house. it's thursday, february 1st, 2024 and "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc we are live at the nasdaq market site in times square i'm andrew ross sorkin along with melissa lee and mike santoli. let's show you where things stand after the comments from jay powell nasdaq is up 117 points. this follows the selloff after jay powell signalled a march rate cut was unlikely. >> based on the meeting today, i

would tell you that i don't think it's likely that the committee will reach a level of confidence by the time the march meeting to identify march as the time to do that. that's to be seen. i wouldn't call -- when you ask me about in the near term, i'm hearing that as march. i would say i don't think it's the likely case or base case >> comments during the conference sparking a selloff. dow losing 300 points breaking the four-day winning streak. the index up 1% for the month of january. gentlema nasdaq sliding down 2% for the worst day since october. the s&p 500 posting the worst day since last september down 1.6% treasury yields with the ten-year yield at 3.946. the two-year yield at 4.240. we will talk a lot about the

path for interest rates with former fed vice chairman roger ferguson give the man credit. roger ferguson has been right every single time we have spoken to him for the last two years. >> it was 50/50 before he said those words. >> the odds, if you watch this broadcast and give roger the credit he deserves -- >> sure. we will in a few minutes >> i'm just saying it's been throughout the whole thing an over -- these wild expectations. >> the market gets to the point where you know the next move is down and they project and say conditions will be right for them to do it sooner and more. i don't think that is because everyone has a huge conviction it will be march or june what was interesting yesterday with the comments and pushing away from the march rate cut for powell, they were otherwise

dovish comments. we don't need the data to be better, it needs tostay strong not all of the committee is on board with march they have a higher burden of proof on march he sees the risk balanced with continued higher inflation and weaker growth. the risks for both are not very high it is one of those things where the market took another leg down 1% on the day when big tech is selling offe the community bank news was not great. >> market was looking for an excuse to selloff. this may be one of them. the fed did not say anything the markets did not know i thought what was interesting in the wake of the fed, the market was declining for may, 100%. they are pricing in 50-basis point cuts which seems unrealistic. they didn't take any rate cuts

off the table for the year they condensed them to the back of the year. >> if they want it to be gradual and ordinar orderly, it sho sooner that is one line of thinking long-term yields went down a lot yesterday. 3.94% on the ten-year yield. the longer they wait, the greater chance they wait too long and the economy does have weakness. >> another thing we are not talking about. if you wait too long, you can't lower the rate even if you wanted there will be such an extreme political pressure although i know the fed -- if you are going to lower rates, you need do it early enough in the ball game that you are not close enough to what is happening in the fall. not that it gets discussed we talked to roger about this. it doesn't get discussed in it the room the question is if it is a

little birdie in the back of your head. >> they should cut sooner. >> i know a bunch of very famous hedge fund managers and we all know if you don't start moving early, you will never move because you will feel trapped and you can't. >> goldman sachs was on a march cut. they went to may, june, july, september. that gives you full percentage point of cuts. you are clear of the election and wait until december. >> november is after the election >> right. >> that meeting. you could put one in there as well the new york community bank factored into the session yesterday. it may have factored in the statement with the language vander surrounding the banking system. >> microsoft is up 1% this morning. back to the old playbook see how it works >> p fflight to safety.

the markets turn back to corporate profits as we are full of earnings reports. we get dow with honeywell and merck expected in the next hour. after the bell is amazon and meta reporting as well as apple. we talk to bernstein analyst toni sacconaghi over what to expect from apple. new this morning, the biden administration submitting the first ever proposal to drug companies asking them to lower the price of ten pre-selected drugs. the goal is to reduce medicare costs for seniors and the government this is the first phase of the process. final prices will be set in september. then they go into effect in 2026 the administration is not publicly releasing the names of the specific drugs targeted, but only saying the group for treatments on diabetes, stroke, kidney and cancer and cardio disease which costs medicare $50

billion per year let's talk about washington. the house passing a $78 billion tax package that took place last night. emily wilkins is in washington with more. good morning >> reporter: good morning, andrew that tax package has major benefits for businesses. it passed the house with strong bipartisan support despite seeing a little bit of opposition from some republicans and then some democrats. this proposal is going to allow for the full expensing of research and development and full deductions for capital expansion. these provisions were part of the 2017 tax law, but they expired in recent years. this package expands the child tax credit, not to the level it was during the pandemic, but allow for a regufundable tax credit the chamber of commerce and business roundtable are pushing to pass this legislation now early on in tax season to help

small businesses get the benefits for 2023. utah republican blake morris said not bringing these back would hurt small business. >> never have i seen neighbors of mine say this is killer for my small business. losing the tax credit has destroyed my ability to grow my small business >> reporter: still, the package was opposed by democrats who thought the tax credit did not go far enough and thomas massey thought it went too far. >> what is a refundable tax credit it is welfare by a different name we will give tax credits to people who don't pay taxes >> reporter: despite the very high bipartisan vote in the house, the bill faces a tougher climb in the senate where republicans on the tax committee

has concerns on the bill with undocumented immigrants receiving the benefit. senate majority leader chuck schumer said he is working on the committee to figure out a path forward andrew >> okay. thank you for that earlier in it the day, the capitol hill drama centered around social media. ceos from meta, x, snap chat and discord testified in front of the senate hearing mark zuckerberg was asked by josh holley to apologize to the families in the audience whose children died on social media platforms. >> would you like to apologize f for what you have done to these good people? >> the things your families have

suffered this is why we invested so much and we will continue to make these efforts to make sure that no one has to go through what your families suffered >> it is unclear if regulation will be produced by lawmakers. we have been talking with this for more than a decade we will talk to a whistleblower from fullacebook and zuckerbergs apology. >> i'm interested if this gets mentioned on the conference call probably not, my guess investors live with it and believe nothing will come of it. >> these ceos say we don't want this content on here we don't get paid for it it does leave the impression they are just ungovernable platforms. nobody wants it and they cannot corral it. >> and resources devoted to

getting rid of it. you add a.i. to the mix? what brew to have you then >> i think it is almost impossible it is an impossible task it is an unsatisfying thing to say. if it is not a real-time service, it is another thing >> a delay >> a day delay if you ran the whole thing an hour or two delay, i think you could get ahead of it. i don't know if that th's what people want. if you want transparency, you say real-time matters. >> or you don't want the algorithm to be that good. change it. >> maybe >> you don't sell as much advertising. there are so many aspects to the story. to the world of elon musk. tesla will hold a shareholder vote to move the incorporation from delaware to texas the move after the delaware judge voided the $56 billion pay

package from 2018 calling it excessive. musk polling his followers on x asking their opinions. 87% of the votes were in favor of the move to texas musk has a large interest in the lone star state. all of his companies have operations in texas. i don't know the size of the package is shocking, but the board being beholden is the issue. >> i wrote about this on xlast night. i covered this and broke the news when this first come compensation plan broke. i talked to musk about it. the first time i looked at it, i was in shock shocked not by how much money he

stood to make. that's not what i was in shock about. i was in shock he put his entire comp plan at risk at a level that seemed especially among the ou outer trenches of the package. it seemed an impossible task most people at that time thought there was no way in a million years that he was going to hit these numbers. we all talk about pay for performance. i critique comp packages like chr crazy. there is no market for most of the deals and in most cases, the ceo is not going anywhere. this is a different time at that time, he already told the public and hinted he might step down as ceo he was getting very interested in spacex and had become wealthy, not this wealthy at

all, but wealthy one of the great conundrums of comp for ceos what does it take to keep them you could say that this package seems crazy. by the way, in some ways, it was. at the same time, the idea that it worked unto itself should be a surprise and surprise on the upside then from the capitalistic society, i'm not sure this is -- i just don't really understand this judge i do understand the beholden idea >> the board were different and could have voted the paydispute. if the board is independent and voting for the pay package

>> the shareholders voted for it, too. let's not pretend. >> the board negotiated it >> this goes to the unique role or place that elon musk had inside tesla and society which was unlike most ceos where he could write his own ticket if you don't pay me this, i don't want to do this. most ceos can't do that. they need the money. they want the money. there is not another job to take he has five other jobs because he has five other companies. i'm not telling you this is not a crazy number the part to me is if he had not hit those numbers and got nothing, it would not be an issue. if he had gone back to the board and say i want you to pay me something, then people would be screaming about that >> all right let's get to honeywell

adjusted earnings of $2.60 a share. revenue of $9.44 billion the company saying the backlog is at record levels. honeywell sees earnings in $9.80 to $10.10 a share. the street was looking for 9 $9.96. stock is down 3% a hit on the dow at this hour. we are just getting warmed up on "squawk box. we put the fed interest rates in it focus after the comments from jay powell rattled the markets. check out the futures here with the s&p 500 looking to be up .30% after dropping 1.6% yesterday.

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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. the federal reserve left rates unchanged. that was the fourth pause in a row at the meeting fed chair jay powell dashed the hopes in the market for when rates could or should fall let's bring from roger ferguson, former vice chairman of the federal reserve and cnbc contributor. roger, good morning. >> good morning. >> andrew properly gave you credit for believing the market was getting overly aggressive

thinking march is the time for the initial rate cut what do you take away from powell's comments and how he characterized the position of the board and the threshold for them to begin easing >> three things i took away. first, on the threshold question it seems it is just a matter of time i listened to what he talked about is the six-month number is good on inflation, but the 12-month number is worrisome the passage of time without things getting worse is part of the story. the second thing i took away that most people didn't observe was he introduced a new kind of risk here. the risk of no landing i.e., the risk of the no move by the economy. that is not the likely outcome that was interesting for those who follow this closely, at

least for me the third thing is the general expectation that the economy no longer needs to soften below trend. i think he sounded like he was happy with the progress and the committee is, but it is the passage of time that seems to be the issue here >> certainly you can't be faulted if the committee wants to take advantage of six weeks before the next meeting and then six weeks after that one the market is at least sensitive to the idea that the longer you wait, perhaps the higher the chance that you miscalculate and the economy weakens more or something else happens clearly, he doesn't believe that even if they are not targeting the economic metrics like last year with the job openings for the unemployment rate. >> i think they believe things are in pretty good shape he was clear not to declare victory on soft landing. they are getting the best of all

worlds economy is strong and still moving forward with gdp at 3.3%. inflation is gradually moving down the jobs are at a good balance they are waiting a little built bec bit because the economy is showing signs of coming close to the edge things can turn and he needs to be cautious, but give us more time. >> how do you think the fed and how do you think about what's going on in new york community bancorp and the impact on the community lending with the events of new york community bank could lead to a bigger pace of contraction on that front >> i think there are yellow flags among community banks and others in terms of the state of their balance sheets these rising interest rates have had an impact that it is for

some or are somewhat negative with investments before interest rates started to rise. they are realizing losses there. there are cautious tales the fed has to watch closely. >> do you think it was a calculated move for the fed to take out the language with the banking system being sound and resilient? >> i wouldn't use the word calculated i would use the word intentional. >> because of this >> yes, not purely because of that, but they see so-called call reports and they hear anecdotal information which he mentioned coming in from community banks and regional banks telling the fed in various locations that things are challenging on the balance sheets i think it was a recognition of things they might be hearing. >> roger, congratulations. you have been right. i was looking back at the old

tapes. it is a remarkable thing the second piece was and i mentioned earlier that a little birdie in the back of people's heads with the view that it maybe gets harder for them to touch rates. it is not lower rates, but doing anything with rates. i wonder as we do get closer to the election and if you think that little birdie gets louder >> so, when you asked me the other day, i was clear that is not an explicit part of the conversation i can't speak to what's in people's heads we have to recognize the historic chair of the fed most criticized was arthur burns. he was thought to be too low level political. if the data comes in saying they need to move close to the election, they would be unwise to delay then they would have a more difficult situation on their hands trying to move quickly

after it i think they are going to follow the data as powell said and if one of those moves is close to the election, my advice would be to go and take the move because the failure to move on the right time can have a negative repercussion later >> that is where the transparency with the fed has the advantage. they laid out the framework and fit that to current events and data roger, thanks very much. great to talk to you. >> thank you coming up, taking advantage of the risky situation chinese shipping lines promising safe passage on the red a.se we'll have that story when "squawk box" returns nefits 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.

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time for the "executive edge" and the promise of safe passage on the red sea to factories looking move goods through the region we have eunice yoonwith more o the story. good morning >> reporter: thanks, andrew. the houthi attacks on shipping have created turmoil in global trade, but some here in china see opportunity in crisis. worried about your tv sets from china getting hijacked in the red sea? sea legend says send your products on their boats. >> this is the most frequent pass acknowledgage in the red sa >> reporter: this is the answer to the red sea shipping problems houthis in the red sea will no

assault vessels if they have not connection to israel for li, this is the hot business opportunity. >> it is very, very hot. economy the customers realize they can choose the service, more customers come. >> reporter: li's ship is headed from this port to the red sea carrying chinese goods bound from the suez canal. night and day, the chinese crew is equipped with barbed wire and security the protection is the close relationship with iran which backs the houthis. the company can organize an escort by the chinese navy >> do you ever worry about a backlash because of the politics of it and people say they are taking advantage of the situation? >> no. i don't worry about that because we think we have the right thing. the people in the red sea need us >> reporter: to keep trade flowing. not everyone is as brave as mr.

li some of the bigger chinese shipping lines for costco have told their customers they are steering clear of the area andrew >> eunice yoon, thank you so much reporting from beijing this morning or her evening thanks. merck releasing quarterly results. 3 cents a share adjusted which is better than the 11 cent lost street was expecting on revenue of $14.63 billion which was a beat merck sees adjusted earnings from $8.44 to $8.59 a share over 8 8$8.42 estimate shares down .50%. coming up, the house passing a $78 billion tax package. will there be room for s.a.l.t. relief robert frank will join us with the latest on that and as we head to break, here is

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welcome back to "squawk box. the house passing a $78 billion

tax package, but is there a s.a.l.t. relrelief those on the east coast want to know robert frank >> a glimmer of hope in high tax states republicans discussing a second tax bill to raise the s.a.l.t. cap. the proposal would double the cap on the state and local deductions from $10,000 to $20,000 per married filers it applies to single and joint filers which is a marriage penalty. it is unclear how long the cap would last according to the tax foundation, the higher cap would cost the federal government $19 billion a year in lost revenue the wonders of congressional accounting may erase downside because the cap is slated to expire at the end of 2025. the $20,000 cap could remain beyond that. therefore, it could be counted

as a tax increase for 2026 and beyond meaning no additional pay for it two-thirds goes to the top 10% which faces a fight from the democrats and republicans. progressive democrats say the higher cap is a handout to the we wealthy. guys, the suggestion that they could vote on this next week they have to promise at least yesterday that this would be a separate bill that could be voted on as early as next week we'll see. doesn't have a great track record so far. >> talk about the senate put some odds on the situation here >> pretty low. you know, remember when the democrats controlled the white house, house and senate and they tried to do some kind of amendment raising the cap. they he were talking about $25,0 it did not get through the senate there is no impetus to do this on either side

this time we have a promise in the house. >> robert frank, we will see what happens to our textax bill. coming up, we have big questions in the race for the white house. including whether we should be asking those questions or i should be asking those questions from voters looking for an alternative to president biden from the emergence of the third-party candidate. pollster frank luntz will be on "squawk box" next to break it all down >> announcer: currency check is sponsored by interactive brokers. the best informed investors choose interactive brokers

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welcome back to "squawk

box. president biden's approval rating dropping to 30% in january. many are unhappy with him going into the next election are some supporters changing sides? >> how many voted for joe biden in 2020? hands up how many of you are right now planning to vote for joe biden in 2024? >> joining us right now ahead of that election and head of the focus group that we saw there is frank luntz. pollster and strategist. good morning, frank. help us understand what is happening here i think what you are getting at with particularly this focus group is just what might be described as enthusiasm gap. that can become a demonstrable problem for the president. what are the people not raising their hands saying to you? >> a group of ex-biden voters to

prove to viewers we had the 19 people who voted for him and aren't number one, it is not just about inflation, it is about immigration and the consequences of what is happening at the border they are angry about it and nervous about it number two, they do not hate joe biden. there's no negativity. it is disappointment the number one word they used to describe him number three, there is no embracement of donald trump, but a feeling that joe biden is too old. they are not voting about the past they are voting about the future they are questioning whether or not president biden has a plan or has the action or emotion and passion to carry the country forward. it's a warning >> frank, the thing i can't understand or tell from that focus group and maybe you can describe it. those folks disenchanted with the president or illusioned on

or about not the enthusiasm they had before and when the question he gets asked, are you voting for trump, you say they're not are they effectively saying i'll go and not vote at all what happens there >> these people, when you ask them that specific trump question, 11 return to joe biden. the point you raise is good. if donald trump is the opponent, which it will be, many of those people return. if you give them a third party or third option or throw in bobby kennedy, they hego to anywhere but joe biden this is key in the poll you have been running african americans underage 40, male african americans are moving further and further toward donald trump, not the republican party, but trump. the latino vote. the most critical vote in america, 20% of the population, first the first time polling has

them supporting donald trump young voters have left the current president because they don't think he has the energy. this helps explain why they are moving away. we went through this in 2016 we watched hillary clinton zoom in the polls and collapse at the end. this is no guarantee of what happens in october or november andrew, make no mistake, joe biden is the weakest incumbent in america since jimmy carter in 1980 he was dead even with ronald reagan this is a look into the future >> frank, i don't know if this gets much comment. this must be the first election assuming it is trump versus biden where either winner would be a lame duck immediately no possibility of a further term beyond that. does that come into it at all?

it seems like it is another short-term thing it doesn't leave room for we'll have a new grand eight-year strategy or anything like that it seems like moving the ball ahead a short distance >> they are focused on both candidates being of advanced age. donald trump does not suffer from the same passion deficit of joe biden. the real issue for the voter is what will happen in year two or year three or four they are not looking eight years ahead. they are looking four years ahead. they want a plan of action frankly, they are questioning donald trump's plan of action. they believe joe biden has none. to return those voters that he needs desperately and he has to show energy and enthusiasm and details of what he will do, not what he has done this election is about the next four years, not the past four years. >> frank, is there a third party

candidate that will emerge to attract people dissatisfied with biden or with trump and draw voe votes away >> that is the big question. the third party candidate, i believe, according to our polling starts with 20%. that's the number that ross perot ended within 1992. the most successful third party candidate since 1912 can they go from 20% to be truly competitive? there is nothing that shows a ceiling right now. let's face it, we have 250 years of third party candidates not doing well. >> frank, the thing i can't figure out is are you suggesting and you have been associated as being considered a republican pollster i don't know if you take issue with that. nonetheless, do you look and say

to yourself the biden administration is supposed to look at this and stand down and put somebody else in its place they have to pray and hope that trump is the candidate which you are saying that will be the case and it is some strange game of chicken which it seems to be what are you suggesting here >> andrew, i came into the studio rather than this interview at home and put on the monkey suit is i have never been more serious in my life. i have had conversations with journalists like you the last few weeks, the weakest candidate over donald trump is joe biden any other candidate would be beating trump. biden is falling further behind. inflation is dropping is an issue. crime is falling in most places, although issues the last few weeks. yes, immigration is a problem, but the quality of life is improving and his numbers are getting worse. trump has been indicted 91 time

and his numbers are going up the public is coming to a conclusion that joe biden cannot take this country forward and he seems to be ignoring that conclusion and is determined to run. frankly, for viewers right there, if this continues, donald trump is the next president. >> frank luntz, we will save the tape we appreciate your perspective it gives our audience a lot to think about this morning >> thank you coming up, amazon appand me reporting after the closing bell can. we check out the key metrics to watch. get the best of "squawk pod" on your favorite podcast app and listen any time. we'll be right back.

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amazon and meta set to report results after the bell today. joining us now, brad ericsson, rbc internet services senior

analyst. great to have you with us. i feel like we learned a lot so far from the baig cap tech stocs that have reported good is not good enough. they have to blow it through the doors. but also there might be some issues with ad spending, cloud growth is okay how to you impute what we have learned to the reports that we're expecting tonight? >> yeah. i would say we learned something but not everything google doesn't talk about q1, so we haven't really heard a whole lot there other than microsoft on the cloud side of the business yeah, on the ad -- advertising business, i think it is a case of high expectations our checks were very, very strong through the quarter i think a lot of investors were as well. it is one of those cases where everything is awesome, but everyone knows it. i think for meta in particular it is interesting, i think it is all about mark zuckerberg's performance on the conference call talking about a.i., what capabilities those can actually drive for revenue, maybe even as early as 2024 and how much

they're going to spend i think there is actually some other wild cards that will play in more than the strong fundamentals that everybody seems to be expecting. >> meta had always been scrutinized for how much it spent. are we going to enter the cycle now? they is say something about capex that is more than expected and we drop, is that the potential that you see >> to some degree, yeah. that's a huge driver and a huge kind of trigger point as how investors sell the quarter by the quarter, i would say back to kind of my earlier point, right, the ceo of meta, he, at times, has sounded quite aggressive on spending and other times he sounded, you know, sort of really prudent on spending. that is kind of the spectrum that investors look for and we'll see what we get tonight. >> for amazon, you know, last night i was watching amazon and they were asking me if i wanted to upgrade to watch ad free. how do you think that's going as

far as uptake and we get color on that. is that going to be a big thing for this quarter >> yeah. what did you do? >> i upgraded it mainly because i'm a cheap skate and i probably would suffer through the ads but i don't want my subject to be subject to ads. >> yeah, yeah, yeah. it is going to be a mixed bag. we have run the numbers and just getting the revenue contribution because that's what everybody is really after, we think it could be somewhere in the neighborhood of $3 billion to $4 billion annually at a very high operating profit but, yeah, it is going to come down to how much the people really value prime video, obviously, relative to the utility that they get out of prime. we think a huge portion of those users are going to pay up for it >> brad, one of the maybe upsides ofthe choppy response to some of these results is that this group starts to trade not as one big blob of mag seven

maybe that started a while ago with apple and tesla falling away, but do your clients think of them as a group or is it kind of name by name? >> it is definitely name by name, i would say, at this point. i happen to cover three of them. i can't speak to all of them but, like, just as an example, right, the other night, google's ad numbers were incredibly strong, all things considered. but, again, that kind of playing that expectations game i think in google's case, though, you know, when you're raising capex as much as they are and it is around generative a.i., you're not beating search estimates and everybody is nervous that generative a.i. may have an impact on search you have a company specific bear case we call it out as buildings, this was one of our concerns in 2024, we laid out the year, that's a very google specific issue, right with meta, just as another example, a.i. probably works much more as a tailwind and something that people are more optimistic and kind of biased to

the upside on. so, yeah, definitely company to company. >> brad, thank you brad ericsson. >> thank you for having me coming up, when we return, two big hours ahead. fed chairman jay powell taking a march rate cut off the table steve liesman will break down the fed's ggbiest challenges right now. "squawk box" coming right back f. 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. 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.

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[bird chirping] [laughing] with our laser—measured cargoliners. no drill mud flaps and floorliners. to secure your phone don't forget the cupfone. order yours today at weathertech.com. you never know when it's gonna be a weathertech day. perfect weather today... . >> good morning. wall street picking up the pieces since the worst day since september. this after fed chairman jay powell dashing any hopes of a march interest rate cut. meantime, the ceos of five major social media companies appearing before the senate judiciary committee. lawmakers holding the ceos accountable for rampant sexual exploitation and drug trafficking across their platforms. we're going to hear from a whistle-blower who tried to warn mark zuckerberg. and fbi director chris wray warning lawmakers that chinese hackers are focusing on american infrastructure and an attack could, quote, wreak havoc.

that story and more as the second hour of "squawk box" begins right now good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin with melissa lee and mike santoli in for joe and becky. let's show you the futures after jay powell's comments. we're going to talk about the comments in a minute right now the dow looking open after selling off, dow up about 38 points, nasdaq looking to open 98 points higher. the s&p 500 looking to open 17.5 points higher. jay powell discouraged investor hopes for rate cuts steve liesman joins us now with more steve? >> good morning, melissa the fed acknowledging cuts are on the way, but disappointing markets when fed chair jay

powell took the march rate cuts off the table. >> based on the meeting today, i would tell you that i don't think it is likely that the committee will reach a level of confidence by the time of the march meeting to identify march as the time to do that but that's to be seen. >> all right, so the fed policy statement took cuts off the table, said cuts are coming, but the committee needs more confidence that inflation is heading back down toward 2% target, even though it has been there for six months it found risks better balance between inflation and unemployment mandates. the probability of a march rate cut sinking from nearly 60% earlier in the day on concerns about banks, to just 36% this morning, but futures markets trade, as if may or june is a near certainty 99, 100% for some of those later months now, this is interesting, while markets are now priced in later cuts, the year end funds

contract is still trading with six quarter point cuts built in for a yield of 388 if the fed doesn't go in march, it is going to have to cut by some 50 basis point cuts some months to meet the market's expectation the and the mark set pricing in more than a one-third chance of 50 in may. so the market is pretty much saying the fed and jay powell are making a mistake by not going to march and they're going to catch up later. and maybe, guys, that's because of recession concerns from the fed starting cuts too late melissa? >>i asked this to roger ferguson could it lead to a faster contraction in bank credit in commercial lending that could be another wild card in the economy >> you know, it could factor in if it ends up being more widespread the troubles at the banks have not played a big factor in the

fed's thinking it initially was, but if you look at what happened yesterday, interestingly enough, maybe this is terrible timing on the part of the fed, they took out of the statement a whole section on concern about banks and the tightening of credit and i think that's because you did not have the follow through from the silicon valley bank fiasco into the border macro economy because of certain policies that the fed put in place, but also because the banks did really retrench as much as expected when it came to credit tightening. so we'll have to watch it, melissa. notice he didn't take march completely off the table if you have a weakening in the job market, if you have an obvious weakening in the economy, and if you -- if you have a big banking issue,march will be right back on the table. >> right steve, thanks. steve liesman. for insights in the bond market and the fed, let's bring in

kek kelsey barrow. have your expectations for cuts changed in the back half of the year and do you think, you know, a 50 basis point cut would be crazy? >> so, our expectations really haven't changed recently even with the meeting yesterday and the press conference you know, chair powell, he wasn't willing to announce that they have achieved a soft landing, but honestly, i don't think he needs to. you can kind of see it you can see it in the data you can see it in how the markets are behaving we had 25 months with unemployment below 4%. we have inflation coming down to 2% we have the wage data, the employment cost index earlier this week. 3.5% that's right on top of where the fed views inflation to be sustainable. so a very good concoction of data i agree, 50 basis points is not something i think is as a base case, that they're expecting

how do you get 50 or 75 basis point rate cuts? you need to see a weakening in the labor market data. layoffs have been incredibly low on an aggregate level in the economy. and the unemployment rate has been very stable and very low. so, to get that more aggressive rate cutting cycle, you're going to need to see it start to hit the real economy harder. but as mike has mentioned, i was looking at a segment you did yesterday, the market tends to not expect how aggressive rate cuts ultimately are in a cutting cycle. so essentially the market underestimates the -- >> the impact or the size? >> underestimates the size of rate cuts in an easing cycle right now the market is pricing the fed to get to 3.5%, 3% and just chill there that's a very optimistic view. could it happen? maybe. but there is so many things going on in this world that it is hard to imagine that's actually where we end up.

>> i mean what is your read on the way that long-term treasuries rallied so much and yields came down so much it seems to be the case that the longer you wait for the first rate cut, you know, things can happen in the interim and that make the economic situation a little bit less secure and maybe we have the rising possibility of a mistake from the fed waiting. you don't want to make too much of it. ten-year yields in the range they have been in for months on the other hand, it was a pretty stark reaction to see yields going down, small cap stocks going down yesterday. we'll see if that shakes out differently today. >> i agree it was a pretty strong reaction for ultimately something that most people are expecting. most people expect rate cuts this year. most people didn't expect the rate cut to come in march. so the fact that two-year yields were down 12 basis points, ten-year yields down a similar amount, that's pretty surprising but i don't think that i would fade that move until i see some of the upcoming data

so we have is it manufacturing today, we have payrolls, and then we also have some data next week, very important, cpi, cpi revisions and also the senior loan officer opinion survey which asks the banks about credit tightening. with the headlines about new york community bank right now, that's something that i would be watching to try to indicate is this a one off, or is there more concern? we do think that this is more of a company specific issue, but that's a place where you can really dig your teeth into that and get confirmation. >> funny, i was looking through the transcript and it did seem specific, idiosyncratic. >> they made acquisition, they went to a new threshold, they were really not very common portfolio of new york city, multifamily and -- >> but in terms of, you know, the great cuts, we need to see 2%, we need to see the path to 2% and there is that risk that, you

know, the low hanging fruits of disinflation, we picked them, we harvested them and now it is just the much harder part of the cycle. do you think there is a risk that markets are getting too giddy thinking that inflation will actually come down toward that 2% enough for the fed to feel conviction to cut and that the risk could actually be that we stay higher for longer? >> so there is a risk that we are not talking about right now, which is the reacceleration risk, the risk that inflation, six-month run rate right now we view that as a fairly lower probability than the two more realistic scenarios. we think there are three essentially scenarios that we're thinking about for the bond market right now two of them being very positive for high quality fixed income. one of them, soft landing continues. it is what we're experiencing right now, the fed delivers grg gradual cuts if you lock in high income fixed

yield incomes now, you're getting your carry the second most likely scenario is that this all ends in recession like it normally does. that's not our base case, but we know that the fed is not very good at engineering a soft landing, there are risks to the economy. and in that case the fed deliver a lot more rate cuts than we expect you get that carry, but you also get capital appreciation the third risk, the third scenario, the lowest probability scenario is that reacceleration risk, which i think both equity and bond markets are not prepared for right now >> kelsey, thank you for coming in. >> thank you kelsey berro. coming up, social media ceos grilled on the hill yesterday, senators accusing them of facilitating child sexual abuse online we'll speak to a whistle-blower who tried to flag safety issues while working for mark zuckerberg that's next. the futures this morning, trying to get their feet back under them the s&p 500 up a little less than half a percent. lost 1.6% yesterday.

aqp er00 1 we'll be right back.

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i think you've said enough. why don't we just switch to xfinity like everyone else? then you would know what year it was. i know what year it is. welcome back ceos of meta, snap, discord and tiktok convened on capitol hill yesterday. >> would you like to apologize for what you've done to these good people? >> joining us right now is one of the whistle blowers who tried to flag child safety issues while working for mark zuckerberg, a former facebook

engineer and director and consultant to instagram. good morning to you. what did you think when mark zuckerberg turned around to the families and made that statement to them? >> it is the least that he could do he begins the hearing talking about how there is no proof about the impact that social media has on people. which i can't imagine how disrespectful that was to everybody sitting behind him all of those parents who have lost children, their loss was preventable and mark has the capacity to make that better and that's what he should be doing >> arturo, one thing we have been batting around this table for a long time and again this morning is how in fact not necessarily that you would regulate social media, we could talk about that as well, to the extent that mark zuckerberg and others say we're investing an enormous amount in trying to prevent these things from happening. are they do you believe that they're not? that there is no effort being made

it appears they're spending millions if not billions of dollars to try to prevent this and it is unable we talked about could you put the whole thing on a delay, put the whole service on an hour long delay, could you catch these things in a way you can't if it is all in real time? what would you ultimately suggest? >> so, they're investing, but they're investing in the wrong thing. they're investing on what they call prevalence, which is a fraction of a percent of what people experience. what they could invest in and what nick clegg asked them to invest in in the knowledge of issues with addiction, bullying and harassment and self-harm are tools that help people with those issues when they face them so, in the case of bullying and harassment, what you have to build is something that makes a teen feel heard when they ask for help instead, when a teen asks for help, half of them don't feel any support from instagram whatsoever, and when you can do this through product changes

that acknowledge the issue that you are experiencing, it is not about the bully, not about taking the content down, there is -- for each one of these categories, self-harm, child endangerment, there are things they could do, they have the infrastructure to do, but if they only reporting on prevalence, they're not talking about the harm that people experience i believe with the quarterly earnings they would have to report on the number of teens experiencing bullying, unwanted advances, these areas, then they would be doing the work in the correct area, which is -- >> arturo, you've been in -- you're an insider or former insider, if you will you understand how mark and others think about these issues. to the extent that you feel like you were not heard, but i think you were heard in that obviously he heard your words, why do you think they're not doing this is it a cost issue or something else is this a philosophical question >> i think it might be a philosophical question for him this is not a cost issue

they have the infrastructure they have the know how but they need to be investing in things to help teens it is very easy to build, they haven't done it. >> but i guess that's what i'm trying to understand, why do you think they haven't and do you believe that regulators, you're meeting with lots of them in washington, plan to actually do something? we talked about -- i should say policymakers talked about doing something for a long time, but for whatever reason have never got there. >> yeah, as to the why, i mean, the best thing i can say about that is what we saw yesterday is mark being indifferent to the harms that were put in front of him. he said we're doing enough when clearly they're not and they have the capacity to do so and they do believe that regulators have the capacity to change this, if they were to compel transparency, through the upcare, the things that regulators talk about would make a difference as a companies are doing this on their own. >> so what does that actually

look like, though? and how do you think that meta compares to the likes of tiktok or the likes of x or the likes of discord or others >> so, in terms of how meta compares, there was a question of child endangerment on sexualized content yesterday there was a story published about that and i go in regularly to test, and last week, you go into reels and there is an easy way to get back-to-back recommendations of 7 to 8-year-olds, one which did a video to a sexual song that had 150,000 views. and so instagram, in particular, has a huge problem with under 10-year-olds being there in a way that incentivizes the most awful things and that's not something that happens on tiktok each of the platforms has things to work on but i think meta, because they have the greatest use surveys and infrastructure has the greatest responsibility. >> what did you make -- i'm curious how you think about

this, there is issues about self-harm with kids and issues about speech, free speech, good speech, bad speech, i don't know if you saw that the president of tiktok saying he believed there was no, what he called pro hamas videos or other things running on tiktok. a lot of people put a spotlight on that and say what are you talking about. and then there became a debate about what it meant to become quote, unquote, pro hamas. what do you think about those issues >> i think people should be able to post anything the platform allows them to that doesn't mean it should be recommended to kids. the thing we don't have today that we should have is real control against what gets recommended to us. imagine a product, when a kid goes in, it says this feed i for you and it is going to be easy for you to like something as it is to tell us it is not for you and why. and all of us should have that it should be able to say, you know, i don't want to see that, why? because to me it is racist or it is just not the kinds of things i want to see.

without that, we don't have any agency against misinformation. all these kinds of awful content that is getting put online that they are recommending and you have to separate out the right to say something from it being recommended to you and that part is really broken right now. >> arturo, thank you for joining us this morning. i'm sure we'll talk more about this with you, hopefully in the future thanks again >> thank you for the time. coming up, a look at some individual names moving in the premarket. and later, the economic impact of the biden administration's lng export approval ban on the u.s. and the global economy. we'll speak to two former senators about that move "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. what state is home to the nation's first circus, the first discount department store and the oldest carousel? e sw wn quk x" returns. - okay! - love it! umm... first word. - tonsillitis! - nostril! uh-uh... bill! uh-huh...

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let's get to dom chu with a look at this morning's premarket movers good morning, dom. >> let's start off with big pharma the earnings report there from drug giant and dow component merck has those shares roughly up a percent right now just around over 5,000 shares of trading volume it posted a surprise profit for share on adjusted basis on the back of stronger than expected revenues merck was helped by stronger performances in key drug franchises, like cancer treatment, keytruda, also hpv vaccine gardasil it gave a full year forecast that generally fell in line with consensus estimates. on balance, you got a share price up 1% from merck, 122 bucks and change a share next up, shares of peloton, which are right now up just about fractionally they have been swinging around they were up about as high as 3.5 to 4% at one point over 100,000 shares of volume. this is the maker of connected fitness equipment, media content. it reported a slightly worse than expected loss on better

than expected revenues peloton was helped along by stronger sales of both the equipment side of things as well as the subscriptions that often go along with them on the negative side, it did give a current quarter forecast for revenues and operating losses that came in worse than analysts expectations. but paid subscription guidance came in better shares up fractionally now three quarters of 1% and new york community bancorp, the biggest one day stock drop in corporate history yesterday, down nearly 38%. as things stand now, we're up 2.5% on just a little over 150,000 shares of volume now, the drop came as the new york based letter which took over the failed regional bank reported a surprise loss per share as it boosted reserves for possible future bad loans. it also slashed its dividend by 70% in an effort to preserve capital. those shares up 2.5% over the last week, down

massively. a lot of the regional bank stocks, small and midsized ones had been underperforming yesterday. there is not a lot of trading volume so far in many of those names, like valley, the bancorp, like some of the other smaller lenders, frost bank, others out there, but we'll keep it on those just because of the new york community bank underperformance yesterday we'll see what happens after the opening bell back over to you >> dom, thank you. coming up, is field security at risk because of the lng approval pause by the white house. and esther george talks about the fed's next move and much quk x"ilbe "sawbo wl right back.

a bit of news on the jobs front, just hitting. steve liesman joins us now with that hey, steve >> michael, good morning all those announced job cuts you've been hearing from big companies, they're adding up with the employment firm challenger, gray and christmas

saying january announced layoffs surged to 82,000, up 136% from a december numbers challenger says that all of the -- it was tech, the tech sector and the finance sector, which you've been hearing about on our air over the past month have led this surge in layoffs it was the second highest for the month of january since january 2009 the first highest was last year, so layoffs are down 20% from a year ago but, still at a high level for january. and hiring plans were the lowest on record for a january. andrew, challenger, writing with the report, these layoffs are given by the broader economic trends and the strategic shift toward increased automation and a.i. adoption in various sectors, though in most cases companies pointed to cost cutting as the main driver for these layoffs. looking at it by sector, finance, 23,000, tech, 16,000. food services and retail also getting in on the game of layoffs. unclear if all the recently announced layoffs are actually

in this data yet u.p.s. let go of 12,000 workers. citi at 12,000 some of those are worldwide, not just in the u.s. and most of these layoffs take place over time, they don't hit the jobs number in a single month we'll see if that affects the numbers we're looking for. tomorrow the big january jobs numbers, looking for 185,000 mike >> steve, thank you very much. meantime, the biden administration's plan to pause lng export approvals and that is now putting energy sector in the spotlight this morning for story, we brin in pat toomey and mary landrieu, democrat from louisiana. good morning to both of you. i think i know what you're going to say >> you think >> i do. the question i would ask you as you look at the remarkable rise

of lng in the united states during the last several years, frankly under president biden in truth, and you can say in spite of if you like, but nonetheless but i think credit is what it happens and we can debate it, is there any argument in your mind at all to say we have come so far so fast that there is -- there is a look that is worth having at what is happening here >> certainly not if that includes a pause this is ridiculous let's be honest. this is an obvious soft to the far left of the democratic party. frank luntz walked us through some of the serious political problems that president biden is facing among them is a lack of enthusiasm among the most liberal members of their coalition. so this is a gesture to them but to in any way threaten to interrupt the continuing expansion of lng exports is bad for the economy, it is bad for the environment. it is bad for national security. this is a no brainer

and more lng exports helps all of those situations. so, pretty blatant political move on the part of the administration. >> is there an argument to be made that it isn't political can you tell this senator why you think this is the right decision >> well, first of all, pat, good to see you, even though we're separated by technology. but let me just say that you can evaluate something while it is going on we can walk and chew gum at the same time. these evaluations are constantly ongoing about the benefits of natural gas. and what senator toomey said i agree with so much natural gas is part of the solution it is not the problem. and i'm serious about this most americans know this this is not just about louisiana and texas. this is about ohio, and pennsylvania, and michigan and illinois, and new york this is about rebuilding our

manufacturing base in america. i think this is an extremely counterproductive move i don't understand it. most people i talk to broadly don't understand it. many democrats are taken back by it natural gas is part of the global climate solution. it is the only thing available to replace global coal emissions, which are counting for most of the damage to our atmosphere today and every scientist knows this so, why are we stopping it i'm not sure it is not helping our economy. it is going to undermine the president's own climate goals and our own climate goals, which is why democrats and republicans are concerned. so i'm hoping they'll reconsider >> so, can i add one additional thing, the pause is completely indefensible i don't get the purpose for the

review in the first place. to me there is an implied conceit there that the government somehow knows what the correct amount of lng exports is correct amount is whatever there is demand for. if we had a supply problem, let's build some pipeline so we can bring more to the market. >> you think this is a -- to climate activists? >> absolutely it does have one actual adverse effect, it casts a chill on investment you pointed out we're at record high production and exports and that's true. let's be honest, the development that got us there started before biden took office. it takes years to build these kind of facilities, to even do the production and certainly the pipelines, all of it is complex and time consuming >> he admitted he's heeding the call of the activists. he's listened to the young people who want to use their voice for activism. >> and the danger is that investors conclude that, well, under democratic administrations we might have some real obstacles to future development. that could have a chilling

effect on investments. >> you to tdo you think there i chance he walks this back? >> not at this point the president himself personally -- >> that's what i'm wondering. >> no, i think this is -- he's in a terrible political spot and he's hoping this is going to help him a little bit with an important subset of his voters >> this is -- you think this is just about these -- sort of younger voters and talking about the enthusiasm gap with frank luntz. >> the white house said it was i didn't say it, the white house and their press release said this is, you know, i don't know, a gesture to the left. the problem is we need to stay focused on jobs in america and manufacturing base and rebuilding and the president has been focused on this he passed the i.r.a., the infrastructure act, he's invested more than any president and with the help of congress and some of these bills, both democrats and republicans, but mostly, of course, democrats

passed the i.r.a. which to my knowledge and i've talked to tons of people about this is one of the most exciting and interesting and exciting climate initiatives that is spurring all kinds of great investments so, to step all over his whole agenda is what is so puzzling. this is completely counterproductive. will he reverse? i don't know but i think congress might reverse it i've been talking on the hill constantly since this happened friday, there are lots of leaders on the democratic and republican side that are, like, no, this is not our policy and we have the right as congress to make our policy as well. so i'm hoping that, you know, cooler heads will prevail, people realize natural gas is a solution it is not part of the problem. m particularly hwhen you take out methane leaks and production many of these companies are in

his area, not just louisiana, they're in pennsylvania and ohio so, i hope that congress will take a hard look, senator manchin will have a committee hearing, i think jeff duncan, congressman duncan is going to have a committee hearing next week, and we are hoping that both democrats and republicans can come together and say, hey, this is not going to work, we have to reduce coal globally and we got to get -- keep our climate initiatives because senator toomey, even republicans are stepping up, understanding that we need to meet global emissions like, you know, congressman curtis >> well, senator toomey, just to play devil's advocate, yes, natural gas is part of the solution to the degree it displaces coal but to the degree -- there is a branding issue natural gas sounds like it is pure and clean if you think more natural gas is forestalling the transition, if you think you have to get cleaner, that's the argument. >> well, i would -- i would push back on that first of all, sometimes american natural gas displaces, say,

russian natural gas. which country has stricter standards on the production and the distribution of natural gas, we do. so even in that trade-off it is better for the environment but i think realistically we should just acknowledge we have huge need for fossil fuels now and for the indefinite future and to try to artificially come in and mandate some kind of pause in the growth of the cleanest of all the fossil fuels makes no sense. >> senators -- go ahead. >> no, let me just say, we do need, you know, natural gas for a long time. we have significantly reduced coal use in this country, which has been a remarkable achievement. our emissions have gone down the last 24 years by 60% and it is because of natural gas and renewables so i disagree slightly with senator toomey here in the sense that natural gas is part of the solution to get to our global

goals, which is net zero and you can't get there without it because nuclear is not strong enough yet i support nuclear. we'll grow nuclear natural gas is that transition fuel, foundational fuel. this is part of a climate agenda i think the president made a mistake. i hope congress can fix it >> senator, both senators, thank you, appreciate it nice to see you. >> good to see you coming up, fbi director christopher wray warning about the growing threat of chinese cyberattacks against u.s. infrastructure that could wreak havoc. we'll speak to a former mendhola security, cybersecurity director next "squawk box" will be right back.

the volt typhoon malware allowed china to hide, among other things, preoperational reconnaissance and network exploitation against critical infrastructure like our communications, energy, transportation and water sectors. >> that was fbi director chris wray on capitol hill yesterday, warning that chinese hackers were preparing to wreak havoc on american infrastructure. for more on the growing threat of chinese cyberattacks, chris krebs, sentinel one chief public policy officer, he served as the

inaugural director of the u.s. department of homeland security, cybersecurity and infrastructure security agency. great to have you here with us so, you know, this threat that director wray was talking about, it was intercepted and detected, but there is still a high level of alarm about just the ongoing potential for disruption here. is it new, has it escalated, should we just assume that there is a constant attempt at these incursions how do we think about it >> well, with china, what i have seen out of the national security community and out of the intelligence community has been a marked shift in their level of concern and their public outreach engagement for about the last year or so. and it really kind of kicked off last may when there was a discovery or announcement of some activity in guam and indo-pacific region where they detected chinese activity targeting military assets. and the thought is as tensions

escalate between china and taiwan, noting that the united states would likely come to taiwan's support, the chinese would want to put the -- undercut the military capability of the u.s. and support swtaiwan there is a second element of the campaign detected over the summer and into the fall where there was additional cyberactivity against u.s. critical infrastructure, and that's exactly where director wray and director easterly from siss sia was going yesterday, there is has been a significant increase in activity targeting u.s. critical infrastructure and a very opportunistic and ad hoc way. even as recently as this week you heard the fbi disrupted some of the cyberinfrastructure, a botnet that the chinese amassed over the last year or so so it is very concerning it is not theoretical. it is very much here and now researchers have detected the same sort of activity. it is not just the government,

it is the private sector as well. >> and what is the, i guess, the intended takeaway of this? does it require some kind of congressional action do we need to reinforce the defenses is it really just becoming public about it and putting china on notice that we're aware of this and won't tolerate it? how do we consider all those things >> look, i think the committee hearing yesterday in and of itself was significant if there is any issue on capitol hill here in the u.s. that congress is bipartisan on, it is understanding the threat from china and pushing back i think the second real takeaway from yesterday's hearing is that cybercommand, the u.s. military, the u.s. intelligence services continue to really deeply try to understand and penetrate chinese net works and chinese operations but the third and i think the most important is that we're not going to attack our way out of this and we have to have better defenses and there really is an

element of corporate responsibility here at home, and this is exactly where director easterly was going, is that companies need to up their game and understand that cyberrisk is business risk and you have to take it seriously. >> is there a general sense that companies are, you know, insufficiently attentive to that right or that they just treat it as, you know, only an emergency basis or is there a reporting requirement for these things >> well, that's a great point. the securities and exchange commission required certain reporting for publicly traded firms back in december, the first was that you have to have some kind of cybercapability on the board and you have to report that, you also have to talk about in your 10ks or annual filings, with your governance and policy is on file. and you also have to report any sort of material disclosures we have seen a couple of those over the last couple of weeks. microsoft disclose cloze sed th

corporate email and there is some activity shifting in the corporate world. we also have seen a shift when it comes to ransomware ransomware payments are down, that's what we have seen and that's due to better defenses companies still paying, but payments to unlock are down. >> i'm glad that the attention to this is -- has increased. more recently, this has been a threat for i would say decades and it is very easy for anybody let alone the chinese to do this if you blow out a transformer, that's not a piece of equipment you keep on a shelf. it is hard to back up. how can we think about this in terms of if they are successful in doing this, should we be thinking we have a strategic petroleum reserve, how do we think about this as a country to protect ourselves in the case that it does happen? if intthere is no electricity, does paralyze our economy. >> the director of national

intelligence working with the department of energy and the department of homeland security looked for many, many years at the nation's infrastructure to get a sense of what the r vulnerabilities and consequences of a cyberattack would be. and the latest assessment still cyber attack at best could have regional impact, or locally constraining impact and you wouldn't see the nation's entire grid go down however, given the way interconnects are set up you could have regional outages. got to tell you, from a societal perspective even three, four days without power to replace a transformer, as you pointed out, would be pretty devastating. we do believe that's exactly what russia has in their doctrine, china in their doctrine. >> sure. >> increasingly shifted to information operations trying to hit the chaos button here at home as best they can. >> chris krebs

appreciate it you walking us through this thank you. >> thank you. and coming up, boeing is accountable for what happened in the alaska airlines incident last month we'll discuss leadership at the company and its crisis response. all that and more at "squawk box" rolls on. and businesses need to navigate the changing landscape to stay ahead. when you partner with barclays, every change leads to a bold possibility. you have the vision. we have the insights, financial solutions and global perspectives to help you make it real. barclays corporate and investment bank powering possible.

i want everybody to know that boeing owns it. we own spirit, own the results of our work. we understand that we really do. >> boeing ceo dave calhoun answering questions from the regulatory board and others, lecturing practice of management at the yale school of management great to you have. you know, it's been weeks now that this has been going on and to me this was a clearer sort of admission or ownership of this problem that dave calhoun has made do you think there were missteps on his part in terms how he managed this crisis from the

beginning to date, and do you think he is safe as ceo? >> so that's definitely the right thing to say, but i think the most important thing to say, it hasn't been weeks this cries has been going on. more than a decade go back to the 787 where boeing had battery flyers products of manufacturing problems go back only a few years ago, and 737 max two crashes boeing involved in crisis more than a decade, boeing has the last few weeks, the last in the symphony. >> does that mean you think he's not safe he has to own, as ceo, all of those crises in the past even though he was the guy brought in to fix it >> he was brought in to fix. as i said. he's saying the right things right? boeing has to take ownership and predecessors did not, that kind of thing the problem is not something that you can fix with statements the problem is that boeing for the last, you know, generation

since it merged with mcdonnell douglas, has been a company whose senior management is operator under the disillusion his job was making numbers and not planes he needs to be what it once was, committed to making great planes i'd like to hear from him, what's his plan for doing that >> can i switch gears and ask about this musk pay package and the corporate governance issue and this judge's decision to effectively invalidate the pay package. what do you think about that >> step back, think about what the purpose of a corporate pay package is from perspective of the board. right? that they're trying to get is maximum performance from their ceo at the minimum cost. their job. of course, ceo wants the maximum cost from the perspective of the sport, use rough numbers elon one day oerlds the pay package already owned about 20% of tesla stock this would have given him

another 10%. just think that through as the idea that 20% of tesla stock was not enough to incentivize elon musk to put his full efforts into making tesla as propertiable as possible and another 10% would make the difference it doesn't take anything away from what he's done at tesla or spacex or many other -- >> a much longer debate. as i see it, slightly different. which is this is a guy moohad a couple businesses, quite wealthy. could have say, have somebody else be ceo of the company and take a little step back. not a huge step back incentivized, i don't disagree in that seat at that time, i reported of it in the moment in realtime a real issue thinking i want to focus on this other stuff. at some point the board, you have -- by the way, had he not hit these numbers, nobody would be sitting around saying he was overpaid >> yeah.

no numbers he hit are astonishing no one's taking that away from him. note the model elon is not necessarily in day-to-day operations in fact has someone else who does that works really well at spacex rockwell is doing exactly that that might actually be what they want isn't necessarily making a bad decision. >> right thank you. "squawk box" will be right back. (fisher investments) in this market, you'll find fisher investments is different than other money managers. (other money manager) different how? aren't we all just looking for the hottest stocks? (fisher investments) nope. we use diversified strategies to position our clients' portfolios for their long-term goals. (other money manager) but you still sell investments that generate high commissions for you, right? (fisher investments) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest.

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and good morning and welcome back to "squawk box" right here on cnbc live from the market site in times square mike santoli and melissa lee with me. joe and becky off today. u.s. futures up after tumbling on the back of the jay powell comment. talk about that in a moment. dow up 65 points nasdaq up 108. s&p looking to open up about 22 points higher in about an hour and a half from now. treasurys.

ten-year note 3.933. and caught up on honeywell shares down o'mid-quarter results. beat estimates revenues missed honeywell's full-year projected below. merck moving higher. company projected to lose 11 cents a share fourth quarter posted three cent per share profit full year guidance above analysts forecasts up more than a percent here. one story to tell you about, elon musk says tesla will move a shareholder vote whether to move it to texas from delaware. musk post add poll on x tuesday evening, and his followers resoundedly supported a move a judge voided musk's $56 billion pay package granted to him in 2018. >> maybe shareholders are not independent? judge grant that

eye roll >> can't even talk about musk's previous loss in delaware. doesn't seem to have -- all right. s&p 500 off its worse day in more than four months. blame somebody, blame fed chair jay foul and these comments on potential rate cuts that came after yesterday's fed decision. >> based on the meeting today i would tell you that i don't think it's likely that the committee will reach a level of confidence by the time of the march meeting, to identify march as the time to do that, but that's to be seen. >> joining us now on the markets and the fed, chief investment strategist at oppenheimer asset management go to see you. >> great to see you, mike. >> worst day in four months only a 1.46% loss keep it in mind. haven't had a 3% pullback in three months that said, it suggests the market had a pretty aggressive

appetite for continued good news, both on fed potential easing, on the soft landing, on the economy, on earnings coming through. where does this lead us if we're not getting a march rate cut powell seems satisfied with the state of the economy. >> thanks, mike, for having me only the show. i got to say that when we look at this it -- powell is powell and an attorney. always adds the disclaimer if he says the fed is achieving its goal as it moves forward and things look positive, then he'll added fact perhaps not the market has had a rose-colored glasses, we would say in terms of expecting a cut in march, expecting five to six rate cuts. we don't buy that. we are the club, one of the two cuts this year, probably, and now earlier we thought, towards the end of the year, now we're thinking more like probably midyear, can start as early as midyear but might be later it's a second half kind of

story. >> 50/50 march rate cut. maybe built up the degree to which the market was dependent on that. now it doesn't seem like it's going to happen, you know, not long ago, a month ago, 80% for a march rate cut hung in there. what are earnings trajectory telling you right now. noisy in general getting pretty decent beat rate with guidance has been a dampener and, of course, waiting for big ones later today. >> i think, you know, the -- for the year, i think just as we approach the earnings season really beginning to open before the banks, looking for 1%. even 0.6% earnings growth fourth quarter earnings season. now it looks like that's what it perhaps will be, but revenue growth is about twice that right now. and the concentration of the earnings growth is in energy, materials and health care. technology is, earnings growth,

when i looked this morning, as of yesterday's close, up about, double-digit 15% and what is it communications services which is about 50% tech, about 25% earnings growth. so really telling you that things are a lot better when you look undered hood. >> you're on the more bullish side of things when it comes to your s&p 500 forecast for the year 5200, forecasting one or two cuts you don't think markets need significantly lower rates in order to move higher >> melissa, we don't think we don't think it's higher for longer just staying at the end of free money for longer by that we mean, with the ten-year treasurys somewhere hovering what? today about 3.8, 3.9% down from about 5% just a few weeks ago. we'd have to say that the fed this cycle may actually have its cake and eat it, too, in the sense it will be, it does begin

to cut, it won't be because we're moving to recession, but, rather, that we're at a point where enough is enough in terms of the tightening cycle and they'll give one or two cuts and it begins a process. but to expect -- you know, going back to a band of zero to 0.25, that's an emergency kind of fed funds band 5 to 5.25, pretty realistic now based on stickiness of inflation. >> yeah. i guess encouraging that, powell didn't come out and say we need to run the economy below potential for long period of time he's okay with the economy being okay if inflation does what it's supposed to do john good to see you. >> thanks for having me on. comeing up, former house majority leader joining us on a tax cut package just passed the house. eric cantor. and later, esther gegeor stay tuned you're watching "squawk box" and this is cnbc.

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welcome back to "squawk box. house of representatives passed the $78 billion attack package including business tax breaks and expansion of the child tax credit broad support in bipartisan house but fate much less

-- senate. joining us, former house majority leader. take on the first before we get into other issues. what are the chances when it hits the senate it goes anywhere. >> look at the vote last night in the house you have a pretty resounding endorsement of this bill so i do think that gives it some tailwinds when it gets to the senate maybe bruised egos, other dynamics on the part of certain senators that will come into play ultimately my sense is it passes this is sort of a look into what we're in store for end of '25, because these provisions that are now being restored, if you will, were a result of what i call sort of the gains around what the d.c. world calls pay-fors in the tax cut jobs act in 2017. and if you look at it, it's about r & d expensing. already an expense you pay for

the r & d and expense it, and in order to come up with a reduced sort of cost to the bill they played games never did i think the business community or republicans think that would sustain itself. similarly, on the child tax credit side i think the democrats took the view back then there's no way republicans would allow that to expire, and i think we're seeing that, and if you saw the difficulty around this, this time, just imagine what we're in store for at the end of '25, when the whole thing expires. >> did you see our segment with robert frank about s.a.l.t. tax. what are the chances that comes back >> interesting thing, in 2025, caps are removed incentive for the s.a.l.t. crowd, i know that the table i'm speaking to, very interested seeing that cap removed. >> yep. >> right so that's, that adds to the difficulty that we're going to see in '25, in addition to the fiscal stress that the country's going to be under at that point,

because you've had this interest rate rise, and you see the incressed costs of the debt for the federal government all coming to roost in '25. >> put your banker hat on, and your former political hat on and let's talk about jay powell for a second and what he said yesterday. >> yep. >> we keep talking about how the election plays into this little birdie in the back of people's heads, does the fed think about that, getting closer to the presidential election? can you make a move, not make a move how do you see that? >> listen, i do think that there's a human nature sort of aspect to this, that, you know, wherever jay powell sort of affinities are politically, you can't say -- he's not a human being -- there is bias but also the desire institutionally for him to want to restore the credibility of the federal reserve. and so, you know, you're beginning to see reporting

reflected in numbers the company seems to be smoothing out, let's say. look, from the banker perspective, i would say you just look at the numbers i mean, investors have been struck by this historic increase in rates over the last almost two years, and you look at the numbers. m & a, the deal account is down. >> right. >> and you -- if you think, okay yesterday you heard the chairman the chairman didn't say when but he clearly leaned into, hey, we're going to be discussing rate cuts going forward. so if the direction of traffic is really changed, i think investors especially the sponsor community, that's been particularly impacted by the rate hikes and the uncertainty, i think going forward we're going to see a much more positive deal environment. that's my sense. and if you also look at fact that the amount of dry powder

sitting there, especially in the sponsor community, it's way up from where it was in '19 even i think 8%, 9% up from last year. >> and morgan stanley saying, floodgates open in terms of dealmaking wondering if the political calendar factors in to that cadence of dealmaking heading lower on rates but enter the political cycle? >> an interesting question how much can the election then hold up, if you will, to deal activity my sense, the earlier -- if we see an uptick in the m & a market earlier and momentum that comes that way, i sense that the, you know, there's so much out there about the election the minimum i think will overtake whatever uncertainty there is around the election and i think we'll go forward we'll see. we've got to see momentum, and coming relatively soon in the m & a market. >> the republican party viewed as a party that is in favor of

business i mean, what this tax bill has underscored is that it may not be anymore it may be republicans that defeat this bill in the senate >> you know, melissa a great point. my party is now no longer the sort of -- we used to call it main street republican, there for business, for growth in the economy. i mean, it has taken a much more populist turn. no question. donald trump has remade the republican party we're a party that really is much more in line with what maybe the working -- the working man or woman -- >> in line with your views >> listen, andrew, you know i am a limited government, fiscal conservative and believe in free markets. so, you know, when we hear folks on my side of the aisle talk about where government should be spending money, where government should choose to allocate resources, i find that

objectionable because i've seen what happens when you put washington in charge of allocating capital that's not a good thing. >> and not a lot of attention on specifics of a rematch between trump and biden. 10% across the board tariff? get more focus trump is proposes >> right talking earlier what the discussion was in daub vos. a lot of rhetoric about the business climate in china. if you add on a 10% tariff we are off and running to i think a -- >> got to run. where do you think the business community is veis-a-vis the election people looking for alternative to trump right? trying to give money to nikki haley. i don't know what you think handicap on that will be ultimately fall in line with trump? not vote do they vote for biden how do you see this? >> look, i still think my party has in its dna lower taxes, less regulation, more free market activity you'll never gelt t that from t

democratic side. >> you would take the trump version of whatever that is. >> i will take that policy version and the republican candidate over what the other side is offering up, because there is an adversarial relationship now it's not just, hey, we're going to go and try to get what we can. used to be democrats were there for the unions. >> what do you make of all the folks that worked with trump the barrs and others who think, you know what? either a character perspective that unto itself is dangerous? >> i think andrew, writ large, majority of the voters in the country don't like the choice. bringing up the real point that we have too little participation in the primary process less than 10% of voters participating but making the choice for us. that's the real issue that we have to address going forward. >> come on back. eric cantcantor, great to see y.

>> pleasure. did tesla shoot itself in e ot by giving elon musk a new package? "discuss when "squawk box" returns. market from wherever yo. e*trade from morgan stanley.

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a delaware judge this week ruled elon musk's 2018 may package worth now about $50 billion went too far so should musk have to give up his right to this chunk of tesla stock? jon fortt is here to weigh in. good morning. >> yeah, mike. i mean, musk was overpaid. that means he should have to give up the right to stock he hasn't received yet. the argument on the other side musk is a key figure at tesla. central to the reason the stock has gone up and deserves every pen pip back story in 2018 tesla's board announce add

ten-year compensation plan musk could get about 1% of tesla shares for every $50 billion gained in market cap up to theed $650 billion $50 billion roughly his entire fact value what happened next tesla produced electric car against the odds stock roads in a period of exuberance through a gold pandemic and must hit all in the plant. the plan approved by the board too stacked with musk friends and family richest pack 'ever existed and dilute shareholders as musk sells them now musk wants even more despite what was granted just six years ago. >> you acknowledged the other argument meaning you dismiss it? >> if i dismiss the argument, the segment would be over. right? on the other hand, elon musk

deserves every penny of the apard proposed when all tesla was worth a measly $52 billion sounds obscene one man got compensation not worth $50 billion but increased their value to more than a trillion dollars at one point in general investors grouse about execs who take home fat bonuses for barely moving the needle operationally or get hefty stock grants and investors are holding the bag. this is not that the tesla agreement structured so elon musk only became the richest man in the world if he turned tesla into one of the most valuable companies in the world and he did in 2018 they approved it with 73% of votes cast and knew what they were voting for the 2018 plan modeled on tesla the 2012 plan seen musk take tesla from $3.2 billion in market cap to $52.4 billion. 16x. no one take for a right.

might not like elon musk or his tweets, but he made investors rich along with him. >> on the other hand -- you need another hand part of this the board was too cozy it wasn't just the pay package itself wasn't how big it was or how structured that the board was beholden to him, approved this package. >> a separate issue. talk about a number of cozy boards, but this is about compensation right? >> look, i think the judge's decision, as melissa said, relates to this board issue. the one distinction i would make on this is that shareholders voted for this, and they saw the plan opinion what was clear to them was the plan. it wasn't, like, the plan was a fraudulent plan. what the judge is effectively saying, the fact it was endorsed, quote, negotiated by this board too close to him creates some kind of, i don't want to say fraud but some kind of misunderstanding that somehow

the shareholders doesn't understand kniss wasn't a quote/unquote independent board. an interesting and novel argument to make, having said that, i'm on the, the second hand with jon here, which is that clearly he had all of numbers and nobody thought he would hit these numbers. and you have -- >> and the 2012 plan. >> incentivizing to stay, seemed like a crazy incense ish plan. truth was he had three our businesses i think even thinking -- i know at the time he was thinking about whether he could take some form of step back and put somebody else in his place could have been another ceo. >> not only that 20shgs 18 -- 2018, a question whether tesla would make it. >> yes >> honestly. >> yes >> the "new york times" piece. worse days of my life. always where you're sleeping sleeping in a tent on factory floor under a couch somewhere. >> friend, co-founder of google. >> talked about it earlier

has to hold shares five years, too. truth is, if you think the company is overvalued today. say you believe that and comes down by a third or half or whatever i'm not saying it will but know what? he's going to eat that, too. >> right. >> either way, shares don't disappear. still worth something. >> correct just less. >> got to go so got to plug the "on the other hand" newsletter you can dig into this argument word by word. put the qr code on the screen. there it is. or type in cnbc cnbc.com/ontheotherhand and share your thoughts. >> thank you. ck> "squawk box" will be right ba with breaking economic data.

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welcome back to "squawk box. rick santelli here live at cmhq a fourth quarter preliminary number up 3.2%. better than expected following a rather juicy up 5.2% third quarter, which was the best going back to the third quarter of 2020 but a nice pop and look at unit labor costs, less than half of expectations 1.2 expected half of 1% is what we end up with half of 1% in context to last

month, which was minus 1.2 so to reach half 1% go into the quarter before second quarter '23 up 2.6% you see right now that yields continue to be under a little bit of pressure, but not far from unchanged initial claims, 12,000 more than expected 224,000. we're expecting 212,000. that follow as slightly revised 215,000 placing it up 9,000. 224,000 is the hottest since the second week of august. second week of august. you have to go back a ways to find claims up at that level, which really is a testament how well behaved they've been and continuing claims? they definitely are more than expected getting ever closer to 1.9 million. 1 mill 908,000

1 million 898,000, excuse me -- would be the highest level only best if looking for claims to go higher, because, of course, you want the fed to take notice and potentially lower interest rates, but that is the biggest continuing claims level since the third week in november. november of last year. we continue to monitor all the aftermath of the fed decision yesterday. what seemed like it was a hawkish statement on first flush certainly doesn't seem to have left the markets with that taste at all this morning, and when you look at bank of england and some of bailey's comments, i guess the notion is that europe has different aspects to inflation, consider aspects of ukraine and russian war. also the notion that inflation, just because it's coming down doesn't mean it stays down it also doesn't mean that core rates with questions on energy are going to behave as well behaved as many think melissa

lee, back to you. >> thank you. stick with us. rick mentioned seeing reaction in the bond market bonds up ten year 3.194% and 2.05 joining us on the data and economy, from the brookings institution and studies director american enterprise institute and our own steve liesman. steve, to you first. how do you dissect these numbers? >> watching the jobless claims numbers ticking up layoff report earlier at 7 3507:30, jobs report tomorrow weakness in the jobs market what is a cornerstone of fed policy they're expecting it to come down productivity number is very good news, but you have to be very guarded about it two months in a row good productivity data. they did downgrade the third

quarter from 5 to 4.9. both still above trend, and a story here, melissa, productivity surge beginning of the pandemic low wage, low productivity workers, first to be laid off. surging productivity and came down, and now we're back more or less on trend with a sense maybe we're running a little bit above trend. that's kind of helped the fed in its effort to keep inflation down one other quick thing, melissa everybody gets worried about the idea, will they cut in march cut in january in june or july? i think we need to take a step back there's a long game played here. inflation for decades in the united states was low in coming down and remained low, and i think what happens now will pay off and be important for what happens in the next coming decade if we can keep and break the back of inflation, the fed can gain credibility on inflation there will be payoff over many years with a difference between march, july, june, may,

december won't matter all that much in the long run. >> wendy, how do you determine this in the jobs expecting and seems increased number of layoff announcements had in the past few days, most notably u.p.s. cutting 12,000 jobs? >> these numbers basically confirm what we already knew, which is that the economy performed really well last year, even as the labor market was slowing to a more manageable pace my guess is we're actually not going to see -- if the fed does its job right, my guess, we're not going to see the labor market slow much in terms of payroll growth relative to what we've seen 175,000 a month might sound like a lot, but -- given the population growth numbers that i'm now seeing coming out of the congressional budget office, we should get used to about 175,000 a month in terms of payroll growth for a while now. so i think the labor market is basically at a sustainable level and i think the economy is doing

really well. >> will we not see the jobs picture worse at all, michael, in your view >> i expect that we will see the jobless picture worsen there are reasons to believe that the labor market is being helped by supply-side backers, that will dissipate in the coming months, and that might make it harder for the labor market to withstand the current level of the federal funds rate. especially if the fed kind of kicks any rate cuts into the seconds half of the year. i don't think we're seeing it in these claims data. i disagree a little with steve the four-month moving average was 208,000, initial claims. kind of right in the ballpark of where we've been the last three months it's less than where we were prior to that. so, yes, lots of layoff announcements and anecdotes about layoffs. i don't see them in this claims report i think this is another

indication that the economy finished the year really, really strong. >> rick you maengsed mentionede light of morning doesn't seem the bond market necessarily believes it was a really hawkish message from powell yesterday. what's your specific interpretation what's going on in the longer end, ten-year yield, ticking lower here? and what the inference should be about economic outlook or the risk the fed stays here too long >> you know, i think the long end is, had a shift. a focus on servicing the debt, issuance of debt many saying, why does the general public feel more happiness regarding the biden administration economic landscape? i think two reasons. prices are significantly higher than pre-covid and people understand debt. they really do understand debt but i think the handoff has been to a slowing economy even though many of our guests, present guests includeding, enamored with the level of

economic activity this far after all the money we spent on covid, i still think in the grand scheme of things, that a slowdown is coming i also think that when it comes to inflation, the market's going to have a tough time trying to define what the fed ought to do, if not the fed itself, because many, including me, believe that inflation probably would have come down on its own anyway. how much is the 5.25, 5.5 policy actually made a difference it doesn't seem to be slowing the economy down that's for sure, and with regard to lingering issues of inflation, like long-term energy costs and botched handoffs in the ev look at how many are on the lots no rate from the fed is going to help some of those situations, or take the pressure off future inflation. so i think that the fed is, the job is that much more difficult. don't look for ten-year note yields to spend significant time in my opinion, under 4%. especially as we start to near

the refunding that's coming up more size in 3s, 10s and 30s and arguably people are going to question whether the treasury really is going to be able to keep size of the auctions in hand in that this is the last increase in some of those packages for refundings. >> get more of the contours of the issuance later this afternoon on the back of the qra. curious, wendy, if you think it's part of your analysis that we're going to get the same number of rate cuts in terms of it not being as bad? terms of the labor market not worsens significantly that we're going to get five to six cuts later on this year because that's what the market is pricing in. do we need that in order to fulfill your forecast? >> so that's a little aggressive for me i do think that fed policy being as restrictive as it's been has had a really notable affect on

the economy. all sorts of dimensions slowed housing market, labor market slowed consumer spending has come down. still remarkably strong, but a bunch of dimensions which i can point to restrictive monetary policy slowing the economy the part that is going to be complicated for the fed to thread this needle is to how much of this is supply side that's buoying the economy versus its strong demand is frankly the immigration numbers. those have been very strong and i think a fundamental reason why the labor market has been so strong and we've seen such large employment growth numbers even with inflation coming down you know, i don't see immigration numbers coming down notably over the next months i'm guess what mike is talking about supply-side factors waning the next couple months, guessing he's talking about participation, which i completely agree probably is not a sustained

structural change, but i think high immigration numbers are here with us for a while >> michael, you want to chime in here >> i mean, i just -- stepping back, i think the outlook for rate cuts in 2024 is very cloudy i think chairman powell was right to take march off the table effectively, which is how i interpret his remarks. there is a real risk of the economy reaccelerating the fed wants to tighten overall financial conditions overall financial conditions have actually been quite loose prior to yesterday, they were looser than they had been in six moss, maybe looser than in a year depending how you calculate it we saw financial conditions tighten a bit yesterday after the press conference there's -- look at data. wend ip absolutely right we saw a slowdown in interest rate sectors of the economy like housing like consumer durables we're starting to see those

sector reaccelerate. they're not where they used to be but we are seeing them trend up powell said we've had six months of good data maybe need a few more months of good data. i think there's a risk that the data, that the data in the future don't look so good and we do see a reacceleration. that might be the -- three rate cuts are too many, that might mean. >> got to leave it there, guys. >> and bond -- >> quick response, steve. >> well, quick, the idea that we're growing doesn't necessarily mean that it's inflationary factor in the productivity number factor in the idea that we have had relatively strong growth with inflation coming down one of the interesting developments yesterday was poum k came off the idea rising unemployment to get inflation down a factor, maybe right the supply side is responsible for it, but i don't think we should be afraid of growth and fear that there's an inflation factor in

there. >> all right thank you all. >> steve, i agree with that. i just -- cpi is going up. >> all right leave it there thanks, guys coming up, former kansas city fed president esther george joining us in central bank's decisions after chair powell yesterday cast serious doubt on a march rate cut as we head to a break, check out shares, reporting ankara holdings has caken a billion dollar stake in the tech giant directors of the company's board in an attempt to oust the company's ceo alan shaw. that will be a story to watch today. stay tuned u' wchg quawk box." ♪♪ ♪♪

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welcome back to "squawk box. topic of the day, when will the fed cut rates? based on what powell said yesterday in his postmeeting

yesterday. it may be when the kansas city president esther george shares when should we start expecting cuts given the market seemed to get ahead of itself a little bit? >> good morning, andrew. yesterday i think was a reminder to everyone that the federal reserve is squarely focused on its mandate of getting inflation back to target at 2% and so after the december press conference, obviously, the forecast that showed a series of rate cuts in 2024 set in motion, i think, a growing consensus that that would happen sooner rather than later. and i thought the chairman was very clear yesterday that the committee will move on a timeline that involves there being highly -- their beal highly confident what it is, it's hard to tell.

>> your standpoint, a april situation, march situation, a may situation? we're waiting for things to firm up and so we just want an extra month? we need multiple months? >> yeah. so if you listen to the emphasis on obviously exh ly six-month a on inflation are looking very positive, but the committee has a long horizon in terms of thinking about year over year, which is still running higher. so i think when you see the march meeting outcomes, absent any unexpected shocks to the economy, you're going to see a new set of forecasts coming out of this committee, and i think further discussion about the progress they've seen in the months following this meeting, and i think then, an opportunity to provide a better signal so clearly, i think the committee is in line to begin

cuts this year march is going to give us some more information about whether may is the timeline to do that, and i suspect the first half of this year, assuming things go as they have been, is an opportunity to do that. >> was this a surprise for you we talked to roger ferguson. not a surprise to him, but to a degree seems must have been a surprise to the market when i wos would argue maybe it shouldn't have been? >> yeah. i think the surprises come following that december meeting. i think that was taken as a pretty significant signal of cuts coming, and i think as people began to look at six-month averages -- and, remember this is a committee trying to balance going too soon versus too late too soon meaning you allow inflation to re-ignite, relive the '70s experience. versus, too late meaning you do damage to the economy. and right now we hear the committee members talking about

a soft landing, a path that does no harm. i think we have to wait and see. that timing is consequential the chairman said that would be consequential in terms of when they started that cycle. so it's a challenging time for this committee, i think. >> think >> for sure, and even with the just slightly softer than expected unemployment claims number today, you've seen the bond market move again two-year yields are back toward their lows the market's going to continue to try to maybe overanticipate the initial cut, and perhaps it's because what we know about the fed's stated outlook means they're further along on the inflation progress, and the economy's held up well, so they seem like where rates are right now looks increasingly out of step with where we've come for inflation. so, i just wonder if you think that eventually that's the market's logic we know what they've told us

about, we don't want to be too restrictive if inflation is going down, so let's get started. >> i think you've described it exactly right, which is the risk on both sides has been highlighted, the risk of reaccelerating inflation, but the one you noted, which is staying restrictive too long, we know, historically, has consequences to the economy. and i think when you watch the banking system and you see some of the credit issues being highlighted, you look at asset classes like commercial real estate, it is a reminder of how the policy adjusts and how it affects the economy over the longer term. again, i think the message yesterday was clearly, greater confidence, because once we start, it sounds like there will be a series of cuts to follow, and the committee will want to be highly confident in doing that >> president george, want to thank you for your perspective on all this. great to see you >> thank you coming up, the countdown to

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apple slated to report

fiscal first quarter results today after the closing bell let's bring in toni sacconaghi good to see you. wondering what in particular you'll really be looking for in this report. the street's expecting a modest return to topline revenue growth as they benefit from the new iphone launch, but what are we looking for beyond that? >> good morning. i think we're looking to hear whether apple has confidence to grow for the remainder of the year our forecast is for next quarter. apple will grow modestly this quarter, and for next quarter, it won't grow, and you know, given a relatively high multiple for apple and all the magnificent seven stocks, i think the street wants to hear some hope for what the trajectory is for returning to growth for apple >> yeah, i was struck by that in your projections in terms of the next three fiscal quarters you think there's a significant risk of revenue shortfall from

iphone sales versus what the street's expecting what, in particular, is that based on >> yes so, our contention is that the street is basically saying the year is going to play out very similar to last year but last year was a very unusual year in the sense that apple had shutdowns in china in the december quarter, and so a lot of units were pushed into the march quarter, and so accordingly, if you're assuming what happened last year is going to happen again this year, you're going to have elevated expectations for the march quarter. we think that supply for iphones this quarter has been great. all of apple's factories have been running apple has been in supply-demand balance since december and so, it's not the same as last year, and if we run out more traditional seasonality, we actually have iphone being considerably weaker than what

consensus expectations are for the remainder of the year. >> apple shares have actually been a bit sluggish, certainly relative to the nasdaq 100, they've underperformed by 13%, 14% in the last six months is that the market registering these risks, or did it just hit a valuation ceiling? how do you value it now? >> yeah, mike, i think that's a great question it's always hard to know what is in a stock obviously, we had great results from google and microsoft earlier this week, and yet, those were fully priced in, and strong double-digit growth and the stocks reacted modestly negative to those results, so i think that's always very tricky. i think what we would observe is that apple's valuation is towards the high end of its range, but it's not at its highest as it has been in the past and so, you know, the market may be saying, hey, we know this we anticipate this

and you know, potentially, there could be a short-term relief rally, but i think at the end of the day, every large portfolio manager is trying to get the magnificent six or seven right, and at almost 30 times earnings, apple's not very differently valued from many of the other magnificent seven, but its growth rate certainly last year and this year is dramatically below that so, i think it will be difficult for apple to have a sustained move from here until investors get more confident in the topline growth or get more confident about the relative valuation versus other mega cap technology names >> or if they pull a rabbit out of a hat, toni the bull case is that they could emphasize a.i. they could come out with some a.i. something, because that has led to the rerating of some of the other mag seven, big cap tech stocks, whatever you want to call them >> sure, look, a.i. pixie dust

is everywhere, and if you can get some sprinkled on your company, that can certainly help with the multiple. so, i think this notion of, you know, can vision pro be really outsized because expectations are very low, or can apple do something in a.i.? you know, it would clearly help the stock, i just think that's difficult for apple to be able to do. >> hey, toni, 30 seconds, tesla, musk, pay package, warranted, unwarranted? you be the judge >> i think the absolute number is unwarranted 250 times what the average ceo is making is outsized. i think he does deserve an outsize pay package, but that number is too big. >> okay. all right. toni, appreciate it. we'll look at what apple has later. let's show you where things

stand. about a half an hour before we are set to open. s&p up about 20 points nasdaq up about 100 points after a selloff yesterday. the dow jones up about 8.5 points >> apple, amazon, meta >> pretty much across the board. >> after the bell. >> we are going to hand it over to our good friends on "squawk on the street. make sure you join us tomorrow we got a big show from pebble beach. "squawk on the street" begins right now. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer. david david faber is back at post nine of the new york stock exchange ugly close to january, dovish macrodata, better productivity has the ten-year below 3.9%. our road map begins with the fallout from the fed as the chair says a march rate cut does look unlikely. mark zuckerberg's meta