>> why because of the claims number >> it was weaker than expected >> the weakest gdp number isn't necessarily what you would think. >> it's not. but there's going to be a lot that plays out, and we'll be right back here tomorrow to talk about it with you. right now, it's time for "squawk on the street. see you later. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange futures do tumble here, not just on meta and ibm but that disappointing gdp of 1.6%. a warmer than expected core pce. ten-year, 4.7%, is now the high of the year. our road map begins with that growth surprise. stocks do look to open sharply lower. meta shares are set up for what could be the worst day the stock has seen in years. the company surprised investors

with plans to spend even more aggressively on a.i. also, that second quarter guidance, perhaps, not that exciting on top of that, we got a massive earnings day comcast, five dow components also reporting, merck, honeywell, caterpillar, dow and ibm, one of the biggest laggards on the s&p, by the way let's begin with the market reaction to the weaker than expected gdp, jim. 1.6% looking for -- prior -- actually, it was about 2.5%. goldman was at 3.1%. >> this is one where people were obviously the wrong way on both. wrong on how slow it is and wrong on inflation so, the fed needs some help. these were numbers where you could say, you know what, they can cut. but david, you don't cut when you have this kind of inflation. so, the core price index, up 3.7 when you were looking for 3.4. what are you smirking about? these are awful numbers. >> i'm not smirking. i was looking at you happily, happy to see you

my gosh. >> what am i, your kid you bring me to work today listen to me gdp -- no. >> the worry now is stagflation, right? >> i was leading to that >> all right, well, i beat you to it. >> yeah, you did look, stagflation, to people who aren't familiar with things, means there's nothing you can do the fed can't get inflation under control. so, therefore, it can't cut rates, which therefore makes it so you get today >> you get a weakening economy or is this just some sort of weird one-off, or is it reflective of these things you've been talking about, i've been talking about a little as well >> march is a crummy month >> when you hear restaurant receipts and think various things like that diesel prices. i don't know >> you got a frugal consumer thank you, goldman, for upgrade, tjx. we have industrials just doing okay we have caterpillar. we don't have that revenue raise i'm looking for. we have tech, where you have servicenow they're going to be coming on soon this stock is down very badly,

and one reason is because people say, wait a second, they didn't raise as much as they usually raise. that's a kind of false positive. in other words, they're still raising. what it amounts to, david, is you're struggling on a day like today to say, what do i do i got this ten-year at 4.7%. i was told if it didn't hold 4.6%, i should sell. >> not to mention, we haven't seen 5% in a little while in that two-year. hello. >> i bought that two-year early this week. i'm already taking a beating can you imagine taking a beating on a two-year? carl, i'm not giving up on it, because today is a tough day, but we left here last night, and you could say we left here on ford, and ford is great, and we're talking about how we have a part of ford that is worth the price of ford. >> you want to go through the names that raised guidance mark, ford, royal caribbean, waste management, chipotle, sp global >> yes, yes! >> and all that and a five-plus percent two-year will get you a down market. >> carl's right. we're sitting here, and we can

bemoan everything. >> a lot of the 1.6 number is net exports and inventories. you still got consumption running 2.5. and i mean, we'll see. but it's not -- stagflation is a little extreme >> i agree i'm just -- look, i wanted to give the conventional wisdom, because people are going to say, wait a second, why is the market down 4.6% versus 4.7% is not that big a deal, but what's happening is let's say earnings beat but sales weren't that good today. we're only looking at the sales. so, waste management, which i have on tonight, the sales slipped. well, this stock has been a horse. i mean, let's address the elephant in the room what has meta done this year meta's done nothing but go up, 135% year over year. and we're going to complain about it today i think waste management is a terrific company i have them on tonight i hate to say this and jim fish, please don't take it -- they're run of the mill good company >> and a good indicator of

industrial activity. >> exactly we have ways to look at the economy other than the 4.6, 4.7% conundrum. we also know when you get a company like meta lowering the boom, and you get a company like servicenow not raising enough, then people start saying, okay, bonds going the wrong way, the gdp going the wrong way, maybe i have to trim i don't think that's wrong that's what i said yesterday i was apologizing to club members, saying, i hate being this negative, but i don't have the horses when you don't have the horses, you can't foment the horses. >> to jim's point, raising guidance, take a listen. >> significantly more over the coming years to build even more advanced models and the largest scale a.i. services in the world. as we're scaling capex and energy expenses for a.i., we'll continue focusing on operating the rest of our company efficiently, but realistically,

even with shifting many of our existing resources to focus on a.i., we'll still grow our investment envelope meaningfully before we make much revenue from some of these new products >> are you worried about the opposite of the year discipline? >> it was a year of efficiency it wasn't necessarily years. >> all right, so, when someone has something to invest in, and it can give you a good return, then someone who is rational is going to give it now, what he does say, and there are some great lines in the call historically, investing to build these new scaled experience which is what he is doing, has been a very good long-term investment for us and for investors who have stuck with us >> yep >> why doesn'the deserve the benefit of the doubt >> he does >> i'm giving it to him. >> he does deserve the benefit of the doubt, but you have to also take in mind that the next quarter, where the guide was not -- not as high as had been anticipated -- by the way, they're going to start to lap

those big concepts that they saw as a result of shein and temu, spending enormously on the platform and so, that makes the revenue guide a little less than perhaps had been anticipated and then, there's -- $40 billion number, just to sort of stop for a moment and think about that. if, in fact, they were to hit it that's the very high end of that envelope but $40 billion in capex the number itself is staggering. >> as i quote him, smart investors see the product as scaling. there's a clear monetizable opportunity there, even before the revenue materializes in other words, you don't have to wait until the numbers explode. you got to get in the ahead of it witness how much the stock was up last year and this year >> still up almost 20% for the year >> i'm defending it. i think you can buy the stock. wait a couple days, because there's guys who want to get out. he didn't tell you to buy ahead of this quarter. >> there are still plenty of people who have a $24 a share earnings number for 2025, and

believe that it should trade at a 20 multiple, which would mean right back to $480 if you believe that $18 gets you around where we are right now. so, you know, that said, it's going to be a little while until we see these products. >> right >> and you say he gets the benefit of the doubt he very well probably deserves that >> yes >> but it also does raise some concerns, even though they have 30,000 fewer employees than they did in november of '22 >> that's -- you know, a situation where hardware costs more what are the takeaways evercore, really good piece today. winners, nvidia. nvidia stock is going to be down today because it's part of a cohort called tech >> meanwhile, all they did was tell you how much money they're spending on these chips. >> i got a great one for you who's the second on the evercore list >> i don't know. who? >> broadcom. who joined the board in february >> right >> hock tan. >> that's an interesting -- >> he said something interesting on the clip. energy costs speaking to ge vernova, the

amount of cost of energy for the first time in years is really going much, much higher. they're going to have to -- all these companies are going to have to compromise and start using natural gas. they can't just rely on wind and solar. >> it's one thing when alphabet or microsoft or amazon, even, their capex, particularly when it comes to the spending they're doing as hyperscalers in the datacenter, because that's just money they're putting in that they immediately charge customers who are using it this is different. this is new products that conceivably are going to be based, by the way, on the incredible amount of data that this company has that is -- makes it unique in terms of the personal data it has to -- but everybody can come up with their own guess. is it going to be an a.i. agent that helps you create content? >> it's going to be search dynamite search. >> what is it going to be that ultimately they have >> it's going to be exciting >> somehow, it's going to be merged with reality labs where they've already spent, what have they spent overall, $40 million? >> questionable so far

listen, they got the ray-bans. >> they do >> someone this morning said -- >> i saw that. >> a new fashion style >> ray-bans is crushing it >> new fashion styles are coming >> don't laugh everybody -- do you know how many companies would kill for some invention like ray-bans carl, he comes up with this thing called reels it's a competitor to tiktok. the president signs a ban on tiktok, and he's got reels, and we think he's not worth trusting >> and for all the -- >> the guy's a visionary >> for all the protestations yesterday by tiktok, information this morning saying they're beginning to game out some sale scenarios. >> i saw that. >> they have to. reels is going to -- >> potentially selling at least some portion of tiktok by the way, on the reality labs spending, i did note another part of the call was he was talking about how we report our financials as a family of apps, and they also report reality labs with an operating loss of $3.8 billion in the quarter. maybe they spent as much as $40 billion on the thing remember, they changed the name

of the company to meta he goes on to say, i think fundamentally, the same thing with the vision of reality labs to build the next generation of computing platforms in large part so we can build the best apps and experiences, so over time, we're going to need to find ways to articulate the value that's generated across both segments, meaning maybe they start breaking reality labs numbers out. >> i think they have to. they bought 300,000 of just the humdrum nvidia chips >> h-100s? >> yeah. what's he going to do when he gets the blackwell although, of course, amazon wants the blackwell. of course, we say that all these companies are making their own chips. well, they're making the low-end chips. you're still relying on nvidia, and i know that it's fashionable to sell nvidia these days, but when the smoke clears, and it hasn't yet, nvidia is the winner when we come back, we're going to see how many earnings we can get to in one block or two on this busy thursday. plus the ceos of servicenow and southwest, shares under pressure we'll look at merck, bristol,

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shares of servicenow, symbol n.o.w., are moving lower, despite a first quarter earnings beat, although it's a little more complicated than that joining us now is servicenow chairman and ceo bill mcdermott. always great to see you. subscription revenue guidance, not as strong as i thought, despite the fact that you had a great first quarter. i'm trying to figure out whether the first quarter may be an aberration and that the next quarter is more important or whether things are just fine >> things are just fine, jim you know, we had a triple play we beat on the top line. we beat on the bottom line, and we raised our full-year guidance and we can all debate, did i increase the guide enough, but that seems to be a pretty high-class problem because servicenow has become the a.i. platform for business transformation, and we're

proving that the number one gen a.i. use case in the world today is process optimization, so jim, in terms of things being fine, think about every business work flow and every enterprise around the world is going to be engineered with gen a.i. at its core, and we are that single pane of glass that's going to drive that transformation >> let's talk about that after listening to mark zuckerberg last night, he says that gen a.i. costs a fortune, and there's absolutely no return within a couple of years why is the return instantly for gen a.i. for servicenow, and mark zuckerberg says, forget it? >> we're may thiking a lot of m on it already because we have small language models that are domain specific. they don't take a lot of compute power. they're lightning fast, and they're highly secure because it's the customer's own data and we also remain open to the ecosystem and all the models because they fully integrate

with servicenow, should the customer wish to go that way, and you know, that's the best of both worlds for the customer totally open, but at the same time, today, we're taking great companies like microsoft and ibm. they're transforming their employee experience with digital-first support models, freeing up resources and fueling innovation with service now's gen a.i. or novartis, great ceo, delivering new drugs while increasing operating efficiencies, and he's streamlining clinical trials, research, and financial management with gen a.i. from servicenow and we're billing for that right now. so, the game is on at servicenow >> right, again, and i totally agree with that. you know, i'm looking at the stock being done i'm looking at people feeling a little jaded about gen a.i., and i'm wondering, if i worked at novartis, how am i impacted by servicenow what makes my life better? how am i more productive

i need to know this because this is a day where your stock is down and people are feeling very foolish about buying stocks that are making money off of so-called gen a.i., and i put the "so-called" in after listening to mark zuckerberg, who is a darn smart guy. >> he sure is. we admire him greatly, and he's got a great company. we just have a different approach to this the proof is in the pudding. i mean, our free cash flow is up 47% year over year total gross profit, up 83% year over year. so, we've proven that we cannot only grow the top line but also the bottom line. so, here's what's happening, jim. let's take employees and customers. think about gen a.i. deflection rates. they've doubled in all of our installs, and they're improving every month. so, the soul-crushing work that people don't want to do, they don't have to do anymore with servicenow think about software engineers 48% increase in the speed to innovation with natural language text turning to code

think about security and risk. gen a.i. remediating vulnerabilities and improving the security posture for companies. and i can go on and on these are use cases that we're doing right now. so, the ceos that are out there, they want a flag in the ground on gen a.i microsoft has done a great job with their solution, and they're giving a copilot, and we're teaming up with microsoft with our now assist a.i. copilot, so just think about a ceo listening to the show right now. you want to team up with microsoft, you want to team up with servicenow? total engineering integration, total teamwork, let's go >> all right, so, you said software engineers doing better. when i listen to jensen huang, he's saying we don't need software engineers like we used to are you able to eliminate software engineers because you're talking natural language? why do i need code writers >> it's a great question we still need our engineers, jim, because we're going to be

the defining software enterprise company of the 21st century. we've improved productivity by 50%, so you can say, do i need half the engineers no at servicenow, we say we need all the engineers and we're going to keep hiring them, because we intend to define the enterprise software market in this century and give customers an entirely new experience, and we want our people fired up, innovating at clock speed. >> okay. i totally understand that. and what i'm trying to do, again, is deal with the research which talks about how they did expect a bigger guide, and what you're saying, which would indicate that you could have blown the doors off, and i'm wondering whether maybe when we go to your big meeting that is upcoming, your financial day, maybe we'll hear what disappointed these skeptics, these analyst skeptics they may regret that they were skeptical about the billings when they hear what you do at your conference. >> let's face it, right? five years of this, the execution has been stunning.

all the research reports that are going out today say near-perfect execution i'll take that we know how to win the game. we know how to execute, and when they see what we have in gen a.i. solutions, the speakers that are coming to endorse that, the logos that are already using that and the many more that are signing up, they'll see that, while it's a small percent of today's revenue, i mean, we're a 10 billion run rate cloud company, they'll see that a half a trillion by 2027 will be spent on gen a.i and if you think that the number one use case is process optimization in the enterprise, you got a pretty bright future in front of you with servicenow, and we always beat our forecast. so, that's the ball game we're going to win it. and we're excited. >> i think people know that at the may 6th meeting in las vegas, the financial analyst day, and i think the problem is a lot of people don't understand process apt optimization, but a know is we want it to be cheaper than it is right now

that's bill mcdermott. the stock is down. the stock has been down because he tends not to take up the numbers big, because he likes to beat the numbers bill mcdermott, servicenow, thank you so much. >> thank you so much, jim. when we come back, cramer's "mad dash," countdown to the opening bell tt scyen does look to be a lilepi don't go away. you need an idea. it's a pillow with a speaker in it! that's right craig. a team that's highly competent. i'm just here for the internets. at&t it's super-fast. reliable. you locked us out?! arrggghh! ahhhh! solution-oriented. [jenna screams] and most importantly... is the internet out? don't worry, we have at&t internet back-up. the next level network. i sold a pillow! at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals.

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futures decidedly red here amid this earnings blizzard. weaker than expected gdp ten-year now close to 4.75 'rgoto get the opening bell in five minutes

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>> announcer: the opening bell is brought to you by ncuveen, a leader in income, alternatives, and responsible investing. all right, let's get to a "mad dash. we talked about earnings from so many companies one of them is ibm the stock, jim, is looking down rather sharply in the early going here, why? >> there was a step back in consulting, all the analysts said that. consulting, not being that strong, had been a business that had been strong. i think a lot of people were hoping that, look, they built this hashicorp to go with their cloud business >> they did a deal yesterday >> but at the same time, you have -- tony, i love his questions, they're always incredibly trenchant

he says, you have an outsize market reaction, and i think down 20 is not that bad. it's just you take something like red hat that used to grow in the pretty good double digits it's growing high single digit you take a look at what they've done in terms of the rationalization, offloading kindrell and making the thing grow faster, and people are saying, that's about it. that's all there is to it. i think that's too critical. i like their cloud business. they're fine they shouldn't be down 20. take it down 10. book of business was squishy >> free cash flow generation >> it's okay better than i thought. here's what i don't like that the analysts like. i'm going to -- little bit of a critical moment here for a.i people like the fact that their a.i. business exceeded $1 billion all the analysts like that i don't. that's not good enough they're all happy with a billion dollar a.i i keep coming back to what i

heard last night on "mad," which is, don't get all that excited about short-term gains, gen a.i. now, bill is talking about process, making process cheaper. i get that but david -- >> let's get the opening bell. at the big board, it's rubric, the microsoft-backed cybersecurity company, celebrating its ipo. we're going to talk to bi bipul sinha in the next hour at the nasdaq, marex, a global financial services platform. it's a rare day where we got earnings, macro, m&a times two and an ipo >> when i asked about rubrik, rubrik, rubrik, is that they lost $28 million in revenue. i think that's suboptimal, but it is well loved by the best cybersecurity people i talk to

obviously, we like deals that are a little more -- make more money. we don't want companies that are losing a lot of money, but this thing, it will trade well. people are excited about it. >> but your appetite is not whetted? >> i like crowdstrike and palo alto but crowdstrike likes rubrik there's no doubt it's a good company. at the same time, we are stuck with a tape today that is not all negative look, the merck you mentioned, rob davis, absolutely terrific i mean, it's great but then you go and have bristol myers. you have one and then another, and you're in a situation where because of what happened with meta, people are saying, wait a second i'm more critical because when you hear someone really smart like zuckerberg say, we're going to have to spend a lot of money and it will pay off eventually -- remember, bill mcdermott was saying, our customers are doing well, so we're going to get paid. in this particular case, zuckerberg is both the customer and the guy who's building, and

he's not going to get paid instantly, and that is casting a pall on things caterpillar, jim umpalby is doing a fantastic job. the stock is now down 25 that's nothing that's nothing and caterpillar had good numbers. but in a market where stock's up 218 here, profits. when you have meta up more than 100%, profits. there are situations where you have a lot of profits to be had, and people are taking them >> caterpillar with a slight revenue miss >> no doubt about it inventories were fine. look at ibm. david was mentioning, ibm's been doing pretty well. >> yeah, had a good year last 12 months, up over 40%. >> so, people are taking profits. that's what i -- at my club, i said, geez, i hate to say it, but i got six stocks that i think are going to do well short-term and well, yeah there's just not enough good

today to make up for things, but i look at a stock. i'll give you -- honeywell honeywell at one point today was up five buck it's now up 50 cents >> i was going to say, of the dow earnings we've got, honeywell, dow, and merck are all in the green >> yeah. i mean, i spoke to jim fitterling this morning. they have very inexpensive u.s. costs versus everywhere else in the world. it's up 60 -- it's down now. it was a good quarter. yield is 4.9%. there's a lot of companies that did good quarters when you wanted great quarters, and there were a lot of quarters that did fantastic quarters and gave you not as good forecasts. bill mcdermott but bill at service now would argue, are you kidding me? come on. i'm a conservative guy i'm doing really well. i keep coming back to meta is in control here meta and the bonds and meta's -- look you know, when a guy says, trust me, well, david, you know, i'm from the government. trust me >> although, the guy is mark

zuckerberg, and you know, he's -- he may be dressing nicely, but he's still a cold-blooded killer, and i say that in the nicest way >> that's an odd way to put it the killers is a good group. i would buy meta here. >> you know what i mean. he is singularly focused, has been since the dorm room at harvard, and the man can execute. >> yeah. >> and so, to your point, doesn't he get the benefit of the doubt? well, he very well may that said, when people do the math, especially on the second quarter guidance, which, again, as we pointed out a year ago is when the chinese e-commerce company started to spend enormously on the platform start lapping that your revenue numbers are not going to be up as much, although what do you pay for this thing really you think only pay -- if they're going to do -- >> i like it he's going to come out he's going to figure out how to monetize it faster than he says. do you think there's a

read-through to microsoft or amazon because of temu and shein? >> their spending is still going on it's just that it ramped up like a year ago >> right >> so your comparisons for these companies may not be as significant as they were, because you're coming off the quarters where they already were spending a lot on the platform those chinese e-commerce companies represent a lot of what was going on. >> they spent a fortune. they did, amazon, too. >> instagram >> if you buy some of the stuff on amazon, which, by the way, their stuff is about -- there's no accounting for taste, but i don't regard the stuff as being that great amazon gives you a date. these guys don't give you a date temu is, like, it might come, it might not. you buy something from amazon, and alexa tells you it's at your door in about 35 seconds it's a little bit scary. >> parent company reported earnings, as you well know it's only time jim doesn't say anything >> oh, yes he got quiet >> look at him can we get a shot of jim

>> although there are some firms coming to comcast's defense this morning, talking about broadband arpu up. >> the financials themselves seemingly met many of the estimates of the analysts who follow the company, even at loss of 65,000 total, broadband customers was more or less where many analysts had been first quarter revenue was up, was a bit better than the consensus. ebitda numbers, perhaps, depending on which analysts you talk to or follow was more or less in line or a bit below. but there's kind of a quick read wir wir wireless keeps growing peacock, yeah. >> are you going to domestic video? >> but you're losing broadband customers. you're a broadband company >> no, you're not. you're a technology company. that's the problem do you mind if i do a little narrative work for a second? >> let me come to the reason why the stock is actually down,

which is really off the call >> you're doing to do domestic video. just do domestic video >> it's not -- domestic video is for the entire industry. you're still losing 487,000 subs that's not great now, that's -- a year ago, it was 600,000, but last quarter, it was in the 3s, so that's accelerated quarter to quarter in terms of video sub losses that's the entire ecosystem we talk about so often. that's cord-cutting. that's not that important a business for comcast, frankly. it's about broadband and that's why, on the call, when the cfo said this, the stock went down take a listen. >> it continues to be a very competitive environment, and we lost 65,000 subscribers in the first quarter. following the loss of 34,000 subscribers in the fourth quarter of 2023. as we sit here right now, we do not see this trend improving in the near term. we expect churn could be elevated, given the end of acp,

which is only fully funded through april and partially funded through may >> the affordable connectivity program. >> yeah. >> government program to get people broadband in areas and help them pay for it will expire we talked about that being an issue. that's why the stock -- it was more or less flat on these numbers, even though they're not great numbers. they were in line, if not better than some had anticipated, but then that. that took it down. >> look, you come out hot, and you look at a broader number, and the stock's up $1.50 when it reports and people look under the hood, and they don't like it i want to point out some things. i just want to -- and you tell me what they mean. so, peacock does 1.05 billion. people are looking for 1.02. matter >> no. >> no matter >> peacock, there's got to be some scale i may no longer be at the company after i said this. >> narrowing losses and subs up

55 >> thank you experiences. >> experiences are great it's all about theme parks awesome. >> okay. >> love them >> all right revenue, 32.1 versus 32.3. broadband. >> how about being the first studio to finish number one at the box office and win best picture this century >> oppenheimer was amazing >> you sound like edward g. robinson hey, it's soylent green. now, listen to me. this is not that -- >> jim, among the winners today, i know you liked chipotle. comps up seven looking for five stock got to 3,000 ahead of this 50 for 1 >> yeah, and they're going to split it, not until june, unfortunately. the most important thing there, and i'm glad you brought that up because otherwise people are going to hang themselves they raised the prices for california gigantically. no diminution. none that's incredible.

>> there's a piece on the tape right now they're telling employees not to serve chicken in their own meals because of the demand to eintroduce chicken. >> we celebrated by having the chicken al pastor in our office. we said, this is going to be a fantastic number and it was they are -- if you want pure joy, business school, you know, speak, they talk about throughput, and they have this boston -- the boston store that had, like, throughput that was just unbelievable. this is an amazing company it is a lesson people should read the conference call. rather than just pay attention to all the negatives i want to accentuate the positive right here. >> our phil lebeau covered american earlier this morning. then there's southwest moving lower on their results phil is at southwest hq in dallas with a special guest. hey, phil. >> looking out on love field, bob jordan, thank you for joining us let's be honest. you miss on the top and the bottom line. ugly first quarter, and people are looking at your guidance and the cut and capacity investors are saying to themselves, when does southwest start to grow again?

i feel like the ground continues to shift under us. >> well, we had a strong first quarter, despite the financial results. we had record operating revenues, record passengers, record rapid reward member adds, but we have a number of markets in the -- across our network that are just not performing, so we're taking action. we're further optimizing the network. we never like to close cities. we're closing four cities. we are cutting capacity in atlanta and chicago o'hare and restructuring other cities and taking other actions, and we're committed to doing this until we hit our financial returns. >> let's talk about the max planes you started this year expecting to receive 80 max planes you keep having to cut it down lower and lower. new guidance is, what, you're expecting 20 how much is this hurting your ability to plan? >> you know, we, just starting with boeing at the very top, we support boeing taking the time to fix their issues, become a better company, because that is good for southwest airlines and the country long-term. but there's no doubt this is a

significant issue. replanning, adjusting schedules for our customers, and yeah, we're significantly down from our originally planned deliveries, but that's not going to be an excuse. we need to hit our financial targets, and we'll take action we're adjusting our network. we are tuning our revenue management system. we are taking marketing actions. and we're looking at new initiatives, things like the way we seat and the way we board our aircraft >> let's talk about that for the longest time, this has been an airline where you buy a seat, or ticket, you pick the seat generally speaking is there a possibility we may see a business class or some type of a bifurcation within the cabin? >> well, there's nothing to report today, except the fact that we are studying this. we always want to know what our customers expect, and so -- and their preferences, so we are studying our seating and our cabin right now. and again, there's nothing to report today, but customer preferences do change over time, and customers love our current product. i love our current product

but it was designed at a time when load factors were significantly lower than they are today. so, we're working hard to understand what our customers want we've changed before we've added things like wi-fi, power, larger overhead bins, and you know, it's very early, but the results are interesting, and we're continuing to study this and more to come later >> that's a tease. jim, i know you've got a couple of questions for bob >> hello, jim. >> when you're starting to end operations, i want to know how much of these ending operations are for good, and how much is because of boeing? george bush international airport, bellingham international airport in washington, syracuse in new york, mexico's cozumel airport, how many of these are the fault of boeing, and how many are just, we're not making enough money here >> well, we've got to get our financial returns, period, and get back to where we're covering our cost of capital as a first step the network actions have really nothing to do with the boeing delay. we're taking network actions

regardless now, the boeing delays are very painful. they cause us to replan. they hurt us on the revenue front. they cause us to be inefficient. and we're working all of that. but no, the network actions will continue, along with the rest of our comprehensive action plan. >> well, you know, bob, i guess i'm -- i'm spoiled here. i listened to phil lebeau closely, and phil interviews everybody in the industry, american, never looked bad, and then boom, the number's better than i thought delta, better than i thought united, better than i thought. i don't want to see you down there with jetblue in the scrub. >> well, the demand for our product is very strong, jim. i mean, again, we had record revenues here in the first quarter, record passengers, and our sequential -- while we were off our plan, our sequential revenue performance from the fourth quarter actually was higher than historic norms, and our guide would imply that our second quarter will be sequentially the norm from the

first quarter. but i'm not underplaying the fact at all that we have a gap to our financial targets, and we will be absolutely relentless in pursuing those we have work to do a lot of that is around the underperforming part of the network. we've taken action before in the first quarter. that has been very helpful in its own plan, and we are taking further actions here in the second quarter, and we will take more actions with the network as we need to, along with all the other parts of our action plan that i described >> bob, are the underperforming areas, are they specific markets? have you been able to identify why specific markets are u underperforming? or do you look at it and say, there's a weaknessunderneath, generally speaking, in terms of demand >> the other big change is costs are much higher. labor costs, especially, have come up a lot, and it typically takes, you know, the revenue performance a while to catch that but no, we can easily identify areas, particularly in our development markets, and we added a lot of capacity last year as we restored our network

and got all of our aircraft flying, so we have a lot of capacity that is in development today. so, no, we can see the areas of underperformance, and that is what we are attacking. >> and you've done a lot of hiring, especially as you planned on having a number of planes being flown, pilots have you put a pause on that >> we did. yeah we were aiming at, in a lot of cases, you aim a year out, particularly with pilots we were aiming at where we thought our aircraft and our fleet plan would be a year from now. obviously, that's changed. we have stopped and frozen nearly all hiring. we have voluntary programs under way, and we expect to end 2024 at 2,000 heads below 2023, and we'll be down again in 2025, and through our voluntary time off programs right now, we're already seeing nearly a thousand employees take those programs. >> change is in the air. bob jordan, thank you. >> happy birthday, my friend >> thank you i've heard it from a number of people today guys, i'll send it back to you

>> stole my thunder, phil. i was about to wish you happy birthday too great work today that's our phil lebeau jim, reaction to some of the airlines today between american and southwest? >> look, i hate being tough on bob, because obviously, if you don't have enough new planes where you want them -- he did not blame boeing he didn't. i tried to get him to say. >> there's no more pure boeing story than southwest >> look, i think that he's dealing with the hand that he got, and within that confine, i mean, look, he's -- would i buy the stock here i think he was saying, listen, we're going to work the kink out. it's still southwest i didn't mean to be as -- look, it's just that everybody else is doing so well in this industry i mean, when you sit there and listen to delta, and you say, i got to buy delta you listen to united, you say, oh, man, i got to get united you listen to southwest and say, well, not yet. >> we didn't mention rcl today the quarter there, raise guidance >> that's experiential that's a real bargain. i think people feel like you get on a plane, it's not a bargain

get on a, you know, david, i don't know the last time you took a cruise, but they are cheap. >> a cruise? how's never? never good for you >> david >> what? >> you know when i had my cruise booked february 22 of 2020. >> i remember. >> i was going to be next to katy perry >> have you taken one since then in the last four years >> no, my daughter was on one of those electronic music cruises >> edm i like that. >> four-day edm cruise >> love that >> viking is coming public >> i like viking therapeutics. >> as we go to break, dow is down 570 about a third of that is going to be caterpillar. keep that in mind. but all sectors are red, except for consumer staples as for bonds, we mentioned the q1 pce price index running warm, claims at 207, lowest since february, and then we got to get through this seven-year note auction at 1:00. stay with us

lot of kids getting treated to some interesting market activity dow down 600 it is take your children to work day. look at that aren't we lucky to get kids at inglewood cliffs. >> good news. >> so excited. i was miserable. >> along with the mignon. >> i was in the fourth tracker. >> have fun today, kids. we're back in a moment

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it powers big jobs and small ones too. from hospitals to hospitality, people rely on propane-an energy source that's affordable, plentiful, and environmentally friendly for everyone. get the facts at propane.com/now. let's get to jim and stop trading. >> we have a winner it's carrier. this was an amazing quarter. carrier made great acquisitions in europe, heat pump business, got rid of things to make it a great balance sheet and gabe getland is a remarkable executive and people are wondering will he be interested in the boeing job. >> he says on the call, let me be clear, this is david who runs carrier, i have notified the carrier and boeing boards i am 100% committed to carrier and not interested in serving as ceo

of boeing. >> you know, sometimes you get -- >> he's on the board, by the way. >> think about this. >> judy marks and you have dave at carrier, these are clinics. these are people who know thou run a business otis is doing well, including in china and getland doing well at carrier. people when they did that acquisition they hit the stock they were proven wrong and my congratulations dave, who is, by the way, one of the nicest people in the world. nice guys finish first. >> very nice jim, we got microsoft down 4.5 google down 4. ahead of tonight. >> good. at least, you know, my father, jimmy, they seasoned the beach and then got there and everyone shooting them -- >> wm tonight? >> look. jim fisher is doing fabulous i won tickets to great golf that he does in phoenix the stock is crazy it's down i got tractor supply after the

close and then adco, i always like to make measure on food eric hansotta is fantastic agco is up david killed comcast that's all i have to say hashi corp is up. >> there you go. >> killed? >> you're going to stay on this? >> he shot a peacock today. >> it is a tough tape, though. nasdaq now at 2% decline and the dow down 640 don't go away.

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♪ good thursday morning. welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, live as always from post nine of the new york stock exchange. take a look at stocks. ugly day shaping up on wall street ugly reaction to the gdp report. dow down 668 points, decline of

3 $1.7%. nasdaq seeing the most pain in moves like meta down double digits nasdaq down 2% right now every sector lower in the s&p 500. worst performing sector would be communication services that's where meta lives. that sector is down 6% and other names down in sympathy with meta like comcast we talked about, that's an earnings story, down 6%, alphabet down 4%, charter. it's a combo of the media names and tech names today meta down almost 14% nasdaq down 2% so week to date we're actually still positive, but those gains are slipping away. treasuries just take a look because that's been a big story. the selloff continues with yields higher and heading north. the 10-year yield 4.731% we're going back to levels last fall when the 10-year briefly hit 5% before that it's back to 2007 highs if we are able to breach that level again rick santelli says next level is

towards 5%. >> busy day on the calendar. pending homes with diana olick hey, diana >> pending home sales in march rose 3.4% month to month according to the national association of realtors. that's a beat. the street looking for flat. sales were barely up year over year, 0.1% higher. this is the best reading of the year, but that's not saying much sales are still hovering around a 30-year low. this index is based on signed contracts during the month and in march, mortgage rates uneven starting above 7%, dipping below, then back up and down home prices, however, straight line up. banks strong demand and low supply regional sales rose except the midwest and strongest in the south. interesting the west region the most expensive a also saw large gains in sales because some potential buyers were worried rates would go higher given the latest news from the fed and they jumped in the realtors are predicting home sales will be 9% higher than

last year. part of that on the expectations that rates will still come down so i guess we'll see. sara, as you said, bond yields up again and mortgage rates loose follow the yield. >> all heading up. thank you. appreciate it. diana olick. start with the gdp surprise because we did get a rare miss on the economy 1.6% gdp for the first quarter this is the advanced look, the first look and 2.5% the expectation. atlanta fed, which we've been reporting on a lot was tracking more like 2.7% so that was the weakest and you can look at the bar chart to show what an outlier it's been given the strong growth. that was the weakest level since the second quarter of 2022 look at the bond reaction, usually buy bonds on a weak economic number but the bond market likely teeing off the price deflator we get across the three months of the first quarter. the core number there at 3.7, there's the gdp, it shows you

the lower growth we are just encountering in the first quarter, the pce deflator for the first quarter at core was 3.7% and that was almost double the 2% that we saw in the fourth quarter of last year also beating the 3.4% expectation. it was a bad mix of weaker economic growth and higher inflation, which does tilt the risk to the upside for pce tomorrow, which is going to be important. it's just the march number, but it's in these numbers. >> and we start with the gdp number and what a it says. >> sure. here's the breakdown. >> consumer spending powering the economy, but that was a slowdown and the expectation that would be around 3%. residential investment a good story that accelerated, but government spending up only 1.2%, which is a contribution was a slowdown and imports were higher but that subtracts from gdp because of the trade numbers. what else would hurt the overall number was inventory investment.

lower inventory and higher imports doesn't spell recession necessarily. those are sort of statistical and you actually might expect them to go the other way if you were expecting a recession but, it's weaker than expected and the spending number was weaker. >> consumer spending number for consumer led economy, obviously. >> yeah. it was supposed to be better but you know what the bond market could be teeing off of jobless claims again are super low and continue to come in below expectation, continuing claims, those still on it for a long time, have come down. they're at the lowest level since february there's no stress to speak of in the labor market which makes investors concerned the inflationary pressures, even though not in the most discretionary parts of the economy like goods, they're in services more, like insurance and health care, will remain elevated because people have jobs, labor market is tight. they're getting paid higher wages. all of this just means that federal reserve needs to see more evidence and push out the

cutting cycle. we look towards december for a cut instead of september if we get one at all in 2024. >> pce tomorrow. >> pce tomorrow. and, you know, green economics, which i follow - >> fed's preferred gauge for inflation. >> they say, you know, this tilts the risk we could see a 0.5% monthly number, which is higher than expected expected around 0.3 or 0.4. >> if january and february go up revised tomorrow. >> right. >> so look, i think the market is doing a lot of work right now as far as higher yields and expectations of stickier inflation but that's going to be an important number. what's happening on the economy? will we get this weaker economic growth and stickier inflation. monitoring the sound from the earnings' call, ford's cfo how he characterizes the environment. >> you have to factor in right now with interest rates that payment prices have gone up, insurance rates have gone up, as

well as maintenance rates, and so when you take all that together, we think about afortibility, if you're back towards that range of affordability, price have to come off a couple points or so across the industry. >> whirlpool, listen to the commentary there actually i'll read that. that's from the ceo. as expected, according to the whirlpool ceo the north american industry volumes were soft as promotions remained elevated on the back of high interest rates which continue to put pressure on housing affordability and overall consumer discretionary spending and then i wanted to play night swift, the transportation company, some of the weaker parts of the economy and when i say the inflation is not in the discretionary parts of the economy, this is what i mean >> it's no secret we are in one of the deepest rate recessions the truck industry has ever felt it comes during a time when the rest of the economy is performing well, such that cost

inflation continues to be a challenge, labor is staying tight, and interest rates are up significantly. we have never seen these extremes we're currently experiencing. >> a lot of these cross currents you talked about a tight labor market but a freight recession and pressure on prices we've got examples where the economy is doing just fine royal caribbean, what great start to the year. >> they literally said wow in the release. >> wow how about dr. pepper, promising start to the year. harley-davidson we look forward to continuing the positive momentum as the riding season comes into full swing. it's not all bad news out there, but it is a mix the picture and, you know, i wonder if just the higher interest rates need more time to filter through you are getting these kind of comments like people are adjusting to higher interest rates and ther ultimately weighing on purchasing power. >> we are seeing signs of a consumer that's getting -- that's stretched, particularly

at the low end, but we talked about luxury off of it. >> true. >> that's got a lot of reasons behind it and china is a part of that as well, but definitely are signs. >> more credit card debt, more delinquencies. >> savings rate went down in today's report under 4%. they've exhausted the excess savings. as long as the job market hums along, that is a cushion. >> yeah. and if we stay below 4% unemployment, this administration will break the record for the most consecutive months below 4, which goes back to the late '60s. >> will they get credit for it if we still have an inflation problem? >> meantime, meta the locust of the pain today shares tumble after getting crushed on the back of its earnings call, despite a top and bottom line beat street reacting to the lower than expected revenue guide from q2 and higher expenses ahead zuckerberg talking about ai spend. >> we should invest significantly more over the

coming years to build more advanced models and largest scale ai services in the world as we're scaling capex and energy expenses for ai we'll continue focusing on operating the rest of our company efficiently, but realistically, even with shifting many of our existing resources to focus on ai, we'll still grow our investment envelope meaningfully before we make much revenue from some of these new sflooktsz bunch of price cuts on the street, one from oppenheimer who cut from 585 to 500, keeping the outperform rating and jason joins us this morning. good to see you. >> thank you. >> is this -- are the concerns really about growth or is it about spend? >> i think it's two things one, this was probably the third most overweight for investors, right. nvidia, microsoft and then meta. so just very high expectations while they did deliver on the top line in the quarter they

only beat their mid-point by 2 points and folks were expecting more then again, as you cited, you did have the higher full year both op exand capex guidance and comments by mark zuckerberg allud alluding to they plan to lean into ai investments. >> has zuckerberg deserved the right to be considered a disciplined spender and would not cross over into areas that are not eventually monetizibility >> i don't think so, yet i think they're toying with we still have the facebook reality lab still on track to losing $20 million, it has to do with ai and the core instagram, facebook, advertising business, and they may want to shift some of that spending kind of on a reporting basis back to the core so no, i don't think he's kind

of entirely, you know, earned his way out, but i think when being the fastest growing company in advertising, that does earn him a lot of street cred. >> he's invested in the past reality labs, still to be determined, but certainly many of the investments they've made have paid off significantly. what do you think ultimately some of the products that are now being invested in, what are they going to look like when it comes to what this company is doing? >> yeah. i mean, at this point, the company has really had to do two things one, they had to figure out how to ultimately fight off tiktok, and that was an engagement driver, which they ultimately did with reelz, and then secondly, they had to pick up signal loss from idfa, which they did with ai they were so successful with that, it gave them confidence that they should be doing more

in ai, and that is what they're leaning in to right now. >> so are you a buyer on the -- of the stock on the weakness today? >> if you're a long-term investor this is your moment to buy shares with a 12 to 18-month view again, if you're looking for, you know, upside in earnings over the next three to six months, there's probably other names in our coverage universe everything that this company is doing looks like it's the correct strategy it's just investors, you know, really have to buy pretty high ahead of earnings. >> definitely in the top five in terms of worst days in market cap loss appreciate it. good to see you. >> thank you. >> as we head to break, here's our road map for the rest of the hour shares of ibm taking a hit after posting a revenue miss i spoke with the ceo about the results and their new deal details coming up.

rubrik is going public today. we'll have the company's ceo join us in a first on cnbc interview. alphabet and microsoft tonight. what investors need noto kw ahead of those numbers as "squawk on the street" continues on this thursday

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can katie sleep over tonight? sure, honey! this generation is so dramatic! move with xfinity. welcome back to "squawk on the street." check out ibm, one of the biggest losers of the morning. revenue came in slightly lower than expected due to some weakness in the consulting business, which missed revenue

expectations ceo arvind krishna telling me software was good, fracture was much better than he expected and consulting fell short, but he said, results came in better than our peers the momentum in infrastructure and software makes us feel better about the year and keep the $12 billion free cash flow guidance, an important point for him and was raised from $10 billion. focusing on consulting, i just dug deeper because that was where the miss was he said interest rates are higher, first discretionary area where businesses cut we aren't seeing slowdown in infrastructure or software in terms of end prize spend demand. the company had news on the deal front acquiring hashicorp for $35 per share in cash. this was rumored and reported by the "journal" yesterday. the stock went up on the news yesterday. krae arvind krishna telling me on this deal that it's about multicloud ai client infrastructure, which is getting more complex and had having hashi helps manage the

complexity and the security. two other points first on hashi that might be getting lost in the news flow this morning, they do expect it to be accretive to cash flow next year which is only interesting because this is a company that just became cash flow positive. they're expecting that within year two, and the other point is on ai because they're starting to paint a picture for investors about ai demand from their enterprise customers they started tracking this in q3, and according to krishna, it's picked up in terms of the growth rate every quarter, quarter to quarter, and bookings surpass a billion dollars in terms of i.t. related projects that filters into software and consulting they're not going to break it out more formally because it's set to permeate every aspect of their business and they will not give guidance because it should continue to rise but they are putting that marker out there as far as the ai growth and also framing the hashi acquisition as a play for not just this

multicloud infrastructure. ibm does multicloud software this is infrastructure and also an ai apparently the terra form, their open source, hashi's opensource downloaded half a billion dollars which speaks to how useful it is according to ibm and arvind. stock down though. >> stock is getting hit. again, we did point out earlier it was a strong performer or has been over the last 12 months year to date not so much as for the shares of our parent company comcast not a good year for those shares after a fairly strong performance in 2023 the stock is down some 13.5% and as you can see, a lot of that taking place just today after the company reported earnings that in many ways were in line, if not in some ways exceeded some of the expectations from the analysts that follow the company. average user on broadband was higher than anticipated, added

289,000wireless customers. peacock subs were up it's the broadband losses that were 65,000. not necessarily unexpected revenues up 1.2% ebitda in line video continues to just dramatically be reduced overall. that is in terms of the number of people who are cord cutting only continues to potentially accelerate in some ways. cord cutting report they put out, you can bet it's down another 7 to 8%. that's putting pressure on the likes of other companies such as disney that still rely on the group of people to subscribe to new york networks such as espn the broadband business remains the focus for comcast. it is a key generator of revenues and margin at the company and, in fact, on the call, cfo armstrong had this to say about competition in that broadband market

>> it continues to be a very competitive environment, and we lost 65,000 subscribers in the first quarter. following the loss of 34,000 subscribers in the fourth quarter of 2023. as we sit here right now, we do not see this trend improving in the near term. we expect churn could be elevated given the end of acp, which is only fully funded through april and partially funded through pay. >> jason armstrong dave watson the ceo of comcast cable on the same call did go on to talk about the fact that overall the broadband market is still growing, and they do expect and have noted that many customers are using more and more bandwidth and that is ultimately a very good trend for the company. you can see comcast having one of the worst days i can remember in quite some time again on the overall trajectory for that broadband business which is not looking particularly good right now. >> you had another story in which we could use some ho

household creation. >> the key. >> largely dependent on rates. getting supply out there. >> and affordability is not great either so you have weak supply, weak affordability household formation. you were talking about peacock they added 3 million paid subscribers. >> they did. you had that chiefs game they spent a lot of money on that there is still a belief ultimately that scale is necessary, whether you speak about peacock or whether you're speaking about pair mount plus or at warner brother discovery the max service and how that scale is going to be accomplished to bring these services to significant levels of profitability, given how much has been invested. still a money loser for our parent company and for nbc u which is part of that. we don't even talk about that often the numbers which were more or less in line it's a difficult environment when you have -- when you continue to lose video subscribers at the rate that is happening in that ecosystem.

>> i've been silent to this point, not by management, but shock in the decline. >> it is or was the worst day for dow, s&p since january s&p has recovered a little bit, back above 5k, vix below 17, and still a big make or break day te with microsoft and alphabet on deck we'll get you are the after a break. [busy hospital background sounds] this healthcare network uses crowdstrike to defend against cyber attacks and protect patient information. but what if they didn't? [ominous background sounds]

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a bit of a murky picture when it comes to big tech results. tesla surging double digits after its report as you know, meta plunging on pace for the worst day since '22. more big tech earnings on deck tonight. steve covac is all over microsoft and deirdre bosa in san francisco tracking alphabet and kristina partsinevelos checking in on the chips ahead of intel steve, begin with you. >> ahead of this earnings for microsoft the question is, where does the ai money come from? you have to look to the cloud, not necessarily copilot. microsoft has been quiet about its marquee ai product, opilot

which it sells to businesses for a hefty price of $30 per user. [ inaudible ] to the promise to massively boost worker productivity ahead of earnings microsoft did boast about a couple customers that said cognizant is buying 25,000 copilot seats and announced a new cloud deal coke saying -- we have to look at the azure cloud business. growth slowed in that unit through 2022 and 023 as microsoft helped customers cut cloud costs when everyone was worried about an impending recession. growth started to reaccelerate in part thanks to ai openai and other ai companies run their services on azure which means more money for microsoft. for the december quarter microsoft said 6% of growth came from artificial intelligence so we'll be watching for that number to grow because it's the best signal we'll get on ai sales at microsoft, carl. >> steve, thank you. i'll pick it up. lot to watch there let's get to deirdre bosa now

with more on alphabet, which is moving lower today i guess in sympathy with meta. >> yep and you know meta is not the only mega cap spending big on ai that's hitting that stock. this is what alphabet's capital expenditures have looked like over the last few years, hit $11 billion at the end of last year and the ceo saying on last quarter's call capex would be notably larger than in 2023. google has started to monetize its gen ai products through microsoft what steve was talking about. when i spoke to google's cloud chief a few weeks ago i asked him if gen ai was new spend or shifted spend for the customers he was very clear he said net new spend. now a few other things to look out for, google is still looking for a cfo to replace ruth poreat to let her focus on her new role as president and cio some would call it a small possibility of a first ever cash dividend there's a spot if meta can do

it, why can't google finally the biggest question, for sure will not be answered, but investors will be looking for clues on, what of that innovators dilemma that google is facing. its biggest existential threat in decade. willing to disrupt search for gen ai or disrupted by someone else guys >> we've discussed that, and then it seemed to disappear as a concern of investors for a bit of time. when it comes to sort of implementing the levels of efficiency, so to speak, that they did at meta, i mean that's a founder-led company. alphabet is no longer founder led. >> it's not. it's led by sundar pichai who has been at the company a long time, not a founder. in terms of the efficiency, he's proved to be quite efficient and have that drive this year. remember we started the year with these rounds of layoffs although google was kind of seen as a little behind on that so we'll see i mean, this is a spot that maybe they're making room for some of the more expensive data

scientists that are required for generative ai. sundar pichai, this year, that's been a theme of his, to show wall street that it can be more efficient and more tough, right. we saw the firing of those 28 workers just last week who staged walkouts, and that's the change in google culture we'll see how that's going to affect the bottom and top lines. >> okay. deirdre, thank you deirdre bosa we're going to end on the chips and intel. kristina partsinevelos has that for us. >> we had texas instruments earlier this week and that report was less than expected with many wondering if the bottom for non-ai segments is near when i talk about non-ai we think intel, pc and server segments both are highly dependent on i.t. spending budgets. citi points to a pc recovery in march and the launch of windows 12 later this year that could be a driver for a pc refresh cycle. other positives, mobile business, given intel majority

shareholders that could add a bump in other business sesments. investors remain skeptical, no surprise, intel under performing other chips down 30% year to date with the smh up 20% that's a huge discrepancy. even if server sales are improving, competition from amd is a headwind for intel. secondly, intel's new foundry business, which will be operating as a separate business with this report, has deeply negative gross margins, profitability is a ways out. intel, though, will tout its new ai chip which aims to compete with amd and nvidia q2 of this year that doesn't factor into the results yet. lastly i need to mention micron. the biden administration announced a $6.1 billion in federal grants to build out a plant in new york and continuing to build out plants in idaho look at the stock not reacting because it was already priced in the news came out trickled out about a week ago and been talked about. not seeing too much of a reaction. >> all right it is interesting to see some of the chip names up today.

nvidia, broadcom, marvel, intel. >> because of the capex. >> spending. >> meta spending, they benefit kristina partsinevelos. stocks are now on pace for their worst month since last september. worst month of the year. less than 24 hours from a fresh read on inflation. we're going to talk top picks amid this volatility next. plus, not just another gdp and earnings day at cnbc it's also take your kids to work day. back at our headquarters, a lot of cute kids. >> really are. >> hanging around. >> yours aren't old enough yet >> no. i don't work in inglewood cliffs. >> we do it here at the new york stock exchange. >> you could have brought them here. >> we do it after snoog the stage manager is working overtime. >> you could have gone there and had your kids there. >> i didn't even know. >> you're allowed. >> i would love to they are off today it's spring break. >> i think you made a mistake. >> a lot of air time

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welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. it's a big day for donald trump as the supreme court hears arguments on the former president's immunity claim in his election interference case his lawyers argue his efforts to overturn the 2020 results were official acts taken in office. the federal appeals court ruled in february against that claim that he is immune from prosecution. meantime trump is in a new york court today as the former national enquirer publisher david pecker resuming his testimony in the hush money trial. pecker is expected to detail the alleged payment to adult film actress stormy daniels that is at the heart of the case. finally, new york's top court overturned hollywood producer harvey weinstein's 2020 rape conviction this morning the court found that the judge in the landmark trial prejudiced

the former film mogul's case with improper rulings including a decision to let women testify about allegations that were not part of that case. prosecutors must decide whether to retry weinstein who is serving 16 years for a separate conviction in los angeles. >> sara, back to you. >> checking into the market selloff an hour into trading and it's been broad off the lows but sharply lower. the s&p down 1.3%. every sector is higher what's bucking the trend gold, radilroads and semiconductors meta weighing on the overall market the nasdaq down 1.6% microsoft ahead of results is lower as well so is amazon and alphabet portfolio manager and cio bill nigran joins us to discuss what to do. the 10-year note yield at 4.71, some big reactions here. dollar/yen above 1.55.

does this change your thesis on picking stocks for the year, the surprising backup in yields? >> good morning, sara. thank you for having me. no at oakmark we are so long-term focused most of the day-to-day news is just noise to us what we look at in the market today that we think is really interesting, it's not just that s&p is at something like 22 or 23 times earnings, it's how large the spread is between growthier companies and value companies. one way of looking at that, the russell growth p/e is about twice the russell value. something like 30 times versus 15 that number typically is more like 1.5 times at oakmark where we're trying to sell fully valued stocks and buy inexpensive stocks, our portfolio has kept moving lower and lower in p/e even as the market has risen over the past year >> so get a little more granular

if you could about where those enticing bargains are and why you would want to be loading up in this kind of environment? >> i think, again, one of the interesting things in this market is how broad-based the cheap stocks are they aren't concentrated in just one industry so, for example, we own capital one. it's at about ten times expected earnings that would fall to 8.5 times if they can complete the discover transaction. we own conoco phillips, one of the best enp companies in the united states. it's less than ten times free cash flow if oil stays somewhere around $80 a barrel. most of that cash flow comes back to shareholders we own santeen, a large provider of medicaid insurance. its quoted p/e is about 11 times earnings comes down to 9 times earnings if you assume they fix their problems in medicare advantage. we own charter, about 8 times

earnings that comes down to about 6.5 times if you add back the amortization and excess depreciation we think it's a valuable infrastructure asset. >> how cheap is too cheap? are there levels they get to where you have to throw in the towel? >> no, no, no, not at all. if fundamentals don't behave the way we think they should, that troubles us a lot, but a stock getting cheaper is just an opportunity getting better. >> yeah. sometimes, bill, it's because the opportunity is not necessarily as great as had been anticipated. i mean charter, for example, down today on our parent company's earnings it's been a challenging environment. the eight times you're citing is a reflection, obviously, of that why, on this name and/or any others that have those lower multiples, are you constructive on the underlying business,

given, to sara's point, some of them keep getting cheaper? >> well, if charter can even just keep business flat, which i think would be a pretty draconian forecast for them, it's got a free cash flow yield of almost 16%, so the return to shareholders would be very high. one of the nice things about buying companies that are selling at such low p/es, you don't have to believe that other people are going to think these are great businesses you just -- if the p/es can stay static, the return to the investor is quite good if they move closer to the s&p 500 p/e, the returns are very good >> bill, finally, on some of the year to date winners you have, i know you're long term focused but citi and wells multiple returns to s&p this year, do you get an itch to ring the register >> no, not at all. we think bank stocks across the board are quite cheap. the large banks, we think r

competitively advantaged we're very excited about the restructuring and turnaround that jane fraser has put in place at citi. we think it's still among our most attractive names and it's why it's one of our biggest holdings. >> finally, bill, the conversation we've had for years, growth versus value obviously, you emphasize you're long term and you have outperformed often over that longer period, but are we in a period now where value is going to be back in favor in some way? >> i wish i knew how i could forecast that sign wave of when value comes in favor and when growth comes in favor. growth has had a very good decade relative to value it's historically unprecedented. the result has been the p/e spreads are about as wide as they've ever been. we think that puts the odds pretty strongly in values favor, but it's for long term investors. that doesn't say anything about what this quarter or next quarter will look like

>> bill, thanks for weighing in. appreciate you joining us with some of your long-term picks bill, the cio of oakmark funds with the dow down almost 700. after the break a first on cnbc interview with the ceo of red lobster making its debut at the nyse today he'll join us next n'goway.

you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire (fisher investments) at fisher investments we may look like other money managers, but we're different.your job description. (other money manager) you can't be that different. (fisher investments) we are. we have a team of specialists not only in investing, but also also in financial and estate planning and more. (other money manager) your clients rely on you for all that? (fisher investments) yes. and as a fiduciary, we always put their interests first. (other money manager) but you still sell commission -based products, right? (fisher investments) no. we have a simple management fee structured so we do better when our clients do better. (other money manager) huh, we're more different than i thought! (fisher investments) at fisher investments, we're clearly different.

microsoft backed and data security provider rubrik set to make its debut at the nyse, pricing 32 above the range gives the company about a $5.6 billion valuation, indication 37 to 39 joining us on set for a first on cnbc is rubrik's co-founder and ceo bipul sinha with jon fortt good morning take it away. >> good to be back here at the nyse at least something is looking up this morning so far. we'll see how it works out bipul, good to see you investors are familiar with palo

alto network, platforms like crowdstrike and zscaler. you're playing in backup and safe recovery and there's ban spotlight on that from the ransomware attacks we've been going through the past several years. how do you grow from that? >> first of all, thank you so much for being here. what an honor to be on this stage in this time today, the rubrik public debut of our customers, our partners, our employees, a lot of us are here. thank you so much for this opportunity. >> yeah. >> look, rubrik is a different kind of cyber security company we help our customers keep their businesses up and running in the event they have a cyberattack or cyber breach so that kids can go to school, so that hospitals can still operate, so that money comes out, even if the business is impacted. that is different from the traditional cyber security focused on stopping attacks.

we assume attacks will happen. how do you continue to operate the business even when you have successful attacks and breach? >> you're running right now at about 780 plus million annualized recurring revenue you also got about half a billion in sales marketing expense. you're up against some competition. convault, a legacy player trying to change into doing more of the modern stuff, cothesety that just bought an older line player trying to beef up and get ready go public as well. what should investors expect from your growth profile that's different, and how are you going to manage that sales and marketing expen versus the growth you expect coming in the door to profitability? >> if you take a step back, rubrik has transformed backup and recovery industry into a data security platform to deliver cyber recovery and cyber resilience this is a market transitional story. rubrik is leading that market transition whenever you have market transition not all the legacy or

old players make it, and that's why you see consolidation in our market the use case of this product has changed. cyber is the biggest risk and how do you continue to operate the business it's a very large market according to gartner in the next three years, it's a $50 billion market we are operating in a large market with a product helping customers make sure that they can create the products and services to their end consumers. >> is coming to grips with the idea that there will be attacks a sign of failure when it comes to attack security >> it is actually a sign of a strength because we have to reframe cyber discussion cyber discussion cannot say the offenders are successful when they stop 100% of their attacks. >> where are the biggest threats coming from? >> biggest threats are coming from the nation state actors

they're coming from insider attacks. we still have teenagers in the basement showing middle fingers to businesses and governments around the world >> so you've been a venture capitalist and mentioned consolidation is happening in this industry. to what degree is or larger goio be a part of your playbook now that you're public >> look, we are building cyber security, all the data across all the data stage is protected by rubrik. with we want to access this platform, deliver more products and services to our customers. we are always looking out for interesting people, technology, teams, products, and we will continue to accelerate, whether it's organic or inorganic. >> we're looking to see how you open here. i've known you for a couple of years. it's an exciting day for you good to be here with you at the nyse. >> thanks for the opportunity. as we head to break, bright

spot is royal caribbean getting a nice boost on q2 beat. we'll talk to the ceo next hour on "money movers" after wow what a great arr quteis what they put in their earnings release. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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welcome back to "squawk on the street." these kids on your screen, the children of employees including our producer, ben thompson, on "squawk on the street" here as cnbc celebrates bring your kids to work day. two of our own, augie, big 10th birthday coming up this weekend. way to go, man enjoy. make sure dad gets you something good. >> they have red hair like their father happy birthday that's adorable. i'm sad my kids aren't here. >> as you should be. you are really distraught. >> i'm sad for your kids, too. >> they could be having fun at hq. >> it looks like a blast i want to get an update on a big retail story percolating the ftc suing to block the more than $8.5 billion own coach owner tapestry and michael kors

owner. i spoke to tapestry ceo who told me she's disappointed and quite surprised by the way the ftc is thinking about the market. she said they fundamentally misunderstand the market and the way consumers shop we spend time in the market and we have data and it is intensely competitive. following up by saying, do you -- duopoly? she said, i wish our job was that easy. i wish we had to worry about one competitor she was disappointed when i spoke to her about the ftc's argument this would hurt workers. she said, we are proud and focused on this. our people are our competitive advantage and we experience very low turnover for our industry. i spent a lot of time looking into this, speaking to lawyers about this the reason it is unprecedented almost for the doj or the ftc to block a fashion merger is because it's hard to think of an industry that is more

competitive when it comes to brands if they are going to define this market by accessible luxury, which is what they do in the complaint, they should define the market they haven't done that, to my understanding, besides mentioning price points of handbags if you shop for handbags, you know, first of all, some people who make $100,000 still carry around $4,000 louis vuitton bag. there is competition and the market is not segmented by two designers that happen to make handbags around two prices >> accessible luxury was the term they coined. >> coach coined that term. >> listen, there was -- there was a lot redacted from the complaint itself which led those to read it believed there were so-called bad documents that don't look good about competition between the to they would represent 50% if they got together. >> it depends how you even

define accessible luxury i'm not sure you can do that if you look across instagram, upstart brands, legacy brands, can you find a lot of handbags in the same price range. when it comes to shopping, if taylor swift wears a handbag, whatever it is, the next day that blows up. that's competition. >> the judge changed from what we told you the first day. >> the only other thing i want to tell you about this is joanne, the ceo, does not -- this does not change her timeline for closing the acquisition by the end of calendar year 2024 they expected a delay. they expected a tough regulatory environment. they feel very confident in their case in litigating this. >> all right you can see, of course, the performance of those two, no different than the performance of the overall market. but the s&p is off the lows, down about 1.5%. we got a lot more coverage of th vatitfoyowh wisolily r u ene come back.

♪ in any business, you ride the line between numbers and people.

what's right for the business and what's best for everyone who depends on it. solving today's challenges while creating future opportunities. it takes balance. cla - cpas, consultants, and wealth advisors. we'll get you there. good thursday morning. welcome to "money movers." i'm carl quintanilla with sara eisen on the floor the new york stock exchange today the dow is having its worst day in about a year. gdp disappoints. with that back drop,