normal february. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick with joe kernen and andrew ross sorkin. if you check things out this morning, look at the u.s. equities. not a lot of movement at this point. dow futures down 17. s&p futures down 5. as joe mentioned, we almost crossed the 5,000 mark for the s&p 500 yesterday. it did close at a record high. 4,995. we will keep an eye on this. we had the nasdaq 100 closing at a record high as well yesterday. it came after strong gains from

meta and microsoft and nvidia. you have treasury yields with the ten-year yield at 4.11%. the two-year note at 4.42. andrew. let's get right to the big news of the morning. a lot to unpack in the world of disney. let's start with the results. the company beat profit expectations and light on revenue. disney raising its guidance for 2024 as the goal of cost cutting by now of $7.5 billion by the end of the fiscal year remains on pace. on top of the results, disney announcing a partnership. $1.5 billion stake in epic games. they will work together to create a new game or new games and content features with disney characters. the biggest investment in the world of gaming to date. then on top of that is the sports alliance and partnering

with fox and warner bros. discovery. something bob iger commented on last night on "closing bell." >> we are looking for partners on espn to help take espn in a direct-to-consumer business. what we announced yesterday is two partners helping to do that in one way bundled with services and what we do when we la launch espn. we have been in discussion with partners. >> maybe icing on the cake is the taylor swift eras film is coming to disney plus. the service lose subscribers due to price hikes, but that is not impressing nelson peltz. his trian fund management saying it is deja vu all over again. we saw this movie last year and we didn't like the ending.

referring, i think, to the idea of a period of time where he was happy with bob iger's results. suggesting he is happy with the direction they are going, but thinks it is not a sustainable something. i don't know. >> missed the dividend by 50. >> i don't know what else they can do. i'm at a loss as if you are nelson peltz, what do you think you can do? >> the stock will tell the tale. no one likes that ending. that's all you have to look at there. it got back above 100. >> we will have an interview with hugh johnston, the new cfo. we have known him at pepsico and in the middle of the challenging environment in the media sector and living through the activist fight. we will bring some of that to you in just a little bit. we will go through all this with him. shares of arm holdings are

surging this morning. the chip maker beat on the top and bottom lines and issued better than expected guidance. arm's chip design technology by apple and google and microsoft and nvidia and is in nearly every smartphone and pcs. arm went public in september. softbank is under a lock-up provision which prevents it from selling the arm shares with certain exceptions after 180 days after the stock market debut. the rise of tech valuation is helping soft bank's quarterly profits. i was thinking about it. taylor swift goes there? you don't get revenue. >> if you get subs. >> everybody has seen it. five new songs or something.

>> the taylor swift economy. uber -- >> something nice to say. it will not do anything material to disney's results. the epic thing seems more significant. other than that, i don't know of any media company with shiare o our parent? 42 and change. i don't know netflix. i guess that. what is the perfect media company? >> if you assume that is the case, if you go back to the nelson peltz of it all? >> if i was disney? >> i don't know if he has any idea what to do with a media company. remember when he used to do consumer product companies. he has no idea. he likes to go in and he wants a higher stock price. i don't know if he knows how to

get there. i don't know if anybody on the planet knows how to get disney stock price higher. you will see 20% gains. >> up 9% for the week. a big week. you are right. barely back over 100. >> barely. >> the entire -- >> it's daunting. >> yeah. >> tell that to your retirement plan. i'm sorry. it's all relative. you made no money for a couple of years. >> decide you don't want to be in the media business. that's a different story. >> media business is under performing the s&p 500 for sure. also paypal shares sliding today. the online payment company reported better than profit and revenue. full year guidance was below estimates. the number of active accounts

fell to 426 million. analysts had been looking for an estimate of 427 million users. last week, paypal announced it would cut 9% of the work force. that stock right now is down 9%. a news alert from capitol hill. creation of the new a.i. consortium focused on safety. the consortium includes 200 companies and those on the frontlines of creating and using the a.i. systems and hardware which includes apple and amazon and openai and nvidia. the cbo forecasts the deficit will rise to $1.6 trillion this year and expected to grow by another $1 trillion over the next decade. the budget gap will largely be

driven by higher interest payments and the aging population and social security programs. we dig deeper into the this with the budget director and cbo phillip swagel at 7:30 a.m. east e eastern time. coming up, we big into more on disney. did bob iger keep those from storming the castle? we will talk about it. at 8:00 a.m., we have an exclusive interview. you don't want to miss the ceo sundar pichai who will discuss the recent layoffs at the company and the culture and so much more. "squawk box" is coming right back.

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i think he's having a midlife crisis matching yoi'm not.escription. you got us t-mobile home internet lite. after a week of streaming they knocked us down... ...to dial up speeds. like from the 90s. great times. all i can do say is that my life is pre-- i like watching the puddles gather rain. -hey, your mom and i procreated to that song. oh, ew! 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 to "squawk box." disney making a $1.5 billion investment in "fortnite" maker epic games. >> this is the foray in the game says which is timely, but an important step with the demographic trends and gen alpha and gen z. it is dramatic the time spent.

>> joining us now is tom rogers. a lot to chew on bob iger gave us. tom, i'm curious your reaction. >> good morning, andrew. you have to give disney credit here. they did beat on earnings. they did more aggressively cut losses on the streaming side. they have built a streaming business with over $20 billion in revenue over the last five years. they got a lot of wood to chop still. it is not the first time i thought the market overreacted optimistically to the disney report. i think all of the fundamental issues on the streaming side and traditional tv side are still there. a lot of challenges are still ahead. >> if you are nelson peltz, who said effectively, he has seen the end of the movie before. there have been climaxes in the

film, but ends badly, are you in the camp with him? >> i'm not sure i'm in anybody's camp. i think disney still has to answer some significant questions. nathanson had done an excellent report showing netflix at the same point in revenue and same point in subs had $4 billion more in profit than disney with revenue and subs. i think there is still a question about what kind of profitability trajectory the streaming business is on. certainly the streaming business is challenged in subs having lost subs on the disney plus side and lost subs on the espn plus side. the hulu issue points out significant management issues on the streaming side.

everybody is talking about advertising in the streaming space now as netflix lights up advertising households. max lights up advertising in households. hulu is the grand daddy of advertising with far more than anybody else. last year, ad revenue on hulu declined. it declined again last quarter. the rates they were charging for advertising on hulu declined. that is a head scratcher. there are some real challenges on the streaming side. the lineal side continues to decline. the sports venture that was announced, i don't think really adds up to the answer on the sports piece. >> let's stick with that last piece you said for a second. we tried to go through some of it yesterday. the impact of that streaming service and you've talked for a long time of creditating the

switzerland streaming conglomerates, if you will. you talked about trying to keep hulu all together with the various parents involved. why are you not as bullish on the sports piece of this? >> well, it is a question of what this is intended to be. when it was first announced, it was overhyped as an answer to the heavy sports viewers need for a real all encompassing sports service. there's probably $16 billion in sports costs that is put into this across the three participants. paramount is not in there. nbc is not in there. apple, amazon, google sports are not in there. there is just as much not in there as in there. it sounds as if it is a skinny

bundle of channels rather than a real answer to how do you simplify the heavy sports user's need for a sports service. it doesn't really address the biggest challenge we have out there which is where is the fan base challenged when it comes to sports and streaming. it is local sports. the regional sports networks and how to get local programming and local sports into the streaming environment is the real challenge. this doesn't touch it at all. the pricing of this sounds very complicated relative to much cheaper ways of getting all the sports out there and get a digital antennae for $25 and get cbs and nbc and fox and subscribe to espn on its own as a digital service once it launches and you have a cheaper approach. >> you just answered my needs, tom. that is for the games on nbc. the nfl games on nbc and cbs.

i was reading the cheapest thing you can buy is anteantennae. i'm not watching a crappy signal. i don't know how to do that on a big screen tv. all of the other sports, i may or may not think that is a great idea, that i can watch soccer or something. i need cbs and nbc nfl games. now i'm up to $100 if i get this and then try to figure out a way of getting that stuff. i don't understand this. which of the league's feel if everybody -- it's almost like the airlines. they can fix prices. why one of the guys in the partnership bid against itself? >> now you are lina khan.

>> why bid against themselves? we will know with snba. if the nba comes in an $5 billion instead of $7 billion, we know it is easier to pay the leagues less. >> i disagree. they will sell this in various packages. this is not the only place. >> i was asking tom. what do you think, tom? >> it is what are the ambitions? if this is really intended to be a sports venture, then i think the leagues will have some real concern here. the leagues want to know who they are in business with and all of a sudden, independent management has been created in this acseparate entity. if you are in the nfl, what is the governance of this? does each party have a veto of how this is marketed and put together? if so, warner, which has no

relationship with the nfl and doesn't have an nfl package, has control of the distribution of the content within something intended to be a major sports dist dist distributor? if it is a skinny bundle of channels which bob iger suggested yesterday in that interview on cnbc, that is a different question. then the question becomes there is conflict between what the ambitions are of the espn streaming channel on its own and this venture. i was co-chairman -- >> are you convinced this happens? >> i'm not convinced it happens if warner bros. turner doesn't get the nba. i think there is a real possibility here that comcast nbc which has a broadcast network and in some ways could be a more attractive place for

the nba rights to go when it comes to that ackage. if comcast got it, i don't see a reason for warner, although they do have other sports, to be given the prominent position in what is intended to be the triumverant sports venture. >> we'll talk about disney stock price. warner bros. discovery. it is a crappy business right now, tom? >> the traditional tv business is not great. netflix is the only one making real profit and cash flow on the streaming side. look, all these companies, if you take a five-year look, these companies with major studios and major libraries will ultimately have profitable services. the issue is between here and

there and how much patience do they have and does the market have to get there. there were plenty of late entries to the cable game. people said these will never been profitable. they held in there and the model ended up being one that came to them. if you had the wherewithal to wait it outline, you were a profitable service. the issue is in the near term, there are answers that need to be provided by the companies to make them more attractive. >> netflix. netflix, tom. >> look, i said for a long time netflix would be the most valuable media company out there. >> tom said t. greenfield said it. >> netflix. netflix. below 200. i would mortgage my house. probably not allowed. >> tom, thank you.

disney cfo hugh johnston will join us in the 7:00 a.m. hour. we will walk through all of the questions we have about the magnitude of things we heard overnight. thanks. >> he seems happy there. coming up, hedge fund manager bill ackman wants to bring retail investors into his investing tent. those stories and more when "squawk box" comes right back. [busy hospital background sounds]

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welcome back. hedge fund manager bill ackman

reaching out to investors. he is planning to launch a new closed-end fund to list 12 to 4 i 24 investment grade companies. the management fee is free for the first 12 months and then charge flat 2% fee. new details of the connection with jeffery epstein and jes staley. he used an intermediary to stay in touch with epstein. this is part of the settled virgin island lawsuit against staley's former employer jpmorgan chase. the two men stayed in touch and hid their relationship is contrary to what staley told the barclays board in the uk

regulatory probe. >> that's a little rich in terms of him going after jpmorgan chase to say it was not his fault. >> the guy has been dead for how long? every couple of days we have an epstein story. >> nobody really knows. >> you think it was all overplayed. there is no there there for this. >> i think there is certainly there there for the women who were -- the thing i don't understand is there is such a large incentive for prosecutors and class action lawyers and journalists and all sorts of people to figure out the thing, whatever the thing is that we think we all know, but seem to not totally know. >> what are you implying? the boldface naimsmes involved?

>> i think we would know it. i'm not defending the names. i think it is possible they were. i'm surprised we don't have more definitive something. >> you hear about videotapes that supposedly exist. >> yeah. >> ghislaine is writing something. >> he's dead now and the amount of money available otherwise. >> you see his brother. no way. no way he took his own life. >> i saw that. >> that's why we talk about it. you can come up with any scenario you want. >> that's the problem. >> thank your lucky stars. i never met madoff. i have known some unsavory c characters. >> madoff, i did.

i met madoff in prison. after the fact. once prior. >> walter forbes. you know, thank god. when we come back, how ceos view the economy right now. former fed vice chairman roger ferguson will join us with the fresh look at ceo confidence and we will have a question or two of interest rates as well. as we head to break, let's look at the s&p 500 winners and losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. s of cyber threats each year. that rate is increasing as more and more businesses

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welcome back. ceo confidence improved in the quarter after the state of the economy. according to the newest data from the measure of ceo confidence survey.

joining us is roger ferguson. chairman of the business council and former fed vice chair. roger, these results are interesting. i think the reading was just above 53. the key here is it is the first time since the first quarter of 2022 that the reading is above 50. above 50 indicates there are more positive responses than negative responses. what are ceos finally starting to feel? >> i think they are starting to feel a couple of things. one is the momentum in the economy born out by the macro statistics. secondly, i would say the issues with the supply chain wicontinu to improve. the third is the destocking. a lot of companies built up a hughes huge amount of inventory. i think ceos are feeling more

confident they will sell goods and services. >> you don't feel it is an overwhelming vote of confidence? >> it is not overwhelming. anything above 50 is meant to be positive. this was 53. to get context, the high when things were really rocking and rolling was 82. they moved from negative to slightly positive. the other point i would make is there is still some discussion around labor markets, but that is nmore nuanced. wages are expected to rise 3%. for the first time, we are also seeing a decrease in labor hoarding. about 23% of ceos think they may reduce the labor force in the next 12 months. that sis a notable move. >> labor hoarding. we hear headline after headline of layoffs.

it does make people wonder about the jobs market although we get the strong markets. you think that is a result of letting go of some of the jobs they have been hoarding over the covid pandemic and beyond? >> i think that's right. i think the pendulum in labor markets have swung from ultra tight with employees with the upper hand and now it is a more balanced story. you are reading more stories with employers saying it will let people go or shutdown the open recs. i think the market is moving more in balance. you see that with employers thinking we'll layoff people and still increasing wages. the labor market is moving back into balance between employer and employee. >> can we bring back up the chart that shows the ceo confidence measure over time? roger, i want to mention the

high, the all-time high was 82 or north of that. that happened right before the covid pandemic hit. i guess that makes you wonder how useful these measures are in predicting things to come. was that an an comaly because ts was a one-off situation or is this not always the most useful measure? >> it has been highly useful when it gets below 50 and generally speaking it is signaling a slowdown. it is signaling some sort of recession. i think the 82 shows out the covid outbreak was and how little understood the implications. there is a lot of learning that occurred since that time. 53 is consistent with things continuing to get better and consistent with the consumer survey which is at the two-year high. >> it has been below 50 since the first quarter of 2022.

we didn't see recession. we didn't see the downturn that would signal either. if we're improving, are we not looking at a recession on the horizon? >> look, i think many forecasters, as you know, are pulling back from the recession calls. that is also true at the conference board. my view about the recession question is it depends on the fed engineering this thing which is a soft landing. there is a lot of good news that has come in. the economy continues to be robust. iting the interest rates well. the fed is clear it will delay its cuts. maybe more than the market thought. recession concerns have certainly receded. i would certainly say until the fed gets the soft landing and will is still a possibility we will have a mildish recession. i don't think it is the likely outcome, but not reject it

completely as the possible outcome s outcome. >> roger, thank you for your time. roger ferguson. >> thank you. coming up, a shipping giant reporting on the financial impact of the red sea trade disruption and we will have a live report from iraq after a u.s. drone strike taking out a kma commander of the militia group. all that as "squawk box" rolls on this morning. >> announcer: currency check is sponsored by interactive brokers. the best informed investors choose interactive brokers.

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just kidding. join 18 million americans and take control of your financial future with a real time dashboard and real live conversations. empower. what's next. welcome back to "squawk box." maersk feeling the financial impact of the red sea shipping disruption. company saying there is high

uncertainty in the 2024 outlook as the disruption continue to weigh on the industry. the company's ceo speaking to our colleagues in europe this morning. >> we are heading for a period of oversupply and probably a lot of price pressure which is what we flagged already in our q3 report in november. of course, since then, we have seen the situation unfold and continue to unfold in the red sea. the impact of the situation is causing new unscertainty for ho this will play out. >> the company saying the board is decided to suspended share buyback program with the reinitiation to be reviewed once market conditions settled. shares trading lower in europe this morning. a u.s. drone strikes takes out the militia leader in jordan. we have keir simmons joining us from erbil, iraq.

>> reporter: becky, they are not clear how many strikes there may be. the government official telling nbc news that this strike was authorized by the president early last week and they waited for the opportunity to present itself. clearly it did last night with what you have to say from the pictures a targeted strike. the car set ablaze. three inside killed, including according to the group itself, commander with hezbollah that is accused of carrying out the attack on the base that killed three u.s. service members. that strike targeted and creating anger on the streets immediately afterwards with crowds shouting no to america and no to israel. whether or not this will be the

last hit, if it you like, i don't think anyone can say. i wouldn't predidict that, beck yic y. the big question is and the comment before you came to me about the continuing uncertainty. uncertainty is an understatement in the region and red sea and here in iraq. i think the interesting question is to what extent are these u.s. strikes deescalating things? this morning, we have those iranian-backed militia groups asserting again they will double down on their attacks on bases and u.s. bases and on kurdish forces in iraq. the strike that we saw last night, once again, not a direct target on iranian or in iran. that would be a massive escalation. seemingly calculated to hit, if

you like, specifically, those militia that the u.s. government deems responsible on tower 22 that attacked the u.s. service members. how this plays out from here is a question. becky, to finish off, i'm hearing in iraq the oil pipeline into turkey is closed down. they have a huge financial crisis here not able to pay civil servants because of a lack of cash flow. it is not clear when that will resolve itself. think about the kurdish part an of iraq are partners of the u.s. they fought isis with the u.s. and now standing up against iran. they have some relations with iran. it is a complex region. very, very difficult. it continues to be difficult for the biden administration in all this. >> keir simmons in iraq. thank you very much. "squawk box" will be right back.

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we have been -- we is a strong word -- we have been tracking the just capital just 100 list this week, a ranking of america's most just companies. joining us now, accenture ceo julia sweet, number three on the just 100 list. i bet you didn't even have to try, did you, julie? >> thanks, joe. this is how we have operated for years. we're proud to have been on the list since it was inaugurated eight years ago. and it reflects, you know, our

70,000 people in the u.s. and our over 7,000 around the world because the things to be just are what we believe in and they're good for business. >> and i think every company in america would probably like to be on the list, like todo all the things that get you on the list. the only thing that might hold a company back, maybe, are the realities of shareholders and customers. when you try to balance all of your constituencies, sometimes you have to make some tough choices. how do you do it? >> joe, actually, we look at it slightly differently because if you think about what gets you on the list, like the top things are things like paying the right wages, right, investing in skills, and that's what you need to do in order to have the best talent. and to succeed, it is all about people. so, those are not things that

you have a trade-off. other areas that matter to americans that get you on the list are things like data privacy. in the context of a.i., the fact that we have a responsible a.i. program, that we have very strong programs around data privacy, all essential to our business, and so, we actually haven't found that these are things that are, you know, in contrast to each other, and the facts speak for themselves. over the last four years we have added $120 billion in market cap. and it reflects that, you know, being just is really good. you create value and you stand for values. >> i guess i was thinking about the wage component and, you know, you have to sort of judge your competitors, you have to judge the profitability of your company. and, you know, going to absurdist levels is never an argument that really works, but you like to pay everyone a thousand dollars an hour, if you could.

when a city like seattle or some west coast city raises the minimum wage to where it is going to crowd out any entry level positions, or, you know, you're going to end up seeing most of the franchises have to close down because they can't adhere -- they can't actually earn a profit with -- so that's what i'm talking about, you have to balance that, julie, right, so how do you do it? what is the top wage you can give where you're still able to be a profitable company in relation to your peers? >> well, the way we think about wages is, first, is that we have the policy that we're always going to pay a living wage and that's part of the values of our company, also how you get the best talent. and we pay market relevant pay. it is our job, right, to be able to make a profit at market relevant pay. but if you don't pay what is

market for your employees, you're not going to get the best talent. now, paying market doesn't mean paying the most. it means paying what do you need to actually get the right talent. and as you think about accenture, we added over 200,000 people around the globe. we hired a lot of people in the u.s., strictly following that policy. and when you take a step back, it is not just about wages, it is about how do you attract the best talent because people want to do more than just get paid well, they want to join a company that has values, they want to join a company that cares about health, right? so we talk about are you net better off because you work at accenture? we invest over a billion thar ds on skills. that matters to our employees. what we advise clients is to look at their employee value proposition wholistically and then operate in the envelope of profitability, but what we have seen is that companies that, for example, lean in on disability,

they have 2 1/2 times revenue and they have greater profitability. so, these things about being just do equate to higher profitability. >> but, just when you use the word paying market wages, now you're back to what is the standard model for how companies normally operate. and some of these, i guess, when you say i'm going to pay a living wage, if you're a fast food restaurant, and you want to have entry level workers that are high school or college kids and you need to pay them $80,000 a year, those jobs are not going to exist. you need to pay the market wage. so, a lot of this woke just stuff is antithetical to market forces. that's what i don't understand. and market forces can end up causing you to do the right things to be a just company. and so it is almost redundant to have to spell it out or almost

virtue signalling to have to spell it out when to be a profitable, innovative company that satisfies customers, and employees, and communities. once you do that, you are just, by definition. >> joe, i'm not sure what college student is going to expect to be paid $80,000 if they are, you know, working in a -- >> what say living wage, julie? you're not going to give a living wage at an entry level position at a drive through. you're not going to get a living wage. unless you live in a box. >> a living wage is actually not -- a living wage is not $80,000. it is defined by the cost of living in a -- >> julie, congratulations, you're number three. that's the bottom line. and obviously, you know, when you're number three on any list of 100, that's pretty darn good. thank you. >> great, thanks, joe. >> okay. >> coming up on the other side of this, disney shares sharply higher this morning.

hugh johnston will join us in his first interview since taking the word at the entertainment giant. we're coming back after this. help you find and unlock opportunities in the market. e*trade from morgan stanley.

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good morning. stock futures are little changed after the s&p 500 finished the regular session on the brink of that 5,000 milestone. disney's magical quarter. the stock surging after beating estimates and raising quarterly guidance. the company also announcing a string of new content initiatives. disney's cfo hugh johnston will join us live. plus, the latest bank of america consumer checkpoint data is out. we'll find out why inflation is a sticking point for consumers this year. the second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" on cnbc. we're live at the nasdaq market site in times square. i'm andrew ross sorkin with becky quick and joe kernen. let's show you the futures right now. dow jones off 13 points. nasdaq down 23 points. 23.5 points. s&p 500 off 8 points. we'll show you treasuries, you're looking at the ten-year and the two-year, we flip the board around. the ten-year at 4.135. the two-year, 4.433. and then crypto, quick look at bitcoin. up at $44,724. let's talk about the big story of the morning, shares of disney moving higher ahead of the open. this after the company reported a solid quarter thanks to

strength in its theme parks and cost cuts. ceo bob iger saying the company has turned a corner. >> for the quarter, you have across the board success, all of our businesses are doing very well. you just noted the improvement in streaming which has been dramatic, not only quarter to quarter, but from a year ago. and that's the result of just a tremendous amount of hard work in terms of completely reorganizing the structure of that business, raising prices, of course, reducing expenses. >> disney also announcing a number of new initiatives from a stake in epic games to espn streaming plans. it doesn't appear to be enough for activist investor nelson peltz who is saying, kwoquote, is deja vu all over again. we saw this movie last year and we didn't like the ending. we want to welcome hugh johnston, disney's cfo. good to see you this morning. >> good to be with you, andrew. >> i imagine you're on the west coast. so this is an early morning for you. curious, let's just start --

let's start actually at the nelson peltz of it all, this idea he believes -- there was a moment, a year ago, where the stock popped on some -- on the back of some good news. but it fell back down again. and clearly nelson, i think, is looking at that and saying, is that happening again? >> yeah, it is interesting, andrew. i saw the quote yesterday and i don't know what to do with that. that feels like a bit of an idle complaint in so many ways. let's take a step back and talk about what we really communicated yesterday. number one, all of the hard work over the last year that bob and the team have been doing has generated great results. top line results are solid. bottom line results are really strong. product of all of the businesses doing really well. that was point number one. point number two was we feel confident about the future, which is why we gave the guide we did and not just the future for this year, but the future for multiple years with the

share repurchase and the dividend increase. and point number three, we're making progress on the important strategic initiatives to investors. espn is making good progress in terms of making itself available everywhere. and in addition to that, we feel good about the theatrical, with moana and the exciting news on taylor swift. i think across the board we're making good progress, and investors should want us to continue to do that, not be disruptive by sort of debates about side issues. >> how challenging should we all think the media business is and when investors say to themselves, not just about disney, but maybe more broadly, should we be invested in the media industry, an industry that at least over the past year, two years, maybe longer now has underperformed the rest of the market. >> yeah, it is interesting. and obviously i've come to a decision on that personally, which is why i'm here. i came because i thought there was big disruption happening in

the industry. but i felt we were actually at an inflection point, where the industry and in particular the disney company was coming out of that inflection point and in a really positive way. so, from an investor perspective i think this is a good time to catch us. the market is obviously responding positively to the moves that we're making. both in absolute and relative to some of the other companies that we compete with. so i actually feel like this is long-term a great industry. people want to be entertained. people want to get news. people want to get sports. and when demand is there, generally speaking, we'll figure out ways to make money around it. >> tom rogers was on earlier and made two points i wanted to play back to you if i could, one was that he was concerned and i think maybe some analysts have even looked at this, some of the advertising issues on hulu. and how we're supposed to think about that. maybe the broader point he was trying to make is he was looking at an analyst report that suggested if you looked at where netflix was at the same point that disney is at, in terms of

revenue, the profitability was higher. what do you think of that part of the analysis? >> well, in terms of where we are on dtc profitability, i think we're very focused on building a really strong solid business that is very competitive and what is a competitive space. and we feel good about the assets we have. whether it is disney for the family, whether it is general entertainment with hulu or espn for the sports fan, we feel like we offer the household the broadest array of entertainment options with our streaming service. comparing to where hulu was ten years ago is interesting in some ways, but it was such a different time. there was very little competition at that time. now there is multiple streamers. i feel like we're in a position right now where we said, we're building toward a business that will consistently grow subs, and will be a double digit margin business. that's an attractive business to be in. so, i do feel like we're tracking on the right way, and i

feel like we're actually building what will be a terrific business over time. >> on the new sports package, should we think of it as a skinny bundle that really is focused around sports or should we think about it as something broader? >> i think we should think about it as both in all candor. it is a skinny bundle to be sure. i think it is broader than that. i heard you all talking a little bit about some of the challenges in bringing sports to fans. you know, when we did this, we started from the perspective of the fan. how do we reduce friction, how do we make it easier for the fan? and i think this product will actually do that very well. it is going to offer, whether it is college football, the nba, the nhl, it will offer over 80% of the national games that are currently broadcast in one easy move. to me, that reduces friction for the sports fan. and i know there are still challenges in terms of getting that last 20 pros%, but let's nt

perfect be the enemy of what is a good product out there. >> what about the leagues? there are reports now that the nfl, the nba, say they were caught off guard, uncomfortable about this because they worry that it very well may be, even though everybody is working independently, maybe everybody is not acting independently in terms of as bidding is done for licenses in the future. >> yeah, i can assure you, everyone is going to be acting independently. this is not a jv from a buyer perspective. this is a jv from a distribution perspective. from that standpoint, the nba actually came out with a statement yesterday saying they were supportive of it, in addition to that if i'm sitting in the league offices, the number one thing i'm concerned about is how do i make things easier for my fans, so that those fans can get access to my content as easily as possible? and i think this is and enhancement to them. the league should be actually quite happy about this. >> hugh, that brings the

question, though, is this different than hulu was? because if everybody is still kind of got their own agenda, it is tough to pull that together and that's what we saw with hulu. >> yeah, i think you have to separate the two though, becky. i know there has been some talk about that, but hulu actually procured content as a collective. we're not procuring content as a collective. we're basically offering a distribution option. so the governance will be everyone sort of voting equally, but in terms of the way that content is procured, in terms of the way the economics work, it is really much more based on individuals contributing themselves into this distribution capability. >> when you think about the investment in epic games, owner of fortnite, speak to the economics of that and what that could turn out to be. >> yeah, i think it is early days for us to speculate on that. the product isn't even built yet. we have a little bit of time. what i do know is if you look at

basically people under 40, they do spend a lot of time gaming, and for disney, this is the biggest move we have ever made into gaming. and we're doing it with fortnite, a great franchise, and it will be a disney universe that will sit side by side with the ability to move back and forth between the two universes. it is going to be very, very attractive. in terms of pricing, it is just too early for us to talk about. but i do expect it is going to be a very profitable business for us. that's part of why we took the small equity stake because we thought why not compensate it from an equity perspective, not just from a games perspective. >> and is the view that this gets built in one day to disney plus, is this a stand alone thing, do you have any kind of sense of what that ultimately looks like? >> no, i think it is too early to speculate on that. though i don't know why somehow there can't be some connectivity into disney plus. but this is very early days. we need to get the games built.

ultimately, i can see it playing into some of the disney plus content, playing into the gaming universe, but disney plus will be separate from the games. >> one of the things that did take place during this quarter was revenue was less than expectations, but profit was much more than expectations, which raises a question in my mind, just about the elasticity of pricing over time and the strength of the consumer, the demographic of the consumer for disney, it was always a very broad-based demographic. does that change? does disney become a luxury business? >> i don't think so. and when you talk about elas elasticity, if you look at across the board the way our revenue growth broke down, the parks delivered 7% revenue growth, the experiences business, so, from that perspective, it suggests robust elasticity and high demand for the product. dtc where we took substantial

price increases, revenue grew 15%. the revenue number being flat is purely a product of the fact that we're overlapping last year two movies, "avatar" and "black panther" with basically no movies this year. now, as we go forward, bob talked yesterday about the slate that we have, "planet of the apes," "dead pool," "mu "muphas and we should have good profits next year and this year. >> what is the expectation for -- let me ask you this, when you do something like that, how do you map out new subs versus preventing churn for a product like that, and what i imagine is a big expense. i don't know if you want to give us the details of that expense. >> no, we're not ready to share details on the expense. but what i would tell you, and

we laid out this guidance very specifically for investors is for the second quarter, we're expecting subs to increase by 5.5 to 6 million globally and 7.5 million in the u.s., so that suggests we're optimistic about the sub outlook and obviously taylor swift is an amazing phenomenon. and she'll certainly contribute to that. not just in the second quarter, but actually in the third quarter and beyond. >> do you sit around and map out and say, you know what, that film unto itself could be worth 2 million subs and then the question is can we keep those people around? >> we do. we look at those investments in a very granular way. you have to. predicting these things isn't that easy, but we have models that allow us to at least put a handle around it so we can make a good decision on whether we're investing the money in the right place financially. and i'm optimistic that this one is actually going to exceed our expectations. >> returning to the issue of espn, now that you have this

other package, sports package, you still kept open the possibility of a deal with a league or technology company or something else, can you give us any direction about what that could look like? >> well, i mean -- >> how would that compete against disney package, i guess is the bigger question maybe? >> let's separate the two. what we communicated yesterday or the day before yesterday was i think substantial progress on the distribution side. reducing friction for the sports fan. what we might do on the league side, we'll communicate on that when we're ready to. we're having conversations, we have great relationships with all of the leagues and i'm optimistic we'll be able to get something done there, i don't want to speculate on that. in terms of what we call now espn flagship, which is a much more digitally oriented product, that one is about a year and change away. we said it would be in fall of 2025. i think that sits side by side with the announcement that we made yesterday.

very digitally oriented, we'll have things like enhanced statistics, it will be integrated with espn bet, it will be integrated with espn fantasy sports, so for what will likely be a younger demographic who wants much more inter interactivity as part of their sporting engagement, it will sit side by side with the jv we announced yesterday. >> talking about espn bets. have you made a bet on sunday? >> no. i'm actually just rooting for a great game. >> okay. hugh johnston, we appreciate you waking up early and appreciate seeing you in this new role. thank you. >> thank you. great to be with you guys as always. >> look forward to seeing you again soon. thanks. coming up, a read on consumer spending from bank of america. the firm's latest consumer checkpoint survey is out and we have the numbers. then at 8:00 a.m. eastern time, exclusive interview with the alphabet ceo, company's working artificial intelligence,

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welcome back, everybody. bank of america's first consumer checkpoint of 2024 is out and it does show some softening. in january, total card spending per household fell by .2% year over year. for more on this, we want to bring in liz everett chrisburg, head of bank of america institute. liz, we're talking about a decline not just monthly, seasonally adjusted, but year over year. what do you think is happening? >> i think, i mean, it is really a weather story. even though it is down and it is softer this month, if you think about january, we had extreme cold in the midwest and the south, and the east coast i don't think it is a little too early for milli vanilli, but a lot of precipitation on the east coast, and if you look at the one sector, one region of the country with normal weather in

january, the west, that was actually up 1.7%. so we think that it is really a largely weather story. if you look at the daily data in the second half of january, it started to pick back up. the other thing i would say is if you understand the drivers, services spending that really came down, goods spending was essentially the same level, down 1.5%, but services, which was up 2.5% in november and december was only up 1% and within that restaurant spending, which had been growing at 3.6% in january was down 3.2%. people don't go out. >> didn't go out to eat, didn't get massages, didn't do anything else, everything else you're seeing suggests the consumer is still hanging strong. >> if i cross the other metrics of consumer health, look at wages, wage growth continues to be strong. and we measure that by looking at money coming into consumers checkings and savings accounts. if you look at the level of checking and savings accounts, those are stable, they have been

up about 40% relative to prepandemic levels since the middle of last year. that's stable. away from the checking and savings, we also are in the retirement business. so, look at in 2023, retirement accounts, 401(k)s, are up 15%. and some of that is the market, but if you drill into what consumers were doing, 17% of people who have their 401(k)s with us increased their contribution rate. that's a sign of consumers taking an active role prioritizing savings. the other thing we saw is a decline in the number ofpeople taking loans against their 401(k), and hardship loans are also down. >> the fed is really data dep dependent right now. does that suggest there is not any reason for the fed to be cutting rates right now? >> the data shows that the consumer should continue to be resilient. right? but the conundrum is, and you asked me about this all the time, the conundrum is if the

data is good, why is confidence not great? right? now, confidence ticked up a little bit. when we ask consumers in the latest bank of america insight survey, the top concern is inflation, right? which isn't surprising. what is surprising is the majority of respondents said that inflation was going to be more of an issue in 2024 than in 2023. so that surprised me a bit. because inflation is coming down, right? but why is that? prices are stubborn. prices are stuck. the other issue is when you think about what makes up inflation, it is a lot of different types of categories, right? but you're not purchasing something in every category every day, every month. what are the three categories that consumers are purchasing the most? transaction data says restaurants and bars, it is groceries and it is gas. and if you look at those three categories, those three categories continue to be significantly higher. inflation, the pace may have come down, but the prices in

those three categories is 25% higher than they were before the pandemic. there is a sticker shock component to the consumer that i think is impacting your psyche. >> if consumers are still spending, there is 70% of the economy, as long as they have jobs, as long as they're seeing increased wages, as long as they feel good about the health of their jobs, it is really hard to see a recession. >> well, i mean, i would agree, the one thing i would say that i'm -- that we're looking at in the data, and the labor market is strong and wage growth is continuing, particularly for the lower and middle income consumer, right? but the higher income consumer is seeing negative wage growth, down half a percent in january, second consecutive month of decline. >> what level? >> what is higher? >> what qualifies? >> this is looking at wage growth, it is not looking at higher, it is looking at actual money coming into accounts. >> what qualifies you as a higher income individual?

>> over $150,000 annual income. it is not the highest highest end, but $150,000 or more of annual income. when you were talking with roger ferguson and hiring in the labor market, in talking about job cuts, that's really impacting the higher end of the market. the lower income consume, the lower income household, they're seeing wage growth up 2.5%. >> liz, thank you for coming in and sharing. >> great to be here. coming up, dom chu with a look at this morning's premarket movers. and then we'll talk about the nation's fiscal outlook with phillip swagel, director of the congressional budget office, known as the cbo. its latest report is out, and not surprising perhaps, it is not pretty. "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. what angel investor founded both palantir and affirm? the answer when "squawk box" returns. - hip-hop! - limping! mmhmm!

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and welcome back to "squawk box." i'm dominic chu with a look at your premarket movers. we'll kick things off with a look at shares of new york community bancorp. the embattled regional bank has seen its stock taking a beating since reporting a quarterly loss late last month, alongside a slashing of its dividend. they have more than halved their value since that report. the stock did catch a bid late yesterday on possible deep value buying, also some short sellers taking profits on winning bets. former flag star bancorp ceo ail sandro denello was also then appointed to be the executive chairman there, he also said the lender could look toward shoring up capital positions and reducing its exposure to the commercial real estate market if needed. the shares down 5% after a move yesterday. then shares of computer chip company arm holdings, up a whopping 27, 28%, just about nearly a million shares of volume premarket.

it was up by the way around 41% at one point in an extended action after it reported quarterly profits of revenues that both beat estimates after yesterday's closing bell. it also gave a much better current quarter forecast than anticipated and said demand for artificial intelligence based products was fueling growth there. those shares up huge. and we'll have much more on that story later on this morning when arm holdings ceo joins "squawk on the street" for a first on cnbc interview in the 10:00 a.m. eastern time hour. and let's end with a check on roblox, down fractionally premarket around 50,000 shares of volume. up 10% yesterday on the back of posting a smaller than expected loss on better than expected revenues as measured by their bookings metric. the online video gaming and user interaction platform company also gave stronger full year guidance than expected and we'll get much more on that story later on next hour when the roblox ceo joins "squawk box" including what it will take to hit the company's target of 1 billion daily active users.

andrew, interesting interview coming up. back over to you. >> thank you, sir. coming up, we'll talk deficit in the nation's fiscal health with phil swagel. at the top of the hour, don't miss this, google's sundar pichai on the atste of big tech and a.i. in an exclusive interview here on "squawk box" as things roll on. let newage products transform your garage into an area of your home you can be proud of. modular steel cabinets let you pick and choose the storage solutions to keep your garage organized, with overhead racks and shelving, slat wall,

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welcome back to "squawk box." there is -- there is the picture, the premarket moves that we're seeing in the averages, pretty muted this morning after another good session yesterday. meanwhile, all this happening with the congressional budget office saying that it sees a federal budget deficit dropping by 1$190 billion this year. that's the good news. the bad news it projects the deficits will climb over the next decade from $1.6 trillion this year to $2.6 trillion in 2034. joining us now, cbo director phf phillip swagel. i thought it was going to be $2

trillion this year. why is it $1.6 trillion? what happened positively? we'll start with that, with some good news, phil. >> okay, joe. thanks so much. it is nice to be able to deliver some good news. so there are two things. one is that there is a bunch of revenue that by actions of the biden administration was delayed from 2023 into 2024. think of california wildfire disasters, and then the corporate minimum tax that the guidance wasn't provided by the irs last year. so, that's one. and then the fiscal responsibility act that was enacted last year that slowed the growth of discretionary spending. so it was a mix of those two things, improving the fiscal outlook for this year. >> you mean that was the thing mccarthy negotiated at one of his final things with the biden administration, the fiscal responsibility? has that worked a little? >> yeah, so over ten years we project that that will reduce

the deficit by $2.6 trillion. that includes the caps on discretionary spending, and projecting that out. and then the lower debt service cost from the lower discretionary spending. >> that's interesting. for that, he got -- he got ousted. phil, we don't have to do -- you're not even including any big spending increases, new programs. you're talking about purely debt service gets us to $2.6 trillion by 2034 a year. >> that's right. so our baseline is current law. additional spending or tax relief, anything that would increase the deficit from what we have, from the 2.6 that you mentioned. >> we had a couple of years of flat stock market performance and obviously don't get the tax revenues from that. is that a positive that we're seeing some new highs every day in the averages? will we see that reflected anywhere? >> it will be a positive. both for the effect on the

economy, higher wealth from higher asset prices, you know, means more spending, more investments, it also means more capital gains revenues. we don't know when this will come in, but over time there is a positive correlation between asset prices and revenues. >> i'm curious about what you think of what the irs recently said and what we have seen in a bunch of reports about the amount of money that we should be collecting that we're not collecting. and whether you think either a combination of more enforcement and other tools to allow people to pay in a more efficient way will actually increase the amount of money and revenue that the government collects, that they're already entitled to. >> oh, yeah, so we have some of that in our baseline projections, that the resources provided to the irs in the 2022 reconciliation act will over time help them hire more revenue agents and improve technology, that will have a return.

we see about a 2 to 1 return on that, invest, spend a dollar, they get $2 in revenue so there is a net of one. the irs has put out some research and the treasury put out research suggesting that the return will be much higher. the service has been finding very difficult to hire those revenue agents. so, it could be they get there, but there is a long time path in front of them. >> so you think -- just to be clear about it, you think it is worth hiring some of the agents, none of the agents, move ore of agents. and some think a revenue agent is going to your house to knock on your door and part of that is that because there is a deterrence effect that you're hoping to create, but part of it is just literally from a technology perspective making the whole system work better and therefore effectively hopefully collecting more money that way. >> that's right. and it is a good point you make that the hiring by the irs is on

a wide, you know, range of activities. customer service, and then they really focused on that last year, technology, the revenue agents, and the irs interacts with people by mail, sometimes in person. there is a lot of different ways. it is going to take them time to deploy the resources that they have been provided by the congress. they really focused hard on customer service last year. it is helpful for americans, it doesn't do as much on the revenue, so that's why, you know, our view is it is going to take them longer to get the revenue returns. >> i'll give you the power of the pen to balance the budget by 2034. tell me, what do we need to do? >> you know, i think of two horizons, in the near term, the risk is net interest payments. we have a pretty moderate path of interest rates. the risk is, well, it could go in either direction, but higher interest rates given the mounting debt would, you know, mean a much larger deficit in the near term.

over time, it is mandatory spending. social security, it is healthcare, we're in an aging society, we have still rapidly growing healthcare costs, you know, on the spending side, it is those mandatory spending or on the revenue side there is lots of options on revenues. >> well, okay. with revenue you got to worry about, you know, you go up too much, you might hurt economic growth, i don't know if the cbo or any -- maybe with a.i. you could do it accurately. i'm not sure. but the elephant in the room is what you just said, the mandatory spending. so, there is a way to do it, but no political will to do it and it is the third rail. what would you do? would you raise the retirement age for -- what would you do? how would you do it? how would you bring medicare and those entitlements more in line with what we're able to afford? >> yeah, so i would point viewers to a report we put out in december 2022 that is budget

options. it is a list of ways to reduce the deficit. and in that we have 17 large options. on the spending side, on the revenue side, each of those would be large enough to make an impact. and i wouldn't tell policymakers what to do, but that's the menu. >> they won't listen anyway. >> the challenge -- the options are all difficult, right? you're cutting spending for someone, you're raising taxes on someone and there is no free lunch here. >> so we're stuck at -- if we're -- would you settle for 2.6 trillion in 2034? i think it will be much worse, don't you? >> we project the deficit under current law, if there is new tax relief and there is new spending, the deficit could be larger. >> okay. and that will -- did you do the math on what the total debt will be by then and as a percentage of gdp? >> yeah, so the debt rises to a new record and we're ending up

above 116% of gdp by the end of the budget window, which is an all time record. >> 2034 will be at 116% of debt to gdp. >> yeah, so on our website, we have a one-pager with all the budget numbers and that's, you know, we don't get paid by the click, but that would be great if -- >> why would i want to look at that? why would i want to look at that, phil? >> it is -- the baseline is scary and i -- you know, viewers should see it. >> 116 in -- we're supposed to get it back down under -- this is only times since world war ii it has been here. william devane tells me that every day. >> yeah. and, you know, the other point i would make is that the debt that was accumulated during world war ii was paid off mainly during the lifetime of the people who fought world war ii. that generation paid for the --

what they did for us for the world. we don't see that happening in our projections. >> thanks, phil. i guess. thanks for a reality check anyway. appreciate it. all right. when we come back, short seller and muddy waters research founder carson block will join us. he has a new short that he wants to talk about. and in the next hour, senator tim scott, the lead republican on the banking committee, will join us on the border funding bill battle, the presidential election and much more. "squawk box" will be right back. i was an immigrant and we grew up in public housing. i think there was nothing about my background that would have suggested that i would grow up to become the senior most black professional at goldman sachs or the second person in the firm's history to sit on the management committee as a black person. but i think there is a universality about black history

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welcome back to "squawk box." up next, short seller carson block has a new call out this morning and he's going to share it with us next. plus, at the top of the hour, an exclusive interview with alphabet ceo sundar pichai right here on "squawk box." we're going to talk about a.i. and so much more. and then later the ceo of roblox will join us, that stock scoring some upgrades this mniorng after fourth quarter results, a big, big hour ahead. don't go anywhere. we're coming right back. ♪♪ ♪♪ ♪♪ ♪♪

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and for a limited time, get the new samsung galaxy s24 on us. all right, our next guest is joining us now to announce a new short position that he has. carson block is muddy waters research founder.

carson, what company are you targeting? what are you short? >> so, we're short this very large canadian insurance holding company called fairfax holdings. and the reason that we're short is because throughout the financial alchemy and reasonably a conservative estimate. >> how do you think it's overstating book value, and why? >> sure. so the reason why is that this company is known as the berkshire hathaway of canada. since, almost since its inception it's tried to create a mythos about it that the chairman, controlling shareholder is warren buffett. focus on compounding book value per share. but they set this target of 15% long-term kegger for the book value per share. reality is they haven't been able to get any where are near that since the financial crisis. so what they've begun doing

especially after this one difficult acquisition in 2017, they've begun engaging in all of these transactions that are often value-destructive and require them to layout cash or take on off-balance sheet debt, but these ransactions produce paper profits. they've been able to pad their book value per share but it's costing real cash. either now or in the future, and it's actually completely non-substantive. >> the one example that you lay out up front on this is recipe. which is a chain of restaurants that went public in 2015. you say that fairfax consistently overvalued its equity in recipe and ended up taking it private. you want to walk through that? >> sure. that's just one example, and one of the, i guess, simpler examples of what it does. for years it carried this investment well above what the trading, the market price was,

but at some point it seems like the difference between reality and carrying value was too great. so they spent real cash just to take the entire thing private, and they still had it marked well above where it should be, because from the financials that you can still see, its performance continues to deteriorate over time. so that's one of the more -- one of the more straightforward ways in thchawhich they've done this with riverstone, face a canadian pension and basically take on what's really debt, but they call it equity, and it's high cost. they pay substantial dividends usually on these transactions and that's part of how they're destroying value, but by structuring something like a joint venture, which really alone as a joint venture, they keep the debt off balance sheet and able to take these paper gains when they buy the shares back which is basically the

repayment of the loan. so it can go from the pretty -- you mentioned with recipe to the highly complex, like the riverstone. >> carson, this is not the first time this company has been a target of short sellers. go back to before 2007, this company was dogged for years by a group of hedge funds and actually sued a number of them including steven cohen. going after them saying, look, they were trying to take down the company. basically saying it was racketeering. what makes you think this is different? because the company survived that? >> i think that the the gfc probably actually helped fairfax. i don't know this part of the history very well, but i think that fairfax was positioned well. might have even been short the subprime securities going into the gfc. yeah. what happened before, from what i can glean, is that the short

pieces really revolved and didn't think they were adequately reserved. this is basically consolidated level of the accounting. abysmal basically. highly misleading. a lot of smoke in mirrors. to put it in context here, since that big acquisition in 2017, which seemed to be the company saying, hey, we need to try to grow the book value. since that acquisition about 60% of the growth in book value per share has come through these non-substantive like smoke in mirror-type transactions. so that's a different thesis from what we saw back in the early 2000s, or, you know, when the company ended up suing everybody. i think there were others. >> and pwc toronto. are you suggestingauditors

aren't doing their job? >> funny about that, first time i've seen this is that pwc actually states in the audit report that it's unable to determine when it 12started auditing this company. fairfax, it's been their auditor so long, almost like there's no recordkeeping. a governance point we didn't discuss in our report and you've got two children of the ceo controlling shareholder on the board of directors. as far as the auditor goes been there so long that they can't even remember how long they've been there, a former head of pwc canada also sits on the board of fairfax now. so when we see that kind of arrangement it's very reminiscent of companies we reported on in the past like mmc health, a senior audit partner on the board who, seemingly, kind of helps lull the auditor to sleep there. same thing with signoforce.

not a good thing and doesn't surprise us when you have a longstanding relationship wit auditor is so close they even have a former senior executive from the auditor sitting only the company the board. >> carson, we are reaching out to the company to try to get comment from them, but i don't want to not dig into what you're doing, too. you're coming on to talk about this because you have a short position. how big is this? what would cause you to close it out? stock down 10%, do you close it out. >> i mean, no, not -- first of all we don't discuss size of our short positions. >> we're giving you opportunity to come on, talk about this. we need to be up front about the idea you have skin in the game on this too. stock goes down, you could benefit. what caused you to close down -- >> we definitely -- everybody who shows up to work every day on wall street there's a profit motive in us being short and us talking about it.

the thing about our incentive. it's kind of funny. we often get pushback. well, you know, you're biased why listen to you a short seller? thing is, when we talk about the company's 15% kegger and the fact that they haven't even come close to that in years. i mean, per their numbers, without any of our adjustments, their kegger since the jfc is about 9%. no sell-side analyst has figured this out. i was talking to a credit analyst the other week about fairfax and i said, hey, you know, i run the numbers. they don't kegger at that. this is after the credit analyst was calling the warren buffett of canada and this is the berkshire hathaway of canada. so nobody's doing the work. yes, i have a significant incentive to talk about this but also incentive to ask questions that evidently nobody else is doing. >> asking questions is completely fair, but if you think their book value to be about 20% lower than it is right now, what do you think the fair

valuation for the price is? trying to get at where you would say, okay. forget it. i'm going to close my short because it's back down to what i think is fair valuation? >> so as -- first of all, it shouldn't trade at premium to book. ma ni ma nip plating book value, it shouldn't. there are other areas we'd like to dig in going forward and then 0.8, pain 1.0 book. in terms when we close, because we're activist short sellers, a lot of times comes down to, have we said everything we is say? is there nor juice we can get? do we think an upcoming earnings announcement is likely to shed more light on the story or not? so it's difficult to say. we don't set price targets internally and say at once hits that we're covering. it's really about the uptake of

the information and assimilation of it in the market. >> all right. chris, thank you for your time. again, we are reaching out to fairfax financial to try to get their opinion on this, too. carson block, thank you. >> thank you. good morning, and -- re-welcome you to "squawk box." here on cnbc it's almost 8:00 live from the nasdaq market site in times square when we would normally reset with the markets. i'm joe kernen. tell you who we are. i'm joe kernen. you are -- sorkin. and drew ross, jonathan ross sorkin. >> thank you. >> becky quick. actually i should, should have been you first but i can't say i'm becky quick because i'm not. >> no. >> becky is here. andrew is here. a quick look at futures almost at 5,000. on the s&p. anyone a year and a half ago that came on this show under those words? not many people.

but you have it down today down about eight points. dow jones unchanged. nasdaq indicated down about 26.5 points. treasury yields this morning 4.134 pe4 4.13%. interview the whole world listened to sunday from -- jay powell still having sum effects. i'm surprised -- only one day when the market, you know -- >> yes. >> from what really was, not as many rate cuts as you thought and maybe not as early. >> and said that, every time they say that, a little of a market reaction. >> meantime, breaking news to bring you. as we hit 8:00 this morning. google changing its name to gemini. launching gemini advanced, a paid option. even more of an advanced version of its a.i. model to compete

with chatgpt in an exclusive interview i spoke with alphabet and google ceo sundar pichai about the developments and news and started asking why the name change? >> for us, you know, gemini is our approach overall in terms of how we are building our most capable and responsible a.i. models. the frontier of the technology we pushed along and the most dedicated with our models so it made sense to just evolve it to be gemini, because actually talking directly to the underlying gemini model when you use it. and i think also the way by which we will keep advancing our models and users can experience it directly. we thought the name change made sense. >> you're also introducing gemini advanced. this is google's answer to

chatgpt plus. how does it stand apart or compare in your mind? >> well, gemini advanced has access to ultra1.0, which is our most capable model to date. to me, look, i think it's exciting, because for people really using these products as a power user, a real collaborative partner, maybe in a professional context, maybe using it for coding. just gives you more capabilities. particularly good at complex inquiries, multiple inquiries, very good work space integration. it is built from the ground-up to be a multimodel. it really shines. use gemini app on your phone say tell me more about what i'm seeing on my screen. it's really capable along those dimensions. >> what's the biggest improvement that you think has been made? was there a moment at which they

brought you the latest model, and there was some prompt you put in to it and said, okay. we've done something here? >> for me it was really when the series, really makes sense. almost understanding it as video and can answer questions related to that. so kind of shows, because the first time in the training data we included the text, audio images video code, and so that plays out in the model when you test it that way. so it was kind of, gives you a window into the future. as humans we see the world like the richness of information in front of us. and so we are getting our models to behave in that same way and i think that represents the future frontier. >> what was the big hurdle in terms of this upgrade cycle? >> you know, for us, honestly, it was a large model training,

testing it for safety, andbeing able to deploy it at scale and doing that. revealing it to consumers we feel will share more details tore enterprises and bringing a model at scale and also training our next versions of these models, and still i view '24 at our gemini era. beginning of our gemini era. >> how are you using it? you have an opportunity to be playing around with this stuff k k before all of us. any interesting uses in the pichai family household? >> we've been having fun with it. i definitely, i'm brushing up on my coding skills. a little bit here and there. excited use case. a friend of mine showing trying to put his house up for sale. put a few pictures in it and ask to write a copy for it and it understood the architecture of the home, looked at furnishings

and wrote a better copy than we could have and interesting things on my phone. looking at it. just ask about it and it can give me added information. so all of that has been really fascinating to see. >> you are very familiar with the competition with microsoft having built chrome, many, many years ago, which was in competition back in the day with internet explorer. curious how you think this new upgrade changes the dynamic with which has been this new competition, really, with microsoft all over again? >> look, you know, the consumer side, i think we focused and evolving our products. evolving search. search experience. we are giving access to gemini to user. gemini will power a lot of our work mail, google docs.

i view this is pushing boundaries where we need to go. obviously there's a lot of competition in the tech space. you're going to have microsoft new products, we compete with them. we are growing our cloud business. it is a dynamic moment. the best way to approach it is, stay focused on what you can build for users. that's how i think about it. >> what do you think of the search space itself? you have owned the search space for a very, very long time, and there is a question about how people are going to search for things in the future? are they going to search using classic google? are they going to use search or change what they're even looking for? how they're looking for it using gemini or chatgpt or a -- pe p perplexity these days. there are new folks coming on to the scene. >> eve always had moments in search like this and to me part of the search work is we keep

evolving search. people you know, take it for granted, but we started answering questions in search with feature snippets. use a.i. to extract the answer back in 2014. right? constantly been evolving search. we are doing the same. gemini is in search as well, and so if you opt in to the search experience, rolling it out to more and more people, you know, we give a.i. answers but are the only ones doing it in a way i think users are not only looking for a.i. summaries, a.i. answers but really care about the richness and the diversity that exists. so they want to explore, too. i think our approach really prioritizes that balance, and, you know, all the data we see shows that people value that experience. so people are using it and they are also bringing gemini and users a chance to go back and forth, incorporating gemini within search. so i'm excited.

i see this as an opportunity for search to solve new or used cases better than ever before, but is there -- it's always a moment of dynamism. you have shifts no different than adapt to mobile and mobile to a.i. now and to be, a mode of excitement. >> there's no worry saying this is a transformational moment? for the last call at, what, call did two decades searches we know has been something that i typically, go to google. there's a question mark i think for folks, first time in maybe two decades, about whether search is now going to mean something else? >> it's -- two platform shifts, yes. even through global pl. people asks questions because apps on your phone, you can directly download it and go directly to it. but end of the day you have to give value to users and that's

what we see in our data. people continue to come to google and they do value, the thing that gives me a lot of omit m optimism when we test, very positive. testing it slowly. rolling it out to more people. so we know we're going evolve the product in an exciting direction and the that makes me very optimistic about what's ahead. >> talking about what's ahead when it comes to innovation? feels like processes power and the capital to acquire that processing power is -- is a central component of wherever you think this goes next? especially from a large language model. do you think small players can innovate in this space or will ever be able to innovate in this space? >> i definitely think so. i think the big thing that has changed is, you know, many of us now provide these large-scale

infrastructure. right? so google built, today's start-up, you could access -- remember, giving access to gemini, to cloud. you know? the same models. right? and so i think that really gives companies a chance to build amazing things on top of this infrastructure. so i think the next wave, if you believe companies have access to technology and there's going to be open -- so the combination of the two, no different, enabling more companies to get creative. mobile enabled -- i don't see why we would ever think a profound technology advance would call for innovation on the other side and it's an opportunity for both big players, as i think small players. >> so we spoke with alina kahn about a week ago and she, of course, is launching an inquiry, really a study, to look at the

deal that both you and meta made with anthropic as well as microsoft's new openai. not mergers, of course, but partnerships. whether these partnerships are going to ultimately benefit the incumbents. that's why i ask the question whether, if , you know, the lowy pages or serge brynns could sit in a garage today and come up with something that really could compete with gemini, for example? >> look, fast-forward. we welcome -- we have taken, in fact the way we've done these deals, deals don't give us exclusive access to their models. if anything we have supported companies like anthropic. truly giving them access to our cloud infrastructure in a way they can build these models ship them and compete in the marketplace. so i think it's pro-competitive,

pro-innovation, and i would never underestimate the power of people, you know, entrepreneurs being able to imagine the future. i think you will continue to see great innovation including in a.i. >> between the a.i. and the cloud growth you've had, that infrastructure you talked about, building. so many people are allowed to use now and recently the biden administration and the department of commerce specifically proposed regulation to require cloud companies like yours including yours to affectively cut off access to data from the chinese and to disclose, in terms of foreign actors, who are on the platforms. how is that something you would enforce and what is your thought about that? >> obviously these regulations are newer. right? and so we are in consultation.

part of the reason even with gemini ultra, we spent a few months testing it for safety. we gave access to people outside, outside researchers, and where needed will comply with the directors, but i think it's definitely something that has to be done in concertation with the right regulatory agencies but google, gbt in europe on complying with regulations i think it's part of the competency we built over time. to make sure, you know, we do the right thing from a regulatory standpoint and i see this as no different. if anything, as the frontier moves i expect more, more things like that. i think it's important to balance it with making sure people can innovate and make progress on what's a promising technology. there's a balance to be had here, i think. and we are taking a safe

approach. >> i know we're in an election season about deep fakes. deep fake of taylor swift just a couple weeks ago posted, went around everywhere, viral, taken down. there was a voice call, robocall made in new hampshire with biden's voice telling voters, don't go to the voting booth. how much of that kind of thing do you think we're going to be seeing over the next, you know, ten months or so? and how concerned should we be, and what can the technology companies do or not do? and to some degree asked the question, who should be held responsible for some of that? >> it's a great question. i think the first set of, when we talk about a.i. risks, the most important category, which we will play out in the near-term, will be around deep fakes. you gave a few examples. just reading an example about where a company in hong kong, you know, somebody paid outs $25

million, because they impersonated the cfo. so i think it's a real issue. part of the reason we're being cautious in deploying some of our work is, we want to put the right safeguards in place. we launched a watermark image as we generate them. these are all early technologies. i think all of us have more work left to do. there is no way companies alone can solve this. you are going to need, you know, you're going to need important laws to protect, you know, these deep fakes and it's no different from spam or fraud in the financial sector or so on. you're going need more frameworks, and it has to be a collaboration i think and we will have to evolve it. i think all of us are taking the responsibility seriously. this is a year in which almost one in three people around the world are going through an electroprocess of not just in the u.s. >> right. >> i think it's been a big focus

for us, and it's part of the reason as a bigger company we've been, we've been doing the extra work to build safely as we ish-of-start these things. >> i assume every day somebody's trying to trick gemini into doing something it's not supposed to do. i know last week some folks were -- for example, gemini is not supposed to create images of celebrities, of real people, for example, but there was an example where somebody tricked it into creating a picture of taylor swift. are these edge cases? do you think this is an issue 12 months from now you'll always grapple with? always a way in? is that because people don't fully understand the black box? is that because there's just so many sort of guardrain guardraid to put up? how do you think about those things? >> i think it is a real serious

issue. i think we all need to make progress on it. today, you know, you're -- the more you put safeguards, you are also reducing the model's capabilities. right? these are inherently trade-offs. you have to figure out a way to have the model to have its capabilities building in the right safeguards at the right moments. so there are -- there's underlying research we need to do to actually watermark and do all this in a safe way. right? sorry. in a reliable and consistent way. so there is still an area of research. so i think that's why you have to have balance in terms of how widely you deploy this technology. right? there's definitely a balance to be had, but i think this is no different from other moments. you know, i think the ingenuity of humanity is figuring out how to harness technology in a

beneficial way and companies, nonprofits, et cetera. >> how do you think about the governance of a.i., and obviously we saw it, curious to know what you thought as you watched the issues play out at openai with sam altman? around governance? >> look, i think you know, for sure, to me that moment showed how important governance is and i wished them well, and it's an important company. but i think when you're deploying such important technology i think it's important to have the right governance. right governance. and over time, you know, as a society we will grapple with how best to guide this technology. it will have implications for national security as an example. right? trade-offs we'll have to make. what is good about this moment, it's making, compared to any other technology, people are thinking about all of this at an earlier stage. partly because people realize

the future of a.i. and a lot of important conversations under way. the answers aren't fully clear but i think you know we are making more progress than people think, too. that gives me optimism. >> i want to talk about tv and sports for a second just because the super bowl is coming up and there was a big deal made this week in the sports tv world. you've been writing youtube tv quite successful. youtube bigger than netflix. a fact most people don't focus on. what do you think will happen to the cable bundle? you've been keeping that bundle through youtube tv. what do you think about the new bundle that disney is creating with warner brothers, discovery and fox? >> first of all, these are some of our important valued partners both on youtube and youtube tv and i expect our partnerships to continue. look, i think people are

responding to how users are consuming all of this. right? users are ordering with their feet consumption patterns are clearly evolving and i think you're seeing people adapt to that. excited to see what they put together. these are great organizations, and they are have of our valued partners, too. as you said, youtube tv is now over 8 million subscribers and the work we've done with nfl on sunday ticket super well received and i'm excited for the super bowl as well. so -- >> do you see yourself becoming a major bidder over time for sports? >> i think it's a great question. i think we will be focused. depends for us, nfl sunday ticket gives a great way to work with a very, very good partner with very valuable content and see how it works. so far it's been great, but i think we'll have a disciplined

auto a.i. framework. we have subscription products, advertising products, some demand through advertising products as well. so i think evaluate it on a case-by-case basis. >> all right. culture question. you've been going through a number of layoffs. both of us try to keep up with the company from the outside. reading articles about some of the all-hands meetings and frustration hearing from employees and the like. what's happening inside the company right now? >> look, first of all, we see an extraordinary opportunity ahead, given the shifts under way and enlisting for the future, but i think it's important that we're able to create capacity from within and some of it is really focusing and readdressing within the company making sure we can make the investments we need. and we really focus on improving velocity and execution as a company as well. when it impacts people it's hard. even a company like google for the past 25 years hasn't gone

through a moment like this, but always deeply cared about our employees. i don't think most companies engage with employees in the transparent way we do and i think that creates some of this conversation outside, but always viewed it as a social strength for the company, and we'll work through this moment and i'm excited about the opportunities we have and what's ahead of us. >> what do you think google looks like in five years from now? >> look, i think -- i think part of what excites me is the company for the first time, we are working on, always been a deep technology-focused company at the foundation but with gemini and a.i. it's the same technology which impacts surge, youtube, cloud, waymo and so on. we can invest in this underlying technology and bought amazing companies and businesses on top and investing for the future.

so i'm excited what's ahead, and if anything i think a gold indicator of ahead for google. >> fascinating to talk to sundar. t appears at least look at gemini ultra a truly competitive, now leapfrogged some of the things chatgpt account do. much better at facts, things that are on the web now. so a lot of the things obviously play with chatgpt, using from 2023, and before. some of that's picking it up using bing and microsoft but this is at a whole other level. ability to take images. i think his example is remarkable. you can take pictures of a house and you can take a floor plan of a house, send it into gemini and it looks at the pictures. then writes descriptions of what it sees better than any real estate agent ever could.

sort of a remarkable thing. because it has nothing to do with text on text. it's actually taking images and seeing and by the way, not jut true of pictures. actually true of documents. you can actually give it a document and it not just -- summarizing the document, it can take one document, another document and be able to pair things and able to see the distinctions between them and really make some incredible connections that i think human, even, you know, very smart humans can do, but -- other humans maybe can't. >> all of these tech companies are ignoring the very really copyright infringement, real issues of deep fakes using photos, being ask to do things that be deep fakes along those lines. you asked about the taylor swift thing said put limits to not allow it to do that it limits its abilities to do other things, and last week, lester holt talking to satya nadella about copyright issues, well, need to look at copyright

differently, talking about emerging technology. it's all crazy. >> look, you know -- >> need to go -- >> you know my view on the c copyright issue. not a question. >> can't ask us, emerging technologies. need different rooms like section 230, or -- >> on the deep fake issue, most people, 99.999% of people asked you to go create a deep fake on any of the services at this point, you could not. you genuinely could not do it. >> somebody can and using it to do it. >> no. somebody can. i'm saying, not just the average person, but most people. some of the smart of the people, cannot. what you have to do is effectively genuinely trick the system. it takes a lot, a lot of effort to trick the system. and so -- >> just says they are not worried, nearly worried enough when you -- >> look, as i said, real issues opinion not saying these people have it all down and one of the

reasons you're hearing them including sundar and hearing it from satya and sam altman say we do need regulation. actually saying that. more so than any of these guys ever said that with any other technology. >> reliable for anything that comes out. seems to me all asking for some sort of section 230 to be applied to a.i. don't give it to them. be responsible for what happens. sounds like what satya was asking for when interviewed with lester holt. my assumption on it. a lot more coming up on "squawk" in a moment. ceo of roblox after their earnings report. coming back with that and more in just a moment. the not-so-secret to our success? earn and keep trust. build and maintain financial strength and stability. deliver solutions that meet complex needs. do right by customers, clients, and policyholders, always.

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welcome back to "squawk box." on cnbc. second away from initial jobless claims. look at futures.

see s&p. actually says implied open is down nine. maybe that just changed but -- yeah. it is now down nine. i've seen it at 5006, indication where the s&p is. we don't have any data, s&p 5000 hats, but that is a significant number that -- year and a half ago people would be surprised. standing by at the cme. rick santelli, economic numbers, please. >> since its thursday, initial and continuing claims. expecting initial claims for week of february 3rd around 220,000. comes in at 218,000. that follows at least up until this point unrevised 224,000. continuing claims week in arrears, 1 million 871,000. close to expectations. last week on initial claim0 hig. so that puts us down 9,000 on l claims. and 1 million 871,000 versus

last week's adjusted 1 million 894,000. slightly lower see ksequentiall lower knissing the 1.9 million mark. last time there third week in november. highest level going all the way back to november of '21. quickly. 30-year auction today $25 billion. not the highest ever as the ten year was yesterday. had 427 billion options right post-covid. see down 0.8 on year over year cpi in china. worst in 15 years and, hey, everybody celebrating nikkei still 2000 below. 1989 high. so, joe, back to you. >> that is unbelievable. you're right. 1989. still below. coming up, gaming and a.i. in focus. first interview with ceo david

baszucki. stay tuned. we're coming right back. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently.

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up next, south carolina senator tim scott joins us on the fight to secure the southern border and whether there's still a chance legislation on that could be paired with aid to ukraine and israel. "squawk box" will be right back.

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treasury secretary janet yellen on capitol hill this week. highlighting concerns about commercial real estate, set to face the senate banking committee this morning. joining us now on the hearing as well as the congressional fight over the border, international aid funding, and maybe a couple other things, senator. tim scott. lead republican now on the banking committee. is today thursday, senator? >> good morning. >> good morning. tuesday? anything going on in south carolina? is that coming up? >> our election primary in south carolina is february 24th. we've got a couple more weeks before we get there. certainly it's a hot time throughout south carolina even though it's middle of february. >> you obviously -- have your finger on the pulse of that. it's not even close, i don't

think. >> it isn't close. no. not really. tell you the truth, bottom ayn lie prediction about 25-point spread between nikki haley and president trump. reasons are clear. most important issues facing americans today according to americans is the border. fixing the border means buildin talking about securing the border. we just saw it fail yesterday. focused on america's priorities it means listening to what they tell us. they tell us 90% of those conservatives want a wall. that is the greatest and strongest impediment to the challenge we see today, which, of course, is ten million illegal immigrants crossing our border in the last four years. a devastating number. joe, live. we have 10,000 americans born in america every day. in december 10 million comes to

the country every day. stunning numbers. two, the economy. without question about two-thirds of americans today do not have about $1,000 in their savings for emergencies. that is not a problem. that is a crisis. as a kid who grew up in poverty, got to tell you, gas still up 40% food's up 20%. energy's up 20%. none of those numbers are coming down. they're only going to continue to go up. the biden administration and bind nomics is devastating paycheck posip paycheck to paycheck americans in this country. >> and mentioned, too, one of them. do you know if he's leaning towards you? i know kristi noem was mentioned as well. has he said anything to you you can share with us? >> a great governor without

question. christie. corking towards low interest rates, low crime, low inflation what i'm interested in doing. >> we don't have that much time. republicans said, all right. we don't want to give money to ukraine and israel if we can't do the border. you know, mitch mcconnell heard them and got a great senator to try to put something together. senator lankford, knows the issues, down to the border many, many times. something put together might not have been perfect. we know not let the good be the enemy of the perfect and republicans say we don't want border included now back to considering stand-alone bills for israel and ukraine which they didn't want to do in the first place. the average american is like, you know, get it together. both sides. >> no doubt. i'd say that's a poor

characterization of what actually happened, though. what happened was the president said he would veto stand-alone aid for israel. in the midst of the greatest crisis our ally in the middle east is facing the president of the united states and chuck schumer both said d.o.e. for individual assistance for only israel. there base will not allow them to deal with the crisis at hand. there cobbling together more assistance for ukraine some assistance for the border was the package they put together. the challenge with the package put together is till allowed 5,000 people day to come to our country and over a leap year that's a little over. 1.8 illegal immigrants stillg to our country. doesn't sound like securing the southern border. to secure the border you have to start aphis impediment.

tunnels above and below a wall. part of the reason the deal fell apart. second, codifying catch-and-release. 85% of 10 million by november of this year will have been released. 8.5 million illegal immigrants left to run through the country. that is a scary fact for most americans, and if we're going to have a deal we better get back to the basics. physical impediment secures the border. number one. number two, we certainly need border patrol with more resources, officers more overtime. that is job number two. wall and then taking care of our border patrol agents who desperately need additional assistance. >> senator, the, you are going to hear about banking stability and we've had another bit of a, a trimmer here in the new york area. one of the banks here. i know secretary yellen

expressed, said i wouldn't say concern but she didn't take a position on raising capital requirements. let what bank regulators decide it. were you satisfied with some of the answers yesterday? what do you want to hear today? >> first, i will start off talking about the october 7th attack and why this administration, the treasury department released $6 billion in august and then $10 billion in november, before we even get to the conversation about the hundreds of billions of dollars come with reducing sanctions from oil perspective, but as relates to bank stability, certainly we've been communicating with occ, as you said, in the new york area. some trimmers are out there. occ is a primary regulator of the banking question and we'll continue to monitor that situation but we need to understand, joe, you know it well. you're an expert at this. bottom line, capital standards is not, the challenge was, svb. liquidity issue not a capital issue. when you increase the capital on the sidelines you reduce number

of entrepreneurs that have access to the loan that may change their future and employ their community. you do that, you reduce number of homeowners that could have their first home. the american dream. millennials in high interest rates, high inflation, with more capital on the sidelines because of regulators having little access, lowest access to a home in 40 years, joe. 40 years. >> so got to go. you have not -- president trump has not offered a spot yet? >> he has not. >> okay. all right. still plenty of time. you'll let us know, call us before -- either way. one way or the other. >> it's all good. >> thanks, senator. see you later. thanks. >> take care. coming up right after this, interview with ceo of roblox. stay tuned. isk"nd watching "squaw a th is cnbc.

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or other signs of infection. verzenio may cause low white blood cell counts, which may cause serious infection that can lead to death. life-threatening lung inflammation can occur. tell your doctor about any new or worsening trouble breathing, cough, or chest pain. serious liver problems can happen. symptoms include fatigue, appetite loss, stomach pain, and bleeding or bruising. blood clots that can lead to death have occurred. tell your doctor if you have pain or swelling in your arms or legs, shortness of breath, chest pain, and rapid breathing or heart rate, or if you are nursing, pregnant, or plan to be. i'm making my own way forward. ask your doctor about everyday verzenio. welcome back to "squawk box." roblox analyst upgrades at goldman sachs and barclays following fourth quarter results. a loss there. according to bookings highest company has ever seen. joining us, david baszucki, roblox and known at builder man on the platform. builder man, do you go on as

much? my kids say they don't see you as much. >> andrew, thanks for having us on the program, and question have a great quarter. i am on the platform a lot but i don't use the word builder man or daibvid baszucki. trying not to gather so much attention. thanks for calling out first quarter. $1.1 billion in bookings q4. 21% year over year growth. >> talking where this company is going, and what comes next. obviously, you get new milestones, but we're still, you know, living in the loss world. what do we have to do there? >> i want to highlight. we run our company on bookings and cash, and we generated a lot of cash in q4. generated over $140 million of net operating cash. by gap accounting, which is different than bookings, we do show a loss, but are generating

cash and growing bookings and that's how we run our company. >> when you look at strength of the advertising component of all of this, you have big advertisers adidas, loral, lamborghini and others. what does that look like as you look out over the next six months? the next six months? >> well, i want to highlight that we continue to grow users. we continue to grow hours really powered by the amazing content on the platform, and up until now, almost all of our bookings and revenues have been generated by virtual currency and transactions. we're excited, in q4, we had 69 brands come on board for both portal and video ads. that's growing. we're not splitting up the numbers, but we do see a future where advertising that is native, immersive, and fun complements our virtual economy. >> that's what i was going to ask. long-term, how do you see the virtual currency business, if you will, versus advertising or

other kinds of revenue streams? >> we see them really working together, side-by-side. right now, roblox is free for the vast majority of people on the platform, and the forms of advertising we're doing, which are immersive, for example, lamborghini introducing a new vehicle, are really fun, are really native and don't take away from the engagement of our platform. so, with 15.5 billion hours of people engaging on roblox, being together, doing things together, we think advertising is going to be a complement, not take away from the fun or engagement, and supplement the virtual economy. >> meantime, the other piece that i found interesting was 58% of users are now 13 years old and up. do you continue to believe that that's going to be the trend? and what does that mean economically? >> i think it really bodes well for us. we have such an amazing

population of 13 and under people on our platform, but there's a lot more 13 and over people in the united states and around the world, and as we see that growth in those segments, once again, powered by the amazing content on our platform that more and more is supporting people of all ages, it's an amazing new market, and it's much larger than our existing markets. so, the big market, coupled with the growth there, really is a great future direction for us. >> you know, in many ways, you were a pioneer of what maybe people would describe as the metaverse today. i'm curious what your reaction was to apple vision pro and what you think that represents and to the extent you think roblox is going to be a part of it. >> hey, great device. want to call out in q4 also our new partner, sony, as well as meta. we introduced the playstation

and the meta quest, and part of our vision there is all of that content we have on roblox runs on those two devices. apple vision pro is another amazing device, both for virtual reality as well as mixed reality and augmented. we're looking at that device, and of course we'll be on it some day too. >> is that something that's on your road map for this year? do you see that's going to be a big market, too small a market because it's a pro device at a very expensive price point? how do you think about that? >> i won't share when we expect to release on that, and as our community knows, there's a set of other devices along with vision pro that make sense for roblox, but over time, we really have this vision of being on all devices, phone, tablets, computers and bringing people together across all of them. >> finally, safety and a.i. i think everybody's worried about it. we're obviously seeing deep fakes. the ability to write things automatically. what are you doing on your end of it, and how are you using a.i.?

>> hey, we've been really doing a.i. at roblox behind the scenes for four years on text, on moderation, and now on voice as well. we arguably have one of the largest realtime voice safety systems all running on roblox a.i. our a.i. platform powers realtime translation on text that we just introduced on monday, you know, that vision of people around the world of different languages coming together, and it's going to power future things, automatic avatar creation, and ultimately, if you or i wanted to make a virtual george washington, we'd be able to do that. so, we've been doing it for four years. we have a great platform, and we continue to leverage it. >> all right. dave, it's always great to see you. congratulations on the numbers. we look forward to hopefully seeing you again, maybe even before next quarter. thanks. >> thank you, andrew. "squawk box" is coming right back after this.

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well, forget the magnificent seven. our next guest calls apple, meta, and google the three a.i. amigos. joining us right now to tell us why, we want to welcome deepwater asset management's gene munster. why these three? >> they have the biggest upside potential relative to where expectations are. when you think about the a.i. opportunity, you think of a dumb bell. mega cap has an impact and that late-stage private as a secondary positive impact.

but on those megacaps, those three are largely underappreciated. i want to start with meta. i think it's the biggest a.i. opportunity that's misunderstood. most investors understand that meta is using a.i. to improve ad campaigns, ad attribution, engagement with new products like emu and meta chat, also this celebrity bots. all that is impacting engagement, and really what powered the upside to expectations for the march quarter. all of that is good. all of that should lead the way for meta to grow their business by 50% over the next two years, but there is a significant underappreciated lever that could take thisinto just a whole different atmosphere, and this is -- this theory comes from deepwater's doug clinton. i know you know doug. he believes that, ultimately, they will monetize llama. llama is just taking a step back, an open source model. the other foundation models, claude and chatgpt and gemini,

they're all closed. llama has 30 million downloads. if they monetize this, they will likely announce some sort of a cloud infrastructure or probably a few ways away, get into the same aws, azure, google cloud type of business. that is a new -- whole new shift and new benefit to meta. >> gene, we're almost out of time. i've only got about 30 seconds. why apple? that's the one that i think may be most underappreciated. >> apple's going to come out with their own foundation model, likely in june, and they're going to allow this to do personalized a.i. this is really going to capture, i think, 20% of the world's interest, and they can charge $10 a month for this. i think that's a significant opportunity that most investors believe apple is asleep at the wheel at a.i. that's the opposite. >> and very quickly, i'm guessing microsoft, not there just because they've already seen so much benefit from it? you're not ignoring their a.i. >> exactly. you want to go to where ultimately the unknown opportunities are. i think llama, and i think

personalized a.i. with apple, those are the two biggest unknowns or biggest opportunities relative to where street's at. >> gene, thank you very much. gene munster. >> thank you. >> big hitter, that llama. >> as in the dali? >> isn't that what you thought? thank you for joining us today. we'll see you tomorrow. right now, it's time for "squawk on the street." ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange. we remain on s&p 5k watch. several solid reactions to earnings this morning. our road map's going to begin with disney and that epic quarter. quarterly beat, div hike, buyback plan as well as guiding well ahead of aexpectations. the s&p is nearing a new record milestone less than three years after it cro