tv Squawk on the Street CNBC April 13, 2022 9:00am-11:00am EDT
let's get a look at the futures after we got the cpi number hotter than expected 11.2% year over year we saw the futures come down into negative territory. dow down by about 35 points. nasdaq up by 14. take a look at the 10-year note. the inflation numbers were higher than amended, the yield is below where it was. that does it for us today. we'll see you tomorrow right now time for "squawk on the street." good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber some push and pull on futures. ppi runs hot up 11.2 year on year we have oil above $102 jpmorgan resulting shares under
pressure we'll dig through the numbers. why one fed president is warning it's a fantasy to think that modest rate rises can combat inflation and delta looking to return to a professional. imagine that as more travelers return to the skies. the company's monthly revenue exceeding prepandemic levels, carl, for the first time since march of 2020. >> jpmorgan is the lead, of course earnings do miss revenues beat first quarter profit down 42 driven by increased costs tied to bad loans and the war in ukraine. jamie dimon strikes a note of caution. jim, you've been framing as the credit reserves on one hand, the buy back on the other. >> yeah.
there's no doubt about it, when he buys back $30 billion, he believes that's long-term he won't buy at short term but when you look at it you say he was on the wrong end of the nickel trade holy cow, he's building reserves $900 million i thought we weren't going to do it the 5% loans so i'll put to you, david. >> to me >> you're my partner. >> always. >> carl, come on it was everything was pretty good especially by the way of equities that shocked me. he is talking some stock down. >> the challenges and the broader economy. >> yeah. >> gloom and doom. >> but he does that. listen, one of the things we appreciate about jamie dimon is you seem to get fairly straight from him there is that. never recovers from the last
quarterly earnings there was concern about expense. i don't believe that'll be the case here in terms of additional expense or expense coming in way above where the estimates had been and the stock prices never fully recovering they added to the loss provisions in a fairly significant way. >> yes. >> reflective of what mr. dimon is talking about on the call. >> right remember what drove it down last time was he had to increase the spend on technology. this time not really a focus if you think -- i mean, this is the way i would play it. let's say i'm the ceo of another bank, i will be sure not to mention long-term. is he worried about ukraine?
he's scared about china. i didn't want to hear it because those things could get better or worse. they don't have to necessarily both get worse. >> certainly the reserve build up is a change directionally. >> yes. >> and as jim mentioned, trading was a beat investment banking, though, a bit of a miss. mortgage demand will be a worry as affordability takes in. i don't know if you saw mortgage apps we have mortgage origination the bankers association said we'll probably be down by a third year. >> yeah and the refinance is awful. >>yeah then i worry and, david, did you know on the other side of the nickel trade >> no.
i didn't know who is on the nickel? >> i believe i do. i'm not going to share. >> you don't want wrong! [ laughter ] i don't know who is on the nickel >> oh, my god. a lot depends on the tenor of the call, which is ongoing now is generally positive. i mean, expect questions on the path for capital markets and normalization but, frankly, you know, we think overall this is not bad and the stock consume bli should trade fairly well on
the results. >> i agree. >> we have bank of america saying stock reaction should be positive we believe it should be positively and the pocket the short rates will go up it has to be huge positive base. why? >> only because you believe the economy is going to go into a significant downturn it says the consumers is strong. and the equity strategies and the market is not coming with the announcements. >> we'll talk about the consumer later in more detail through the eyes of delta.
>> right. >> but also through the eyes of car max yesterday. >> right. >> and bed bath today. >> right. >>well, bed bath the supply chain problems are awful and the fact this quarter has started off bad is awful buy buy baby is good know what they did a lot of this quarter, david >> i don't i didn't know who was the other side of the nickel trade. >> they bought back a huge amount of stocks only $80 million isn't it one of the things that used -- i used to say maybe the stock could be a takeover one day. >> yeah. here we go. >> yeah. your friend ryan cohen. >> yeah, he's my buddy you know that. he's going to go for ice cream cones gorilla. >> two companies that missed the quarters ryan is in there getting it done. they own harmon.
>> harmon is kind of cosmetic -- >> yes okay how about that delta >> just to put it on bed bath comps down 12. gross margins miss badly jim, they have a metric gross margins excludeing supply chain costs. >> no. it was horrible. i like mark. he remade the stores they're good but you need the merchandise, which always helps when you're a retailer i remember the great mickey drexler saying you have to have the inventory. you can't have way too much. they have way too little what is happening now is i think that they have to really start coming to grips with the fact that some of the parts are worth significantly because they've got a couple of good admissions. >> yeah. coming to grips with something doesn't mean you'll do anything about it i'm not sure what your
implication is. >> someone will come to grips for them. >> you think so? >> yes, i do. >> it won't be ryan cohen? >> and company not by himself. >> no. >> no. before we transition to delta, the broader market and yesterday's action, if we can get to that briefly. i had a couple of calls this morning. you hear this no incremental buyers have you heard that line before? >> yes i've heard they're staying away. >> it sounds like all right give me another explanation is it real is it a thing? you know, the hedge funds right now are netted out a lot of them are just low, so to speak they're not buyers or sellers or nothing. >> i think there's an important pivot going on >> get out of tech they're in tech. >> right and get into things they don't like like they don't want to buy -- a nice upgrade today they're not looking to it. i mean, they're not.
>> any take aways from the market sort of moved yesterday when we looked like we were -- >> i thought the interest rates were good. i prefer markets that open down. i got up this morning at 4:00 a.m. futures are flying on what? on what? why were the futures up big yesterday? on cpi hideous. >> hideous. >> we were looking for that second derivative and we got it. we got a bunch of reports goldman and peak inflation but that leads to ppi today. >> that's the biggest gain on record year on year we were looking for 8.4, jim and cathie wood yesterday on closing bell talking about the impact of inflation and the interest rates on her fund take a listen.
>> i think our ilk on stock is even if interest rates back up more i believe cyclical inflation is near a peak. if you look at last year near this time, april delivered a 0.9% cpi read. that's our comparison. we're seeing used car prices fall i think energy is even down month to month i think we're seeing cyclical turn down. >> that's cathie wood. that was four people in one day. >> yeah. it's hard to be worse. big category used cars. what did she do yesterday? she bought stratuses okay she didn't do well on the previous one yes, her company is not going to be hostage to inflation.
but it's hostage to being stratuses. it's not a great company i think there's two things going on with cathie wood. her long data and the stocks she's buying now it seemed to have very little vision i thought she liked twitter. a little shake up in twitter activists in twitter now she doesn't like twitter >> she was selling for we knew about elon's filing. >> right. >> she's inconsistent. >> yes. >> fair point. i like your combo today. very nice >>well, i'll tell you another one now. carl mentioned musk. you mentioned twitter. if he actually was buying on monday, conceivably we should get a notification today and in the filing either if he passed 10% nothing
says he will or did and nothing says he'll file on time, if he did. >> right given his potential violations in the past. it's possible. >> he has different filing requirements obviously under the 13 d it might give us some sense if we hear anything he was doing more buying. we're trying to figure out what went wrong on there. >> right fundamentalists are not that good and they can get better. >> right in terms of what the peak inflation. i believe to believe, i hope i believe. hope is not strategy i look at gold yesterday gold was up big.
>> we'll see all time high demand shares of delta surging after results. we'll dig through the numbers and talk about consumers willingness to pay up. another look at the premarket. we'll get to news on paypal, peloton, pvh got an upgraded at j.b. hunt today. more "squawk on the street" coins aomt.ntuein men mount everest, the tallest mountain on the face of the earth. keep dreaming. [music: “you can get it if you really want” by jimmy cliff]
delta rallying in the premarket and predicting a current quarter profit airline said monthly revenues exceeded prepandemic levels for the first time since march 2020. here is what ceo ed bastian told phil lebeau earlier. >> the demand is phenomenal. we've never seen in our company's history demand for our product and services at the level we are we expect it through the first part of the summer into the second quarter only about 85%. partly it's because international restrictions are limiting what we can fly internationally. domestically about 90%. >> so for the june quarter, they see operating margin 12 to 14. street at 6. >> look, i listen to a man who
can be critical and negative when it should be jetblue. there will be no merger. because pricing can go up big. >> yeah. i think we're both in the same camp on that as are many others in terms of opportunity to potentially get spirit to even listen to them. >> yeah. >> let alone agree to a deal yeah, overall are there they earning their cost of capital? getting close.
>> that's what the atlanta airport is like. >> i flew delta. i flew delta from palm beach it was a cool wedding what was amazing was -- if you don't want to the go on that plane, they don't want you on that plane because it's overbooked they basically offered you a free trip. you wait five hours. this is incredible >> yeah. there was a line stretching around i don't know for the delta club. you had to wait an hour to get in. >> this was sort of what bastian said this morning in defending the government assistance during covid. this is an industry that consumers depend on and have basically asserted we need this. we need to be able to move
around. >> i know people say you think bastian is being too clipped i mean, he'sfabulous we're glad to see it. >> i never got an ipad back i left on a delta pla -- plane that was like 10 years ago. >> i thought united was deserving of a shoutout. >> that's good we'll find out what made print in the days to come. cramer's mad dash and countdown
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unlimited data for as low as $25 a month. welcome back you know, the movement of freight in this country and where we stand in terms of too much supply, too much demand has been an issue. we've discussed it a lot. >> right. >> this is one of the boldest calls we've seen in the cycle. deutsche bank is saying j.b. hunt has come down so much that it literally is pricing in a recession. are you looking at this? and i'm glad we have the chart up i mean, you can argue they've gone from boom to bust.
this is a remarkable collapse. it's a crash i did say the other day that freight rates have crashed. >> you did and we also on friday we made note of that call from bank of america, i believe it was. analysts in question there downgraded the sector. >> very gutsy call. >> butyore premature to call a bottom in the cyclical stock ahead of what could be multiple rate increases
so i don't know. >> all right the stock ticked up a bit. >> corpus christi, yeah. no seats. >> no. >> it was coming back there there. >> that i get. i'm saying you're going to places unknown. >> i am. unknown. isn't this incredible? the back and forth between jim, me, and carl. >> i wish. you can catch us any time, anywhere we are a podcast right. so represented by -- >> yeah. how popular that is.
opening bell on the cnbc real time exchange in a moment we're talking about consumer, jim, with regard to retail dvh with a billion dollar buy back and revenue target for 2025 on top of what they put together yesterday. 30% growth in core fashion. >> yeah. they're doing it without china i hope they can pull it off. jamie dimon gives us too much. i thought pvh gave us too much optimism versus what i see in a
they said business was going to get good next year and businesses go back to the old growth rate. and plus 20 the stock is very cheap. and then he subsequently missed the quarter that he promised i'm doing a lessons learned. a lessons learned i shouldn't waive it for 23. i had a chance to bolt and i
through. >> no. right. you get down to this level and it's like really am i going to do it down. >> yeah. that's what i said what is the point? the whole point it's awards it all. i went out and believed a man i've always believed and it was wrong to believe that's on me i should have been more critical. >> resident. it happens ted williams. but that's what fraud does you ever see people on tv? they never have the stock that went wrong. >> that's right. i'm not that. >> you're not?
>> speaking of apple, key today reiterates overweight. they say, jim, the iphone is shaping up to be a minidisaster. >> yeah. overall demand is robust. >> yeah. it doesn't matter. look i look at the issue -- deserves some sort of medal. remember amazon would come to your house in the height of the pandemic no one is really doing that apparently in the china. >> china continues to be a concern as you might expect. we talked about it for weeks it's only in the last week that really seems to be having a true impact on the market
virus. it seems two plus years in -- >> counter intuitive. >> and the damage being done but, you know, trying to figure out what has gone on in china is a difficult thing to do for people who have spent years there let alone people who sit on a desk at the new york stock exchange. >> but i'll tell you what i hear from ceos. they are frantically trying to diversify a way from china not because of problems with
ports. not because they now regard china as unreliable. they didn't see they could become a lockdown country. people you truly respect are telling me they're unreliable. >> yeah. there are so many u.s. companies that are still deeply impassioned there. it's not like russia where you can basically say we'll take the $4 billion hit and get out. >> yeah. >> i know. so it's going to try to crush. >> i was going to mention a lot of defense names are close to breaking out to new highs. >> yeah. >> watch lmt and raytheon today. not only has putin declared peace talks are essentially dead today the foreign ministry said u.s. assets that are transporting military equipment down seen as legitimate targets. now why jim, the pentagon hoisting eight manufacturers to talk about where our capacity is if the war goes on for years
in terms of supplying weapons. >> if that's the case i don't want to be too mercurial raytheon is very inexpensive >> boeing is up almost 3%, by the way. david is going to start on me why i didn't sell the boeing he's going to start on me. i'm not going to let it happen [ laughter ] >> hey i'm your biggest supporter. >> oh. thank you. >> every so often i'm not. >> you're my number one fan? >> yeah. i just think that raytheon is doing very well. and we still haven't seen the weapon -- the laser weapon that shoots down planes. >> yeah. really for laser weapon? >> i know. i know you're not kidding. it's not austinpowers.
black rock reports on the same day. we don't usually talk too much about black rock we look at the european markets now. we take a look at shares not doing much generated $114 billion in the first quarter. positive flows across all product types, investment tiles, and regions, as well it's an enormous asset manager, as we know it was $952 asadjusted our investments over the build he said the all weather platform positioned them well he's talking about private credit something i've been talking
about a lot in terms of its sudden -- it's ur jensen in financing. somebody needs to go private lately s as well the energy transition. esg is such an important component now of the asset gathering that is going on at black rock it's not going to be a straight line, as my letter is wrote about and any energy transition has to be fair and just or it doesn't work we're witnessing it now. and now the excess demand. all of this is playing out is going to create an investment boom on the european part. there's a look at black rock shares up ever so slightly. >> i think that one -- i got a call yesterday about black stone. >> yes. >> these nonbanks may put up spectacular numbers. i talked about state street. these are trustee banks. some 350e78 don't want them
because theyfeel like exposure to the rates >> right. >> but this might be the key the companies that are custodian trustees and companies that are able to be sort of the role of banks. >> yeah. the banks are vidding credit to some of the pools of capital so they can lever it's not nearly as profitable, i don't think. >> i think you're on to something here, david. when i look at traditional banks. it's great the margins are so great. >> yeah. >> you want to get the advisory fee, as well it's important by the way, the banks are still participating. if you haven't -- we're talking about the financing of so many of these being done by private
credit funds whether it's owl rock or black stone and on and on. >> yeah. i don't know. >> who expected everything. >> right i think that it's something to watch. but i also think that if you ask me whether jpmorgan is going to go down another 10%, i don't think it can. >> right it gets to 126 this morning. it'll take you back to january of last year leslie picker has been listening to the calls good morning. >> good morning. that's right chairman and ceo jamie dimon noting the firm's internal model showing the severe adverse event in the economy is 10% higher than before he doesn't think there will be a recession in the u.s. this year. but notes he can't forecast the future. >> these are unpredictable wars are unpredictable
they have unpredibbleble outcomes you've seen the oil markets. they're precarious okay i pointed that out over and over those things can change dramatically for physical reasons, side reasons or. >> you know supply and demand. that's another huge cloud on the horizon. and we're prepared for it. we understand it i can't tell you the outcome of it stwrm we have to solve it. i just wouldn't bet on all that. >> relate think there was a lot of discussion on the call about why jpmorgan offered to take that higher than expected credit reserve build in the quarter amounting to $902 million. about a third from russia-related counter party exposure and the rest related to risksi the broader macro environment. they note in a note this morning that this is the first time management add to the credit reserve since q22022 it was in
the heart of covid the cfo noefrting the firm has various levels to pull ahead of stress tests in june as a result quite good about the capital position from here and a reassuring sign for the prospects of buy backs and dividends. still the overall results weighing on shares this morning. jpmorgan down more than 3% about 3.3% currently guys >> we know this. i are guess we don't want to hear from jamie dimon. i don't like -- obviously i mentioned it if the russians -- we're glib. if we say it could be contained. and i guess i i'm so used to jamie dimon being more confident, david i could see how someone might say, wow, i can get another. >> he's being realistic. you don't know.
>> yeah. but they're not selling citi that hard. goldman is up. >> yeah. >> i mean, the average person is not saying what david solomon is worth. they're saying solomon is taking care of it that's why i sat down with him he's waiting for volatility. getting it. >> i don't know. >> yeah. that's where it coming from. the environment of raising rates is an opportunity. more than it is a challenge. >> yes thank you. leslie picker watching the banks. do you think mathematically jpmorgan sets up the banks this quarter or not >> i think if you're solomon, if you're brian moynihan you realize what you shouldn't say you say it's uncertain times but we got your back we'll have rising rates. we like the consumer and we're not as exposed as other banks to international repercussions. >> right. >> jpm is up about 2%.
by the way quick reminder. get in on the cnbc investing club with jim. sign up or point your phone at the qr code on the screen. we'll check bonds and treasuries pretty wicked 24 hours of comments from bullard and the ft this morning br br brainard with the journal yet. the 10 year below 2.7 yesterday. we'll be right back.
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huge call by deutsche bank on research where they said you have to be worried the bears are saying there could be a 20% downside. we have no evidence that orders have slowed but this is the kind of call that two days ago would have knocked the stock down seven. because the ten-year is going up in price and down in yield a lot of people are feeling better about things and clearly by the way, jp morgan from just 20 minutes ago. so just be aware rates are down for two straight days 2.75 may have been some sort of level and people are ignoring the negative today and they ignored it yesterday until late after -- >> we did not hold yesterday. >> but i like the open down. >> you like those setups two-year yields down basis points this week. >> that is a big percentage basis. david, what are you working on >> so many different things. there is not really enough time to actually enumerate them all.
>> the nickel. >> the nickel trade has gotten my eye now. >> you won't rest. >> until i find out what happened. >> it is lincoln by the way. >> lincoln >> i'm talking about different no, i'm talking about other coins. >> i have no idea who is on any currency who uses currency any way? when was last time you took out a wallet. >> i use apple for -- docu sign is up. >> you mentioned tonight. >> we have dr. toppol, he is a worldwide scientist who is used everywhere except for in china >> wow. >> this lackdown is hard we'll see how it ends. jim we'll see you at 6:00. a lot that might happen between
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good wednesday morning, welcome to another hour of squawk on the street sara eisen is with us. >> welcome to the first day of earnings season. yields are down and dow is up 60 and delta and travel and airlines help out. jp morgan is off the initial lows as jamie dimon warns about a number of challenges. >> we're 30 minutes into the trading session. here are three big movers. paypal under pressure after the new ceo is losing the company for same job at walmart. and blackwell's capital reiterating the push for the company to consider a sale and arguing that peloton's made little progress, little to no under the new ceo bury mccarthy.
shares are down more than 35% since he took the role they're up 1.5% today. and earnings season kicking off. from delta to bed, bath&beyond and first we'll start with the banks. financials are the worst perf performer. leslie picker joins us with the details. >> they're digging through today's result and whether jp morgan specifically and financials broadly are being conservative or if they see something more concerning on the horizon. as it pertains to these earnings results. shares trading about 2.3% lower today off the lows of the session. but after the firm beat on the top and bottom lines but net income was about 42% lower during the quarter $900 million reserve build, the first in almost two years. capital levels also declined given the confluence of factors out there, inflation and
tightening and rate hikes and war and jamie dimon sees no way that volatility doesn't continue >> i cannot foresee any scenario at all where you're not going to have a lot of volatility in the markets going forward. we've already spoken about the enormous strength of the economy. qt and inflation and war and commodity prices, there is no chances you won't have volatile markets. that could be good or bad for trading and i think people should be prepared for that. >> there were some positives from the quarter trading revenue came in better than expected and loan growth is strong and according to the executives the prospects there are quite good block rock getting a bounce offer its earnings missing off the top line but beating on the bottom. due to lower asset prices as it still sought inflows of about $86 billion during quarter chairman and ceo larry fink on
their call discussing the macro environment and reiterating what he said in his annual letter about russia's invasion fundamentally altering the path of globalization as for interest rates, he sees higher rates as an opportunity, not a problem for the firm which of course has a variety of fixed income oriented etfs guys. >> david conrad joins us this morning at wbw, a steifel company joining us for our discussion it is great to have you have how do you square the buyback with the provision build >> leslie hit a lot of the key points in the intro. it was a mixed quarter buff i think what caught people off guard most of all was the decline in the capital ratios with now the ce t1 ratio around 7.9% i think there is risk with as eights as we now through the
year but it is a big head wind to the buybacks as we move forward. >> do you think he speaks for bank management at large >> well, i think in general, yes. i think one thing that you have to think about it that as we take a lot of the liquidity and we're seeing loan growth coming through, when you transfer on your balance sheet cashto loan there is a lot of capital that needed to be supported by that so i think we're going to hear that story from citigroup because of the exposure and the inflation. >> i don't know who has got one so i'll take one what is your expectations when it comes to reduced buyback as a result of the where the capital ratio is right now. >> i don't think the buyback is as material as what it sounds. i think if i took it to zero and which i don't intend to do, it is roughly 15, 20 cents to the number it is morethe sentiment on the
stock and just another head wind we've been pretty cautious on the universal banks. morgan stanley is our only performing name of that group. just because of the offsetso on revenue as we come from the high numbers which is probably more than offset some of the nii benefits and now capital is creeping up on the requireps while one thing that we're seeing that will be a read through across the industry is the aoci hit which is effectively the mark to market of your bond book as rates move up and that was a bigger number than what we thought it was about $9.5 billion and we were forecasting $8.5 billion. >> leslie, what did we learn about the outlook for capital markets? clearly it is a headwind m&a is down, we've covered that, that hurts the big banks what did you hear out of the call >> yeah. >> i think it was a bit more -- oh, sorry, david, that was for leslie but then i would love to get
your thoughts after. >> okay. go ahead. >> just wanted to share some sni insight from the immediate caw call where we talked about the and its prospects. interestingly, they said that initially that a lot of deals were punted toward the back half of the year to just regular way market volatility. but now there are some concern given there are higher interest rates out there, given that inflation has really remained very high. that some of the deals may not materialize. now, it is really unknown at this point in time whether they will or whether they won't but it is not your typical oh, there is volatility, we'll wait and see if things calm down. as we heard from dimon they expect continued volatility for quite sometime which isn't the best news for deal making. >> david >> i completely agree with leslie i think the longer pipelines are in pipelines, the more in question they are to deliver and with jamie's comment that the one thing that we could expect is volatility, that is
usually not good for m&a and ecm. so i think this might be a bit of a trough quarter in terms of vcm but i think it is difficult to get back to anywhere near where we were last year. and so i think overall the trading expectations, i think are pretty good across the street i think the banks could deliver on that. but i think expectations for banking still need to come down. >> david, you mentioned morgan stanley is the only name amongst the big names that you seem to really favor listen, it is been a good call to not be particularly positive so far this year, the banking sector and these things in particular have underperformed the broader market but why morgan stanley a positive >> well i think largely they have about 300 basis points excess capital and so their ability to maneuver through here is much better and so that is the one name that we still expect pretty large buybacks coming from but it is also the momentum that they have in wealth management
and jp morgan actually beat our number on revenues with wealth management so i thought that was a positive read-through. but there is a lot of momentum with their work strategy, workplace strategy and with the e-trade strategy to continue to grow revenues there. >> and leslie, to you, trading retches were actually a beat as well that should bode well for goldman sachs and morgan stanley, shouldn't it? >> yeah, that was a surprise for analysts i mean, trading revenue was a bit of a wild card going into the quarter. everyone expected it to be lower. but it did beat expectations for the quarter. that should bode well as you mentioned for the firms that generate more revenue from those businesses interestingly, as you see, kind of the stock reaction today. it is -- it is bank of america, and citi getting kind of whipsawed here as investors are reading through jp morgan results and see what the flow would mean for them. all of the big universal banks are trading lower as they digest
these results. >> yeah. jp morgan at the highs of the day but still not above yesterday's intraday low david, leslie, thanks guys appreciate it very much. >> thank you well it is not just banks that are on the move one way or the other this morning check out shares of delta. up over 4% after what were better than expected results and fresh off an interview with delta ceo ed bastion this morning. phil lebeau joins us with more on those numbers good morning. >> good morning, david strong numbers not only for the first quarter where they were better than expected but the south dakota is really the reason that shares are delta are moving higher. when you look at griedance for the second quarter, you're looking at double-digit profit margins. that is what they are expecting. which means it will be a profitable second quarter. strong demand and right now as they look into the bookings for june, they are going to be strong as well and then finally you have corporate travel that is also
rebounding one of the things to keep in mind when you look at the june quarter as they call it, is the fact that corporate travel is improving and they are waiting to see what happens with masks remember, the mask mandate is in effect until monday. ed bastion earlier today was emphatic in saying it is time to take off the masks >> candidly, it is time to let the masks go and let people decide. because you're still going to see a lot of people having the option to wear the mask. i may wear the mask when i travel if i have a cold or something else but i don't know what will happen but i hope they lift it. >> as you take a look at shares of delta, one other thing to keep in mind is the transatlantic bookings they are strong in q2. now they expected that they're coming in better than expected overall the demand is there and not only is the demand there but they are finding that passengers increasingly when they're booking travel, they are paying to go premium as opposed to just saying i'll go in the main capp cabin. that is one reason why you're
looking at the profit margins being much stronger than many analysts expected. at least that is their guidance for the second quarter analyst quarter just began we'll have more later on today back to you. >> nice move in the stocks today and the group. but the airlines are still in a bear market. they're off like 22%, 23% from the highs. >> sure. >> did the street just get too pessimistic about the rising cost of jet fuel and international travel because of the war? >> i think it is mainly because of jet fuel. that is the primary one. and what is under-appreciated perhaps on the street is how much that not only is there strong demand, everybody knew there was strong bemand, but the passenger booking that ticket willing to pay up. you talk with delta and other airlines increasingly people are saying i don't want to book the ticket i want to pay more put those two together along with very strong numbers, and the fact that increasingly as corporate travel comes back, you are going to see a real swell of
demand that they probably did not expect to this great of a degree so those things are all perhaps a little bit more than wha analysts were expected. >> and it is reflected today american up more than 9% phil lebeau, thank you. as we head to a quick break, a road map for the rest of the hour inflation makes waves from home builders to retailers. we'll break down the impact and where things could go from here. >> plus, trying to buy a lamborghini. through supply chain slowdowns we'll talk about why things just got a bit more difficult >> and finally as russian president putin said peace talks with ukraine are dead, we'll check in on the global economy with tim adams next hour as we dip in below 4400 again. about 20 pntabe ois ovtuesday's low.
-- could be contained. >> joil working on the audio but she's giving a speech at the atlantic council right now ahead of the imf world bank meeting and talking about the global economy warning countries sitting on the fence on russia not to undermine the sanctions that have been put in place. but what are the fakers to the macro economy, joining us is
undersecretary and current ceo for the institute of international finance tim adams in person. good to see you. >> good to see you >> you have been traveling an talk to all of the banks what is the recovered -- we covered jamie dimon today but what is the mood overseas around what is happening in the russia and the sanctions and how much it will bite the global economy. >> sure. a lot of concern about growth especially in europe on the eastern periphery and then for those countries that are close to the crisis, the front. there is concerns about sanctions and what it means. i was just in turkey they expect 4 million russian tourists to show up in turkey this summer. will they come and spend and will this be allowed to spend and is there a threat to the institution with more sanctions in place. >> and you also do a good job of tracking money flows out of emerging markets, going to certain places how is the war changed all of
it. >> sure. for commodity producers it is great. if you're an energy or a food producer, you're doing well. if you're an importer, your suffering. turkey has to import energy, egypt has to import food so it is really a function of where you are in the commodity production cycle. >> where does it leave china >> well we've seen some capital flow out of china. there is a concern on the decision they'll make and as i told you washington is poised for a tough approach to china. if china makes their own decisions over the next few weeks or months we could see reaction out of washington. >> that is what yellen just said beijing reaction to the call for action against russia may effect the world's willingness to embrace them further it is being characterized as a bit of a hard-edged speech in that financial diplomacy is not about flows but where you are on the lines of war and peace. >> when she thinks i think she speaks it and it's the message
to president modi this week and i think they need to make a decision about where they are in this crisis. >> and any signal on their response as there is no benign interpretation of russia's invasion of ukraine and does nothing what two do we then do >> there is always secondary sanctions. also in washington there is a number of pieces of legislation sitting on the side liblines foe on chinaand other countries which would impact capital flows. >> but it would impact a lot of other things, too. huge collateral damage. >> that is why you don't want to do it unless you have to but this is clear messaging they have to ratchet up. >> and also on the food, the comments from yellen on potential food crisis so to speak. and the vulnerabilities in the global food system how real is that in your opinion? >> it is very real i've been to eastern ukraine, it
is like a bread basket and it looks like kansas and once you have wheat and barley and oat, you have real impact on prices and it is remains to be seen who will make up at margin. >> but we don't know where this is going we don't know when the war will end, sooner rather than later and now supply is getting worse with china so in that kind of environment, how do you plan and what is the outlook? >> i think jamie hit the nail on the head today, we don't know. it is the known unknown and the unknowns, but with supply chain still stressed, china locked down potentially hanging in the balance, and a war that is in europe that continues to go on in a protracted way and we just saw president putin today say he's in the interested in peace. so this is not going away any time soon. >> sow mentioned growth concerns in europe and we've gotten a couple of examples of demand destruction in cars or retail or certainly used car prices. do you think we're getting to a
point where the prices are putting the consumer back in this country >> oh, absolutely. try to buy a new car or a hybrid you can't find them. if you do, you will pay a substantial over sticker price but if they make a decision to cut off oil and gas, we'll see a hit to the economy are they ready for it? i don't know about. >> you raised the prospect of secondary sanctions. talk about a hit that is why it is not going to happen, is it? >> i can't imagine but i also didn't think that russia would invade ukraine either. so i think we're in a situation where everything is on the table. maybe not now. but if this thing continues to he escalate, i think all weapons are available. she just said it, the treasury secretary. >> there is a running theory that putin wants to declare some kind of victory by may 9th and maybe he retrenches his ambition and the donbas in the east and is that working in your
circles. >> i've given up what is in vladimir putin mind. and we believe he will react like a western perspective but the question is what will he do. i don't know i think we need to prepared for all various outcomes and trajectories and maybe this doesn't stop may 9th and maybe we're here a year or two or three from now. >> so bottom line, are we going to see a global recession. >> i don't think so. consumer and business household balance sheets are pretty strong and unemployment is record slowing and a lot of spending, it will take a lot to pull this thing down but it could. >> and finally to come back to china, you pointed out these are strong words from yellen, do they have any impact in capital flows or corporation's willingness to -- geez, to do things >> we're all getting it. >> when she said, tim, that beijing's reaction may effect the world's iwillingness to
embrace economics -- >> she wouldn't have said it if she didn't have the president behind her i i think pir putting the world and capital markets on notices, this is serious and they're willing to do more would you take her at her word. >> and finally a lot of people y yesterday arguing for peak inflation. are you buying >> no, i think we still have a ways to go. >> do you think short-term bankers could contain it. >> i would to get it back in front of the narrative, but salaama slicing this given the next 24 months, it is embedded in there we saw it in the numbers yesterday. small businesses are pricing this in. >> tim adams thank you. the ii f president and ceo. >> and consumer prices fastest pace since '81 couple coupled
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we're looking at the spdr xrt as it outperformed this month while the s&p is down almost 3% in that same time, it is seen strength in kohl's, is a big winner after shares popped on reports of a $9 billion buyout operator from the franchise group. shares now less than 10% from a 52-week high and don't forget about macy's, nordstrom and ross all in the green for the month. >> and retail sales out tomorrow morning. as we head to a quick break, don't miss the interview with federal reserve governor christopher waller joining me this afternoon on closing bell talking about the brand-new inflation and more 3:00 on closing bell with the 'rd governor wee back here with squawk on the street in a moment don't go away. ♪ ♪ wow, we're crunching tons of polygons here!
i'm courtney reagan and here is your cnbc news update the lone person of interest in the new york city subway has been upgraded to suspect. the hunt continues where ten people were shot from the midwest to the gulf coast, severe storms are causing extensive damage and in iowa, at least two tornados touched down destroying businesses and snapping power lines n. texas the roof was blown off a dairy queen while customers were inside and it landed on cars in the parking lot. the risk of more tornados is leading to school closures from the mississippi to the st. louis area. a kremlin spokesperson said it is unacceptable for president biden to describe russia's actions in ukraine as, quote, genocide however, there was no mention of retaliation for the remarks. and the world health organization said new confirmed covid cases and deaths around the globe have fallen for a third straight week. this a day after the 500
millionth coronavirus case was confirmed. the decrease should be interpreteds with caution as many countries scale back on testing. that is the news update for now. sara, back over to you. >> courtney, thank you. inflation hitting records. but what is actually driving prices higher. if you ask the american public, just about everything. steve liesman joins us now with more data. steve? >> the all american economic survey shows plenty of blame to go around. let me show you where inflation rank as mong top issues of the public and it is number one by far, number one at 48% up about 10 points from last survey ukraine war, first time, up 31%, it is the top one or two concerns of the public followed by immigration and border security, jobs and unemployment and crime and look at the coronavirus just 14% name it at the top issues for country that is down 25 points since october. take a look at the politics of this there is a series of issues that we could show you where the public is united and others will
show you the wedge issues. democrats and republicans cost of living, pretty much agreement. how important it is. same with jobs but little further apart but still relatively close together on the issue of crime. now look at the wedge issues here immigration, border security, ukraine war much more concerning to democrats than republicans. and immigration and border security, republicans huge issue and not so much for democrats and climb change big issue for democrats but not so much for republicans. but looking at how they're coping with inflation. we find 84% of americans doing something to make ends meet these days, including 45% who say they're using some of their savings to make ends meet. 56% are traveling less 59% are driving less and i guess that has to do with turn arounds for the number one that is what you would expect. spending less on entertainment, movies and restaurants and concerts, plenty of blame to go around as we discussed business closing supply chain is the number one issue
we let people pick more than one. that is not 100. corporations taking advantage of the situation. 66% of the public. putin an the ukraine war 55% there is president biden, 49%. and this all effects results in very low poll ratings for him. finally the fed, just 31%, sara. i would have thought maybe the fed would have ranked a little higher certainly in our conversations maybe not broadly in the nation. >> right i think president biden gets more credit or blame for that one. steve, my question is sort of the debate de jour is where it is going they might be able to get a handle on the home price inflation, but without ending the war, how you could predict energy and food and the supply chain issues tipping to pile up in places like china >> i'm going to punt on that and ome say you're asking a really good question. because the extent to which we have to learn as a country to deal without commodities from
russia and ukraine,dy see this morning this incredibly heroic report that they're out there planting in ukraine despite the shells flying. that is big. and whether or not they could get the crops out, it is big not just for the u.s. but for the african nations where there is potential starvation and hunger without russia and ukraine wheat. that is a big issue. what is clear, though, what is happening here in the united states, is it really dragged down opinions. 56% of the public sara believe we are going to be in a recession in the next 12 months. in the 15 years of this survey, we've never had numbers that high outside of an actual recession. >> hmm. >> just one more indicator, steve, that might lead us there. we'll see. steve liesman, thank you so much. >> huge implications for housing. u.s. mortgage rates rising over 5% last week, the highest since november of '18 according to survey coupled with higher inflation and supply chain issues, all of
the troubles here to discuss, one of the largest u.s. home builders try point home ceo doug bower. thanks for the time. good to see you this morning. >> thanks for having me on. >> how do you tell viewers to think about the market when you got obviously rates and supply on the one hand and the view that we're structurally underhoused on the the other >> well it is interesting. if you think about housing sector, it was really the tip of the spectrum for inflation the pandemic has definitely made housing a preference for the -- especially the millennial housing group which represents about 55%, 57% of our backlog. what the pandemic did back then is cause a huge supply chain issue and it continues to this day on effects on cost and timing and then as you go through the whole set of variables when i've never seen so many variables in
my 30 plus years effecting our economy, you have some fiscal stimulus that fueled this fire, right. there is over $5 trillion floated into the economy and now the fed is put to a point where they want to put out this fire. and they're going to raise rates and that doesn't take into account what going on in ukraine. so all of the variables have had a significant impact on housing. hard costs have increased well over 20%, 30%, just the billing costs and that doesn't include all of the timing related costs and land development at the same time, house prices have increased, too. right. over the last couple of years we've had quite a bit of discussion about that. as home builders have been able to combat the costs with higher pricing, but i think sara made a good point, as rates go up, rates effect the purchasing power for the consumer and that is what the fed is going to try to effect over the
next, you know, several quarters, the next year or so. >> sure. >> and with those rate increases, you should see hopefully a soft landing, but god only knows. >> right when you think about the things that are getting better, by that i mean at the margin, is it labor maybe as participation rises or do you have lumber 30% off the highs, are those not significant relative to the challenges right now >> oh, carl, i call it whack-a-mole there is really no let up in the challenges to this day i will tell you, though, what is interesting is the demand side of the equation, mortgage rates for a conforming mortgage has increased every 200 basis points year-over-year and we still see good demand in all ten states that we build in the reason we see good demand is there is no supply there is resale market out there for the consumer and interest
rates are a driver of how much you could acquire. but income levels are much higher and there is plenty of millennials and plenty of other consumers that are in the base and we continue to see that demand. >> how high do you think mortgage rates have to get before that demand cracks? >> it is a constant debate internally, sara i wish i could tell you. i mean back in 2018 it was you know 5%, 5.5%. and i remember going back to a meeting with the fed chair and mortgage rates were in that spectrum and right now their conforming at 5.25 but the big difference between 2018 and now, a couple of things, one is there is no supply and income levels have increased quite a bit. so, i don't know i wish i could tell you. i would have thought i would see some more softening right now. we haven't seen that yet but listen, we're not going to
put our head in the sand there is going to be a soft spot in the business, whether the fed could bring it in for a soft landing or a hard landing, god only knows but one of the important points that i will make is housing is in really good shape long-term and the reason it is in good shape is the -- you can't change demographics the millennials that are out there look to buy a home on a needs-based basis are very deep. and as new home builders, we could easily readapt to product sizes and prices and so forth much easier than the resale market and then in the resale market, if you're in a mortgage right now at 3%, 3.25%, sub-3%, unless you need to move, you're not going to move and that is our biggest competitor is resale markets. so when you look at housing on a macro basis over the next five to ten years, i think it will be very good. >> i want to get back -- this is david, to the mortgage rates
you've been through similar moves up to some extent. does the repetitivity of the move up have any impact or is there anything to be drawn from that in terms of whether it dampens buyer interest >> no, david i've been through so many cycles in my 30-plus years and interest rate cycles as well. again, i would of thought that the current increase in rates would have had a bigger stall effect so to speak like we saw in 2018. but i keep drawing back to the fact that there is just to supply >> the stocks have reflected sort avenue different reality than when you're painting. you've seen this in your own stocks and it is off 30% of the highs and one the biggest losers from the higher interest rate environment. due think there is a disconnect there or is the fed going to succeed and hurt demand enough to bring down prices
>> again, i think the fed will have to succeed in bringing this inflation bug under control. this is a supply chain challenge. it is not a demand side challenge. so that is the interesting dilemma that the fed is going to have as far as home building stocks, listen, the investors that buy home building stock have always been attune to interest rates. and it is disappointing to look at that in the home building sector when you look at where the home builders are today, they're balance sheets, their liquidity, positive cash flow and their ability to deliver more alternative product and get better price points. it is disappointing to have the investor just kind of zero in on interest rates but it is understandable i get it i've been seeing it for years and years. but i think there is a bigger macro picture here as i mentioned earlier and that is the demand and the fact that the
supply side of it isn't going to correct itself overnight >> finally, as you think about building materials, i've read about garage doors, floor tiles, appliances, is there one category where when it cops up -- when it comes up at the table, everybody rolls their eyes like good luck. >> i'm laughing because you miss windows. >> windows >> hv system, our air ducts. we had a construction manager that took a refrigerator from his own house to put it in his home to get it finaled i don't know what this wife thought of that. it is a all over as i mentioned, it is whack a mole i would say the biggest challenges right now are definitely in hva system and windows. >> fascinating we're going to watch it with your help. good to see you, thank you so much. >> thanks.
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looking to buy a sports car. well thanks to inflation, and struggling supply chains as well, it is going to cost you a lot more and take a lot long tore get that car robert frank has that story for us. >> good morning, david lamborghini launching a new supercar yesterday it is called the technica. price tag $240,000 it is going to sell out by
tomorrow other lambeau models take up to a year or more for delivery. now to get the cars sooner, buyers are paying six figures or more above the sticker price for the lamborghini, that is up to $100,000 over the $225,000 sticker price just to get the car in the next few months rolls-royce suv called the cullin will cost you an extra $85,000 over the $350,000 sticker price if you want to avoid a longer wait. mclaren is getting $50,000 for the speed tail sports cars now porsche getting an extra $50,000 just to place a order for the turbo 911-s and that retails for more than $200,000 now lamborghini ceo telling us they try to police so dealers continue to test just what the wealthy are willing to pay
>> we have no real tools to let's say act against sticker pricing. but when we talk to our partners, our dealers, we always are very clear >> a lambo doesn't have a supply problem. they expect to produce the same number of cars more than yesterday, that is about 8400. but they did lose 85 lamborghini that sank with this felicity cargo ship last month. now pre-owned lamborghini now selling for 150% of the new sticker price. so whether it is used or pre-owned or skip the waiting list, getting that car now, they're paying a premium of six figures. buys >> it is unbelievable. it reminds me of what is happening in the luxury handgba space. the prices are too the moon and the increases are in the
hundreds of percent. is there any ceiling on how high people will pay for these luxury goods. >> there is probably a ceiling we haven't found it yet. whether you're talking about burken bags or rolex watches these are all items that are limited in production and yet we have so much money all chasing the same things that right now wherever that ceiling is, we haven't found it, sara >> i'm certainly thinking twice. i had my eye on that lime green lamborghini. >> that is a david faber car right there. very practical. >> but i do wonder, who are all of these incredibly wealthy people obviously something something you follow closely and have for decades now. are there more of them and are there still collectors because of the resale values. >> there are more of them. the number of people in the u.s. worth $25 million or more has grown by 50,000 over the past two years. and it is also with lamborghini,
their client base has gone dramatically younger so it is a lot of crypto people that made a lot of money in crypto for whatever reason, lamborghini is just a favorite of crypto millionaires so it is not only the existing wealthy, but there is a brand-new crowd of younger, whether it is stock investors or crypto, that are now buyers of luxury goods >> offsetting the russian oligarchs, i guess. >> exactly >> thanks, robert. >> thanks, guys. come up next hour on tech check, don't miss an exclusive with microsoft president and vice chair brad smith. we're going to talk some privacy, some innovation, and office 365, who owkns and his outlook for tech in a few moments. don't go away.
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sniez i spoke with trenton who said the quarter had 30% of our key category inventory not available for sale and -- he says the strategy is the right one, just delayed at the moment on the call the cfo said the current comparable sales are down 20% right now the supply chain issues were among the most problematic trenton told me --
shares are down about 35% in a year it did rally about 24% after ryan co-cohen took a 10% stake but they said it was propped up artificially by cohen's comments trenton told me, there is no guar guarantee buybuy baby will be spun out that value going in a negative direction today, courtney thank you for the report all of april we are celebrating financial literacy month.
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and your friends. help grandma cross the street. yeah. he's gonna blow it. you think i can't do this? ow! we would like to invent a system, but i think it will be a long time before the dollar is replaced as a key currency in the global economy that's fundamental because of the strength of the role of our financial economy, the fact that we have institutions in law and deepened financial markets that make investors all around the world feel safe in relying on
the dollar value in means of exchange >> yellen said a lot of important things about food and china, but we did that for you, sarah. >> that was important. >> the dollar. there are questions about china and russia and whether it's a significant threat one thing i would say it doesn't appear to be if you look at the market the index is up 9% or so in the last year or so. there is a lot of money going into the dollar and against the japanese yen the market is picking up pretty well today it's not happening, but these days where you get sharp spikes in the dollar
>> as you point out, the yen, that's a new low, certainly in the last -- more than a decade >> the polar opposite of what we are doing. they are not raising rates, we are raising rates. they are still fighting inflation. >> sara will h will be right he this desk at 4:00. good wednesday morning i'm carl coulantanilla. don't miss our exclusive with microsoft's brad smith talking privacy and a lot more >> we are starting off with the nvidia upgrade the street
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