good morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm mike santoli along with contessa brewer and roberts frank. joe, about andrew, and becky are off today. we mentioned the nasdaq is under pressure following some underwhelming earnings reports, i should say, from microsoft, alphabet, and amd. 100% decline. although interestingly it seems like it might be happening toward a rotation of nontech stops. s&p 500 you see down just a little more than half a percent. dow futures up and small cap futures also up. we also have a fed decision today. take a look at treasury yields

here. the 10-year yield, 4.03%. it's declined from a couple of days ago. you have seen what's going on with global yields also coming up some pressure. china market had a weak overnight, growth numbers causing some concern. >> meanwhile a delaware judge struck down elon musk's $55 billion pay package after a shareholder challenged it as excessive. do you think? musk has tesla holdings worth billions with stock options have in vested. but regulatory filings show he hasn't exercised any of the options following the court challenge. muffing has repeatedly urged tesla's board to ainge for another stock award years after he stow chunks of tesla to buy twitter. he's pushing for a bigger stake in tesla to maintain control of the company and push further into ai. this was not surprising for those who look at governance because of his relationships

with the board when your brother's on the board. that could be a conflict of interest. but when they awarded this, tesla market cap was $60 billion. the idea they could ever get to 650 at the time, many people thought tesla was a mirage, it was losing money. so, you know, when you look at the economics, yeah, $55 billion compared to any other ceo is outrageous, but no other stock that i know of has really done that in that period of time. >> all righthough what the plai argued was not just that it was outrage, they downplayed the targets that would be awarded to him and that the company's own projections showed that they were likely to do it even as elon musk and others were talking down the likelihood of doing that. as the shareholder said, was misled into voting for and approving that as were all the other other shareholders.

that's question one. i really question what happens with the board governance from here on out because we know that there are some boards that have very much followed the instructions of their ceo, chairman, in some cases founder, and have just done the building of whoever's holding that top job. and so will we start to see more restraint when it comes to that? >> i mean, the judge, you know, was pretty critical of just the board's structure, saying this is not an arm's length decision. but it's hard to know to me how applicable it is to a lot of other companies. you don't always have those market caps. >> contessa, you're right. it's not the dollar amount. who's to say how much is too much. it's the process, the process by which they went through the estimates and are the board members really arm's length and did elon have direct control or control over the process, which

she said he did. he insists he djts. >> also after this, elon musk tweeted never incorporate in dell wear. but a lot of these shareholder-brought plaintiff lawsuits are thrown out and never get to this level. there was some there there even if it goes onts an appeal and those kinds of things. an interesting story and certainly not expected. shares of both alphabet and microsoft are lower. the tech giant plannaged to beat wall street's expectations, but ad sales came in a little light why microsoft's forecast was. strong enough for analysts. there you're saying alphabet in the early trade off by 6%. microsoft down. joining us now paul meeks, veteran professor and finance minister at the citadel. you know, dan ives the an alyst was on "last call" with me last

night, paul. he said for microsoft, this is one that should be printed up and hung in the louisville. louvre. what's your take? >> i thought microsoft was pretty clean both with the report and the guidance. you know, i'm always looking at azure, and actually the year-to-year growth rate there picked up a little bit. and the forecast for the next quarter for the next company at about the same rate. the only thing that really disappointed me with microsoft is they need to quantify the co-pilot ramp and they chose not to. disappointment to me. the ceo gave some use cases, which is pretty cool. it's probably going to appease the street for a while. but we need to see in black and

white some real uptake in calendar '24 and co-pilot, and they just didn't talk about it unfortunately. >> well, azure had 30% growth. you know that some of that was from currency. six points from artificial intelligence alone which gives you a real use case scenario. what about google? we're seeing the shares off in the extended trade by quite a lot. what's your prediction for how this goes today and how much ad revenue is really the bear that is in alphabet's way? >> yeah. with alphabet, i actually wasn't so down on it as the market actually shows this morning, down six preopen. yes, digital advertising, what they call on their p & l google networks was a little bit soft, but it wasn't material. the way i would play this stock, i think the way all the majors have reported last night, this is your buying opportunity,

right? the stocks are going to open up at 142ish. i think if we find an average day support at 139, this becomes a better buy. >> yeah, dan -- paul, excuse me, it's worth noting that not only did these stocks run into print before their declining hours, they're not going back that far in time. the dac 100 was down. microsoft has backed off the $3 trillion threshold and alphabet is back a couple of weeks similar to amd. i think e the question is was there anything about the investment in capex plans that were detailed by alphabet and to a lesser degree microsoft that changes the longer-temp view of the paybacks on a lot of the ai initiatives? >> well, that's the absolute key, and you raised a fantastic

point. yes, that will continue to spend a lot of money, particularly training these large language models. everybody thought 2024 was going to be the year in which we shift into seeing actual ai-driven softway apps. i think 2024 is much less like '23. we continue to train large language models, and, of course, who is the greatest beneficiary? we know it all. it's nvidia. i would say, you know, their capex plan that you mention proves that out. you know, it's going to be expensive, and ai is going to be the reign of the big boys because they can actually spend the billions on r & d. if they can't do it internally, they have the balance sheets to be able to do mergers and acquisitions. we'll see the take-up of some of these products. i think it's a next year thing, and the test, the absolute test, not just for microsoft, but for

the entire ai cohort is co-pilot going to be a good product and is it going to be a profitable product? that will be the ultimate tell not just for microsoft but for a whole lot of folks in this pool. >> paul, can you weigh in on the implications of the judge's decision in delaware on elon musk's compensation? >> that's ridiculous. that didn't bother me so much, right, because that was the board decision from years ago. you're absolutely right. the setup for this segment, yes, the board made that call whelp it looked like there was no chance that would ever happen. however, michael is absolutely right. this is a rare compensation structure, and what bothers me more than that is his insistence on getting more shares because he says he doesn't feel comfortable that he can control the company. well, he's already the world's

wealthiest person, and does anybody think when you read the news day in and day out of tesla he doesn't have absolutely absolute control? he doesn't need any more voting control. so it's a mark of selfishness, and i think tesla is actually in some trouble not just for that reason, be but some real fundamental weakness, and i think that this stock goes from 186 over the next weeks or months down to 160. that will be the test. if it doesn't hold 160 support, i think it a is going all the way back town to 100. >> professor paul meeks. paul, thank you very much. appreciate your time. >> best wishes. all right. a few other earnings movers to watch. as we were mentioned, amd shares fall. revenue, slightly above expectations. the current quarter revenue forecast came in lighter than the street expected, though, and amd said it expects some of its major businesses including pc chips to decline during the

quarter. ceo lisa su will be on "squawk on the street" in the 9:00 hour. she does a good job with the big picture vision. we're watching shares of starbucks as well. earnings came in 90 increments per share, missing estimates by 3 cents. revenues also fell short. look at the revenue up 3%. international and domestic falling short of estimates. the company's ceo says the company faced headwinds including boycotting in the united states and discounts in china. coming up, the ceo of knovo nordisk will be on to talking wee go i have, the wait cloth

drug. at 9:00 a.m. eastern don't miss lhn interview with ceo dave caouon "squawk on the street." we'll be right back. giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

♪ voya ♪ there are some things that work better together. like your workplace benefits and retirement savings. presentation looks great. thanks. voya provides tools that help you make the right investment and benefit choices. so you can reach today's financial goals. that one. and look forward to a more confident future.

that is one dynamic duo. voya, well planned, well invested, well protected.

danish pharmaceutical giant novo nordisk reports quarter 4 results. the company expects demand for the two products to continue strong in 2024.

joining us now is lars fruergaard jorgensen, ceo. how much of this market are you now serving and how do you see that developing your ability to supply it in the coming year? >> thank you for having me this morning. we see a very, very large opportunity going forward, and, honestly, we're just getting going. we're serving a very small faction of the market and we're scaling the market. you see a sustained growth, but it's still a very small part of the overall market we're going to address this coming year. >> you're attempting to aggressive will i increase supplies. as for o'companies, i wonder how this race is going to go, your ability to kind of get out there

and exploit the lead you have had in these products while other companies are also rushing to do so. how is that shaping up right now? >> i actually think that it's a positive that we have competition because i think the main challenge will be the opportunities, one of unfolding the market, really making it well understood that obesity is a serious chronic disease. it's a journey we've been on on our own for quite some time and now we welcome competition from eli lilly. we respect them a lot. we've been competing in the diabetes race for years. we need to make the diseaisease understood. it's one for society. it's about helping people living with obesity and making them

stay active in the work force and prevent diseases that follows obesity. >> it's interesting, though, because we've seen such a huge run-up in the uses for these drugs in the united states that just this week north carolina said its state health plan would no longer pay for these drugs for weight loss, reserving it for diabetes treatment alone. the state treasurer came on "last call" on cnbc to talk about it a little bit. i want to play on that and then, lars, get your reaction on the other side. >> we've never questioned the efficacy of this drug. what we're questioning is the price. it can cost up to $1,500 in north carolina. in norway and denmark it costs about $280. what we've asked novo nordisk to do is sell this drug for the

same price as people in denmark pay. >> and the treasurer says that novo nordisk has refused to negotiate and, in fact, suspended rebates when the board tried to negotiate it. why can't the price be the same? >> well, the price listed -- mentioned here in the clip was actually above our list price. i don't know where that price comes from. but we give rebates in the u.s., and we also are willing to give rebates to north carolina. of course, we need to discuss under which conditions those rebates are paid. so i think it's a grossly oversimplified story. so we believe that the value of treating obesity outweighs the cost of the medicine, so to say, and the clip mentioned the figures, the product, one being weight loss. but it's adding additional

benefits. labor is something that's another value driver. we believe the value of our medicines. we're also willing to negotiate the rebate numbers. >> the treasurer says his plan members account for 2% of the prescriptions filled in the united states. if other states start following suit, could that be meaningful to your bottom line here? >> today we see that they're more seeking coverage that other states and plans are leaving, and i think the clip here is perhaps not perfectly resembling what the type of business we conducted is because we are giving significant rebates in the u.s., and we're also willing to pay that in north carolina. so it's not worth it to pay for the list price. of course, we have to negotiate

what the rebates are and the situation in north carolina. i cannot get into it here as to the list situation. but we're willing to negotiate what the rebates should be, to bring down the price significantly to bring down the list price, also in north carolina. >> demand and shipping supplies and heavy costs. that's going to be continuing for some time, lars. we know you have to go. thanks so much. >> thank you. coming up, a major music label threatening to pull its artist content from tiktok. they're accusing the social media service of bullying. we'll show you how tiktok responded. plus sterp like's office space warning. "squawk box" will be right back. what is cirkul? cirkul is the fuel you need to take flight. cirkul is the

energy that gets you to the next level. cirkul is what you hope for when life tosses lemons your way. cirkul, available at walmart and drinkcirkul.com. ♪ (upbeat music) ♪ ( ♪♪ ) constant contact's advanced automation lets you send the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall.

oooohhh, it is cold outside time to protect your vehichle from winters wrath of course the hot sun can be tough on vehicles too you need weathertech all year round! come on, protect your investment laser measured floorliners and cargoliner will shield the carpeting from sand and snow for your interior, there's seat protector and sunshade

plus, mudflaps and bumpstep for the exterior order american made products at weathertech.com surfs up yeah, right

ion versal music group t refuses to use tiktok. it accuses the company of bullying. the licensing agreement between umg and bytedance separated yesterday. it's pushing for appropriate compensation for artists, pushing for safety on artificial intelligence. tiktok tried to bully the label by removing some of the labels of some of the artists. they accused the label of putting greed above the interest ts of their artists and songwriters. tiktok called umg a false

narrative. there's back and forth. roy's fair to be paid, when is your music being used. a lot of times it will take down your content if you try to put music to it. >> five years ago universal had the upper hand. but you look at the songs tiktok can make or break. you have a song from ten years ago, 20 years ago suddenly blows up as number one because it's on tiktok videos. they're a hit maker, and that's changed the power dynamic between the companies. >> it's interesting that tiktok having the power, but also what are we fighting over in terms of dollar value, you know what i mean? it doesn't seem it's going to be make or break financially for tiktok to be able to share that much ad revenue. it's kind of interesting because it tends to be just a trickle for most artists. >> it would be problematic. it's true for emerging yurj artists. if that's the place where

there's some hang-up and if tiktok's taking that -- you know, you can see why that would be problematic. when the 10-year-old twins start to rick roll their mom -- for those who don't know rick rolling, right? >> we know. >> you all have been rick rolling? >> he hasn't recorded in decades, is that right? >> how amazing to come back and have that kind of re-emergence. thanks, social media. meanwhile bernie sternlicht out with a stern warning. he says the class never recovered from the pandemic. he said officers were once a $3 trillion asset class that's probably worth $1.8 trillion now. he says there's 1 pnlts $2 trillion in losses spread somewhere. no one knows skbactsly where it is. i would guess most of it is in the regional banks.

i know some of it is in family offices and investment funds that the asset managers and big companies have started with commercial real estate. i think we kiejt of know roughly where they are. also worth noting here, bernie sternlicht has a distressed real estate fund. he was raising money last year. he said he's been champing at the bit for distressed real estate. i'm not saying he's talking his book, but he certainly is ready and positioned with a lot of capital to exploit whatever weaknesses, and he's had the same message for quite a few years. >> $1.2 trillion is a lot of money and sounds like a lot of money. by the way, if you don't flow where it is, it's probably not a big problem in any one place. goldman sachs said they basically wrote down their commercial office portfolio by 50%. so it's kind of done on some level. >> the crises that happens are never the ones we foresaw, so

this has been the most widely telegraphed crisis for the past three years, and because it was so widely telegraphed and everyone has been bracing for it, and we understand it's a small sun sector of offices and cities, it's new york, san francisco, los angeles, so i think we've got our arms wrapped around the offices at this point. there could be surprises and small blowups, but i don't think it's going to be what we thought. >> maybe it feels like we've cleared that risk for a while. walmart offering a three-for-one stock split. the additional shares will be payable after the market closes on february 23rd to shareholders of record as of the previous day. that i'll begin trading on a post-split day sis on february 26th. it's interesting because though it doesn't make a difference to how much you actually own, walmart says this is for the employees that they have, you know, 400,000

associates who participate in the stock purchase plan. and so it provides more opportunities for them for the payroll deductions to buy in. >> or buy or sell in small increments. historically it doesn't matter, but there's a vague signaling that it's positive. if the management team was nervous about the stock value, you wouldn't do a stock split and say the normal price is going to be lower. >> walmart is going to trade how heavily it influences. >> yeah, the split doesn't change the weighting and the index. walmart punches way below the weight in tin dex because the family still owns almost half. so only the publicly owned shares are counted in the s&p 500. >> they have to maintain the shares to be under the ceiling of the cap. >> they're comfortable.

coming up, all eyes will be on the fed as it's fed decision day. we'll tell you what to expect in fed chair powell's news conference. as we head to break, we look at yesterday's winners and losers. >> announcer: expectation edge is sponsored by@not business. next-level moments need the next lefbl network. and this must be the ocean view? of aruba? huh. is sponsored by@not business. next-level moments need the next lefbl network. xexpectation edge is sponsored by@not business. next-level moments need the next lefbl network. expectation edge is sponsored by@not business. next-level moments need the next lefbl network. sponsored by@not . next-level moments need the next lefbl network. gents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪)

♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

good morning. welcome back to "squawk box" from times square market. you can see the s&p 500 in the red. the dow looks luke it's set to open in the green. and the nasdaq, ooph, looking rough and ready too. >> investors are awaiting fed chair jay powell at the conclusion of the two-day policy meeting. our next guest says she expects them to move their tightening

process. megan, thanks so much for joining us. i think the idea of a march rate cut is off the table now. what should we be looking for from today's press conference? >> yeah, i mean i think rates unchanged is all but a foregone conclusion at this stage as you suggested. really it's a signaling around the path forward that will be the more closely watched piece of the equation this afternoon. what we're likely to see is a much more hawkish bias. far too much confidence for a march fed cut. there's a derecent amount of data that the fed should approach today's meeting with. at the on set of cuts with a healthy dose of skepticism, we've got financial conditions that have eased for three months running. we're continuing to see strong employment figures.

we've got j.o.l.t.s. data this week and cpi running higher. between those things, the most likely scenario is the fed looks to buy their time here. the conditions are supportive of a more sustained return to target. >> it's interesting. you mention the potential for a hawkish bias. we saw a dovish powell in the last conference. that's what gave us the end of year-rally last year. what makes you think they're not going to pivot again and show a perhaps more hawkish stance at this meeting today? >> i think we saw some of this backing away of an expectation that cuts are imminent for much of the preblack out speech. at a minimum we'll see powell echo what waller said and not

anticipate a sharp cutting cycle, which is certainly what the market is pricing in. >> meghan, you mention all the things that seem that maybe the fed doesn't have to be in a hurry with economic growth holding up pretty well. the other side of that and a lot of people are trying to send around the six-month average core cpe charts that show, heying we're pretty close to target, and here we are with a 5.25-plus funds rate. the fed have said they'll be cutting before that. i wonder if people are triangulating where rates are, what the trajectory is on inflation and if thawer ooh doing what they're supposed to and cooperating, they don't have to ir wo about financial conditions. >> i think you're exactly right. our economists at barclays are calling for march as a potential first cut. it's not a shir fire thing and they want criminal data to

support we're not going to reaccelerate. that's the risk here. i don't think they want to get over their skis and be premature or be overly aggressive out of the gate here. they can be patient. i think that's an every-over-meeting cut as they initiate some of the moves. i think cpe in and of itself, while certainly suggestive that they met that 2% target, there are enough counterbalancing forces, cpi being one, that suggests there's still some contagion risk to that. we need to keep an eye on that and they'll need to be patient going forward. >> looking at the rest of the year, the market is hoping for, you know, at least perhaps 7500 basis points in cuts. what do you think? the consensus is rate cuts will start in june or july. what do you think we'll end up the year at when it comes to fed funds? >> i do think we see three or four cuts. that consensus is in line with our thinking and it could be as

early as march, depending on the data. we see other incremental cuts next year as well. we've got two yours toward a prolonged path back toward normalization in line with the market and our depositions. i don't think anybody's anticipating this to be an aggressive move by the fed, certainly not in the first half of this year. >> all right, meghan, we appreciate it. thanks so much. >> thank you. coming up, a closer look at some of the stocks dragging down the nasdaq this morning. that is next. plus, we'll tell you what you need to know about nikki haley's fund razr in new york city last night hosted by billionaires. and a reminder, get the best of "squawk box" in our daily pod kachlt follow "squawk box" on your favorite podcast app and listen any time. we'll be right back.

(ella) fashion moves fast. setting trends is our business. we need to scale with customer demand... in real time. (jen) so we partner with verizon. their solution for us? a private 5g network. (ella) we now get more control of production, efficiencies, and greater agility. (marquis) with a custom private 5g network. our customers get what they want, when they want it. (jen) now we're even smarter and ready for what's next. (vo) achieve enterprise intelligence. it's your vision, it's your verizon.

falling. growth in asia and north america came in lower than expected. mondelez says the price hike helped improve its margin last year but sees a softer demand ascob supers are cutting back. it was a massive outperformer over almost all of the food stocks. a little bit of profit-taking relative to what the rest of the groups have been doing. shares of retailer h&m tumbling. the company said daniel erver will take over. you can see the stock falling there, almost 10% in the early trade. nikki haley pulling in a

reported $1.5 million at her fund raiser yesterday. cliff asness, ken langone, stan druckenmiller were there. she has ten more events including one in miami with the aforementioned bernie sternlicht and next next to donald trump in palm beach. she has raised more than $5 million since her loss in new hampshire. an interview with cnbc yesterday, scitadel's ken griffn says he has supported nikki haley. >> i support nikki haley. she's a tremendous candidate. i would wish on both sides we would have a candidate of a younger generation. big picture, trump's running on a record of success. his four years were a really good time for policy in america.

>> trump's comments were that haley's donors would be permanently barred. h he's already sold 15,000 of them. after the griffin comment, griffin had given her campaign $5 million. unclear whether that was before new hampshire or afterward, but that was a huge gift from ken griffin. >> traditionally, and you and i have covered politics for a long time, you would see the amount of money going into campaigns matter, that if you were outraising your opponent, you got a significant advantage. i'm not sure that that's the case anymore. if you look at how much money nikki haley was able to bring into the campaign and then failed to win iowa, failed to win new hampshire where she had her best shot, and we'll see what happens in. >> announcer: bnew hampshire, bt i'm not sure fund razzing

matters as much as passion and narrative and just hangover. >> donald trump has changed a lot of things about politics, and the whole donor dynamic is obviously one of them. we remember hillary clinton vastly outraised trump. i don't know that money is going to change the dynamics of this choice. most people know biden, they know trump. they have strong opinions. i don't know that advertising is going to change their minds. what's different about this, is after nikki haley's performance they would stop giving, but they're burning $100 bills at the altar of nikki haley out of anger over donald trump or think suddenly it will make her a possible candidate. right now it makes no sense. she's staying in the race because she's stagetting money. they're giving her money because

she's staying in the race. she's got donors continuing to fund her. the other thing is the campaign contributions to trump over the last few years, you've got now his political pack pacs help fund his legal defense. those donating trump now not only believes in the power of using their donation to help re-elect him but their power to help keep him out of legal hot water. >> his strength when it comes to campaigns is the millions from small donors. relying on the mega donors, there's only so much they can give before they max out. that's an enduring advantage, i think, over biden as well. >> do you think that's potentially an achilles' heel raising money from billionaires and being seen in new york city? >> absolutely.

as both parties become more populist, you know, you don't want to -- trump has made a lot of this. all the establishment and elitist love her, and it's true. coming up, the city's controller joins us next to get banks to disclose their plans for clean energy versus fossil fuels. "squawk box" will be right back.

three of new york city's pension funds are pushing for some of the largest u.s. banks to disclose their financing ratios of clean energy to fossil fuel. joining us now, new york city controller brad lander. brad, good to be with you this morning. thank you for being here.

>> good morning. thanks so much. >> can you explain to me how going -- asking bank of america, citigroup, jpmorgan chase and royal bank of canada to disclose their ratios of clean energy to fossil fuel financing, how does that help the investments that new york city makes for its pensions? >> so, look, new york city's investments are long-term. first year teacher, we're going to pay their retirement decades out from now, almost toward the end of the century. so, climate risk is financial risk. we got to make the energy transition from fossil fuels to clean renewable energy or we're going to burn it up in our portfolio as temperatures and seas rise, banks know this, but they aren't being transparent and rapid enough in that energy transition and that's why disclosing their ratios, financing renewable energy versus financing fossil fuels and making the transition, you know, quickly enough to matter is what matters to new york city

retirees decades out. >> there is a survey that shows the energy sector investment needs to reach 4 to 1 by 2030 and in 2022, it looked like the banks were getting an average ratio of 6 to 1. if you get the banks to come out and disclose that ratio, will that influence the way you make investments? can you foresee the pension actually changing their investment strategy based on those ratios? >> yeah, let's be clear, right now it is .6 to 1. they're financing twice as much in fossil fuels as they are clean energy. and we got to get them to finance four times as much renewables, that's what bloomberg new energy, the former bank of england, the international energy agency says is necessary to keep warming below 1.5 or at least 2 degrees. and so, yes, we want all these banks to disclose these clean

energy ratios and we are going to be taking it into account as we pay attention in the coming years to where we invest. we have done some selective die investments, for example, of fossil fuel reserve owners, but mostly what we want to do is engagement, to persuade the banks, the utilities, the auto companies, that represent most of our portfolio overall and who need to decarbonize in the real world on a reasonable timeline, with good data, and really that's all this is, is basic disclosure of what your plan is for your energy transition, just like bloomberg new energy, just like mike carney, just like a lot -- the international energy agency says is necessary for us to prevent warming at a level which not only won a catastrophic global impact, but global impacts on our portfolio. >> they said in november that carbon taxes, public investments and subsidies, they're all inflationary.

i know that we're concerned about inflation. i know that the people who contribute to pensions in new york city are concerned about inflation. what is your response to that? >> look, the nice thing about getting people to invest more in renewable energy and increase its supply is that over time that energy is cheaper, that's why its price has come down so rapidly if banks will continue to scale up their investments in solar, in wind, in renewables. we'll see the price of energy come down over time and that's why we really want to see them scale that investment up. >> brad lander, have a great day in new york city. thank you. >> thanks so much. great to talk to you. all right, coming up, the countdown to today's fed decision. we'll tell you what to expect straight ahead. plus, nasdaq set to report. we'll bring you the numbers and a first on cnbc interview with ceo adena friedman. "squawk box" will be right back. hi, i'm greg. i live in bloomington, illinois.

i'm not an actor. i'm just a regular person. some people say, "why should i take prevagen? i don't have a problem with my memory." memory loss is, is not something that occurs overnight. i started noticing subtle lapses in memory. i want people to know that prevagen has worked for me. it's helped my memory. it's helped my cognitive qualities. give it a try. i want it to help you just like it has helped me. prevagen. at stores everywhere without a prescription. it starts with a grill. but it becomes so much more. an extension of your home. not just a weekend retreat, but an everyday getaway right in your backyard. newage makes it possible with beautiful all-weather cabinetry, grills and appliances that transform your backyard into a complete outdoor kitchen. visit newageproducts.com to book a free design consultation and create the outdoor living space you've always wanted. at morgan stanley, old school hard work

meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. we really don't want people to think of feeding food like ours is spoiling their dogs. good, real food is simple. it looks like food, it smells like food, it's what dogs are supposed to be eating. no living being should ever eat processed food for every single meal of their life. it's amazing to me how many people write in about their dogs changing for the better. the farmer's dog is just our way to help people take care of them. ♪

good morning. nasdaq futures sliding after google parent company alphabet and microsoft results are run down. what to watch in the trading session. boeing set to report in the hour. the shadow of the 737 max grounding, the reaction is straight ahead. and verizon tech layoffs have workers rethinking their career. we'll discuss the impact of a.i. and where investments are being made as the second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" here on cnbc. live from the nasdaq market site in times square, i'm mike santoli with contessa brewer and robert frank. here are the futures this morning. mentioned nasdaq under pressure, still indicated down a little more than 1% after some of the slightly disappointing earnings, microsoft, alphabet, amd, though rotation into nontech dow indicated higher as are the small cap russell 2000 futures. two major tech earnings after the bell last night weighing on the nasdaq this morning. shares of both alphabet and microsoft are lower this morning. the tech giants managed to beat wall street expectations but ad sales at google came in a little light. microsoft's revenue forecast for its current quarter wasn't strong enough for analysts. and the federal reserve is due to announce its latest interest rate decision on -- today and is widely expected to keep rates unchanged as it is done at its previous three

meetings. it comes as recent economic data including the personal consumption expenditures price index, the fed's favored inflation gauge, suggests pressures from higher prices are easing now. investors are hoping the central bank will provide them some hints about the path ahead for monetary policy and interest rates in the guidance issued alongside the rate decision and fed chairman jerome powell's post meeting news conference. that decision will be announced at 2:00 eastern time today. cnbc will, of course, have full coverage. checking on the treasuries now, you can see the ten-year heading lower at 4.028% and the two-year, 4.322% is the yield on that. there is so much expectation here that we're going to get more of the same from the fed today that the attention is likely to all be focused on the nuance in the language. >> like one word that everyone -- >> there always is, yeah.

they're probably going to change the statement, so we have to do a little bit of -- you have to do some criminology of what happened in the room with the committee. i think a hold here. we keep march in play. we'll see how the market absorbs that. our next guest says that half her market call for 2024 for some upside has already been achieved with the s&p 500 hitting new highs in recent days. joining us now, head of u.s. equity and quantitative strategy at b of a securities. great to see you. has the market behaved as you expected in terms of what's working, what's not working, how we are digesting the economic resilience, the fed outlook? >> you know, i think what has been happening over the last couple of days is that -- is sort of what we were expecting, which is these big tech companies are great companies, but they're priced for perfection. they're meeting, they're beating a little bit, but not enough to get everybody enthusiastic because we are already at a point where these stocks are

heavily owned by the buy side, they're relatively expensive versus the rest of the market. so i think from here the idea is can the s&p 500 still move higher without this magnificent seven leading it, and i think the answer is emphatically yes. in fact, we ran the numbers. and even if the magnificent seven just flat lined for the rest of the year, but the rest of the market essentially grew into their long-term average earnings multiple, that would put the s&p 500 at 5100 by the end of the year, which is a little higher than our target. so, you know, our view is that it is pretty easy to get a little bit higher than this without the magnificent seven or big cap tech leading, but that's the question we get, nobody asks, you know what do you think the s&p 500 is going to do. they ask what do you think the magnificent seven is going to do this year and that's where the laser focus of investors are. >> the magnificent seven, ro roughly 30%.

the 70% you're saying if it essentially gets to where it might typically get. i guess the question is do we have the conditions underwhich the rest of the market can take advantage of the fact that the economy is doing okay, earnings reflected higher. there are mixed results in the current reportings season in terms of winners versus losers. >> exactly. this earnings season is pretty good. it is not amazing, but we're still tracking a beat. i think what is interesting, though, if you think about the fed and what they're likely to do over the next few quarters, so our view is that the fed starts to gradually cut interest rates, maybe not as much as what the market was anticipating earlier this year, but think about where the retiree assets sit. they're basically in cash, which is yielding 5%. they're making a nice spread between cash and their mortgage, you know, their refied mortgages, which are around 3. if cash yields start to drop, i think there is a wall of money that could move into equity

income. that's not the magnificent seven. maybe it is a few of these guys, but it is mostly utilities, real estate, other areas of the s&p 500 that haven't really caught a bid. and i think that's where the action is. so we actually have this new theme called the magnificent 85. and this is -- so bear with me, i know it is not as sexy as the seven, but it is basically -- >> not a movie. >> no movie. not yet. exactly. it is coming. >> a sequel. >> but, these are 85 companies, currently 85 companies in the s&p 500 that offer cash or dividend yields that eclipse cash yields over the next three years, assuming we're at peak fed funds rates. so, we're in an environment where there are a lot of income opportunities sitting in the s&p 500 because dividend yielders have gotten so beaten down, and i think that's where the money moves. i think that's the new theme for the next few years.

>> and more specifically, you think that there could be opportunities in banks too. >> i do, yes. i think this could be the year for banks, finally. and i mean, i guess when i look at banks, they really have been under pressure by a number of factors. one is this regulatory burden. two, they have been, you know, we have been in a growth cycle and there is not a real strong growth angle for banks. but i think if you look at where we are now, the yield curve is doing something -- it is in that mode which has historically been good for banks. banks are very, very underweight, relative to the rest of the market and if you look at the s&p 500 bank sector, it is pretty high quality. these are regulated companies that are potentially, you know, more capitalized and healthier, have lower earnings volatility than the s&p 500. so this is a new bank sector, this is not 2007. this is what i would consider a higher quality source of cash return. this could be the coiled spring this year because i think when you look at the financial

services sector, it has been sold systematically every year since, you know, probably around 2017 or '18. i feel like there is a potential for rerating on quality, cash return, you know, a lot of these angles that haven't really been that popular for a while. >> and going back to the '85 and the broadening of the market which people had been expecting since late last year, that -- >> that happened for a nanosecond. >> it did and then reverted. and i guess a lot of that base case depends on stronger earnings. but if you look at projectings for gdp growth this year, if you look at all the layoffs we have seen, u.p.s. yesterday, getting to be pretty significant numbers, do you think we'll get earnings growth, i don't know what the street is expecting, but certainly in the double digits, it is hard to square that with what we're seeing for the macro economic conditions and the fact that the labor market is just slowing, maybe not as much as some people had worried about, but certainly slowing. >> yes. so, things are slowing, but i

think they're not collapsing -- >> do you think they'll reach the double digit earnings targets? >> our forecast is a little lower than bottom up consensus. we're looking for 5%, 6% earnings growth this year. but the point is that earnings bottomed mid last year on a stronger trajectory and as long as we don't see the consumer roll over, and, you know, kind of really stop spending, and i think jobs are critical here because u.s. consumers have insatiable appetites and they, you know, they really only stop spending when they lose their source of income. so that is what we're watching and so far, you're right, layoffs have been, you know, kind of amping up in conversations and on calls, but we're not at a point where the labor markets are showing real signs of fraying. i think we're in a structurally tight labor market environment. we have tight immigration. we have this great resignation during covid. there is not enough people in the u.s. to fill a lot of the

jobs. so the layoffs have been most acute in silicon valley and wall street. but the rest of america seems like it is doing okay. there are some layoff announcements but not enough to make us worry at this point. >> i know it is semantics as to whether we're in a late cycle environment. midcycle. it would seem to me for most of those companies gearing to the economy, for them to be a recipient of this rotation, you have to have confidence spread that we averted a risk. >> i don't think there is a reason to question that. if you look at consumer trends, they're slowing, but not rolling over. if you look at the s&p 500 and earnings growth, it is much more tied to goods than services. and i think what's hitting the economy is we're seeing a normalization in services demands. we have all gone to europe and we have all, you know, we have all done our travel for -- since covid. i think that's where you're seeing the slowdown, which hits

the economy more than it hits the s&p 500. so that's why i feel pretty optimistic about s&p 500 earnings. i think we're in an environment where we're all talking about everything that could go wrong, which is bullish. >> yeah, i agree with that. savita, great to see you. >> thanks. coming up, adena friedman talks about the ipo landscape, the rally in tech stocks and the exchanges quarterly results. and later, boeing set to report results in the shadow of the 737 max 9 grounding. the numbers and the market 'lbeigtrghahd.ea wel rht back.

that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first.

godaddy. so, you've got the power of xfinity at home. now take it outside with xfinity mobile. with a partner that puts you first. like speed? it's the fastest mobile service around... and right now, you can get a free line of our most popular unlimited plan. all on the most reliable 5g network nationwide. ditch the other guys and you'll save hundreds. get a free line of unlimited intro for 1 year when you buy one unlimited line.

and for a limited time, get the new samsung galaxy s24 on us. some big deal news this morning, "the wall street journal" reports that cigna is selling its medicare business to healthcare service corp. for $3.3 billion. deal talks were first reported earlier this month. the deal would mark a major expansion for hcsc, which the

parent company of blue cross, blue shield plans in five states including illinois and texas. nasdaq quarterly results out this morning, ajustdjusted earn, net revenue grew 23% to $1.12 billion, which includes a$148 million net benefit from acquisitions and divestitures, including the recently completed acquisition of adenza. for more on the tech rally and more on the nasdaq business, let's bring in nasdaq ceo and chair adena friedman. good to see you. >> great to see you. great to have you here. >> yes, great to be here with you. talk a little bit about the business. the fourth quarter, you know, sure, equity markets rallied, not a lot of ipo activity, somewhat muted on the capital markets side, that's obviously a component of your business, not the majority. give me the profile of nasdaq and what was driving its business leaving 2023. >> we're proud of the continued results we deliver to primarily

our clients and our shareholders. i think we had 7% overall organic growth and 9% growth in our solutions businesses, which is -- continues to show strong diversification and strength across the franchise. key contributors this quarter were index business and continued strength in our antifinancial crime business for 25% growth there. and then i think overall we had 11% organic eps growth. now, 2023 was a big transformational year for us. we reorganized around our divg divisions and going into 2024 we have another growth pillar to drive us forward as we help our banks solve more and more of the challenges they face in the financial system. >> so this is serving financial services firms, risk management type software and tools. what is the unifying vision of, you know, is it a customer base that you feel like you have, you know, a real franchise with, is

it just in general participating in the flow of financial related software and network services? >> actually we take the foundation of us as market operator and we have three key themes that underpin being a market. provide liquidity, transparency and integrity. as we have grown and expanded nasdaq, we have focused on those three key pillars. we provide market technology to 130 other markets and now with adenza, we provide risk management technology that allows banks to put more liquidity into the system. with transparency, we have corporates and investors, providing esg tools, index products, data and analytics that help them navigate the capital markets. and then in the e suite, antifinancial crime suite which helps them manage their regulatory reporting and all of the management and criminals in the system. it is aligned with us as a

market operator but being a deeper partner to our clients across the suite. >> mike mentioned ipos and we're seeing a fairly stable outlook at this point. bankers say the pipeline looks good, not just for m&a but also for ipos. i like to see liquidity events and we didn't have many last year or the year before. what does that pipeline look to you and is it surprising that we're not really seeing much activity? it is still january, but what is the second, third quarter look like? >> i would say we're off to a slightly better start this year than last year even. but we are seeing a lot more interest in coming public this year, 85 companies on file to list on nasdaq, assuming that the markets are receptive, and as you know, investors need to have a pretty good understanding of what the future looks like in order for them to underwrite risk and i agree with you, more normalized inflationary environment and the cost of doing business is more known and now you know the cost of capital

isn't going to go up and there is potential it comes down, that gives them more confidence too. our view is that the markets will be hopefully a lot more receptive, the economy -- >> are there any names out there you can mention that we might look out for in the next six to nine months. >> i would say we have this new ipo pulse index we created that tries to provide a leading indicator what the ipo environment is likely to look like and it is indicating over the next six months we should be able to see a real pickup in ipos. that's consistent with the conversations we have been having with companies as well. >> so exciting. you mentioned financial crimes several times. the nasdaq's 2024 global financial crime report, it is stunning that you've been able to quantify $3 trillion in illicit funds makie ing its way through the financial system. what kind of a headwind does that create for global business.

>> it is kind of stunning, isn't it? the second part of that is that there is also a half a trillion dollars that is lost in fraud. so, when we work with the banks, this is a huge problem, a problem for law enforcement, a problem for banks. and frankly no single bank can solve it on their own and law enforcement can't solve it on their own, so the need for collective action is very significant and that's sort of the big part of the report. also the ability to use technology and data, so, you know, a bank can only look within their own transactions, but criminals don't bank in one bank. one of the great things about our solution is that we take data across 2500 banks and create a consortium data link that we use a.i. tooks and look at specific criminal behaviors. someone who is perpetrating elderly fraud is different than a human trafficker. they behave differently. so our algorithms allow us to look at specific criminal behaviors, be more effective in rooting out criminals in the system. but it is such a big problem.

it will be a continuing drive for automation and innovation. >> what is your perspective on how a.i. and for that matter crypto complicates the task of trying to monitor illicit funds? >> well, actually, i would say that whether it is government or crypto, the problem is the same. it is a matter of making sure that everyone takes their responsibilities very seriously to root out the criminals, to partner with law enforcement where necessary, to make sure they understand how important it is to be vigilant constantly on trying to root out criminal behavior. but our solutions work across crypto and government, but at the same time it is not really how it is done, it is really making sure you're just focused and constantly vigilant on rooting it out. >> you mentioned that, you know, last year was transformative for nasdaq in the sense of the m&a. that came out of -- it was previously owned by private

equity. i'm wondering about the areas you focus on, if i look at the publicly shared prices of the index providers like the mscis, fico, one of the craziest stock charts we have, it is going to the moon, this idea of this repeatable revenue stream from financial related data is in demand. does that mean that things are too expensive to acquire or how do you think about filling out the portfolio? >> i think, first of all, we really do -- despite the fact we have been doing acquisitions, we spend a lot of time on our group, but our business is data driven and that means in the world of automation, digitization, it is in high demand. when you think about the ability to execute orders in the markets or navigate the capital markets more successfully, it is all about the data. so, those who have what i call gold source data, proprietary

data sets are ones that especially in the world of a.i. i think are going to benefit a lot. i think investors understand that. with the nasdaq, we have market data, we have antifinancial crime suite of data that is quite unique because it is across so many banks. and then we have proprietary data for asset managers that really is a unique data set and investor relations. so, we are saying, how do we take that automation and apply to the data sets in unique ways to make all of our clients do their job more efficiently and efficiency is return. if you can deliver and rely on that, you have constant demand for your products. that's across the entire sector is information businesses are just, you know, also have a really strong cash flow that comes off that consistent cash flow. investors -- it is a good investment. >> i always point to those stocks when people say, everyone is obsessed with tech or the magnificent seven, which are nasdaq companies for the most part because it is more of the underlying business dynamics

that people love, which is the, you know, the data, utility type. >> the data utility and thinking about applying digitization to that. partnering with those technology companies to really unlock potential of that data. >> adena, great to see you. >> thank you. coming up, companies in the tech sector have been on a layoff spree as they shift their investment strategies to focus more on a.i. will the move by amazon, google and others reduce future demand in the space? we'll discuss that. look at the futures now. you see the nasdaq 100 futures still down about 1% in the premarket, s&p 500 off by a bit less than half a percent. dow indicated higher by 55 points. >> announcer: time now for today's aflac trivia question. microsoft's first headquarters was located in what city? the answer when "squawk box" returns. oh, charades! - okay! - love it! umm... first word. - tonsillitis! - nostril! uh-uh...

bill! uh-huh... - hip-hop! - limping! mmhmm! medical bills! uh-huh! - pancakes! - cash! who pays you cash when you have medical bills? grrr! no idea. [tapping] gap! the gap left by health insurance? who pays cash to help close that gap? aflac! oh, aflac! get help with expenses health insurance doesn't cover at aflac.com pictionary?! ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

>> announcer: and now the answer to today's aflac trivia

question. microsoft's first headquarters was located in what city? the answer, albuquerque, new mexico. in 1979, the company moved to bellevue, washington, before relocating to its redmond corporate campus in 1986. coming up, boeing quarterly results and other stocks on the move in the premarket. as we head to break, here is a look at the premarket winners and losers in the s&p. take a look at paramount, up 17%, that's on the report that byron alan has made a $14 billion discussion, i don't know if it is a formal offer, i don't know where the financing is going to come from, but a lot of discussions around, you know, possible bid there. that, of course, follows that report that skydance may be interested and so a lot of action around that stock. "squawk box" will be right back. i think i'm ready for this. heck, yeah!

with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. (applause) here's to getting financially ready for anything. and here's to being single and ready to mingle. who's ready to cha-cha?

7:30 a.m. in new york city.

and boeing quarterly results are just hitting the wires. let's get to phil lebeau who is looking at the numbers. hi, phil. >> hi, contessa. this is the beat on the top and bottom line for boeing with the company reporting a smaller than expected loss of 47 cents a share. the street was expecting a loss of 78 cents a share. revenue coming in better than expected at $22.02 billion. and then the numbers within the numbers in the fourth quarter, operating margin positive, 0.4%, compared to negative 3.2% in the fourth quarter of '22. free cash flow, $2.95 billion. that is a little below where they were fourth quarter of 2022. but more importantly, they do hit the guidance for 2023 free cash flow of between $3 billion and $5 billion, $4.43 billion. and they are taking a charge in the defense group of $139 million. now, for what's really driving

the stock today, boeing's guidance, the company is postponing its 2024 guidance in light of what is happening with the 737 max as the company is wrestling with the safety culture issues that are front and center, which is now capping max production 38 per month. remember the faa said it needs to get the faa approval before it can increase production. 787 production has hit 5 per month. boeing is not changing, nor is it reaffirming its guidance for 2025, 2026. remember, that guidance was to have max production hit 50 per month in the 25, 26 time frame, with $10 billion in annual free cash flow. and, again, the company not mentioning it all in this earnings release. so they're not pulling it, but they're not reaffirming it. no doubt this will come up on the conference call with analysts a little bit later on this morning and a note to the

employees here at boeing, ceo dave calhoun said while we often use this time of year to share our -- or update our financial and operational objectives, now is not the time for that. we will be talking with dave calhoun, cnbc exclusive, you do not want to miss it coming up at 9:00 a.m. on "squawk on the street." we're going to be talking about the fact that they are not mentioning this long-term guidance, even though they have pulled their guidance for 2024. and in the fourth quarter, boeing doing better than expected, with a loss of 47 cents a share. the street expecting 78 cents a share loss. guys, back to you. >> we watched the shares as you've been talking, which were negative in response to this. now turning positive up by almost half a percent. on the call, what are analysts likely to focus on here, phil? >> the guidance. if you're not pulling your guidance, you're not reaffirming it, does that mean that dave calhoun and his team believe, look, it is only a relatively

short time before we believe that we can show to the faa that we have put the safety protocols in place so that we can increase monthly production of the 737 max? that's it. that's the primary question that dave calhoun and his team will be facing in terms of what analysts want to hear about. >> all right. phil lebeau, there you have boeing up now 1% and we'll continue to monitor that throughout "squawk box." let's get to dom chu with a look at the premarket movers. >> good morning, contessa. we know that alphabet and microsoft earnings reports are shaping the premarket narrative with boeing this morning. but outside of those reports, we have other big earnings names movers. we'll start with advanced microdevices, those shares down roughly 4.75% off the premarket lows by the way just around 700,000 plus shares of trading volume so far. the computer chipmaker reporting profits in line with expectations on better than

expected revenues, but the outlook for their current quarter revenues missed consensus estimates and amd says it expects revenue in its data center segment to be flat on a sequential quarter over quarter basis. so that's driving the downside move down nearly 5%. on the consumer front, shares of starbucks which are up roughly 3.5% or so, nearly 100,000 shares of volume. the coffee giant did report quarterly profits and revenues that both came in shy of estimates. a miss on both. but there was some optimism that the results weren't worse. now, global sales growth that established restaurant locations at so-called global comp store sales really kind of came in below estimates because due in part, anyway, to competitors in china turning toward discounting to gain market share and its second biggest market. starbucks up 3.5%. and by the way, we will get much more on that story later on this morning when starbucks chief financial officer rachel ruggeri joins "squawk box" at 8:30 a.m. eastern time, a big interview there. and we'll end with tesla. electric vehicle giant is now

just down 2.5% over 600,000 shares of volume. down partly in line sympathy with the rest of the down tech tape and down perhaps on some of the headlines of a court rejebting ceo elon musk's pay package. but also out this morning as well, analysts at baird named tesla as a fresh bearish pick, citing that pay package rejection acting as an overhang on the shares and potential impacts to its current quarter delivery numbers given the disruptions we're seeing. big names on the move. i'll send things back over to you guys. >> you would think if tesla doesn't have to pay elon as much, they'll get back some of the money they had as part of the pay. you would think that would help the stock. i'm glad you mentioned the other drivers of the stock this morning. just purely on the pay package issue, you would think that would help the shares. >> it also depends, robert what does it mean for elon musk? does it improve his focus on tesla or not? >> i think he'll be okay.

dom, thanks so much. up next, capitol hill trying to get a vote as early as today on a bipartisan bill to expand the child tax credit to provide some tax breaks for companies. we'll discuss after the break. futures ahead ofdp a private payroll data. "squawk box" will be right back. a force to be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently.

you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today.

house leaders have notified members that the $78 billion tax package will get a vote today. joining us now to break down the new bill, gene ross covers tax policy at the center for american progress and ro rohit kumar. thanks so much for joining us. jean, i want to start with you. there has been some analysis from i guess we could say some conservative groups that perhaps show that this could lead to some full time workers switching to part time because of the child tax credit or even some people not working altogether. an estimate that says maybe net 150,000 workers could stop working because of the incentives from this child tax credit. what do you think are the potentials for that?

>> i think we should look at the upside of these improvements, which is 16 million children, more money in the households helping parents to pay the rent with food on their children's table. there is a large body of research on the question of what do these credits mean for work, both the child credit, long time earned income tax credit and the academic research firmly shows us there is virtually no measurable impact of work, even with the much larger expansion of the credit in 2021, that was true. so i think that's really the cover-up or smoke screen for people who oppose expansion of this credit overall. >> yeah, it is hard to imagine, though, since the refundable portion of the tax credit is now so much larger, there is estimates that i think you can't argue with that there is an equivalent of a 14% tax rate

increase for switching from part time to full time work, how does that not have any impact? >> well, we're still looking on the margins. not enough money for a family to live on. we're working, for example, single parent of two earning $22,000 a year as a child care worker, $675. that's not enough for somebody to decide they're going to move out of the workforce. it is enough to buy winter clothes for those two children, can buy school supplies, help make ends meet for a family. >> it is not surprising that congress, when they agreed, they agreed to spend more money. the concern that i have that really hasn't been looked at much, i think, is the pay for here, which is, of course, the employer retention tax credit.

are you confident that we're going to really get a pay for for that through this retention credit? >> i am. look, this program was only estimated to cost $50 billion when it was first enacted. and then congress loosened the eligibility requirements, in the midst of the pandemic. and so now the claims have rushed in at a volume that was frankly never anticipated. this might be, to my mind, the most real pay for, the most real offset that congress considered in a generation. if we don't make this policy change, if we don't say, look, amended returns have to be filed by today, then the irs is going to pay out tens and tens of billions of dollars of these claims. some will be legitimate. some might not be. but the truth of the matter is this was a pandemic era program and if you're around today to file an amended return, you made it.

congratulations. and clearly you didn't need this money to survive and i think that's the judgment that congress is making. >> but isn't a lot of that money and there is clearly -- there is an estimate that 95% of the payments on this program are fraudulent. which also tells us that maybe all the money is already out the door. so the idea that you're going to save an additional $79 billion in the next ten years from this, especially because in order to get that back you have to prosecute -- irs has to go to court to prove fraud and to get that money back, that could take years and years and years just to get back. and this legislation was so poorly written and so broadly written for this tax credit that it is highly possible that no one actually violated the law. they just -- it was just a badly written piece of legislation. >> no, no. this is not the issue goving bof going back and getting claims -- >> they're saying that some of this money will be gotten back from the irs prosecuting this

and getting money that has been fraudulently taken as a tax credit. >> look, yes, very small amount. the vast majority of the $80 billion that will be saved by making this change is by saying all amended returns have to be filed by the end of january. if we didn't make this change in law, people could continue to amend returns and file until april 15th, 2025. so they're cutting off a year and change of additional claims that will be filed. it is those claims, the fact that those claims now will no longer be considered that the savings are generated. some of it might come from prosecuting fraud and things like that, but really it is shutting the program down effectively a year and a couple of months earlier than it otherwise would have been shut down. >> it would have been shut down today. >> yeah, today. >> one last question on the business side of this. you make a great case how this helps those most in need, low income households and taxpayers. on the business case what was interesting to me is you're rewarding businesses for things they have already done and so perhaps this stimulative element of this tax change may not be

that strong. what do you think of the business givebacks on the other side of this legislation? >> yeah, look, these are the real growth drivers, the long-term economic growth drivers of the proposal. the retro activity, especially for the treatment of research expense, there are thousands and thousands of small businesses that just had no idea this change had happened. and when they rolled up to file their 2022 taxes, got hit with a huge tax bill. not just sort of, like, this is a pain, or i have to delay an r&d project. people are dipping into their retirement savings. and the relief, if congress enacts it, will sort of solve the wound for those businesses, they can go back to hiring, go back to doing r&d. these are the life blood of the economy and republicans are getting not only that, they're getting a child tax credit that lives by their 2017 standard in terms of eligibility criteria, incentive to work and the like, so, look, every republican that i've talked to feels pretty good about the terms of the

transaction and i think we're going to see a big bipartisan vote this evening in the house. >> and, jean there was an effort by republicans to get that salt cap lifted as a huge concern to those in blue states like new york, new jersey, california, lifted from $10,000, that really, once again, fell by the way side. do you think that has any chance in this legislation or anything coming up? and should it? >> fortunately it will not be part of this package. i think that should be considered separately. 2025 would overwhelmingly benefit the highest income households. i think this is a modest package, it is a compromise package. we think that the business provisions should have been paid for by lowering the corporate -- raising the corporate tax rate that they were initially designed to help pay for. but this is a good package and deserves a big vote. >> all right, and they're going to vote on it, maybe, today and

get something done. that will be interesting. thanks so much for your time. we appreciate it. >> interesting. still to come, layoffs in the tech sector mounting as companies like google and microsoft shift their investment focus to a.i. will the move reduce future job demand in the space? that's next. and next hour, starbucks cfo joins us to discuss the company's latest quarter. that interview in the 8:30 eastern time half hour. "sawbo wl atth. quk x"ilbe right back.

xfinity rewards presents: '1st and 10gs.' xfinity is giving away ten grand to a new lucky winner for every first and ten during the big game. enter daily through february 9th for a chance to win 10gs. with the ultimate speed, power, and reliability the xfinity 10g network is made for streaming live sports. because it's only live once. join xfinity rewards on the xfinity app or go to xfinity1stand10gs.com for your chance to win. in the tech sector, mounting, paypal the latest to announce job cuts slashing around 9% of its global workforce, 2,500 yobs in all. following layoffs from amazon, alphabet, block and ebay to name several. joins us whether a.i. play add role in these cuts, founder of a technology company and great to

see you. >> great to see you, too. >> in terms what's happening with the individual companies. paypal, stock's under pressure. trying to reorient the company. ebay, slowest growth. then the very profitable, large winners of tech that seem to be doing this ongoing pruning. what seems to be driving that? >> totally right. paypal, struggles. google. why are they laying off? whatever you heard yesterday, this is a culture thing. trying to build faster and finding levels within the companies that's holding them back. they need to build faster and understand they're under threat. this a.i. thing is ream, not going away, and can't have people holding them back. they're finding places within the last year places within the organization to trim and get to a place they're shipping faster, taking managers out. engineers skilled for previous generation of technology, they're also leaving to make room for people more skilled for artificial intelligence. >> making room for other human beings who are skilled and in

executing a.i. strategy is not necessarily somehow they're jobs are automated? >> definitely. isn't a moment starting to see a.i. replace engineering at google. absolutely not. it's too can build the new a.i. technology for us? make room for them and room to run within the organization and not held back by managers skilled in the old technology but not able to handle the new. >> there was a lot of, on both sides, what elon musk did with the former twitter, actions like eviscerating the staff and running the business with a fraction of the previous head count. i don't think any other company looks at that and says, hey, great idea. maybe a revelation over the huge growth period and a time of labor scarcity and, around the pandemic, that these companies just kind of added and added and added and preserved more people than necessary to do the work? >> i ask every tech ceo. do you take inspiration what elon does? on the record say, no.

we don't. wouldn't want to do that. group chats. wow, an mays move. love that, how can we -- he cut 70%, 80%. cutting 40%? not that bad. that said a lot of people in sales struggling to make the same revenue number. i don't think any executive is going to cut the way elon cut but they see you can cut a lot of people and still keep the business running. >> engineering getting laid off here, you mentioned sort of more well-versed than the non-a.i. old school technologies. are they finding places in other companies? what's the demand for those workers? and the managers probably even tougher. right? >> absolutely. look, if you are hiring in this environment you spent the last five years in the zero interest rate world trying to poach from google and unsuccessable. thousand the mid-level engineers are shaking free. this is your dream. hold your hand up in this job environment in you're a formal google engineer and you'll get

offers. some companies will be reticent. google viewed as a summer camp you don't have to do much. might be a shock those within google to find new employment. that said, this is a job-seekers' market, right? they can get the work. >> seeing any impact on return-to-office? in other words, at the job market in tech is tight egg more people laid off, perhaps a more imperative for these companies to come back to the office or not part of it? >> loopholes. not coming back to the office, you won't fire them. a two tier thing. ten x engineers don't need to come back, rank and file will. tension there. people going into the office, badging in, going home, working from home. i don't expect to see the mass cuts in return-to-office people talk about. >> quick, those laid off by elon musk lethal over the judge to deny his compensation. what do you make of that? >> elon of making way too much money.

$50 billion is too much. >> look at the value he's created? went from $60 billion in market cap to 650. who's to say he is paid too much? >> $1 trillion in a minute now back to -- >> $50 billion do we not have a problem with ceo pay? in this country? that said, to go this route, go through the court, they said, well we didn't really understand that he knew the fact that they were going to make these benchmarks. come on. they've gone from $50 billion to $650 billion. no one predicts that. if they predicted that he'd be buying more and now saying, okay. he has, tesla stock anyway. fairly compensated. such a ridiculous argument. >> interesting timing that right before this ruling he said, i deserve more shares for this a.i. reason. not about the -- >> maybe knew it was coming. just like, you can't do that. if you're a court, can't retroactively four years of pay

say he didn't earn it. of course he earned it. >> what if had he exercised those options? >> can't do it now. >> and ceo compensation, need a conversation, in this country about that. >> good to talk to you. thanks. >> thank you. still to come, data from adp. numbers and market reaction and starbucks ceo rachel ruggeri arr,ta othths about the latest qute stef e e consumer and different notes they have. "squawk box" will be right back. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq,

a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

good morning. futures mixed on this final day of january. tough tech earnings weighing on the nasdaq and in the pre-market. speaking of earnings you boeing out with new results. speak wig a top analyst about the quarter and hurdles ahead for the company. u.s. central bank afew hours away from its latest rate decision. what do investors need to know? getting into that as this final hour of "squawk box" begins right now. good morning and welcome to

"squawk box" here on cnbc. live from the nasdaq market site in times square. i'm mike santoli along with contessa brewer and robert frank. joe, becky and andrew are off today. look at u.s. equity futures at this hour. pressure on the nasdaq. indicated down 1% and firmed up over the course of the morning. earlier down about 1.25%. now less than 1%. microsoft had beat on earnings last night but a sell the news reaction, has also firmed up a bit. dow you see indicated higher as rotation happens into non-tech, small cap, futures also are firm this morning. treasury yields. take a look. fed day, expecting no change in rates today, but the market's trying to figure out what the message is going to be about the pace of potential rate cuts down the road. 4.024 on the ten year yield that's come in from 4.14 a couple days ago at highs and two year note yield connected to fed policy 4.31. among today's top business stories --

boeing, big quarterly report of the morning. the company posting smaller than expected loss and revenue above expectations. boeing also is postponing 2024 guide innocence light of the problems surrounding the 737 max aircraft. saying, now is not the time for the company to update its financial and operational objectives. don't miss an exclusive interview with dave calhoun in the next hour on "squawk on the street." also going to get deeper into this story later this hour with a boeing analyst. in other news, a delaware judge voigting elon musk's $56 billion tesla pay package ruling the company's board failed to prove it was fair or that board members even negotiated with musk. the judge noting the pay scheme granted in 2018 was largest in history of public companies. shshareholders weren't happy, including the one who brought the lawsuit. current lawsuit, against musk. he may appeal the decision to the delaware supreme court.

like many other companies tesla is iran torpted in delaware. following the ruling musk post add poll on x asking followers if tesla should move that incorporation to texas. and media mowing's bidding $30 billion for all outstanding shares of cbs paramount global. the $30 billion includes outstanding debt. in a statement allen media group believes its bid should be taken seriously and pursued. changes in the entertainment business shares the family that controls paramount to consider offers. another stock to watch today. chubb. the global insurer sees shares rising after earnings beat the street. results helped by stronger underwriting and investment incomes. the company's conference call starts at 8:30 a.m. eastern time, in the pre-market seen shares increase. i want to point out for this insurer, they say the best year

ever. ceo evan greenberg said that it was a blockbuster. they are reporting here for the full year core operating income up 45%. the net income, up 72% year on year. partly this -- >> 72%. >> that's right. partly the because of much stricter underwriting discipline. they are not going out and insuring high-risk customers anymore, or they're charging way more for that coverage. also it what do with interest rates are higher. so fixed income investments are returning more money. and you're also seeing, i heard a lot of people complaining about what their car insurance costs what their home property insurance costs. part of that is, they are starting to get the rate from regulators state by state to charge what they think the risk is worth. we've seen that from travelers reporting as well. in the fourth quarter, helped they didn't have the catastrophe results they, some insurers had

seen earlier. >> like the luxury brand of insurance. i cover high wealth. it you're wealthy that's your inchurns company. those people toned care less about rates and more about the security. a privileged position to be in. it's hard to brand yourself as a luxury product when in a business that really ultimately for people just comes down to premiums usually. >> what we're seeing for instance in florida, people choosing, if you think that you want to insure a multimillion dollar property, you are now going to the excess and surplus lines which brings and delivers a premium into an insurer like chubb or many of them are self-insuring saying if a hurricane hits, destroys this home, i'm going eat the cost. >> more like -- weighing today's fed decision this afternoon 2:00 p.m. expected to hold rates steady. investors sifting through chair

powell's comments. and joining us to talk about this, insurance and banks, bob diamond, urchin capital cio. thanks for joining us. >> good to be here. >> earlier in the year you were right. predicted no interest cuts in 2023. what are you looking at for 2024? >> there can be cuts, but i think we have to take it in the context the economy is actually accelerating. first half last year was about 2%. second half last year was 4%. i think the fed is absolutely delighted with where the economy is, where inflation is. and i think if the fed did cut in the first half of this year, and the economy began accelerating more, and worse, if inflation picked up, that's exactly where the fed does not want to be. so i do think we'll see more neutral language today. i don't think it will be hawkish, but i think the expectation of first half cut rates i think are ahead where

the fed would want to be. >> just because the economy is strong doesn't mean that rates aren't restricted. the real rate, as inflation has come down, is much larger, much higher than it should be. isn't there room for them to cut even if the economy slows a little bit but is still strong? >> i don't think so. i think if the risk for the fed is, you know, accelerating the growth of the economy and inflation. i think as you talked about in insurance, you know, not everyone wants rate cuts. so financial services, insurances you just talked about, they're definitely benefiting from higher interest rates. a lot of savers are benefitting from higher interest rates. most importantly, if you look at the average funds rate since the financial crisis in 2008, it's like 1%. if you look at the average fund rate for decades and decades and decades before that it's more like 4%. so i don't think they're anxious to cut. i think they're prepared, if

necessary, to cut, and i think they have room to cut, which is really important from a policy point of view, but i think we're looking at probably, unless there's a big change, looking at end of the year. >> you think 25, 50 basis points? >> this year 25 to 50 is probably what we're see. i think the markets are discounting more like 125 to 150 by end of the year. so i think the markets are a bit ahead of themselves. not bad news, robert. i think it's because the economy's doing pretty well, and particularly relative to china. we have stronger growth than china relative to europe. i think the ecb may be cutting in april. that's a different situation. they're facing a weakening economy. and somewhat high rates relative to where they've been. i think we could see using monetary policy and easing in april in europe, but i don't see it in the u.s. >> the fed for better or worse, they have their models and they have their stated framework and their models say the neutral

rate for fund rates is well under 3%. 5 3/8 right now. inflation number is reaching 3 to the downside. in other words, started from zero say what's the appropriate fed funds rate for this environment in front of us they probably wouldn't say 5 3/8. is that why the market's happy about the idea kind of these rate cuts would be trimming and even maybe 1995-style, hey, just tweak around the edges so we're not overshooting on the upside? >> mike, i would keep in mind that one of the reasons we've got into this situation is the fed waited too long to raise rates, and they recognize it, and they talked about it. it wasn't transitory. so you know, inflation was up to 9%, and it, it looked like it was raging. i mean, go to double digits. the fed played a blinder. i think right now they're very pleased with -- i think the rest of the world looks at the u.s., see as soft landing of 3%, to

4%, economic growthinflation trending towards 2%. it's great. why get ahead of it? providing support of monetary policy right now has a larger risk of accelerating growth and accelerating inflation and i think they want to keep their powder dry and they're going to have supportive monetary policy when it's necessary. >> the industries that like the rates this high. saw it with travelers, and mentioned chubb, phenomenal equity when reporting earnings. so it's not bad for everybody, even because the market wants them to be lower. how long do you think we can glide in the sweet spot? >> that's the big question. i think the fed will have neutral language. i think they're going to be very data dependent, but to your point in terms of the economy, there are whole sectors of the economy that benefit from higher interest rates. financial services is probably the single best example. seeing it in insurance. seeing it in the larger banks. you're seeing it in the easing of some of the conditions around

regional banks that, you know, had a bad reaction to svb almost a year ago. portfolios are better and i think we're in pretty good position. >> bob, great to have you here. thank you for joining us. biogen holding development and commercialization of its controversialalities humor drug adulon. drew intense scrutiny whether its benefits outweighed its risks. bio general will continue to advantage the alzheimer treatments granted full approve the last year by the fda and accelerate development of other potential new treatments. biogen said the decision to discontinue this is not related to safety or efficacy kearns but because it was unable to find strategic partners or external financing for the program. and the medicare, limiting coverage to patients in clinical

trials effectively cutting off access for most beneficiaries to this expensive treatment. coming up, breaking job data. january's adpm employment, 150,000 versus lasyet ars 164,000. we'll be right back.

we're approaching january's adp report. futures mixed. dow jones industrial up a bit. s&p and nasdaq down a bit. we'll get steve liesman coming up in a bit. yeah. steve? >> thank you very much. robert, thank you. january adp coming in at 183,000 p183,000 -- 180,000. it's a miss. estimate 150 coming in 107. good sector doing okay, plus services doing good. up. and non-pay roll 187,000, friday, including government and private sector as well. so it's always going to be a

little different, but in this case maybe quite a bit different. see what happens. december adp revised down slightly from 164 to 158. i do want to highlight here that, the change in their wage calculations, which jobs stayers got a 5.2% down from 5.4 in december. slowest wage gains since august 2021. job changers, 77772, and h highlighting data coming in at 8:30. employ index something powell watches closely. jobs by business size. small business secretary hear been keeping pace with medium and larger with concern as wages went up. small business would not be able to keep pace, but they have been. up 25,000. medium up 61,000 and large, up 31,000. job growth from expected sectors some from unexpected sectors. leisure and hospitality atop list as throughout the

postpandemic recovery period up 28,000. tl trade, transportation and utilities also doing well. interesting to see the strength there. also strength in construction, but education and health services another perennial sort of job up 17,000 and the other sector down 9 now. contessa, adp viewing more closely to the bls private sector data the past several months. look up here that the difference has been over a three-month period on absolute basis plus or minus 45,000. that's pretty good for kind of forecasting the bls. at least the private sector section. we'll see if that causes some people to think, know what? maybe that estimate for the friday number is a business hotter than it should be. contessa? >> all right. steve, thank you very much. >> going to say, bond yields react add bit to rally. yields's down a few basis

points, stephen and glad people are reading through the friday number. >> steve, stay with us. more on data and bring in adp chief economist. you got, like, a head nod there from steve about the accuracy of the data how it compares to the bureau of labor statistics. give us a sense what this says about the u.s. economy. >> good morning. i think what we're seeing is a solid but slowing economy. you can see that in the jobs numbers. remember, january is going to be an active month in both of these indicators for the ner, and the bls number, because we both read benchmark to the qcuw to meet the number's representative. if you see through the technical update what you see is a labor market that is slowing, particularly in industries tied to services and white collar jobs. there's actually three different narratives going on in this labor market. there's the slowdown in manufacturing that we've seen for the last few months through

2023. there is the resilient health care and education as well as leisure and hospitality. those sectors affected a lot by the pandemic, and then there is the slowdown in information finance and technology in the hiring where hiring was on potential during the recovery and seems to be easing now that we're out of the heated job growth we saw in 2022, early part of 2023. >> we saw a real resurgence in union activity, and pressures for new contracts from writers and actors, from casino workers which had an historic contract come through last year. and then, for u.p.s., and then yesterday they said, okay. we're going lay off 12,000 people. are we going to see the after effects of these historic new contracts, nela? >> well, yes and no.

for adp data, those contracts were built on the backs of striking workers as well as negotiations. now, we measure employees on pay roll. even if striking, weller paid or not they're still on payroll. they're not coming up immediately. look at the broader industry. depends which one, because a lot of industries especially for white collar jobs, maybe even tied to the information sector, you're going to see large firms pay severance, which means not an immediate pick-up in initial jobless claims numbers we all watch every single week. i will point to the premium. steve mentioned the pay growth numbers for job changers and job switchers, from the adp data. that stopped to a low of 1. %. a reference number. it was above 7% beginning of 2023. now it's the lowest in several months, including before the

pandemic. so the gains from switching in this market are very, very low, and it means that the market has cooled a lot since this time last year and the year before. >> well, that's a real switch, steve, from what we saw last year when people got a boost if they left their current jobs for new jobs? >> yeah. i think if you take a step back, contessa, from this data. the thing that you see is, perhaps, just things getting back to normal. 100,000 on the private sector. that's a pretty good number in normal times. remember, we're coming off a two, three, 400,000, as this job sector was still adjusting to the postpandemic period. what you see when you look at the three-month average, for example, of jobe growth in the add mm number an 130,000 or so. adp. hopefully you'll see, get past, nela said, bls data corrupted a little by returning strike workers, leaving strike workers,

that stuff. but private sector number was probably, was stronger because of that reason. it's interesting to see things get back to normal. for the market, and i think mike is really good on this issue here, which is, you see things coming down to normal and how much concern you are that it keeps going down. do we come down or level off? that's what we're watching now. things getting back to normal and whether or not they stay at norm or sink further? >> yeah. all right. steve, thank you very much. nela, thank you for joining us on the numbers. appreciate that. >> thank you. coming up, facebook parent meta under fire from new mexico's attorney general, charges ilg ptefaintoroct children. we'll hear from him after a break. "squawk box" will be right back.

it's time. yes, the time has come for a fresh approach to dog food. everyday more dog people are deciding it's time to quit the kibble and feed their dogs fresh food from the farmer's dog.

made by vets and delivered right to your door precisely portioned for your dog's needs. it's an idea whose time has come. welcome back to "squawk box." new mexico's attorney general is

suing facebook and instagram parent meta from protecting children in onloon abuse and human trafficking. eamon javers joins us way special guest. >> right. a massive social media hearing expected up here on capitol hill today. we are expecting to see mark zuckerberg of meta and i'm here with raul torrez. he is the attorney general of new mexico. mr. torrez, you've been suing meta over thepast several months engaged in an epic lawsuit with them alleging that basically meta is not doing enough to protect children, in some cases actively aware of problems that they have, and not solving those problems in order to protect children. i wonder if you can tell us how your investigation is coming so far and what you're finding? >> well, you know, we initiated this investigation after numerous public reports that meta executives have known for years that their platforms were a breeding ground for ped pedophiles, for predators and

what we did was to create an undercover account and what we found was truly shocking. it was an account that was a fictitious 13-year-old and she was simply inundated with images and targeted solicitations, which, you know, frankly, i found to be shocking, because when i started doing this work 20 years ago, all of this kind of graphic information were, they were in the dark corners of the web and i was surprised as how readily available this was and how easy it was for predators to target underaged children. >> and emails between meta executives themselves talking about this inside the company and in some cases acknowledging, it seems, that they're aware there's a problem. one of those emails talks about using the meta services as a way for pedophiles and other really sick people to find their targets. can you talk to me about that email and what you're seeing? >> well, it's from a senior

executive in the company warning other executives about some of the features that facilitate this kind of targeting and this kind of sexual exploitation of children. but what it really does is demonstrate a pattern of safety officials within the company who have repeatedly raised these concerns. many elevated to highest levels including mr. zucker brg and those recommendations and warnings ignored repeatedly. >> are you saying that mark zuckerberg himself warned warnings of safety of children on his website? absolutely. it's clear to us the warnings issued throughout the company over numerous years have been elevated to the very highest levels. >> mark zuckerberg will be here on capitol hill today. obviously you're going to be at the hearing yourself. >> yes. >> what will you say to mark zuckerberg if you meet him in person today? >> he needs to do the right thing. bottom line, he's a parent. not just a business executive.

needs to start acting like, comply with policymakers and users and business partners. they have the resources and the technology, the ability. they just need to have the will. and they have to have the commitment. what i need to remind him through this lawsuit and i hope policymakers do the same is that we don't just believe in building businesses in this country. we believe in building ethical businesses. >> look, the company says, we're addressing this. they announced just last week a whole slate of proposals that are going to change the way the systems operate in terms of adults contacting children that sort of thing and say, look, we're in a sense a victim ourselves. we're a service that's open to the entire population. there are bad people in the world. bad people will use our service when we see it we stamp it out. what do you say to that? >> should have done this years ago and shouldn't have had to wait until they were sued by myself and other attorneys general from across the country. by their own reckoning nearly 100,000 children a day receive

sexually explicit material or are targeted for sexual harassment. that's unacceptable. >> a couple seconds. last question. what's your ultimate idea here? >> change the way they do business. bottom line. put interests of their users and particularly children front and center and not place their own profit ahead of the safety and interests of the people that they should be protecting. that's the most vulnerable members of our community. >> attorney general of new mexico, raul torrez, thanks for being with us. >> no high hopes he'll hear different from testimony in the past. eamon, thank you for bringing that interview. rick santelli standing by with breaking economic data. the number, please? >> fourth quarter look expected to be up 1% comes in a bit better at only up 0. 9%.

lower is better in this instance. inflationary metric and 0.? b 0.9, the best going all the way back to second quarter 2021. i will caution. i will caution. pre-covid this number was running 0.7 consistently. so even though it is good news and well off 1.4%, which was first quarter of '22 high, the all-time high going back to recordkeeping in '96 it is at least moving in the right direction, and one other thing. last fed meeting, december 12th, two-year note yields were 43 basis points higher than they are now. while ten-year note yields were only about 18 basis points higher. a lot of moves, pretty much lower since the fed telegraph rate cuts for '24. mike? back to you. >> yeah, rick, a busy six weeks since then. thank you. breaking news out of the

treasury. hotly anticipated by the bond market. we have the report. good morning. >> good morning. treasuries refunding plans for upcoming quarter. agency plans to auction 121 billion begins next week refunding 105 billion and raising almost 16 billion. now, they will be gradually increasing those auction sizes for the february through june period but officials say this should be the last quarter they will need to keep increasing. treasury officials say "should be well positioned after april to address changes to the fiscal outlook without further increases." the breakdown, leading more on the shorter-term notes once again. see a $3 billion monthly increase to two year and five year. $2 billion for three year and $1 billion for the seven year each month. the 121 billion overall is an increase from last quarter, but in line with estimates. unlike previous quarters this shouldn't come as a major surprise. the emphasis on the shorter end of the curve, some analysts thought we might have seen more

rebalancing there. treasury officials according to the analyst i spoke with don't want to put too much pressure on the longer weighted bonds. use to be a release, in previous sparked a rout then a rally. see how they react today. >> thanks. coming up, starbucks a key mover this morning on the back of first quarter earnings. after a break we'll speak with the company's cfo. stay tuned. you're watching "squawk box" on cnbc.

fresh, warm hot dogs! when i'm not selling hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. hot dogs! fresh, warm hot dogs! before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot.

starbucks missing analysts profit and revenue estimates for its fiscal first quarter. comp store sales lower across the board and the company lowered its global same-store sales outlook. however, starbucks reiterated full years earnings per share growth guidance and very confident in its china business long term. shares actually higher in the pre-market despite slightly lower than anticipated comp numbers. shares up 5% now. joining us now, rachel ruggeri, starbucks cfo. even as you say you're confident, the company the confident that comp store trends will turn more positive this

year, it's also more loaded towards the coming quarter. in other words, current quarter maybe not as fast a start. what gives you confidence things will move in that direction? >> sure. thank you for having me. good morning, everyone. when i look at our business and our outlook it's base and the strength we saw in our first quarter. first quarter was incredibly strong globally. that was driven by the strength we saw across our most loyal customers around the globe. specifically, to our u.s., our u.s. business drove revenue 9% and that was driven by record growth amongst our most loyal member whose came more frequently and spent more money. that was driven a lotby our holiday, which was successful. we continue to see growth in cold and that drove highest ticket seen in our over 50-year history. so all of that gives us a lot of confidence. we see some near-term, i'd say transitory headwinds, reflective in our guidance, but importantly, we're seeing that our triple shot strategy sun locking efficiencies and so it's allowing us to have the

confidence in reaffirming our 15% to 20% earnings growth, earnings from revenue and as well as efficiencies unlocking through our triple shot strategy giving us confidence on our full guidance for the year. >> you mentioned that you saw good results among your most loyal kwcustomers. p maybe more softness on consumers. how do you look at that? >> we look at a broadly. our brand remains strong across the globe. in the quarter we had our most loyal customers remain loyal. we saw softness in terms of more occasional customers but have robust plans in place and feel confident we'll be able to navigate this dynamic environment. look at all of that, the performance we have as well as the opportunities around our ability to continue to innovate new product offerings which we spoke about yesterday. we have a lot of innovation in

the pipeline that resonates with our customers as evidenced in q1. we saw a record high ticket in the u.s. our innovation drives a lot of our success as well as our ability to continue to increase digital compact bringing more into our rewards program and continuing to open stores, provide channels of convenience. all of that helps to serve our overall business and gives us a lot of confidence that despite there are near-term head were winds, we see ability to be able to deliver well over the long term. >> rachel, we've seen some companies coming out with lackluster results in china and others coming ot overperforming. when you look at china, how are you able to hold on to that premium choice that starbucks reports to be in china for takeaway coffee? >> really comes from in the market over -- we've been in the market for over 25 years and built a very durable business. we have a strong brand.

we continue to be the number one choice for our customers from away from home coffee. and what that does is gives us a leading advantage in the premium market, where we're choosing to play. we have distinct and competitive advantages. we have 7,000 stores highly profitable and in prime locations. we have innovation, coffee-forward innovation resonating with customers. it's driving trial, driven consumption and seeing it resonate with even a younger customer and amplifying our innovation and messages on social media driving strength in our business and continue to believe where we lead today is through the experience that our partners create for our customers. that's other differentiator and worked well for us over the 25 years and we've continued to believe we are best positioned to be ale tble to lead in that space. >> you mentioned strength in the latest quarter on average ticket size, you know, embedded in your comp sales. how much of that is pricing?

how much is the mix? and can it continue at this point if you are, you know, in general company seeing a little more hesitance among consumers in terms of paying up? >> the record ticket this quarter was driven by a combination of annualization of pricing moves taken last year as well as a little new pricing, also driven in it is increased beverage and food attach. that speaks to the strength we've been able to drive through our holiday promotion. through our offerings. it resonates with customers, cold, as an example. 59% of sales this quarter. typically in q1 cold is clovser to 5%. we've innovated in cold around iced chai tea lattes, gingerbread lattes, do incrin incredibly well with ice espresso in an iced format. we believe we'll be able to drive ticket try attach and as well as food. food in the quarter had record revenue in bakery and breakfast.

so we see a lot of opportunity with all-day breakfast and all-day snacking and leveraging our digital program to come more frequently. also to attach in certain day parts. there's a lot of opportunity ahead as we think about how to continue to drive our overall ticket. >> and in terms of overall store growth, i mean, am i rate that anticipated about 2,000 net now stores this year from 38,500 or thereabouts right now? where is starbucks in its ultimate trip to its destiny in terms of overall footprint? >> so what we've cited our goal hit 55,000 stores and we'll well on track for that. despite everything in the quarter hshs a strong quarter. certainly headwinds and specifically in our international market, but despite that we opened 10% of our net new store growth came in our international market. that's 26,600 stores. ebbs collude china, about 7,000

stores, 14,000 stores outside of the u.s. and china. we're continuing to grow. then broadly, we still have a lot of opportunity in the u.s. so when we look at our u.s. business, coupled with our opportunities globally, we feel very confident about our opportunity to continue to open new stores which really drives new occasions but also brings in new customers. >> rachel, appreciate the update. thanks so much. >> thank you. coming up, we go inside boeing's fourth quarter results speaking with an analyst. shares moving higher after earnings up up 2% in the pre-market. reminder heading to break. get the best of "squawk box" in our daily podcast. follow us on your vofarite podcast app and listen anytime. we will be right back.

there are some things that work better together. like your workplace benefits and retirement savings. voya provides tools that help you make the right investment and benefit choices. so you can reach today's financial goals. and look forward to a more confident future. voya, well planned, well invested, well protected.

welcome bhak to "squawk box." the futures right now still showing about ahalf percent loss in s&p 500. driven by the big nasdaq stocks.

nasdaq down 1% in pre-market. dow showing gain of 50%. microsoft, amd and others. >> shareser boeing moving high perp expected smaller than expected loss and revenue above expectations. boeingpostponing 2024 guidance in light of the problem surrounding the 737 max aircraft. in a note to employees ceo dave calhoun said now is not the time for the company to update its financial and operational objectives. joining us now is goldman sachs u.s. aerospace and defense analyst. noah, great to see you today. how important is to do you this pause in guidance? >> yeah. it's important. i think it makes sense. i thought there was a scenario where boeing would have enough visibility and do enough inputs to provide 24 guidance today,

but it's not particularly surprising that they're holding off, because it's pretty early in the process of bringing in the faa, other third parties, to evaluate their manufacturing process and quality control. you know, boeing wants to and should respect that regulators process, and so, you know, today to provide guidance which would have to assume units buy aircraft including the max would be getting ahead of that. >> how much -- sorry. go ahead? important? >> they state at 38 the month on the max for online production rate and 5 a month on the 787. the market and investors can extrapolate where the units can be based on that. and i think that's relatively in line with the consensus. you can get to earnings and cash flow in monetary con sense based on that. an important piece in there, but i think it's makes sense how they have approached it this month. >> how much of that do you think

is calhoun deciding that he needs -- he's taken a far different approach in this current crisis than his predecessor. how much do you think just withholding talking about financial objectives is because of the way it plays out in public headlines? >> yeah. you know, i think part of it is -- a lot of what's happening here is unprecedented. it's hard to analyze. it's hard to predict. so, you know, for boeing to take the approach as they kind of did early with the impasse of the max estimating timelines of faa would come through when they deliver airplanes you end up moving those targets around, changing things a lot, and it just doesn't show the proper level of respect to the process with the regulator that should be there. that's of the utmost importance right now. the company has pivoted to that

framework, and philosophy, as you alluded to, and i hi that's right. boeing needs to get the product quality right. redand more the product is really strong. the airlines want the product they just need to deliver it to specification. that's first and foremost what they need to get and foremost, that's what they need to get right. to take that approach today, spend a few months with the faa, with third parties in the factories getting things 100% correct, you know, the long-term of boeing can be really great if they can just do that. >> okay, so, given that they've posted the charge for the fourth quarter, given, i mean, cash flow here of almost $3 billion, that topped analyst consensus expectations, what did you think of the quarter, and what are you expecting for commentary on the call about the future? >> i mean, the quarter itself looks pretty solid. there's $3 billion of free cash in there. gets them to 4.5 for the full

year. the guidance had been a range of 3 to $5 billion and they had said low end of that. so, $3 billion of free cash in a quarter, it's not perfectly fair to annualize it because there's seasonality, they had some advances timing in there, but boeing will give you free cash flow quarters even at these very low volumes where if you annualize it, you can see the cash flow value and power of the company. there's a cash flow machine in there somewhere if they can just deliver the airplanes to specification. so, that number's very encouraging. stating that they're at 38 on the underlying max rate, 5 on the 787, which we just visited that facility in charleston, and that looked clean, optimized, ready to go to higher rates. those elements of the quarter are encouraging about where the cash flow can go. even the margins are a little bit better sequentially. their services business is really strong. plenty of challenges here, a lot they need to improve still, but

also some encouraging signs here about where the cash flow can go, especially relative to the current stock price. >> all right, well, those boeing shares up 1.5% in the pretrade right now. noah, great to see you. thank you. busy morning for you. a reminder. don't miss an exclusive interview with boeing ceo dave calhoun next hour on "squawk on the street." coming up, what to watch in the markets on the final day of january. we'll get you up to speed as we move closer to the opening bell. stay tuned. "squawk box" will be right back. like a nightmare.

but for one in four americans with disabilities real nightmares happen every day no accessible bathrooms on most flights. 31 wheelchairs damaged daily by airlines. disrupting lives, sometimes for months. so many other barriers to safe travel. change isn't easy, but we can build the world's most accessible travel system. help us make sure airplanes connect everyone. to family and friends. to opportunity. to possibilities. we're easterseals.

♪ a little more than half an hour to the opening bell on wall street. the big event for investors today, this afternoon's fed decision. joining us now on the markets in the big slate of earnings we've seen this week is the portfolio manager at dcla as well as a cnbc contributor. thank you so much for joining us. we had this disconnect last fall between the markets and the fed.

that seemed to narrow quite a bit when powell gave the market exactly what it wanted to hear, that we had that end-of-year rally. do you think he'll give the doves and the bulls more of what they want to hear today, or do you think he might back off some of that? >> i think the important part is a message, and the message is going to be, hey, are we going to stay here for a while, and the next step's going to be lower? or is it going to be, we think we might have to stay here for longer and raise? if he says the latter, i think the markets will not like that at all. but if he says the former, we're in a glide path, looking at the data and the next step's going to be lower, we just don't know when, i think the market's discounting that. but the market is also looking for, hey, when are you going to cut? and i don't think he's going to give us that. >> we certainly heard more of that higher for longer talk from the other fed officials after the powell press conference. what do you think we're going to -- what do you guess we're going to hear from him on that

this afternoon? which direction? >> i think higher for longer just because if he hints that we're going to cut sooner, then the market is going to say, what are we seeing that the fed is seeing and we're not? i.e., we're seeing job cuts, but we haven't really seen them other than tech go far. so, i think to hold where we are, strong economy, inflation coming down, and as soon as the fed sees the economy slowing down, i think that gives them the ammunition to go forward. but you got to preempt that, then i think you're going to get bonds and stocks selling off. >> we're seeing the markets this morning driven a lot by those tech earnings last night. microsoft and google, they were pretty good reports, especially for microsoft. microsoft stock was up a little bit right after that report last night. now they're both under pressure. why are they being punished for what, at least in the case of microsoft, was a fairly strong earnings report, and are we seeing that more broadly with

earnings this quarter? >> yeah, and i think frankly, if you look at last year, last year was the year of efficiency. i think this year is going to be the year of cash flow. both microsoft and alphabet said, we're going to spend more money for a.i. if you said that two years ago, the stock's rewarded immensely because interest rates were zero. now, where interest rates are, investors are saying, wow, these stocks have run quite a bit, so what should we do? let's take some money off the table. same thing happened to google in the third quarter of 2023. stock was down 10% after earnings. i think they have had such a good run, and if investors are looking at cash flow, they're going to take a break, because there are other areas of the market that actually are improving cash flow, and you also have other alternatives, just not kind of the mag 7 at this point. >> what stocks or sectors do you like for the rest of the year? >> defensively, i think health care has great cash flow and growing earnings. going into the election year. commodities.

you look at copper companies. you look at the supply-demand imbalance. i think that's a great opportunity. consumer staples, the multiples have come down quite a bit in the last 18 months, so you're going to get with input prices coming down and pricing holding up, i think there's a lot of value there. and then kwutilities. utilities are still acting as if rates are going up and i think the opportunity to grow there. the market's broadened out in terms of valuation. it's just a cash flow of investors hasn't followed but i think there are maturities. lastly, fixed income, as i'm sure you know, you can actually ladder out whether it's corporate bonds or treasurys, munis, three to five years getting good returns that are higher than what inflation's expected to be. >> i mean, i guess that whole case relies on the consumer holding up in the broader economy. sarat, thank you so much for joining us. >> thanks, frank. let's get a final check on the markets. you see the s&p 500 indicated lower by about 0.5%. most of that driven by those big

nasdaq stocks. a little being skimmed off the top of that big nasdaq rally. dow up 50. small caps, also up. take a look at treasurys. they've rallied. that treasury refunding announcement, nothing scary in there, the market was okay with it. make sure you join us tomorrow. "squawk on the street" is right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. final day of january, fed decision on deck, some wariness around mega cap tech earnings but more signs of wage inflation and does that build the case for a cut? our road map begins with tech earnings, microsoft among the names dragging the s&p lower. delaware judge strikes dow