good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. good morning. day after valentine's day. we're here. >> we are? >> after the super bowl. day after valentine's day. >> a pattern. >> will you get to the nba all-star game? >> that will be interesting. we'll watch it. >> i'm thinking about the big east tournament. not because of xavier this year. last night, i had a four-way -- that sounds horrible. i had a four-way hit. maryland, uconn, clemson and

tennessee. they all covered the spreads. 4 of 4. >> what did you win? $20? >> no. more than that. $5. i won $62. >> congratulations. >> good for you. >> i'm buying today. >> coffee all around. >> dunkin. >> we'll talk more about that in a little bit. let's look at the u.s. equities. you see green arrows today. yesterday, there was a bounceback for the markets after the losses we saw the day before on that hotter than expected cpi number. pretty decent size bounceback. we are only talking about the dow and s&p 2% from all-time highs with the losses. at this point, the dow indicated up 60 points. s&p futures up 6. nasdaq up 23 you have the treasury yields which have been el the sevated then. the ten-year note at 4.22%.

higher than we have been in the last couple months. we have signs siof concern the global economy. japan and uk reporting a second quarter of contraction. the commonly used definition "r" word recession with the economic contraction in japan losing the third spot as the largest economy to germany. it will push the boj to move interest rates from negative levels. that move was expected in march or april. bank of england has inflation eases with the numbers putting pressure on the bank to cut rates. a flip flop there versus here and what their central banks are thinking. >> it is interesting. we need japan. for some reason, i thought germany had already. >> i knew they were the third. i didn't realize they were close

to falling to fourth. >> recession. >> yeah. >> if they sneeze, don't we eventually catch a cold? it happens if we sneeze. i don't know. >> i didn't get your cold. >> we didn't have a cold. i'm good. i'm 100%. >> november or december. i didn't catch your cold. >> how about pebble beach? >> i didn't catch that. >> it wasn't anything to catch unless it is airplane food. cisco announcing plans to put 5% of the work force or 4,200 jobs. that announcement as earnings of 57 cents a share. revenue down 6% year over year. it beat wall street expectations. guidance for the quarter in full year fell short of estimates. last night on "mad money," ceo chuck robbins explained the cautious guidance to jim. >> we saw more caution with the customers this quarter than we

saw in the prior quarter which led our teams expressing more caution in their forecast. >> robbins spoke about the job cuts. he said when you are off the plan, in his words, the way cisco is this year, you have to adjust expenses. they will move through the plan with employees the next few days. >> i think they heard that people are not spending through inventory. the customers are not using the inventory as quickly as anticipated. it could take the rest of the year to get back to normal. >> $600 billion company once. market cap. morgan stanley announcing layoffs. the company plans to cut several hundred jobs in the wealth management division. that is the driver at morgan. the cuts are expected to hit less than 1% for the company.

ted pick took over from james gorman at the start of the year. the latest in the deadly shooting during the end of the kansas city chiefs super bowl victory parade. investors are looking for a motive that left one person dead and 20 people injured. police say three people have been detained, but no suspects have been identified. the chiefs said all players and coaches and staff and family members were safe and they were saddened by the senseless act of violence. a senior republican lawmaker warning of the unspecified national security threat to the u.s. mike turner, he chairs the house committee, asks to declassify the information to how to respond to the information. sources familiar to the matter claim russia is developing space weapons designed to target u.s.

satellites. the threat that congress member turner is concerned about is trying to get folks to talk about it. the white house saying it has planned a briefing for congressional leaders. very strange story. >> why would you need a nuke to blow up a satellite? i can blow up a satellite -- it doesn't seem to take much to take down a satellite. >> the aall that space junk. >> hard to know. >> totally speculating, which we shouldn't do. house ofrepresentatives rejected a proposed change to the $1,000 cap on the state and local tax which is known as a s.a.l.t. deduction. the bill would have doubled the cap to married for $20,000 only for 2023 and only those making less than $500,000.

some democrats joined with republicans to block it in the procedural vote. congressman josh on yesterday. mine's joker. that's not too bad. we had him on yesterday talking about it. it's never happening? >> no. >> no? >> you will see what happens when it expires next year. there's enough of a pushback from democrats and republicans that i have a hard time seeing how that ever gets changed. >> it is weird. it is double tax aationtaxation mayor eric adams said his administration filed lawsuits against social media companies which alleges the services are damaging to the mental health of young adults and children. the tech companies violated city laws related to public nuisance

and negligence through the design and marketing of the addictive products. tiktok has industry leading safeguards for teens. google said the allegations are not true. meta said it has spent a decade working on the issues and has 30 tools and features to support teens and parents. snap feels good about the role of helping close friends feel connected. coming up, some new moves from the world's wealthiest investors like that guy coming up. as we head to break, check out the shares of nvidia. closing 2% higher yesterday. market cap of nvidia has now passed that of google par parent alphabet. it is now the third largest u.s. company behind apple and microsoft.

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for the second straight quarter, berkshire asked for treatment from the s.e.c. for one omitting from the quarterly filing. investors can ask the s.e.c. to keep a holding private if disclosing would disrupt the program of buying or selling of

securities. the disclosure can lift the stock price because people following warren buffett's lead. joining us with the rundown, we have leslie picker. le leslie, good morning. >> reporter: becky, good morning. we saw profit taking in the magnificent seven names during the fourth quarter among the hedge funds. microsoft getting reduced in q2 to third point. vikings sold out $1 billion position there. if you recall, microsoft shares surged 19% in the fourth quarter. viking decreasing meta. meta up 18% during the quarter. q2, tiger global decreasing nvidia and d1 dissolved. many amazon is a mixed bag with tiger

global added. amazon was up 20% in q4. interestingly, alphabet was up 7% compared to the peers here in q4 was a mixed bag. tesla got a small boost which increased stake during the quarter. berkshire sold 10 million shares of apple, but that is just 1% of the firm's ownership. just a reminder, these are snapshots from the end of 2023. they may have changed since. nvidia and amazon and microsoft and alphabet have continued to see gains year to date while apple and tesla holders are probably more disappointed. guys. >> leslie, the buffett change in the apple stake. we were having a conversation on set.

it was around 1% of the overall stake. i have a hard time believing that was a direct move by warren buffett or anybody else. it seems more house keeping funds within berkshire. >> reporter: exactly. as you look at a lot of these trims during the quarter, some of the positions likely got so big in certain portfolios that they had no choice but to decrease exposure to them because they did not want to start the year with the out sized exposure to any individual name they weren't showerure abo. in terms of apple and berkshire, that is likely house keeping. it is remarkable trimming 10 million shares is 1%. $ $174 billion for apple is huge. >> leslie, thank you.

>> joining us now for more is jay woods from freedom capital markets. what do you use this information for and who do you pay attention to here? >> you pay attention to the big names. that's what moves markets. the teppers and barrys of the world. it is a lagging indicator. this is from 45 days ago. this is interesting to see the trends. that's what people follow. some people like to follow that mentality and ride the coattails of the big names. as a young investor, i bought coca-cola because warren buffett bought it. you look for the overall market sentiment. sectors they are getting into or getting out of here? the magnificent seven is scrutinized. that rotation was jockeying. there were no big positions. then that's the last thing. look for new positions. two that struck me looking at

michael and tepper. they got in hch healthcare and oracle. those are things people watch. there are the diamonds in the rough. nvidia filed 13f today. >> you are a nvidia? >> you think it is interchangeable? >> if you own it, it doesn't matter how you say it. you are happy to have it. you talk about diamonds in the rough, two stocks up 60% in the pre-market in the 13f. you are going to see people jump into these things although these positions are 45 days old or older. >> in general, what is your freedom since you are running the global strategy? what is happening? what is the macro back drop look

like? >> the macro back drop in relation to the 13f did not tell us anything. there was a big change. i like morre rotation into healh care. we are 10% above the 200-day moving average in the s&p 500. a pull back is normal. i think that's what we're about to have. after the last cpi reading and fmoc meeting, it was a big deal. we slowly made it back. i think the cpi number is a little bigger of a deal. it will struggle to make it back to the march meeting. i expect us to chop sideways. seasonally, it is a weaker time. i don't expect us to make record highs until after the fmoc speaks in march. normal 5% correction is healthy. >> what is better for the markets if the economy continues to stay on track like it is now?

come in better than expected or the economy slows a little and the rate cuts come back on the table? >> it seems like we're in a good spot. the stock market is reaching all-time highs. the fed can stay back and stay higher for longer. not that they are supposed to follow the stock market or anything like that. the numbers are coming down. we didn't meet expectations. they are trending the right way. earnings are trending higher. it is a lower bar as you mentioned. things are progressing slowly. if we get a cut unexpectedly, that would be a danger of why we are cutting. it would be nice to see the cut before we makes the election. >> a quarter point? we were going to get six. >> i don't know where that number came from. i was always in the three or four camp. six was priced into the market. the market is holding on. >> you don't see the labor

market and wage gains? you saw the senate race in california? $50 minimum wage. the living wage in california is $104,000. i don't think it is serious about that. will the last mile, as people are calling it, getting to 2%, is that increasingly difficult? do you see another rate hike in the next year? >> hike i would be surprised. you would have to see jobless claims spike out of control. that thursday jobless number. we have not gotten to 3.9% unemployment. the low was 3.4%. if we start thinking about recession calls and bringing that back on the table, we need to see unemployment tick to 4% and get .50% off the low for three months following thought indi indicators. it is not going to be a soft

landing. it is going to have turbulence. we are sailing at a nice altitude. higher for longer. yes, maybewe cut in may as powell says every time we are data dependent. the data hasn't said cut yet. >> unless a door plug gets blown out. we're flying okay? that's not going to happen? >> we're okay. i was just on the plane where they could not open the door. they bolted it too much. >> they couldn't close it and the captain came out and said i'll do this. that was the third plane. yeah. that was after a six-hour delay. what just happened? grounding those fleets made a difference. it really did. >> it was expedia which said that was the reason for the pull back. >> they left the salami on the plane that was supposed to fly a week earlier. thank you. i'm still here.

barely. >> good to see you. >> good to see me. yeah. up. vertical. when we come back, dunkin selling out of track suits that were featured in the super bowl ad on sunday, but the company sent us a few to talk about. zach will model it for us right now. >> i would be wearing my dunkings. >> do that. >> do we have extra? >> bring it out. bring it out. >> i said no. >> we should all wear them. come on. have fun. >> it is not fun. >> morning show. >> we will talk about the cost of the viral ad and whether the company got its money worth. andrew's going to dress up. maybe the rest of us will. "squawk box" will be right back. no doughnuts. my grandfather was a doorman at the marriott for 41 years. yet, me, his grandson, owned a marriott hotel a few mew miles from him in the same city.

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pre-order a set of the pants. on e-bay, these are going for $200 at this point. check it out. andrew has his on. >> i feel like i'm part of it. this is an american iconic moment. these guys -- i look like an idiot. >> don't you expect to get paid for product placement? >> no endorsement. not a doughnut. hold it there. all i was going to say, this is -- get it off your microphone. this is like a masterclass in advertising. if you think about how they did this, they first ran that first ad before the super bowl that was a teaser. the little tease. this is the little teaser. they did the ad during the super bowl. then they dropped the full thing. now, by the way, they dropped the actual song, which, i think we can play. i think they would be happy for us to play.

"don't dunk away at my heart." you can get it on spotify. they cut up the ad in other ways. it is amazing. you can now get the dunkings -- they have thought a meal, but drink with the dunkins. >> it looks good on you. >> i'm saying, come on. give these people credit. >> i have some dunkin nderwear. they sent me a thong. if i wear a thong, i wear one in front and two in back. >> yesterday, andrew, they probably spent $20 million on this if you add what it costs for the super bowl ads. >> $7 million for each 30 seconds and $14 million to be on the air and the production with the cost of ben and jennifer and matt and tom brady. i'm thinking you are spending

another collectively and costs, $10 million to $15 million. >> you think matt got $1 million? >> maybe. i think there was a report about a year ago when ben did this the first time that he was paid $10 million. i don't know if that was just for him or the production cost. i'm getting zero to look like a schmuck. >> i'm wondering why zach is getting zero for this. dunkin is no longer publicly traded. it wasbought by inspire brands in 2020. that included debt. it was a big number and inspire is owned by private equity. i wonder if they are making plans to beef it up so you can sell it again. that would make the investment worth it. i'm speculating on this. >> i don't know about that. >> it worked. i think it was money well spent.

>> that is my view. >> it looks like a prison got a little -- an orange jump suit with the designs on it. that could be the next thing. sponsors prison jump suits. the szipper doesn't go all the way down. what it my hair stayed in the suit? that would be bad. >> all right. >> orange man. coming up, cisco and morgan stanley the latest offering layoffs. we talk about corporate cut backs straight ahead. and as we go to break, here is a look at yesterday's s&p 500 winners and losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. . we see

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good morning. welcome back to "squawk box." we're live at the nasdaq market

site in times square. the futures are higher. you saw gains yesterday building on that. the dow futures indicated up 50. s&p futures up 6. the nasdaq indicated up 30. >> bitcoin up $52,500. you both are now orange pilled? >> what? >> orange pilled? >> he was orange a long time ago. i see. ha-ha. >> that is when you become a bitcoin bull. you are totally orange. >> is that a signal? >> i thought it was a different orange. >> is that a signal? >> is that like carrol burnett o her mother? cisco slashing the work force about 4,250 jobs or 5%. it is joining others like amazon and alphabet.

paramount and "sports illustrated" cutting back with l levi's putcutting back. let's talk about this with evan stone. good morning to you. we hear about the headlines and they are impacting people in a real way. you look at the employment picture and it seems to be remarkably strong. what is happening here? >> good morning. great to see you. you are correct. we are still dealing with the reshuffling, if you will. restructuring and reshuffling that was a spillover from 2023. post-2022 higher at any cost. that was the layoffs that you saw. it is pretty common for companies to be laying off. they have become vocal and louder in the overall economy today. the market has really rewarded companies that announced layoffs. not too long ago, layoffs were a

sign of weakness. now it is a sign of a company getting their house in order. you look at zoom info which reported great numbers because revenues were growing. you will see ass shift in 2024 with growing revenue. we will see the data of the trend of hiring sales people. >> is your sense that the folks who do lose their jobs with the bigger tech companies are getting better jobs or higher paying jobs or lower paying jobs? are you able to measure that? >> the wages have become stabilized. people used to leave for significantly more money. they are more lateral in terms of overall wages. when we looked at data, you see software engineers almost 50/50. for every software engineer leaving their firm in 2023, they were hired by somebody else.

you think of that as a talent shift. a company needs different types of talent from a year ago. they are still in high demand or maybe in a different industry. >> we talk about a.i. almost every day taking jobs of white collar workers. is that something you are starting to see? >> we saw a really big trend in a.i. jobs in the fourth quarter. i think you will see those impacts later on in this year in terms of cost cutting. we think it will have a bigger impact with fewer people needing to be hired. if the rule of thumb is through generative a.i. is 20% or 30% more production of the talented professional, you can hire three people instead of four. the other thing we see with the longer-term trend is the software impact on the financial firms and accounting firms since 2016 as it relates to the overall software outsourcing.

many jobs over the last decade decreasing in the back office. >> in terms of where it is going first, is it the engineers where you are starting to see the a.i. be able to do what they can do and help them really become much more productive or is it other places? >> we measure it in terms of augmentation and automation. augmentation, we will make you more productive. automation, we need fewer of that type of job requirement. i think the company that's very heavy in customer service roles, you could see that replaced by a chatbot or chatgpt or live a.i. person or a.i. person handling the support services opposed to the software engineer to use tools to make them more productive than five years ago. >> here is the question and i imagine you get at cocktail parties all the time. if you had a kid today and they were going to college and had to major in something, what would

you have them try to do? >> the highest skill that is in the most demand and this came out of the linkedin report is communication skills. communicate with people. build relationships. you know, those things are not going to go away. if you are not going into software engineering and data analytics. >> engineering? engineering is out? >> i think generative a.i. and data and lit exhibit analytics . nurse practitioner is a big job in the u.s. very safe industry. >> evan sohn, thank you. >> thank you. >> i can't believe the communication majors just got a free pass. >> totally. >> that is the greatest major. you can go out every night. at least when i went.

unbelievable. >> you were a communications major? >> yeah. yeah. i didn't do any of that. i learned all on the job. it's still a learning process. elon musk making good on his promise to move the companies out of delaware. details are next. "squawk box" will be right back. >> announcer: currency check is sponsored by interactive brokers. the best informed investors choose interactive brokers.

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welcome back to "squawk box." tesla filed to change the o operations to texas from

delaware. elon musk's court ruling ordering tesla to rescind his pay package. neuralink moved from delaware to nevada already. of course, the question is whether other companies may start to make similar moves as well. becky. meta platforms announcing that ceo hock tan has joined the board. he has experience in computing and infrastructure tech. this is a big focus as meta works to add artificial intelligence. meta is also adding john arnold to the board. he once worked at enron where he j oversaw trading of natural gas

difficult r derivitives. and fastly guidance misses the estimates. that stock is down 20%. when we come back, we will talk to a pioneer of online sports gambling to appeared to be ahead of his time. and we will talk to sara nelson, the head of the flight attendants international action. attendants international action. "squawk box" will be right back. sleep number does that. can i make my side softer? i like my side firmer. sleep number does that. can it help us sleep better and better? please? sleep number does that. 94 percent of smart sleepers report better sleep. now, save 50% on the sleep number limited edition smart bed.

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shares of deere falling

after first quarter results. the company beat earnings expectations, but cut the guidance for the full year as high prices are hurting demand. in the 1990s, the sports gambling pioneered in the caribbean. i wrote a story about the company before they were indicted. joining us is jay cohen. he is the founder of world sports exchange. jay and i have not spoken in 25 years until last week. jay, welcome. it's good to see you. >> good morning, becky. great to speak to you again after 25 years. >> this goes back a long way. i think of it as you being the guy who helped come up with draftkings before draftkings. at the time, it was a really interesting and exciting time on

the internet. you were a trade are r at the pc stock exchange. you and your partner left and set up a gambling operation in antigua. it was an sports, an online bookie guy, basically, and you were doing things that were legal in antigua. you thought you had the right to do this there? >> that's right. we were licensed and regulated by the government in antigua. we didn't just wake up one day and say, let's become criminals. we wanted to do this as legal as could be. and we checked with lawyers, accountants, et cetera, and the model was set up antigua, be licensed in antigua and be wholly located in antigua, all of our servers were in antigua, all our operations were in antigua. that's how we ran it from there.

you're right. it wasn't just a sports book. it was a full fledged sports book and sports futures market, and we even offered betting on games in progress during play to the end of the game and other propositions throughout play, like who will score next, what will the next play be, what will the next score be, a field goal, touchdown, a pass, a run play. we were doing it all, over 25 years ago. >> why did you think that the united states wouldn't go after you if you were taking money from customers in the united states? >> well, before my prosecution, the justice department was widely quoted in multiple publications saying that if we're offshore, it is out of their jurisdiction. i didn't come up with that. that was out there by the department of justice and washington, d.c. it wasn't until the law firm for the sports leagues encouraged

their connections at the southern district u.s. attorney's office to change the position of the department of justice. >> i mean, i think it is kind of fascinating, just how the leagues themselves have really changed their opinions on this and have embraced online gambling at this point. what happened? you were indicted and you came back to face charges, thinking what? >> i came back, i said this is ridiculous, no judge will let this stand, i'm going to fight this. and then i drew -- let's say i drew an unfavorable judge, i felt like it was a directed verdict. i invite anyone to read the transcript and draw their own conclusions. but for the first major internet trial of the 21st century, to have the judge's first two questions be what is a mouse, what is a cursor, in 2001, i think kind of set the tone for the whole thing. again, read the jury

instructions at the end and you'll see the jury had no choice. as a matter of fact, one of the jurors came up to me immediately after the trial and said, we want to acquit you, but we felt the judge gave us no choice. and from there, once you're in the system and the federal pipeline, that's kind of the way it goes down from there. but, i'm sorry, go ahead. >> you served time and it has been really hard for you to get a job or be able to do anything since then. what do you think when you see the way sports gambling has been embraced at this point? >> well, it's comical to me. i mean, we certainly would have been opening to partnering with the sports leagues back then. but they acted like we were the -- we were the devil -- we were the devil on earth. they wouldn't have any part of sports betting. now they're teaming up, pairing up with all the all major sports books and basically offering

some of the very products that my partner steve and i invented in 1997, the live betting on games, that was our product. and by the way, to this day, they still don't do it right. they're leaving a lot of money on the table, but that's for another discussion, but the point is they're doing everything that we invented and were doing in real time for real money in 1997 while other sites were still talking about traffic and clicks and we were doing financial transactions. we were moving money back then. these sites today, i actually, on a whim, applied to a job at draft kings to manage a team of nfl live traders at draft kings and i got the standard rejection, we found someone with more experience for a product that i invented or co-invented.

>> what do you think could and should be done differently with online gambling? are do you kind of admire the way it is rolled out? >> i'm not part of it anymore. that's what could be done differently. they drove me out of the business and some others and now the big boys are playing and they chased us out. they chased away the competition. >> you have hopes to eventually work in this business again? >> i'm not itching to get back in and startingon my own again. i mean, i don't want to be another one of these startups who are more -- more proud of what round of financing they're in than how much business they're actually doing. we were actually doing business back then. but i mean, some giant came to me and said elon musk came to me and said i would like you to

fire up and run x sports booking casino, i mean, you can hit the ground running. we have the software and the team. we can do it better than anyone else, but, no, i'm not looking to crawl back and fight against all the majors at this point. >> well, jay, it has been nice talking to you. again, pretty amazing to see what has happened over the last quarter century. it is amazing to think it's been that long, but jay cohen, thank you for your time today. >> thank you for having me, becky. have a nice day. >> you too. okay, coming up after this, two big hours ahead, we're going to talk about this week's wild ride in the markets and what is next for the federal reserve. right now as we head to a break, take a look at the biggest premarket winners and losers in the s&p 500. quk x"omg ghba."sawbo cinrit ck s of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit,

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good morning. stocks looking to add to yesterday's gains as wall street claws its way back from the cpi fueled sell-off. today, another round of economic data for investors to digest. house speaker mike johnson throwing cold water on the senate's $95 billion foreign aid package. we'll debate what it will take to get it across the finish line. plus, ahead of next week's big earnings, nvidia has edged past google in market cap, approaching $2 trillion. can nvidia shares stay dominant? jon fortt is searching for the answer. second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square. i'm andrew ross sorkin with joe kernen and becky quick. take a look at the futures, ahead of the markets, still 2 1/2 hours before we get completely moving here, but the dow would open up 54 points higher. s&p 500, up about 6 points. nasdaq up about 25 points. treasuries right now, the ten-year and two-year, flip the boards around, ten-year, 4.228%. the two-year at 4.559%. oil, the energy complex, you can buy wti crude, $76.12 right now. and crypto, it continues to move up, you're looking at bitcoin at $52,392. back to the broader markets. clawing some steep losses back from earlier this week.

joining us to talk about the market is meera pandit, global market strategist at jpmorgan asset management. good morning to you. we have been trying to make sense of all this. i think the hot cpi number has spooked a lot of folks and maybe has a sense that it spooked jay powell or should have jay powell and everybody not been spooked because maybe we knew this already? jamie dimon knew this already. >> the fed has been saying since december 75 basis points worth of rate cuts. we want to see consistent progress on inflation in 2024. so, the market shouldn't really be spooked and i think that coming into the year, pricing a peak of 170 basis points of cuts was very optimistic or perhaps very bearish, but the reality is i think with inflation it will be two steps forward, one step back, we're not going to have an even path to 2%, but we can get there. and at some point, we're going to need to see the fed and the market converge in terms of expectations. now that that's mostly happened, it can be less volatility for the bond market and in particular going forward. >> how do you think about

equities, though, in this world? the equity side, we had unusually low volatility last year. i do think it is going to pick up a little bit more this year, back to normal levels. we have to get a little bit of custom that markets can go down as well and that's healthy market functioning. and essentially that helps us from an investment standpoint separate what stocks are going to do well over the course of the year and which ones aren't. last year was very much a year driven by multiple expansion. this year, earnings are going to play a big are picture and there are some pretty lofty expectations for earnings growth, but earnings growth should broaden out beyond the mag seven. >> you think the multiple game is over for the most part? >> look, never bet against multiples. we can see overvalued stocks can stay overvalued and people get enthusiastic about the markets with these types of profits and this type of economic growth. but, at the same time, we should really be focused on earnings. i would say from a market perspective, if we think about earnings this year and what can

do well, last year you had all the profit growth come from magnificent seven up about 30% in terms of profits while the rest of the index contracted. this year, you're going to get 40% of the growth from the mag seven and 60% from everything else. i think it is the digging into everything else to figure out where the profits are going to come from. i think quality is important in this environment, but certainly broadening out of the rally is not simply reversion to the mean. very much -- >> 60% what do you like in the 60%? >> i think in this environment where yields are around 3% to 4%, right now a little above that, you tend to see value in growth pretty competitive in a benign economic environment. we have been in an environment where below 3% rates has helped growth outperform. we have a bit of recency bias. trying to get to more of a neutral position given the drift last year. we're still interested in quality. that means larger and midcap and i think the challenge with small

cap is that even though it is cheap, there is a little bit of an uncertainty around the profits there. they're dealing with higher costs and 40% of the index there is floating rates, so there are higher rate environments that will bite a little more there. >> how do you feel about foreign equities now? japan and the uk this morning? >> areas like china are going to continue to be challenged from a property sector perspective. europe still looking a little bit slower growth. i think there is room to run on japan with the corporate reforms. and areas like india that though they do look expensive are producing that growth favorable demographic. i think it is tweaking within there. but being narrow in terms of the themes that can do well, tech or biotech, luxury goods. >> final question what would you run from? >> what would i run from? i think, again, some of the lower quality areas, small cap, people are getting too enthusiastic about the valuations where as again i do worry about the costs and the floating rate. >> you don't like the russell at

all. >> don't love it at this point. i think there will be an entry point. we're not there yet. the other thing is are still sitting on so much cash and cash had its best year in almost 25 years last year and still underperformed everything else. i think people are still falling into the cash trap. >> thank you. nice to see you. appreciate it. coming up, weaker u.s. demand and excess supply sending the price of natural gas into a nosedive. we're going to talk future production and where prices could be headed. and later, thousands of flight attendants pushing for new ntctancoras d higher wages. the association of flight attendants president sara nelson will join us. "squawk box" is coming right back. now earns 5% apy. (♪♪) that's how you business differently. intuit quickbooks. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror.

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airbus releasing results earlier this morning and announcing a special dividend. to phil lebeau with those

details. hey, phil. >> hey, joe. 2023 turned out to be a good year for airbus. why it is awarding the special dividend in the first quarter. shares of airbus under a little bit of pressure this morning. the company announced its adjusted earnings in q4 up 3% year over year on revenue that increased 11% year over year. the focus for investors is going to be delivery increases and how much they're going to grow in 2024. they're targeting 800 for 2024. to give you some perspective, in terms of where they have been over the last couple of years, 611 in 2021, they had to push out delivering over 720 and they didn't achieve that until 2023. now they're targeting 800 for this year, provided the supply chain holds up worldwide. here is the ceo a few minutes ago. >> we are always trying to find what i call the sweet spot, the right balance between demand and supply to increase the

production, the deliveries, but do it in the right way. supply chain is in recovery, is getting better, but as they keep getting better, we keep asking for more. >> it is the supply chain that both airbus and boeing somewhat wrestled with because it is a global supply chain and they are dealing with the same exact suppliers, it is a matter of those suppliers increasing their productions. we have seen a split in shares of airbus and boeing. the airbus backlog far greater than boeing's. almost 8600 aircraft. look at boeing's, 5600 is what you're looking at in terms of the number of planes on order that have not yet been built. remember, boeing's production of the max, which is really what drives deliveries, the bulk of deliveries, that's capped at 38 per month. at least for now by the faa, guys. so there you have it, the airbus quarterly results in a special dividend after a really very strong 2023. >> all right, phil.

got any updates on new orders from previously where airbus was not a player? how is that proceeding? idle threats, you think? i'm talking about boeing's problems and -- >> talking about boeing and united? i have no update. i have no update. and, look, it is going to -- with a large customer like united, if it were to go over to airbus, that's going to take, you know, for an additional order, that would take really reworking the order book on airbus' part. so, it is not something you can do overnight. would they be interested in doing that? yes. and let's be clear. united has not canceled its max 10 orders in terms of what they're planning to get from boeing. they just have strictly taken it off the planning for when they expect to receive those at least for now. >> yeah, i mean, you think about just ordering one of these babies, when you're going to get it, what goes into making one, i

mean, it is -- you're talking years and years and years. i don't know. just to cover -- just in case, what can unite d order one, lets try one. >> think it is like mcdonald's, i'll take one of those. >> a la carte, give me one of those. >> exactly. >> probably no tht. thanks, phil. when we,b come back, the foreign aid package still in limbo with the house. we'll talk foreign aid, border crisis and much more with former congressman joe crowley and mick mulvaney. the futures this morning are indicated a little higher. dow futures up by 50. the nasdaq indicated up by 40. s&p futures up by about 9. "squawk box" will be right back. >> announcer: time now for atday's aflac trivia question. wh is the record for the number of most people in space

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and now the answer to today's aflac trivia question. what is the record for the number of most people in space

at the same time? the answer, 19. on december 11th, 2021, the human population in space for a few minutes was made of six people in a blue origin new shepherd capsule, three in the chinese space station, and ten in the international space station. >> that is pretty cool. >> line at the bathroom. spacex filed to change its incorporation location to texas from delaware. elon musk making that move after a delaware chancery court ruling ordered tesla to rescind his 2018 pay package. neuralink has also begun moving its location incorporation from delaware to nevnevada. we have seen this coming. he's been pretty vocal about it and he said as much, i think, just telling people, any other companies that they should do the same. cisco announcing plans to

cut 5% of its workforce or about 4,2 4,250 jobs. it beat estimates of 84 cents, revenue down 6% year over year, but wall street expectations. guidance for the current quarter and full year fell well short of estimates. shares of deere falling sharply after reporting first quarter results. the company did beat earnings and revenue expectations, but then it cut its profit guidance for the full year. it says that borrowing costs, high borrowing costs hurting demand for farm equipment. let's check out the energy markets this morning. natural gas futures falling to near 3 1/2 year lows, down 50% just in the space of a month. there continues to be a surplus of storage as production is near record levels. while the price of crude remains below $80 a barrel. the energy information administration says the crude inventories jumped by 12 million barrels to 439.5 million.

analysts were only expecting a rise of 2.6 million, that's a much bigger move there. joining us right now is amarita send, founder and director of research, and we know the supply has gotten to be a much bigger, bigger deal, a lot more of it there, but i think it is still kind of startling to watch what happen is happening with natural gas. how would you describe this? >> i think the natural gas phenomena is far more to do with winter weather really. it has been super warm, continues to be warm. our price forecast is down to 1.75 and we think we should cut 1.5 a day of q2 production to balance the market. it is just there is just no winter weather right now to support the kind of production that we are seeing. >> and normally you would think seasonally we would get into a

much tougher time of the year as winter is farthest away it is going to be this entire time. but there are some people who think that the blood letting is going to stop at this point because prices are at such low levels, it is going to put some of the producers out of business. >> well, whether it puts producers out of business or just the voluntarily cut production, we have seen in the past, you know, they have kind of come in the past to cut production, because at the end of the day, nobody wants to be producing at losses. so i think that is roughly why we are talking about prices needing to go to levels which then incentivizes, produces core production. >> amarita, i don't know if you saw the shell forecast, increasing demand from china and southeast asia as over the next 15, 20 years, they switch from coal to natural gas, these are rapidly ly growing economies t need energy. 50% increase in global demand

for natural gas, between now and lng too, what about that move by the biden administration to throw a bone to the hard core climate lobby before an election? does it really, you know, some people said it doesn't do that much. it is only new ventures, so the other ones continue, so they can do it without actually hurting things. is it as stupid a move or as political a move as it seems? >> i mean, look, if this move were to be permanent, remember right now it is just a pause, then, of course, it is going to have a massive impact on our long-term balance. right now it has minimal impact on our short-term balances because, you know, most of the projects are still going to go ahead. it does imperil some of the projects that hoped to reach -- this year and to service by the end of the decade, but, you know, ultimately we absolutely believe that the decision is

political. we are very optimistic and very bullish on the demand for natural gas in the long-term. precisely for the reasons you highlighted. asia, latin america, even africa, there is a huge need for natural gas there. but, yeah, i think it is -- we're not expecting it to be set in stone. it is a few months impact we believe. and, yeah, i think after -- it comes at the outset of the presidential election, of course, and i think that's why it is a political decision. >> such a gift at -- where does the price where it is and the emissions that we're talking about versus other things and the price versus renewables, it is, like, it is staring you right in the face, other than nuclear as the greatest answer to the world's energy needs. >> i think that the argument if u.s. industries actually lost out because of exports, it doesn't hold. look at where prices are.

and the one very quick thing i want to add, i got back from india and meeting with the minister there, he was very open in saying to me, look, the evs we're doing it going to be fired by coal, which we have known about, but the reason for that is because coal is right here, it is secure, it is reliable, and it is cheap. this is the thing western politicians don't understand, that decisions like this actually make natural gas a less reliable source in asia and they will absolutely continue to burn coal, which inarguably is easer to decarbonize in the longer run, but the point is that if you make energy in the west more political, then you're not going to be able to get asia away from coal anyways. >> is the damage already done? that sense, not just for countries like india looking at this and saying, hey, we're not going to put ourselves in a position of being vulnerable, but even companies that have to make investments for billions and billions and billions of dollars for decisions that are going to play out over the course of the next decade, are they willing to step back in,

even if the decision goes their way because they have to worry about the back and forth, the political wins? >> i think the point you make is excellent and i think this is exactly what industry will not want, right? this is disruptive and it makes it very, very difficult for companies to make investments. and the same companies are then, you know, penalized if prices go up in the medium term because they haven't invested. no win for them. i still do believe that there is a huge interest in natural gas. i think this move is much more because of what happened after russia's invasion of ukraine, and the price increases we saw in lngin the back of that. and ultimately they do want to move away from city pollution and away from coal, but, yes, in a much more sustainable manner and more cost effective manner. that's where the western governments need to realize that. >> amarita, thank you. >> thank you. coming up, the latest on the foreign aid package and whether

it can pass the house. and later, can nvidia hold its market cap dominance over google as the chipmaker gets ready to report results nt?ex jon fortt will break down the battle for the $2 trillion market cap. big mark. "squawk box" returns after this. (grunting) at morgan stanley, old school hard work

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welcome back. check out shares of shake shack on the move after reported fourth quarter results. earnings at 2 cents a share, double the street's expectations, revenue grew 20% to $286.2 million over the prior year. also a beat. same store sales growing 2.8%. 1.6% the street had been looking for. that was better than that. the full year, the burger chain expecting revenue to come in just about above expectations, comps in the low single igits, that stock up moving this year in a big way, up 44%. almost 45%. >> maybe people are looking for -- doubled expectations there. 2 cents. that's funny way of putting it, versus 1 cent. the foreign aid package continues to stall in the house while the white house denied requests from speaker johnson to meet with president biden.

joining us now, joe crowley, senior policy director at dent. i was going to ask, congressman what you're doing now. and mick mulvaney, former u.s. congressman, served as president trump's white house chief of staff, co-chair of actum strategic advisers. joe, suozzi did it. do us a favor. come back. didn't aoc take your -- didn't that happen? will you do the world a favor and come back, please? >> joe, you know what happened. it is like being dumped by your first girlfriend. six years ago. i'm kind of over it by now, you know. and life does go on. >> you have to dust yourself off, pick yourself up and come back and serve. mick, don't you think crowley would be good? >> as soon as i say i support crowley, he doesn't have a chance. i don't think he should do that. >> thanks, mick. appreciate that. >> you're probably right.

so, congressman -- i could be talking about either one of you guys. i'll start with you, joe. i asked people this and said it, i don't know what mick's going to say, republicans said no way, no way we're doing any of this funding without a border deal, no way. then you get lankford and spent all this time, they put this together, so you got the border deal, they reject that, and now we're back to no way we're doing this without a border deal. it doesn't -- i think that's part of the reason, don't know why suozzi won but it doesn't look like republicans really want to govern in the house. >> no, it has been a bad week or bad couple of weeks for republicans. you know, they have, i think, six rule votes that were defeated. that's unheard of. one rule vote going down is unheard of, but six, had to pull the fisa bill, lost that election on tuesday, the message it sent to other republicans not only in new york, but in swing districts was remarkable. so i think, you know, these are really tough weeks for speaker

johnson. and i think you're right about the $95 billion package from the senate, it lands in his lap, and he wants to meet with the president now, after he said, as you said, joe, he wanted the funding for the border in there, then when it was in, he said it is dead on arrival, they take the money out, still dead on arrival. i think there is a messaging issue. i think there is a problem with his own conference at this point in time. >> there is big problems in the conference, mick. and i mean you look at the republican party, think of how popular is minority leader mcconnell at this point? he's like 8% or something, just a mess, isn't it? anything he does, people aren't going to want do it because he had something to do with it. doesn't portend good things, does it? >> right now the house is a couple of groups that if they support something, it means it is automatically not going to be very popular in the u.s. house, like that u.s. chamber of

commerce is the kiss of death and anything that mcconnell likes is the kiss of death. let me disagree with joe on one thing. i think as speaker of the house, when he calls the president of the united states and says i want to talk about the leading issue of the day, that request should be taken seriously. i'm surprised the white house said no. but, joe is right, a rough couple of weeks for the republicans. what does that mean for this current debate? it is going to be discussion, there is already discussion about something that joe will tell you, crowley would tell you, would ordinarily never be seriously discussed on the floor, a discharge petition, where a bunch of people get together and get against the leadership to say we don't care what the leadership of our party says, we want to vote on this bill anyway. and ordinarily properly functioning house of representatives, that never happens. but i'm hearing more and more there are folks discussing that because this is not an ordinary leadership position. mike johnson does not command the same kind of control over his party that certainly nancy pelosi did over hers, hakeem does over his or even kevin mccarthy did before he left. >> it is kind of a weird perfect

storm, mick. you got some republicans, i don't know, this gives them cover not to support ukraine. there are some republicans that don't want to -- they just decided they don't want to support ukraine. so then you say, well, listen, we got to support israel. then you got democrats that stealth because of whatever pressure they're getting from about gaza or palestine, they don't want to support israel. it is a mess. it is a mess, mick. and these are things probably that -- and then all of it means we can't close the border and biden looks in the camera straight in his face and says i can't do anything about it. we know he's got 70 executive orders that he reversed that he could reverse back in closing. >> put the border aside, i think that there is a group of republicans who don't want to do anything for ukraine. there is also a group of democrats who don't want to do anything to support israel. i get that. i get the feeling that the center of gravity in both parties is to do both. ordinarily in washington, d.c., the way these deals get done is

they get bigger. and this particular circumstance i think you might actually see a smaller package being something that most folks might be able to rally around. i don't know if crowley sees the same thing on his side of the the people, the moderates, the folks in the middle, they get this over the line. and that's what seems to be missing right now. right now the speaker controls the floor. hakeem jeffries cannot put a bill on the floor. the only person who can do that is the speaker. he's had difficulty in his own rules committee. so, he's had difficulty getting rules passed on the floor itself. he is in a quandary. the difficulties there. in terms of the package itself, i do think it is tough for republicans to -- i think at this point not support israel and i think as i said before there are democrats who are not supportive of israel but want to see the ukraine package piece

put in. the congress is dysfunctional. last year they passed two dozen bills, most of them changed things, post offices. it is not working for the american people under these circumstances. >> you want to -- i want to get to one of andrew's questions. >> i have a quick question. >> you quoted mulvaney as saying stuff about trump. i wonder if he's -- >> i have one quick question. you said at the beginning, joking around, that you wouldn't give your support to joe because it probably wouldn't help him. it would probably hurt him. i wonder what you think of putin saying that he would prefer joe biden this time around after endorsing former president trump in the last elections in 2016. does that ring true to you? i keep trying to figure out what he means with this. it seems like not having ukrainian funding is the most important thing in putin's mind and biden's been a supporter of that. >> i can give you a serious answer to your question and a

practical answer. the serious answer, he think he's playing the american media, i understand that. the practical answer is nobody cares. none of the swing voters care one way or another about what putin thinks about biden or trump. >> andrew quoted you and your comments about your former boss. would you support the republican nominee if it is for president if it is donald trump? >> the same question is putin, the answer is probably, yeah, i would. understand there is going to be an interesting third party effort, i've not supported anybody in the republican primary, back to the putin thing, you can say that putin likes biden -- i want to finish the -- andrew is trying to get me in trouble. i know that. that's fine. look, putin did not invade ukraine under donald trump. he did under biden. let actions speak louder than words, probably good advice in politics generally. andrew and i can have a nice long chat about the republican

nominee after we have one. >> oh, not until. >> not until. >> you think there is still a third party possibility, either one of you guys. larry hogan is running for senate. who is at the top of the ticket, mick? >> they keep talking about joe manchin. i think the only people that want joe manchin to run for president are joe manchin and his family. i don't know what joe thinks there is somebody out there. rfk jr., i don't see a third party really moving the needle very much. >> if i go for congress, when do you go for president? >> well, the problem with the no labels party, it is a party itself. no labels is its own political movement. and i just don't see the room there in the national election for that third party. >> you're not going to escape unscathed. you got joe biden, seriously, i mean, i don't have to say anything, and then kamala harris a heart beat away from the presidency. you okay with both of those? >> i worked with kamala harris

many, many times over the years and she's a wonderful person, i think she's very bright, very smart, she was the attorney general of california -- i'll be fine with that. i'll be fine with that. >> is biden too old? >> with age comes sage and i'll tell you one thing, i'll take him over the end of democracy, let's put it that way. >> oh, my god, really, our forefathers are that lame that they'll let one guy -- >> nobody ever anticipated donald trump coming along, ever. >> you think the constitution can survive another trump presidency? >> it already has survived once, it will do it again. >> okay. thanks. thank you, both. this conversation a million times. i guess we will too. when we come back, has id'stonvia sck run too far? that's the topic of this week's on the other hand. jon fortt is here to weigh in. "squawk box" will be right back. in the u.s. we see millions of cyber threats each year.

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welcome back, everybody. ahead of its earnings report next week, nvidia edged past

google. so can nvidia stock stay dominant? jon fortt is here to weigh in on that. >> yes, this is just the beginning for nvidia. i know the rise has been dizzying. the stock closed at $739 a share on wednesday. 10 times where it traded before the pandemic four years ago. more than tripled in the past 12 months aloalone. nvidia's graphics chips are a key ingredient in the artificial intelligence revolution unfolding right now globally. the other trillion dollar stocks in the market, microsoft, apple, alphabet, amazon, meta, they tell the story. microsoft is there because it has come back recaptured business productivity software. apple won mobile. alphabet won search. amazon won cloud. meta won special and nvidia has pole position in a.i. chips and platforms and while it is tempting to see how others will commoditize the business,

skeptics thought the same of every other trillion dollar stock on the list and they were wrong. smart company with the right technology and first mover advantage in a true sea change is really hard to beat unless it beats itself with mistakes. that's because its strategic advantages are deeper than observers realize. allowing it to outmaneuver the followers. that's what nvidia is about to do. >> you know what they say about stocks that climb up, they're going to fall harder. there are questions about whether it has run too far. tesla, down 35% from highs of 7 months ago and nobody is beating tesla when it comes to electric cars. we had an analyst this week who said he likes nvidia, but not nearly as much as he likes microsoft and google on some of these questions too. >> well, becky -- >> or alphabet. >> on the other hand, nvidia is in for a tumble. as great as the company's technology and competitive position are, the market mechanics have just gotten out of control. look at a two-year chart of

proxy supermicro. smci went from $40 a share in february 2022 to $880 yesterday. 22x, it is double just in the last three weeks. so, two reasons nvidia's monster move is about to be tested. one, amd and intel are coming to market with more competitive chips in 2024. these chips don't have to beat nvidia's to cool the stock, they have to put up a decent fight and the co-founder of mnio told me this week she believes that they will. two, there is history. google docs challenged microsoft office, microsoft challenged aws. point is, to maintain their trillion dollar market caps, each had to first successfully answer a challenge and prove it had a durable platform and not just a line of hit products. in this a.i. phase, nvidia hasn't yet been through that trial. but, i bet it is coming soon.

>> i mean, there are so many things to kind of weigh on and this is probably one of the biggest questions that is out there in the investing world at this point. i see why you do this. you get to be right no matter what happens. >> yeah, yeah. i don't get to do that in marriage at home, so only on "squawk box" on thursdays, becky. >> valentine's day, you realize that, is that what you're trying to say? >> i'm quite a ways in. >> if a.i. takes over the world, like the potential, like exponentially, could this be a $5 trillion company theoretically? >> i think it could. but i think there is that real question, often these companies do make mistakes. blackberry made a mistake in a similar position, but didn't extend it enough and realized what had to change. so, is nvidia going to build out the software platform that it appears to be building, but just doesn't get the headlines.

>> where are you on sam altman? behind the scenes, he's trying to raise trillions of dollars to build his own chips. >> no one raises trillions of dollars. >> the emirates. >> no one raises trillions, right? >> i don't know. half a trillion dollars? you've seen -- >> it is a great headline, come on. >> do you think there is a possibility he is able -- given what he knows and what openai knows about the software piece of it, do they have some kind of unique advantage that the folks in the chip market don't? in terms of understanding what the chips need to do in a way that maybe even people who are in the chip business don't know? or the folks in the chip business actually know something about chips that are different than the people in the software business? >> it is just the margins and manufacturing chips aren't that fantastic. so it makes more sense for him to partner with various foundries or help them to get funding or at least that's what pat gelsinger is about to argue when they have foundry day.

you can buy intel for a lot less than that and fix intel's problems for a lot less money than $7 trillion. got to mention the on the other hand newsletter so you can delve deeply into these issues. the code is on the screen. type in cnbc.com/otoh, get both arguments and you can share. i forgot to switch hands with the pen this morning. >> that would have thrown all of us off. >> i think of you every time. >> you do that on purpose? >> he does. from one hand to the -- >> becky caught it two years ago. >> the control room caught it. >> you almost forgot. >> i had help. i must fess up. >> i want to see what you do if there is three possible options. coming up on the other side, flight attendants demanding better pay and working conditions, the association of flight attendants president sara nelson will join us next. take a look at the futures ahead of some key economic data. retailal ses, jobless claims due

at 8:30 eastern time. we'll have the numbers and instant market reaction. don't go anywhere. we're coming right back.

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thousands of flight attendants pushing for new contracts and higher wages pictured as airports around the world tuesday. our next guest was there. brin in sarah nelson international president of the association flight attendants representing nearly 50,000 flight attendants. her union one of three who pictured tuesday picketed tuesday. >> this is showing the airline industry flight attendants are standing together as the uaw. making airlines compete to heightest standards rather than compete against each other for the lowest standards. >> in terms of what you're seeking this time. talking pay, hours? what are we talking about? >> first of all i just want to acknowledge joe said two days ago we should have a pay raise. i want to negotiate with joe.

>> okay. >> you deserve it. you know, whatever amount of flight i'm on, like, my question, my whole view of humanity, when i see the stuff flight attendants have to put up with, sarah. >> well, thank you. >> it might not be enough money. >> might not be enough money. get real. the pilots got between 35% and 50% raises. we're talking about being on par. i talked during the pandemic about the payroll support we got about keeping everything in place. not going backwards like we did after 9/11. it had been 20 years of posterity. mergers pushed passengers together squeezed staffing out of our work. how does working longer hours for less pay -- been a long time since we've seen a significant increase for our careers and we're working harder than ever and need pay increases and pay for all the time at work and need to have a secure retirement so people can retire some day

and move on and leave room for the next generation to come along. these are the things we're fighting for and they're significant demands but it's been a long time and they're overdue. >> talk numbers. what are you looking for? >> going to look different depending on the airline and how that's defined, andrew. looking at how we're paid for every hour actually on the job. those numbers may look different end of the day, but when you look what the pilots got, we're talking about commensurate amount of pay percentagewise for flight attendants. panning out to very significant double-digit raises and increases in amount of time and amount of times we're getting paid during the day for our efforts. >> what is the effective number, though? looking at numbers. no. talk brass tacks. audience needs to understand what we're talking about here. the average flight attendant in the united states, airlines that you represent, gets paid what?

>> well, depends where you are in the pay scale. to be as low as $25,000 a year starting out. average around $62,000 a year. we need a significant pay raise from that in order to just have a living wage to get by. talking about, somewhere in the range of 30% depending how that's defined across the pay scale and across how it's designed for all of our hours of work. >> starting -- did you say $25,000? >> yes. sometimes less than that when talking about the regional airlines. this is not enough to live on and why people are sleeping in their cars. we have a lot of people who are qualifying for food stamps out there. talking about raising the standards here just so people can actually make enough to come to work and do the job. >> is that true just upon regionals? is it on -- some of the bigger flights and the reason i ask, you do look at some -- look at some of the numbers that have been published and significantly higher. i mean, you know --

>> starting out, andrew and you're in a major airline talking -- regional air line, $20,000,s $25,000. >> some of these six-figure numbers are not true? >> that isn't for the people actually working what could be considered and 80-hour workweek for anyone else. you're talking about people busting their butt. frankly, do you want aviation's first responders working so much just to make ends meet? when they're trying to also save your lives? i don't think so. >> sara a much longer conversation. ask one thing. delta. just had delta on. obviously one of the phi -- you hear two things about that airline. one, that they're doing better than just about all the other airlines. two, that argument they pay their people more than all the others with all of the bonuses. true, not true? >> first of all, it's not true. it is true they're making more

than anyone else. so they should be leading the industry. we should have a contract there that is setting the highest standards for the industry. that really does undercut the rest of the bargaining across the industry not having a union like delta and negotiating. pilots started the standard at delta because they negotiated a pilot agreement and set a standard for all the others to fall in line. what we'd like to see for the flight attendants. >> and pay highest at delta? >> it is not. just out walking with flight attendants yesterday, the day they got profit-sharing checks saying, management can take that away at any time. not locked in to a contract. we can't count on it and it's not enough. it's not enough for -- >> satisfaction, you look at every customer satisfaction rating, the last several years even more than that now, and delta's at the top. >> i think alaska's at the top actually. depending what you're looking at. >> performance, people happier. just citing statistics here. why is that?

>> well, because you're only hearing the management voice coming out of there. not hearing the voices of the workers talking about the -- >> i'm talking customers. the customers' voice. >> know what? customers across the board are supporting us and our contract negotiations. i think we're at a real turn. people saying you need a union a voice at the table, a fair return for the work you're creating and delta creating more profit than anybody else should be seeing a higher return. >> sara a longer conversation. i'll say this as a long-time flyer, i think folks who work at delta seem happier. i wonder why that is. >> andrew, i understand. i understand that you think you can do our job well and invite you to come out with me some day and do that job, because i think -- >> i am -- >> serving bug juice at summer camp 30 years ago. >> i can do your job -- i

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good morning. fuchters pointing gains after opening bell after tuesday's major sell-off. major averages making their way on back but on pace to snap a

five-week win streak. focus for investors this hour, economic data. a lot of it. bringing you new retail sales numbers jobless claims and key manufacturing reads. the fallout from one of the biggest financial frauds in u.s. history. 15 years after busted, take you live to texas to revisit the case of r. allen stanford. final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin. sometimes they just really surprise me. u.s. equity futures -- >> you know -- >> at this site. so you understand there could be have -- restrictive effects from

union -- >> yes! you heard me talk about unions, starbucks, unions related to certain types of businesses. unions related to the auto industry. >> you're an enigma wrapped in a riddle surrounded by a conundrum. >> it's called being fair-minded. >> now, let's not get carried away. treasury yields at this hour -- like actually looking at the world in a realistic way in this, you know -- there are times it's troubling, if you -- >> it's not religious. my point. not religious. among today's top business stories cisco shares ls lower i the pre-market. gains in the third quarter. cisco plans to cut 5% of its workforce more than 4,000 jobs opinion the ceo commenting on layoffs on "mad money" last

night with jim cramer. >> these are very tough decisions we're going to spend time with employees s over the next days talking through this. clearly, when you're off plan the way we are this year because of these issues we talked about, we have to adjust expenses. that's what we've done. it won't be easy but we'll get through it. >> elon musk's space x filing to change the location of its incorporation to texas from delaware. it's the latest move by musk following a delaware court ruling that ordered tesla to rescind his 2018 pay package worth about $56 billion. musk encouraged other businesses to move out of delaware as well. separately, spacex launched odisious. it was deployed and making its way to the moon expected to touch down february 22nd. if successful the first american

spacecraft to gently touch down on the moon's surface since the apollo landing back in 1972. new york city's mayor eric adams says his administration file add lawsuit against parent companies of tiktok, instagram and facebook, also snapchat and youtube alleging the services are damaging kids' mental health in new york. responses from the companies range fra disputing allegations to highlighting platform safeguards. over to frank holland joins us with a look at today's biggest pre-market movers. good morning. >> good morning to you, andrew. start with the name talking about all year long. nvidia. continue to hit new highs and mark new milestones. chipmaker, down now in the pre-market but made history passing alphabet a day after passing amazon fourth place. incredible nvidia riding the wave for artificial intelligence. quick history lesson.

nvidia seventh largest company market cap a year ago. outside top 20 four years ago. share of that fractionally up and nvidia hitting milestones up over 200% last year. and moving on, earnings to neutral jpmorgan. rerebounding crypto prices should sustain and improve activity left vels. shares up in the pre-market. last, not least, shares of deere under pressure despite earnings beat. pressure due to full year outlook soft compared to analysts' estimates on, in the report. executives expecting fleet normalization this year after a record 2022 where they obviously saw a lot of people buying their equipment. also coming up later today on

"closing bell: overtime" cfo top the quarter and broader ag space on "closing bell: overtime" deere cfo josh jepson. back to you. >> thank you. now broader markets and specifically the so-called magnificent seven stocks. in for thoughts on mini caps bring in head of u.s. equity strategy. and granted maybe still are at the magnificent seven. remember who they are. taken some out, and played around with the fabulous five and the fantastic four, but let's do the seven, scott. what should we do with those? are they going to lead this year as well? >> i think you have to hold them. our view as we've been consistently overweight tech and that the premise has been you want to hold on to mega cap growers. earning weight if you will in the indexes and function of the financial dynamics under way. aside from that we expect the market to continue to broaden

this year on holds. magnificent seven, big seven, however you refer to them, they're 28% of the s&p 500 now and contributing about 20% of earnings. that's up from only 5% of earnings in 2017. our point here is that the business model maturation, turn of profitability and significant growth in profitability is under waying the market cap growth seen here. we think it's to a certain degree deserved from here. stocks become more yidiosyncratc looking ahead. >> always want to be in the magnificent seven. want to win it, got to be in it. like the lotto. they say, what they say, scott. there are things to think about in terms of valuations. we know that tech is where the growth is. but then you've got to worry about, as you talk valuations then interest rates and prospects higher or lower interest rates affect when

multiples go. fastest growing companies but doesn't mean the best performing stocks. >> i think that's spot-on. the way we've been discussing it is, you know, a lot of discussion this week is, fed timing on first rate cut and so forth. we're attentive to that for sure but for several months now been saying, we're much moff re focu on tender nominal yields because to your point, sends a signal how the market will think about the valuation of these stocks. so suffice say we're yoursing a year-end 5100 target. not that far away at this point. mantra has been buy pullback. part of what we're watching is direction of ten year nominals. feeling much more comfortable with a valuation tailwind to the big seven with a ten-year yields closer to 4%. we've nudged up to 4.25 and want to be careful to assess how the

stocks could react, which go higher short term from here. >> a law of large numbers, scott. does that ever come into play, and if you ever believe that thing, going broaden out, when did the small caps have their day? can you go from 2 trillion to 4 trillion? on 1.5 trillion to 3 trillion? and when do you make the decision to -- actually move into a less well-known name? >> yeah. look, i think relative valuation set up for small caps is very compelling right now. historically, historically, gotten bigger sustaining moves for this part of the market in sort of early cycle dynamics. right? so what we've been arguing here is you want to use the relative valuation setup, which plays to lesser confidence in the small caps generating outsized earnings growth to leg in the positions. ultimately what you're going to need to get to is a little bit clearer early cycle play.

now, the city house views for midyear recession. we're trying to time it in troel relation to that. you get a year part of the broadening effect, continue to see small cap regain its footing after several years of normalcy. >> midyear recession. hmm. like a -- like a -- semi mild hard landing? just a little bit -- you know, not -- kind of a soft landing that gets you to a small negative print in a couple of quarters? is that what you mean? >> pretty much what we're looking at here, but essentially that needs to come from, you need to see employment fade, see consumption data points come in a little bit. that's from life's equity strategy perks. it's going to be certainly possible, but i think what we've been argues under the surface is that sector by sector and we like to think of the s&p in clusters growth, defensives and

cyclicals. most of the equity markets have actually gone through earnings recessions already. so even despite an economics call for a midyear, call it, mild recession, our view is that the earnings setup for the s&p 500 is quite strong here actually. we're using a 245 estimate for full year '24 and that's even factoring in economic weakness middle part of the year as we navigate lagging effects of fed rate hikes to date. atte attentive, but where it happens comfortable owning u.s. equities. less comfortable chasing them crossing the 5,000 level. look to be able to be more aggressive on pullback. >> where are you based? >> in san francisco. >> you're getting a background, my look in a couple hours. >> okay. >> just, you know, $50 an hour. i don't think you're going to,

enjoy your mcdonald's while you can. all going to close in a little while. see that? $50 an hour minimum wage? >> you know, i will say on that point we recently went underweight consumer services. it's hard -- part of our thought process there is after the wage gains of the past year, that that part of the market's going have a tougher time holding margins. >> ought to go overweight, moving to some other state! anyway, scott -- >> look at that view. >> that's right. look at the view. so don't go in too closely. you may not like what you see. thanks, scott. >> thank you. when we come back, a full slate of economic data at 8:30 eastern time. got new retail sales numbers. jobless claims and more. next report on headwinds and opportunities for key u.s. restaurant chains in china. who's eyeing growth and who's pulling back? get into all oth wn quawk box" returns.

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we're watching shares of west p civil services. medical kwiptmaker missed estimates hurt by weak demand for equipment used to make covid vaccines opinion the company says the headwinds announced in current quarter and full year guidance came in below expectations. stock down by about 17%. meantime, japan losing its title as the world's third largest economy despite a booming stock market closing in on all-time highs from decades ago. data showing the country's economy contracted 0 b.4%. happened on a shrink. third quarter recession often defined two consecutive quarters of contraction. so here we are. this was a surprise. economists projected growth 1.4% in q4. germany holds the title over the u.s. and china. chinese consumer in focus

for some of america's biggest restaurant brands. kate rogers looking into the story and joins us with more. hi, kate. >> hi, becky. good morning. much of the commentary this quarter in the restaurant sector focused on markets in the middle east and u.s., also a flurry of chatter on opportunity and challenges ahead in china. starbucks reported same-store sales growth 10% in china. second home market. the company's ceo did note chinese consumer is currently a bit more cautious. it's leaning into being premium offering for chinese coffee drinkers competing less on value than lower-priced competitors. starbucks is playing long game in the market with more than its 6,500 stores aimed to hit 9,000 in the years to come. mcdonald's another major u.s. brand planning to expand more in china. ceo has says it could one day be the company's large market in the world. plans to add about 7,000 locations in its international developmental licence market segment with more than half planned for china.

currently it has about 5,500 locations there. young china, on the other hand, stellar quarter. kfc parent saw 2023 annual sales climb 21%. currently serving one-third of the chinese population, but aiming to get to half of the country's population by 2026. focusing on lower tier. the opposite approach from starbucks in terms customer looking for there. one brand pulling back slightly on consumer sentiment, restaurant brands international has said planning fewer locations this year in china, but the company's ceo added, given the incredible geographic scope and population of the market, success there requires a serious long-term capital commitment from our partners, a long-term time horizon and commitment to grow the brand in the face of tough competition. becky, a lot of competition there and a lot of going back and forth on value right now which we're seeing in the u.s. as well. >> right. some bigger headwinds restaurants face there right

now? other than just the tensions between the united states and china politically? >> of course, tensions obviously have potential to impact whether or not they want to spend money there, consumers. depends which company starbucks, a big challenge. converting people into drinking coffee as mentioned value prices going on now. companies like a mcdonald's or a young brands competing on price since they have the lower price to bring in consumers need and finally heard from qsr, long-term capital commitment, too. >> kate, thank you. kate rogers. when we come back, one of the biggest investment frauds in the united states. still over rating today. scott cohen live in houston, texas, on the story and will join us next. scott, what's coming up for us? >> hey, andrew. this was the home of the stanford financial group. remember that? a 15-year ago this week federal

agents swarming the place. allen stanford ultimately sentenced to life in prison. coming up, how he is still blocking more than $1 billion from being returned to his victims. that's coming up on "squawk box." custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley. you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses

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this 15 years ago this week in the middle of the global financial crisis we learned of another scandal back then. a $7 billion ponzi scheme run by texas billionaire r. allen stanford and today stanford is serving a life sentence and still managing to torment victims and cnbc's scott cone c cohen covered the story back then and what used to be stanford's quarters in houston. >> joe, yeah. scene of the crime. one of the biggest financial frauds in history.

it's where allen stanford stole billions in certificates of deposit in his offshore bank claiming safe investments pap federal jury found a $7 billion ponzi scheme to finance his lavish lifestyle. convicted on 1 felony counts long since exhausted his criminal appeals. from prison single-handedly managed to block the biggest source of recovery for this 18,000 victims. a $1.3 billion settlement with three of the banks accused of aiding the fraud. stanford argues because the s.e.c. sued him in dallas instead of here in houston, the whole thing is invalid. courts have thrown that out again and again. he's filed appeals again and again. this is frustrating to the court-appointed attorneys trying to get stanford's victims' money back for 15 years. >> to be put in a position where the actual convicted criminal responsible for all of this, here 15 years later, can still

stick his finger in the eye of thousands of his victims. it's just disgraceful. >> it shows who stanford was. always has been that. >> and, of course, it's infuriating to victims. many retirees back then when they bought the cds including edward and beverly who put half their retirement fund into stanford's cds. >> how does he justify all that when he knows he's cheating everybody and still feels okay about it? that he's done nothing wrong? i don't understand it. >> stanford has until today to file one last appeal to the u.s. supreme court. even if that doesn't go anywhere it's going delay payout for months. stanford's victims have gotten thus far about 25 cents on the dollar. that bank settle finance finally

dloe dl goes through double it to about 50 cents on the dollar. these victims are still hurting. >> no interest along the way. >> no interest along the way and always when it's a ponzi scheme, trying to just get principle back. it is -- it's obviously infuriating to victims and the big differences between this case and the madoff case, broke about two months prior. those victims have gotten about 75 cents on the dollar and counting. stanford an offshore bank. didn't get pacific coverage that the madoff victims got. the victims in many cases are out of luck. >> wow. madoff, two months prior. a period that we're talking about. try to figure that out. when i read it in the rundown thought it was about stanford the school. hadn't remembered about allen stanford. didn't know what stanford scandal you were talking about. while in texas, scott, look around down there for the stakes

to do business? pretty solid place to do it. while you're in houston. you can do things. can't you? chew gum, walk? >> we'll see. yeah. we can. and just starting on that. a nice -- tease-i -- it's a lie but. >> all right. thank you. >> coming up, breaking economic retail sales and more, when we come back. they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities

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welcome back, everybody. rick santelli is standing by at the cme in chicago. we've got breaking news. breaking economic data hitting right now. futures up. rick, take it away. >> yes. there is a lintny of, start out with retail sales. expected to be down 0.2%. it's been running pretty hot lately. well, we ended up with down 0.8%. that is the biggest drop since march of last year when it was down 0.9. follows up 0.6, the third strongest number of 2023. in terms of month over month change. now, if we strip out autos we could see that it still remains highly negative. minus 0.6. triple what we were expecting

and strip out autos and gas, it's still down 0.5%, and once again that is the weakest month over month since march last year when it was down 0.8. the core of control group put it into, up the food chain economic sticks doubled. minus 0.4%. that is weakest since march of last year. now, let's go to initial continuing claims, shall we? expecting 220,000. 212,000. that's down 8,000 from a revised 220,000 and continues to remain rarp rare tame even sub200,000 reads. historically a very good number. look at continuing claims. move up higher than expectations. 1 million 895,000. still under that illusive 1.9 million, which we haven't been above since november of '23. now go to empire manufacturing.

expected toing down minus 12 to minus 13. down minus 2.4. minus 2.4. that actually is the best read going back to november last year. last time positive at 9.1. philly fed, another business outlook we want to pay close attention to it's exactly the opposite. expecting down 8 and ended up with up 5.2. look at import prices. our last series of didead releas for the 8:30 eastern tranche. month over month expected unchanged up 0.8%. strip off petroleum see it wasn't only petroleum prices. still up 0.6%. now to be fair on import prices month over month up 0.8. big jump. last month unchanged minus 0.7. see how that works out there. if we look at year over year import prices, down 1.3. they've been dropping rap idly

following a much larger drop minus 1.6 down to 2.4, minus. two categories left. export prices month over month up 0.8 following a revised minus 0.7 and year over year, minus 2.4. following minus 3.2. that is upgraded to minus 2.9. we could see some prices really starting to gain some momentum. after all of that, becky, how did the markets synthesize this data? down a handful of basis point. right now at 420.5. all washed out kind of so to speak. pre-opening equities like the washout, sideways movement lower yields across the treasury curve moving a bit higher. see pre-opening dow futures up about 111 points. becky, back to you. >> rick, excellent job of taking

a whole lot of data and analyzing it for us. stay with us. come back to you. for more on the data bring in former counsel of economic altds v altds-of-advisers and alison schrager, senior fellow at man matin institute and steve liesman is standing by. steve to you. look for a deeper analysis on some numbers? >> yeah. i'll echo, kudos to rick. wonderful job on that. seeing a lot of negatives. look down the line and i see some negatives that are, some smaller, some bigger. standing out to me is this 4.1% decline in building materials. and garden equipment. not sure why that is. 3% decline. month to month. sometimes year to year numbers. huge decline on miscellaneous store retailers. motor vehicles down 1.7 was expected. gas station sales down 1.7. that's expected. but it's the other stuff.

electronics down. one ridiculous bright spot, furniture and home furnishings up 1.5%. contracting is going on around the world, becky. sure you're aware what's happening in japan and the uk. one of the questions we want to think about is this notion of, is the concept of fortress usa still a good one? are we going to be affected what's going on overseas in gdp and economic contraction? this will cause u.s. forecasters to reduce their outlook for the first quarter gdp. it had been saying between 2% and 3%. atlanta fed at high side, north of 3%. certainly coming down today. >> all right. continue this conversation. jason, why don't you weigh in on what we've seen this week? first you had hotter than expected cpi, made everybody think, okay. not rate cuts coming from the fed anytime soon. see a weaker than expected retail sales number, maybe hope

it will happen sometime before july? >> yeah. look, the fed plays a lot less attention to retail sales and cpi for good reason. this is a subset of consumer spending. one weird thing about the inflation numbers this week is goods pricesfell 0.3. among the largest falls in goods prices we've seen in a month. reason you have that hot number the incredibly high service numbers. a very skewed report. that then relates to this retail sales report. >> a good point. >> sales reported of course, nominal basis. you see declines in nominal spending, but when prices are down it's mostly goods we're talking about here. that doesn't mean real spending was down quite as much as meets the eye. >> i do realize that cpi -- sorry. i do realize that cpi is far more important than retail sales. measuring strength of the consumer. long as that's strong hard to

kill inflation? >> look. i agree and agree with steve. look what's happening in the uk, the euro has yet to report. i think, why did the united states not go into recession despite all of these fed rate hikes? the american consumer. the american consumer month after month after month surprises on the upside. this month it's surprised on the down side. so that gives me a pit of nervousness about the one part of the economy i felt best about, but you know, i don't want to overstate how nervous that is given the price declines, expect some spending. for goods. expect spending declines. >> alison, how about ing jitter economy and whether we'll hang on when you see places around the globe deal with these recessionary issues? >> for now looking at good shape. consumers ultimately will keep spending long as they feel they're employment look is good and jobs number potentially is

more important than that. on the other hand, i just see a lot more weakness cropping up that make us a lot more susceptible to any shock where the cards could come down. certainly, as i said, recession numbers coming out of uk and japan and just general, like, weakening consumer balance sheets and that might explain as well sort of decrease in spending as people are getting a little more nervous. ultimately the economy still sees pretty good resilience. >> means what from the fed's perspective? >> i think they're going to be pretty cautious, but -- about a rate cut happening immediately, but i think it's still looking like it could be on track later this year. >> later this year, meaning, a., later this year meaning june or second half of the year? >> may-june assuming next cpi reports are exceptionally high. if they stay sort of in the range they are. could be. especially the fed gets nervous

it starts to impact the jab market. for some reason it keeps keeping on. >> how do you weigh this and think, here's what has to happen in the next few cpi reports to clear a path for the fed to cut? >> well, first of all, i think there's some, like, rule, some economists. can't remember it. maybe jason does. don't make a decision when you don't have to make one. i think that's where the fed is now. i think the fed has the market in a place where it's comfortable, where there's not a huge disagreement. the fed doesn't like to go into a meeting with 100% chance of a cut and it's not ready to cut. then you have all of this volatility associated with it. got plenty of that anyway. the fed is not in a place now where it has to make a call, and i think what you're talking about, two or three inflation reports. i kind of think the fed might welcome this retail sales report. especially the way i like the way jason thinks about it,

inflation-adjusted manner. in this case, talked about that. used to take off inflation numbers might add them again because of good deflation. take it with a grain of salt. jason also pointed out this is part of consumer spending. there's a bigger chunk, services. hello statisticians in the government. don't have good data on good service spending's could be robust in that regard. consumer sentiment has been relative ly strong, at least on the rise. watching that. fed is comfortable to wait and watch and if there's a dig agreement over a springtime or summertime rate cut, handle that later. >> what about, jason, as steve mentioned, not a good way to mention the services economy, at least in the data points we watch. what else do you look to for clues?

>> you know, look, i think -- >> it's difficult. >> and normally -- >> i'm sorry. go ahead. >> jason first, then rick. >> you know, becky, i look at all of these numbers. for me, the key is, you know, what's going on with wages? a bunch of different measures of wages. are we going to see those converging down to prices? see prices converging up to wages? for the fed, two big risks. is there a recession, resurgent inflation and look at the data this week, and one data point said, inflation more of a risks than we thought. next data point says recession more of a risk than we thought. how does the data change how they balance those risks? you know, probably that cpi, i said, is more important. i think it raises that inflation risk more than the recession risk, but both are a little

higher than a week ago. >> rick, last word. >> you know, i think that there's so many cross-currents. still surfing down a wall of money that was spent with regard to the covid years, and if you look at things like the inflation reduction act, subsidies moving forward used much more significantly, talking budget of, omb regarding that issue. plenty of money out there. more than lucky. consumption-driven economy. heard all our guests, smart guests, talking consumer. while the rest of the world expert side is starting to hurt. i think our game is going to last longer. the funnel's going get sharper in terms of the rest of the world's wants to tune in as much. product in demand of the u.s. ultimately perpetual motion in the u.s. economy is slowing a bit. just a question of how long it takes before we chew through the money and stare at future debt issues making government spending a lot dicier.

>> steve, a small thing to jump in with? >> very small point. the street was at 0.2. exxon and gas, cnbc nrf retail mark minus 0.2. came in minus 0.5. just want to put that on the score card there. doing a little better on our cnbc provisions on that. >> congrats, streve. >> jason, thank you, guys. all of you. coming up other side of this, get a deeper dive into the economy. particularly the higher prices that consumers are still dealing with. we're going to speak with former contact ceo carlos gutierrez. you can live live right this second if you want on the cnbc app. stay tuned. "squawk box" coming right back. live from the nasdaq market site in times square. a beautiful shot of the skyline of new york city right n. ow

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quick market flash. shares of digital world acquisition corp. sharply higher. company announces s.e.c. declared effective its registration to combine with the trump media and technology group digital world said it would soon announce a date for a special shareholder meeting to vote on that. of course, the spac we've all talked about associated with trump and -- what's the phrase? what do you call it? truth social and the like. >> truth social. >> here it is. so looking at that stock up in a big way. >> former president trump talking about? >> yep. heard of him too. producer price inflation due out tomorrow. hotter than expected cpi sank

the markets tuesday. investors began worrying that the fed won't cut interest rates as soon as they'd been hoping or betting. joining us to talk where inflation is, where it's been and where it's going, former commerce secretary and kellogg ceo carlos gutierrez. cnbc contributor, current position. with all your contacts in the business, carlos, interested in just anecdotally what you're hearing, because there's so many different components to inflation, and some seem to be going the right way and other ones seem to be stubborn, i think. what are you hearing? >> top line is becoming a struggle. and i think that's the sort of expected. take of prices, it's going to take some time for consumers to get used to it, but i do hear top line. that is the issue, and -- and

it's an important issue, because what's happening is, companies are sticking to their earnings targets. so if they had a 10% or 12% eps growth but salesare growing at 1% or 2%, then they're just ramping up operating profit margins. eventually they're going to have to reset. will have to pay for that. that's a thing, you know, we talked before about protect gross margins. when you say pricing up. yes. the first thing. now it's about ebit and about eps. and if you have to cut, then that's where you're going to cut from. and if you need to make earnings, no matter what, you're just narrowing the gap between gross and operating, and, therefore, you have less space to invest in marketing. to invest in brands. you know, it's a fast way to go

through a commodity status, from brands to a commodity status. >> we've heard, procter & gamble on, prices are, still seeing increases even though i don't know if input costs are increasing anymore. now consumers might not be as amenable, you know, just to amenable, you know, just to say, okay, fine, i'm going to pay these prices. i think there was a little pressure from that. >> yeah, i think that one of the things that happened is we hadn't had inflation in a long time. companies hadn't taken a lot of increases, so there were some increases that were pretty dramatic, 10%, 15%. now, what i hear companies talking about, potentially, is, let's establish a rhythm, perhaps an annual rhythm of 2%, of 3%, and then you don't have to get into all of a sudden having to make up for several years in one price increase, and i think that has happened in some instances.

>> did you see the shrinkflation speech? i just wonder what was that? if it ends inflation, whether you're getting less for the same price or getting the same amount for a higher price, it's still inflation, and i don't know who's -- i guess the president doesn't think that it's his fault or he wouldn't bring it up if you thought it was your fault. you would blame it on price gouging or it's the company's fault. >> i think there's a misunderstanding, probably a confusion, but i think that sometimes, when the white house speaks about inflation, it sounds like they're expecting prices to come back down, so inflation is declining, prices should decline. that's never going to happen. prices are going to stay where they are because the costs are there, and yes, the rate of inflation is down, but prices are still going up.

so, you know, there's confusion, and people throw out terms, and i think that's what -- that's what drives some of the confusion and some of the false expectations. prices are not coming down. >> no. how about the labor market, carlos? with cable companies and fiber was always the last mile, so now we use that metaphor for talking about the last mile of inflation. i think it means from like 3.5% all the way down to 2% again. if labor is tight, how do you ever get -- how do you ever accomplish that to get -- to solve the problem for the last mile? >> that's a great point, because there are still labor shortages. it's just not easy to go out and hire the people you need to hire, whether it be the labor participation rate being so low, but we need people.

we need specific skills, and that is going to be a continued pressure on inflation, no question about it. so, that hasn't really been fixed. i mean, we continue to see good wages. wages are going up. unemployment is low. but again, i worry about that labor participation number that is so low, but i do hear everyone complaining about, "i can't find people." accountants or marketing or whatever it is. >> yeah, i saw some crazy -- the other day, like, 30, 40 years ago, the number of people of a certain age, it was like 88% or something. it's just a staggering number, how much lower it is right now, carlos. i don't know what it means. do you think we can get back -- do you think the fed can orchestrate 2% again in the u.s. economy in the next year, two years? will we do that?

>> maybe the next two or three years. i don't think it will happen next year. as you say, the last mile is the toughest. i just don't -- you know, go from 3% to 2% is just -- it sounds so easy. it's going to take some time. i just hope that the fed moves a little bit early. if we move early, and they do it with precision, and they know what they're doing, we could have a soft landing still. if we move late, then i think we've blown it. >> that's interesting. we'll end on that point. carlos gutierrez, former kellogg -- ceo of empath now. thank you. >> i know where those people are. the historical full-time college enrollment skyrocketed. it's like as many as 15% of american adults now versus, you know, it's grown steadily. >> for college, yeah. >> hide out there when you can't find a job or don't want to. >> the greatest seven years of my life. >> miss them so much. when we come back, we're going to talk markets and get eaadg y y for the trinda

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we're just a little over an hour until the opening bell on wall street. joining us right now is emily roland from john hancock

investment. we've got two minutes to talk here, emily. given all the numbers we've been looking at, futures pointing to a higher open right now in a nice way, but there's still so many questions. what are you doing? >> yeah, and mixed picture this morning across the economic data, seeing the miss on retail sales. i think there was a -- probably a yolo element to consumer spending to end 2023, and we're starting to secret conditions deteriorate a bit, but again, some of those regional fed surveys coming in a bit hotter than expectations. so, we're seeing this mixed picture where we're having this fed tightening really not create meaningful cracks in the economy yet or the labor market, and one of the reasons for that is that we're continuing to spend. so, you know, in this environment, you want to stay invested. typically, the fed raises interest rates until something breaks, and we're not seeing that. in fact, we're seeing momentum pervading across the markets. we're seeing riskier areas like crypto-related stocks, a.i. darlings, momentum taking hold

in this market, so you want to stay invested. it's tough to fight that momentum, but we think you want to be thoughtful about where you're taking risk. >> you're saying you want to be in this market. is there a point at which you think you don't, though? >> well, i mean, we're certainly starting to see a lot of exuberance, but it's limited to some of those areas, again, that are potentially unprofitable companies. we're seeing some high-flying names related to crypto markets, so we think you want to trim those areas and redeploy assets into higher quality parts of the market, ones with great balance sheets, great return on equity, lots of cash, a low interest burden. it looks to us like the fed is going to have to remain on hold longer than many of us expected. we think that's going to challenge companies that have high interest burdens and that need to tap the capital markets. those are some of the areas we need to avoid. >> emily, i want to thank you. appreciate you sharing your perspective as we're getting data coming in right now.

the dow, up. the s&p 500 just up about five. let's show you where the ten-year and the two-year sit. 4.197% on the ten-year. make sure you join us tomorrow, folks. >> us. >> "squawk on the street" begins right now. >> us. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with sara eisen, david faber. cramer has the morning off. ten-year back to 4.2% as some of the data comes in light today, including the biggest retail sales decline in about a year. add to that some lower guidance from cisco, deere, wendy's, and others. our road map begins with stocks and the economy. investors closely watching the data today, including retail sales, claims, manufacturing, ip. plus cisco shares moving lower. the company cutting more than 4,000 jobs and lowering its revenue outlook. and warren