moving in a big way as well, the ten-year note at 4.495%. creeping up to almost 5%. >> you're talking big, big jumps. >> bitcoin has fallen on the back of this news with the idea that maybe rate cuts may not be coming any time soon, and well, we'll talk about the value of the dollar maybe tomorrow. right now, it's about $67,000. join us tomorrow. "squawk on the street" bins right now. ♪ good wednesday morning, and welcome to "squawk on the street," i'm david faber with jim cramer. we are live from post nine at the new york stock exchange. carl's on assignment this morning. let's give you a look at futures, of course. as an drew just told you, we ar looking for a lower open. our road map begins with that inflation surprise, consumer prices rising more than expected for march. futures, tumbling, all of it

because the odds for a june fed rate policy pivot, well, they're going -- >> it was just -- it was ridiculous. it was always going to be hot. >> yeah, yeah. >> no. plus, big tech divergence, alphabet, amazon at highs, jim, but apple and tesla, i don't know if you noticed, they've been struggling a bit. nvidia, we're going to talk about that stock, of course. how could we not? it's entering a correction. >> well, if you don't know what it is or if you think it's my dog, then why don't you sell some. finally, jim, the airlines are leading s&p premarket gainers. delta topping quarterly estimates. it's focused on efficiencies >> i'm focused on the fact that phil lebeau has been here for 25 years and he's the best. let's not lose sight of real things. he's the best he is. >> rely on phil more than we ever have. let's start with the market, get your reaction to the hotter than expected cpi print. we've heard from the analysis in terms of expectations for a fed

rate cut, which are fading fast. the yield curve inverting a bit. the two-year moving up more in yield than the ten-year right now. >> you start thinking, why did the fed kind of commit to neutrality? these numbers, what was bad was worse. we've been worried about shelter for a long time, shelter going in the wrong direction. i think the employment number on friday gave you a good read of what was going to happen, things that have to cost more. we have a surge in people who work in travel and leisure, so of course, those wages have gone up. they had a surge in health care. those wages have gone up. david, there's a premium to oil, and we know there's a war premium to oil, and that should be the least of our concerns. as long as there's a war, there's going to be a premium. if you think that war in the middle east is going to last for a long time, there's going to remain a premium. the only number that i really -- the numbers that i really freak out about, i guess i'm supposed to freak out about, are just the

endless ways to find people to have somewhere to live. that includes immigrants, of which, by the way, since the government doesn't have any numbers at all, we have to presume is hot. it won't stay -- by the way, raising mortgage rates only makes it -- exasperates. >> exacerbates. >> you don't want to build. if you're tol brol brothers, yo say, i'm going to make fewer homes. that's the part that wouldn't make things better if you raised rates. that's where the fed is really in a box. finally, food stopped being more expensive at home -- it's a little more expensive at the store. i like that. but these numbers are the numbers of an economy that is on the move, that is terrific, and if we're all going to sweat the program, decide that the ten-year and 30-year auction's going to go bad and get to 5%, you and i have been there at 5%. that's called a great level, so i don't want to lose sight of how unnatural -- >> but the fact that we may very

well get no rate cuts for the remainder of this year is very different than what people had anticipated as 2023 came to an end, not to mention even a few weeks ago or months ago. >> well, those people -- >> what does that mean for the broader market? >> those people are wrong. >> they can also vote with their feet and say, i'm not going to buy equities. >> they can go buy cds. they can buy the short rate. i have a lot of short rate paper, and i'm looking at it and saying, what do i do? buy more? buy cds? the cd rates went down yesterday. it's kind of disconcerting. but i think there are a lot of people who are on the wrong side of this trade, and they're frantically getting out, and you see them first in the futures, and then there will be a lot of people who are very scared and are in the mag seven and they don't know what the mag seven are, other than it's not steve mcqueen and yul brenner. then, they think datacenters aren't going to be built out. that's wrong. fellow travelers just say, this

market's been good since the fed pivoted. oh, my, maybe the fed's done. >> all right, so, what does the year look like for a stock market in which the fed is, you know, we're neutral -- in other words, no rate cuts? >> well, one or none. rick santelli's been very right about what's going to happen with the auctions, i think, and yesterday, he said there was a short rate auction that was very bad, and i think this auction is going to be very bad today. but i also think -- i come back to say, let it come in. if you haven'ttaken any profits and you don't know what you own -- let's get to nvidia. i'm sticking by it. i have a long-term view of nvidia, i have had since 2012. am i changed? no. the intel so-called claim that they're faster, stronger, this or that, give me a break. no one's committing to that. nvidia's a great company. it's got a very low multiple, but if you don't know what nvidia is, david, and you bought it because you liked what i said

about it, just sell some. just, like, please sell some so i don't have to hear when it's at $800, why didn't i get that. >> we do have morgan stanley raising its price target as this continues to strengthen for nvidia. >> they have, but so what? >> they're talking about the hyperscalers, planning out data expansion centers that would tend to indicate durability. >> there is great durability. own it, don't trade it. we also know there are people who don't know what they own, and when you meet people who stop you and say, thank you for nvidia, and you follow up and say, what does nvidia do? they're stunned. they're stunned. they don't know. they think, well, nvidia, let me tell you, they -- they -- wow. jensen. that's what they say. those are the people who have -- they're the fellow troavelers that i'm most worried about. they don't know what they're doing with nvidia. they see it go down and say, it must be wrong.

those are the people, you're going to have them reassess, just like there are people who are reassessing the fed. and then, once rates get to where they have to go, which is not that high, because there is, frankly, at a certain level, self-correction, you're fine. but nobody wants to hear that you're fine. we have cash for the travel trust. i've been waiting for a decline. we're getting a decline. does that mean i should now wait for a bigger decline? no. >> i don't know where -- as we're calling it a correction. this decline of 12% from the highs. nvidia's multiple is down to what, jim? where are we? >> it could be 23. >> yeah. >> but david, if we go -- if we bore people and don't talk about musk -- haven't talked about buffett lately. if we go over this news release from the -- >> on the consumer price index, yeah. >> the department of labor. it's energy. it's rent. it's -- it's auto insurance.

can we have some competition in auto insurance? >> food away from home keeps going up. >> what are you going to do? stay home. the last month was actually not that bad in terms of food away from home. and liquor prices are coming down. a lot of people don't realize that. these are just sticky. you need commodities to come in a little. they are. and you need labor to cost less, and that's what the immigration issue is. the hidden labor workers in the kitchen will make it so eventually you'll be able to get a cheap burger or fries and not diet coke but jack and diet. >> all right, so, you're not overly concerned as we look at a market -- we watch the s&p have a significant decline, again, when we start trading 22 minutes from now. >> again, if you know what you own and you look at the news release from the bureau of labor statistics, and you decide, you know what, i'm going to bail out of nvidia, because i see this food away from home number is bad, and i'm worried about used cars and trucks, well, i mean --

used cars and trucks are actually pretty good, so forget that. but you shouldn't have been in. you got a chance. you're up a lot. sell it to me. come down so i can buy it. i know what it is. i know what nvidia does. i know that blackwell is multiple times better than what intel is doing. i know that google and nvidia are working together. i know that jensen huang said if google's making a chip, i want to help. is that a reason to bail? well, go ahead. i said it over and over again after the gtc conference, the stock goes now. now we're in the gtc conference. what a shocker? shocker. >> as for the mag seven overall, mentioned it at the top. alphabet, amazon, of course, all-time highs. alphabet is something of a surprise. again, i've made this point a number of times. given the existential crisis that lasted a week there for investors. >> and thomas curry is the star of the show. >> and the number of well-known pundits reflecting on social media for -- x, for example, about the coming demise or

questioning its ability to compete or whether -- >> that got down to -- >> it might still have its monopoly in search threatened. >> it had the multiple in the french fry company, for heaven's sake. >> thomas kurian, of course, the -- yeah, they had their big -- >> that's a big get. >> yeah, that is a big get. >> if you're not respectful to kurian and you call him "tom"? interview over immediately. >> i'm not familiar with the gentleman. want to take a listen to what he had to say? >> what the hell else are we going to do? watch the market go down? let's have some information. >> this was him yesterday, the google cloud ceo. take a listen. >> one of them's offering a closed system. they have one model, one provider of that model. they don't even own that model. the other one does not have any a.i. expertise, so they only offer third party models. we blend both. we have our own models, and we have the expertise to build

systems and integrate these models into our products to that people can use it. at the same time, we're not taking a closed, proprietary point of view. >> told you he's going to do $50 billion. yesterday, i told you he was going to do $50 billion, and people were like, what does that mean? he's doing very well. he's taking share. >> there's an awful lot of share to take. i mean, that's the point. you can have an environment in which the hyperscalers, amazon, microsoft through azure, and google cloud all are beneficiaries of what's happening in terms of generative a.i. >> i hate baseball analysis because second inning, now baseball games go so fast, but i do think that the cloud is just in such demand, and they're only about 80 -- i would say about maybe 15% of businesses have moved to the cloud. lot of room. >> it's a lot of room.

>> what do people do? as long as interest rates are going higher, and we do have some auctions, and the auctions probably go badly, you start picking at things when you see things overdone, but you must know what they are. okay? you must know that abbvie has a bunch of really good drugs, so when it gets to 4% yield, that's good, not bad. you have to kind of flip the equation and say, wow, you know what? the market's been good ever since the fed pivoted, but now we're not sure about the fed. let's go back to what looks interesting. actually, let's get granular. let's talk about caterpillar, because we all know what caterpillar does. earth movers? they do more than that. they're central to datacenter and to oil, not to china anymore. cat got up to 17 times earnings, and it's had a run of 25%. all right? 25% for one of the companies that is decyclicalized, which is what i call it.

it's a strange term, but i got it from the ceo. is that stock due to come in? yes. do you buy it or sell it? it's an infrastructure play. the federal money is just getting there right now. that is something -- it's $370. at $330, which is probably going to be at 3:30, at $330 at 3:30, i would buy cat. let the people who have just been riding it and say, i've been great in cat, let them get scared. let them get scared. okay? >> okay, jim. >> let's talk disney. there's one. >> we got to talk disney again? >> no. let's forget disney. >> i know. it's enough. >> i'm looking for dow stocks that i know are going to be -- the reason i'm doing this is the dow is down 500. >> how about your favorite? salesforce. >> let's get to -- probably goes down 5%. servicenow probably goes down 3%. these are a.i. companies.

a.i. goes down between 3 and 5%, and everyone gets scared and thinks it's over. maybe they retreat to the ten-year. maybe they retreat to cds. i'm saying this is the squall. we've been expecting it. i'm not saying, enjoy it. i am saying, it probably lasts a little bit, because we have to endure jamie dimon saying he's very concerned that rate -- that's tomorrow's business -- i mean, friday's business. >> we're getting jpmorgan. memos starting, earnings season begins at the end of the week. we're working off his comments from the annual letter in which he said that rates could hit as high as 8% as a risk. he didn't say it's going to happen. >> he'll, like, say something negative, and kill his own stock for a couple weeks, and you'll say, why'd you do that? he'll say, that's what i think. >> meanwhile, his stock is up over 52% in a year. >> yes. it sells at 12 times earnings, which is too low a multiple, but

i think that when i look at -- i'm trying to pick dow stocks. i'm not being random here. you ditched me on disney, that was fine. i didn't care. but jpmorgan is at 12 times earnings, and he is going to say negative things because that's what he does. so, do you buy it or sell it after he said negative things? how about you wait four days, start the buyback of the company -- well, he's not going to buy that much here, but i just think that this is real life, that jamie dimon's stock is up huge. so, people are going to sell a little. that's what happens. >> that's what happens, jim. that's what happens. we are potentially going to have a down day. well see how we move towards the -- in the midst of the trading day. >> this is not the playoffs. >> no. >> and what happens is we're one and done. it's not that. this is a long-term situation. and we can trade it. you want me to trade it? oh deere, i bought it and sold it. no, let it come in a little. if you don't know what the company does. if you think deere is a deer, and you think cat is a cat,

well, i mean, go to the darn zoo. >> you shouldn't be doing this stuff anyway. >> right. >> of course, these days, a lot of -- a lot of it has been reduced to almost trading on your phone as though you're betting basketball. >> my wife -- maybe she watches the show. >> lovely woman. >> i've had the show for 12 years. >> i'm aware how long we've been doing this. >> why don't you tell her? >> why change a good thing? when we come back, delta is one of the morning's bright spots. we're going to explain why. take another look at futures, of course. jim's not worried. 14 minutes until we open. >> david, i'm really scared. the market is up huge. >> we're right back after this. . off the comcast business van. into the vending area. oh, not the fries! where's the ball? -anybody see it? oh wait, there it is! -back into play and... aw no, it's in the water. wait a minute... -alligator. are you kidding me?

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the year in business travel, and we're now back, revenue-wise, at or above pre-pandemic levels. the volumes are still a little bit off, maybe 90%, but we're doing really, really well. >> that was delta's ceo, ed bastian, discussing the state of business travel with phil lebeau. that was an interview earlier on "squawk box." the airline did post quarterly results that were above analyst estimates. it is forecasting strong summer travel demand. i thought that was interesting, jim. it was a question we asked so often during the course of the pandemic and since then, would business travel ever, ever get back to the level? he's saying, dollar-wise, i believe it has. >> stock is up $2.50 when phil interviewed mr. bastian, and delta's really on its game. there's some -- there are actually a lot of different -- dispersion among the airlines about who's doing a good job. there's disarray among the

spirit, jetblue, not clear whether united is momentum. southwest air is, unfortunately, really bad, and delta has shined here, and that's because it's really well run, and i applaud mr. bastian. he's done a great job. that stock will be down today. that's the kind of thing i'm looking at. all the analysts tomorrow will come out and recommend it, and it's got a good model. pilots are being laid off right now. >> pilots are being laid off, yeah. >> we had a pilot shortage. that ended. that's a good example of what can happen if you take rates higher and not everybody does well. so, that's where the economy is working. and where it's not, david, can we just, like, talk about the idea that there are -- there's no price cutting in insurance? there's nothing. your health care insurance has gone up, up, up. there's no competition among those companies. it seems like there's no competition among auto insurance, and we're accepting,

and that is a shame. i don't understand why the capitalist system isn't working and someone doesn't come in with a decent rate health care plan and a decent rate insurance, because that's killing us, and the fact that we haven't been able to build enough buildings to be able to accommodate 10 million people that have come here, legally and illegally, in the last three years. and those are the things that i don't want to get too political, but those are the things that are going to create an issue when it gets to the election. those are the things people get mad at and blame the president. >> well, and/or -- right, inflation overall. again, we're running at whatever 3.5% or more. >> we've dealt with 4% before. >> that's off 19 to '20. get ready. you got a "mad dash" coming up. we're going to get back to talking about stocks as we count down to an opening bell. you see futures, you know we're going to have a far lower open based on that cpi print that was, as we like to say, hotter than expected. bracing, perhaps, many hopes

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there's a look at the ten-year note. of course, yield is moving up. not as sharply as the two-year in comparison. so, that has had a little bit of a steepening effect on the yield curve. but there it is. 4.483%. of course, a significant move higher based on that cpi number, and there's a look at your two-year. i mean, jim, we talked about your 5%. >> well, i told you, the fed's ucni >>peng bell coming up.

the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, let's get to it. quick "mad dash," jim. >> yesterday, we had this piper teen survey. what did they like? they liked hoka. they liked uggs. today, truist comes out with some credit card data saying that uggs is being outperformed, but hoka had a weak february, david, and that's going to cause people to say, why did i buy that yesterday? >> hoka, weak, no way. love those hokas.

>> they didn't slag on. on had good numbers. >> those squeaky sneakers. >> and the pebbles in the soles. >> never wore those ons again. >> i take them off when i come in the house because i don't want pebbles all in the house. bam-bam. >> i'm off on on. a lot of red on that board. here at the big board, auna celebrating its recent listing at the nasdaq -- excuse me, recent listing. over at the nasdaq, we've got the national security emerging markets index etf because, jim, there is an etf for everything. >> did you see that private credit etf that came out the other day? it just got crushed. i mean, the value's, like, $4 and it's at 60. >> there's literally an etf for everything. >> and a lot of them are silly, but david, china etf, yes, no, maybe. jack ma saying things. >> jack ma is saying things, and

it may be having an feeffect on baba. >> are they pivoting towards capitalism? >> no, listen, mr. ma's comments about alibaba -- it is interesting, because we talk so often about that being the bellwether of the chinese market in some way, and certainly it's the name that many investors know the best, but they lost their mojo at baba. >> i'm glad you brought that up. >> temu, pinduoduo, bytedance, not a public company, they've been outclassed, and so ma kind of saying, hey, you know what? we got to get back to business, a lengthy memo that's been reported to employees, expressing support for their restructuring efforts. you know, saying, hey, we've had a somewhat tumultuous time recently, but we must not only have the courage to admit and correct yesterday's problems but also make reforms for the future. this year, there have been many doubts and questions about the

company, and babel alibaba shar an outlier today because they are up about 2%. >> i think the stock is very inexpensive. can we reflect on sara's excellent interview? >> sure. >> we have our treasury secretary go to china and basically slam the chinese, right? then, we have fitch downgrading china, okay? well, these aren't supposed to happen. we're supposed to go there and try to sell more prell, for heaven's sake. we're supposed to open more plants and take share. meantime, what happens? tim cook. devices in india. >> yes, 14 -- yeah. >> do you think he's sitting there and saying, oh my god, china's not growing and india has the youngest population? i'm saying there's a shift going on, and we act as if the chinese, because they do have a very powerful military, are always threatening us. taiwan semi with a fantastic number last night. when i listened to the interview with sara, i say to myself, wow.

where's the old days where we were mendikens for chinese business? those days are over. >> direct foreign investment has fallen dramatically. >> big election in mexico. we're not spending any time in mexico, which is ridiculous. >> why do you say that? >> they're a fabulous trading partner. you can't even buy anything that makes any money for you. you can buy the peso, which i think is very strong, but ultimately, that's our biggest trading partner, and i don't know why biden doesn't spend more time trying to figure out how to fix the border, because we have a president there who's have pro-capitalism, and the new president will most likely be pro capitalism. that's where we should be spending more time, india and mexico. the sunset interview with yellen was meaningful. the thing that the chinese are exporting more than anything else i know is cyber terrorism. last i looked, that doesn't really have a good multiple. >> no, it doesn't, and it is a huge issue, one that we can't

really talk about enough in some ways, but we don't because it's become so commonplace. it was many years ago when i did my doc on chinese cyber espionage. >> you didn't bring your phone, famously. >> you always have to bring a burner. >> that was the closest you ever came to "the wire." >> i don't know how many years it was. it's only increased since then. there was a brief lull during a part of the obama administration, but it's come back. they have thousands of people dedicated to doing nothing but, as we know, cyber espionage. >> are you watching what's going on with united health and the duelling press releases by companies that are actually -- >> i thought you were going to take me more to your guest from last night. we can talk about the breach at united health care, but what did kurtz have to say about microsoft? i thought it was interesting how outspoken he was. let's take a listen. george kurtz on "mad money" last

night, ceo of crowdstrike, talking about how or not how active microsoft has been in terms of combatting. >> and being transparent. it's really important. we should all listen to this. >> what was really concerning to me is if they're not being transparent and forthright with the public, what are they doing to their customers? i think that's one of the most damning things that came out of the report is the cultural change that has to take place at microsoft at the moment. >> microsoft did -- >> give us more context on that. >> microsoft did give me a release saying that they are changing things, but there was an investigation. microsoft said they had found the hack and it was not true, and microsoft admitted that it wasn't true, and i think that george, if i had prodded him, given one more minute, i would have asked him, what would happen if this were boing and david calhoun went live to the

faa? i think we would see very few boeing planes in the air. they would be grounded. microsoft would be grounded. but microsoft, they were beating up in 2000, and ever since then, free ride. >> you think they have not received enough scrutiny for their lack of and/or -- i mean, they're so important for the number of hacks that have taken place and/or their unwillingness to fully communicate around them. >> i think they're -- i think that they're surprised there isn't more appropriate. i think satya nadella would say, we're trying frantically to get this culture together and this is never going to happen again. the report by homeland security -- this is not a department of google and amazon -- is so damning, that i was like, no, they could not have lied to homeland security, could they? could they have said a hack was done, rooted out, and it wasn't? >> seems like a bad thing to

choose to do. >> suboptimal. >> yes. >> but anyway, i think that george brought it out. i'm trying to get the department of homeland security guy on. we did read a statement from microsoft, which admit, by the way, they got to fix their culture. here's what happened when this report came out. microsoft was up 15 cents. hey, you know? the people have spoken. homeland security? ain't got nothing for you. >> those kinds of stories don't typically get a big reaction in the equity markets. microsoft shares up some 45% over the course of the year. of course, it is the largest market cap company of any in our market at $3.13 trillion. >> they're having a great quarter. >> far exceeding that of apple at this point. >> new pc is going to have a copilot button. it's going the biggest refresh cycle in history. i know today is not the day to talk about it, because we're supposed to be very scared. >> if you are just joining us, you can see at the bottom of

your screen, cpi ex-food was hotter than anticipated. >> what was hot? rent and gasoline. >> that has led to a surge in rates, and of course, an overall belief that we will not see a near-term rate cut, certainly june seems to be off the table. >> so -- >> to the extent that the fed is data dependent, and we have, by the way, all right, we're down 1.1% in the s&p and 1.08% in the nasdaq, jim. it's not bad. >> the auction later is going to go badly. heating oil is up. we don't use heating oil in the country. 8% of the country uses heating oil. i'm not going to -- this is -- this thing was created before we had a surfeit of nat gas. >> now you're going to take the cpi to task? >> if you don't go granular, you can't explain why this index is incorrect versus things americans really do. go to tj maxx, for heaven's sake. that plastic belt fooled you.

>> it was up 7%. >> where? >> i don't know, jim. i don't know where. i don't shop. >> gap stores? >> okay? i don't know. >> maybe it's up macy's because they're being challenged. >> thank you. yes. macy's did add two members to its board. >> who'd they add? >> they are gentlemen named clark and markey. i'm looking for various press releases here. rep, ark house, along with a credit-focused fund, have been trying to buy the company. >> yeah. >> and they have agreed with macy's to add two board members, immediately, as i go through my papers here, trying to find it. here's my macy's file. stock's not doing much. >> are they walking away? >> richard clark and richard markey will join the finance committee, tasked with reviewing the ark house and brigade proposal to acquire macy's. remember, you've also got that acquisition out there that at

least they are now doing due diligence on and trying to move forward with a plan to potentially buy the company. interesting, because arkhouse is sort of the activist here. brigade, their partner, is really a $25 billion credit-focused fund that would and is potentially happy to move forward with the offer. the last offer was 24, right, jim? 24 bucks a share. >> macy's is six times earnings, which is in the pathetic portion of the s&p, along with ford and gm. macy's is incredibly inexpensive. tony spring, succeeded jeff ganette. tony's got really good eyes, meaning that he has bloomingdale focus. i don't know if you've seen the stores. the stores are electric. >> electric? no,i haven't. as i said previous lly, i don't- >> macy's will be harder to turn, but what he's doing with macy's is he continues jeff's

approach of closing the ones that have bad numbers. so, should the stock have six times earnings? people think the department store is dead. i understand that. i don't think -- i think tony spring can resurrect it. watch -- >> but at the same time, all right, but 24 bucks. sold to you or not? here you are, macy's shareholders, 24 bucks, take it or not on a $19 stock right now? it's going to take a while. it's not going to trade at $24. >> this is that dilemma. do i take the $24 now or bet that i'm going to get to $30 in three years? $24 in this market seems good. >> you're taking the $24, jim. >> i know. and i don't mean -- >> you are. move on. >> the market doesn't want to give tony spring his due. the market is down 504. >> give me the cash. figure it out as a private company. >> all right. >> glad we settled that. we don't need to -- >> how about poultry, david? poultry was up. >> enough with the cpi. >> why do you think the market's

down, because of macy's? >> i don't know. let's talk about ubs for a minute. let's go overseas, shall we? bloomberg story. the stock is down. it's almost a year since credit suisse failed. >> i'll go with you. u.p.s., down three, and ubs. i'll see you u.p.s. and raise you ubs. >> shares down. substantial increase in regulatory requirements under reforms the swiss government is advocating for in the wake of the collapse of credit suisse. the council reporting banks that will basically be -- what else is there? >> santander. >> that's not a swiss bank. >> but in europe, it's the largest bank in europe. >> must holdal significantly more capital against their foreign units. ubs very aggressive in the u.s. once again. forget, though, credit suisse, they were a major player for so many years. all they did was get everything -- just get things wrong for so many years of getting things wrong. >> they've been on the wrong side of the trade for --

>> remember archagos? anyhow, that's why ubs shares are down. back to our domestic stocks. what do you got? >> nvidia's up, so therefore, if -- remember, if you think that nvidia is a dog, then you get your little chancy here. >> up, in part because of the morgan stanley price target move we mentioned. they're talking about a stock based on their $25 calendar year -- 2025 calendar year estimate, the stock trades at 28 times. >> if i have to hear -- >> 28 times. >> if it's part of a bubble once more, i say, again, people don't understand that they have tremendous earnings power, that they're well ahead of everybody else, that blackwell is going to crush everyone. that's their new iteration. but david, look, we're yeast u -- used to this. these stocks go down. the reason i've said, own it, don't trade it is because it's inexpensive in the same way that alphabet, google, is

inexpensive. amazon is expensive, but it's doing the job. >> i was going to mention amazon we go through some of the mag seven. we talked about amazon yesterday as it approached $2 trillion in market value. didn't quite get there. >> it's barely down. >> it's backed off a tiny bit, but right near all-time highs. >> it's barely down. >> it's not cheap. >> they have andy on tomorrow on "squawk." >> on "squawk box," i saw that. >> andy is not promotional. he's very calm. giant fan. sorry. but i think that in the end, that stock's had a very big move, and if someone wants to sell them, i'm not going to fight him. i'm not selling any from my trust. what are you doing? >> i'm looking through my notes to find something else to talk about. >> have it in your head for heaven's sake. >> i have lots in my head. may not compare with quite the number of voices in your head. >> oil and gas. >> you really want to talk about oil and gas? >> people don't stop recommending them. i thought it was interesting. >> i wanted to talk about bytedance. it's a private company, but you

know what? sometimes, we should talking about private companies. they're enormous. private credit is enormous. bloomberg reports that earnings before interest tax, depreciation, and amortization, $43 billion in 2023. put a multiple on that. >> wait a second. >> $40 billion. >> where's that come from? >> yeah. >> that's amazing. >> that's what they're talking about. we talk about tiktok here. we haven't actually discussed that story in a while, in part because the senate, we thought, might move very quickly to move its own bill or companion bill to the house's ban on tiktok here in the u.s. hasn't happened as of yet. but bytedance has so much going on in the chinese market, in the form of doien, which is morphing into an all-in-one platform, akin to ten cent's we chat, and encroaching on alibaba in terms of e-commerce.

bytedance. amazing. one day, it will come public. i'm not sure -- it's not going to come public here. but i mean, put a multiple on $40 billion ebitda growing at that rate. >> i'm astonished it's that big. that was something that might transcend even the problems we have, fitch downgrade, yellen having -- >> one of the largest private companies in the world. >> that's incredible. >> yeah. i'm glad you appreciate that. now, you get to talk about a public company again, jim. go ahead. >> okay. i'm going to do that. i'm going to talk about -- >> you got to look through notes? isn't it in your head? >> david, i'm going to talk about tesla. >> okay. >> every day. the long knives are out for musk. just when everything was going up, everyone was a fellow traveler, now it's going down. he's tripolar, which i think is really unbelievable. they're studying that at hopkins. he's despised. i mean, it's incredible. full self-driving, you know, hey, we got to -- oh -- >> nobody believes in full

self-driving. >> lithium is bottoming. remember when he devoted one call to the incredible rise in lithium. >> yeah. >> you got that going. but i think what he lacks is sales. that's often -- >> i feel like you've been warming up to the stock. >> what will happen is cathie wood will come on air, use a 200 times earnings, $800 price target, people will say it's the bottom because it's cathie wood, and you'll get a rally. >> or ron baron will come on. >> these are fellow traveler, amen corner people, they always say it's done going down. if i said nvidia's done going down and it doesn't, they're going to put me in the stockade over here. >> they got a nice safe downstairs. they can just put you down there. way down deep. >> you never hear from me again there. >> no. >> i'm just saying that tesla, right now, it's on the other side, so everyone thinks that this unbelievable magician, brilliant man, is not -- no

longer capable of coming up with anything. and i would rather be an insurer. i'd rather be with buffett in geico. >> i'm not sure you want to be with banks. bank of america, of course, that bond portfolio, always -- yeah. >> they're doing fine. >> because their long-term bonds are far lower rates. >> we didn't talk about the rails. those are going to be up. norfolk southern. those are one-way stocks now. norfolk southern. good proxy fight going on there. >> let's give people a quick look at the bond market because it has been a big mover off that cpi number this morning. as you might anticipate. as i've said, two years, perhaps, a bit up more. where are we now? 4.496% on the two-year. both yields, obviously, appreciably higher, in part on the belief that, hey, that fed, maybe we don't see any rate cuts in 2024. we'll be right back.

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let's get to it. got time for stop trading from jim. >> one i wanted to be able to bottom fish soon was boeing. morgan stanley goes 235 down to 180, production is slowing. the stock was getting hit. i wish i had something positive to say. >> do you think it's time i'm due an apology for all the crap you gave me for getting you you out of the boeing. >> that's why i did this at the end of the show. i want bell to know that -- david's mother -- i am apologizing. you got me out. i missed the 100 point move but

boeing is still too early. >> it does go back. the reason i'm referring to, the conversation we had where you were talking about the pain and difficult things of boeing yet you hadn't chosen to sell the stock. >> you were right. i got out. i didn't make money but i got out. i have a company tonight, david, that is a little off the beaten track. it is a mushroom company. >> you got a mushroom company. >> a health care company. a little off the beaten track. >> mindmed. >> we're talking ha lewis najen eccs? >> yeah. not the kind from chatgpt. we can hallucinate chat. >> opening up new neural pathway. >> i thought it would be a nice diversion from the gloom and doom. >> you say you get to an age, a full trip, you have to have

something guiding you. it can be beneficial. >> ket mien. >> maybe you and i will try that some time. not the ket a mean. get the mind guy -- >> you had a bad option today. if you don't know what you own, sell something. >> he's jim cramer you'll see him tonight on "mad money" as for us we'll stay on top of this morning's selloff. don't go anywhere. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

good wednesday morning welcome to another hour of "squawk on the street" i'm sara eisen with david faber. carl on is assignment today. selloff mode as we digest a hotter than expected cpi report. another hot read on inflation. the s&p down a full percent. nasdaq down a percent as well and nasdaq down 183 points. almost 1.5%. treasuries in the eye of the

storm as we've seen yields higher across the board. they've been inching higher but look at the 2 year note yield, a new high back to november, 4.9%. bumping up against the 5% level. 30 minutes into the trading session, three movers. delta is moving higher after beating earningsest at mas swinging to a profit in q1 we'll look at the quarter later this hour with phil lebeau. deckers taking a hit after a street downgrade and a price cut. truist saying it has concerns over the growth of the brand. and nvidia trying to buck the selloff. the stock trading in correction t territory down 10% from recent highs but up today 2%. we have economic data crossing the tape let's get to rick santelli. >> these are february numbers,

whole wholesale inventories the final numbers. it remains up .5% and that is the biggest month over month change going back to november of 22. on wholesale trade sales, a fresh number, expecting the number just below 1%. much stronger up 2.3%. that happens to be the biggest positive month over month change since march of '22. a subtle revision of last month from minus 1.7 to minus 1.4 so part of the pop in sales is reversing last month's negatives but both are positive february numbers and should in many ways impact better gdp numbers and hopefully fill the pipeline in the future. we know we've had bumpy rides along the way. interest rates, what moves we've had.

472 was where it was, currently up 495. cpi, 444 now up 439 up 15 basis points back to you. >> is there a level we're watching? like a breakout? obviously back to november highs now. >> yes. i would say that really, in my opinion, the breakout was when we closed above 433 from a technical basis. i think four and a half was always in the card my next level is coming in around 467. >> got it, thank you rick. >> on the ten year. >> showing the two year now near 5%. part of the move today is really driven by the cpi report. >> i'm so glad you're here. first of all welcome back. >> thank you. i couldn't miss the march cpi. >> an incredible trip. 30 hours of travel back and forth. i'm sure you have no idea where you are. but you're with me, back in new york. >> i'm a little messed up.

no directs from new york to china. >> i love when you go through the components of the cpi and tell me what's moving and not, give me your take point for the headline versus the estimates of .3. what's it mean, sarah? >> the overall take is the fed and the market was looking at january and maybe february as okay could be an anomaly seasonal factors that's why it was so disappointing to get another read of .4% of a month over month gain on the headline. there's the change, the .4%, matching last month but those were hotter readings and we wanted to see going into the next quarter lower readings. the disinflationary trend from last year was still intact. so now the numbers are higher than the fed wants them to be. look at core, the fed takes out food and energy, more volatile. also .4% increase there. and a higher number there in

terms of the year over year number. and a couple more, core services, exshelter, rent because that's the super core that they look at. that's a problem. rose .6% on the month. and then, over the last three months that measure has surged 8.2% at an annualized rate. that's not what the fed wants to see. >> that doesn't sound good. >> the upshot is, the fed is saying it left its options open need to see more evidence we're go down to 2% this is not that. >> so less than 20% at this point -- >> we were confident earlier in the year we were going to get a cut in june now not so much. we punted to november. getting two rate cuts now that the market is expecting? we'll see. there are those that say no rate cuts this year because the economy and inflation -- >> but things do change as we k know. >> things can change.

i want to go through the cpi and show you where the price pressures are coming from. good news and bad news. food at home continues to decline, no real inflation month over month for grocery prices. food away from home, 4.2 restaurants. >> yeah. >> year over year increase, not great. shelter sticky still, 5.7%. go through some of the other service measures i wanted to pull out. transportation services were really high. >> i saw that as well. >> month over month. and that has to do with car insurance. look at that yearly year gain in car insurance, march-to-march, 22%. >> significant increases in different states they happen at different times. eventually you get to the end you expect but to your point it's painful. >> it's painful. >> the good news is i show you new and used cars here, goods

deinf deinf deinf deinf deinf deinf deinflation -- deflation is still a thing. gas prices have you seen it? >> gas is going up. >> gas is going up. we're higher than where we were as you can see on a week, on a month, on a year basis on gas prices. americans feel that and it filters through. so the next stop is ppi, wholesale inflation we get tomorrow both factor into the fed preferred measure the pce coming towards the end of the month and that will be definitive. but the market is telling you, rising dollar, rising yields, rate cuts later. >> later. >> not sooner. >> and later obviously means a lot more data between now and then that we have to digest to figure out if ever. >> correct. the problem, and it's not so much of a problem is the economy remains strong. and nominal wage growth is 4 to

5% not consistent with inflation. and gas prices are on the rise and food prices are high and services are high because people are getting paid so they're paying for it. so it's not all bad. >> no. the economy is strong. >> the economy is strong. and that's okay. but you don't want to see inflation stay stubbornly high when rates are already more than 23 year high and considered in restrictive territory. >> i suppose they're restrictive. although for those at home and looking at their money market account, versus an allocation to equities when you get up into the high fours or five that's attractive. not a bad thing to earn some interest on your savings. >> good for savings. not good if you're trying to get a mortgage, if you're waiting for the lower rates to get a mortgage and we got them for a little bit and now the rates march back up. auto loans. all those loans that are sensitive, credit card rates to what's happening on interest rates. another headline i wanted to

mention, what's not helping is china has not been really been helping on the growth and market side. fitch cutting china's ratings outlook on growth risks. they warn about rising debt and warn the economy hasn't been as strong. >> we'll get to it in more detail i hope at some point but any bigger takeaways. forgetting your time with yellen, that was the main thing, but if you have any sense for what's going on in china? >> that was a peking university p . i was there over the weekend and it was a holiday. it was the tomb sweeping holiday, so people were off work and more people in beijing at the tourist attractions. we went to the some of the malls. my sense -- first of all i loved beijing i hadn't been there before. thought it was a great city. the forbidden city.

7,000 structures. >> so cool. >> really interesting history. they love yellen, as i mentioned many times. >> you mentioned that. >> i think that's pretty unique probably among american policy makers not sure who's coming next on that front. but it doesn't feel weak. felt like people were out and about, going to nike and adidas and lululemon and the gap. amazing to see the brands we talk about every day those are the main stores along the with ev show rooms in the malls that we were at. >> of course. >> but food was good. just takes a really long time to get there and hard to get a visa. so tourism. i didn't see a ton of westerners and the airports were empty. >> and takes a while to adjust back to the time zone. >> what day is it? >> if you fall asleep i'll wake you don't worry. let let a bring in mike santoli for a take on where we stand. s&p down 1%. >> it's cpi day, sara, that's

all you need to know. it is also wednesday. >> that's why i came in. >> i figured that. down 1%. what's interesting is where the market immediately went to, s&p 500, 5150 thursday's low. spent most of the last month twine 5150 and 5250. so the point is the market was sort of testing its tolerance for that level. see if it holds see if we can still rotate what did the market immediately go to this morning when it needed a little rescuing, it went to nvidia and meta and lilly. basically the themes that are not sensitive to cpi and yields at least in an immediate term. so we'll see if that keeps working. the market is having its patience tested as well, in terms of having inflation fall into line. i keep saying this, back late last year, the decline in inflation and the fed pivot immediately made good economic news, good market news. it meant all they cared about

was getting inflation in line they didn't think they needed to slow the economy much to get it done. that equation is now getting questioned more, sara was saying about services based inflation, which is the stubborn piece. you're finding people saying it's a matter of time before the shelter factors start to kick in and maybe that takes some of the pressure off of cpi, people saying pce, the fed's target, is a little bit more tolerant right now of some of these moves in the end prices, in other words a big spread right now between cpi and cpe and if the fed wants to anchor to those things that's fine. i don't think the market needs, in quotes, rate cuts soon but it becomes harder to wait. if the ten year goes to four and a half and the short end higher, and it's longer and do we have to hike again, it raises the odds of a fed mistake.

it raises the odds the economy is not going to be able to handle it. that's all that matters for market. it's not really the valuation math between yields and stocks to me as much as it can the economy handle what the fed has to do in terms of patience. >> you know, secretary yellen said that she's not worried, inflation is going back down to 2%. she's been on the economy and the nonrecession call but wasn't right on the transitory inflation call. after hearing that, i hear from ceos and cfos they say we don't agree. economy is strong, inflation remains sticky. they're the ones, i guess, passing it on. so people are getting higher wages and then those services prices are absorbed. >> what's she basing her view on? >> inflation expectations are very well anchored. we've seen a little bit of a creep up but not much. she's a central banker at heart, that's what she looks at.

they have not shown anything worrisome on that front and we've already seen -- it has been a fairly large slow down in the inflation rate from what % to where we are right now in the 3%. and so, she thinks the shelter ultimately is going to -- >> exactly. as you plug in market based measures of rent to the equation for cpi it gets you towards the target. not -- you can't just do that. you can't just sort of tweak the methodology on the fly. that's what gives confidence to people running these models and saying that's where we're trending. i think it's a decent chance that 2% remains this kind of aspirational goal the way that 2% was aspirational on the upside in 2010s, we went years without getting up to 2% inflation on the sustainable basis and did okay. you tried to tweak policy along the way. i know i talked to you about the 2015 example when yellen was fed chair and they wanted to hike,

get off zero. the economic data none of it said they should. no growth, no inflation, and they said we're still going to force a hike. that's the only way to punctuate a rate cycle, do the opposite of what you've been doing. maybe that's where we are with the current fed saying we need to squeeze an ease in there. >> an adjustment not an ease is the way they're looking at it. >> yes. >> but they want to see more progress or at least inline numbers and we're not getting that. >> that's why they hope to get lucky in the next couple of months. >> mike, thank you. let's get more of the streets, david zervos joins us. good to have you. david, give me your take on the cpi print and the market reaction. >> you know, i guess there's disappointment but at the end of the day i like the market

reaction. i like the fact that the curve is inverting. i like the fact that as sarah was talking about, long-term expectations are remaining anchored. and people are adjusting the timing of these rate cuts. these what i like to call victory cuts. victory still a little bit elusive and the cuts will come a little bit later. i do think, david, it comes down to some of the things we've been talking about on the sessions that we've had the last year or so. that policy really isn't as restrictive as people think it is. and there's a lot of folks at the fed still trying to figure it out, the market trying to figure it out. i go back to my thesis, which has been the balance sheets that the central banks are still highly accommodative. so i don't know if i'm right or wrong but i certainly feel like some vindication on the idea that policy is just not as restrictive as a 5.25 to 5.5%

rate that mike suggests. >> so based on that and this print we got today, i know you were not one of those looking for four or five or six rate cuts in 2024 but looking for any let's call it in the back half of the year? >> so i made a clear statement to our clients to start the year. it's not about how many or when. it's just about ability. which means if things get messy, a bunch of data starts to turn sour and negative, both inflation and growth, and i think they have the ability to cut and that wasn't in play over the last couple of years. so that fed put is there. maybe today the fed put is a little less powerful because they're going to be thinking, well, the inflation is a little sticky. but i think we've come a long way and we should celebrate the almost 600 basis points of disinflation that's occurred the last two years. hopefully that's not transitory. i don't think it is.

i think it's more in the yellen camp but who knows. nobody knows. i don't want to base my views on that. i want to base my views on the fact that really where we sit today is a place the fed has accomplished a lot and has credibility. what the market is telling you today with the moves and fixed income and the equities aren't that bad, still 7% for the year. it's going to take more time but the fed's commitment to anchoring long run expectations has never been longer. >> i wonder if we're in this cycle where easier financial conditions are making it harder to fight inflation? if you look at housing for instance, we saw rates come down as the market got really excited about fed cuts and that stimulated some more housing demand and housing activity and all this optimism in the stock market and bond market. so it might make it hard to cut for the fed just because these

financial conditions will go easy. what do you think? is there a link? >> i think you're right. i think a lot of the financial conditions are easier than we thought. i think a lot of what has transpired with the fed's balance sheet and kind of immunizing wall street from a lot of traditional losses it would have on their mortgage books and other books because they owned a lot of these securities. i think that helps with financial conditions. i think our financial sector is in incredible shape and that's a stimulus, even as rates went higher. so i think there's a lot of effects, sara, that we still don't understand. that we don't process fully from 15 years of running extraordinarily large balance sheets at central banks. we have 7.6 trillion still of assets on the fed balance street, 8 trillion on the ecb balance sheet, 6 on the ecb balance sheet. i think our efforts as economists need to center on that. because clearly something is not

right. 550 basis points in a normal historical setting would have knocked the economy down more than this and it just hasn't. it's just continued to accelerate even as inflation has come down the last few years. so i think a lot of soul searching has to happen for economists, rethinking of models on how interest rates transmit themselves through the financial system what you're talking about, but more broadly economy has a whole. it's been an amazing story for two years and we need to better understand i think what the wholistic level of policy restrictiveness is balance sheet and rates included in both. not just focussing on rates. >> david, to be continued. and it's certainly worth continuing to think about as well. in terms of that $7.6 trillion balance sheet. david zervos from jeffries.

nvidia shares higher in to today's selloff but the stock is in correction territory, down 10% from recent highs. plus the state of the financials, earnings from the big banks a couple of days away, what investors need to know. >> and delta airlines another bright spot in today's sell off. what's ahead for the company on the back of the latest rul. ests we have the s&p down a little less than 1%. energy is the only sector higher. we'll be right back. the all new godaddy airo helps you

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welcome back to "squawk on the street." nvidia shares higher in today's down day but the stock has fallen into correction territory, down 10% from recent highs and the semis as a group lower for the month. the next guest believes the periods of consolidation sets up for stronger moves later, vivek aria from bank of america joins us now. do you see this as the stocks needed to cool down? >> i think, sarah, this is the ninth or tenth time in the last two years we have seen nvidia stock have a 10% or so correction. every time it has done that it has been a good opportunity to relook at the stock. because fundamentally what's happening is that we are going to have at least a four plus year of the a.i. deployment infrastructure across cloud service providers, enterprises.

still in the second year of those, so anyone trying to call this as a peak in my view is being too premature. the size of the opportunity is growing. size of opportunity is growing. second the pipeline is extremely strong. today a lot of the a.i. infrastructure has been built on a product they conceived during the covid time. generative a.i. was not a thing at that time. it was the new part of black welcoming out that we think is coming out with generative a.i. so a longer opportunity size, much stronger pipeline and the third most important thing is valuation. we think nvidia is the cheapest large cap growth stock in our coverage. selling for under 30 times, 30% plus. the s&p 500 is trading two times price growth ratio and nvidia is

less than one time. we think increasing size of opportunity, better pipeline, and volatility is part of the game here. >> i wonder if investors are worried about competition. we got the news about google announcing their own armed design cpu thchip. is that a threat to names like nvidia. >> the competition is going to be there since the a.i. market started we have seen custom chips amount for 10 to 15%. and we have seen nothing that changes that view. google has been designing their internal chips, actually designing in collaboration with broad com since 2017 and to now their data center business has probably grown 20 to 30 times. so google designing their own chips i don't think is extraordinary. cpu is something that nvidia

doesn't even sell to them. so i don't think that cpu announcement should have any implication on nvidia. the other interesting thing that i think sometimes gets forgotten if you look at who is ahead in terms of monetizing generative a.i. it's companies like open a.i., microsoft, meta. look at who's the largest adopter of nvidia chips rather than custom chips it's microsoft, meta, versus others, so is it coincidence? >> do you think they're hyper scaler partners, the ones spending the money on a.i., will be able to go elsewhere to another competitor or develop their own like google is doing? >> i think that we will continue to have this mix because there is just a wide range, right.

the large cloud companies have internal workloads, surge, monetization of the video infrastructure and they have pluc public work clouds where enterprises are working with them to set up their own a.i. training and inference and that's what nvidia does extremely well because it has this large base of deployed hardware based on their operating system and that is what incentivizes enterprises to come and ask for nvidia based hardware when they come to the public clouds. the big picture view is accelerators is $100 billion market we think it doubles in the next three years at least and in that nvidia maintains 75, 80% market share and the rest of the industry has 20, 25% market share. so there's a range of choices but i think it's a large and prospering market.

>> you're a buyer on the dip. thank you for joining us. vivek arya bank of america, $1,100 price target. >> the key point is the multiple staying below 30. if you get the earnings growth -- >> it's cheap then. still to come, keeping an eye on delta. shares are higher even amid the selloff today. looking at the numbers and the sector. tomorrow morning you won't want to miss this, an exclusive with amazon ceo andyas at live on "squawk box," 8:30 a.m. we'll be right back.

welcome back to "squawk on the street" i'm contessa brewer with your cnbc news update. the exchief financial officer of the trump organization was sentenced this morning to five months at new york city's riker's island jail his jail

time for perjury comes a month after he admitted to lying under oath in donald trump's civil fraud case. the u.s. and japan are set to announce a historic upgrade to the security alliance today. president biden held taulks wit the prime minister. the pm's visit is first state visit by a japanese leader in nine years. and the first ever limit on so called pfas in drinking water. it's to reduce the lowest levels measured. the agency said it will reduce exposure for 100 million people and prevent thousands of illnesses, including cancers. back to you. delta a bright spot this morning swinging higher after swinging to a profit if the first quarter. phil lebeau caught up with the ceo. what are the headlines?

>> what stands out is the consistency of the first quarter. they beat the street in terms of a bottom line profit by 9 cents with revenues coming in this just shy of expectations. but the numbers within the numbers, this is a tough quarter. in terms of let's look at cost per available seat mile up 1.5% the guidance earlier in the year was an increase of 3%. better than expected. passenger revenue, flat, and swung to positive domestic passenger revenue. so an improvements in the operations and that's filtering down. demand, internationally it's hot right now. we talk about how transatlantic demand in the spring and summer will be strong they're seeing it with transatlantic and transpacific. corporate travel, that's improving as well. here's ceo ed bastian.

>> we've seen a 15 point acceleration since the start of the year in business travel and we're now back revenue-wise, at or above pre-pandemic levels. volumes still a bit off, maybe 90% but we're doing really well. >> shares of delta this year, seeing a split in performance between delta shares and their competitors in terms of what they've done this year. delta reiterating the guidance to earn between 220 and 250 a share in the second quarter. the street right now is 223, that was the consensus this morning headed into the results. bang to you. >> phil, explains the bump in shares today. appreciate it. after the break, former dallas fed president richard fisher here to weigh in on the hotter than expected inflation report. what it means for possible rate cuts ahead. markets have recovered some of the early losses, the dow down 335 it was down about 500 at the start of the hour.

s&p down .75%. energy is the up ononly sector higher. and meta shares bucking the trend also higher. noos nasdaq down .8%. we'll be right back. the road to opportunity. is often the road overlooked. at enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. because we believe the more ways we all have to move forward the further we all go.

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welcome back to "squawk on the street." traders slashing their bets on a fed rate cut in june, following that hotter than expected cpi print we got for march. let's bring in richard fisher. great to have you back, richard. the odds for june go for 50 before the report to around 20% chance now. does that make sense to you? do you think we'll get it? >> it's all over the place. feds funds aren't much for a predictor. look at what they expected at the beginning of the year, even

going to say six rate cuts, et cetera. you just have david zervos, one of my new colleagues i'm the new colleague at jeffries, and i agree with what he said. i think you have to step back here and take the look from 30,000 feet. what's the objective of the fed? it's to wipe the egg off their face for when they let the inflation horse out of the barn as i like to say. brought it back into the corral, a little distempered. it needs to calm down. until that happens they're going to keep rates pretty much where they are in my opinion. the other thing, sarah, we have to worry about is enormous fiscal deficits and financing rolling over treasury debts. now having gone to the short side, as they announced at the end of last year, the cost of money has gone from almost nil

short term to the u.s. treasury to 5%. and that keeps compounding. the first half of this year, for example, we spent more on interest costs than we spent on defense spending. this is, to me, good stuff to the standpoint of forcing fiscal authorities to hopefully get their act under control. >> don't you think the bond market is reacting more to just the fed policy path at this point? the economy, where inflation is going, when those things calm down you don't see a lot of worry out there about the fiscal path or the size of the auctions and stuff like that. >> i think it's a little bit of both, sarah. we're beginning to see that build. clearly they're coming off the fed, all the stuff we just talked about. but you can't reduce the pressure that comes from having to finance these massive refinancings and growing deficits we have in the united states. it's not just us. you just had the japanese prime

minister on that clip on the news. they too, all of europe, everybody is going to market at higher rates than they did before. and their needs are tremendous given defense costs in had particular because of russia, north korea, china. so this is across the board and i think it's enthaving some influence but clearly what the fed does is anchor expectations. >> i don't know what the federal budget looks like if you slash things, particularly to your point given defense needs at least the seemingly endless needs we have in terms of providing defense to others not just our own. >> this is purely economics, settlset aside who's in office. there's no difference between republicans and democrats when it comes to spending with one

exception, democrats used to enjoy it more, that's what my mentor used to say. $10 trillion has to be coming to market this year. at a much higher cost. on the longer term side, the ten year and so on, it was 2%. now it's 4 1/2. now i believe, my own personal belief for what it's worth. the risk is for higher rates on the longer side than for lower rates. that has to do with the option sizes running at 60 billion and so on. so again, fed fund futures are important. they're fun to trade around. to me they don't provide much information. and one last thing if i can say this, carl -- >> it's david, actually. >> sorry, david. i can't see you. i hear your voice. david, if you look at the analysis we got this morning right after the release, people say take out the insurance cost, take out this, that.

that's what arthur burns did when he was chairman and what led to the disaster we had in the 1970s. so you have to take it as a whole, cpi is 3.5%. see what the pce reports out as. these are the facts and the fed is held bent, correctly, on getting back to that 2% number they keep touting as their target. not going to change. >> i guess with your view that rates will remain higher, and already we're starting to see these elevated yields again across the curve, back to november high, dollar stronger, i wonder if that starts to weaken the economy to a point we can look at rate cuts again? >> sarah we've been -- everyone is forecasting a recession, hard landing soft landing. i thought david zervos was good

this morning explaining it. the markets are still trading rich, the spreads are still narrow and that is an accommodative stance that the market is leading us into and so far helping to propel the economy. >> absolutely. richard fisher always appreciate the incite good to see you. >> thanks for having me. >> still a warner brother's discovery board member as well. no longer at&t. >> i didn't realize that. >> a levered company once again the shares of levered balance sheet companies get hurt when we have an up yield day. >> he's telling that board higher for longer. >> i know. >> cut down that debt. >> cut down that debt. quick programming note we're a day away from the second installment of cnbc's "cities of success" an hour long special highlighting businesses and power houses. tomorrow is about denver and

boulder. kro carl is going to join us live with more ahead of that, which airs tomorrow at 10:00 p.m. eastern. quick break, don't go anywhere. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

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markets off the lows of the morning but you can see still down sharply on what was that hotter than expected cpi report. let's get to bob pisani. don't have to get to him, he's right here. i can touch him. >> feel so good when you can touch me. >> we've been here 30 years together. >> enough of that. the market? >> the narrative is getting more complex. let me explain why here, obviously the good news is the economy is strong and earnings are strong. that's why we're not down even

more. but if you look at what else is going on you have the sticky inflation so that makes this narrative more complex. this is bad news for small caps, speculative tech, reits and utilities but good caps, but good news for the inflation trade. small caps down much more than midcaps and big caps. borrowing costs are higher. higher risks are small caps. all of this is perfectly understandable. big cap tech, not down as much as you might think because of the earnings power that's out there. apple, microsoft, this is all 1%, half a percent, and nvidia is up today. what gets hit is speculative technology, which obviously have higher costs associated with them. here's kathy woods' stuff, teledoc. you see down two to three times down more than big cap technology. utilities, this is a little complex, but higher rates are generally bad for utilities.

higher rates mean increased borrowing costs. so if utilities can't pass on the high costs, tehe equity investments suffer. reits are really tough on this. it's a complex issue. reits rely on debt financing, rising rates, increased borrowing costs, higher borrowing costs hurt profit margins. that's why you see them down so much here. if rates go up, because the economy is strong, that can benefit long-term reits. so the knee-jerk reaction is sell reits on this, but long-term, strong economy, can it be helpful to reits again. kind of complicated? what's working is the inflation trade. we haven't used that in a while. commodities and look, we've been talking about the refiners like valero, marathon, new highs recently. the sector is skbroverbought. that's the problem to the sector. for stocks to work, you have to have companies that are not

super interest rate defensive. kroger, walmart, procter & gamble, constellation, as well here. and inflation in some parts may not be so bad. higher rates are good for insurance stocks. look at these insurance companies. they're all up here today. life insurers, remember, they reinvest the premiums from policy holders, and put them in bonds. so the higher yields lead to higher investment income, and that enhances the returns on the portfolios, and you see insurance stocks are doing well. this is all kind of tricky. and the bottom line, the most important thing is if the economy holds up, the earnings are going to hold up. and already, you see, we're off of the lows. i'm not saying it's because people are thinking long-term, but that to me is the key. higher rates with strong economy and strong earnings is something the stock market ultimately can handle. higher rates with an economy going down, of course, and earnings going down, now we're going to have much bigger problems with the s&p down 50

points. >> well, i think, also higher inflation not good, right? because it does increase the chances, as mike was talking about, of a fed mistake, right? if we get stickier inflation, what does the fed do? even if the economy is in a better place? >> we had six interest rate hikes in december, three a few weeks ago, now we're going two, essentially. does that mean the s&p is down 50 points was we're going from three to two? i'll take three to two. and 50 points down on the s&p, any day. so far, i think that's a pretty modest reaction. >> if the economy holds up to your point. thank you, bob. coming up next hour, we'll check in with evercorps's vice chair krishna guha, that's coming up at the top of the hour. be right back, stay with us with the dow continuing to recover f e wsf moing. down 350 right now.

coming up, big interview tomorrow on the show, the imf managing director, kristalin georgeiva. it's her so-called curtain razor, what she does ahead of the imf meetings next week, when she gives a bit of a preview.

and the last time they did in january, they expected 3.1% global growth, not too shabby, soft landing, and moderating inflation pressures. i do wonder if she changes her tune, based on now three hot inflation reports out of the u.s.? >> yeah. >> we'll also get an ecb meeting tomorrow. no one expects a change there. commentary always interesting. >> i can't wait. >> good to have you back. >> thank you. >> thank you for traveling 30 hours. >> it was worth it! >> yeah. absolutely. all right, a lot more coverage of this market sell-off after that hotter an eecd thxptecpi number. don't go anywhere. you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. great job astro-persons. over. boring is the jumping off point for all the un-boring things we do. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank.

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good wednesday morning. welcome to "money movers." i'm sara eisen with mike santoli live on the floor of the new york stock exchange. markets move lower following that hotter than expected cpi print on inflation. krishna guha joins us with some reaction. >> we'll get to three stocks that oak mark says are undervalued, including one householdnamein the industrial sector. >> and one chartist says the regional ban