good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with mike santoli. andrew is live from seattle. andrew, what do you have coming up today? this is big. >> good morning, becky. we have a big show right here. we are live at amazon's headquarters in seattle for a big interview this morning. couldn't be better timed given the conversations about the consumer and inflation. we will speak this morning with the ceo of amazon andy jassy about just about everything. we will talk about the state of the consumer and a.i. and the

battle twith microsoft and the battle with prime. things were in a different place with layoffs and a big restructuring taking place with the distribution model at the company. if you look at where things are right now, even with some of the downward pressure on stocks across the board, you are looking at the market cap of $1.9 trillion. the company making $575 billion in revenue and sitting on $70 billion of cash. the stock is up year to date and is now up 6% since andy jassy took over from jeff bezos in july of 2021. that was in the middle of the pandemic. we have so much to talk to him about. we will bring that interview to you in the 8:00 hour. >> as you mentioned, given everything with inflation and the consumer may be feeling at

this point, really perfect time to be talking to him about what he sees with his huge retail operations and beyond that and what is happening with technology. if you look at where the markets stand after big declines s yesterday, the dow down 400 points. the similar with the nasdaq and s&p 500. you are looking at red arrows this morning. dow futures down 112 points. nasdaq indicated off 40. s&p futures duown 15. the treasury market yesterday. hotter than expected cpi number came in with yields and the equity markets moved instantly on this. a 20-basis point move within a matter of minutes. t t two--y two-year yield at 4.95. mike, what was interesting is this is not a major move if you

look at equities. pull back of 4400 is 1%. the shift with the big moves in the treasury markets and the idea that the fed will not be cutting as soon. >> it created a plot twist for the year. if you go back a month, the idea is the bull case is the economy is better than expected and earnings are higher. bond yields are tame and oil was okay. although it was rising. we were likely to get the fed to ease pretty soon into the record high stock market. >> perfect scenario. >> now it seems there is a bit more waiting to be done for inflation. there are tradeoffs. we have to understand if the fed will slow more before declaring victory on inflation. it is a complicating factor. 1% move down in stocks. that was the move that was

predicted by the options market. yields will determine if stocks can get out of the fix. there is some rate sensitivity in the market. >> you are looking at commodities prices, whether it is oil or copper or aluminum. precious metals across the board and the commodities prices are higher and the concerns of iran and the retaliation and what it means for oil prices. when you have all of the commodities moving at the same time, that brings you to concerns over inflation prices. >> the goods disinflation seems like we got the benefit of that. you cannotcount on that going into the right direction. the surprise was modest. 0.36% rounding to .4%. we cannot count on it going down from here. you will have harder comparisons in the next several months. we have to see how we navigate that. >> andrew, you have breaking

news from there. once a year when we come out to see andy jassy, this happens at the same time. we will bring you this right now. amazon ceo andy jassy releasing his annual letter to shareholders. i want to bring you notes from it. i'm sure we'll talk about it when we speak to him later in the broadcast. he is striking a more optimistic tone in this letter than the prior year. a challenging year they had navigated layoffs and restructuring with the distribution centers and amazon stock trading near all-time highs. it has been a turn around. the investment making the delivery network and a.i. appear to be paying off. a.i. is the theme of the letter. j andy jassy writing much of the world is built on top of aws

with a.i. there have been questions of microsoft and what it has been doing with openai and what google is doing. he says he believes that generative a.i. may be the largest technology transformation since the cloud and since the internet. we heard something similar, by the way, from jamie dimon, in his annual letter last week. part of the strategy is amazon's effort to compete in the chips business. he goes into depth in the letter. it is worth looking at it if you follow amazon. aws sales side, andy jassy is seeing improvements while 2022 companies were trying to save money, but he said by the end of 2023, he saw cost optimization and new deals accelerating and customers renewing at larger commitments over longer time periods. he made it easy for people to

turn on and increase the dial or lower the dial. some people thought he should force the customer to keep on the dial. he said if you give them the option, they will come back when things get better. amazon has changed the delivery network to the regional model to bring products closer to customers. if you are a customer, you might imagine you are getting packages quicker. andy jassy saying that shift has not just gotten the packages to folks more quickly, but brought costs per unit down to 45 cents in the united states. also, the number of items delivered same day or overnight increased by almost 70%. that's a remarkable thing. they are beating their own numbers from the past. on the advertising business, that is a big grower. grew 24% year over year to $47 billion. then, i'm sure in the media world, people will focus on this in the letter.

andy jassy writing, we have increasing conviction that prime video can be a large and profitable business on its own. we will dive into all of this when we speak with ceo andy jassy coming up at 8:30 a.m. eastern time. of all of the ceos in america that have touch points in so many pockets of the economy, it may be that andy jassy has a pulse on where things are and as we figure out where the economy is going. we could not be more thrilled than to talk to him this morning. >> absolutely. plenty of touch points. thank you, andrew. now to the fed and minutes from the recent meeting backin march. officials neared agreement on the plan to slow the run up of $7.4 trillion in asset holdings choldings. this is a concern over the bonds they used to stabilize in 2020 and 2021. officials are allowing the

holdings to run off in the months to slow the pace of the runoff to ease interest rate pressure and ease the supply demand for treasuries. the minutes show most fed officials show cutting the pace of runoff by half. >> meaning there is a bigger buyer in the market that is still the fed? >> yes. >> they won't go as high? >> they won't buy enough to keep the overall amount steady as bonds mature. mart part of this is to make sure there are enough reserve nos ine system. it is not just driving interest rates lower. it is part science. >> it is a method of easing to some extent. quantitative easing. >> their argument is neutral if it is no runo off. >> it is neutral from where you stand right now. not neutral from where we thought we were headed on the path to tightening. >> a lot of handicapping of when

they would do this. i think this would be earlier than expected and they are sensitive to not creating these log jams in the overnight funding market which happened in 2018 and 2019. coming up, a.i. news from companies belike microsoft and adobe. and the latest on thimcte pa of hotter than inflation numbers and the election. "squawk box" is coming right back. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

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welcome back to "squawk box" this morning. sam altman has been meeting with officials in the uae. he is meeting to boost the supply of data center chips. the report saying altman is holding meetings in washington this week over part that the concern of chips and infrastructure will not keep pace with the rapid deployment of a.i. one of the issues he has been raising is the issue of how much energy it will take to make all of this happen. of course, i'm sure we'll talking about this very topic with andy jassy here in seattle in a little bit on "squawk box." becky. >> andrew, that was a big issue we spoke with dan this week. microsoft was saying this is opening a data center every

three or four days. the demand they have seen overall for electricity, there is no way we are on pace to keep track with that. the needs for the electricity everywhere in large part of the because cloud data centers and a.i. this is going to be something to watch because it is not easy to get that electricity to the right place and permitting issues have been a problem. the buildout itself and the expense to do this is something they have been talking about for a long time with the demand on the evs on the grid. a.i. puts it in a new chart. you have to wonder if that is a limiting factor with how much we can deliver on a.i. and how quickly we move to try to fix the constraints. sticking with the a.i. theme, microsoft is releasing new tools for the pcs at the build conference in may. that is according to the session list posted yesterday. among the new feature, we have advanced pace which will draw on a.i. models that run directly on

pcs without having to send and receive data back through the cloud. microsoft shares, if you have been keeping track, up 13% this year. $425.47. separately, a bloomberg report says adobe is buying video to build a a.i. model generator. the software company is offering photographers and artists $3 to $7 per minute of video. it is seeking to show people engaged in walking or expressing emotions. it is requesting video of simple anatomy shots of hands, feet and eyes and video of people interacting with objects like smartphones and fitness equipment. the company warns against sharing copyrighted material and nudity. >> this what adobe is trying do. build without the copyright

infringement. everybody else is suck up the data and move faster. we'll figure it out later. andrew, we talked about this for a while with adobe. >> it is fascinating. we will talk to andy jassy as well about this. they are building their large language models. data is the new oil, if you will, as how these things are generated. how do you build them? people are running out of data to train on. you are trying to boil the ocean and dhow do you do it without infringing on copyright? openai build a program expectly specifically to try to generate transcripts off youtube to train off the transcripts. there is a question over if that is a copyright issue. this is a very big issue. it is interesting to see how adobe is trying to deal with this. everybody in the space is trying to hoover up what they can with

the copyright issues which need to be addressed. we will see how it gets addressed ultimately. >> it is an argument against the companies vacuuming up the data and saying we'll sort it out later. it is an argument saying it is the only way we can do it. adobe is proving there is another way do it. how successful remains to be seen. there is another way to do it. the justice department has opened an in-depthing anti-trust investigation into the nippon steel takeover of u.s. steel according to the politico report as japan's prime minister is visiting washington. the timing could not be more awkward. the prime minister said in the conference yesterday that he hopes the proposed deal would proceed and believes appropriate procedures based on law are implemented by the u.s. government. president biden previously said u.s. zsteel must remain an american company.

president biden yesterday said he stood by that position. of course, along with the japanese visit, president biden hosted the japan prime minister at the state dinner at the white house. amongst attendees are jay powell and masa son and apple's tim cook and shawn fain, jamie dimon and larry fink. john gray and ibm's arvin kris hak krishna. the guests were entertained by paul simon. >> becky, can i make a quick point? to me, one of the most salient or fascinating facts about the dinner. jamie dimon at the dinner. i raise it because there is a

lot of conjecture since we did that interview with jamie in davos about his comments about politics and president biden. specifically president trump. a lot of people took the clips he said on air as if he was a supporter of president trump's. i thought that was misconstrued by the public and not his intention to suggest he was backing president trump, but saying you have to respect a group of people who want to support him. by democrata, godemaging him ma for society. every person that the default, is a supper of sorts of president biden. >> his comments at davos were not just respect people who

voted for president trump, but his point was there is a reason they are voting for him because of the policies he thought were better from immigration to others. he named them beyond that. i don't think he came down on one side or the other saying he was supporting one candidate or the other. i think it was more than just saying you can't mock those people. he was giving a reason for why. some of the policies. >> it was an explanation to the the public about that. for those who were curious, if he was all of a sudden named exploded as a potential treasury secretary for president trump -- for those of us who have reported on this and understand it would never happen in a million years. the idea that jamie dimon is voting for president trump, i think, for those online who seem to be conjecturing that was the case, i think that is not the case.

i think the evidence is on the tape, as they say. we very more coming up on "squawk box. we will talk about the hotter than expected inflation data. later, don't miss it here in seattle. our interview with ay jay.ndss that is coming up at 8:30 a.m. eastern time. we're coming right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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into the election. joining us to talk about the rising issue of inflation is head of policy and politics. tobin marcus. the second the number came out yesterday and you see the headlines means this is a headwind for the biden administration. they had been hoping the trend was turning the opposite way. it has turned back. what do you think? >> i think an th lot of the dam has been done. a soft landing would be better than reacceleration. anecdotally, a lot of voters want prices to come back down which is not what anyone is steering toward for the policy perspective. it will remain a huge problem for biden regardless of the data in the near term. pushing rates outdoes not help. what would be helpful is mortgage rates coming down and auto loan rates coming down.

credit card rates coming down in a durable way. not a rate full of cuts. you know, i think biden is at the disadvantage over trump in the economy with regards to data. >> this is a question that we talked to lael brainard about over the last three years. a lot of voters say their wages have not caught up with inflation, even if they are outstripping inflation today. the view is the current trend, if the trend is friendly, and now it was not, but if it was, it doesn't matter with the damage already taking place and you will not get back to where you were three years ago? >> right. change happens at the market. one way or the other, voters will say trump's rating on the economy is better than biden's when election day comes around. i think we will start to

mitigate the vulnerability. i don't think we get a version in november. biden is doing a great job steering to the crisis and we give him the election. i think biden's campaign will be populous and talk about drug pricing and set up priorities and values. the trump campaign will be focused on remember 2019. that felt better than today. there is no way that dynamic changes. >> is there anything that you think either president biden could have or should have done or president trump could have done or would have done relating to the inflation issue or is it doesn't matter and it is always something that is in the hands of jay powell and whoever was

the president sitting on top of that would be held responsible? >> there have been a lot of recriminations of overstimulation in the american recovery plan passed in 2021. when you look with the benefit of hindsight and look across countries where nobody really managed to avoid the inflation outburst. if they calibrated that down a bit at $1.2 trillion instead of $1.88 trillion, then that would be fine. that is not correct to me. mostly what we have seen has been a set of dislocations coming outs o of the pandemic. we have seen that across the coun countries across the globe. when you look at the comparison in terms of the jobs and gdp growth out of the pandemic compared to other advanced economies and trump's policies

looks more inflationary. the combination of less iteration and tariffs and deficits under the divided government under biden looks stagflation to us. i think this is a problem that could have been avoided in the first place. this is about fed management of that problem as it emerged. >> tobin, fascinating issue. i'm sure we'll talk about it every day from now until november. thank you. >> thanks. when we come back, some new data on the return to offices and which cities are leading the way and returning to pre-pandemic levels. this video is a slight hint. see if you can figure out where it is. okay. that's the only hint you get. as we head to break, let's look at the s&p winners and losers. we showed you palm trees before we passed the shot change.

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new york city's return to office rate has reached 80% of the pre-pandemic levels according to foot traffic. miami has reached a similar in-office rate placing the two cities amid the top. >> that's the city. miami. you could not see the water. >> exactly. >> the palm trees. >> san francisco was at the bottom of that list in terms of return to office with foot traffic at 45% of pre-pandemic levels. four paramount global board members are expected to step down soon according to the wall street journal report that says controlling shareholder sherri h redstone wanted a smaller deal with sky dance. among those expected to depart are the attorney and veteran

banking executive frederick terrell and the long-time attorney bob klagger. some of them were on the board, that independent board, making sure this was going to be a fair valuation for all shareholders because national amusements, redstone's group, owns 80% of the voting rights, but 10% of the shares. that has made it difficult to figure out especially how this deal is structured. the one they are working with right now where it pays $2 billion to buy out national amusements and a separate deal after that pay $5 billion for the rest of the company. they are negotiating with the partners exclusively. they have said no to another deal that was a higher deal, but said they were not sure they could get financing from apollo. $20 billion. >> yes. >> very interesting around this. the journal said one departing board member had concerns about

the deal. you will see more coming into this. >> there is a share class which is controlled by sherri redstone. they diverge massive live. this is a super shareholder. >> that stock down 28% year to date. it is up about 6 cents today. when we come back, new data on china's economy. "squawk pod" has been nominated for a webby award. you can scan the qr code over our feature of the interview with charlie munger before he passed away. that code on the screen will take you to the page where you can show support for us in the webbys. voting is open until april 18th.

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good morning. welcome back to "squawk box." we are live at the nasdaq market site in times ins square. here we go. the hotter than expected inflation numbers lasted throughout the session. the dow down 420 points. that's a decline of 1%. it was coupled with moves with the other averages and especially what we saw in treasuries. a surge of 20 basis points or more in the two-year yield. the futures had morning are not recovering. down more with the dow futures

off 110. s&p futures down 16. nasdaq down 36. we will get the production inflation numbers or producer price coming up at 8:30. >> this futures decline would get us back to the afternoon lows from yesterday. new data on the chinese economic picture. let's bring in the china book coo with fresh insights on the first quarter. shazad, good to see you. >> good to see you. >> you say there was improvement in the first quarter by the metrics you look at. you have questions about the sustainable rebound in that. authorities are more interested in putting in a floor than stimulating activity. elaborate. >> no question about the fact that q1 was solid. year off to ga good start.

there was clear improvement into march. do we get back-to-back quarters and back-to-back months of solid improvement and can china hit the stated growth target or do we start to see a clawback? do we see consumers pulling back or weakness in the property market where housing remains in a crisis. those are the concerns we have as we look out for the rest of the year. >> we are just coming off this week where treasury secretary janet yellen was in china and articulated familiar critiques of the chinese approach. more or less saying domestic demand is something you should encourage owes pas opposed to ex-pexport led. >> the communist party is interested in reengineering the economy and transitioning the economy to be consumer led.

that is not impacting the industrial policy which is what the secretary was concerned about. one of the key things we saw last year is markets were panicking about the china manufacturing collapse. they were pumping other products and cutting prices. that is being dumped abroad. manufacturing strength will continue. they he want to focus on evs an provide policy support. i don't think what the secretary said will impact the communist party industrial policy in the coming years. >> you mentioned the ev situation that china is building up with capacity and driving prices down seems to be a flash point here. where do you see it headed in terms of the overall market in chinese ambitions? >> i think our view is we're headed toward another trade war. regardless of who is president next year, they will absolutely have to take this issue head on.

some members of congress have begun putting out aggressive proposals. i think we're headed for a new round of tariffs and aggressive years. >> is it your sense the chinese authorities are prepared for that? how does it game out with the back and forth? >> they will do their best to skirt how to do this which is why a lot of members of congress will tell you we need to make sure we are putting tariffs on force produced in mexico. we need to get rid of the mexico loo loophole. as i said, between now and the tariffs, there is a lot of time and opportunity especially in europe for chinese cars to be exported out. we don't have chinese evs on the streets as of yet. >> sure. you know, one final point is the travel burst. is there any sign of anything sustained there in terms of chinese consumers wanting to get

out and around? >> retailing did well. they are spending money on restaurants and food and clothing. i think until the time you get some kind of stabilization in the property market, overall consumer sentiment is not that strong. >> savings rate is high in response. shezad, thank you. andrew. >> mike, when we come back, a lot more here in seattle. we will take a closer look at amazon's push into artificial intelligence. we will hear from one of the executives that is spearheading the unit. you don't want to miss this. all that coming ahead of our big exclusive interview later in the broadcast with andy jassy, the ceo of amazon. that's coming up at 8:30 a.m. eastern time right here live in seattle. we're coming right back.

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welcome back to "squawk box." we are live in seattle this morning at amazon headquarters. artificial intelligence is a big theme of amazon's ceo andy jassy's annual letter just out. it is increasing the investment in thanthropic. we spoke with matt wood at amazon about that relationship with anthropic. >> we have made equity investment in anthropic. we don't have a board seat or control. anthropic is one of the model

providers that make available foundation models customers can use to have reasons and intelligence inside their businesses. >> antropic is competing with openai and google and competing with openai, google and others. but interestingly we asked wood about the work that amazon doing to try to build a.i. technology in-house, building its own large language model itself, called olympus, versus making partnerships like this. >> one of the things that we have noticed with generative a.i. is that there is know going to be one model to rule them all. it seems that each different use case from different customers has a different sweet spot with a different model. so customers really value the opportunity to be able to match their use case to the right model. so some models are really great at reasoning. some are really great at

summerization or image generation or understanding images. others have really great operational characteristics, cheap or fast or intelligent. by offering models from amazon, plus anthropic and others, we're able to allow customers to match their use case to the model that makes sense. so in isolation, they always get the right fit for the right model. so that's really, really important. the super power of generative a.i. is that by combining these models together, you get a compounding effect of the intelligence and a compounding effect of the types of problems you can solve in aggregate. so they have become much stronger than the sum of their parts. >> this will become a very interesting and important point when it comes to competition in the a.i. world because of the exclusive nature around openai's relationship, for example, with microsoft, anthropic has this relationship with amazon and

also has one with google. we'll see a very interesting thing play out and we'll talk more with andy jassy about this issue in a bit. we should mention some other breaking news out of amazon this morning that relates to a.i., which is that the company adding an expert in a.i. to its board of directors. andrew yang is joining the board, he had been the founding lead of google's deep learning project and formerly the chief scientist at baidu. we had him on the broadcast a number of times in the past. so andrew ng joining the board of amazon and just another example of how a.i. is becoming increasingly important to all of these big tech companies. as we mentioned, we'll be talking to amazon's ceo andy jassy in an exclusive interview. we're going to go everywhere with him, that's at 8:30 eastern time. in every part of the economy, > raumer, tech, everything else. >>stight ahead, how confident are ceos right now.

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welcome back, everybody. 87% of ceos are confident in the growth prospects of the u.s. economy over the next year. that's according to kpmg's latest ceo outlook poll survey which polled over 100 ceos from some of the nation's largest companies. joining us rightnow is paul knopp, kpmg u.s. chair and ceo. and, paul, i think what i found most interesting about that, that headline number, is 87% felt confident in the u.s. economy, the number was lower, something like 78% for just in their own company's future. usually it is the other way around. i'm not sure how i feel about the overall economy, but i feel pretty good about what we have happening. how do you explain that? >> i certainly think that ceos are looking at the issues they face into. geopolitics, cyber right now are really important and then you

think about the structural changes, such as sticky inflation rates and such as the -- what feels like a tight labor market that's going to continue. i think they definitely are looking at how they navigated all that over the course of the last several years. and are thinking that with that high level of confidence that they're going to be able to continue to navigate it. it is not clear why that small gap exists, i think at the end of the day, what's important is that there is a lot of confidence among ceos about the prospects of their own companies too. >> what you mention about jobs is important too. hotter than expected inflation number again yesterday, looking for ppi today and the economists who are still anticipating that the fed is going to cut this year say that because they think the job market is going to turn over. they say that based on what they're seeing in small businesses. when you talk to big business leaders, the ceos there, they assume that they're going to continue hiring. >> they do. 72% of ceos said they're being modest to significant increases in hiring over the next 12

months. only 4% said they were going to reduce hiring. i think it is a sign of that confidence they have in the future of their businesses. at the same time, there is a little bit less clarity around the direction and the duration of interest rates now, maybe six months ago we thought there was a lot more clarity. so i think that's causing some ceos to really step back and think about how they can use things like generative a.i. to increase the efficiency of their workforce. >> that was another thing that surprised me. you talked to them about generative a.i., every company says that they're doing it, but the ceos you surveyed only 41% of them i think said they would be spending more on generative a.i. this year, more than half said they would maintain and keep their budgets flat. >> right. last year we saw generative a.i. as a top investment priority bill for the ceos, so that 56% staying flat is really flat off of very high number. >> okay. so you get that. >> and 31% of that 41% composition was a 50% or more

increase in spending on generative a.i. we see it as a huge priority for businesses, and they're seeing it not only around making sure they have a trusted a.i. framework, like we do at kpmg, and also to ensure that they make those use cases, those pilots now real, and industrialize the use of generative a.i. moving forward. >> the biggest issues that they are concerned about, i think regulatory issues top the list? >> so regulatory, safety, the ethical safe uses of generative a.i., cyber is a more prominent issue with generative a.i. what we need to do is first put in place trusted, responsible frameworks around a.i. use that a.i. to really promote strong business practices. and that is what we see going on right now. we see alot of movement in coding, for instance, software coding, real implementation of that, finance, i.t., there are real use cases that are being

put in place to cause businesses to become more efficient and more effective in what they do. >> in terms of m&a spending, we keep hearing maybe there is going to be more m&a activity this year. but the survey that you did showed that a lot of them are waiting for potentially administration change. >> yes, so -- >> what happens with the election first. >> right, the two biggest issues, undoubtedly, are interest rates, the direction of interest rates, and shifting business valuations. the multiples are still very high. even in the private markets. >> that's interesting. >> yeah. they are. much like the public markets. so, the election just adds an additional layer of complexity to it. and i think it was 62% of ceos said they would wait until after the election to significantly increase either capital expenditures or acquisitions. so i think it is just another element of uncertainty. >> they think prices are high. you just said valuations are high, meaning, you don't think this is necessarily going to last, you think it could come down. >> i think, yes, eventually.

i think as businesses become more realistic about what they -- the values of their organizations are, ultimately they will come down. >> paul knopp, thank you for joining us. >> thank you for having me. it is 7:00 a.m. on the east coast, and you are watching "squawk box" on cnbc. i'm andrew ross sorkin with becky quick and mike santoli. i am in seattle this morning. i should say, by the way, 4:00 a.m. if you're on the west coast. among the top stories that we are watching this morning, another hot cpi inflation report. investors waiting for a read on wholesale prices, producer price index data, that's set to be released at 8:30 a.m. eastern time. consensus estimates, the number to beat or maybe come in lower than expecting prices to rise .3%. we'll keep our eyes on that this morning. vertex buying alpine immune sciences for $4.9 million, giving access to the

immunotherapies. and amazon releasing its letter to shareholders this morning. ceo andy jassy telling investors that generative a.i. may be the largest technology transformation since the cloud and perhaps the internet. in the next hour, why i'm here, andy jassy will be joining us here on "squawk box" live from seattle. becky? >> let's look right now at what is happening with the futures this morning. down day for the markets yesterday, across the board. decline of about 1% for the dow. you see it indicated down once again this morning. decline of triple digits. the dow is indicated off by 110 points. s&p 500 futures down by 15. the nasdaq down by 35. we do get another inflation reading today in less than an hour and a half's time. that's the ppi, the producer price index. and market is awaiting that. we want to get over to dom chu and look at what is moving in the premarket. dom, how are you doing? >> i'm doing very well. thank you, becky. mike and andrew, we got three interesting analyst calls out

for your morning movers so far today. we'll start with more chatter and activity on nvidia, down just about fractionally, a third of 1%, 100,000 shares of volume. outperformed the broader market decline yesterday, posted 2% gain. this is the world's most valuable computer chip company. it is getting another target price hike, this time by raymond james, which raises it to $1100 a share from a prior 850. they're citing things like more revenue momentum into 2025, driven by new products and developing arms race, if you will, between big companies that will use high end a.i. and data center products, hyperscalers. analysts at goldman sachs are naming nvidia a top pick heading into the earnings seasons report. down fractionally, big gain yesterday in the down tape. next up, shares of nike, higher by 2% right now, around 70,000 shares of volume. the athletic footwear apparel giant is getting upgraded by bank of america over to a buy from a prior neutral. they modestly bump up the price

3 bucks target-wise to $113. they think expectations are finally set up properly for things like growth and revenues and profit margins alongside a discount valuation where it is traded on average over the last five years. nike shares getting about a 1.75% bump. a check on robinhood, down roughly 2.5%, around 120,000 shares of volume. this is the financial services company most well known for its retail stock in cryptocurrency trading platforms. it is getting downgraded to a sell rating over at citigroup. while they raise the target price to 16 bucks from $13, they think the sharp rise of stock over the last kind of several months over here has now gotten ahead of fundamentals at the company, with downside risks to the stock if there were to be any material pullback in bitcoin and crypto prices. so those robinhood shares down 3.25%. if you're looking for more on these stories and other analyst calls of the day, top calls on

the street, head over to cnbc.com/pro. subscribers can get more access to detail and analysis. keep an eye on the shares. back over to you. >> dom, thanks a lot. some breaking news on goldman sachs. leslie picker joins us now with that. good morning, leslie. >> reporter: good morning. i'm hearing from people familiar with the matter that cal carey hali i h halio will be in charge of firm liqu liquidity, resource allocation and other roles. she'll be replacing philip berlinski as treasurer. reporting earlier that he's joining millennium management where he'll serve as co-chief operating officer.

goldman has a slew of banks reporting first quarter earnings over the next week. we have been digging into what to expect in 24 flouhours from when we'll hear from jpmorgan, wells fargo and citigroup. there is a huge shift in expectations since the last time banks reported. at that time, traders expected five cuts starting in march. now the market is favoring two cuts, no sooner than september. for banks, higher for longer rates can be kind of a mixed. on one hand, investors are hopeful that will mean the more asset sensitive firms, with shorter duration loans on their books, will increase guidance on net interest income. that's the profitability network for loan-making. morgan stanley say that bank of america, wells fargo and jpmorgan are most likely to benefit from fewer rate cuts. higher rates can also pose problems for banks in other ways. it makes debt service more expensive which can be a headwind for credit quality and it may deter activity in certain

corners of capital markets, which were otherwise ripe for a rebound. that's why you saw the kbe decline more than 4% yesterday on this idea that we could see more of a hawkish posture in terms of monetary policy. guys? >> yeah, and leslie, banks are basically right in the center of the current market debate, which is can the economy handle higher rates, can consumers handle higher rates, are we basically seeing the fed wait for good reasons, which is that, you know, credit conditions seem like they're fine or are we just raising the risks down the road of what this might mean if we have to keep rates up here. >> exactly. and the overall economy, that is why it is so important to hear from the ceos of these banks about what they're seeing, what clients have been telling them, kind of what they have been discovering in the various businesses they run because the fact that the economy has held up so well, despite the fact that rates have seen a historic rise, and kind of remained at

those levels, tells you that so far the banks are doing okay and that's why over the last six months prior to yesterday they did see pretty dramatic outperformance relative to the s&p is because they have this kind of sweet spot dynamic where the economy is holding up. but the question is if that does start to deteriorate, the picture could look a lot different. so, investors will absolutely be very clued in into what these executives are saying about the state of the macro at this current time. >> yeah. starting in about 23 hours, i guess, we'll hear about all that. leslie, thanks a lot. >> okay. when we come back, we're going to talk about whether the inflation data, did it disrupt the fed's rate path and what will it mean for the market bulls. jeremy siegel will join us right after the break. and then later, we are here in ceo this morning for an exclusive interview with amazon's ceo andy jassy. he just released his annual letter to shareholders, a more

optimistic tone than last year. we'll talk to him. that will happen at 8:30 a.m. eastern time, about everything that is going on with the consumer, technology, a.i., advertising and so much more. all that coming right back after this. (grunting) at morgan stanley, old school hard work meets bold new thinking. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you

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welcome back to "squawk box" this morning. joining us right now, jeremy siegel, professor of finance at the university of pennsylvania. jeremy, things have been moving along in a lot of the right directions, equities had been on quite a streak, things are now turning around in large part on the back of this inflation data and the expectations for the fed. i'm curious what your reaction to that inflation data was yesterday, and how you think jay powell will handle it. >> yeah, you know, i think as mike said in the 6:00 a.m. hour, if the data came in yesterday, just two or three hundredths of 1% lower, it would have rounded exactly to the expectations of the market. it sort of reminded me of what happened after the last fomc meeting. if one of the 19 fomc members

had raised by one tick their december estimate, we would have had a median of only two increases, instead of three, probably the market would have collapsed, but because they didn't, it is at 3 and the market soared. it is so hypersensitive, overweight sensitive to these numbers. you know, let me just read right -- two sentences from the bos report that came out yesterday. after reporting, they said -- they said the shelter index increased 5.7% over the last year. accounting for over 60% of the total 12-month increase. other indexes with notable increases include and we talked about this, motor vehicle insurance up 22.2%. well, the shelter and motor

vehicle insurance are the two most backward-looking of all the components of the consumer price index. if you take, for instance, on the ground indexes such as the zillow index or apartment list index, which has an excellent index of monthly rentals, it is actually been zero year over year. zero year over year for almost two years. we have talked a lot about the way the bos does it. it is an 18-month moving average, that way lags the market. you take auto insurance. it is verified that auto insurance premiums follow 12 to 15 months after the increases in used and new car prices. >> in other words, in other words, are you suggesting that we are overstating or overthinking maybe? >> you're overstating.

>> on the economy? >> i think they're overstating and overthinking. now, all that said, commodity prices have stopped going down. there is no question that we're seeing some rising commodity prices that we hadn't seen for two years and that's something to look at. by the way, the money supply is finally beginning to rise again after, you know, being really flat for so long. so these things bear watching. i just think that there was an overreaction to what we actually got and i really think that inflation is still going down to the fed target and that we might see -- i said two rate cuts, i never thought three. two rate cuts by the end of the year. but more important than that, if given the choice, rate cuts or strong economy, it's no contest. strong economy is better for the stock market. >> jeremy, can i just ask you, though, all of those things you

listed off as being not forward looking, being backward looking, when a homeowner -- when you're a car driver and get hit with higher insurance, you feel it, you feel it heavily. maybe it is you're saying it is something that is lagging 12 to 15 months, that's true. but it is still hitting and still hitting the consumer. if you look at rents, that's one thing. if you look at people in homes, home insurance prices rose drastically and that really matters. property taxes have risen pretty substantially too. those are issues that hit people in their pocketbooks. >> absolutely, becky, no question about that. and that's a big source of current complaints about inflation. but the fed is supposed to project inflation over the next 12 months. not over the last 12 months. when they're conducting monetary policy and they admitted that it works with lags, you can't think of what's happened last 12 months and say that's going to repeat over the next 12 months.

they have to be as forward-looking as they can. and we actually know with more forward-looking indicators those two hot measures are going to subside over the next year. >> so, jeremy, real quick, you're looking at, you know, yesterday, 400 point drop, on a day like that, do you say to yourself you're a buyer of this market or you still say it is overheated? >> well, you know, even with yesterday's drop, s&p's return isle lalmost 9% this year. that's 6% after inflation. well, over the last, let's say 30 years, the average return is 6.5%. over my study, 200 years, 6.5% per year. people -- they're disappointed they're not getting 15 or 20% a year. but 6.5% a year, which we really reached in the first four

months, has actually been the long run average, bonds, bills and every other asset. and has given the wealth in stocks. so i think our expectations of, you know, i'm going to get 5%, 10% every quarter, are just too high in terms of what we can think about in the current market. we have really almost reached the long run average return going forward. that said, i still like this market next year and i think this year, 2024, is going to exceed that long run average. but certainly i don't think we're going to get another 2023 return out of the market. >> all right. and it is only april, jeremy. it is only april. prof professor, we appreciate having you on the broadcast. look forward to seeing you again very soon. becky in. >> andrew, thanks. when we come back, the ceo of one of the leading i.t. companies for the u.s. government will join us. we're going to talk cyberhacks, the boom in a.i. and much more. and later, paramount global

shares are struggling as the company negotiates with sky dance for a potential merger. we have the latest on the talks to buy the entertainment company. right now, as we head to a break, let's look at today's aflac trivia question. on this date in 1970, which apollo mission took off for the moon, but vener made its destination? duh. did you see the movie? we'll give you the answer when "squawk box" comes right back. mmhmm! medical bills! uh-huh! - pancakes! - cash! who pays you cash when you have medical bills? grrr! no idea. [tapping] gap! the gap left by health insurance? who pays cash to help close that gap? aflac! oh, aflac! get help with expenses health insurance doesn't cover at aflac.com pictionary?!

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now the answer to today's aflac trivia question. which apollo mission took off for the moon in 1970 but never made its lunar landing, it did make its back. the answer is apollo 13. that mission was aborted after an oxygen tank ruptured two days into the mission. didn't know that, you didn't see the movie. unlucky 13. >> absolutely. movie from a while ago. >> aging myself again. >> we're aging each other. >> defense company science applications international corp. posting investor day. the company is expected to outline the multiyear growth strategy. joining us now to talk about that and the challenges shaping the world economy and security landscape, tony towns whitley,

science application international corp. ceo and cnbc ceo council member. welcome. >> thank you. >> been with the company six months or so in the job and announced a reorganization. what is your top line message today to investors about reviving organic growth and your key prioritys? >> we're going to outline a four pivot strategy, four pivots of the organization we're making. and all of that is going to accrue to an accelerated growth wra rate that will drive ebitda that will allow us to grow back into midsingle digit, where our market is, which we haven't been for the last few years. we're going to continue on our path on just converting to free cash flow, which is we had a very strong track record and we're going to continue that. we're growing 10%, going to talk about that in terms of what it looks like over the next three years. >> i guess increasingly probably it has always been the case, but

defense advantage or capacity is technological advantage to a large degree. so, how does your business fit into allthat, especially in light of a.i. and all the new technologies? >> you think about what it does for the last 55 years we have been serving primarily in national security, and across government and civilian agencies. what we do fundamentally is integrate. we integrate emerging technology in a secure real time way into mission critical operations for national security. so think about how the department of defense and the intelligence communities, they want more and more commercial tech, but you are to understand the mission, understand real time capability. we will talk today and we talked to the market about differentiators on secure data, on secure cloud capability, on operational a.i., which is where we focus our a.i. capability, things like digital engineering, these are the unique technologies are now part of integrating in a new threat environment and how the department of defense is going to go for the war fighter and support the war fighter. >> a huge part of the threat

that the nation's worried about, our government is worried about, but also ceos, we just spoke about kpmg survey that looked at top ceos, cyberattacks and the potential for that. as we get more and more integrated, how do you keep yourself safe? >> yeah. we really see it as three fold. a lot of times you'll hear about zero trust architectures or zro trust environments. we assume no trust, no capability initially and you have to prove access and the ability to access data at different levels. the other thing that we have to understand is the way we -- the war fighter operation happens today requires the integration of data from so many different sources. and that's -- and so many different classification levels. we talk about multilevel security. how do we then bring data just in time, just for the individual, has access to that data, to be able to make decisions in a real time sometimes war time environment. >> and show it off again. >> and shut it off again. that's where we actually are -- our expertise is around secure data analytics, we use platforms

and capabilities. you have to understand the operational environment and that's where we think we're different. >> is it harder -- are there nation state attacks that are coming, from iran, china, has it gotten harder and harder every single year? >> particularly in the area of unmanned aerial systems, one of the largest attack vectors for our war fighter. there is a lot of technology that helps us in encountering that kind of attack, swarm attacks around the world. that's one area we differentiate. >> as relates to your business, federal budget issues? is it sort of a constant or do you feel like it is more pressure? >> we live in a cr environment, we call it, the continuing resolution environment. it was great to get one out in march and yet as we know a cr really represents a cut for most agencies with inflation. it becomes a cut. probably number one thing i hear from defense and national security customers is the concern, like there is an external threat, but the internal threat, if you will, feels like the budget environment, not having a stable budget environment being able to

go forward. so that is one of the major issues that we deal with. at the end of the day, we do see that there is some reduced spend on the r&d side. so that we can do current delivery. but our hope is that we stabilize this environment, that's what our customers want as well. >> toni, great to catch up with you. thank you so much. >> thank you. andrew? >> okay, thanks, becky. coming up, former council of economic advisers chair and harvard professor jason furman will talk to us about the hot inflation numbers and so much more,making news himself yesterday with his commentary on twitter or x, i should say, about everything that is going on with the mbs nuerwe just saw. as we head to a break, a look at this week's sector laggards. take a look. "squawk box" coming right back after this.

is

some breaking news this morning. we're live in seattle at amazon's headquarters.

amazon's ceo andy jassy's annual letter to shareholders is out. and he strikes a more optimistic tone than the year prior, which was, of course, a challenging one as the company was navigating both layoffs and restructurings of distribution centers after the pandemic. amazon's stock now trading near all time highs, and it has been quite a turn around. the investments amazon making in its delivery networks and artificial intelligence appears to be paying off. a.i. a big theme of this year's letter. jassy writing, we are optimistic much of the world's changing a.i. will be built on top of aws. part of that strategy is amazon's effort to compete in the chips business. meantime, on aws sales, jassy saying he's seeing big improvements while the 2022 companies were trying to save money at the time. they were allowing customers to effectively downgrade and upgrade their services. jassy saying at the end of 2023, he saw cost optimization attenuating, new deals accelerating and customers renewing at larger commitments

over longer time periods. amazon has changed its delivery network to a regional model to bring projects closer to customers, saying the shift has brought down costs per unit costs down by 45 cents in the united states. also the number of items delivered same day or overnight increasing. this is a remarkable number. we're going to talk to him about it by almost 70%. that's an enormous shift. meantime, on its advertising business, that grew 24% year over year to $47 billion. and on amazon prime, the prime video service, jassy writing, we have increasing conviction that prime video can be a large and profitable business on its own. so a lot of folks in the media universe likely to take note of that. and i'll be speaking with amazon's ceo about all of this and so much more coming up at 8:30 a.m. eastern time. >> so those 7 billion items delivered, same day, andrew, i was trying to figure out how many of them are arriving at my

house. a lot of them? it is my new go-to on -- not my new go-to, my go-to on anything, especially if you're getting ready to leave on vacation or do anything else, i need this, i need it right now, and they have an army of people who will deliver those things to you instantaneously almost. >> they do about $575 billion in revenue. so i don't know how much you -- the quick family accounts for that revenue. >> more than we should, let's say. andrew, a fascinating interview, we can't wait to see it. again, it is coming up in just an hour's time. when we come back, though, does yesterday's hot cpi data mean the fed is going to stay higher for longer? hot inflation numbers, how much should we read into it? we just heard from professor siegel what he thinks. some of these are backward looking numbers and we should maybe not pay as much attention to it. we're going to get aifri dfeng opinion from former council of economic advisers chair jason

furman. he feels very differently and he'll explain it for us in just a moment. "squawk box" will be right back. - i got the cabin for three days. it's gonna be sweet! what? i'm 12 hours short. - have a fun weekend. - ♪ unnecessary action hero! unnecessary. ♪ - was that necessary? - no. neither is a blown weekend. with paycom, employees do their own payroll

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economists are calling into question whether the fed will be able to lower rates anytime soon

after a third month of higher than expected inflation readings. our next guest says there is no room for a fed cut in june, or quite possibly this year. joining us right now is former council of economic advisers chairman jason furman, he is a professor at harvard's kennedy school of government. jason, we were reading your tweets, because you were pretty active tweeter yesterday, we were reading -- or xer, i this say, we were reading your xs as you were doing this real time on your reaction to what happened with the cpi number. you're of the opinion now that there is basically no way they can cut anytime soon. >> yeah, look, becky, i allowed myself to get optimistic a couple of months ago. but, you know, fool me once, shame on you, fool me twice, shame on me. we now had three months in a row of prints coming in above just about what everyone expected. it is time to change the way we think about things going forward. the market has done that for june.

but, you know, continues to hold out hope. i'd love the fed to be in a position to cut rates later this year, but the data is just not close to being there at least yet. >> what's so concerning to you on the inflation numbers? we have a lot of people who will look at it and be able to argue it away. we just had professor siegel on with us, jeremy siegel, from upenn, who was saying, look, a lot of this is backward looking, this is stuff that we knew was out there, these are late things that we know are going to be after 12 to 15 months when you got things like car insurance that go up, you have other people who a citi economist on yesterday, saying the same thing after the numbers, it looks like the job market could be on the verge of a turnover if you look at small businesses. what do you see that they don't? >> the first thing i would say is you can take the inflation numbers and slice and dice them lots of different ways. and if what you do is take out

everything that has unusually large increases, and see all the decreases continue, you're always going to think inflation is going to get better. that's a mistake i've seen people make over and over and over again. the systematic ways of dropping the bad -- the extremes on both ends and we drop the extremes on both ends, the inflation picture, anything looks a little bit worse than what the headlines are. the other thing is, you know, the stuff has lagged, but core inflation on a three-month basis has gone from below 3 to 4.6% over the last six months. it actually is rising. and, you know, none of these lag stories give you why it should be rising. it should still be falling. now, look, do i think we're at 4.5% inflation? absolutely not. what the fed targets is lower than that. i don't think it is a moment for panic. but really not a moment for complacency either. >> jason, we probably are guilty

of talking about the inflation numbers a little bit too much strictly in the context of therefore what will the fed do. i think everyone agrees, it is fine to wait for a potential fed rate cut if it means that we have to let inflation settle back a little bit more. it is more about the potential adverse results, if there are going to be any of the fed staying tight. what is your theory of the case? do we have to have unemployment go up more, do we have to have service, the service economy slow a lot more in order to get inflation down or can we somehow just wait and have time take care of it? >> yeah, so, first of all, thing to understand, even if the fed doesn't move rates, financial conditions are easier now than they were a year ago. they got a bit less easy yesterday in terms -- as the expectation for what the fed was going to do shifts and if that expectation shifts more, they'll tighten even more. financial conditions are just not especially tight right now. in terms of what it will take for the last mile of inflation,

i had long worried the last mile of inflation would be the hardest. a lot of evidence for nonl nonlinearity in the disinflation process. if that's the case, it would require a decent amount of unemployment to get inflation all the way to 2.0%. this is where i turn dovish. i don't think the fed needs to get to 2.0% inflation. at a minimum, i think getting to something that rounds to 2% inflation would be just fine. 2.49% rounds to 2, if it stabilizes there, i don't think anybody would notice it. i don't think they can tolerate a risk of inflation above 3, though, and that's the risk that we're facing right now. >> and we should also mention that the fed's inflation gauge pce has been running lower than cpi by a significant degree. >> you're not a huge fan of that, are you, jason? >> no, no, i like the pce. i think that's probably a better measure, we have to wait two extra weeks for it, which is a bit of a shame. if i believe the cpi, i would be

saying the fed should raise rates in may. but their preferred gauge is running lower. it is running lower in part because housing is a smaller fraction of it. and people made a lot of hay about housing yesterday. when you look at the pce, the housing stuff isn't nearly as important. so, yeah, as i said, it is not a time to panic. but, you know, they need to stick with where they have been, and not ease off, because this victory is just not here yet. i was hoping it would be, but it is not. >> we have a lot more to talk about with you i hope you'll come back soon, just in terms of some of the things that are bleeding into inflation, where you see that heading, we'll have you back very quickly, okay? >> great. >> jason furman. coming up, the latest on the drama taking place at paramount. and later, tired of targeted ads on social media, want to opt out of sharing certain data with

websites? the government is looking to do something ouabt it. we'll discuss new bipartisan legislation making its way through congress on this issue. we'll be right back. and more about discovering magic. rich is being able to keep your loved ones close. and also send them away. rich is living life your way. and having someone who can help you get there. the key to being rich is knowing what counts.

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paramount global shares are struggling as the company negotiates with sky dance for a potential merger. julia boorstin joins us right now with a look at what's next. julia, there have been some pretty big developments. >> yeah, and also some pretty big stock moves. paramount shares lost over 4% yesterday on a dow jones report that four board members are sk expected to leave in the coming weeks. with yesterday's declines, paramount shares are down 22% for the week, a week where it started negotiating exclusively with sky dance. the stock is now down 38% since december 10th, when it was first reported that sky dance was exploring a possible merger with paramount through national

amusements. the three investment firms have now sent letters to paramount's board, raising concerns that this deal would be dilutive to shareholder value. yesterday, aspen sky trust, which owns over 6 million shares, joined matrix asset advisers with about 350,000 shares and blackwood with over 100,000 shares. matrix's chief investment officer writing, quote, the vast majority of shareholders would not receive a similar premium and would be forced to finance a speculative investment in skydance. but analysts are less negative. michael morris writing, the ownership and management refresh likely to take place with the skydance combination is unlikely to harm the business relative to its current trajectory and could potentially spur operating and creativity improvement. i've been talking to entertainment industry sources who say this deal could be a win for the industry, sky dance could recapitalize, the studio

would consolidate ownership of key ip and add their animation business which is run by the former pixar chief. >> any way you slice this, the one given has to be that there are going to be shareholder lawsuits filed and you can understand why directors might want to leave and get out the door. how big is the d&o insurance they're writing on this stuff, how much protection do they have? anytime you're already hearing from this much about it, hard to think there is not going to be a lot of lawsuits filed. >> yeah, i mean, i think the other thing to keep in mind here is that paramount global's annual meeting is coming up in june. and so we're hearing now or getting these leaks now that these board members are going to basically not be standing for re-election. so, that's coming ahead of the proxy which is expected out in the next couple of weeks, which with indicate who is running for re-election. it is not like they would be stepping down midcycle. they would be saying, i'm giving everything going on, we're not

going to be running for re-election and if you look at the names of the people who are not going to be running for re-election for the board, it is a mixed bag and you would think that maybe each of them as different reasons for wanting to step down. >> julia, thank you. >> thank you. when we come back, a lot more right here on "squawk box." new legislation making its way through congress that is designed to protect your privacy. we'll speak to the representatives behind that deal next. and then later, i'm here in seattle this morning at amazon's headquarters and we will be speaking with amazon's ceo andy jassy after the company released its annual shareholder letter earlier this mniorng. that interview on everything from a.i. to the consumer still coming up at 8:30 eastern time. we're coming right back after this. it's time for wealth solutions as sophisticated as you are. it's time for corient.

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welcome back. our next guest joins us from capitol hill where they are pushing new legislation that aims to establish a national data privacy standard. want to bring in senator rick cantwell and nancy rogers, chairman of the house commerce committee. i want to welcome both of you to the broadcast. explain how this bill would work in practice.

>> well, we're trying to establish, andrew, a strong, strong national standard for how you collect, use and transfer people's most personal sensitive information. we believe there should be a strong national standard on this. we are an entire country with internet commerce across the united states. we want the information age to continue to unfold. but we certainly want consumers to be protected on their most sensitive personal information from being used without their consent. >> why now? not why now, but why do we think this has a better chance of passing now? we have been talking about privacy for a decade now. for all sorts of reasons, there has never been a bill that has gotten passed the finish line. >> well, this is an important legislation. i think that this is a moment when people in america

understand how important it is that their privacy rights be protected online. this legislation is foundational to protecting americans online. but also as we think about ai and the growing amount of data businesses are going to be collecting and ai, these large data sets, this legislation is so important to protecting americans online. right now we have a patch work of state laws that have been passed. what we're doing, what we have hammered out in this very strong privacy and data security bill is a national standard that preempts state law in a way that is stronger than any state law, that is going to ensure that americans' privacy rights are protected when they go online. >> chair cantwell, let me ask you. we always say that the public feels very uncomfortable about their privacy being taken and their data being used in different ways. yet, i am always surprised that we hear about a breach, some kind of terrible privacy breach

at a company where a whole slew of datas come out and yet, we, the consumer, the public, goes back to that store or that website or that platform again and again and again. and i genuinely wonder. you may think this is a crazy question whether you believe that the public actually cares about this issue as much as we may very well talk about it. >> well, i know you are in seattle, so i know you are in the epicenter of all this. and i talk to a lot of 20 and 30-year-olds who think this is the way it is and this is the way we operate, but this is why we want this law, because we know this law particularly outlines what those who hold our data, data security requirements. so it also sets a national standard for how data security is supposed to operate in the united states of america. so, no, we're not going to tolerate companies that hold big data and have a 25-year-old that

manages all that data and forgets to put a patch when microsoft or someone puts it out like equifax. one person's data is being held by a telecom company that they haven't been a customer for 25 years. how data security is supposed to work and it is enforceable under this act to make sure that if consumers are greatly harmed that they can take action against that harm. >> to the extent that this is married at all or relates to tiktok, how does it work? and how do you think about tiktok in this context about data privacy? >> the tiktok legislation that passed the house is separate from this bill. that is -- that is targeting apps that are controlled by foreign adversaries, tiktok and other apps. this legislation is separate. we've been working on this for months, actually years.

the both the house and the senate have been working on legislation believing it is important. i'm encouraged we have been able to hammer out language that will protect our data online with a strong preexemption as well as enforcement when there is harm andprotecting small businesses. we don't want to burden small businesses with regulations or with costs. we cherish american startups and small businesses. i really believe we have been able to hammer out a strong bill, and i believe that this is a bill that many see as a bill whose time has come. >> well, let me ask you specifically about small businesses because one of the big issues around data privacy on the other side that you talk to both big tech companies with platforms but also small businesses trying to reach individuals who say, you know what, some of these rules invariably make it much tougher to advertise, market and touch our consumers.

what do you say to them? >> well, andrew, listen, i keep going back to seattle because that's where you are. i'm a big hiker. so it's okay if they know, if rei knows that i like to hike and they send me the specials and the great deals i might get at rei. but it is up to the consumer here to say what information they want shared that's their most sensitive information and if they're okay with them selling that to a third party. so we want to put the consumer a little more back in control about how their data is used. since this is such a voluminous business here, their ability to continue to get us good information. so this basically says that the consumer has a little bit of right here about that most sensitive data, even when it

involved the government. that is that you can't collect sensitive information about me and sell it online to anybody, including the government, without any consent. >> let me ask this talking about concept. i'm sure you have experienced this. we all do. we have seen this come out of europe. how many times have you been asked, do you consent to cookies being, you know, put on your web browser? or do you consent to this or that and invariably like sheep we click, we click. we say yes, yes, yes. of course if you say no then the whole process ends. how do you get around that? >> well, this legislation also includes a provision that says you can't use nefarious ways to trick people or force them into accepting cookies. what we want is to make sure that the policies that companies have are clear and transparent and that they tell you what they're doing with your data.

>> right. >> because what we're trying to stop is the voluminous amount of sale of data so i am profiled online that my health habits might be used against me, i'm prejudiced against insurance or a job or something dilatory to me. with ai exploding, we are concerned people might use these tools to create unbelievable things that might harm consumers. >> i want to thank you both for joining us. we will follow the progress of this bill and we appreciate you joining us this morning. >> get some good coffee. >> what's your brand of choice. it is just after 5:00 a.m. on the west coast. you are watching "squawk box" here on cnbc. mike santoly right here onset. amazon ceo andy jassy will be joining us for a wide-ranging

interview just about a half hour from now. in it, jassy says again raytive ai could be the biggest evolution in tech since the internet. meantime, jeff bezos and other business titans like the ceos of apple and jp morgan attending white house's dinner. and new inflation data coming out after yesterday's hotter-than-expected cpi release. the futures are under pressure. actually at the lows of the morning. the s&p 500 indicated to be done just about 26 and a half a percent. the dow indicated down 188. all the indexes down about 1%, a little more than that on the dow yesterday. and we have bond yields also making new highs. and then you see the two-year

note yield, 298. let's get to don chu with a look at some movers this morning. >> mike, we'll start things off with a check on the takeover thursday story of the day so far. that's in health care and pharma. it is alpine immune sciences surging by roughly 36%, 37%. over half a million shares of volume after it agrees to be bought for $4.9 billion in an all-cash deal that equates to $65 per share of alpine just to put things in perspective. this will help them bolster their performance to target kidney related disease. vertex shares down just fractionally right now. moving on to the semiconductor front, qualcomm getting attention this morning. they're down roughly half a percent or so, 45,000, 50,000 shares of volume. jp morgan opened up a negative

catalyst watch on the shares. it is mostly a valuation call after a nice run of the stock, as you can see over the next several months. they do not expect any down sides. but without market change in fundamentals or with the smartphone industry overall, there may be limited up sides, shorter term. they are overweight with $170 price target. for more on that, head over to cnbc.com/pro. subscribers can read more about that and top calls. we each cap things off with an earnings mover. that's car max, which is down by roughly 8% or so, and that's off the free market lows. just around 75,000 shares of volume. reporting quarterly results. car max said results were impacted by continued affordability challenges that led to a reduced number of

vehicles sold all against a backdrop of consumer headwinds because of widespread inflationary pressures. i would show you car max. but i will tell you right now, becky, it is 8% to 9% of the premarket right now. go to cnbc.com. don, thank you. we will stick to that inflationary commentary. we are counting to the second inflationary report of the week, which follows yesterday's hotter than expected consumer price index. that sparked worries that the fed will put off potential rate cuts. the fed vice chair and a cnbc contributor. roger, let's talk through this because you have been very right for a long time, and you have also been highly skeptical. >> i thought in some ways it's unfortunate that the inflation is still running a little hotter

than the fed would like because, as you know, inflation is a drag and a tax on many individuals. secondly, i think, you know, the commentary from the fed, i think, had been pushing towards this notion of, you know, no rush to cut. we heard from president bostk possibly only one cut. this in one sense supports that commentary. take the june rate cut pretty much off the table and now we're looking much later into the year for the first rate cut, if any, occurs this year. >> it didn't just take the june rate cutoff the table. it took the july cutoff. people are thinking it is going to be a long, hot summer. you are already of that opinion? >> absolutely. the good news here is that the economy is doing really well.

the truth is we aren't really sure how restrictive monetary policy is because if it were so restrictive, youwould have seen things slow down much more than they have so far. so the challenge for all of us, becky, is post pandemic, all the changes occurring in the economy, the older folks leaving the workforce maybe, changes in how people work, all of that is leading to how uncertain inflation dynamics work. and that is an inability to be accurate about the inflation call and therefore the ability to be really prescriptive and accurate on what the move will be on rates. >> there is a number of doves and dovish outlooks there that are able to look at this number and say, well, this number doesn't take things into account. when you get the cpe number, that will show us the -- i'm sorry, the pce. that will show us something different. these are things we knew would

be lagging indicators. what do you say to all that commentary? >> yes. first pce has been somewhat slower. that helps the fed a little bit, and it is a patient story. i'm always careful to exclude the things you don't like. you know, you start to say, well, you take this one out, you take that out, you can certainly look at this in a more optimistic way if you want. i think that's unrealistic because if you talk to individuals, what they are feeling is continued pricing pressure. we should take this at relatively face value. yes, there are ways to cut it. but i think that leads to a very dangerous situation that we have seen long ago. when you start to ignore the bad parts of the inflation number, you get to a place where the fed is falling farther and farther away from the curve. that is not a good idea. i do take some comfort the pce

is lower. but i think the fed is right to hold off any cuts until they gain higher and stronger confidence that inflation is really coming down closer to that 2% target. >> roger, you're certainly correct in underscoring that the good news piece of this does continue to hold up pretty well. of course, the outlook for cuts, even in fed's own kind of projections was not about the economy needing help. it was not about the economy really performing at all. it was about that they think their policy is restrictive and pce cuts. do you think there is institution momentum at least by the end of the year to at least begin some kind of trimming of rates, similar to what happened in 2015 when they wanted to get rates up off of zero and the economy didn't like that idea. yet, they did get one up in

december, get a rate hike of that year. >> look, i think the institutional momentum is shifting. we'll see more in june when they come out with the next so-called dot plots. but we have heard from a number of policymakers, waller, nester, logan, bostik, all of whom are basically saying we are in no rush to cut. bostik said if we were to cutit all, it would be later. i think what we're seeing is the institutional momentum is actually shifting as the data proved to be somewhat disappointing. so i don't think -- we'll see more in june, but i don't think they're going to, you know, proceed to cut even if inflation is not come down. i think that would be very unwise and inconsistent with what they're saying in terms of getting a greater degree of confidence. >> roger, thank you. again, always appreciate seeing you. your message has been very

consistent, and for those who have been following, it's been right. we'll see you soon. >> thank you, becky. coming up, cnbc's latest cities of success. showing spotlight on denver, colorado. and later, don't miss an exclusive interview with andy jassy. that is coming up at 8:30 a.m. eastern. "squawk box" will be right back.

cnbc's cities of success looks how key cities have rebuilt themselves. we are joined by karl. this is a bit of a coming home for you. >> it is, becky. as you know, we're here on the campus of the university of colorado where i went, where joe went. sun is starting to come up on

the flat irons here. you know, it's funny. when we launched and were profiling nashville, denver and colorado leapt to the top of the list. the population here is up 18% in a decade. boulder's gdp is up 23% over five years. a few things at work. it was the first state to legalize cannabis, gruesome tourism post-covid. the work from home phenomenon allowed people to move to their dream town. more than that, the area was able to diversify beyond a lot of the old line industries that in prior decades sort of made them beholden to economic cycles and made them vulnerable to economic shocks, something that is key to this area's boom. take a listen. >> denver was originally an energy town. so it had these big ups and

downs with the price of gas. we now have a healthy diversification. aerospace, tech, manufacturing, a very broad base. obviously innovations, entrepreneurs and starterships. it wasn't identified as a sector until i was an entrepreneur in the '90s. and denver, boulder area really at the top of kind of introducing new businesses. we have a number of unicorns come out of this market and a great place to start and grow business. >> so ahead of tonight, morgan brennan will profile her piece where she looks at the aero space energy, a huge driver of this economy for years. diana will look at real estate where prices over the past decade have exceeded the national average. and housing really is a key issue, a key challenge to get more affordable units built in this area. and then of course cities of success denver and boulder airs

at 10:00 p.m. eastern time. we're excited about it. we will get to look after that on what the next one might be. >> karl, mike and i were talking about it, denver, boulder together, i guess i never thought of them as being joint cities. but you are looking at this as a dallas-fort worth combo or minneapolis-saint paul. >> yeah. in the past there is a highway that connects the two, highway 36. when i grew up here in the late '80s, early '90s, it was basically an empty space. that's all filled in. and it sort of points to the sprawl that's happened as huge employers have come in, google, amazon, salesforce, quantum computing has created a bigger workforce here. that's the key change. in the past, if you and i had a startup and we moved to denver, the reason might have been because we like the lifestyle or we like to ski and we like to hike and we'll brick our employees with us or go on the

hunt for talent down the road. now the key reason to move here is the workforce itself. and it's that sort of self-sustaining tool of labor that is probably the most important thing in any city that we're going to look at now or in the future. >> that's amazing. and you get the benefits of 300 days of sunshine and that beautiful vista behind you. yeah. a lot of greatthings to look into. we can't wait to see the doc tonight. >> thanks, becky. we've got a lot more coming up. i'm live in seattle this morning with a can't miss interview. amazon's ceo andy jassy will join us here at the headquarters of amazon in just a moment. so much on the agenda from consumer to regulation to ai. it is all ahead. we'll have to bring you the ppi numbernd m aore. stay tuned. don't go anywhere. "squawk box" returns after this. climate researchers are weathering a data storm.

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news just out from deal books, lauren hirsh reports that aerial investments that had a 1.8% amount stake in para mount is the largest shareholders to join the list of investors objecting to a deal. despite concerns on how that deal would be financed. ariel is concerned about the reports that four paramount board members would soon depart. paramount shares are up since this morning $10.52. earnings season gets into full swing tomorrow, including

jp morgan, citi and wells fargo. joining us with what investors should be watching, he managed the trust fund and financial services opportunities etf. good to see you. >> thanks, mate. >> a few themes. the group hit hard yesterday on this move up in bond yields and reduction in fed rate cut expectations. how do each of these banks stack up? >> right. so clearly in the short term we're being driven by the rates and the outlookfor the fed. but i think, as we think about the reporting season set to kick off tomorrow, in general, it should be a fairly positive income for the major banks. think about the aspects of that going into this year. either we will have a down comparison year over year, the contribution from asset and wealth will be good.

we're seeing capital wealth pick up, so record levels of corporate issuance up 80% year over year, and then we will work through the component and we should get guys, jp morgan at $90 billion, we expect an increase there. so positive kind of outcome from the earnings results and more momentum going into '25 in terms of accelerating earnings. >> yeah. i know it will be sort of the front and center and it varies by bank. big over small has been a real theme, obviously. the regional banks have not been as advantaged. what about within the big banks. jp morgan so outperformed the rest of the group, what do you prefer? >> in general, the funds will favor the bigger banks. i think that goes to the diversity of their revenue stream at this point. more competitive cost of funding. and just, you know, a better capitalization and so on.

so that -- that is for this year. you know, obviously, there is a disparity in terms of valuation between some of that and the smaller banks. but going forward, within the big banks like wells fargo, you know, it is still trading at 1.3 times tangible for '25, you know, improving operations, simplifying the business and then an ultimate catalyst as the cap is removed. >> i guess the credit question, people have been feeling better in general about things in terms of consumer credit, certainly corporate credit. is that going to soften up at any point or has it already? >> so new york community bank, you saw a hot spot. so we'll get some of that noise. i mean, you saw the headline in the wall street journal about st. louis. people are considered about cre. in general, unemployment trended better in terms of credit, preserves, et cetera. so that's positive. consumer has been good in terms

of car payments. so it is a little bit of a mixed bag, but investors are focused on those hot spots in terms of commercial real estate. >> now, outside of banks proper, i assume you look at other financials, do you actually like other parts of financials, you know, any better than some of the banks? >> so we own a very diversified financial services. yesterday, i was at the k car investor day, and, boy, everybody should go back and review the slides there. they earn $3.50 last year. they're looking for earnings of $7 to $8 by '26 and decades out almost $15 in earnings. incredible growth trajectory and visibility and very well managed to take advantage of the opportunity that they're seeing. so lots of opportunity. >> yeah. that's where the assets are flowing. i guess that's where the fees are flowing. great to see you. thanks. up next, we do have breaking producer inflation, that big

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all right. here we go.

welcome back to "squawk box," everybody. obviously, the focus, though, on producer inflation. that's the number of the people so keen to see after the consumer inflation numbers that we got yesterday that were a little hotter than expected. the sent the market into a bit of a tail spin. there morning there is not a lot of optimism ahead of that number. s&p futures are off by 30. the nasdaq is down by 75. of course, this comes after a day when the markets were down about 1%. the dow was off by 420 points yesterday. treasury yields ticked up pretty instantaneously after that hotter than expected cpi number yesterday. we are now looking at the 10 year sitting at $458. rick is standing by in chicago. rick, the expectations for this one, 0.3% for headline. >> yeah, 0.3% for headline.

i think really what many are paying close attention to is that last month's headline was up six-tenths of a percent. that was the hottest run month over month since june of '22. we are looking to see how much of that we reverse. if that comes in even at 0.5% or 0.4%, that will be significant. or a few seconds in front of march cpi, we will be watching claims quite closely. the numbers are our final ppi headline month over month, up two-tenths of a percent. you have to go all the way back to equal it in september of last year to find a lower number would be june of last year when it was zero. up two tenths when you strip out food and energy. that follows 0.3%. strip out food energy and trade, up two-tenths. our last look was up

four-tenths. it is absolutely the lightest level going back to november of last year. and if we look at year over year headline, year over year headline, we are expecting 2.3. it comes in as 2.1 -- i'm sorry. year over year at 2.2 we're expecting. comes in at 2.1. that follows 1.6. 2.1 there is the hottest level going to april. that is the first number that hasdefinitely been hotter than our last look, even though it is a little less than expectations. many will compare it to the actual number. we go from headline to core, 2.4. higher than anticipated, much higher than a 2.0 in the rearview mirror. and, finally, 2.8 is our food, energy and trade that follows 2.8 which which was actually revised to 2.7. these 2.8 numbers are basically running where we were in

september of last year. initial continuing claims quickly, 211 on initial claims and 1 million 817 when it comes to expecting claims. very close to expectations and both those metrics stay relatively depressed. interest rates moved down a little bit. 455 to 457 to 494, 494.5. the numbers, even low they're hotter, they seem to month over month sway some wholesale inflation fears. back to you. >> that's the case in the equities outlook, too. if you are looking at the stock market futures, bring that board right back. we went from looking at the futures 200 points to right now the dow future is down 47 points. nasdaq futures turned positive. rick, thank you. let's jump over to steve with more details on that data, too. what do you see?

>> yeah. real quick why the number is important is how it feeds into the pce number. i think it could cause a tenth decline. so the fed's deflation ind indicator, what it follows on the 26th of this month will not be as bad as the cpi. i don't think today's number gets rid of or otherwise offsets the cpi number. it does suggest there is not tremendous inflation up the pipeline coming down toward the consumer when you take out some of the comedy price increases, which are with the headline. there was an increase in wholesale passenger costs. might reflect increase in international travel, airline costs. other than that, things seem pretty well under control. and what we're going to look for here is what happens to the pce later this month. it could potentially still show some improvement. and that's what i'm watching

for. do fed officials still believe they will be improving inflation this year. >> yeah, sure. not the confirmation some people were anticipating with this number today, so it does keep things in the air. steve, thank you very much. let's get right back out to andrew. he has a special guest joining him in seattle this morning. andrew? >> thank you. we are here in seattle this morning at amazon's headquarters. earlier this morning, touched on everything. and andy jassy joins me now. we're thrilled to have you here. >> thanks for having me. >> thanks for waking up early to do this. we were talking about this inflation data. before we get into amazon, i'm so curious, given you have your tentacles in so many parts of the business, how do you see things and how do you see things as it relates specifically to inflation right now? >> well, when we see our

consumers are spending but they're being careful about what they spend on and what they spend. you know, you see -- you know consumers wherever they could find a deal, they take the deal. we see -- it's going to take a lot more people not to buy detergent or shampoo or things like that. you can see that in the growth of our every day essentials business. some of that is because people are in a bind. some of that is the speed we have. people are still -- they are still buying. they're just being careful about what they shop for. >> but you are seeing a trade down. >> we see people trading down where they can. on the enterprise side, you know, the last couple years, companies have tried to save money however we could. the last optimization we saw,

but i think a lot of that cost optimization has attenuated, and we've seen a lot of the deals that people were talking with us that were sitting on the back burner and started to move. migrations have picked up again. the pipeline is really cool. i think people moved from largely trying to save costs to modernize their infrastructure and use generative ai to improve their business. >> are there places where you see price declines? anything in terms of wages? >> consumers are spending. they're just trading down. you know, a place where we see a real impact is, you know, on discretionary items, things like tvs or computers or electronics. >> i want to start.

there is 100 places to go here because you touch on just about everything in this letter. but i want to start with ai because it seems to be the buzz word of everything. when we were here last year, we were talking about ai. it was unclear where amazon was going to play in this ai world. you now say it is going to change everything and that you have shifted the whole company towards ai in almost every space now. >> yeah. we have been saying it for a while. i do think that ai is going to transform every customer experience that we know. and, yeah, i think a lot of the discussion has been around applications. and, you know, charting really with chatgpt, which caught people's attention. but we thought there were three big areas, each of which were gigantic and each of which we're investing deeply in. think of it as the lowest layer are for people building their own large language models.

compute to train the model and run the inferences. what matters in that is the chip. >> right. >> and then the services that you have to actually build models. and we've got very significant investments there. you know, most of the early ai models were built by nvidia, but supply is more scarce and people are concerned about cost. we built a training chip an an inference chip. so a lot of the training and predictions will be done on those chips. you know, and then i would say at that middle layer of the stock, for people that will leverage somebody else's model but customize it with their own data and use our features to make it easy as a service and we used the service called bedrock. it is the easiest way to build a high quality ai application. then there is the applications.

a vast majority are built by third parties. >> let's talk about large language models because there is so much focus on it. you have made investments. you have building your own large language model called olympus. how are you thinking about investing, versus trying to build your own? >> i think the one thing we have seen consistently in this relatively early stage of generative ai is that customers want choice. they want different model types for different applications and use cases. they want different sizes because it changes the latency and the cost structure. part of the attraction for so many people at bedrock just is the largest selection of models available. it's got not only models we build but meta and straw and cohere.

so you have a lot of choices. then bedrock makes it simple to move between models and move between sizes to experiment and get the right quality and latency. for us, we're building dozens of generative ai cases right now. we find it with our own that sometimes they want to use our own models. sometimes they want to use third party models, and we give people a choice. >> how important is it for you to catch up on having your own generative ai large language model. how important is that? what do you have to do to get that to the same level as where an tropic may be or where ai is today? >> first of all, what i would tell you is that this is -- this is going to transform virtually every experience we know as a gigantic space and there are a

lot of successful players in it. if you talk to companies using ai, they are very excited about what we're building and more and more customers are moving to our services. we will have partnerships. we have a very deep partnership with them. cloud three is the best model on the planet right now with the best performance. and it runs best on top of aws. so our customers are very excited about that. but at the same time, you know, we have a lot of experience building models at the company. we have been doing it for a long time. and, you know, we have been building our own models. and these titan models we have, we will keep building those and give people a choice. >> the data input is being used to train. do you know, for example, with your new large language model what data you are using to train it on? there were reports that open ai was desperate for data. they actually built a program just to create transcripts of

youtube videos so they could train off the transcripts because they didn't think they had enough data. i'm curious how you guys are doing it. >> we have a group of people that spend a fair bit of time all the time, by the way, because the landscape continues to evolve, but thinking through the best way to build the models. we're very thoughtful and very careful about what data we use. we, of course, have some proprietary data and some publicly available data. we use all of it. >> some people ask because -- someone asked me this. you have all the books in the world. many on kindle. are you able the train on that data? >> again, there is some of that data we can train on and, again, we try to be thoughtful about what data we train on. we also do licensing deals in some of these cases in different types of data. and so, you know, to these models that they're getting smarter and smarter and i think you have probably read about,

you know, as you build these big models, we have not yet gotten to a point where the models are so smart they wouldn't benefit from more data. we're being thoughtful about how we use it. >> does it matter that someone is also operating with google? they have an investment with them as well. they're on their cloud as well. i ask because i looked. you have $70 billion plus in cash. would you just prefer to buy the whole company if you could? >> we have a great partnership. it is true with most technology. if you operate in the tech knowledge space, you get pretty comfortable with coopetition. we're excited about the investment. remember, as part of our relationship, it is not just that we offer their models an ease way to way use bedrock. they're training their future models on our chips. they also named us as their

primary cloud partner. there is a lot of collaboration there. we're really happy about the relationship. >> do you think you could buy a firm in this environment from a regulatory perspective? >> i don't know. i mean, it's -- i think we got to be careful right now in western countries and the way we're handling regulation. a good example of that is what happened with i-robot if you follow. that it is really a sad story. it is a great entrepreneur ship. an american company invented this product, built a business that was almost $1 billion in revenue. you end up with company and competitions. they tracked these two large chinese companies as competitors, and they needed scale because scale lets you buy components at the right price. so they merged with amazon. and the european commission blocks it because they worry we will feature our vacuum cleaner, the roomba, versus others.

which, of course, is not our model because we make less money selling third party products versus our own. so what happens? we abdicate the aboutwy igs. i-robot lays off a third of its staff. the stock price tanks. now there is a question whether it will be a going concern. turns out with these vacuum cleaners, they have to map the inside of your house. really what western regulators were saying was that they trust these two large chinese companies with maps of the u.s. consumers home over amazon. and were aws. that can't be what we were going for. >> right. >> so i think people don't know what they could do right now. i just think we got to try to find a way to be reasonable in what we're doing. >> the ftc is looking into the partnership you have with an thropic. they're looking at the way

microsoft's relationship exists with open ai. i'm sure they will look at their hire deal as it relates to inflection. i mean, it is very interesting what's happening. nobody is making outright acquisitions, but in some ways, these partnerships are in lieu of that. no? >> i mean, there are stoome acquisitions happening, but we're consuming time and taxpayer money with what we're doing right now. i think a lot of it is out sides the bounds of the law right now. i think that some of these organizations are making decisions that are outside the bounds of the law. >> let me ask you this since we're on the topic of regulation. i want to get into what you have done with sellers over the past year and just what's happening on the consumer side of the platform, which is a remarkable thing given how you changed the distribution model and you now have more sellers on the platform than ever. at the same time, you have the

ftc out there saying you are a monopoly that one out of every $2 that a seller on the platform is getting, is going back to you in the context of advertising, servicing the distribution and the like. what do you make of that? >> well, i think you got to start with the facts. you know, and if you look at on amazon over 60% of the units we sell are sold by third party sellers. you know, it is not hard to actually create software to put up an e-commerce website or store front. it is easier to give distribution to customers. our sellers on average sell about $230. in our marketplace, we have thousands of sellers that sell over $1 million a year. so sellers are making a lot more money selling on amazon than they could on their own. if you look at things like

fulfillment by amazon, which is our service that allows you to ship it for you and is also available for prime shipping, that saves sellers over 70% from having to do it themselves. >> right. >> it costs money, so we charge a fee for it, but it is much more cost effective for sellers. when things are doing better for sellers, we have a great relationship for sellers. >> is it better to have a first party marketplace? if you look at just the margin and the fees you have been able to accumulate from third parties, is that a better business? is it less capital intensive? is it more capital intensive? >> it's a very good question. they're both interesting businesses. you know, one of the main reasons we have first party business is that it allows us to make sure for the items that customers care a lot about that otherwise wouldn't happen, that you can keep the prices as low as possible for customers and

keep the in stock levels the way you want. but wherever we have third party sellers who are selling, it is always a great value proposition. they sell the majority of the units for us now. >> one of the things that you write about in this letter is this idea of primitives. i just want to talk about it for a second so that those who follow amazon understand it. it is really the way you think about building new parts of the business. can you give me sort of a 60-second overview for those that haven't had a chance to read that letter yet, what that means. >> yeah. think of a primitive as a foundational building block that does one thing really well and that people can stitch together however they see fit. when we came up with this idea of primitives about 20 years ago, most of the software and technology services out there were these all singing, all dancing services that did lots of things, but none of them very well. what we ran into -- we were building that way, too.

we had a number of these e-commerce services like payments or ordering or item catalog or search that when we started doing deals with companies like target where target.com used amazon's e-commerce technology under the covers to try to provide the individual services through api so they could customize however they saw fit, it was way harder than we imagined because all of our services depended on each other and had become jumbled up. around this same time, when we were building aws, we were really convicted that we were going to build this set of foundational building block primitive services like storage or compute or database that people could stitch together however they saw fit, and the two big advantages are it really fosters creativity, because, you know, you can combine the components however you want, and it fosters speed, because if you want to actually use one component, you don't have to ask five services to make a change. you just use that component. >> and now you're using that

across the board for everything that you build. >> yeah. >> including on the consumer side. one of the things i said at the top of this was you really redid the entire distribution model of how you get products to consumers, and you have been able to get them more quickly than ever before. we were shocked. up 70% in terms of -- 70%? >> same-day, one-day. >> what is that going to look like in two or three years from now? can you continue to bring the costs down? that's one of the pieces of this. >> i think, yes. i think we have been -- last year were the fastest shipping speeds for prime customers in the history of the company. we have been even faster in the first quarter of this year. we have a lot of ideas on how we can continue to take delivery times down. i mean, i talked about, we have these same-day facilities where we have, you know, we store about our top 100,000 skus there, but we also have nearby fulfillment centers that can

inject selection in there. they're in our major metro cities, and we can -- those fulfillment centers are so streamlined that we can get from the time you pick an order to when we're ready to ship in as low as 11 minutes. we're doubling the number of those. when you think about what we're doing with drones, with prime air, and i think in several years, when they're more pervasive, we'll be able to get items to customers in less than an hour. >> i got to ask you about returns, because this is also a big issue. there are a lot of folks that are frustrated about what they call fraudulent returns. i didn't realize this was a thing. people are buying stuff on amazon, oftentimes from third parties, and then they return it, but they don't return the actual product, so it would be, you know, i would buy these sneakers and then i'd return a fake version of the sneakers back, and they're grappling with that. is that something -- how to you deal with that? >> well, at our scale, you find you get some of everything. and so, we've seen that in the past, but we have a pretty

substantial team that works on making sure that returns are appropriate, that we keep counterfeit really low. so, we change a little bit of -- some of your policies on returns and when you actually refund people, and you know, you try to make sure you know you got the right product before you actually authorize the refund. >> what about stolen goods? that's another big issue that a lot of brick and mortar retailers worry about. you hear the complaints all the time. they say people are robbing us and then they're taking that product and selling it as a third-party merchant on amazon or ebay or these other kinds of services. >> yeah. it doesn't happen -- i mean, again, at our scale, you find some of everything, but we have a really significant team that looks for that, and to get -- it's not, you know, you have to get authorization as a seller. we have a group of people looking for items, whenever we get reports, we act on it. so, we have a group of people that are watching that very carefully. >> one of the stats this year that's just mind-bending is how

big an advertising business you have. i mean, just, it's really grown quite remarkably, growing 24% year over year, $38 billion in 2022. now $47 billion in 2023. how should we think about amazon in that regard? where does this go? >> well, you know, look, advertising doesn't work unless you provide the right experience for customers, and they respond to it, and then it actually benefits the brands who are advertising. so, we, you know, most of our advertising team are actually machine learning practitioners who are actually figuring out the right products to put in front of people, so it doesn't even feel like advertising to them. it actually feels like the item that they were searching for, and you know, when we have a product called sponsored products that has been very successful in this realm that we've expanded with sponsored tv, and you know, the sponsored tv offering allows people to have self-service access to entities like freevee and twitch and things like that, but we've

recently added the ability for people to do advertising on prime video shows and movies, and that's very early stage, but you know, i expect that we will continue to very thoughtfully find ways to place advertisements in the different entities we have. >> when you think, though, about prime video, one of the sentences that stood out to me this this letter is that you now think prime video could effectively be a profitable and completely stand-alone business. what does that mean? >> well, i think that when we started with prime video, it was very much about driving people to find value in our overall prime offering, and we found that a lot of people would sign up for prime because of our exclusive content, and then once they become prime members, they would shop in our e-commerce offering, so it drove our business downstream, and that continues to have much be the case, but we now have conviction that apart from the value it

drives for the rest of the business, it would be a good economic business on it own as well. >> the nba. does it have a place on amazon? >> i assume you're talking about their upcoming -- >> yes. >> we'll see. it's hard not to be impressed with what adam silver and the nba has done. it's an incredible product, and it's an international product, and we have a lot of respect for them, and we'll see what happens. >> how important are sports, though, for this? could you ever see yourself spinning this business off separately, or is it so intertwined? >> did jon fortt ask you to ask me that? >> no, i'm genuinely curious. >> no, i don't foresee us spinning it off, because it's so tightly integrated into our prime offering, but i think that sports -- if you look at the ratings of shows every year, sports occupies 90-plus percent of the top ratings, so we've seen with thursday night football just how many customers love that offering and how many

people come to it and how many prime subscriptions it drives, and so you know, thursday night football has been a huge success for us. we've got nascar coming. we're going to have six races right in the middle of the year. we have soccer through uefa and champions league. i don't know if you watched the women's final four this past weekend, which was just unbelievable. we have -- we're the exclusive streaming partner on the wnba, so we'll get to see caitlin clark on prime video as well. sports are very attractive for our customers, and you can expect to see more. >> would you do more deals? we keep talking about paramount all morning because there's lots of deals going on there. you bought mgm. would you want to buy paramount if you could? >> i think we're pretty comfortable with the offering we have right now, and we're continuing to produce, i think, really great, exclusive content. i don't know if you've seen flutter yet. it's got great reviews, and so i'm really pleased with the content we have, and we're just

starting. >> let's talk satellites real quick. i'm trying to hit everything we have. >> i like that you said, let's talk satellites real quick. >> very hard to talk satellites real quick. when will we see this product? how will it compete? >> there's 400 to 500 million households across the world that don't have broadband connectivity, and in october, we got two end-to-end prototypes up where we were able to exercise all the functionality, which is really rare in a prototype test like that. we're putting the satellite up. the first big production pieces will be the second half of '24. >> finally, real quick, i talked last week to steve cohen, the investor, and we were talking about -- he has a very interesting thesis. he thinks we are completely moving to a four-day workweek that will be, like, truly establishing -- will change economies as a result of it.

i know we were all struggling to get people back to the office to begin with. what are you seeing right now, and do you think there is a complete change in how it, therefor, affects the economy? >> you know, my own view is that i think we're on a journey, and we still don't know where we're going to end up. what i have noticed since we've gotten people back in the office at least three times a week is that the collaboration is much better. if you do a lot of innovation, which we do, just, you know, the way you innovate, it's not like you schedule an hour, and you innovate, and you invent something, and you're done. it's messy. it's meandering. it's wandering. it often takes 90 minutes. when you're done, you don't quite get there, and two people get on a white board and work it out after the meeting. the collaboration is better. the innovation is better. people understand the culture better. i just noticed that we've gotten back to our culture more since we've been back in the office. >> okay. we're going to leave it there. andy jassy, it has been quite a

remarkable year. the stock up 22%. we appreciate seeing you. thank you for touching so many different topics this morning. >> andrew, i think the thing that jumped out to me is his strong take on regulation and how overreach in regulation is really changing things. it's something we hear from a lot of businesses, but andy jassy speaking out very forcefully on that. right now, it's time for "squawk on the street." >> good thursday morning, welcome to "squawk on the street," i'm david faber. he is jim cramer. we are live from post nine at the new york stock exchange. hey, look, there's carl quintanilla. he's in boulder, colorado. that's ahead of tonight's premier of cities of success, denver and boulder, which airs at 10:00 p.m. eastern. let give you a look at futures right now. we get ready to begin trading 30 minutes from now. we're looking for -- i don't know what you want to call that. >> ppi scooped.