan on here, i think he would say, i'm going to be getting a lot more out of my people. rbc is saying that right now >> something we haven't talked a lot about at all, we did for a while, was the use of 5g in the enterprise at the edge because of the computing power, but that's starting to come around too. >> yes >> that's something, you know, a usage case for 5g that hasn't appeared in full as yet but at least, you know, if you talk to enough people now, say it's starting to get closer >> right that's not nvidia's failing. >> hp, inc., for example, where

you can bring enormous computering power as a result of wireless technology, and bring things right to the edge, do things in a manufacturing plant in a realtime basis that you couldn't previously. >> people can't see it one of the things that jensen talks about is that things will be moving on robots. they won't be using forklifts anymore. what does that do? it makes the economy a little bit faster, also cuts down pollution. by the way, you know, jensen was more interested in waste and cutting down waste than he is in anything else, but that is inherently productive. and do i think larry fink is wrong? i think trying to figure out how much is a fool's game right now. too early. >> too early >> yeah. even great people like jim breyer would say it's too early, from excel but he thinks it's going to be monumental >> he does, and obviously, we've talked a bit about what it's going to mean in health care, for example, and i think people like jim breyer are thinking a lot about the opportunities there. >> he is, he is. >> from an investment standpoint as well, from new and emerging

companies that can use and incorporate generative a.i. in what they do to greatly increase health care outcomes >> yeah, and we have to distinguish this from the letters that you send, the war letter with the four wrong cases. that's not it. what it is is, when you go to a website, they will direct you to the right person i'm hearing things here. >> you can hear the applause starting here. it's going to get very loud, of course we're surrounded by many people who are here to celebrate the ipo of cava. it is one of the bigger ones we have had in quite some time, certainly at the new york stock exchange with a lot of focus being on this mediterranean fast casual that is going from a regional more to a national player certainly plans to use some of the proceeds from this ipo to help fuel that growth phase that it hopes to enter. lot of doubters too, jim, in terms of profitability, in terms of future cash flows and their ability to garner them

>> across 23 states, washington, 82% are in the suburbs that's very interesting because that's a little bit well here. and i know that they could show profits in one >> like any company choosing not to have synthetic profitability. there was the opening bell just a celebration here at the new york stock exchange. again, cava. we're going to talk to the company's ceo in just a bit. few minutes. over at the nasdaq, by the way, fifth third bank corp. celebrating an anniversary of that bank. >> almost every single regional bank has had its numbers cut of late, and a lot of them are saying it's hard to get is a loan, and yet, there's powell saying, look, the growth is still -- david, this incredible dichotomy that you're seeing between the banks that are saying, look, it's getting tougher and tougher to get a

loan and the fact that the fed says things are still too easy it's really an amazingly difficult time to figure out what to do so, people default to -- >> they default to buying apple or buying tesla, although they're not buying it today. >> even though there's some very positive news. >> or they default to buying nvidia or amazon or microsoft or alphabet that's about it. >> yeah. they're down today >> they're all down today. a lot of them. >> are you concerned about all about the different lawsuits filed against google from the eu and from jonathan kanter >> you've done more work on this than i have. you've read all the complaints, the doj one in particular about having to split the ad business, and to your point, the eu is potentially embarking on a similar axiom, so they have a lot of front on this war they're going to be engaged with >> this is unlike any other

challenge to alphabet. this is a very serious, rigorous challenge about you maybe should pick one side or the other, the buy side or the sell side. in their defense, alphabet is saying, listen, everybody gets a bargain. there's lots of different competitors. you don't need to use us and i understand i have said, i understand both sides, but i think that people -- most of these lawsuits, people say they drag on too long. that's not jonathan kanter's goal he wants quick resolution. he wants them that would dramatically lower their profitability. i think that mr. kanter is very good at his job. used to be at paul weiss, a corporate lawyer this is not ftc. however, alphabet also has some compelling things to say on its side this case and the case that merck has filed against medicare are two cases that people aren't talking about nearly enough. >> we'll have time to talk about them, but i'm glad you did bring them up because they are important, of course, and it is important to point out, by the way, when it comes to alphabet,

the last administration also, bill barr also brought an action too. the doj, you know, it doesn't -- this one does not fall under the broader theme of, what are these guys doing on the antitrust front? this is more -- >> it's kind of cut and dried. >> you said it, i didn't >> jeff green would tell you, look, it's, which side are you on kind of like harlan county >> yeah. speaking of trials, i got to talk -- i got to tell you about the one that's really stirring up the m&a world microsoft is going to go head-to-head with the ftc in federal court in a week. >> someone had to. >> but jim >> a week? >> a week. >> how'd they do that? >> judge corley. it is something that, at least, people that have been doing this a long time like myself and covering it, been participants in these markets, have never seen, which is, we're going to trial.

next week. five-day trial >> are you going to go out >> i don't know that i am going to go there. >> can i suggest that you go i'm not kidding. >> yeah, i know. i've thought about it. >> this is the test case of the renegade runaway rogue ftc, and it really is interesting you got to go. >> by the way, usually, we talk about the limitless resources of the u.s. government. >> right >> in this case, microsoft may have them beat on that, because i don't think the ftc ever expected they would have to go to court >> microsoft has the -- they have more unlimited buying power than the ftc who are they using >> they're using everybody they could put 500 lawyers to work on this thing, and they're going to have to they're taking depositions maybe there was some prep already under way for the alj, the administrative law judge here, that's taking place in august, but this is it this is the -- this will decide from the u.s. perspective whether microsoft is violating

antitrust law in trying to buy activision so, important case that said -- >> could this be the twilight of the ftc? >> this could be very important for the ftc in terms of the continued cases they are bringing >> that's incredible >> and whether they're going to continue to chill the waters of m&a. >> please describe to people what typically would appen, ho long this would be drawn out >> you were not expected to have a trial until the fall, most likely, and then this thing could go until march i mean, who knows? that said, we'll take you back to the uk to remind you that when it comes to this deal, $95 a share in cash that you can still see there is a significant spread as we say to that price it is still the appeals process that microsoft is undertaking for the cma, the uk antitrust regulators' decision to block the deal to prevent it and that is still thought to be a very significant hurdle for microsoft, perhaps not one that

is unbridgeable, but a difficult one nonetheless, jim so, as important as this case will be next week, and the week following, it's five days they're giving it, don't forget that when it comes to the success of the deal, the ability to close the transaction, microsoft still has to win in this -- against this tribunal in the uk >> i know. >> which sends it back to the cma if they were to win and the cma has to change its opinion. >> let me give you a more positive scenario in all that. retailers. kohl's recommended by powell, very good piece, this is tom kingsbury, used to run burlington target yesterday, people did not talk about how brian cornell was very upbeat when he spoke about target that's the second day it's up. when you have both kohl's and target up, people are going to go buy walmart costco is saying some very good things so, i think that the big retailers, home depot, of

course, kept its outlook the same, but the big retailers are talking very positive. bad for the fed, good for the stock market >> well, all right and target is up again now after numerous consecutive days down, just the stock was reeling in part because of that shrinkage number they gave us, in part because of this boycott because they got themselves embroiled in the culture wars, unclear that they really had -- i don't even want to talk -- >> i felt that brian handled himself very well in terms of just saying, universally, look, we have always been in favor, worked hard to embrace everyone. and i think that that's kind of the american way, even if people think it isn't the american way. >> there's this rumor, which i have not been able to confirm whatsoever, that there would be some activists in the stock. what's the plan? you're going to -- what are you going to do? >> they have no plan >> yeah. no plan. >> look, it's a great company, and it actually had, you know --

sales were slowing regardless of what you thought, sales were slowing i now feel it's overdone, and i think people should recognize that it's overdone >> speaking of a little bit of a different -- you know kroger reported, right? you got any take on the kroger quarter? >> yeah, i mean, kroger is back in that -- smack in that takeover world >> yeah, they are. >> the kroger numbers were fine. >> purchase albertson's, what they're talking about. >> talking about the one i could get done >> that one, again, you have to differentiate sometimes between these cases in the sense of, all right, that would have been brought under any administration, most likely. amgen horizon, nobody thinks there was another administration that would have brought a case on that one. >> i'm not sure whether -- rodney mcmullen, the ceo, has told me, point-blank, we will do what is necessary to close it. >> they have made a lot of

overtures in terms of divestitures they're willing to do >> doj has said those deals don't work >> it's no good if you divest something that then goes bankrupt >> people should google hagen, an outfit that got a bunch of stores from safeway, and then within a few months, they went under and safeway took over the stores again just be aware there are very big obstacles to that deal >> tesla shares have finally reversed what was that 13-day -- was it 13? i believe it was straight upstreak. yesterday, down. again, today, down not much more to say about it other than that. but it was notable, of course. tesla stock, still up well over 100% flirting right around that $800 billion market value for the company. >> david, did you -- >> i think jonas had some things to say i is he paid by the word, that guy? >> i used to be paid by the

word >> you're not still paid by the words, the words you say >> i had my larynx looked at because i was overpaid here's something that's amazing. oracle can come out, larry ellison, and say, we're taking huge share from everybody, and nobody reacts the first day, but amazon is down today, and i think people should recognize that some of that is indeed oracle taking share. >> you think so? >> i really do >> really? >> i've been doing some work with other companies that are involved with web services >> oracle's cloud? >> oracle's taking share larry ellison is not just saying stuff to make his point. he's just very on fire oracle quarter matters but david, nothing matters more than cava. >> speaking of cava, we're going to get to that let's give you a quick bond report as well before we head to a break. treasurys this morning, you know, we had had -- where are we now? you said, jim, you mentioned there was a -- things kind of

reversed a bit prices higher there. 4.66% is where we stand right now. >> what an exciting day. >> say again >> it's a very exciting day. >> it's an exciting day, in part, because, of course, we do have this ipo and the ceo of cava will join us shortly. >> i feel the market is about to come alive for the first time since maybe uber >> you remember "frampton comes alive" remember that album? e eranraton was involved with thamic bin foundation. >> i didn't know that. we're back after this. >> announcer: the bond report is brought to you by pimco.

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visit indeed.com/hire and get started today. fast casual eatery cava is making its market debut right here at the new york stock exchange $22 a share is where the ipo priced we'll keep an eye on it, of course bob pisani will be tracking it as well when we get closer to an actual open for you of that stock. the ceo is going to join us at post nine. that will be a first on cnbc right after this break he's the owner of petsworth vetworld. business was steady, but then an influx of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem?

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david, happy cava day. >> thank you >> cava is set to go public at the stock exchange this morning. it's very exciting, priced at $22 a share, it will probably open much higher than that we have ceo brett schulman joining us now congratulations on all your success. >> thanks, jim, thanks, david. >> i think that your story is

one i want people to know. it's an actual, authentic story from three people who were great cooks, and i want you to just tell america what has happened with your story. it is that good. >> our brand was founded by three childhood friends, sons of greek immigrants, ted, ike, and dmitri, really to bring their modern american spin on their family's heritage and culinary we do that in our mission to bring heart, health, and humanity to food i was introduced to the guys when they had two full-service restaurants and sold their dips and spreads in a couple local whole foods markets. they said, come on board, be our fourth partner, and we talked about, we need to bring this unique cuisine where taste and health use without compromise to a larger audience. so, we worked and cofounded our fast casual restaurant, cava, and operate in over 22 states and have over 263 restaurants across the country >> so, let me ask. you've got a great average unit buy, north of 2.5 million, which is very good, but i think a natural, more critical person might say, you're not making

money yet. so, why not? >> yeah, so, when you think about it, we've got this amazing white space opportunity in mediterranean. we have a clear dominant leadership position, defining the category and we create a powerful unit economic engine. our restaurant level profit margins are strong our increase in restaurant level dollars, $50 million in the first quarter alone, over $91 million all of last year restaurant-level profit is the oxygen, the life blood of our business, and then we've invested in significant robust infrastructure over the years, so as we grow and move forward, we'll be able to leverage that infrastructure, and we get a really attractive cash on cash returns on he's all these investments in the new restaurants we're building, and you're seeing that momentum build in the business. >> that ends up being the concern, at least, of some, chbz, very impressive revenue growth, but they do wonder about ultimate profitability you seem to be indicating that if you were to stop investing right now on the restaurant level, you are already profitable but what do you tell people when they look out in terms of how

much you're spending, what you're going to use and the resources you're garnering today from the ipo and when that day comes that you actually will be overall as a company profitable? >> well, we made significant investments in the zoe's kitchen acquisition. we converted that and transformed that acquisition, and you're seeing the momentum come out of that where our net income from where our net income in q1 went from $20 million loss to $2 million loss. you're seeing the inflection point in the business and all of that robust structure we've invested in, the restaurant growth, starting to take hold and drive tailwinds to the business. >> you're talking about years before you're profitable >> no. >> if you simply look at the restaurant level profitability, look at our cost structure, you can have line of sight to it. >> what's line of sight? give me -- am i talking a year, two years, five years? >> the restaurant -- >> wait. let him answer the question. >> you can see line of sight, you can read the s1 and our numbers. >> yeah. >> so we're incredibly excited about it we have a great path forward

we see this working and improving affordability, whether in the suburbs or city, bryant park in manhattan or fayetteville, north carolina we're seeing results when you look at our average unit volumes it's not just one region of the cont that's successful it's all regions and that gives us the confidence that that is coming -- >> the line of sight is -- >> they do break down the regions. this is a very transparent company. and on the profit margin first, the profit, the actual restaurant level profit margin, which is a good indicator, they are, last one was 25.4%. now chipotle is 23.9%. so the comparison, a lot of people are comparing you to sweet green, which is a fizzler and some compare you to chipotle long term. i want to ask you, where is america in terms of greek food

versus where it was five, ten years saying in. >> that's the incredible thing when you look at the demographic shifts in our country and trends, 48% of gen-z identify, that's up 38%, gen alpha the first generation across the 50% paradigm what we know is, as the country gets more diverse people are seeking bolder, interesting flavors, the new cultural cuisine, beyond the mature cultural cuisines of mexican, asian, and it yan and that's where mediterranean comes in you match it with the shifting health perceptions where people want to eat better but don't want to have to make compromises doing it, that's where our unique quis seep where taste and health unite come in it appeals to so many people whether you're a vegan, vegetarian, you want to eliminate lactose or gluten or eliminate garlic. >> i know. >> that's impossible. >> our culinary team made a garlic-free creamer bowl for you today. >> the cramer bowl. >> the cramer bowl. >> that's -- >> you already have it

really didn't need to do that. >> unbelievable. >> he's already, obviously, in your corner. >> cramer bowl i can't even get in your restaurant the line is so long you're telling me -- >> i have to get you in line. >> so the point is - >> it is exciting. the place is exciting. >> we have 38 items on the line to make over 17.4 billion combinations and what that leads to is a diverse customer base which leads that die krers afortibility which again rates the economic engine to address what you talk about. >> what is the primary use of the proceeds from the ipo? >> to build new restaurants and bring this to the 26 states in the continental u.s. we don't operate in today and grow in the markets in we do operate in. >> you will not do willy-nilly growth, you will not cave to wall street and put a 200 stores next year. >> we've put a reasonable plan out for a growth rate because we agree, we think the same thing we want to make sure the growth is measured and we maintain this, lent quality we've been

able to deliver the last 12 years. >> discussions with the bank, jpmorgan, stu discuss, as the price moved up, there is the possibility you could do this at $30, $40 obviously, big institutions want in and individuals how do you think you came to that $22 number? >> it's a reflection of how we thought throughout our journey and our board and investors think. we want to about this the next ten years, not the next ten months this isn't a destination it's not a moment in time we're trying to maximize we're trying to build this for the long term. >> in the near term, dealing with things such as food costs and inflation, not to mention, obviously, wage costs, how have you navigated that and has or have any of those sort of started to get better? >> yeah. so i think that goes back to my point about the infrastructure we've invested over the years beginning to see the ledge from. we have a direct source supply chain with scalable producers where we control our inbound

freight and logistics. as we grow in markets we move from ltl pricing to half truck load to truck load, economies of scale with our providers and we're vertically integrated. we have manufacturing facilities where we produce all of our dips and spreads, allows us efficient cost effective production of our high quality ingredients that we're not having to produce and have the complexity within the four walls of our restaurant and what that allowed us to do is take less than 5% in restaurant pricing last year while expanding restaurant level margins and really driving that value proposition for our guests. >> you know, a number of people, i mean jim mentioned sweet green, down the treat from cava here, people can remember when that company went public as well telling a similarly strong story in terms of sourcing a lot of things hasn't gone that well, at least as a stock how do you differentiate yourself >> look at our restaurant level margins and how strong and robust they are and our proven affordability. we're 82% suburban in our

portfolio, over 80% throughout our history. as i mentioned we're in small markets like lynchburg, virginia, lancaster, pennsylvania, westwood in los angeles. the incredible diversity we see this resonate and as jim pointed out in the s1 the consistency of that performance in all regions of the country i think really shows the difference with cava. >> hence why i've been saying, i know david, i've been going on and on about it, why the deal is so important it's going to be very exciting, and i know that's a word that is loaded because we want people to be -- people to do all the homework if you do the homework and the transparency of this company this is the way that chipotle started. chipotle is one of the greatest restaurant chains on earth. >> that's high praise. it's a great compliment. appreciate being included in that category. >> you have too many good things going for you -- >> thanks. good luck today. 29 to 31 looks to be at least the latest indications. >> and a cramer bowl without the

garlic. >> we'll have to figure out your david faber bowl. >> it will be cranky whatever that bowl is. >> we don't want you to be hang fwri. >> what do you have tonight? >> adoeb probably the best use case for a.i. and how much productivity there is and money can be made i cannot wait. he's terrific. >> okay. >> thank you thank you. >> again the guest tonight on mad. we'll be back right after this ok meets bold new thinking. ♪♪ at 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley.

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good thursday morning. welcome to another hour of "squawk on the street. i'm sara eisen with david faber live for you at post nine of the new york stock exchange. carl has the morning off stocks here in the early action. we've got a lot to talk about, economic data, central bank decision and we're in mini rally mode s&p 500 up a third of 1%, energy and health care lead the charge. most sectors are higher. you have pressure on technology. the nasdaq 100 dipping negative we'll watch that with the nasdaq lagging behind say the dow up 170 and the s&p, david, as we continue to chew on some of the

data which we'll talk about. >> yeah. something else we want to show you as well, ftx sam bankman-fried, arrived moments ago at a new york city courthouse this is for an appearance for oral arguments of course he's -- there he is escorted in. he's under house arrest, right, out in california, living with his parents? he has his ankle brace on or whatever there he is. sam bankman-fried. that's moments ago probably not far from here given all the courts are just a little north of where we are at the new york stock exchange. let's get into it. we've got a lot to talk about here i want to start if i could with the 10-year treasury yield to see how this is digested in the bond market you're seeing lower yields, bond-friendly mode there's a few reasons why. you have some economic data showing claims remain elevated, retail sales were stronger than expected, but weakened a little. import prices came down, which sort of supports the inflation moderating in the last hour or so we heard

from the ecb, christine lagarde, raising interest rates as expected -- actually, before we get that that. we have economic data we want to get to business inventories rick santelli? you got that for us? >> yes, sara as a matter of fact, it's up 0.2% exactly as expected. and this series has had a lot of negative numbers of late this is the first positive number of this year in february it was 0 that was the bear stearns. this is the highest level since up 0.5% in december. inventories are important. april the first month of the second quarter and when you build inventories you add gdp so we want to keep very close attention. interest rates as you pointed out have been dropping all morning. 10-year note yields below where they were before the fed announcement yesterday back to you. >> all right. >> all right. >> i got so many things i want to talk to you about. >> let's go. >> i haven't spoken to you since the fed meeting. i want to get your reaction and the reaction you have to the reaction in the marketplace and

everybody else >> i found it a little confusing. i think that fed is trying to have its cake and eat it too walk and chew gum at the same time they paused, which is dovish and seem worried about lags, and on the other hand they signal more hikes are coming and inflation problems from deal with. they're in the awkward communications spot of why didn't they hike if they're worried about inflation. they upgraded their forecast for economic growth this year and downgrades their forecast for unemployment rate. and then they also upped their forecast for inflation put them together and expect two more hikes by the end of this year which surprised the market. >> two years before we see lower rate snooze that doesn't jive with the dots which is why i told you i hate the dots >> they did get us to a higher terminal rate than had been anticipated previously or prior to the meeting. >> correct but the dots are wrong two-thirds of the time and most

economists out this morning goldman sachs and morgan stanley are not changing their forecast of what the fed does morgan stanley thinks they're done goldman sachs thinks there's one more hike left in july and part of the confusion, david, is that the dots were hawkish and they wanted to send a signal there's more work to be done on inflation. maybe there was some sort of compromise inside the fed. powell was more dovish than the dots and he said july is a live meeting, but we haven't made any decision on july just want to contrast that from what we got in the last hour or so from christine lagarde at the ecb who is raising rates and is very clear that she's on a mission to fight inflation listen. >> are we done have we finished the journey no we're not a destination. do we still have ground to cover? yes. we have ground to cover. and i can go further than that and tell you that bearing a

material change to our baseline, it is very likely the case that we will continue to increase rates in july. >> i mean, that's pretty clear. >> i understand everything she said. >> correct she was tougher in terms of the message on the market. by the way, the euro is up, rallying because there's an expectation they will do more. there's now an 80% chance they go 50 basis points by the end of the year. contrast that with what we heard from chair powell yesterday when he explained the pause, and tried to signal that they have more to do listen to this >> nearly all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year. but at this meeting considering how far and how fast we've moved we judged it prudent to hold the target range steady to allow the committee to assess additional information, and its implications for monetary policy in determining the extent of

additional policy firming that may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects activity and inflation and economic and financial developments. >> maybe, sara, it's a reflection of a muddled economic picture than in europe. >> for sure. and it is. we still have to deal with the credit tightening and there are still some serious worries about what's going to happen in the banking system the fact that there is still stress in the system and still more than $100 billion in emergency fed borrowing from banks out there, the lagged impact, said lag, many, many times. >> we're having qt. >> and there are a lot of people cheering him on the pause, but the problem is, pause and say, we're going to see how the data comes in you know, the message on we still have more work to do on inflation, the fact that 12 out

of 18 fed members expect 50 basis points of hikes by the end of the year, three of them expect us to get to 6% by the end of the year and only two of them expect us to pause, expect them to pause at the current levels, it's two different messages and does feel like the fed chair is in between leaning more dovish. but i don't know it was surprising. it was surprising it was a unanimous decision to pause interest rates given the kind of backdrop it's one or the other, right maybe they did the right thing to pause and you think they should stay on pause what's the argument for going again if you want to see how the data really shakes out with when it comes to the lags you will get one more employment rate and one more inflation rate is that good enough to do it >> i ask you i don't know. >> it's not a lot. the alternative, pantheon wrote about this, they could have raised interest rates this time and said we're going to take the summer and pause, give three months of data

i guess they're worried ability financial conditions market closed unchanged yesterday and up again today the messaging is still a little confusing and maybe they're confused about what to do because inflation has moderated a lot and we got further evidence of that and we're getting evidence now that jobs, you know, the fact that claims stayed elevated at 262 last week the highest since 2021 and didn't come down, shows okay, maybe the layoffs are starting to have an impact. anyway, s&p up half a percent after all of that data and central banking. we've got the doj tomorrow, too, by the way restaurant chain cava going public at the new york stock exchange this morning. fresh indications coming around 29 to $31 per share. bob pisani joins us with the latest from the floor, bob it feels good to have an ipo here again and people on the floor. >> we were talking about this. it's like the old days it's like 2007 again in some

ways the important thing, there's 200 cava employees outside serving food now and going to come inside in a few minutes and wait for this open. when is it going to open it's going to open higher. as you indicated we priced this at $22, but right now there's the indications, 29 to 31. where is it going to open and what time? we don't know for sure, but i can tell you the guy you want to talk to is glen, the dmm in charge of opening this thing okay give us an indication what's going on >> as you can see we're building the book we're building with the book with the syndicates. we have the retail side of things within our book talking to the institutional side and, you know, all the flows are coming we're out 29, 31 on about 4 to 500,000 shares. >> remind everyone how the book is built you're talking to jpmorgan, the lead underwriter, the book runner among several firms out there. they're talking to clients saying how much do you want? what do you want you're helping them build the book which is where is it going to open? the bids and offers right now >> correct we're not talking to jpmorgan

but the nyse is. we're building the book and seeing all the retail side of things and institutional flow is coming in. fully transparent with the world. 29 to 31 out there at some point we're probably going to reset that indication we're in the process of building it >> demand seems strong the volume seems high. any idea when we might open? >> not sure just yet we still have to wait and make sure everyone is okay with price. we want to make sure everything goes off without a hitch building the book and making sure you have the supply and demand side in there you want enough bids and offers and once you come to that medium price, that's where we're going to open. >> raise your hand if we get close. the important thing what's going on right now they changed the indications 31 to 33 what's going on, we said 29 to 31 just now now we see 31 to 33. the important thing is, this is the perfect moment for the ipo market we had been waiting for years, the great ipo drought, what

makes an ipo market strong, most important thing, the market strong s&p 500 new high, second most important thing. stable interest rates. they are stabilizing they've been higher recently but stabilizing. the final thing higher valuations for ipos. that's exactly what's happening here that's going to send the signal to all those other companies that are out there, and the list is as long as my arm it even includes arm put up the list of ipos sitting there. reddit, instacart, arm, the british semiconductor giant, stripe, fanatics, stub hub, the list goes on and on. and this is the moment if it doesn't happen in the next two months, we don't start getting a lot of ipos coming, something is wrong and they're not going to stop in july and august and say oh, we can't do that now because july and august we don't go public no not in this market they will bring it if the market there is let's see if we can pull it together sara was talking about the markets. the important thing right now, is it didn't change.

powell tried to sound hawkish. it didn't change at all. the biggest problem we've got with the stock market right now, it's not very attractively valued 19 times forward earnings. that's not only not a recessionary multiple, that's an expansionary multiple and that's the biggest problem the market has to deal with right now it's looking past theed if and their interest in possibly hiking rates. sara, back to you. >> bob, it's david real quick on the ipo and your idea, you know, that jim has iner inendorsed it and could open up the market would it be better if it was a well-known or at least an emerging technology company, as opposed to a fast casual restaurant chain >> yes, of course. the sector always matters. but in this kind of market, what matters is, ultimately, is the market suitable for ipos that's the most important thing. this is the market right now the answer is, you might be able to get a higher valuation on a company like an arm, where there's, obviously, enormous demand for semiconductors,

higher multiple than you could for other industry, but that's not going to stop it from going public the question is, can this tidal wave of companies go public at whatever valuation and this is the moment for all of them to do it they're not -- you cannot wait until the fall right now the window has now opened. let's see if we can pull it off. >> all right restaurants was a good component of retail sales this morning by the way. the only services component in retail sales up 4% on the month. bob, thank you. >> okay. >> bob pisani. as we lead to break our road map for the hour more on the markets as fed chair powell says there could be more hikes. daniel joins us with his take this hour. >> plus, is a fed pause good for commercial real estate we're going to talk about that a lot of other things having to do broadly speaking with real estate with the chairman and ceo of walker dunlap. >> after the break the executive chairman of lennar as shares rise on strong guidance and results. big show still ahead stay with us with the dow up alst00ois.mo 2 pnt

lennar. shares of lennar are up on the latest earnings results. did raise full-year forecasts on home deliveries on what it says is upbeat demand or strong demand the stock as you see has had a strong run over the last 12 months over to diana olick and does have a special guest for us. >> that's right. lennar had a strong beat on the top and bottom line and we are thrilled to have executive

chairman stewart miller joining us now great to have you back i want to get to this quarter which was actually pretty difficult when you look at mortgage rates you started over 7%, came back a little ended the quarter over 7%. how did you get the buyers in? >> look, i think we have to remember that in the housing market you're looking at a fundamental shortage of housing. there's demand that has been underlying the market in general. there was a great deal of sticker shock, as interest rates adjusted rather aggressively i think that the buyingpublic has become used to what i think of as a new normal in interest rates. people need a place to live, and demand is starting to come back to market. but affordability remains an issue. so while at the same time we have a housing shortage, demand is strong, but only as people can afford to buy. >> and on affordability, i saw that prices were a little bit

lower than they were the year before that's going to represent closings from previous quarters. for this quarter and your new orders were you able to get any pricing power back >> surprises remained fairly stable and we've seen this throughout the housing industry on the for sale side, we've seen that our prices came down rather aggressively as the fed increased interest rates and has remained about 10% below its peak 11% if you look at our sales pace so that's remained fairly stable if you look at the rental market where we also have a sigp ca-- significant presence, you're starting to see rents moderate you're not seeing rental increases as you were in the past you might see downward pressure as there's a sizable supply in some markets some over building, and there's more supply coming

to the market as over the past couple years you've seen development of new rentals at about 500,000 per year >> well, you talked about the fed. obviously, you had to be watching with everyone else yesterday. what is your take on potential increases again and how will that affect not just your home buyers, but also your ability to build homes, get the capital to spend on land, labor, materials which are still seeing inflationary costs >> look, i think you have to take the fed at its word it's going to be data driven, focused on what they see relative to inflation. they're targeting 2% the data that we're seeing in the housing market, which is in the cross hairs of the fed's attention is that housing prices and rental rates are moderating and the market in our world is holding fairly steady. what does that portend for

future interest rate hikes, we'll have to wait and see, but as long as the market has time to adjust, as long as the interest rate hikes are not as dramatic as they were a year ago, i think the buying public and given demand patterns are going to find their way to accessing the housing market america is short housing supply. >> this is sara eisen. in the studio. if you would have told me the fed increased interest rates 500 basis points like in a year and mortgage rates go from under 3% to over 7%, and your stock is trading at a record high up 72% over the last year, it would be very confusing and you wouldn't expect it. does it suggest that fed is going to have to do more, given all the supply challenges that you laid out >> so i don't think you can use lennar's stock and performance as a proxy number one, if you look at the

existing home market, supply just isn't coming online that's because many of the people that have homes have interest rates that are in the 2, 3, 4% range not putting their homes on the market. if you look at the supply deficit that exists in the market right now, it is a derisk tifr over 15 years it's going to take years to get through that you have the banking world that is pulling back from lending to both land developers and to some of the people, some of the participants in the home building world so in many ways, lennar's performance is somewhat anomalous relative to the overall housing market so it doesn't become a proxy for where housing is in fact, i think that we're benefitting from some of the tailwinds, given the structural changes that have taken place in

the housing market. >> stuart, it's david. on the one part you discussed namesl names -- namely people who have low interest rate markets ant not interested in moving to a higher monthly rate, there is a historical analogy available and how long typically does it take -- it's based on rates and what fed does, back to what you were talking about -- there is a period you look back on to get a beat on how long this is going to take to readjust? >> i don't think there's a historical proxy for that, but it is going to take time and particularly, if interest rates drift higher, it just embeds those with a low -- people have equity in their home ne they now have equity in their mortgage as well and reluctant to unwind a low interest rate mortgage keep in mind that this is a bit of a zero sum game as supply comes online from the existing home market the seller also becomes a buyer

it's a net neutral relative to demand in the marketplace. >> stuart your mentioned the build to rent that you suggested was overheated, we're building too much and we have a lot more supply coming on the market. you are in that market you've sold hundreds of homes to investors and you have a platform for that. if we are over heated and there are too many rental homes do you expect those to get sold off into the market for sale, and to help some of this supply problem? >> so let me clarify when i was talking about the rental market i wasn't talking about the build to rent market i was talking about the rental apartment market where we have a sizable multi family program as well that's the part of the market that has been softening. on the build to rent side you have to look at that as people who want to access a single family lifestyle, are going to -- are going to either buy if they can, if they can afford, or

they're going to rent if they can't purchase, but they want that family lifestyle of single family with a back yard and access to schools and parks. >> we'll leave it there. stuart miller, executive chairman of lennar, thanks for joining us back to you, sara. >> all right thank you. stuart, thanks you so as well. the latest pricing indications ahead of cava's first trade. indications are up to 33 to 35 this priced at $22 per share there's excitement building ahead of the first trade we'll monitor it for you behind us at post nine. as we head to break the top gainers on the s&p this morning. lennar on there, 4.3% move an all-time high and domino's pizza, cava competitor perhaps, up 6.2% as well we'll be right back here on "squawk on the street. dow up almost 200 points right?! i'm hearing the new google pixel is really great. and it comes with at&t best deals on all of them. this one looks nice. that's a house favorite

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little under an hour into trading here let's get to dom chu with a look at what's moving and most of the sectors are higher looks like the rally is building steam. >> it is building steam and we started off negative there are some analyst calls getting attention thismorning.

one of them is td cowan which upgraded kohl's from a market perform to out perform and raised to 30 bucks those shares up 2.5% they cited among the other things, newer product mix, simplified promotional strategy. kohl's up 2.5% moving in the opposite direction is s sophie, snapping a nine-day winning streak analysts have downgraded it from an outperform after a blistering upside run that seen the stock double in a month and a half and then speaking of streaks the record run for tesla stock right now has come to an end in yesterday's session, 13 straight days the run added $240 billion in market cap to tesla and it's moving between gains and losses right now up about 0.25% microsoft and meta platforms each working on six-day winning streaks of their own, david, keep an eye on that microsoft, meta, and tesla trade.

i'll send things back over to you. >> yeah. significant gains there. given where we started the session as well. dom, thank you after the break, one former fed governor's take on where rates go from here this as you saw from dom, markets overall are up rather nicely with the s&p up 0.5% - wow. - get it there. and sometimes luck. but what if luck had less to do with it? what if we had the tools to help us practice smarter, the insights to gain an edge, and the data to inform our strategy? taking our games from that... to this. yes sir. kpmg performance insights are transforming the game for the entire lpga tour.

welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. nine women have filed a sexual assault lawsuit against bill cos nb nevada. just weeks after the state passed a law eliminating the statute of limitations for civil cases. the suit claims cosby used his fame and power to isolate and assault each of them cosby, who has been accused of sexual abuse by more than 60 women, has denied all of the allegations gem him. >> north korea launched two short-range missiles towards the sea today in protest of south korean and u.s. live fire drills

which have just concluded. north korea called those military drills an invasion rehearsal. the country's first launch since its failed attempt to put a spy satellite into space last month. and the pope is expected to be discharged from a hospital in rome tomorrow after having undergone abdominal surgery last week the vatican says the 86-year-old pontiff's recovery continues to go smoothly. last night he had a dinner with those who have assisted him since his hospitalization. we wish him well. david? >> thank you the restaurant chain cava making its debut here at the new york stock exchange. we're talking 33 to 35 i have to look over my shoulder. you may be able to see it in the shot it has moved up 29 to 31 is where the indications began. let's get over to leslie picker to bring us inside what's going on here? >> david, cava is known for dips like humus and feta, but doesn't look like we will see a dip in

the stock price once it opens again today. there was demand describing cava as the next chipotle chipotle, of course, up 10,000% since its ipo 17 years ago recent gains in clip and other fast casual comparables like sweet green boded well for cava's ipo valuation the mediterranean self-described chef casual above a price boosted earlier this week and if indications are showing 33 dollars it's $11 higher than the pricing. profitability still front and center for investors cava earned more in adjusted ebitda in the first 3 1/2 months of the year than it did in all of 2022. net losses narrowed as cava integrated that 2018 acquisition of zoe's kitchen according to ceo brett schulman >> you're seeing the momentum come out of that where our net income from last year in q1 went from a $20 million loss to a $2 million loss you're seeing the inflection

point in the business and all of that robust infrastructure we've invested in, the restaurant growth, starting to take hold and drive real tailwinds to the business. >> scarcity in stock available and the overall new issue market is at play here as well. three mutual funds have indicated they will purchase $100 million worth of the offering at the ipo price, and i'm told pre-ipo crossover investors bulking up at these levels as well that led to the deal being 30 times over subscribed. this indicates nonbinding interest rate but it helps qualify just the overall tilt of demand relative to supply. risks to investors that cava highlighted in its s1 includes competition, food safety, pricing, labor costs, supply chain, and, of course, that history of losses. guys >> you cover the banks, it's been 18 months now, paltry offering so to speak, not many companies being willing to come public too this market does cava change that given the

reception it seems to be getting in the public markets? >> it doesn't hurt obviously, a solid debut, especially one of this size, it's not massive at about $300 million, but it's not small by any means. the mutual fund interest is certainly a green chute for this market, but in talking to sources kind of behind the scenes, does this jump start talks, has it jump started talks as we've seen the price range go up over the course of the week and then, of course the indications this morning, they say its doesn't necessarily alter the equation immediately doesn't create the sense of urgency the ipo window is open, we need to just charge through the gates and get out this summer people think that, you know, especially with yesterday's rate fed decision, and the indication that there could be more hikes in the future, a lot of companies will want to kind of wait to see how that transpires before really charging out of the gate to go public. there isn't that urgency, although talks have restarted for some companies behind the scenes. >> thank you, leslie

on that note, let's find out where rates are going. the fed left rates unchanged yesterday, first time since march 2022 but according to the updated dot plot or forecast by the fed members published yesterday, most policymakers are projecting two quarter point increases this year joining us is former fed board governor, now a professor at harvard law school how much attention should wall street pay to the dot plot and the two rate forecasts higher that we got in the medium? >> well, sara, i know you've always been skeptical of the utility of the dot plots >> they're wrong and it's confusing. >> well, that's one thing. they're not especially accurate and nobody forecasts are when you go out more than a few quarters another thing about the dot plots they're often used, i think, as signaling devices and that's a what was happening yesterday. this curious outcome of the

fed's meeting where they had a moderately hawkish statement, but a very hawkish -- but a pause in the action, and then was supposed to be a hawkish set of sep projections, and i think, you know, if you are trying to reconcile those, you can say maybe there's a policy reason for it, or maybe there's an institutional reason for it or some combination of the two. on the policy side - >> wait. i want you to dig into that you've been inside the room. i don't know what that means maybe there's an institution because i do think a lot of people are left scratching their heads this morning about why they paused if they think that they have more work to do. >> right on the policy side you might have said if the data is wait most of the committee pro purtss to be reading it, why didn't they raise rates is there a reason to pause from your strong policy inclination is as i think you pointed out there's not much data coming in of the regular data series that can't be the reason

is there concern about what's going on in the banking sector i guess that's a possibility but again, it doesn't seem as though the next six weeks is necessarily going to tell you that much. so that pushes us i think more towards what i call an institutional explanation. this may have been a way for jay powell to hold the committee together, saying there are some members of the committee who think we've gone maybe almost far enough and are a little bit nervous about the pace of increases. there are others who think, you know, there's a lot more work to be done, maybe we can square that circle by having a pause, but indicating that no, we don't think the work is done yet but it became i think a difficult communications issues, both before and after the meeting. >> totally agree and that, your thesis there, i mean the compromise which i mentioned earlier, it explains why you got a unanimous vote when three weeks ago you had

voting members like lori logan, governor chris waller, not seeming like they were in the mood to pause. >> exactly exactly. i mean this -- it does -- i think we've been seeing the hints of the pause for some time now, and i think they basically got themselves in a position, and maybe they didn't mind being there, but they were in a position where if they hadn't paused yesterday, it would have really raised questions about, you know, what governor jefferson was saying, what chair powell was saying a few weeks ago, they would have had a credibility issue there as well. >> the question is, with the sort of confusing awkward messaging here, what should the expectation be for the rest of the year as you say, they signaled more to come in the dots, but then you kind of didn't get that message from fed chair powell. he was more dovish than the forecasts. >> yeah. i think he was trying to walk down the middle. that was the impress that i had.

and i think he was accurately reflecting the fact that you can kind of read into the data what you want to read into the data you know, the jobs report, you can see, hours worked down and job creation strong. the inflation report, you know, headline is still down, core, though, is still not moving that much and so i think what he was trying to do is to preserve the fed's optionality. having said that, if they don't raise in july, it's going to get everybody who is on your show, speculating that the increases are over and turning their attention to when is there going to be a cut. to the degree that the committee is worried about that, and they don't want to get in the position where the speculation is when are you going to cut, i think there's going to be a fair amount of internally generated pressure on them to go ahead

with one more rate increase. whether there's a second rate increase i think is much more debatable. >> so you're kind of in the one and done camp for now? >> well, so that reflects my policy read, which may not -- i think is not the committee's policy read and i wouldn't say it's a done deal in july by a long shot, but, you know, the figure that i saw tossed around by some analysts this morning of, you know, about a 70% increase, 70% chance of an increase, that seems about right. >> dan tur ril lo, great to have you here today thank you very much. >> thank you, sara. >> super valuable as someone inside that room and knows the sort of xroe pieses that can be made which i think is a good explanation. >> help you understand things a bit more. >> for sure. >> of why it was unanimous when some members were pushing for a rate increase. and why the dots were such a hawkish signal when it doesn't really match up with the pause. >> with what they're saying.

right. speaking of the pause, was it good for commercial real es estate is there more pain ahead we're going to talk all things real estate with willie walker, chairman of walker and dunlap. keep an eye on shares of cava, now 35-37. this is moving fast. started at 22 where it was priced and still hasn't opened it could be a dole oubn open take a quick break and come right back

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we do expect that there will be losses, but there will be banks that have can concentrations and those banks will experience large losses we're monitoring it carefully. it feels like something that will be around for some time, as opposed to, you know, something that will suddenly hit and, you know, work its way into systemic risk. >> that was fed chair powell addressing systemic risks, for

example, higher long-term rates will have on commercial real estate, willingness of banks to lend joining us willy walker chairman and ceo of walker and dunlap continue the conversation that you and i have now had for years, actually, we started sort of the heart of the pandemic, kept talking to you about return to office. we'll get to that. coming off sort of these concerns about banks and what they're willing to lend to, if at all, when it comes to commercial real estate, what are you seeing and what are your expectations in terms of this tightening that we all talk about? >> so i was at the morgan stanley financial services and commercial real estate conference yesterday and i had an investor come in and says i'm completely confused. i hear banks have pulled back, yet i hear banks are making loans. i hear there's private capital being foreign but hasn't come into the market. what's going on. i said it's all going on right now, in the sense that yes banks have pulled back, but there are still banks lending on commercial real estate the other thing they are doing

is they are working to make sure they don't have defaults in their portfolio. they are working with borrows to make sure they're not going to default because the bank doesn't want the building. >> right that's going to continue for what period of time? >> that's the thing. like last time i was on and you and i were talking about this, there was a sense there was this cliff coming up, everything was going to fall off the edge of the cliff. commercial real estate is a slow burn look at the defaults out of the financial crisis, the great financial crisis hits in 2008, most of the loans resolved in 11 and 12 these things take time to go to special servicing, to go back to the borrowers and be worked out. it's not like all of a sudden this will hit bank earnings in q3, in 2023. one of the other things to keep in mind this is truly an earnings issue and not a solvency issue is this commercial real estate overhang going to take down another bank there may be reasons other banks go down, but it's not going to be specifically to commercial real estate exposure. >> we talk about commercial real

estate in our conversation but i would love to come to multi family you guys do a lot of business in multifamily which has been, how would you characterize it right now and how much is it weakening? we heard from stewart miller on single family. >> so of all commercial real estate industrials held up the best if you look at the publicly traded industrial companies they're trading at a slight discount to net asset values today, and then the next best is multifamily. then you have all the others, retail, office and hospitality below that and multiis has done very well rents have flattened where they were rising at 8, 12, 15% in some markets the thing to keep in mind housing is an important component of the consumer price index, it's 40% of the cpi the fed is really focused on the cpi and that's a lagging indicator. they're still looking at rent growth where represents have basically flattened. the issue is going to be that there's a lot of supply in the

multi family space coming online in 2023, but what you're not getting is new shovels in the ground i mentioned the other day a very large developer here in new york starter first time in the 55-year history does not have a construction project under way what that's going to lead to is under supply in two to three years which is going once again cause an issue for represents to start moving. >> which is inflationary and a problem. >> so back to office for a minute i saw this headline, one of the companies i follow is fifth third bank yesterday at the morgan stanley conference where the ceo said they are currently not pursuing any new office cre originations. >> yeah. >> is there a credit crunch or not in real estate >> well, so they're not pursuing new loans. they're not going to go out and make a new loan on a new building but i can guarantee they're working with the existing existinger -- existing inventory. they don't want the keys because if you're a lender and get the

keys back on an office building today, yaurz' accurately saying, there's no market to sell it into there's no bid on that property. >> but it's going to take years to work through, just in this area alone in manhattan just the convergence of dealing with this huge occupancy. we're actually better than a lot of other markets. >> better than other markets as you know, david, around office buildings is a whole ecosystem of restaurants and of pharmacies, and of taxi cabs that would take people to their offices, to government payroll -- to government tax revenues that would come in. there's a big long-term issue here as it relates to -- a lot of people say the only people hurt are the landlords of the building and the lenders to the building wrong. there are ecosystems around it, including tax revenues to local municipalities, that if they don't get those they can't invest in police and fire to keep us safe. >> is the worst behind us for

the office market? >> no. >> the ceo of jll was on with us saying no. >> i think the world of christian but i don't think the worst is behind us. >> why not >> because we haven't seen any real rebound in office occupancy, which means ceos like myself aren't sitting around saying, we need new space. you've seen the tech sector do massive layoffs and bring down their -- >> does it ever come back? >> i do think it comes back. there are going to be real winners here >> who's the winner? >> oh, the winner is the class a office building. boston properties, owen thomas, they own class a office buildings. they are where people want to be today. they don't want to be in b and c class office buildings those are really challenged assets now. >> back to the interest rate market, so to speak, and treasuries there's an avalanche of treasury issuance we're in the midst of it it's going to continue is it a concern in terms of what it may mean for rates? >> very much so, david

yesterday's fed announcement was great. we have been waiting for the pause. we got the pause the real thing to be watching right now is exactly as you say, the trillion dollars that janet yellen and the treasury department are having to raise for the rest of 2023 depending on what maturity they issue those bonds at, that's going to put upward pressure on that category. if they say we're going to issue two-year treasuries, that will put pressure on two-years. as far as what they do for issuance on the duration of those bonds will have a real impact on that treasury market >> so that's something you're watching closely >> very much so. i think the fed pausing is great, but some analysis says 25 to 50 basis points added to rates given the amount of treasuries coming out of the market from the treasury department. >> we'll keep talking about that always a pleasure, thank you >> thank you >> willie walker, chairman and ceo of walker.

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look at delta, we're watching that one now, aiming for a record 15 straight days of gains. the rally broadens out. >> wow what's that all about? >> i know travel demand -- >> i know it costs $1,000 to fly to cincinnati. >> maybe not quite that much but it's high. and delta has monopoly in cincinnati. >> do they >> not literally but - >> the doj may have errored along the way. >> cincinnati, what a shell of an airport it used to be big but it's cut down with all the airline mergers and delta is predominant there in its presence. not going to do a delta stock rise today.

>> are you excited about this ipo today? >> a lot of investors are. look, it's been a really slow and sleepy ipo environment this year this is important. >> what is exciting we're all going to potentially get a free lunch if we can get over there quick enough they're piling up the bowls. >> you're not. you're staying with me on the next hour. >> i am. that is almost worth foregoing lunch for. almost >> it's only 11:00. >> but we eat early. you get the "fast money halftime" people up there. ayitus more "squawk on the street" after this man, i feel good. could be the food i'm eating. no artificials.

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good thursday morning. i'm sara eisen with david faber. what a treat. setting the agenda, an exclusive with the ceo of kroger the grocer finally seeing relief in the supply chain. we'll talk the consumer and inflation and the latest on its deal to buy albertsons. investors ingest the hawkish pause from the fed why there may be more downside risk