holiday. the next week is -- >> is shorter than this week. >> right. because we put in the five days already. at the paid it forward, sirat. thank you. >> thank you, sir. >> all right, have a great weekend. and make sure -- oh my god. i've got six seconds. make sure you join us on tuesday. >> have a great weekend. >> good weekend. "squawk on the street" is next. ♪ good friday morning, welcome to "squawk on the street," i'm david faber with sara eisen and mike santoli. we're at post nine of the new york stock exchange. carl and jim have the morning off. let's give you a look at futures. of course, we get started with the final day of trading. you can see we are set up for, i don't know, usually i defer to somebody else to tell me even what that looks like. mike, you want to? >> it's flattish on the s&p. >> there grow. >> nasdaq has a beat. >> this morning begins with

economic data. ppi did come in hotter than expected, did further complicate that picture for future inflation. nike, the latest company announcing job cuts, slashing more than 1,600 position. shares of coinbase are surging after the company posted its first quarterly profit in two years. we do start with this morning's ppi report. 0.3% for the month of january, and i'll turn to sara to sort of give us a sense here. we've gotten a cpi, and now this. where do we stand? >> it was not a great read, because what we were hoping going in, after the hotter consumer price inflation report, is that ppi, which measures the prices in the pipeline, it's business to business, not business to consumer, so it's before the price increases that we get from corporations. we were hoping that would be lower, and it has been a lot lower than cpi. now, it is still lower overall. year on year, it's only 0.9%. however, it's higher than expected. we were expecting that number to

come down. so, the 0.3% headline compares to consensus that was looking for 0.1%. the core, which strips out food and energy, 0.5% on the month. that was a lot hotter than the 0.1% expected. it was all a story of services. goods are deflating in many categories, and it was good to see that food prices were down as well in that ppi report. but it's services that are the problem. they are sticky. there was a 2.2% increase in the month for hospital outpatient care. that was a big factor in the rise in prices, but you did see a number of other categories. so, mike, i think the question now becomes -- after the cpi, it was, well, it was just one report, kind of an anomaly, and now the question is, is january an anomaly, or is there really a re-acceleration in the economy and in prices that the fed and investors should worry about? >> you know, the market's response is kind of interesting because in the two days since that one-day selloff we had on

the cpinumber, bond yields went up, stock market goes down 1.4%, we recaptured all of it over two days, so it seems like this moderate response we have right here is investors saying, i'm not going to get trapped into selling because we have this uptick in an inflation rating. whether that's right or not remains to be seen. another factor that people had anticipated in the number is portfolio management services, so these financial services metrics, because the market's up a lot, people's portfolio balances are up a lot, and therefore the fees they pay are up a lot. that's not something people get too excited about, because it's a market effect, and now the game is extrapolate ppi and all of its components to what the pce number is going to say next week because that's the one that matters to the fed. so, so far, i mean, look, ten-year treasury yield pretty much went back up to tuesday's high, about 4.3%, sort of at the borderlines of the comfortable range that the market has been treating it as for now. that yield sensitivity has been

in things like the russell 2000 and the breadth of the market, although that game is changing. i mentioned a couple times yesterday, there's all this speculative stuff happening in precincts of the market, and super micro is the largest holding in the russell 2000 right now, and it's literally material. >> it's got a $60 billion market value. >> doesn't belong there. of course, it's overgrown for the index. it happened with gamestop and amc a few years ago. anyway, all these things get thrown into the mix in a market that otherwise was feeling pretty good about the backdrop. >> but it does make you wonder. we got that retail sales report yesterday, and that one was worse than expected. and a lot of people said, okay, well, there was weather, there was the holiday spending hangover, and all true, but when you get hotter than expected inflation reports, and weaker than expected economic data, it's not as good of a mix as just the soft landing and the fed has nailed it when it comes to inflation going back down and the economy slowly weakening. we don't want to have sort of

stagflationary concerns. i'm not saying that's in the market necessarily, but that's why we're going to have to continue to watch the data points. we're going to get consumer confidence at 10:00 a.m. today from university of michigan. it's partisan, so especially in an election year, people answer these surveys, but it can also tell you a little bit about -- >> the next big one is pce, correct? >> that's on the 29th. >> that's not until the end of the month. >> we're going to get walmart and home depot earnings next week, and walmart always gives a good early read, i think. they were the first to mention deflation in goods prices. last quarter, they mentioned a pickup in the general goods merchandise. i wonder if that continues, and they will give us a read on whether the consumer is still spending into this year as much as they did at the end of last. >> any other dynamics, mike, that we should be thinking about as we sort of end this kind of interesting trading week? >> it's been interesting. and the notable thing, to me, is the persistence of the rally. if we're up today or up this week in the s&p, and i think

5,026 is the number we closed at. you'll be up 15 out of 16 weeks and five in a row. usually, you don't get these kinds of runs, and it does show you there's this underlying, you know, bid in the market that's real, and it's responding to the fact that earnings have been much better than expected, even if they were considered to be, you know, clearing a low hurdle, and then you have the excitable, erratic action in, like, all the speculative stuff i was saying. at some point in the last month, you had all these charts go vertical. there's been arm, there's been super micro, microstrategy, and there's been a lot of stuff you never heard of, and i think that shows you -- part of that is just the bull market acting like a bull market, but i think it's an interesting element that it isn't as tightly knitted to the bond yields. >> it's come in the face of rising bond yields and a strengthening dollar. let's turn to nike. some news there, the company the latest to announce job cuts. so, nike is announcing that it is reducing its workforce by 2%,

about 1,600 jobs. they have about 80,000 people globally. john donahoe did announce this. i got my hands on the memo. explanation for why he's doing it, i'll just read you part of the internal memo that he sent here. "while interest in sport, health, wellness and comfort has never been stronger, we are in a highly competitive industry where speed and end-to-end execution is critical to win. to compete, we must edit, shift, and divest less critical work to create greater focus and capacity for what matters most." and then another part, he went into where those opportunities are. "we are redeploying our resources to increase investment in our most significant fields of play and growth opportunities, running, women's and the jordan brand. this is how we will reignite growth." it's a little bit of a story about the economy and where companies are, but for nike, the story is, where they have been hit by competition in many ways. running, we know they've lost a

little share. we don't know exactly how much, to hoka and on and some of the running shoes. women's, not sure they've kept up with that growth necessarily in that category that we've seen. and jordan has huge opportunities, they think, when it comes to international and different categories like kids and women's, so they're redeploying and right-sizing the businesses to focus on the areas that they want to compete and grow. the backdrop here is that they, you know, more in the last quarter. topline has not been as strong as it has, and so they're emphasizing profitable growth. >> looking at one downgrade this morning to a perform, so to speak, at oppenheimer. >> very friendly downgrade. >> yeah, it's a friendly downgrade. to your point, sara, repositioning in the way they are is going to take time, and until then, the stock is probably not going to do much. that's the opinion of this

analyst. >> brian from oppenheimer, he said just for a few quarters that the growth is going to be under pressure and it's going to take a while because of things like, you know, innovation and i think the macro as well plays a big role into nike, and that they don't necessarily deserve the premium valuation that nike has had if they're not going to grow as much as the bottom line. >> they've retained, you know, most of that. it's like 30 times earnings. it's still given a premium because of the brand value and because of the scale, but yeah, it shed some light on them kind of backing away from golf, which was a small part of the business, but this idea of refocusing -- and it does fit in with, you know, you have this january reporting period where everyone's setting annual budgets and figuring out head count, and a lot of companies, anecdotally, have these trim, refocusing-type head count moves that haven't really aggregated into much in terms of, you know, official jobless claims. >> it's not in the macrodata. >> no, it's not there. it's trimming. >> i want to add one more thing that i learned about these job cuts. they're not going to affect the

retail business. they're not going to affect the distribution or warehouse businesses. this is mostly corporate. for those that are working in nike stores and wondering. >> not dissimilar from many of the announcements we've seen of a similar time. still to come, we're going to break down the battle between nelson peltz and disney. just a few days ago, peltz joined our show, called out the company's board of directors. >> that's the problem here, jim. this company is just not being run properly. the board oversight is awful. it really is. well, we're going to get a reaction. that lady right there is one of dina disney's board members, and she will join us after the break. we get started with trading 20 minutes from now from here at the new york stock exchange. lot more "squawk on the street" straight ahead. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is.

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start off with a look at disney there. you can see the stock is up almost 13% or roughly 13% since it reported earnings, that is the company last week. also announced that new sports streaming app, of course. it's gotten a lot of attention. this is the threat of nelson peltz and trian is looming. there's a proxy fight, of course. he wants two boards on the board of directors of disney, and the annual shareholder meeting, really, what six weeks or so away. joining us now is disney board member carolyn everson. also a board member of coca-cola and under armour. she ran meta's advertising business for ten long years. we want to talk about advertising and a.i. let's start off on this fight about disney. sara had nelson join her a couple days ago. >> wednesday. >> he's unsparing in his criticism of you directors of disney. i guess we can just start off, take a listen, carolyn, questioning whether you have been to the parks and whether you know anything about the media business. take a listen. give your response.

>> i wonder if the disney board and the disney management team, do they know anything about the media business? this company has put forth losers in a row. five. think about that. that's a record. i don't know that anybody has put on five losing movies with brands like they have, marvel, et cetera, in a row. >> all right, disney board member, you want to respond to that >> i actually do. number one, i got married at walt disney world, which many people don't know. i've been to every park around the world prior to becoming a board member. been on five disney cruises, two disney vacation club memberships, and been to walt disney world with my family over 50 times. i am as passionate of a fan of disney as you can get. so, number one, i want everyone to know that the board is extremely engaged, both as a board member as well as

consumers. number two, disney had six of the top ten most streamed movies in 2023 across all platforms, and "moana," which is coming out in november for a theatrical release, was the number one most streamed movie on streaming in 2023, bar none. i joined disney's board the day bob iger was asked to return as ceo. we did not have a prior relationship. i can tell you my observation, it was a brilliant decision of the board to bring bob iger back. he has fundamentally restructured the company. he has laid out his strategic priorities. espn is one of them. of course, we're going to launch flagship next year, 2025. we're very excited about our live sports franchises. we are refocusing on the creative and the theatrical side. bob personally is spending a lot more time in partnership with allen bergman on that business. the streaming business, when bob walked in, was losing over

$800 million a year ago, and now, we lost a little over $100 million. we're well on our way to profitability, which we promised the street, and we have real ambitions to have that be a healthy double-digit business going forward. >> right. >> so, my perspective is bob iger is, by far and away, the best person to be in that chair. he's got the company on a growth trajectory amidst a lot of change. >> a growth trajectory? that seems a bit aggressive. a lot of it is cost-cutting, on that point, peltz pushing back both when we interviewed him and when sara did more recently. he says, yeah, you can have one good quarter, it doesn't mean you're going to have another. a i've seen this movie before, so to speak. >> we've cut $7.5 billion in costs, and we will continue to look for opportunities there. we feel very good and positive about the streaming outlook. i believe there's going to be a few streaming providers out there for consumers that are going to win, and i believe that

disney, hulu, and espn are going to be very well positioned on that front. we have, obviously, reinstated the dividend post-covid. we announced a share buyback. >> but you feel confident as a director that you can continue to deliver on that $7.5 billion of cost-cutting? >> without question. disney has always been smart about capital allocation, and we have a fantastic new cfo in hugh johnston who joined recently, and i feel very good about our discipline. >> what about the announcements last week around earnings? nelson did this cartoon where all the -- very flattering portrayal of all you guys throwing spaghetti at the wall, and it was a lot. it was the jb and taylor swift and 1$1.5 billion in epic gamin, and it feels like -- his accusation is it was about the election, it was about the proxy fight, and that the company was doing a lot of razzle-dazzle to juice the stock. >> all i can tell you is bob,

when he came back into the ceo role, he outlined strategic priorities for the business, what to do about espn, and the future of its streaming. he wanted the parks and resorts to be in growth mode across the board. he wanted to reduce losses in streaming and get that to profitability and reinvigorate the creative studio. he's acting on all of those initiatives along with his leadership team. i think the investment in epic gaming is a very smart one. i am gen x. my twins are gen z. the switch in behavior is extraordinary. gen x spends about 17% video gaming time. gen z, 32%. movies, less for gen z versus gen x, so what we're doing is we are responding as a company to the consumer and getting new offerings out there, and as a board member, i'd rather see action. i'd rather see execution and a commitment to reinstating growth

than to sit idly buy and allow the consumer changes to impact the company's growth. >> can you explain the sports jv? it was a big deal when it was announced, but since then, you know, justice department might be looking into it. there are reports that the nfl isn't happy and wasn't aware of the venture before it was announced and that there's some pushback from nfl owners. how's this going to work? >> espn's mission is to serve sports fans everywhere. and the way we think about it is, and the materials we reviewed as a board, is we looked at a spectrum of offerings, everything from basic espn to the jv with warner and obviously fox, as well as espn flagship that will come out in 2025. right now, as a sports fan, my daughters are college lacrosse players. every weekend, when we're looking for opportunities to wo wo watch sports, you're trying to figure out which service is

putting what game on. last night, i wanted to see caitlin clark score the ncaa point history, which was incredible, but you have to figure out where you're going to find that game. our objective at espn is to serve sports fans and give them a variety of options at different price points so that they can actually engage. and espn flagship, when it launches, is going to have incredible digital capabilities. >> what is there to differentiate it from this new app offering? some are wondering, what's the need? fall of 2025, i think, is when you guys are talking about that. what is it going to look like, again, that's going to allow it to garner subscribers beyond what's going to go to the ability to get so much espn programming on the new app? >> i would say the difference is the jv is about viewing the sports on the platforms, and the espn platform is about betting, social commentary, eventually being able to buy products that you're seeing fas a fan, so thik

of an immersive digital experience, and i think the market has in their mindset that espn is a cable channel. espn launched their mobile app well over ten years ago. espn is a digital sports platform, serving sports fans, and we're really excited about the offering next year. >> carolyn, the time you have left, let's move on quickly to some of the other things you continue to focus on, both as a board member at coca-cola and under armour and just in general. generative a.i., we've been talking about it now for the last 18 months. what are you seeing in some of the companies on which you sit, not to mention your other areas of expertise, in terms of its use, what its impact will be? >> coca-cola has been undergoing a marketing transformation. james quincey in his aerngsz call this week, as well as i know he was interviewed on cnbc, talked about the importance of the marketing innovation to the company, and it has

fundamentally transformed the way coca-cola is going to market. they were one of the initial partners with openai, and so we have access as coca-cola, as well as wpp, to incredible cutting-edge a.i. technology. we're using it on consumer insights, content creation, shop or marketing materials. you're going to see now with the announcement last night, text to video that openai announced. that will fundamentally change the way traditional video advertising is created, and coca-cola is on the forefront of that. so, i see it fundamentally changing the industry. i think that content creation, as we know it, is now being done in milliseconds, and it's being done incredibly efficiently. coca-cola is benefitting from that efficiency, not just with the consolidation with wpp and the work that's being done there but also just the way content is being created. it used to take literally weeks

if not months, briefing. briefs used to be 25 pages. by the time it got to the agency, the message was often lost for marketers. now, a.i. can literally assist marketers in creating a brief. so, i think you're going to see tremendous efficiency, and likely effectiveness as it becomes more personalized. >> and what about, you know, that's the creation of the advertising. what about the distribution of it? this goes up against disney as well. you talk about the streaming success in hours watched. but you know, you have the decline in linear tv advertising. it seems to be going outside of the traditional media companies. obviously, to the big players in digital. is there anything that you can do to get in the way of some of that flow? >> yeah, it's a great question. one of the things that we look at on the board at disney, i look at it very simply. disney has a large advertising business with traditional media assets, and now, of course, consumer behavior's shifting into disney plus and hulu and espn. is the money moving? can disney capture those advertising dollars?

all indications are extremely positive. we launched advertising on disney+ in canada. we have 1,000 global advertisers advertising in disney+ now. that's up 10x from the launch. what disney needs to do, as well as other media companies, no question, it's shifting out of linear. they need to have the right consumer proposition and engagement to capture those dollars. >> one more on disney from me, which is, why not nelson peltz? he's had a very good track record on big consumer-friendly companies like procter & gamble. he knows his way inside a boardroom and the governance. why are you guys fighting so hard? >> we have not seen a strategic plan or idea from nelson and his team that would make us think about bringing him into the boardroom. and we feel very confident in the skills and capabilities. his accusation that no one knows the media business, i've spent almost 30 years in the media business, and others have some really great, fantastic ceo-level experience as well.

>> and got married at disney. >> i got married. i don't know what else more -- >> how many cruises? >> five disney cruises, two caribbean, mexico, alaska, and europe. >> all right. >> i challenge anyone to do a disney trivia with me. >> i will certainly not. carolyn, always good to see you. thank you. there we go. there's a picture. oh, you see? look at that. >> that was posted on facebook. there you go. >> oh my gosh. >> carolyn everson, thanks for joining us. quick break. don't go anywhere. we'll be right back.

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our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly. all right, let's take a look at how futures are faring. we're going to open less than a minute from now. mike, give us a couple words of wisdom. >> you have bond yields, ten-year testing the earlier week highs above 4.30% on the hotter than expected ppi report. interesting to set up. s&p did close slightly into record territory yesterday by a few points. we're working on another winning week. the one thing i keep flagging is a lot of this erratic high-energy action in some of the speculative stuff. super micro boomed and had a mini-crash toward the open. >> arm is another one we've been

watching. all right. we've got an opening bell right here at the new york stock exchange. take a look at the realtime exchange as well. get a sense for how the market is going to open. here at the big board, ubs. at the nasdaq, harboring hearts. mike, you said it. we sort of circumnavigated what was a difficult cpi number in some way very quickly and easily despite a one-day drop. >> i think we're going to test the market's ability to shrug these off a little bit, not just because of this idea that inflation is maybe not going down in a linear way as we thought, and the bond market's responding to it, but just the stock market itself has been on a great run. up 22% a week ago. the line was, well, we've kind of hit a lot of the targets we thought we would. s&p 5,000, nasdaq 100 hit

18,000. nasdaq composite touched 16,000. and then, it was a matter of, do we need to take a break? we got a one-daybreak and nothing since then. >> now we game out why the market is being so resilient in the face of higher bond yields, rising dollar and stickier inflation numbers. you might have expected a beiggr selloff at the open. hear me out. the concern after cpi and now ppi is that the economy is overheating again. we don't want to see that. the fed has spent the last two years fighting that. however, we got a really weak retail sales report, and we got some weaker manufacturing data as well, industrial production. housing starts today were weaker. that sort of pushes against the overheating and may just take us again into this soft landing period that the market can like where the fed can still be patient and look forward to rate cuts. i will say, i'm excited to talk to raphael bostic, the head of the atlanta fed.

he's a voting member, and he's going to be joining us on money movers today. it's the first time we'll get reaction to this twofer, the cpi and the ppi. we have two data points. he made some headlines already last night talking about the fact that victory has not been won yet on inflation, and he is perfectly happy to just wait and in no rush to raise rates. >> i'm just enjoying the fact that the market is backing me up by saying, it doesn't need rate cuts soon or many of them in order to justify where we started the year and where we've gotten to right now. look, the next move has to be down. i know there's some people at citi saying, hey, listen, brace for the possibility that we don't actually go lower in rates, but in general, nothing has totally upended the idea that the economy is more ro resilient than we thought it was going to be. the economic surprise index has been really strong, and on the

other hand, inflation is down a lot, and in this 3% zone that investors can handle. >> certainly, the chip sector, led by nvidia, has been one of the driving forces of this market during this year. i want to start off with amat in terms of earnings and take a quick look. the stock is responding quite positively to numbers that were, i believe, above most of the analysts who follow the company's estimates. not to mention an outlook that did seem good. you got a number of analysts raising their price targets not unexpectedly. the company's ceo said, "as customers ramp up next generation chip technologies, they are positioned at key inflection points in the chip industry." >> it's all they really needed to say. you want to also call media bottom in the memory chip area. this is not a hot, sexy area of chips that have been getting people excited recently, but yeah. and also, not one of these crazy expensive stocks. it's capex. it's heavy equipment.

it's 24 times earnings, not nosebleed, so that has worked and besides that, i think the earnings reactions to some of the, you know, the earlier stage stuff, we mentioned, quickly, coinbase that had, you know, a somewhat surprising earnings report at the positive eps yesterday. it's up 13%, and there's this whole class of stocks almost exactly four years ago, nonprofitable tech peaked. that's when ark invest peaked. that's when the unprofitable cloud stocks peaked, and that's when the ipo index peaked. february 12 of 2021. so, you had coinbase go from 340 at a high down to 33, down 90%. it's now about -- gained about half of it back, so 190. if so many of these stocks in that situation, whether it is the airbnb or draftkings today is another good example, so it's interesting that you're having this echo effect of that boom with these companies in a slightly many mature state but

not yet at the sort of crazy high momentum levels that we hit back then. >> the maturity is an important point because if you look at the coinbase number, just to reiterate, they did post a profit for the first time in to few years. revenue jumped 51%. transaction revenue nearly doubled from the third quarter. so, clearly, there were some questions going into coinbase about whether the new etfs that were approved would cannibalize some of that revenue. turns out it did not hurt them. they're also a custodian, i believe, for about 8 out of the 10 etfs, so that was beneficial as well. even the most skeptical analysts on this stock, ann dolan, who we always have on, and he still had underperform in a $60 target. he pointed out the take rate was down. he even said, there's progress here and he's happy to see it. >> i think the question is, the conditions were nearly perfect for coinbase in the fourth quarter in terms of massive ramp in crypto, all this intense

attention on the space because of the etfs. on a full-year basis, revenue is down like 36%. so, the question is, do they just need this constant, you know, new flow of users and turnover in that area? and that's the question. if you're bullish on bitcoin, then, you know, coinbase is not a crazy valuation. >> you were talking about applied materials. you know, just to hit where that sits in the chain, it's still thought of as a cyclical indicator because a lot of -- electronics, auto, their biggest manufacturers are samsung, taiwan semi, and intel, and they make a lot of these future demand products. so, they sit at a key part of the supply chain, and it's cyclical, and i think it's a bullish sign. it's not just about a.i. it's up 9.25% after this bullish forecast that they gave, and the other interesting thing i thought here was given all the restrictions around china, china was a big part of this quarter,

i noticed, that obviously the chinese chip makers are building up, but sales there more than doubled, and they accounted for 45% of the company's total. so, risk but also clearly a positive here. >> and seems to be having a beneficial effect on some of the other names you might anticipate, including nvidia, which is up another 2.3% sort of right near new highs at a $1.83 trillion market value, and again, of course, as we pointed out a couple of days ago, i was tracking it, and it is larger than alphabet at this point. we like to just -- it's kind of fun horse race. number three on the market cap list of u.s. companies. >> yes, and it has much smaller economic footprint. it's amazingly profitable. the earnings estimates have been ramping. we're going to hear next week what the whole pipeline looks like in terms of whether there's been some front loading of ordering and all the rest of it, but nvidia's also just taken the mantle as the favorite intraday play thing in terms of trading the stock, trading the options.

yesterday, nvidia had $75 billion worth of turnover in its own shares. >> wow. >> that used to be tesla. tesla would be routinely 50 and above, and now it's nvidia, and it's, you know, five, six times what apple and microsoft trade in a day. it just sort of shows you the level of fever in this area, and it's obviously pulling in other things from the supply chain. that's why there's people receptive to these kinds of moves in arm and super micro, and even taiwan semi. it has great move recently. >> yes. >> and because if you believe that somebody in the world collectively invests $7 trillion in semi manufacturing, then you buy everything. >> anything and everything associated with it. >> not endorsing it, but that's the idea. >> no, and you're referring, of course, to sam altman's efforts to raise -- it's not even conceivable. >> $7 trillion. >> the chips act allocated $50 billion. even if he comes close, it could be possible. >> shopping around the world. should we hit draftkings? >> sure.

>> that stock is not moving that much, but keep in mind it's at 150% run-up in stock on the last 12 months. the company reported miss on the top and bottom line, but i think that was largely expected just because some of the bets went the consumer way instead of the house's way. the company still raised guidance, so reflecting some of the positive momentum in the business. they also announced an acquisition. they're buying a lottery app called jack pocket for $750 million in cash and stock. we're going to talk to the ceo of draftkings in money movers as well about that, about their new partnership with barstool that people are talking about. obviously, that has been probably a few months in the making, since the break-up with penn. and about the super bowl. but in general, i think the read on draftkings is that it was a healthy business momentum as more of the population can use sports betting, but it is increasingly a competitive space. some of the big guys like betmgm

and caesar's and fanatics is entering the space. it's been an incredible space over the last year or so. still off the long-term highs. >> way off the long-term highs. this is definitely in that situation of, everyone got super excited about it a few years ago. obviously, it was a spac, and it got, you know, caught up in a lot of these different -- in these different little pools of excitement, but yes, there's no doubt about it. you do have to be aware of, what's the market here? lot of states are going to legalize. i think it was over a $100 average revenue per user in the quarter. you're pushing it, i think, on that lecvel. it's been going in the right direction. up to believe that many, many more people are going to get into the legal sports betting pool. >> yeah, over time. got a couple of stocks that are notable for their declines on earnings. i'll start with doordash, and then i want to get to roku. shares of doordash down almost 13%. mike, it's interesting. i talked to one owner of the

stock who obviously wasn't positive on it, said in their mind it was pretty good quarter in terms of the numbers, not necessarily the reaction here, and you can see that here. again, they did have an increase in revenues and orders. there was a hope it may get added to the s&p 500 as well. i'm sure you've heard that. >> sure. >> but not, i guess, at this point, up to what at least many investors had been hoping for. >> yeah, i mean, all of the aggregate metrics are very good in terms of the gross merchandise volume, the order volumes that are growing extremely fast. it has that issue, though, of just when do they reach that scale when it actually flows to the bottom line and, you know, you model it out. they guided toward 1.1 to $1.2 billion in comp-based stock this year. it's a familiar story. i mean, in some ways, it's what you had with airbnb and what you had with uber where you had the platform is growing like wildfire, but how much of it are you going to be able to cap

chur capture and bring down to the bottom line and what's the threshold of scale that gets you there? >> sara, like so many companies, they're stressing efficiency and expense discipline, hoping to be rewarded for that, of course, the way many companies have been of late. >> at the same time, they're really trying to expand their offerings to consumers, partnering with grocery stores like stop shop, for instance, to start delivering. they have to increase awareness, and so they have to invest there while also talking about efficiencies. it's interesting that some of the analyst commentary was very positive as well, and i think truist and oppenheimer raised targets on the back of these earnings, even though the stock is down. it had outperformed, i guess, going in year to date, going into the report. >> it still had performance this year, even with this 12% decline. >> some people thought that the q1 guidance suggested a deceleration versus uber eats, for instance, which they projected an acceleration in the outlook. perhaps that's raising some concerns.

>> yeah. i know. well, we'll be watching in the days ahead. roku is the other name, down some 18% plus on a quarter that has not been particularly well received. there was a downgrade as well, again, from oppenheimer. they've been busy over there this morning. they simply say at this point, even where they're guiding revenue, platform revenue is only going to be up an implied 9% for the remainder of the year. just generally some concerns there in terms of platform revenue being driven by streaming vod advertising and price increases. tony wood, the ceo, joined "squawk box" earlier to give his commentary on the quarter. take a listen. >> we had a really good quarter, great quarter, great year. i'm super confident in our business. more confident than ever. we passed 80 million active accounts. we added 10 million new active accounts last year. you know, we passed 100 billion streaming hours, which was strong growth for us.

revenue, quarter is up double digits. we had a great quarter, and you know, we're really well positioned for the future. >> well, there it is, sara. does that assuage any concerns you might have had with roku? >> i wasn't really concerned with roku, but i think the big concern is average revenue peruser dropping by 4%. they beat revenue estimates, right, mike, but there's been a sort of general slowdown in the media industry, and they're not immune to that in advertising too. >> yeah. and the question has always been, when it comes to roku, whether it was kind of a transitional technology, whether their moment was, you know, going to be fleeting. it gets into smart tvs. they have the third-party ad-serving business, so it's a business, but is it a company longer term? it's a feature. and you know, the more that other companies encroach, walmart vizio, it just seems like their opportunity isn't as wide as it might have been at

one point >> they reached 80 million customers, which was a sort of new milestone. just want to mention coca-cola. carolyn everson was here, the board member. coke is in the news today. it did raise its quarterly dividend. lot of people own these kind of stocks because of the dividends that they get paid. it's one of the appeals of consumer staples. so, coke is lifting its dividend for 62 years, making it one of a very limited number of companies to do that annually for more than 60 years. it has that distinction. >> dividend aristocrats. >> pepsi raised the dividend in the middle of 2023. there's kind of -- there may be a little bit of a competitive dynamic here. >> a little bit. they've tracked over the years, and over the last20 years, coke has almost always had just a slightly higher dividend yield than pepsi. pepsi is, with the snack business, it's growthier, so it's a little bit less. >> pepsi up about 3%. coke is around 5%. >> yeah.

coke's at 3.3% dividend yield. >> increase of 5%. yeah. it's a little more than 3%. so, a little bit higher. >> mike, i did want to come back to doordash for a moment, because you did mention stock-based comp, which is very high, and there is some frustration on the part of some. we talk about their adjusted ebitda and how they get to it, and in fact, i'm told they don't even provide a reconciliation to gap because it would be too difficult. >> wow. >> not to mention the venture capital. so, there are perhaps some investors who, you know, were not overly happy with the way that they report. >> they put it in the too hard pile. the worst case scenario, in my mind, on that front is snap. snap will just never outgrow the stock-based comp. and -- i mean, at least at this point, it seems like they won't >> it's an important point. we make it every so often. we always go with these adjusted ebitda numbers and they often do not include stock-based comp, which if you were to take it away, what are the companies

supposed to do in terms of compensating their employees? >> exactly. if the stock rose to the moon t company gets much bigger, -- facebook outgrew it. it's not a problem for some companies. the idea of getting to the s&p, i mean, there's no magic there. tesla's down since it went in. it's not like once you're in, you're automatically going higher. >> got a lot of movers today and many more. >> we didn't get to bezos continuing to sell a lot of stock. >> lilly to potentially a trillion dollars for its health care stock. that's what morgan stanley says. >> wow. $728 billion right now, lilly. >> that's the nvidia of the health care space. >> can't keep lilly down. before we head to break, it is time for a bond report. important day to do it with that hotter ppi wholesale inflation rate. treasurys are selling off this morning, especially in the two-year yield, which is sensitive to the fed policy rate where yields are higher, 4.66%. ten-year yield, 4.30%. we're going to get consumer confidence at the top of the next hour. very heavy economic data week, and we'll discuss all of it for

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mentioned eli lilly. want to show you this chart. it's an unbelievable chart up 134% year to date. higher again. morgan stanley takes its price target on the stock from 950 to 805. wonder if it can be the first trillion dollar stock. they say current valuations understate how much revenue this company will get from its diabetes and glp-1 revenues. zepbound, mounjaro, trulicity. dow down 116 and the s&p down about 0.3%. back in two minutes.

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all right. openai has unveiled its new text to video model it's calling it sora. it generates videos up to one minute long based on whatever prompt a user types into a text box. take this if you use the prompt the camera directly faces colorful building in burano, italy, an adorable dalmatian looks through a window on a

building on a ground floor, many people are walking and soil ling on canal streets in front of the buildings. this is what you get. wow. look at that. we're done. i think it's time to hand in your resignation. they're going to say give me mike santoli, sara eisen and david faber in digital form. >> that's garbage? >> they couldn't get it as accurate. >> no. >> this is -- this is a first. i mean what is this going to look like in two, three years? >> who does this displace, right? it's graphic designers and video. >> want another one? we have another prompt here. step printing scene of a person running cinematic film shot in 35 millimeter. right. >> he's running backward on the treadmill. >> i can't figure out what that is. it's shot in 35 millimeter, though. it did it. >> look, the problem is we already have this problem with deep fakes.

taylor swift up in arms about this. and -- this is an election year. for this tech to come to the floor when the u.s. and 60% of the population is going to polls, that is very scary. nick is going to join us next hour from meta to talk about this. >> they talk about watermarking but so many ways around these things that it raises a real possibility. forget deep fakes. they have to come up with another word at this point. >> i don't know. that dalmatian looked truly life-like, like it was video? >> yes. >> did it? >> yes. for the first iteration of this, it did into first iteration. >> you're calling out the dalmatian? you can tell that that's not a real dalmatian? >> i'm sticking to my prediction. we're done for. before that, we got breaking economic data coming up right after the break. don't go anywhere. icy hot. ice works fast. ♪♪ heat makes it last.

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good friday morning. welcome to another hour of "squawk on the street." i'm sara eisen with david faber live for you as always from post nine of the new york stock exchange. carl has the morning off. take a look at stocks under pressure and selloff is accelerating down almost 0.5% on the s&p and negative on the week, down 0.4 on the week. nasdaq down 1.25 on the week. look at what's a little bit stronger today, materials and health care. those are the only sectors that are green. everything else is red. communication services are at the bottom of the list, so a step back in the rally that we've seen over the last two weeks. part of -- two days i should say. part of it is the selloff in treasuries. two-year yield 4.66, 10-year, 4.30. ppi after hotter consumer price index earlier in the week, hotter ppi report as well. 0.3% jump month over month versus 0.1%. we're 30 minutes into the trading session, three movers

we're watching. coinbase shares surging. the company posting a profit for the first time in two years. boosted by a surge in crypto prices during the fourth quarter. we'll talk to an analyst who raised his price target. roku shares plunging forecasting a steeper than expected loss in the q1 as it competes with names like netflix and amazon for ad dollars and getting price target and rating cuts from the street this morning. draftkings in the red after results fell short of expectations. revenue did grow more than 40% year on year with losses narrowing and the company did announce an acquisition of a lottery app. all with jason robins the ceo on " "money movers." >> rick santelli has it for us, rick. >> yes, indeed, david. these are preliminary february readings for university of michigan which means in about a week and a half we'll get the final readings. 79.6 on headline and even though

that's less than we expected, that is still the best, the highest form of confidence back to july of 2021. and if we look at current conditions, 81.5. now, definitely lower than our previous and it's lower than expectations. but 81.5 isn't bad because 81.9 in the rearview mirror was the best since july of 2021. expectations, 78.4. the only one of the three that's above expectations and sequentially higher. 78.4 is the best since we have to go back to july of 2021 once again. inflation, 3% on the one-year outlook, now that is the highest since the end of last year when it was 3.1. it has been at 2.9, the lowest since 2021. we have moved away from that by 0.1%. finally 5 to 10-year inflation, 2.9 equals the rearview mirror

110, higher than we were expected, to find a lower form of inflation than 2.9 you have to go back to september of 2022. we see that yields are definitely on much higher than they were on the close yesterday. coming down from the most extreme levels consider we're up a dozen basis points on the week on 10-year right now and on the two year 17 bases points. >> thank you, rick santelli. just adding that data, especially what rick reported on the inflation expectations taking a little bit of a step higher, which is something the fed has mentioned in the past. i look at inflation expectations in the survey, they want to make sure they're not moving up. they moved up a little bit. we take that after we get the ppi report this morning on wholesale inflation. the 3% month on month jump, which was higher than expectations. the core, take out food and energy, was 0.5%, higher than

expectations. is it enough to make you wonder about the entire disinflation trend falling apart? no. but -- because we've seen the trend in place for the last year or so, but it will make investors and the fed want to see more data to make sure that they're still on track with inflation coming down. if you look at the culprit here, there's a great, you know, the bank -- the government put out this great chart about where the inflation is in the pipeline, it's in services. it's all in services. services versus goods. >> we're a services economy so that's not insignificant. >> for sure. it's problematic. used to be in goods when we had supply chain problems. >> right. >> and now it has completely reversed and, of course, this is going to be the worry and this is why -- >> what explains it? to what extent do you think at this point? what's going on? >> the economy is good. >> i turn to you. what is going on? >> the economy is stronger than we expected and people have jobs and people are getting real wage

growth. >> wage growth. >> and so the services inflation is rising alongside that which is why we know the fed targets wages so much. it's why, you know, we're able to pay things like sharply higher hospital services costs which was in this report and transportation costs and all sorts of other services. to just translate it, it's why you're seeing really strong earnings growth in certain companies that are related to the service sector. we're going to get live nation next. that's a poster child. the hotel companies and the experience economies, restaurants have been a place where people have been spending a lot. the question is, is the spending slowing down? will that ultimately pressure the services inflation and so we got the retail sales report, which was weaker yesterday, upper january. i was trying to look for any kind of other real-time data to see what was happening with the consumer and i found a good sh chart from jefferies on foot

traffic they track for certain fashion brands. it was a note about these brands coach and michael kors and versace. january saw a notable decline in foot traffic. now, is it because we spent so much during the holiday shopping season? that can happen. is this the start of a new trend if i will note it backs up the data that we are seeing as we continue to look for more evidence about what's happening with the consumer. >> right. you also have pointed to rise in delinquencies. you have to put those in perspective versus 2019 levels, but nonetheless they have been going higher. >> across the board. auto, credit card, absolutely. listen to the commentary. you mentioned doordash earlier with a healthy report and also i would say a healthy read on their employer base. here's some sound from that conference call on the environment. >> dasher supply, i mean, it's been the healthiest we've seen. you know, as you said, 7 million plus dashers earn over $15

billion in a year, these dashers on average only dash about four hours a week, 90% dash fewer than ten hours a week. in the vast majority north of 80 plus percent have other full tile work. >> tony xu. i don't know if it's bad 80% have full-time work. people taking on more jobs. but it does show you that people are getting paid and the demand for labor continues to be high. i thought that was interesting. applied materials, as a cyclical read on the economy and end markets and things like electronics and autos, here's what they're saying about the environment. >> in our discussions with customers we're hearing market dynamics are improving. there is a re-acceleration of capital investment by cloud companies, increasing all device types, and memory inventory levels are normalizing.

>> yeah. >> i picked that up because of the word improving. >> right. that's also the hyper scalers just building data centers left and right to support generative ai. >> sure. >> it is -- those capex budgets we talk about of meta and amazon and go on and on and microsoft, those are numbers we've never seen before. that does have a positive impact, one would think n terms of economic growth. >> if you add it up it's why rick said we saw a jump in treasury yields which makes sense on better growth and higher inflation prospects, something we thought was in the rearview mirror when entering 2024. the only other one, we got news from treasury last night on tick flows, foreign buyers of treasuries. >> yes. >> all-time high. $8 trillion. remember how we were bemoaning china for unloading treasuries for several months in a row. >> not just no longer a buyer but a seller. >> they're a buyer for the last two months they have been adding

treasury holdings in the last two months. >> okay. >> just pointing it out. japan is our largest foreign holder of treasuries but japan and china have been buying. i think it's interesting, and it sort of mirrors the pivot we've seen from the fed and other central banks as we've seen bonds rally and yields lower, so we'll continue to watch that. we got that. u.s. dollar and u.s. treasuries are the only game in town. fed governor waller yesterday talking about how the dollar is not going anywhere, we don't need another reserve currency. money has been coming into the u.s. and it will continue to do so if we get these growth numbers. >> speaking of rates, as you point out, up today on part on this number we got this morning as we take a look at what waller had to say about the u.s. dollar, we are seeing that typical trade a little more muted than we saw earlier in the week, but those companies with fairly highly levered balance sheets are down. banks for the most part are down this morning. not any big declines to speak of, but nonetheless, even though we did get a positive piece of

information from cbre. >> i saw that. >> they say we're cautiously optimistic the worse is over for class a properties where we generate approximately two-thirds of their leasing revenue. cbre. but that would be taken as a positive for anybody looking at the banks and/or others who have those significant exposure to office. >> makes you wonder if we're seeing some sort of bottom. >> again, class a in particular. >> right. there's a distinction there. >> yeah. >> by the way, that stock had a move up yesterday on that news. stocks trying to rally for six straight week of gains. we're negative on the week because of today's selloff. our next guest says it's time to look at some of the dividend plays. brian belski has a target of 5100. not far from where we are. joins us now. brian, we're kind of going back and forth here about whether the economy is accelerating or slowing down. and what that is going to mean

for the market. what do you think? >> well, sara, so great to see you. thanks so much for having us on the show. bmo has learned that sometimes prices not only go up, sometimes they go down, and oh, by the way, sometimes they go sideways. i think what's happening and everyone is missing it once again, this is year two of normalization, probably a three to five-year process we started talking about in late 2022, sara. we tend to continue to act and react to every macro data point that happened yesterday and we're still so focused on the fed. the fed funds futures have been wrong. we for one have said that we were not in the camp for march. we for one said that it would not be surprising if the fed doesn't cut rates this year. however, i think what you have to understand is the markets are still trying to figure out what normal looks like. remember, the average 10-year treasury since 1950 is 5%.

that's clearly higher than what we've seen the last five years. so that's why i think these reactions are going to continue and why we're probably not as bullish as you and most think we are all the time. it's a time for moderation, i think it's a time to own a lot of different types of stocks, not just growth, not just value, not just small, not just large, but also look at yield at a reasonable price which we wrote about in both the united states and canada yesterday, and dividend growth, esp those areasthat have cash flow yields above the dividend yield and we think those are great strategies heading into 2024. >> am i hearing brian belski be less bullish or making that up? >>. >> no. i mean, david, how are you? nice to see you. we are in -- our bull case is 5500. what do we need to get to 5500? we need to see a massive acceleration of earnings. our earnings number is 250, to get to i think 53 to a 5500, we

need $260 of earnings. the same is going on right now that everyone is happening last year. earnings revisions have been very good and that company expectations have been very under stated. let's -- given the fact that we ran so hard in november and december again, act and react, we need to normalize here a little bit and understand that this inflation is not going to go away forever and rates higher for longer. the higher for longer rates are actually normal. we haven't seen a normal market environment, my friend, since the late '90s, early 2000s and we have to unwind some of the silliness. >> actually, you mentioned that a couple times in terms of normal. so what is a normal market environment? what does that mean? the late '90s, that didn't feel normal to me in some ways, brian. >> we have said this, and again, you and i have been doing this a long time talking about this stuff and had long careers. look at 1983, madonna, "borderline" putting this in a song notion so you can remember

n 1995, nirvana, "lithium." what do you do to a borderline personality disorder? you give them lithium. think about the '80s and '90s. the fed pivoted after the commercial real estate crisis. coming out of the '80s recession, the fed was cutting and trying to normalize the economy. i think that's where we're going. by the way, those two periods, the early '80s and mid '90s were about stock picking and not about aulz macro stuff. i think some of that has to unwind and that's what's going to end up happening the next couple years. >> more of a faber market than an eisen market, do you hear that? stock picking not macro. >> he's going back years and years? >> because i tend to focus more on, you know, companies and you are our expert on so many things, including macro. >> why we're so good together to complement. thank you. brian belski, thank you for establishing that for us.

we appreciate it. brian belski on bmo. a little bit of a comeback here. we're down 94 points on the dow. some of the sectors turning green. our road map for the hour, shares of coinbase are surging after posting a profit for the first time in two years. we're going to talk to an analyst who raised his price target more than 20%. >> shares of starbucks have been down three straight years. we're going to take you inside the coffee giant's store format as it looks to expand its u.s. footprint. the future of ai and regulation, meta's president of global affairs, nick clegg, joins us in a cnbc exclusive. big show still ahead. "squawk on the street" will be right back. don't go anywhere. ( ♪♪ ) we're in the security business... our job is to help people feel safe. not only our customers but those who matter most to them. just like our company does for us.

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all on the most reliable 5g network nationwide. ditch the other guys and you'll save hundreds. get a free line of unlimited intro for 1 year when you buy one unlimited line. and for a limited time, get the new samsung galaxy s24 on us. coinbase shares having a nice morning up about 12%. the crypto trading platform posted a quarterly profit, the first time it did that in two years. approval of the first bitcoin spot etfs helped to drive results. john is needham's senior research analyst and has a buy rating on coinbase and raises his price target to 220. let me just start there, john, in terms of price target and what gets you there. i think you're working with, correct me if i'm wrong, a value of about 8 times ev over revenue on a multiple on '24. why do you think that's appropriate for coinbase? >> yeah. so we actually raised the

multiple. what you have now is a very different environment from a few years ago. you now have a bitcoin etf out there, institutionalized asset class. that takes some of the risk out of this space. there's a little bitof the regulatory overhang. coinbase is in that lawsuit with the sec. we expect more of a favorable outcome on that front as well. we think some of the main concerns that investors had around the story, a lot of that has been derisked. another big one, some of the biggest points we heard from investors, a bitcoin etf, you have the low cost etf products that's going to take share away from coinbase, but we didn't see that, either on commentary from coinbase management or commentary from robinhood management, both said that bitcoin etfs have been additive to their bitcoin direct buying and selling business, so we think some of those big concerns that were overhanging the stock have been flushed out a little bit. >> you don't think that's going to be a concern though?

i get there was excitement around the launch of the etf this time which drove up the price and drove up the enthusiasm around the ecosystem, but going forward, the etfs are a much easier accessible way to buy bitcoin. >> i would argue you have a bitcoin etf, you're likely not to see all coin etfs for the next few years. in an environment where bitcoin does very well, even if they lose bitcoin trading share they're going to make it for the noncoin values, with 71% in q4 '23, the highest for any quarter in 2023. we expect that to increase even more if there's a crypto bull market here, typically you see the bitcoin dominance decline, all coins see higher volume. even if they lose some bitcoin share they make it up in the all coin value. there's no etf on alt coins and likely won't be for the next couple years. >> why would you buy coinbase

over bitcoin, the etf? what's the investment case there? >> yeah. g coinbase is a little bit leveraged in more products than just bitcoin. they're hedged where they have the interest come from ustc. not only the hedging benefit there but you have the growth in payment adoption under pinning that should benefit coinbase or bitcoin not quite as much, bitcoin is not really used too much as a currency, like stable coins are, you have that angle. the next the alt coin activity. in a bull market which if we are in one, alt coins see greater out performance than bitcoin. coinbase is a little bit leveraged to the alt coins and alt coins are out performs coinbase is going to outperform. it's a bet, for coinbase, totally crypto adoption growing. bitcoin is a bet on just bitcoin. >> john, thanks for your time. appreciate it. >> of course. thanks for having me. still to come, starbucks

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we have a few semi names on the move. we talked about applied materials in the 9:00 hour, at the top of the 10:00 as well, you heard the conference call the stock is gaining perhaps momentum as well as a result of ai and just the chip making demand that's out there for powering these generative ai models, particularly from the so-called hyper scalers fueling beat revenues and guidance. luke research out with a bull call on nvidia. i mean, really? making a bull call on nvidia now, 1200 -- 1200. sara. >> yeah. they're all stepping out in front of the quarter. >> is that value add? coming out -- all right. 60% higher. >> goes up every day anyway. >> i know. would have been nice if they made it a year ago. super micro, mike santoli talking about, some on the

street calling it a meme stock, down today, though, after, of course, an enormous gain over the last year. wells fargo initiates. they have a neutral. >> he was saying it moved the whole russell which is ridiculous it's in the russell. >> it is. $60 billion market value as of yesterday. >> don't tsee a stock up 820% to often. starbucks unveiling a new store design on accessible and inclusion and it could be coming to a location near you. shares have been under performing on the year. to kate rodgers with the details. accessibility and clinclusion, what does that look like? >> the company introducing its inclusive stores framework opening a first location in washington, d.c., with key upgrades including a point of sale system that will have voice assist and screen magnification and support for language diversity. customer order boards will give visual updates and power operated doors easier to activate from different heights

and angles included. all newly built and renovated starbucks stores in the u.s. will incorporate this framework as the company looks to grow its u.s. footprint by 4% from 16,000 including licensed stores. the north american president says the roi is meaningful. >> i think about it as something that's going to, you know, help us, right, in terms of customer connection, employee engagement, partner engagement and we're optimistic we're going to get a great return as well. >> now i asked does this mean you're moving away from formats like drive-through which have been successful, she says not at all and some of these upgrades like better sound control will help baristas working drive-throughs as it's awfully loud in there. store conditions a sticking point for some of the workers who organized at starbucks. sweetgreen and mcdonald's other names who tested out different

formats including some automated sweet green locations and, of course, the new cosmics locations that mcdonald's has focusing on snacks and drinks. companies trying to really figure out what consumers want, make things better for workers and also make some money at the same time. guys back over to you. >> look, store refreshes at these restaurants have been drivers of sales. i was going to ask about the bathroom policy. that is a big thing for starbucks they have an open door policy, most of the starbucks in new york i see can be an issue for the employees and customers. >> i believe it was under howard schultz, no longer ceo because baristas did express concern about that and the safety and some of the stores, that's been a priority for starbucks as they look to reinvent and make things better. i know you were talking about the stock price and what could drive that. i did want to mention, too, the company is looking to cut about $3 billion in costs over the next few years.

$1 billion worth of that savings, they say, is going to come from making the stores more efficient. when you see changes like that, this is all part of the bigger plan there. >> why has it been an under performer? >> you know, it's hard to say. there have been so many factors to this starbucks story. if you look at the last quarter they had head winds in the middle east but there was also a protest that went on in its u.s. market as a result of that and what company says was due to misperceptions around its stance on the conflict in the middle east. so many different things. last year it had a big impact as we were talking yesterday about the chinese market because they do have such a presence there and such, you know, a force in that market. there's been so many different things. the union fight ongoing. they are now three ceos into this over the last few years, so this is part of the triple shot reinvention plan and we will see how it plays out and investors react. >> got it. thank you very much, kate rodgers. after the break, meta's global affairs president nick clegg joins us live from the

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♪ welcome back. i'm julia boorstin with your cnbc news update. russian officials say opposition leader alexei navalny died in prison at the age of 47. navalny's wife addressed the reports of the munich security conference saying if they are true putin's government will be brought to justice soon. russia's prison service says navalny lost consciousness during a walk today in the arctic prison where he's been held since late last year. fulton county georgia

district attorney fani willis will not return to the witness stand today. she answered accusations yesterday she had an improper relationship with the lead prosecutor in the georgia election interference case involving former president donald trump. and a congressional committee investigating anti-semitism on college campuses issued multiple subpoenas to harvard university today. the house education and workforce committee claims the university failed to turn over documents related to their probe. this is the committee's first subpoenas since its founding in 1867. back over to you. >> thank you. there have been rumblings in the press this week about technology companies coming together on an ai framework to protect the elections. meta global affairs president nick clegg joins us in an exclusive interview from the munich security conference. welcome, nick. good to see you. >> good to see you. >> what can you tell us about these reports that tech companies like play are going to

get together to try to ensure election safety? >> well, we're going to make an announcement in the nx few hours, so i probably shouldn't spoil the surprise, but i don't think it's any secret that if we're going to try and make sure that the rash of elections that are happening around the world this year go off as smoothly as possible, you would have the world's three largest democracies going to the polls this year, india, indonesia, just this week, and, of course, the u.s. later in the year, and many other elections besides, it's going to be essential that the big tech companies either build the tools that allow people to again rate, ai generated content, and/or distribute that content on their platforms, should work together as much as possible. this is a challenge, preventing the use of these new ai tools to sort of deliberately deceive people in elections which can

only be dealt with check collectively because of the way it sloshes around on the internet from one service to the next. there's been a concerted attempt from a lot of significant players to work as collaboratively as possible together. >> yeah. i understand, report are that you're going to label them as ai generated. why not just ban any ai generated election content? >> i don't think playing whack-a-mole and sweep stuff under the carpet, experience suggests that doesn't work, you miss stuff, and start taking down and removing things that people feel are not as, you know, not so offensive, that they should be removed. i think most people in the industry believe that the greatest antidote to deliberate and nefarious deception is transparency, but you can only have transparency, in other words you can only act either labeling or demotingor if you

in exceptional cases removing ai generated content if it breaks the rules of the various platforms concerned, if you can identify it in the first place. that's where a lot of engineering work and technical work at the back end still needs to happen so that ai generated content produced on one tool will be identified as ai again rated when distributed on another platform. that's the gap, if you like, that the companies are working together to try to close. >> just basically how to know whether it is ai generated? because we know we got this announcement from openai overnight, we played with their new product generating images and videos based on inputs in ai, and we did a dalmatian in italy, it's hard to tell what's real and what's not. >> that's why it needs to be what they call in the jargon watermarked. if you use meta's image generation ai image generation

tool, slash imagine, and i don't know, you say give me a picture of a man jumping from a cliff into a red sea, you'll get a very, very realistic photo, but what you'll get in the corner is a clear circular watermark so that anyone who looks at it can see it's a synthetic piece of content, it's not human generated. the challenge, which is why industry wide corporations are important, is to make sure that's best practice, if i can put it like that, visible and invisible watermarking is spread across the whole industry as far and wide as possible. >> shouldn't the government -- i mean we're working -- government has been trying to figure out how to regulate ai. it does strike me this is an issue, disinformation, misinformation, interference with the election that government should be taking on. are you working with the government as well? this is just something that has to come from the private sector because they're not there yet?

>> so i think the thing about this whole issue, it's easy enough to say label everything. water marc everything. it's much harder in practice, and you're right, the governments play a role in setting the guardrails, the parameters in which the industry should operate, and the u.s. government's executive order already includes provisions about the need to invisibly and visibly watermark ai generated content, the eu's ai act similarly includes provisions on user transparency labeling and so on. the trick is how to actually do it in practice. i'll give you a concrete example. at the moment, the technology is relatively mature, such that there are shared or interoperable standards you can apply to image, so it's a photo, synthetic ai generated imagery, but it's not as developed for audio or video content, which is much harder, particularly if you are in facebook or instagram's

case, if you're importing it from other companies' ai generation tools, it's much harder to tell at the moment because of the state of the current technology. that's why you need engineers, technical expertise, and researchers working together, to put their heads together, to come up with a best interoperable standard so we can apply the same standards of visibility to audio and video content as we can to synthetic still images. we will get there, i'm absolutely sure of that, but it's work that needs to be accelerated and the kind of announcement that's going to be made at the munich security conference will help in meeting that objective. >> it's pretty daunting whether you think about how many images or videos or voices can be faked. there was already that fake robocall using president biden's voice to get new hampshire voters to skip the primary you had to deal with and whether you keep it up or label it. how many people do you have

working on this issue? how do you know what's enough? >> so we have around 40,000 people working on kind of safety and integrity on our platforms and spend a lot of money on it. we spend about $20 billion u.s. dollars in recent years on things like election integrity, about $5 billion in the last year alone. here's the interesting point. you know, even if we employ double the number of content moderators we have, here's the irony, we're talking about the risks of ai generated content but ai is our most powerful tool to deal with the content we don't want to see on our platforms. take hate speech, the prevalence of hate speech as a percentage of the total content on facebook is now down to about 0.01%. that's been reduced by over 50% just in the last couple years alone for one reason only,

improvements in ai technology. it's important for your viewers to know there are issues and concerns about how this technology is going to be used for bad purposes. it's ironically also the same technology that helps, you know, established players from making sure that their policies have been properly respected and enforced. >> i mean, i don't know how long you've been there at the munich security conference, nick. i think it's interesting that companies like meta and other big tech companies like apple are there as well. how do you judge your role in the broader security environment right now? we're in two wars in this world, ai is, obviously, an increasing threat. there are concerns abilout defee spending and nato relationships. as someone there from the private sector from meta, what's the role? what's your perception? >> i mean, you're right. it's kind of striking, isn't it? i think the munich security conference has been going on for 60 years.

it's the sort of setting for decades was the place where people, particularly from the defense establishments, would talk about the cold war and now you have people like me, executives from social media companies here as well. i think it shows how technology and geopolitics have become increasingly intertwined. my own view remains that, much like any great technological innovation, yes, there will be disruption, there are new challenges we need to meet, but in the long run, the benefits to better health care, better education, tackling climate change, raising economic productivity and the wealth of nations, through the use of ai, is so considerable, we shouldn't lose sight of that. in many ways, i think the ai race is not so much a technological race, it's a kind of economic race. it's a race between which economies will use ai most

rapidly and smartly and deploy it in the workplace in a way which really kind of raises prosperity for everybody. i really do think this technology has the potential to do that. >> how far ahead is the u.s. on that front? >> i'm sorry. i couldn't hear you. >> how far ahead is the united states on that front, versus say china? >> well, so -- yeah. good -- i think the u.s. is way ahead in terms of the actual development of the technology. you've got these extraordinary world-beating tech companies, meta, microsoft, google, et cetera, in -- on the west coast in particular who have the ability to invest vast amounts of money to build the computing power that is needed to drive these so-called large language models, like chatgpt and others, so i think in that sense, the u.s. really is leading the world. but that doesn't necessarily mean that it's the u.s. which is going to benefit from that technology most because, you

know, for instance, meta, we openly share our technology, even though we spend billions of our own money in developing it in the first place, we open source it in the jargon so anyone around the world can use it, so it's fully democratized. there might come a difference over time in places like california where the technology was invented and other places where the technology is put to the best possible use. >> nick clegg, thank you for joining us with a taste of what you're doing there. >> thank you. >> and the agreement expecting that announcement soon. nick clegg, meta's president of global affairs. 40,000 people working on security at meta. $20 billion. >> you know, they went from 87,000 to 67,000 employees. >> in the efficiency year. >> that would be 40,000 of 67,000? maybe they're not all full time working on it? maybe they do it -- >> the point is it's a lot of the company. >> if that's the right number, yeah. quite a bit.

still ahead right here, what is this morning's inflation data mean for the fed's next move? we're going to discuss that. that's coming up.

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stocks are still lower, but they've recovered some earlier losses. the s&p down 0.2%. it was down double that about an hour ago. you have some groups turning green, material, health care, consumer staples and energy are higher. nasdaq under a little more pressure down 0.5%. for the week we're almost flat on the s&p. still down a little more than 0.1%. we've come off of such a strong run, weekly gains. we're going to talk to a voting member of the fed's committee, atlanta fed president raphael bostic at post nine in an exclusive interview coming up in the next hour on "money movers" and he will react to today's hotter ppi number and what's happening with the economy.

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consumer and producer prices

data just coming out this week hotter than expected leading to a murky picture going forward on inflation and the fed. steve liesman joins us with a rapid update. so where do we stand, steve? >> reporter: okay, sara, we've been able to survey economists since the ppi, surprised to see how they changed their forecast for the fed's preferred inflation gauge, the pce comes out february 29th. on average the survey of seven forecasters sees boosting the outlook for core pce by a tenth to 0.4% doesn't sound like much but it is double the december rate. and then here is a bunch of the estimates heave we are. you can see pretty much 0.1 across the board, pantheon, citi, jpmorgan, goldman sachs and some you don't see here. the annualized three-month rate end up being right would rise by a percentage point to 2.4 would decline for the year over year because of bigger or hotter january '23 number drops out.

it will give the fed pause is the bottom lionel. i want to show a new chart we've never shown before. what this does, it tells you the number of 25 basis point cuts now in the january 2025 contract. i don't know if that helps viewers envision where the market is, but you can see they were up as many as seven cuts built in the middle of january. now they're down to playing with 3.75. sara? >> they've come to the fed, to the dot plot, the market. >> reporter: exactly. there's a little bit of a gap between three-quarters of a point. >> what do you make of the argument the economy is potentially overheating again? i know it's preliminary, a strong word. we don't want to say it too much, but just some of the data points adding up with a stronger economy after the january payrolls number. >> reporter: i'm seeing a lot of commentary about this idea there's these one-time increases that happen in january that are not seasonally adjusted, things

like outpatient hospital services, a bunch of things that were in there. i am wary of the idea it could be overheating. i think you need to take it into account, but i wouldn't prejudge it. if this is a one-time january effect, it should work its way out by february, perhaps by march. and soap you could still be on pace for a summertime rate cut. maybe it's fall now, but still on pace if you get march, april and may, come back into the line after some of these one-time price increases. >> january is funky. even you can say the same thing with the retail sales. we wonder if the consumer is slowing because of weather and holiday and all that stuff. >> reporter: right. you don't want to go too far into the weeds when you're fishing, sara, but sometimes that's where the fish are, in the weeds. you have to go in there. we know there's stuff in there like, for example, the bls said it today, they don't adjust for outpatient home services but there's a seasonality to it. so don't want to get too

detailed on this thing. it's one you take under advisement. don't panic. watch it. if it keeps going, then you have to be worried. >> maybe the february data even more important. steve, thank you. >> reporter: there you go. >> steve liesman. >> sara, as we sort of continue to monitor a market that broadly speaking is down, though not down sharply, i did want to point out shares of eli lilly. we mentioned them very briefly earlier in the program. they're up some 3% right now. this has been one of the great stock moves we've seen in the last year or even more because, of course, it was a big story in 2023, the development of the glp-1s, the commercialization of them specifically for weight loss. they've been on the market in terms of treating diabetes for some time. but their effectiveness, specifically lilly's in terms of taking body weight down some 22%. it has create add market cap at an enormous rate, now one of the

largest market cap companies in the country. eli lilly shares, no slowdown as this year moves along. >> what did you say, $700 billion market cap? >> $742 billion. >> morgan stanley said it should be maybe a trillion dollars and at $700 billion market cap they think lilly shares reflect $70 billion to $80 billion in diabetes and glp-1 revenues. that number, i don't know how you model 2030 but total addressable market should be in the $100 billion to $110 billion range for revenue and drive up their price target on the stock. >> driving that stock yet again. don't miss atlanta fed president bostic next as our live market coverage continues right after this. an office. hi! hello! a cinema. so automated.

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