"squawk box" begins right now. ♪ good morning, everybody, and welcome to "squawk box" right here on cnbc we're live from the world economic forum in davos, switzerland. i'm becky quick along with joe kernen and andrew ross sorkin. we've got fed governor michelle bowman and john. they're looking for any comments the fed might make about future interest rates, how many cuts you might get, or hikes. that would be something that would catch their attention. if you watch the futures markets

we're kicking off lower. dow futures off by about 150 points, nasdaq futures down by 86 the s&p down by 21 even after two days of declines, you're talking about the s&p and dow a little over 1% away from their all-time highs, nothing to cry about at these moments if you're looking at the treasury market right now, let's take a look at how the major averages look at this point. 405 for your the 10-year the 2-year is at 2.48. hong kong's hang seng index tumbling by 3.71% after china missed expectations. the country's economy is growing by 5.2% which sounds like a great number. >> chinese 5. >> you look at it relative to what they've been doing up to this point. >> commercial property. let's go to washington for your a moment and talk about what's happening back on capitol hill a temporary spending bill ended up preventing a partial shutdown

bill for saturday. 68-13 to advance that measure. the bad weather kept some back they'll keep the government funded through at least march 1st. so we'll keep our eye on that. >> march 1st and february is a short month. way to go, guys. in corporate news, new details on disney's ceo bob iger's pay package he made $34 million. he made 46 the year before retired and coming back. a pretty significant pay cut. in other news the board initially nominated 12 directors for its upcoming shareholder measure. disney rejected the nominations by nelson petsknnelson peltz an.

did you see where -- did i -- >> say that again. >> bob chapek who used to run disney is suing the company on the blood oxygen monitor we were talking about yesterday with the phone and the watch. >> it's like ke kevyn kevin bacn you say massimo, i'm thinking of the guy with the two olympian champion rowers. do you remember? >> who got in trouble? >> yes. >> now i know, yes >> that was a good one news with water -- they had never -- >> never been in rowing. in the meantime axios is reporting that uber is working with tesla to get its drivers to go electric. the company is sharing data with

tesla to figure o it where drivers make the most trips to develop better charging infrastructure and better evs. tesla is offering better incentives uber's ceo will be joining us later this morning we've got a lot to discuss with him. >> madison square garden's c o james dolan slapped with a lawsuit, this time for sexually assaulting a massage therapist he assaulted her and set a meeting up with harvey weinstein. that led to her getting assaulted by the now imprisoned harvey weinstein he said there's no merit dolan served on weinstein's production company for a about a year between 2015 and 2016 >> who says slapped with a lawsuit? they always say that

slapped with a lawsuit that's how a -- did someone come up with that >> i don't know. i have not spent time -- >> it sounds good. you can be hit with a lawsuit. >> served with a lawsuit. >> but it's like a slap. >> right. >> it's a good word. i like the way you said it. >> thank you. meantime let's talk about what's going on here in davos, switzerland. you claim president volodymyr zelenskyy to support its war against russia there was a roomful of editors and journalists across the globe who had a chance to ask zelenskyy about the ongoing war and what he believes will happen if he does not get the financial support he's asking for. here's what he had to say. >> you said without help can we win? without help we have to stand. stand without support of the united

united states. it would be a huge challenge. >> then we got into a fascinating conversation about how he thinks the world will look and his world will look if former president trump becomes the president again and what it means for the war and the support for ukraine, and this is what he had to say. >> he decided, i think, that if there's a conflict and to allow putin to go through ukraine and occupy us, that he'll stop bull [ bleep ] the question is what will the united states and donald trump will do after this point because in this case it will mean that europe lost the most useful and the most strong army in europe because we lost ukraine.

>> i'm going to do a little translation. some of that audio was a little hard to hear. >> yeah. there was a beep. >> yeah, there was a beep because he said bull you know what effectively -- he said a couple of things. on trump, when i first asked him about trump, he effective will i said, look, i can't get in the middle of this, i'm going to have to work with whoever the president is and i think he felt boxed in, frankly, about the question unto itself it was then asked again, and he said that he felt like there were some conservative republicans that he considered radical. the question was was he suggesting that trump was radical. i think he was then pivoted toward talking about how trump had said, look, that trump thought he could solve this whole thing, that he would either force putin to end this or end it -- or if zelenskiy wasn't willing to end it, he would take away his arms. he said, if you think that would

end things, bull you know what he said, it wouldn't end it because he believes that putin will not stop and that effectively it will cost a lot less to try to solve this now than it will in the future because he believes that ultimately putin is going to go after other nato countries and all of a sudden the united states is going to be in a completely different soup that's going to cost an enormous amount of money and be the next true world war. >> that's been his argument from the beginning. >> before we started talking about trump again, there was a faction of republicans -- >> they can't get the funding through right now. >> it's almost an anti-neocon part of the party right now that is not -- ramaswamy -- that's not interested in foreign conflicts. that is -- of all the things that europe probably would be thinking about or worried about if trump regains the presidency, i think ukraine might be the top one. >> top of the list top of the list. he also talked about his meeting

with jamie dimon we're going to talk to jamie dimon about that meeting itself, jamie dimon saying -- i don't know if you saw this. >> i saw it, yes. >> jamie dimon said god bless you. he's desperately trying to get pledges made. >> not bitcoin. >> no. one of the things we talked to jamie about, he's been making this argument to financial institutions for a while they're a great investment he believes he's directionally getting in the right place, but it's not clear. >> well, bank of america's ceo brian moynihan told us after his meeting with them, that, look, the economy is doing much better than they anticipated. they're wfighting and chewing gm at the same time. >> it's very hard. i mean be ever this ends, it's going to be very hard for big investors to put real institutional money behind what's happening here. he's trying to set them up for what's hopefully the after.

>> from political tropes, is there anything more effective than your political party than being worried about ukraine's border than our own border they always throw -- even in legislation, it's like you want money for ukraine, and you've got to do something here so it's all tied together. >> we will discuss this and much more coming up this morning. we've got the markets and the future of interest rates should the investors expect the fed to start cutting by the spring. josh friedman will join us to tackle that question next. we have more of aed by lineup coming this morning we still have a big hour ahead when "squawk box" returns. we are live at the world economic forum in davos, switzerland.

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welcome back, everybody. let's talk markets, interest, real estate, and much more joining us now is joshua friedman josh, welcome. >> thank you very much for having me. >> thanks for being here we were talking earlier this morning about how the markets are going to be pretty focused today on some fedspeak coming out. john williams and others will be

talking. market expectations are that you get more than six rate cuts this year we had peter orszag on yesterday and others who are convinced you're not going to get that many, and peter said you're not going to get any in 2024 what are your expectations because there's a lot riding on it >> sure. th it's a tough business. in my view, as long as the unemployment rate continues low, which it's likely to, it's been under 4% for like 23 months in a row, and as long as the stockmarket remains strong and there's a ton of federal spending that's going to take place where money has been allocated and it will be spent, it seems like there's enough tailwind that the fed won't have to engage in great rate cuts they main ta flexibility to contain the last bit of inflation, which is always the most stubborn part, by being lower than the market anticipates. there's a grid disparity between

markets and economists i would be more on the side of the economists. >> more on the side of the economists >> right in other words, fewer rate cuts. >> i have to say i'm a little shocked to hear you saying this. as somebody who has so much commercial real estate, i would anticipate you'd be pounding the table and saying we need to see more cuts. most say in their world if they don't get lower rates, they can't finance the properties they already own. >> a lot of our real estate is focused around lending because we're basically a lcredit manager. the banks have gone home that you're under severe regulatory restrictions and the balance sheets are not so great. really for all the complacency there is, inflation's under control, the fed can afford to lower rates, everything is good. the market is strong you hear a lot of complacency at davos this year. the three main balance sheetses that you see, real estate balance sheets, the united

states balance sheets, and corporate balance sheetses, there's a ton of overleveraged balance sheets including the united states balance sheet. >> if the fed really did focus just on inflation and not this notion that we need a point and a half increase in the unemployment rate, that would really be nice in other words, if inflation really did come down and you could do something like a tail roll, let is roll, baby. let inflation go to -- the only reason we're that low in unemployment is because wages could engender more inflation. but if inflation is under control, why not let it go why not -- let's party. >> inflation is a little bit binary. >> you think that would come back >> there are parts that are quite high, other parts that are quite low. labor inflation is pretty stubborn the last part is more difficult. >> we shouldn't need a point and a half or two points i'm not stopping or cutting

until we get that unemployment rate up to 5%. that's the wrong -- people are being put out of jobs when you do that, right >> right now you don't see a lot of people being put out of jobs. >> if you go 5% you would. >> yes, but it's not at 5%. >> no, but if you stay tight so that you actually -- you don't maximize the potential economic growth that's what we'd like to do always with low inflation. >> but we're far away from that 5% number right now, and it doesn't look like -- >> it hasn't gotten started. >> we're not any closer to it. i think there's a lot of spending where they're going to think where are the employees coming from. >> i think the biden administration is listening to me going, yeah, joe, yeah, joe, it's possible. >> i think thinkey have been. >> didn't you just hand back keys to a building in san francisco. >> yeah. we had one of ours that was focused on california. california is a challenged market there's migration, change of use

in properties, et cetera we do have some equity in investment real estate i think the markets are trying to figure out what the cap markets are. >> do you think this is a permanent change >> i think parts of it are because there are secular moves. there's a move away from secondary office that's going to be difficult in certain markets in new york and california. >> we were talking about the three-day workweek and whether that's changing things. >> i don't think so. i think people are coming back to work. i think people like being in the office i think people running businesses like people in the office, and i think businesses are run better when people are in the office, so i think that -- i don't really think that's the essence of it. but i do think we're in a worilds that we don't know what long rates are, we don't know what cap rates are going to be, and, therefore, real estate is sort of frozen refinancing is a problem you're going to see a ton of deals where they've been financed with low coupon debts and when it comes up, it will be

a problem. >> back in may you said there would be carnage on the way. have you seen it >> we saw it with blackstone in a corporate world there are restructuring we haven't seen in many years because when you give people something for free and low cost debt, 2% or 3% coupons, sort of free, people take a lot of it. the amount of leverage in the private equity world is extraordinary. so you have a long tail of restructures, and every week it seems like there's another name. yesterday when the conspiracy theory deal fell apart the bonds dropped to the 50s so that's one of many. you have ar tease, travel ports, the list is quite long and that doesn't mean that it's a wave of horrific bankruptcies. and the same with real estate. you might have a very good fully occupied multi-family property that just needs a different balance sheet. >> josh, thanks a lot for joining us this morning.

>> thank you. coming up, lynn martin and later cisco ceo chuck robbins on the ai race and how it's going to paimct the global tech economy "squawk box" will be coming right back ♪concerns of getting screened faded away♪ ♪to my astonishment.♪ ♪my doc gave me a script i got it done without a delay.♪ ♪i screened with cologuard and did it my way.♪ cologuard is a one-of-a-kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪i did it my way!♪

welcome back to "squawk box. we're live in davos. "the wall street journal" is reporting that the interspace of china is looks at ways that beijing handles security they're interested in the type of data chinese will disclose to u.s. regulators. they're seeking a green light. a long review could result in delays in the company's stock sales. the company is now based in singapore. big question whether shein will

go public. is it a chinese company? the manufacturing is there, but so much of the rest of the busy is effectively outside of the country, but nonetheless -- >> we're going to uc ta about new york the venerable new york stock exchange saw some big debuts in 2023 including birkenstock i know you've got a closet full. >> i wish i was wearing them right now. >> joining us now with a look at her new offers, lynn martin president of the nye group that's how we promoed your appearance it's always about ipo pipelines. there's a lot of other things happening in terms of ai, but let's talk about that. you think it might be thawing. that's a bad word because it means it's been frozen, right? >> i don't know that it's been frozen. >> it hasn't been great. >> it has. been great you haven't seen deals flow, for

example. i look at those two different years as two different bell curves if you will you mentioned kenview and birkenstock. those are two deals that got done last year and got done at good prices and the stocks are trading quite well in the secondary markets. it's always been a question of valuation and what value founders would expect to achieve in the public markets and importantly, what does the volatility look like it's not just about day 1. what different systemic issues are in the market that can influence the volatility on secondary trading. >> you're confident. what's adena she's a friend, a competitor, but you have similar landscapes. >> mm-hmm, we do. >> she says, there's no doubt there are at least 100 companies that have intimated something's

going to happen. is an ipo pipeline in the capitalist system, isn't that like taking someone's blood pressure that's a very good indicator of how well things -- if the capital markets are raising money to expand a business, usually a new business, that's essential and a great thing. >> it's a great thing and i'm incredibly optimistic about 2024 and the pipeline of companies we're working with we actually had an ipo last week to open the markets, smith douglas holmes, who had an incredibly successful ipo given the industry they operate in, priced in at the high end of the range. stocks opened up 15% on ipo day and it's continued to trade at that level it gives us a lot of reason for optimism we've been working with quite a few companies who are on the road at the moment to debut them in the next couple of weeks. so i think you're going to start to see some companies come out in the next couple of weeks, not

just in the next couple of months. >> can you way in on this whose s shein situation? >> i can't we're the stewards of the capital markets in the u.s we have a very different responsibility at nyse with that comes an added responsibility what that means is our rules are the gold standards of rules for companies that list. >> are you talking the u.s. markets or -- >> the u.s. markets, yeah. when you actually ipo on the new york city, y new york stock exchange, you've gotten past something extraordinary. >> is that why multiples are higher if you look, this is sort of a u.s. thing relative to the you were to go public in london.

it's just a different game. >> yeah. we're welcoming flutter entertainment, which is the parent company of fanduel, who is ooh transferring their listing out of the markets to the listing because of the valuation difference. >> and you actually understand ai as a coder or scientist. >> yeah. >> that's a good thing, right? >> yeah. >> do you think it makes you more positive about it, or do you tell per the hype and the expectations that we see for it? >> yeah. the way we see ai, we have a tremendous amount of experience in ai. the role i had prior to hopping into this role was data and fixed income business where we had large language models in production for ten years, adding trans parjtscy to our energy markets. we've seen the in credibly positive effects that when used

properly, things like large language models can add from a transparency standpoint. but the way i think about ai is it's just a continuation of a trend that has been in existence for more than a decade, which is a data-driven trend. think about all the reporting you've done on data being the new gold, cloud computing, now ai the most fundamentally important input to an ai model is good data and good trusted data so we're laser focused on that and how do we responsibly roll out artificial intelligence or large language models in the markets to add transparency to those markets. the continuation of a trend we've been really embarking on for more than a decade. >> you go into the exchange how often? >> every day. >> do you say hi to dhoes guys >> i absolutely will. >> will you? i absolutely will. >> will you give them our best >> i absolutely will.

>> we wave from here. >> we have tensions at the nasdaq, but we love you, right we cover all our bases >> we love you guys as well. >> what have you coded and can you help me? what is the amer s per stand -- >> i'm going to date myself. >> pascal. >> pascal and c and importantly c is very closer to the assembly portion of it. >> we've got to go make some money and go to commercial we're going to be coming back in just a moment. one of the biggest topics here at the economic forum, we're talking medical innovations to replacing jobs we're going to talk to the co-founder of the ai lab. and coming up at 7:00 a.m. eastern time, you don't want to miss this.

jpmorgan chase chairman and ceo jamie dimon joining us for an extended interview on everything from the global risks to the interest rate. he's meeting with president zelenskyy and more "squawk box" will be back in just a moment.

there is a lot of information out there. hamas is a terrorist group oppressing the palestinian people. hamas refused a continued ceasefire, a continued pause in fighting and more aid from israelis in exchange for just freeing more hostages. instead, hamas resumed attacks. not to protect the palestinian people or obtain peace, only to destroy israel. we must stand against hamas and stand with palestinians and israelis for basic human rights.

welcome back to "squawk box. the pit falls of ai is top of mind at the forum. joining us is the co-founder of ai research map. he's also the author of "the coming wave. we're going to talk a little bit about the perils and opportunities with that dilemma. great to see you. >> great to be here. thanks for having me again we were talking during the commercial break it's quite the hype. the promenade being the street behind us. everything is ai. >> it's quite surreal.

it does feel like the entire event has been rebranded the ai forum. every company on the street has been leading with the fact they're now an ai first company. at the same time it feels like expectations are the highest they even ever been. >> the scary thing about that, when we hit peek height for things in the past there's a reckoning in the market. are you predicting that's things to come. the market that's been giving huge props to anything that's ai is going to dig down a little cheaper to separate the wheat from the chaff >> i don't think so. i think this is a truly transformational technology. think about it everything of value in the world has been created by intelligence, our ability to reason and make expectations

let me ask you this. our gefrt was on yesterday and believes there's a market cap today focused solely on ai the question is there truly a trillion dollars of value in that company is it a feature set that's embedded in every company? are there going to be other companies that are going to be massive winners? everyone's going to lose how does that work in your mind? >> more than 70% of the s&p 500 use microsoft for cloud service. the way it operates is already embedded in their systems, so the key goal of putting that data in there in the first place is to extract insight and information. >> the question is are they going to capture more shares as a result how much more is a company like motte or google or yourself going to be able to charge those companies for this service, and on the other side, clearly those companies are clearly going to think they fierng to create

remarkably more revenue as a function of it or going to save on the cost side in terms of workforce? >> these tools do two things they take an existing process and make it massively more efficient, and it's a huge savings. the business value shares in the safrgs and the value add that's been created the tools are creative and empathetic and they react more like a tradition ale database, you only get out what you put in. >> what does that mean for the jobs market? are they going to replace luman harriss in mass amounts? >> we have to think very hard how we integrate these tools because left completely to the market and to their own devices, these are fundamentally labor-replacing tools. they'll augment us and make us smarter and more production tib,

but in the longer term, that's the question. >> there haven't been enough companies to be a trumaine ya yet in terms of sucking, you know -- remember the dot-com we're nowhere near there yet what inning are we in before the public gets to act with the public hype, the ipo or traded stock? >> we're just at the very beginning. >> that's what i mean. the hype may be there, but the stockmarket hype is not. >> that's right. in many ways i think things are ujds valued because if you're a company that has amazing data, really good distribution, you control your supply chain and customer then these tools definitely allow you to deliver a better experience to your user and i think that's underrated. >> let me ask you a question real quick people like to interact more with his interface effectively than they like to interface with an actual therapist as you're

lying on the couch trying to tell them all your problems. >> because they don't think the ai is jumping them the way a person would >> exactly we make an ai called pi, personal intelligence. they're about productivity and knowledge. we want a flumt smooth conversation where somebody is kind and supportive. >> where somebody calls me right all the time >> oh caccasionally they push bk that would be boring over time. >> here's my question. if an hour with a therapist is $100 or $150 an hour for a person, if your version in the future, if you and i create psychiatry.com and that's how we do this, is that $5 an hour or are you trying to -- all of a sudden it's $80 an hour and that's the market? >> it's a question of scale. hundreds of millions of people who don't have access to kindness and support, to a

really good analyst, personal assistant to a financial adviser, these services are only available to a top few percent in the future pi will be like having a high family office for everybody. >> what about therapists and everybody else >> for sure it will create competition. >> you should see the way my dogs look at me. i feel fine. >> i love the ai therapist though they're never going to -- >> it sounds ridiculous. it sounds ridiculous to me oh, joe. that sounds ridiculous that i'm right, you're wrong. >> thank you i will be sending joe my therapist's bill thank you very much. when we come back this morning, secretary of state antony blinken with the reaction to the taiwan election and the trouble in the red sea that's impacting trade and raising nsn ve with iran "squawk box" will be right back. e

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impacting trade and raising welcome back to "squawk box. we're live at the world economic forum in davos yesterday i spoke to u.s. secretary of state antony blinken in his first interview since the election results in taiwan this is what he had to say about the relationship

>> thouszs of ships have had to reroute and go around the sue wes canal. estimate times are going up, shipping times are going up. it's getting more expensive. it's been an attack on international shipping, not an attack on israel or the united states that's why 40 countries came together to condemn what houthis are doing and that's why they say if it continues there are going to be consequences, not for purptss of escalating but for getting them to stop. >> we flipped the sound there just for a moment. that was obviously a conversation about what was happening with the houthis in yemen. >> that's really interesting what's happening in the red sea and where this could go because the escalation continues. >> and that's what he's worried about. let's show you the video we were hoping to show you about the relationship between u.s. and china in the aftermath of this election in taiwan. >> when it comes to taiwan itself and when it comes to

cross state relations, we've been focused on one thing with many countries around the world, peace, stability, no change to the status quo, the peaceful resolution of any differences, and there's a reason that it matters, and it matters to everyone virtually here at davos. you know this. 50% of the world's commerce every single day goes through that strait. the semiconductors made in taiwan are powering the world in every conceivable way. if that's interrupted or disrupted in any way, it's bad for everyone. >> the full interview with secretary blinken available at cnbc.com and will be released as a special episode on the squawk pod later this morning also worth noting, there's a huge chinese delegation here he did not meet with that delegation while he was here there were a lot of people trying to read the tea leaves of what was happening. >> that's weird. >> when the taiwan president was first announced after the election, he sent a con congratulatory note.

the chinese put out a statement saying that was an escalation between the countries. he said he thought he was doing the right thing. then president biden came back on the other side and said we don't want there to be independence -- we don't want taiwan independence. so we got into a whole conversation about that. i hope you have the opportunity to watch that video. >> is the speculation then that they didn't meet with the chinese delegation because the chinese delegation is still mad? >> unclear he had said he met with some of the chinese before the election, which is true, a week ago. >> yeah, i remember. >> and he said there was no plan to have a meeting, but nonetheless a lot of people are whispering here what they think is going on. >> instead of biden having to do the strategic ambiguity, you've got the two-pronged ambiguity. that's what we want because we can't really decide. coming up, we'll get into, again, the ai race with cisco ceo chuck robbins and what it means for his mpcoany and the global tech economy.

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welcome back, everybody. companies across the globe are trying to keep up in the a.i. race and our next guest is in charge of a company that is no exception to this. joining us right now is cisco's chairman and ceo chuck robbins, the newly appointed chairman of the business round table first of all, thank you for being here with us. >> thank you for having me quite the lineup today. >> yeah, we do we just finished a really interesting conversation talking about a.i. and this is a huge issue for you all too. what are you doing right now what can clients actually expect when they're using cisco's a.i.? how are you doing this ahead of this acquisition >> we have, first of all, we

have been doing predictive a.i. for a decade, right? because people confuse the two it is basically machine learning and just creating really great analytics around things that are likely going to happen we used a.i. in our webex portfolio, we used it in other places and now we're doing a lot of things that other companies are doing as well. we're building assistance to create natural language processor interfaces, to our technology versus having to type on a command line or some other technical interface, as well as we'll use it to deliver better customer service experience for our customers, et cetera and then we're also working right now on -- we're working on the infrastructure underneath the gpus that's required in the large language models, like the web scale space. but we're also in preliminary work right now on what is an enterprise infrastructure stack look like that will allow them to run inference and those sorts of things. there is a lot going on.

>> one of the things people have been wondering is what happens with splunk. end of the year, closer to the end of the year integration into the company. what will be different with that it is the biggest acquisition. >> it is, by a long shot we're really excited about it. if you think about what splunk is going to do for us, several things number one, they have this security data platform that ingests lots of security information that is going on inside their customers and then we have an extended detection and response system that correlates threats in real time -- >> cybersecurity know exactly what is happening if something weird -- >> we have our platform on top of all the data we have, the ability to provide insights to customers in a rapid time frame is going to be super important we have, there is an emerging space around observability and we also will converge our portfolios in that space to bring customers a better set of insights around what's going on

in their technology infrastructure and then over time, splunk will actually just become the data platform for the entire company. >> i know that you are in a quiet period right now, ahead of earnings the biggest question on the street has to be surrounding what is going on with the company since you issued guidance, lowered expectations for the current quarter, and said it is because your customers are still trying to put in place and implement all the things they have been buying over three or four quarters before that. what can you tell us around what you're seeing from customers, what the landscape looks like? >> what i would tell you is that what we said we expected on the last earnings call is playing out the way we thought it would. >> okay. >> so, if i think about the calendar year, i think we're going to see -- we're going to get through the end of this supply chain challenge we're going to get through this digestion phase we talked about. none of us have gone through this before. we just didn't anticipate it, though you can argue the pc and storage markets i think saw the same thing a couple of years earlier.

but i think you're going to see -- we'll get back to normal ordering -- ordering lead times for sure and i think we'll see our customers get back to normal ordering this year. >> this was really the pig and the python with the -- >> it was. with the cloud providers had bought so much inventory that they're deploying it now and as lead time shrunk, they don't need to order it in advance as much as they used to. we're having this lull i think it is going to be back to normal this year. >> we had jim brier on yesterday, and he said that on air that cisco is a value company now, not a growth play i followed up with him afterwards to talk more about it he said he thinks cisco is a compelling value if they keep making strategic acquisitions and folding the talent of technologies into the platform he said he thinks you do a great job. what would you say to that in terms of the acquisitions? you think they can keep coming what's the plan? >> i think we're a valuable company that is going to grow. how about that we'll have a variation for jim, but, yeah, we'll continue. our m&a strategy hasn't changed.

we're going to be very focused on ensuring that we do the integration properly with splunk so, we'll probably stay very focused on that for some period of time. we'll still do tech and talent acquisitions and in today's world, things are moving so quickly and particularly we talked about a.i. already, you know, there may be tech and talent acquisitions we need to do in that space we have already done several we have a lot of a.i. talent that we brought in through our collaboration portfolio and security portfolio our strategy won't change. >> chuck, thank you for joining us out here today. if there is one thing that you've taken away from the conference so far, what would that be? >> a.i >> yeah. >> i think everybody believes we're much further along with a.i. than we really are. we're really just -- it is so early right now. we don't know what the application and the use cases are ultimately going to be we know some, but not -- the killer enterprise apps are still yet to be determined >> chuck robbins, from cisco, thank you. when we come back, jpmorgan

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. good morning from the world economic forum in davos, switzerland, where world leaders and business titans are gathering to discuss the biggest issues facing the global economy. in this hour, we'll be hearing from jpmorgan chairman and ceo jamie dimon on the markets, the global economy, and just about anything else we can think of. plus, philanthropist and carlisle group co-founder david rubenstein will join us to talk about the fed's inflation fight and much more. the second hour of "squawk box" begins right now. it's you.

>> oh! good morning, welcome back to "squawk box" on cnbc live from the world economic forum in davos, switzerland i'm joe kernen with becky quick and andrew ross sorkin and jamie dimon. he's here, but you can't see him on that shot we'll get to him in a second the futures, we're down again, we were down yesterday, not going to spend too much time here down 147 points now on the dow we will look at treasuries 4.05 is what we were -- the last level we saw 4.06% now on the ten-year. bitcoin, we're not going to do that bitcoin i think is around 43,000 or so. it is actually down -- must be in the 42s, 42,555. >> our first headliner of the morning as joe kept alluding to, jpmorgan ceo jamie dimon is with us 100 things we want to talk to you about. nice to see you. >> great to be here again. >> i see you have ukrainian flag there on your lapel. >> yeah. >> you spent some time with president zelenskyy yesterday.

>> i did >> tell us about that meeting. >> he came and met with a bunch of -- all of you around the world, he came and met with a bunch of business leaders and people who can help think about refinancing the redevelopment of ukraine after the terrible war has ended. so starting to think ahead, how do you structure and stuff like that my heart goes out to the guy people forget that every day he wakes up in the morning, 600 mile front, there is 1 million soldiers fighting off a russian, they had 300,000 casualties so far. we have to help them we have to teach the american public this is about freedom and democracy for the free world, and that that's what the battle being fought i hope our government gets together and finally passes the new bills. i want to show my support for ukraine. >> do you think that's a message that is going to get broad support in the united states because clearly there is a huge polarized split on this.

in fact, when i talked to zelenskyy later in the day, we talked about the prospect of former president trump becoming the president again and what that would mean for the support or lack of support for ukraine in the future. >> i think american leadership has to explain to the american public why it is important has to remind them what happened in 1917. has to remind them what happened in 1941. and so while, you know, america, we have to protect america this is america first this is the battle zone of democracy and freedom and free enterprise is affecting all the relationships in the world a russian victory could cause huge problems that might -- i might write an op-ed on how the west lost and looking back from 2050 did we keep together the alliances, democracies, we have to portray back on the table that's how important this is this may be that -- >> what do you say to the politicians back in the u.s., even politicians in other countries around the world who say, look, we have our own problems back home, we have immigration issues, other things that cost money, we have other crises we have to pay for,

whether what is happening in gaza, or other places around the world, and where do you -- in the sort of stacked prioritization do you put ukraine? >> very high up. i think ukraine is about what the world is free -- may be about where the world is free and safe of democracy. we have been schooling tons of other things, including immigration. life isn't either/or you can't say do this and do that you're dealt the hand you're dealt and you got to deal with it we should be very clear about helping the lower income population, no -- every country has to control the borders we have to control the borders, and so, they're all important. >> do you take the deal that the republicans have put on the table, though, which is we want this border, immigration policy, as we have laid out and we'll fund the rest? would you rather take that than neither? >> i have not read that deal in total. i would probably take it we have to control the borders we need more merit-based immigration. we need more seasonal immigration. we need more -- we need daca to

have a place here, a path to citizenship. if you do not control the borders, you're going to destroy our country. i think the people who think that somehow it is okay, so now they're sending the migrants into new york or stuff like that, all my super liberal friends, now they realize what the problem is did it have to be that that we realize it we want to have a big heart for the world, but we have to control the borders. >> do you view putin's intentions as beyond ukraine there are some people that think he wants the great russia, you know, feels like it has been, i don't want to say castrated, but it is not the soviet union anymore, mother russia he wants to bring some of that back you don't think there are certain parts he would be -- he would stop you think poland is next you think there is larger intentions that are going to come because that -- almost a domino there, because we had that --

those -- >> people like condi rice and bob gates and all these folks who are experts, he clearly has designs in a bigger, broader russia, stuff like that. and we don't exactly know if he wins something there, what is he going to do next why take a chance? i'm not looking at you have to know the answer. we do know if we don't take a chance, we're better off if we do take a chance this is all about iran, north korea, i think it is about how china positions itself over time >> that's where i was going to go next. we talked to tony blinken yesterday about china and the relationship that the u.s. has with china and the prospect of them effectively taking over taiwan in the next call it several years. what do you think the prospect of that is and how do you think multinational businesses are supposed to react or think about that risk? >> yeah, so we met with the chinese premier yesterday, and, look, i'm going to defer to tony blinken.

china may one day have to take sides. they haven't done that we shouldn't force them to we can't tell other nations that how they should behave or how they should act. but i would look at china wholistically. the western alliance, democracy, should stay together, keep it free, but we have to do trade, diplomacy, development, finance. we are not all over africa and latin america like we should be. tony blinken sat with me, janet yellen and a bunch of big financial companies about how to help generate more development, finance, with the world bank but here you need private capital. private capital dwarf what the multinational constinstitutionsn do it is a wholistic war. if we do it wholistically, you heard, we have the better hand we have food, water, energy i most prosperous nation the world has ever seen. >> how challenged do you think

the chinese economy is right now? one of the reasons she thinks china won't try to take the country of taiwan is because they have to deal with their own challenges at home >> i think there is some truth to that. i think it is good they're here. they're trying to make sure they're open for business, they're being fair to foreign companies. you saw the foreign direct investment for the first time kind of ever, i think, since wto was negative this year and you need to invigorate for their own citizens, their oath growth, their own people and that may very well play into the geopolitical view. >> do you -- the message is that they're open for business now. i think people who have gotten burned in the past may be a little reticent before they're willing to invest more into it >> they have -- so take financiers, they have been consistent in opening up took a long time so we have full license there now. i think anyone who is looking to invest in there has to be a little worried so, and, you know, the risk/reward changed dramatically

and like jpmorgan, i always saw when it comes to foreign policy, blinken decides and the president. i salute, i'm an american patriot, but they want us there. they're not asking american companies to leave and being a p premiere bank in china helps us educate the government, helps us educate the world about china. we bank 1,000 multinationals in china. we have to be careful, the laws have changed and we have to change with the laws both in china and america. and we're actively doing that. >> how do you see the u.s. economy playing itself out over the next 12 months this is an election year we talked about what took place in iowa, and trying to understand how the american public is going to feel about the economy may ultimately dictate how the president is decided. >> yes, i agree with that. i think it is a mistake to assume everything is hunky-dory. when stock markets erupt, it is like this whole drug we all feel, it is great. but we had so much fiscal

monetary stimulation i'm a little more on the cautious side that we are facing a lot of things in '24 or '25 and we mentioned ukraine, the terrorist activity in israel, the red sea, quantitative tightening which i still question if we understand exactly how it works, i don't think we do. how qe actually works. what the effect of negative -- zero rates, and the politics and, you know, then the ukrainian war is affecting oil, gas, food, migration so you have all these very powerful forces that are going to be affecting us in '24 and 't '25. if i was the government, i would be prepared to do something like that assuming things aren't good i want to point out, i wish the democrats would think a little more carefully when they talk about maga, you know, and if you travel this country, you know. and the country is unbelievable. we took a bus trip this year, leslie picker was on, spokane and boise and bozeman. people are growing, they're hungry to grow, they're

innovating it is everywhere, not just silicon valley we got this great hand, but when people say maga, they're actually looking at people voting for trump and they think they're voting -- they're scapegoating them, you are like him, and -- but i don't think they're voting for trump because of his family values take a step back, be honest. he's kind of right about nato. kind of right about immigration. he grew the economy quite well tax reform worked. he was right about china i don't like what he -- >> china virus. >> i don't like how he said things about mexico, but he wasn't wrong about these critical issues. and that's why they're voting for him. and i think people should be a little more respectful of our fellow citizens and when you guys have people up here, you should always ask the why. not like it is a binary thing, you support trump, you're not supporting trump >> hating 75 million ofyour fellow americans -- >> the democrats have done a good job with the deplorables, their bibles and their beer and

their guns really can we stop that stuff and actually grow up and treat other people respectfully and listen to them a little bit i do think the economy will affect -- i think this negative talk about maga is going to hurt biden's election campaign. >> i want to get back to the 34 trillion we got, because it seemed like when rates were going up and we thought the fed was going to keep going higher for longer, it looked like some of that was coming home to roost because the options weren't going well like, wow, that service is much more expensive this is going to hurt. suddenly the pad answer is we're already through that rates are coming down again. so the $34 trillion is suddenly okay again and i don't think it works that way. >> i think people are making a mistake. i think it is going to come to bite that could be in three years, five years, seven years. i think it may bite in the markets way before that. the marketmakers don't have the -- because of regulations, don't have the capabilities to make markets like they used to we can easily handle it, but restricted by all these rules

and you're absolutely chreorrect debt to gdp was 35%. we spent 5% of the deficit to -- because of recession now debt to the gdp is 100%. the deficit is 6%. and it is in a boom time it feels pretty good because that money seems to be working i think governments are starting to feel omnipotent and central banks. i would be much more cautious. >> we don't use the word crowding out anymore doesn't the private sector get crowded out? >> like i said, we feel good, but when the government spends a trillion dollars more, what happens? more money in the pockets. corporate profits go up. people spend more. stock markets go up. creates liquidity. >> no money on that though. >> exactly. >> there is a lot of money that is going to continue to be spent on bills already passed this year you outlook is so different than what we hear from so many other people that it worries me. we make the case that davos is the antithesis, they're always

wrong on what they're predicting on things. are you making predictions as a premiere risk assessor, somebody looking at these things or making this as an idea of this is the more likely case scenario >> risk assessor very important distinction, you got to look at all the factors and different points in time you can't look at, oh, it feels pretty good today. a lot of people, what they see, these forces mention, when i look at inflation, the green economy is inflationary, whatever restructuring trade happens inflationary the remilitarization of the world is inflationary. deficits are inflationary. and that -- you can't sit here and say that won't have any effect at all. that stuff is cumulative it is like you guys saw this article recently about the cumulative, negative effect on work from home on young people we spoke about that two years ago. you can kind of see that these kids aren't coming in, not mean people, not learning enough. so you have to wait for it to actually happen to figure out

that might be what happens >> back to your comment about biden and trump. you effectively made a case for trump in some ways we had -- >> i made a case for respect of trump's voters. >> we had bill ackman on the program last week, who wanted you to run for president for a long time and he's been a long time democrat. he effectively said he thought bite biden was just too old and opened the door to possibly voting for president trump you look at the candidates as a ceo of a multinational global business, what do you think will be better for the business >> remember when i gave opinions in the uk, i got nasty emails from the uk, like, leave, get out of here, yankee. i have to be prepared for both i will be prepared for both. we will deal with both my company will survive and thrive in both

i hope the compuntry survives i both i hope whoever it is is respectful of other people, it is not about retribution, it is about growing the economy and helping people you talk about america first, i say no president is going to run for president and say america is second of course it is america first. but america first has multiple different reasons, which has changed over time. and when washington was president, you know, don't get involved in european things. well, we got involved, two major ones to save the world for democracy and freedom. this country is the arsenal of democracy and the bastion of freedom. i hope whoever is president does that so -- >> can we pivot to a topic i know you find sort of laborious at this point? bitcoin. >> yeah. >> this etf was approved, just about a week ago now and i think a lot of people are trying to understand what it ultimately means jpmorgan, i imagine, if you're a client, you could call and say get me some of this etf. what do you tell your brokers to

tell them back when they make that call? >> it is an posh thing this is the last time i'm talking about this on cnbc so help me god blockchain is real it is a technology we use it. it is going to move money. it is going to move data it is efficient. we have been talking about that for 12 years i think we have wasted too many words on that. cryptocurrencies, two types. there is a cryptocurrency which might actually do something. think of it as using it to buy and sell real estate, move data. >> tokenizing. >> tokenizing things that you do something with and then one which does nothing. the pet rock the bitcoin, something like that and so on the bitcoin, you know, there is -- i'm not trying to milwaukee a joke here. there are use cases, fraud, antimoney laundering, tax avoidance, sex trafficking, those are real use cases and you see it being used for hundreds, maybe 50, $100 billion a year for that that is the end use case everything else is people trading among themselves

now, okay, now my last statement, the last time i'm talking about bitcoin is i defend your right to do bitcoin. i think, you know, it is okay. i don't want to tell you what to do so my personal advice is don't get involved but i don't want to tell any one of you to do, it is a free country. >> what do you make of the other firms, the blackrocks of the world and larry fink changed his view of this obviously and maybe he changed his view because you think he genuinely believes in bitcoin or believes it because he thinks there is a marketplace for it and he wants to be part of the market. there is about a dozen big financial companies, fidelity included -- >> number one, i don't care. just please stop talking about this and i don't know what he would say about blockchain versus currencies that do something versus bitcoin that does nothing. maybe that is not different than me but this is what makes the market people have opinions this is the last time i'm ever stating my opinion

>> gold really didn't do anything either. >> yeah, but gold is limited in supply. >> so is bitcoin. >> so you think so, huh? >> i do. >> i think there is a chance bitcoin, we get to 20 million bitcoins that -- that satoshi will come on there, laugh hysterically, go quiet, all bitcoin will be erased how do you know it is going to stop at -- i haven't met one person who i met that said -- >> it is going to happen the last one mined in -- and it gets harder and harder jamie, looking back over -- >> you do what you want and i'll do what i want. >> i love you and i don't want to -- i don't want to be a -- >> you may be right. i don't own gold >> couple of quick final questions. >> i like things that pay me incomes, that doesn't cost money to carry it costs money to carry bitcoin.

>> we talked about commercial real estate here in davos. a big piece on sunday -- >> i think there is another risk to bitcoin if you can't solve the bad use cases, the government is probably going to have to close it down. >> the thing about the money laundering -- here's the -- the number was 20,000 i think for u.s. dollars in money laundering and it was 35 for how much is done with bitcoin. at this point, the dominant -- i know, but the dominant -- historically the dominant currency for money laundering has been -- >> i understand. >> okay. >> quickly, commercial real estate. >> yeah. >> you have a take we have been talking to a number of investors who have been sitting here talking about that it means to the debt markets, what it means to some of the smaller banks, you have a big building going up, by the way, in new york. but the three day week, what that means longer term >> first of all, i think the value of old stuff, old financial assets in america is like $140 trillion, commercial office real estate is like $1.2

trillion $600 billion on bank books corporate owned and stuff like that divide into three pieces if we have a soft landing, which is possible, and rates don't go higher, which is possible, could be a small problem if we have a hard landing, and rates don't go higher, a bigger problem. if we have a hard landing with higher rates which i think is possible, it will be a bigger problem. >> because inflation goes up, even -- >> interest rates are, like, constant anything with cash flow is worth less there is a recession, less need for space and all the things that happened in recession and stuff like that. and i don't know how it is going to affect -- work from home is a whole different thing. our building is unbelievable if you've seen it, walk by. >> it is going up quick. >> i've told you this many times, you said one time, i'm just barely a democrat today all the things you said about maga, what you're saying is really to try to help the democratic party because it is tough love is what you're using

you are not maga you're not going to turn into a republican, i don't think. but you realize -- >> i would say i have a democratic heart and a republican brain. >> exactly >> i do think more and more the republicans that the democrats have big hearts and very small brains they should be a little more thoughtful about policy and how things work. >> if on the front end all the things you're doing to try and help people actually on the back end end up hurting them, you need to cop to that some day, eventually, and they don't. >> i'll come confess here. >> not you i'm saying the -- i'm not talking about you. the democrats need to say, look, we tried all these things and we made things worse. so, at least cop to it. >> i want to point, when i go to d.c. all the time, we spend a lot of time on the wing nuts there are a lot of centrist republicans, democrats, who if they sat here -- >> might be 80%. >> i don't understand, like -- >> partially you invite the wing nuts on. >> no, we invite -- >> not you, cnn and --

>> we'll just take you for a half hour. >> i'm going to start charging you. >> jamie dimon, thank you for joining us. >> thank you enjoyed it. >> appreciate it thank you again. >> thank you when we come back, carlisle group's david rubenstein will join us. "squawk box" will be back after a quick break. >> announcer: you're watching "squawk box," live from the world ecom fum d iss bconicor let newage products transform your garage into an area of your home you can be proud of. modular steel cabinets let you pick and choose the storage solutions to keep your garage organized, with overhead racks and shelving, slat wall, workstations and flooring that let you create a showroom garage to call your own. designed for diy installation. all you need is one weekend to take your garage from unusable to unbelievable. visit us at newageproducts.com.

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>> welcome back to "squawk box" right here at the world economic forum in davos, switzerland. earlier i spoke to palantir co-founder alex karp, a wide ranging interview. here is a moment from that interview. >> we had a movement, i think it is fading away, largely understood is wokeism, where people said quite frankly in public, lots of things that no one believed in private. now with israel, most people in positions of authority realize that what happened on october 7th was one of the worst terror attacks the west has ever seen, arguably the worst terror -- worst act of terrorism, sexual barbarism the world has seen in 100 years. it is incumbent on us to actually not only speak loudly in private, but occasionally show what we mean in public. people want to talk about rebuilding trust, the elite, no one trusts the elite how can you trust the elite if everything you're saying is a

half truth at best >> let me ask you about what is happening here in davos. one of the conversations that we have not seen in large part is one about what is really happening on the ground in israel a conversation about anti-semitism, the same conversation that is happening at institutions all over the world, but doesn't seem to be here yet i know the second gentleman is going to be here from the white house tomorrow and there is going to be some conversation about this, but it seems so very limited. >> i am living, davos has an important function, i live on a different planet the most important issue of our time is war and piece, and absolute most important metaphor for that is what do you think about what happened in israel? and, by the way, anti-semitism as a kind of prejudice has always been the canary in the coal mine for your society isn't working, your university isn't working, you're not prying prov real growth to your population and because you don't explain

how it works, you blame the jews any enterprise about making the world a better place that doesn't deal with these issues is basically saying, i'm not really engaging in the problem >> alex karp never one to hold back we'll bring you that full interview with alex karp tomorrow right here on "squawk box. and, boy, does he not hold back. he gets into a lot of other topics beyond this so -- >> good, can't wait to see it. >> you look at the way the world has been for 2,000 years and remember the hoards that would go from town to town and kill everyone in that town and rape all the women and cut off heads. that was -- that happened. that happened again. that barbarism is just beyond anything we can comprehend and the reaction to it is -- alex pointed out, college campuses, it is -- first, it is just hard to figure out. and then it is just disgusting

and makes me sick. so, i mean, and he says those things he said it very, very -- >> said it very eloquently like the woke stuff too, saying things that you really don't, you know, none of it you actually -- >> that was so interesting because he believes so much of the last couple of years of the public statements that companies said were sort of as -- in his mind, half truths. how is it possible they can go down that road and then -- >> the idea of a lack in trust, he's right he makes a very good point that if you are dealing in half truths at best with everything you say, yes, that's why people don't believe you. they know that up next, folks, carlyle's david rubenstein is here he'll talk the fed, the economy and much more with us. if you're watching the futures, they have been under some pressure dow futures off by 120 this comes after two sessions in a row of declines. also, be sure to follow squawk pod for special episodes all this week, featuring the best of our davos conversations in audio form we'll be publishing multiple

episodes of squawk pod reports davos every day. just hit that follow or subscribe button on your yte.tete podcast app and lisn anim "squawk box" will be right back.

welcome back to "squawk box," live from the world economic forum in davos, switzerland. >> now for a look at the fed's

rate path, the investing landscape and more, let's welcome in david rubenstein, carlyle founder and co-chairman. one of the biggest private equity firms in the world, managing $382 billion globally david, good to see you he's like a media star you do what we do in your sparetime. >> i'm trying to learn from you. >> exactly and what not to do we did have jamie on and had a -- we talked about a lot of things, obviously. but i think it really does matter what happens with rates this year because built into the market, it is either six or seven or, you know, some people think there will be three and we actually had the idea that there could still be a hike. we don't know. but it matters because of what's in the market. >> nobody really knows of course predicting what the fed is going to do is difficult the fed does generally telegraph what they're going to do in advance. jay powell says i'm data driven. the fed is data driven.

>> tell me what the data is going to be. >> they're not going to make the next decision until march. so they're having a meeting in january, but they'll look at the data and wait until march before they do anything almost certainly. the concern that i this is that when you get into a presidential election year, it is very difficult to cut rates when you're right in the middle of a presidential election season because the party out of power will say, well, you're trying to help the party in power. jay powell is a republican, he's not trying to help biden, but he's trying to do what is right for the country. if he's trying to cut rates significantly in october, november, december, before the election in november, people say you're helping the democrats and i don't think he wants that. >> we have a whole philips curve, we don't know if we believe that anymore we had a conversation, the fed, maybe if it focused solely on inflation, that would be one thing. but when it almost seems like they won't feel that they have accomplished their goals unless unemployment goes up, i'm just not sure that has to be the case is it possible to have low inflation and leave unemployment where it is?

>> well, the law was changed when i was in government, so the fed has to worry about not only inflation, but also unemployment however, fed chairs are known in history for what they did on inflation, getting it up or getting it down. and i think paul walker is famous for not worrying about unemployment, but worrying about the inflation rate and got it down jay powell will go down in history for having done a good job if he gets the inflation rate down to close to 2%. >> i'm stick kicking around many my head something that jamie just laid out, the three case scenarios for the economy. one of those scenarios he laid out is a hard landing and higher rates because inflation is still out there, and something the fed says they have to fight first. how likely -- >> there is always possibilities, and predicting what the fed is going to do, what the economy is going to do ten months in advance is difficult to do. i think most people would say the hard landing scenario is not something they're worried about. like most people would say, the fed kind of dodged that, reasonably well, maybe the fed doesn't deserve all the credit most people would say the question is whether it is going

to be a soft landing, what we look like we're having and whether we're going to have good growth next year in 2023, the growth rate is going to be 2.5% we're pulling away from the rest of the orld. and when covid occurred, we were all in trouble now, china hasn't really pulled away and europe hasn't pulled away but the united states is really growing quite nicely i like to thinkit is because private equity people are giving good techniques to business ceos and so forth whatever the reason is, there is no doubt that the u.s. economy is in a league by itself now, it won't stay that way forever and if inflation becomes much higher than we expect it will be, it will be a problem. right now it is on a downward trajectory. >> we don't want to go -- do you think that private equity is so important to the health of the country that you guys should get special treatment still? >> i didn't say that i would say -- i say some things that are tongue in cheek but the revolution of private equity that really changed the u.s. economy, beginning of the 1960s, '70s, '80s, paying

attention to things that people weren't paying attention in the '40s and '50s. the business community was much different. not as diverse, wasn't paying to attention to the kind of things that private equity do i think we deserve some credit. >> no doubt. and you would rather have -- if you have to lay off a quarter of employees to keep a company solvent and be successful and to be here in five years, it is sad, but -- i wonder about the combination of a.i. -- no one might be left. >> nobody really knows where a.i. is taking us. nobody and therefore we're just -- it is like the beginning of the age of the internet. we didn't know what the internet was going to produce and look, it produced some companies that were spectacular and some didn't work as well as what people thought. we don't know what it is going to do yet. we're spending a lot of time on a.i. we do a lot on a.i. with openai trying to figure out what deals are going to make sense.

a.i. can really help you figure out whether a company is worth buying or not, is it likely to fall into a certain trap or not. you have to depend on human brains still, but a.i. can be very helpful. >> if that's the case, though, is everybody going to be competing, is it going to make buying companies that much harder if everybody is using that large language model which does what your brain does right now? >> everybody has been using the same techniques for the same x amount of years. you have to make your own judgment in the end, a.i. can tell you something. you have your own intuition and own gut and you're going to rely on it. warren buffett, you think he'll rely on a.i. to make decisions >> no. >> a lot of the really great investors will not look on a.i they might be intrigued by it. but they'll make decisions on their gut and that's what works out pretty well for people like warren buffett. >> i have to ask, so, you know the president, you know him well have you talked to him about carrying interest? would he like to get rid of that and raise revenue? >> i have never talked to any

president of the united states about carried interest. >> why you see him all the time. >> i have more important things to worry about. >> you don't bring it up, you hope they won't think about it. >> carried interest seems important to people on the show, but -- >> can i ask a different question, i agree it is not important in the context of how much money we raise at all but given -- >> optics. >> the optics and the trust, talk about public trust. part of davos is restoring trust, big institutions restoring trust, restoring trust in private, in the private equity industry. and as somebody who spent as much money as you have donating your money around the country, and trying to build -- rebuild the monument, do all these things, to make america better, great again, whatever you want to say, is there no part of you that says, you know what, from a public trust perspective, if you believe that the tax code is a manifestation of the democracy that we're supposed to have, you know what, i should fall on the sword, not only should i fall on the sword, i should say we shouldn't have this? >> i structured my -- i don't

get carried interest myself. >> i know. i'm sure -- your friends don't feel that way? >> i look at it this way there are so many things in the tax code that are egregious and should be changed that as jimmy carter, my former boss said, the tax code is a disgrace of the human race used to say it all the time. we couldn't get tax code reform through. tax code is replete with a lot of problems. if we get rid of a lot of other problems, bigger than the carried interest, but there are many things that are much more important to deal with than carried interest in my view. carried interest affects a relatively small group of people >> right but the highest net worth -- the rest of the country looks upon you -- >> tickit picks up no revenue >> the reason it is being fought -- trust me, private equity has been fighting this for a long time. if there wasn't revenue going to their pockets, they wouldn't be fighting it. >> revenue is the federal government the federal government gets no revenue out of it because there didot much revenue there. >>av, we got to go

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for that, we welcome in carmine desibio. carmine, welcome >> thank you, becky. great to be here it is not as cold as the other day, but it is cold. >> yeah. it's cold. but it's okay. we're doing just fine. carmine, we have been talking about the economy from a lot of different perspectives all morning long you have an interesting perspective, from all the companies you do work with in the united states and around the globe. where do you see things right now? >> i think things are changing, becky. you know what we have been seeing is there is definitely been a slowdown around the world, slowdown in our own business so good way to gauge this is to look at our own business and look at our consulting business in particular. so that has gone through a slowdown companies have been spending less, they have been doing less on transformations and so forth. in particular in the u.s., actually in europe, that has continued, which, you know, to some people that's surprising. but i do think europe was catching up a little bit on this

so, we are seeing more confidence building with our clients in terms of spending, in terms of the economy but most of them are still waiting in terms of central bank movement and in particular rate cuts >> you with some of the other consulting companies laid off thousands of people as that consulting work slowed down. i think of consulting and advertising as being two things that get cut first when businesses are facing tighter margins and need to cut things >> yeah. we have 400,000 people globally and we continue to hire at schools and so forth in tens of thousands. but, we were in a situation where our attrition rate, post covid, our attrition rate was 25, 27%. the great resignation and so forth. that went down to the single digits, very quickly and so in our business, when that goes down a lot, we end up with more people than we need in the short-term we have been very careful at

certainly adjusting our workforce. we also have to adjust our workforce with technology coming forward. but we want to make sure we're investing in the downturn for when things do come back >> you were spending tons of money on a.i., and partnering up to do some projects. what does that mean when you roll that out to companies and we're trying to get a feel for that means for the workforce down the road. right now it is a tight labor market when it is not and when there is more time to have implemented this a.i. stuff, what happens? >> so i don't -- first of all, i don't think the labor market is as tight as it used to be. but in terms of a.i., we look at a.i. in three different areas. one is what are we doing with clients? what we're doing with clients right now is really use cases. use cases in terms of how do we make their business better and a lot of that has to do with different sectors. we're doing a lot in healthcare, a lot in pharma, some in financial services and a lot of the use cases are either around customer service, where call centers and so forth

using a.i., you can be a lot more efficient, you can be better, or logistics any companies have logistics we're doing a lot of work with a hospital conglomerate in terms of making sure they're matching their patients with the right doctors and using a.i. to do that so there are hundreds of these use cases that we're working cn these are small projects for us, but they havethe ability to turn into big projects what we're doing for ourselves is making our business better, more efficient, better for our clients. we have our own chat bots, eyq, where employees can ask questions. it's learning and answering questions about the company overall. and the third part, which is very important, is we have our leaders around the world working with governments and private companies to make sure that ey is for the good and not the bad. >> carmine, thank you for stopping by. >> thank you great to see all of you. coming up, former bank

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our next guest says a diverse portfolio of investments from science, innation, business, and sports, with us now, steve pagliuca, the former chair of bank capital, ceo of pags group and boston celtics owner. do you get more excited about new investments than sitting on the floor with the celtics >> it's close.

very lucky, especially this year with the celtics is fantastic. we're leading the league, 20-0 at home. it will end some point, but we're living the dream right now. >> i had the bucks on a recent game do you remember that game? what the hell happened >> i've forgotten about that game that was our fifth game in seven days, so we didn't have a lot of legs our coach is brilliant he pulled the starters never seen it in 20 years. he pulled the starters at halftime because we travelled all over the country and the bucks played fantastic >> this company must be exciting because this is the second we've talked about it in davos, and your name was dropped -- well, of course it was yesterday that's when we got here. tell us about it why are you so excited >> it's basically -- i did a bunch of work in biotech investing with scientists and a bunch of work on covid when covid came in. getting to know these guys, after covid ended, we saw drugs could be brought out a lot

faster the world has changed. genomes, 20 years now, so we have that data in davos, the big talk is ai, and now gpus are cheaper than ever you put all that together, it's a golden age to use ai and science together we're eliminating the overhead they have. in universities they spend 50% of their time because of government funding on compliance, another 10% on negotiating licenses, another 10% raising grant money. it's very rigid. you can't change the experiment once you start it. we try to take the best practices in universities, what you do in pharmaceutical companies, and put it in a bell labs we just signed a lease for 50,000 square feet of state of the arth labs in cambridge, the heart of biotech good for humanity and investors. >> kendall square. >> yes >> jim briar and michael dell. >> it's about getting drugs to

patients more quickly or solutions to patients more quickly. >> absolutely. it's really taking this incredible science that can be done, basic research, a long-term approach with basi research, and then using these tools to translate it much more quick we are a sense of urgency into lifesaving drugs. sue schrieber, leading the effort, was the co-founder, legend at harvard, and he's trained 50 or 60 of the top people up there. put them under one roof, and think work together cooperatively. they share the economics from all the companies, so it's not just one person -- >> they are incentivized to share the research that's a big problem >> if you give someone your idea, then -- >> yeah. >> these guys work together. >> we have to go, but itch one nba question valuations of these teams, do you think we've reached the peak there's a whole bunch of people you know -- >> there will never be a peak. >> a bunch of people recently have been selling in large part

because they think or at least suggest maybe we're there, because of the way cable operators are working in terms of regional sports and the like. what do you think happens here >> i go back to 2003 when "the boston globe," we announced we were buying the celtics, it said, venture capitalists pay record price for teams that didn't help was fund-raising highest price ever at $360 million. today values are up around, you know, $5 billion >> $360 million. >> back then, we were saying we reached the peak i don't know if we've reached the peak these are unique assets. two global games, soccer/football and basketball and today's mediatek nothing has allowed us -- you know, i consume the games here when i'm here i can see all the games. dial it up on the phone or my commuter so it's reaching billions of people now there's a huge fan base in china, in europe, everywhere so i think it's going to keep going. >> does it make sense for the

nba -- and we're hearing reports of the nfl -- to buy a stake and have a partnership with espn >> adam will determine that. he'll been brilliant in terms of our media relations. so, the nba has been great at looking at new models, looking at streaming and partnerships. if it works out, if he thinks it will work out, we'll back him fully. >> wherever i go in the united states, i can't bet. i have to put bets on when i'm in new jersey. you have all that potential. >> you're absolutely right and in europe they've been way ahead of that. you kind of bet on what time someone shows up for the game. the u.s. is going that direction. >> we've got to go thank you. >> great to be here. this is the year >> another big hour eaahd right here on "squawk box" in davos, switzerland, including the ceo of uber and goldman sachs.

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good morning welcome back to the world economic forum where business leaders and world leaders are gathering to debate some of society's most pressing issues really who wrote that this hour, some of the corporate world's biggest names, including the ceos of uber, the interview i love, sitting here already, servicenow, blackstone, goldman sachs, coca-cola will all join us the final hour of "squawk box" begins right now

♪ good morning welcome back to "squawk box" on cnbc we're live at the world economic forum in davos, switzerland. andrew ross sorkin with xana kernodle -- joe kernen and becky quick. our first all-star, uber's ceo, in a new op-ed casting doubt on the company's goal of e being emission free in many cities by 2030 he says, "the stark reality is uber will not reach our goals without stronger action from policymakers and businesses. unfortunately, right at the moment, we need to accelerate through the turn many governments and automakers are slowing down." a new, yoegs report this morning, uber is working with

tesla to encourage drivers to switch to evs. good morning >> good to see you >> tell us about what led to this op-ed and the way you're thinking about this issue now. >> i think what is absolute is that we are totally committed to electrification of our fleets, right. we talked about by 2030 in the u.s., canada, and europe, 2040 by all over the world. but i've always said climate is a team sport there's no individual company or person who can drive the climate agenda forward you need companies, governments, individuals to come together and for us, we are building up economic fly wheel essentially incentivizing our drivers to switch to evs. they have to be affordable they've got to have great repair kind of profile, and they need charging infrastructure as well. and the charging infrastructure, for example, is something that's vital that governments and cities play a part in.

>> right >> so this is -- what we've seen is we've gone from a period of excitement to a period of execution. and stories are easier to say than actions are to do >> here we are, though, and it appears there are a lot of folks scaling back >> yes >> a lot of people made big pledges, big numbers about what they were going to do. now we see a sort of major pullback do you feel you're in that pullback >> we continue to lean forward, but we see the pullback. i think that the key is that for us, electrification is good business about 40% of our riders now, for example, in the u.s., have been in an ev and they love the product. their average tips are higher for the drivers, so the driver who is got to an ev, our take rate is lower, so they're making more money from us, making more money because the tips are higher, so both drivers and riders love we ear seeing. but per tesla, we have to go to

oems and get them to lower prices and make it more affordable for drivers to make that switch. >> pullback is coming from places where there's not demand. in hertz, the reason they're getting rid of them is because nobody wanted to rent them the carmakers that are dialing down on it because nobody wants to buy them. >> well, no one wants to buy them, let's say, because it's the right thing to do. they want to buy them if the product is great >> it doesn't make sense for an urban dweller who doesn't have somewhere to plug in the vehicle. >> absolutely. that's why charging infrastructure and making charging infrastructure available to that urban dweller or to our driver who is might not have their own garage, et cetera, becomes all the more important. nobody said this was going to be easy this is one of the biggest challenges humanity is facing. you know, we want too keep pushing forward through this more difficult time. we're fully committed. >> a driver that's driving for you eight hours a day, ten hours

a day in an electric vehicle, can they make it the whole day on one charge? >> they can make it on one charge and what we do is we help them in terms of what's the right time to charge b, for example. the right time is low-demand time we'll find you an open charger the data needs to be good. the charger needs to be not broken we'll find you what the price is, et cetera. so, there's a whole system that you have to build in order to enable all this to come together, but, again, there's an infrastructure that we're depending on, and governments need to keep leaning into that infrastructure >> let me ask you about a separate top that i can came up at davos an alcohol delivery company, you shot it down you spent $3 billion was that acquisition a mistake >> we shut down the app but not the service. what we saw and are seeing, we talk about the power of the platform people like coming to a single

a.m. that knows them, knows their identity, payments, details, et cetera we bought it and essentially started building in alcohol delivery into the uber eats platform, getting all the merchants in place, having the inventory, building the right catalog, et cetera there's a lot of detailed work that went into it. after a while, we saw a lot of drizly customer who is used uber eats, the second time around they used it for alcohol delivery same for groceries it is a disciplined thing to do and a market that requires discipline but more and more, it shows the platform -- >> did you need that to make the jump to get people to buy uber e eats, to buy alcohol >> i don't think we necessarily needed it, but it committed us to move faster to build this one app for every delivery need that you need

so it's worked out for us in the end. alcohol delivery is one of the fastest growing parts of our business but it wasn't working as a stand-alone. that's one of the challenges a lot the smaller tech companies that are private who can't get funded anymore is because these small stand-alone use cases don't justify the returns on capital, but putting these products inside an uber or uber eats makes a lot of sense. >> we keep talking about ai. you can't move without talking about it >> third question. i can't believe it took that long >> how is ai being used in practice today inside of uber? >> first of all, ai is a big word, but there are many different kinds of ai. so we've been using ai to price out your ride, to power your feed on uber eats, to figure out the right route to decide -- >> would you charge me a different amount than becky for the exact same ride, same moment >> not the same ride >> same moment think -- because you could test

this am i a more elastic customer will i pay more, meaning am i willing to pay a higher premium than becky >> probably not. >> i'm the cheapest. probably not >> we don't price based on individuals. but we do price based on routes. for example, you're taking a route from the suburb to the city we may know that aren't many alternatives, so it might be elastic in terms of price sensitivity, but we're very careful not to take individual kind of pricing into account with the drivers, for example, some drivers, a promotion might incentivize them to drive more than other drivers so in promotions, et cetera, coming back to ai for a second, the new version of ai, which is generative ai, we're very focused on, for example, productivity measures, helping our developers be more productive in writing code, our

customer service agents provide better service, summary of what they're doing, what the rules are, et cetera it is very early, but i do think that properly used generative ai will be a huge productivity saver for companies around the world, not just tech companies >> stock has been on the move this a good way. congratulations. >> thank you when we come back, more can't-miss interviews including with goldman sachs ceo david solomon. up next, servicenow's bill mcdermott will joiusn i've been a pharmacist for 44 years mainly because i just love helping people. as i got older, it was just a natural part of aging, i felt that my memory was beginning to decline and that's when i started looking for something that would help. when i first started taking prevagen, i noticed my memory was so much better. just stuff seemed to come together and fit like a jigsaw puzzle in my mind. prevagen. at stores everywhere without a prescription.

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welcome back to "squawk box" live from the world economic forum in davos, switzerland. artificial intelligence on everyone's mind in davos our next guest is helping other businesses transform how they function using that ai technology let's bring in bill mcdermott. he is the chairman, the president, and ceo of servicenow bill, this has been a hot, hot topic in davos this year i've been amazed reading through what servicenow is doing to try and help productivity. i read an interview i think you did with david rubenstein, who was here earlier >> yeah. >> you said you can take an engineer and make them 50% more productive >> yes >> how what happens

how does that work >> it's an amazing once-in-a-generation moment where generative ai meets the servicenow platform. we now have engineers texting to actually code. so instead of all the setup work, you can text a blueprint to actually build a net new application to drive innovation in a company the cycle time to do that has been reduced dramatically because you're getting right to the coding practice. example -- >> i still don't understand. dumb it down for me. >> say you want to build an employee rewards program ceo has an idea, want to make my people happy on generative ai. you can text the idea of the employee rewards program, and that will create a blueprint right out of a text. then an engineer actually codes that right to the servicenow platform and you're doing that in a cycle time that's hatclf of what we ud to do it at. what's happening with servicenow

is we create domain-specific llms on the servicenow platform. and the benefit of that is we build it for a user in a specific industry so that use case right out of the gates is ready for productivity it's ready to help people do their job. we can set up a virtual agent in i 15 minutes. >> you're kidding. you think of the productivity gains you could have with that it's amazing the other side of that, what that means for job creation or potentially job losses it's a replacement of the basic human needs. >> it's unbelievable how it generates productivity, and what the ceos here in davos are talking about is transformation. how do i take digital transformation and up it one level with generative ai to what i have termed business transformation management? how do i look at my enterprise on an end-to-end basis from my technology to my people to my customer to those creators that

are driving innovation and how can i do that on a common platform? and, becky, there's 50 years that have been created of siloed applications in every enterprise and in the era they were bought, they were the best out there but now steve jobs came up with the iphone in 2008, and everybody has in their pocket a machine that is 900 million times faster than the apollo command center >> sure. >> and they want to do all their work on that phone that smartphone. >> very quickly, just in terms of there being demand for this for companies all wanting to figure out ai, how much willingness is there to spend on these initiatives? because they're not cheap. >> itch not had one customer talk price, because it's so transformative if you can improve productivity -- we have 15 llm projects going on in servicenow. we're driving 35% to 40%

productivity improvement, and that's conservative. we're doing that in 15 different projects on one single platform. if you can do that, the cost is not an issue you know you're going to get the productivity you know you'll get the growth also on this jobs thing, i think people have really overplayed this "time" magazine in 1966 said that computers would replace 90% of the jobs and that states would have to subsidize the workers. 90 million jobs later, we're still going after growth, opportunity, and technology as the driving force behind it all. >> bill mcdermott, thank you for being here >> thank you very much for having me. i appreciate it. >> great to see you. coming up, blackstone's steve is schwarzman will join u.

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welcome back the first private equity firm to manage a trillion dollars in assets, blackstone group co-founder, chairman, and ceo, steve schwarzman we see you here just about every year >> good to see you, joe. >> there are opportunities in real estate you're seeing. around the world you're active

too. with a trillion dollars, we look at you, wherever there's an opportunity, we think you have the people at this point define things like that what do you see? >> right now, european real estate is very interesting, which probably is a surprise to people but what's happening is that interest rates were really -- in europe were negative, so people could borrow money very cheaply. now their cost of money is 500 or 600 basis points higher so people who use debt to own their portfolios really are struggling and they have to pay down debt, so they have to sell assets we're one of the few people in the world who have a lot of money and like to buy things >> what kind of deals are you getting? >> well, what happens, becky, is people approach us with

portfolios to buy, and we say thank you for the opportunity, but we're actually only interested in buying a few types of real estate we want to buy more warehouses, student loans, one or two other classes. so, if you could take this pile of stuff back and just give us what we like, we'll buy it all so what tends to happen is they go back and they find all of this stuff of the type we'll buy, and they sell it, and they often bring their best stuff so we're able to buy wonderful pieces of real estate at prices that work for us, and they get liquidity, and this is the start of what we call a distressed cycle for those owners >> it's not super low prices if you're only taking the premium properties you want, right >> you're getting them cheaper

than market where you wouldn't buy them so it's turned into a very good opportunity. >> do you think those value plays in europe will be coming to the u.s. soon >> not -- not real fast. we're starting to see other interesting things to buy. some of the public companies have struggled a bit -- >> in the u.s. you're talking about. >> in the u.s., on prices. so, as we look forward to 2024, we think we're going to be a lot more active in '24 than we have been >> definitely want to talk about politics here, steve i want to talk about china i think first. you each had a long, long relationship with china. how has it changed how do you view everything right now with all the work you've done there, investments and philanthropic things, students -- all the things that you've done there? it's more complicated. or is it >> well, it certainly has been

over the last two to three years, this has been a very difficult relationship i was at the summit time in san francisco with president xi and president biden. evidently, they had a pretty good meeting they don't agree on all things but the tone of the meeting was good the chinese, i think, have decided that they really need to reengage with the world for their own reasons. right now, they have negative foreign direct investment. this is a terrible situation for them they want to reverse it. so, premier li, the number two person in the country, was here at davos i was at a lunch with him yesterday.

they're very pro business, you know, trying to get people to come back. i actually had a private meeting with somebody who runs a large company who told me he 's building a plant in shenzhen in the south. so, you know, the chinese, i believe, really want to lower the temperature for 2024 because it helps them. their economy is okay but not strong >> you say okay but not strong would you say challenged one of the reasons i think there's an argument they're coming here, we're open for business, please do business with us, because of how challenged the economy is. >> andrew, i think you're right on that. it's still growing they're used to higher rates of growth they reported 5.2%, which doesn't sound too bad. i was in shanghai about two

months ago, and the party secretary there, who's an old friend of mine, he said, steve, we're growing at 8.2%, and i believe him because i know him it's out of the big cities where the problems are >> we have a minute left, steve. so, early on, you were close to the president. you obviously fell out of favor, he did with you, and i'm just wonder now if he's the presumptive nominee. would you support this man again? >> well, i think we have to see what happens, joe. >> okay. let's make some -- you makedete. that's how smart you are say he's the nominee assume that. >> i may not be as smart as you think i am, joe. >> i think you are take it as a hypothetical. say he's the nominee is there any way you're back in the fold, a full-on supporter of donald trump >> i think we have an

interesting presidential election now very high negatives, as you know, for both candidates. that's assuming we know who gets nominated right now. it looks certain on the democratic side straight line, because nobody else is running there's still some other people in the republican one, though they'll all be experts, you know, say it's going to be, you know, former president trump so i'm in the let's wait and see and see how this works i'm not into the hypothetical world yet as much as you'd like me to be and we'll see what happens there are always surprises in these elections. >> i was just wondering whether you could see fit -- whether it's gotten so bad in terms of bridges being burned that you could never come back or -- >> i wasn't burned

>> i'm not saying you were, but you made it -- it was a pretty conscious decision that you made i don't know whether it was january 6th or what it was, but there was something. i wondered whether that made it impossible to go back to that. i know you don't wans to answer the question, so i'll stop trying to ask. i know you know what i'm asking. >> i'm not into breaking news today for you. but i love you all anyhow. >> come on back and we'll break the news later thank you again. coming up, more big interviews with the ceos of goldman sachs and coca-cola.

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welcome back to "squawk box. rick santelli live on the floor. i wish it was the floor. cmhq breaking news retail sales is up 0.6%, the best since september if you strip out autos, still twice expectations, up 0.4%, best since september as well if you strip out autos and gas, up 0.6%, equaling our last look. and finally, the control group, which is inputted higher up the

food economic chain in terms of data points, is up 0.8%, which equals july. you have to go back to january to find a better number. now, let's look at import prices, shall we on the headline number, month over month for december, much, much better than expected. we were expecting down 0.5%. they're unchanged, so i guess "better" is in your interpretation lower prices at this point seem to be deflationary, which lines up with more of our global central banking aspects, but this is higher than expected the you strip out petroleum, it's unchanged those are month over month if we take a year-over-year look, down 1.6%, export prices on a month over month, down 0.9%, and year-over-year export prices down 3.2% and that is about half of our last look, which was down a little over 5%

interest rates have moved up on the hotter-than-expected retail sales, and we see that interest rates across the globe are higher uk inflation jumped in the month of december. andrew and the gang, back to you. stay warm. >> thank you for that. goldman sachs shares coming off a positive session after they posted better-than-expected fourth-quarter results helped by asset and management revenue, fourth-quarter earnings jumping more than 50%, but profit down 24%. joining us is goldman sachs' ceo david solomon in town. >> good to see you guys. happy to be here again it's a warmer day. >> you were in new york yesterday because you had your earnings report. let's talk earnings, then we'll get into the broader geopolitical issues and market issues >> sure. >> one of the things is the market likes this. they like when your asset management and the wealth business go up because that's where people will ascribe a

higher multiple to the business. where do you think you are in terms of the transformation at this point of the goldman sachs, theys like to say? >> we made a lot of progress in 2023 we made a bunch of strategic decisions in the last few years to invest and grow that asset wealth management franchise, get it organized i think we've got the firm in a position entering 2024 where we have two key businesses where we really are in leadership positions and have a right to win. the first is global banking markets, where i think we performed very well. one of the things the market liked yesterday was our relative performance in that business in what's not an a good environment. but we continue to grow the asset wealth management franchise. we had a 23rd fourth quarter of consecutive long-term based inflows. we highlighted we met our fund-raising target we set 3 1/2 years ago on alternatives. we raised $250 billion of alternatives a year ahead of schedule and will continue to raise more alternative assets going forward. i think we'll probably raise another $40 billion or $50

billion in 20 to 24. we have strong performance in the funds, and we're growing the management fees. those fees in the last five years have gone from under $5 billion to almost a $10 billion runway we're making real progress. >> people talk about goldman sachs' culture as unique historically it's been a culture around investment bankers and traders. now that there's this flip in terms of shift of focus -- you may say that i'm wrong, you may say we're not shifting away from investment banking or trading, and i know that. but has it changed the culture >> you know, i think that we've got a very strong culture that's centered around the fact that for a long time the firm has been able to hire, retain, and get incredibly talented people to work together in a very collaborative way. i think for us to be successful in asset wealth management, that culture has to be permeating through, and it is i think one of the things that has really helped the firm in

the last few years is the one-gs ethos we've developed that's enhanced our culture of cooperation and allowed us to serve our clients in a super collaborative way, and i think that's helping our asset wealth management business too. >> broader markets >> sure. >> jamie dimon was on with us earlier talking about what the fed is going to do, where the markets are going to go. you were talking during the commercial break, what do you think jay powell does this year? >> i think he'll watch the data, and baseeds on that, he'll make decisions. the market is clearly running ahead to a position of many cults. there's no question. we've made a lot of progress on inflation. depending on how the progress, you know, moves from here, that'll spell the direction of policy i think it's hard for me to see the market's view of seven cults, you know, this year you know, i do think there's a reasonable possibility of some interest rate cuts and some easing but it's really going to be dependent on what the data says

and how the economy transmits through year i see some signs of softness, which would lead you to believe that we're going to see only cults. but there's a lot going on in the world. i know you're talking about geopolitics, et cetera, and all of this can create -- >> chance of hikes >> you know, i don't say zero percent to anything. but it feels like at this point a bunch of work's done with a chance of hikes is a much smaller distribution than we would have thought six months ago. >> if you think the market has got aten ahead of where realityi in terms of cuts, is there a reckoning of -- >> no. the market is much smarter than i am, so the market may be right. there doesn't have to be a reckoning. it's an uncertain time there's lot going on in the world. we've gone through very quick transitions in the course of the last couple years. there's been a lot of shift in view i think that shift can continue. it doesn't have to create a reckoning. i'll not looking for a reckoning

in markets in 2024 you'd have to see a real exogenous event to have something like that. >> steve schwarzman says he thinks he'll be buying a lot of stuff in this coming year. when he says that, it suggests that he thinks there will be more things on sale in an almost distressed -- like big multinationals, divesting units, things like that than we've seen in the past couple years >> i do think that the private equity community broadly -- i'm not being specific to steve's comments -- has really been closed for business over the course of the last 18 months they've sold very few assets there's an enormous amount of pressure from the lp community on that group to create more realizations the markets have settled out values are values. i think you'll start to see more velocity around sales. in addition, you know, private equity firms make money when they can put deals and opportunities together, and i think people have settled in on

the reality of the world we're starting in our shop to see more activity in that community. i think you'll see more activity that's one thing that's been favorable for our business as i look forward, one of the reasons i was optimistic on our call yesterday, the investment banking environment has been a crummy investment banking environment for transactions, m&a, et cetera it's improving and private equity is a component of that. >> what -- you mentioned the exogenous events that could happen we all talk about all the risks that are out here. i'm sure you'll be talking about this week. hard to control politics hard to control any of these geopolitical situations. how do you prepare for it at the bank level >> when i'm asked, and i said this yesterday in my earnings call, i'm pretty optimistic the environment for our business will be better, but we're operating cautiously there's a lot going on in the world. i think the world is a little fragile at the moment. there are transitions. you have to spend a lot of time worrying about the things that probably don't happen, but there's a 2% chance of something

happening and just making sure you're prepared. we think about capital, liquidity, risk positions, we always look through a lens of the tail, not the normal -- not, you know, the large-scale distribution that we expect. and i think there's a lot going on in the world that could make things bumpy, and we're watching that stuff carefully i'll not a good political prognosticator, but there are elections all over the world that can have an impact on economic activity. so, you know, we watch closely and try to be good risk managers >> i ask because jamie made comments to this effect too. listening to his view of the world, it's little more pe pessimistic than most ceos >> you have to live in the moment and, you know, in the moment, we've navigated better than i expected we would navigate in fact, i remember silting here one year ago and telling you the direction of travel on monetary policy in my opinion most likely would lead to an economic slowdown, and i was wrong. so we've navigated better. there are a variety of reasons

why we've navigated better i think the market environment and the tone, x, what's going on geopolitically in the world, peoples better today so you have to take that as a base case. we had a meeting yesterday inside shop looking at our base case economic forecast, you know, for our planning and our budgeting, and it's a relatively benign case, but the tails -- there are some tails that don't look great you think about the tames. >> you have to believe there's free lunches that's jamie's point we had zurich for ten years, $34 trillion in debt rates are coming down. we conquered it. it was a soft landing. let's spend another $34 trillion and maybe the market will double from here. i mean, things like that don't happen, david. just in general, there's got to be some reason for wondering whether it's too good to be true >> well, i think -- i think you should, and that's why you have to be cautious i would highlight exactly what you just highlighted, joe. i'm very concerned about the growing debt and that's not something that i think is going to come home to roost in 2024 necessarily,

but -- >> how could it go down when the government will have to borrow so much money for debt service >> that's one of the reasons i'm more in the camp of, you know, higher rates longer as general base case as you operate over the next five years because we have to refinance this debt on a different basis than we have that doesn't mean the policy rate can't go a little bit lower, but ultimately, you know, the burden -- we go back to prefinancial crisis, we had $67 trillion in treasuries, now in the low 30s, and the low 30s are with a lot of short-term financing and higher cost financing which grows the treasury stack i think that is a big risk issue. it might not happen in the next six months >> how do you feel about china the premier is here. lots of discussions on china, they seem to be very open for business i argue because their economy seems quite challenged but there are questions about whether a company toub taking tiktok or bite ytedance public.

how are you thinking about china given where you sit? >> i agree with your view that the chinese economy is sluggish and slow they have a strong incentive to try to repair that, but they have some significant headwinds. the u.s./china bilateral relationship is probably the most important, you know, bilateral relationship we have and also the most complicated and the most fraught i'm encouraged by the fact that there's been more dialogue in the last few months between the administration and the chinese leadership i think that's important but i'm also eyes wide open that we're going into an election cycle where there's going to be an enormous amount of rhetoric that's going to be very, very tougher, and i think it's going to be hard to understand the direction of travel on policy from here until we get past the election we continue to invest our business we're very cognizant of the fact that u.s. policy around certain industries is restricting capital flow and investment into china. so, we look at our business with a different lens because of

that but where we can and we will, we'll serve our clients, especially our global clients, who operate in china lots of clients operate in china. we're very committed >> navigated a couple rough quarters a great quart they are time. are you getting love letters from the board are you getting a new 18-year contract or something? is it different? does it feel different >> unfortunately, i'm an employee at will i don't get a contract but what feels good is our team, joe, did an unbelievable job it was a tough year. nobody's happier that 2023 is behind us. but we made excellent decision and got the firm positioned well to serve our clients with excellence and distinction and also to continue to deliver for shareholders >> it's weird that, you know, people weren't looking closely at the stock >> i feel very good about the fact the stock is up, you know, 120%, 130% over the last five years. we're making good progress but a lot more to do as long as we serve our clients,

we'll be just fine >> david solomon, thank you. >> appreciate. great to see you guys. see you soon up next, ca-laocco's ceo james quincey joins us old school hard work meets bold new thinking. ( ♪♪ ) partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley.

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welcome back, everybody. our next guest runs one of the world's beverage giants, giving him an inside look at the continue on super and at inflation. coca-cola's ceo james quincey.

pleasure tucho have you here. >> great to be back. >> let's start with those points, what's happened with inflation, where things are headed consumers have been willing to pay up frp quite a while you took the price hikes when you needed to, the high e costs you were dealing with, but you consciously chose to step back from that. how are things going now >> things are good a little gdivergence in the inflation story. what i mean is the main kind of economies is moderating substantially, both on the input side and in the marketplace, and it's kind of coming down in expectations towards the landing zone that's much more normal, and we'll be back to our cor strategy, which is earning the right to take price with our marketing innovation on the two kind of extremes of the thing, you've still got a number, given we operate everywhere, of very high inflation countries that are not really getting better. and there are some countries where inflation is arguably too low and they're kind of borderline need a bit more

inflation. but the main story is moderating inflation, coming into the landing zone, back to the classic story of earning the right for pricing. >> there has been this big story that's blown up between your competitor, pepsi, and carfour, where they said, forget it, we're not putting pepsi products on our shelves anymore because we don't like the price hikes that have come through what do you deal with with suppliers? have you had any kind of those same pushbacks or issues >> when we deal with our own suppliers, we have a very long-standing approach, which is to go for very long-term relationships. so we like, given our side, we like to get long-term security of supply. our number one problem is getting enough and we get long-term pricing agreements then we layer on hedging so, we very much smooth out the cycle, so we don't tend to go up very quickly and we don't tend to crash back down we like the idea of seeing the cycle through. it really helps us stabilize our business, which is why we're not sort of spiking on pricing it's deliberate approach >> and as a result, you have not

dealt with any of these same sort of situations >> of course -- i mean, in different countries, in different environments, there can be more or less friction with some of our retail partners, but in the end we come back to our strategy, which is to earn the right to pricing, and retail is we can grow the beverage business faster than their total business, and we, given our leadership and our innovation, will grow faster within that that's a positive story for them they need their economics to work too >> i love how you are using artificial intelligence even with your innovation too can you explain to people how you are -- how you are using it, even when it comes to new tastes and flavors? >> yeah. i think it all falls in the bucket of seeing what sort of cool stuff you can do in 2023. come on to 2024. we've used artificial intelligence to design a coke drink, a coke variant. we had a program called coke creation, still have a program called coke creations, which is

about making flavors that people can engage with, whether it was space or marshmallow the dj, and then artificial intelligence designed a version, which was cool and very engaging for people i think the challenge now, as we take those sort of applications of drinks, and we had a program at christmas where you could make a coke christmas card with a.i. you could tell it what you wanted to be in the picture and it would make a christmas card for you, and we put them up on times square, thousands of them. next year, 2024, it's about, can we turn cool ideas into ideas at scale? can this generative a.i. operate at massive scale >> in terms of creating actual drinks are those drinks so much fundamentally different than something your team would come up with in a room? >> they were different i'm not sure they were fundamentally different, but they were engaging and it was a bit of fun i think that generative a.i. needs to demonstrate that it can operate at scale, because it could make a profound difference in the marketing industry.

>> more on marketing than on coming up with the next drink and flavor profile that no one ever thought of but somehow the a.i. figured out >> never say never, but i think it's much more likely to be the marketing than the drinks. >> because you trust your gut when it comes to the product >> no, i think there's more creativity possible when you're creating an image or story or text than there is on a physical taste profile. variants tend to be nuanced. >> watching the -- over the years, we own bottlers, we don't own bottlers, can't you use a.i. just to absolutely maximize the profits logistically on how everything operates? isn't it a more effective way to do that? >> absolutely. absolutely as you start to get more compute power and more data available -- lots of companies, including ourselves, including big tech companies, they have data in pockets not talking to each other. these overlays take all the data

sources that are not standardized, and you can layer on good predictive settings that works for the consumer back. so, that optimization is coming and is a big piece of what needs -- >> i have a very selfish question i'm addicted -- i'm an addict of aha, which is his flavored seltzer water, bubbly water, and they were competing against bubbly on the pepsico side and all the other folks that are doing sparkling water. i love the orange grapefruit you say it's a tough business, the sparkling water business i thought it would be the hig hig highest margin you could have because it's just water sparkled up a bit >> there are some consumers like yourself that love it. >> not enough of us. >> it's a very competitive

industry >> aha so what's supposed to happen here >> we're going to keep trying, keep reinventing we've pushed more into our topo chico flavored waters our modus operandi is not to give up on the first attempt but to keep iterating. >> i think you have been amazing, james, in looking at the portfolio and not being afraid to shut down classics like a tab you got rid of odwala, coconut water. i think you said at the time that you had a lot of hate mail coming your way when you decided to phase that out. how do you decide what's worth it >> get a.i. to do it >> it's about the portfolio and the optimization, and in the end, each can, each drink has to earn its right to be on the shelf. in the end, there is a physical limitation on the shelves and in the coolers, and the analysis is

there, whether it's the a.i. or the humans that do it, you can work out what should be in there, and you have to be dispassionate, because in the end, you're reducing not just your own sales, you're reducing the retailer's sales, and you're not giving the consumer the choice they wanted, so it's the right thing to do for everyone to be a bit ruthless >> and you're an engineer and you're very logical. >> i still get a lot of lobbying on tab for all the tab lovers out there, there could be a moment with a special run >> if i could get steve schwartzman to go in with me to buy aha, could we do a deal? are you willing to divest? >> i was going to make a special run for you and steve. >> you definitely need steve schwartzman to go in with you on that >> it sounds like i might not. given what he's saying about the business >> diet coke is how much bigger than regular coke? coke classic how much bigger is it? >> no, it's smaller. in the u.s. -- >> i love regular coke i love it so much, but it

doesn't love me in terms of me being fat. >> we're been improving coke zero >> i love regular coke because of the sugar part of it. >> but i have both >> if you don't feel well, i mean, it's like a curative almost we have to have some >> magic elixir. >> we have to have some in the house. we have to so, it's still bigger than diet? is it bigger than zero >> only in a few countries are they bigger than regular coke, like the uk, for example but a lot of people drink both coke original in the morning, coke zero in the evening people dualize a lot of people dualize. >> can i pivot you're one of the biggest marketing spenders in the world in terms of advertising budget how has that changed we keep talking about social media here and also a.i., in terms of how marketing is going to change. but are you seeing certain platforms working in certain

ways and others not working the way you used to think they were working? >> clearly, over the last 20 years, there's two really big things that have definitely happened from the point of view of a marketer of big brands, i'm not trying to sell a car in minnesota to the people in minnesota. i'm trying to sell a big brand across a large space one was the squeeze-down of paper advertising that went digital. that was the first big thing over the last 20 years you look at the -- a mix of advertising. tv was fine. digital. now, streaming/social media platforms are squeezing radio and tv they're not completely done, but it's there one of the things that we do as a marketer, it's not just about where are the consumers, but it's what price is being charged? for us, the tradeoff is not just, which platform is more effective, but whatever they charging me for it they are in a competitive dynamic. >> are you saying that facebook and instagram isare the game

do you think tiktok is the game? do you think amazon with its new streaming, now that they're placing advertising, is that interesting, all of a sudden peacock, owned by comcast nbc? how do you think about advertising in these new ways? >> i start from, who do i want to reach the what's the most cost effective way to get there? >> is there one where you say, these guys are offering the best right now? >> they're all bidding >> how about x twitter? >> it's not -- that was not a big platform for us, because it was not a big tv platform. not a big commercial, video-type platform it was always historically a text platform. >> james, something you guys can't control, obviously, what do you say happening in 2024 now that the fed is going to start cutting rates? >> i wish i knew the answer to that one i'd probably be a lot richer i could buy the other drinks myself 4x is very important for us.

we make over 75% of the profits outside the u.s., and as the world economy has grown, the importance of the emerging markets has gone up a lot for us, and so not all these currencies are hedgeable we certainly do hedge and spread out. i think we're likely at the moment to see a bit more stability in the marketplace that's certainly what's happened so far this year long-term period of dollar strengthening. i think it's all going to be who goes down when on interest rates is going to make a bit of difference, but we'll have a hedge program. we're committed to our investors that we'll find a way to grow the earnings of the company while we manage the 4x >> is that bottle still back there? >> yeah. >> get it out. >> it's down here, actually. >> it's a beautiful -- >> it is pretty. >> it's a beautiful thing. it really is and it's american and everything i love it. >> it's swiss. >> oh, it's american made. >> james, thank you very much for being with us today. it's great to see you. we appreciate your time.

james quincey. very quickly, we'll take a look at where the market stands. we have been looking at the futures in the red all morning long, continue to be the case. dow futures down by close to 200 points s&p futures down by 31 the nasdaq futures, off by 142, and this is coming after a couple sessions in a row where we have seen weakness in the market, so we'll see how things continue as we get closer to the opening bell that does it for us today. make sure you join us tomorrow where we will still be right here in davos. right now, it's time for "squawk on the street. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber our road map begins with jamie dimon's economic warning, saying he is cautious for