quarterly results from home depot and walmart due out this hour. it's tuesday, february 20th, 2024. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen. it is just the boys today. becky is off. we have a lot going on. including the big credit card deal which we will talk about in a moment. u.s. equities at this hour are looking to open down. 83 points off the dow. s&p off 21 points. treasury yields with the ten-year note at 4.275. the two-year note at 4.176.

let's talk about the big news in the financial world. capital one buying discover financial services in a $35 billion all-stock deal. discover -- i call it discovery. discover shareholders would receive 1.02 capital one shares or a 26% premium from the discover closing price on friday. after it closes, capital one will hold 60% and discover will hold 40% of the combined company. it will keep the discover brand. we will talk to the analyst about the deal which is one of the largest on wall street in many years. i would argue it would create and would be a good thing and create competition with mastercard and visa and american express. discover has a huge network, but it is one of the great

underleveraged networks. capital one is a massive business. by the way, they issue credit cards on mastercard and visa. the question is if lena kahn will like this deal. >> you are right about that. could you see her taking your viewpoint or no matter what it's bad? >> i don't know. this has been a deal that people have talked about being a natural deal for a long time. it happened -- i don't know if we can show the discover shares. discover shares came down and struggled. that allowed this situation to happen. they had their own regulatory issues. this is not going to show you exactly what's going on. nonetheless, that's what led both of the stocks to profit falls and other issues. it is an interesting deal.

>> i don't know who has a discover card? >> i do not have a discover card. >> that's the problem. i have never seen it. >> you can build the network out and put the marketing muscle of capital one. >> i can't tell you about discover's advertising campaign. i'm sick of capital one's advertising campaign. you are inundated with what's in your wallet from jennifer garner and samuel l. and so many people. >> take that marketing and throw it behind -- >> i tried hard to get excited about the deal. i'll let andrew get excited about it. >> it is. the question is if the treasury department will allow it. i will be excited for both of us. i wonder how excited warren buffett is today.

he owns 3%. >> if it was discovery, i would think it is interesting. it's not. >> it's not. it's not. >> you think warren -- >> warren is the shareholder of capital one. >> you know why i love warren? it's not age. it's the odometer. he has nothing to do with age. no one would ever say warren buffett is anything except brilliant and plugging away. same with charlie munger right to the end. chronological age. i'm making my own case. what are we talking about? my case not so good. home depot, i heard of them. >> you want to talk about them? >> yeah. i'm very sharp still. you know, 20 years younger than these guys. home depot reported quarterly results. courtney reagan joins us with

the numbers. i was trying to remember if it was last quarter that they were abysmal and the stock went up. >> it is funny. home depot stock sometimes doesn't move with the fundment the als from earnings. let's lay it out. home depot is reporting $2.82. that is above $2.77 consensus. revenue of $34.79 billion. that is above the $34.6 billion forecast. the retailer guiding sales to grow 1% for the year saying they will open 12 new stores. comps will fall for the year to come and gross margin under 34%. the total comp sales for the 40 quarter did fall 3.5%. that is about in line with the analysts expectations. u.s. sales down 4%. home depot also increasing its quarterly dividend by 7.7% to $2.25 per share.

i spoke with richard mcfaphail. he said holiday sales posted reports. we had some of the best sales in the pholiday categories. i asked mcphail if 2023 was the year of moderation and then what's 2024 going to be. he said maybe opportunity to take share. we believe the market is on its way back to normal demand conditions. pressures from 2023 are receding. when it comes to pricing and if he has seen disinflation, mcphail is careful using those terms. prices are lower at home depot. price levels in the general economy are higher than pre-pandemic. we believe they are likely to remain elevated for some time. when it comes to the u.s. consumer, he said he thinks they are healthy with room to spend,

but are aware of the rate environment and deferring the larger debt financed projects. back to you. >> courtney, i may have more questions, but i'll ask later. tune in. we will talk to brian nagel with oppenheimer. senior equity research analyst. how much is it up since last time you were on? last time you were on is when the company reported. what was the problem? it was comp store sales and guidance was weak. the stock, i remember, was under pressure and it had been abysmal performance under $280. the last three months has been gang busters, brian. it is funny how the stock gets ahead of fundamentals. that is what is so interesting about the discounting mechanism. >> good morning, joe. home depot is a really interesting stock here.

i think what we are seeing is what you were stating in the reporting with the numbers. these numbers are soft. either we look at q4 results and guidance that home depot gave for 2024. those are not home depot-esque numbers. these are soft numbers and post pandemic. i think we're in the post-covid reset phase. what is happening with the market and this is probably my biggest concern. my team downgraded home depot a month ago. the market is looking through this and we will see what happens today. i was watching these early in the morning. the home depot stock did tick down on the results. again, the market is willing to look through this. my worry is despite the greatness of home depot is we will see another few quarters of soft results. i think that does keep a lid on the stock despite potential for

it to bounce. >> home depot seems like it is just, you know, at the whims of the macro economy. i don't know whether they ever mismanage or have bad inventory or any of the things you think of with other retailers. they are sensitive to the economic back drop, especially in terms of interest rates and everything else. why does this year look any better than last year? i guess it did for a while, but we're worried about inflation again and interest rates could stay where they are or the ten-year rate could tick up from here. what is more positive about 2024 that the ceo sees over 2023? >> i agree this is a macro-driven story. home depot is extraordinarily well run company. i can't really remember the last time we had some type of internal mistake at home depot.

to answer your second question, if i'm ted deck eer or the cfo,t is one or two or both these things. one is getting further away from the pandemic. i'm a big believer that demand was pulled forward into the pandemic. we just have to get past that to reset and normalize demand for home depot. the other factor not related is rates. i know we can talk about this for hours where rates go and given the last week's inflation report which is saying rates may stay higher for longer. in my mind, as rates moderate, when that eventually happens, home depot is really one of the best plays in retail because of the sensitive retailer. >> compared to apparel, you can't screw up the color of the

lu lumber. short are skirts. can you imagine being in apparel and stocking shelves for what anybody wants? it is impossible. all they have to do is put the light bul bs up. how do they differentiate against lowe's? it has to do with pricing. that has to do with inflation and input costs and what can stick if they heare able to rai. if they raise too much, they lose market share. >> in my mind, it is interesting. i don't think price is a big factor here. given the way the consumer shops. i think the bigger factor is having the right product and enough of the product and brands. we see home depot and lowe's do a great job of bolstering the brands they carry in the stores. whether in the tool category or

paints. as i go back, i say where is home depot taking market share in it is really interesting to me. you have home depot and i know we talked about this on your show. home depot and lowe's are the dominant players within the home improvement space. if you breakdown home improvement is diy and professional market, in both sides, particularly professional, a lot of market share is left that is not home depot or lowe's. home depot taking market share today, they are not taking market share from lowe's, but the smaller players that exist out there on the professional side with the specialty lumber store. >> still crushing the little hardware store. will home depot with the brands they choose, can they get brands exclusively that won't sell to lowe's? is that part of the game? >> absolutely. both cases. both these companies.

where they grow next with tools or paint. both of them is in the advertising which is exclusive to home depot or lowe's. that's a big deal. this is what professionals are doing for their jobs. the brands really matter. >> yeah. we're not good at this, andrew. diy-type stuff. do you have a feeling of terror when you walk into home depot? i look for somebody. too big, brian. too many aisles. i would be there for ever. bed bath and beyond. >> that's fine. i look for a manager at home depot. >> you send the house manager? >> yeah. >> i hope people are laughing and not thinking that is a serious comment.

>> every comment there is a little bit. i admit. i admit. if someone finds handy person sexy are or attractive, they are not for me. >> right. >> they are not for you, either. you are a good skier, right? >> skiing i can do. handy work? not so much. >> brian, do you know every aisle and know where to get the studs? do you know how to do that? could you remodel your bathroom? >> absolutely not. i can't send the house manager, but i need someone to do this for me. >> andrew sends the house manager. you don't know what it is called. we need these. how many light bulbs do you have in your house? >> i don't know. >> i have 50, i would say. different. chandeliers and light treatment. brian, it's difficult.

it's difficult. i think lowe's is not as bad. >> thank you, brian. when we come back, more house manager jokes or not. we'll get -- >> i believe you. >> we'll dig into the big m merger. capital one buying discover. it is next. later, a rare interview with investor james chadwick at 8:15 a.m. we will talk about his fight at norfolk southern. ckngig box" is comi rht ba. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. at morgan stanley, old school hard work meets bold new thinking.

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i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. that's wall-to-wall wifi on the xfinity 10g network. welcome back to "squawk box." capital one buying discover financial services for $35 billion in an all-stock deal. we have our latest guest with us. good morning. this is the latest deal that people talked about as a fever dream for a long time. it is now here. i'm curious upon looking at just the headline and the deal itself, you think this will work or not work? what's your thoughts? >> good morning. thanks for having me, andrew. we are pretty positively disposed to the deal and like it quite a lot. consumer finance and credit card specifically, andrew, is a

commodity business. scale is important. consumer finance through the cycle is a great risk adjusted return business. in addition to the cost savings, there is an opportunity for capital one to benefit from using discover's back-end network. $60 billion in volume which is how much consumers use on credit cards and they are able to bring that to discover's platform, we estimate $1 billion of cost savings that capital one will benefit. from our standpoint, this is a large deal. the integration risk and we have been doing this a long time, compared to bank deals is less because in the transactional product like credit card, you don't have to worry about retaining bankers. the relationship piece is not nearly as meaningful. despite this being a $35 billion deal, very large one, one of the largest in year, the integration risk is less relative to some of

the larger bank deals in our career. >> discover is now up about$14. you look at capital one which is down. it is all stock. there is an arbitrage situation here. >> capital one is the only one to pay this price. from our perspective, it is full, but fair. if you think about the longer-term potential. the earnings going out to 2027 which is a phased in combined company is roughly 14% to 15% to earnings. that is meaningful. there are regulatory issues you want to talk about, but from our standpoint over the long term, this is a good deal. >> let's hit the regulatory issues. you could pick your person. if you were the treasury

department, what do you think this morning? if you are lena chkhan, what do you think? >> i'm a analyst, andrew. i'm none of those people. from our perspective, we don't cover discover. they have been dealing with regulatory issues. this solves a potential regulatory headache. we think that is positive. capital one is in the d.c. area. we are of the view they had discussions with bank regulators and justice department officials on the deal. that will be an open question and none of us really knows. there has been a lot of consolidation in card to offer consumers the best products at the lowest prices and the transaction business like this, we feel it makes sense. >> david, let's flip it around.

let's say you are visa or mastercard or amex this morning. we should put up jpm and citi with the underwriting role they play in the world. do they look at this and say we have a new competitor and this is a problem or do they say this is fantastic and now we can say to everybody in washington who has been coming after us that we are a monday opoly? >> i think there are a couple of angles with visa and mastercard. i don't cover those, but my had c colleague does. we expect the international volume to stay on the legacy players. the domestic volume to come off the rails. that's where the $1 billion of

synergy comes from. particularly chase has been aggressive in terms of marketing spend and investing in a very transactional and what we think is a commodity business. in order to drive growth, you need a competitive advantage to take share and cost and marketing skill and heft is one advantage. it will continue to drive competition, andrew, in a competitive space. >> david, i want to thank you as the news is rolling out. thanks. >> thank. coming up, the biden administration announcing a $3 billion award from the chip act. details ahead. thursday, don't miss the cnbc documentary. "the big shot" the ozempic revolution. at is thursday at 10:00 p.m.

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the biden administration announcing it will give chip maker global foundries $3.1 billion in grants and loans to build a new advanced chip f factory in upstate new york and vermont. it will boost clients like gm and lockheed martin. this is the largest chips act award to date. also offers a hint of the size of potential awards for intel, micron and tsmc. those announcements are expected

in the coming weeks. when we come back, a lot more here on "squawk box." president biden heading to california on a fund raising swing as the campaign said he raised $42 million in january. we will talk to mike allen from axios after this. look at that nice shot from the shgt, mni fm isorngro wainond.c. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. he u.s. we s lions 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, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security.

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good morning. welcome back to "squawk box." live from the nasdaq market site in times square. you can see three significant downward pressure this morning. dow indicated down 106. nasdaq down 108 . s&p giving back 20. it was cpi and ppi back-to-back last week that shook things up. it woke us up to maybe that smooth line down to 2% which isn't really happening. who knows with rate cuts and all

bets are off at this point. we will talk to people about it today. price of bitcoin is $52,000 for most of the -- >> consolidated at 52,000. >> i mean, we were asking if it was consolidating at 26 six weeksing ago. it is up 100% the last six weeks. it was 49 when the etf got approved and went down to 42. that is where i was saying it was useable to stabilize at 52. someone would say 100 by the end of the year. someone i think is pretty smart. i don't know who it was now. >> it could. who knows? we heard people say $500,000 or $1 million. it is all speculation. >> like everything we talk about every day. some stocks are worse.

>> hopefully less so. >> netflix. 750. take your pick. crude prices. those could be used as currency. they have been stable. they are near three-month highs after another attack on the ship in the red sea. houthis forced an abandoned ship since the attacks began last year. two ballistic missiles damaged the area on sunday. the war ship and another merchant ship responded to the d distress call. the houthis said it was a complete sinking, but it was not verified. there was a big piece on "60 minutes." did you see it? >> i'm worried about what is happening in space with russia.

we haven't talked about that yet. >> yeah. i'm not sure about it. i'm worried about the zap on the grid. >> that could happen on the grid or with a satellite. either one would do the same -- create big problems. big, big problems. >> right. we heard about in a strange way. initially, we heard about it. they were going to have a nuclear equipped asset up there. we didn't understand why you needed a nuclear weapon to take down a satellite. let's talk about what president biden is thinking. president biden's campaign raising $42 million in january bringing his war chest to $130 million at the end of the month. that's a record amount for a candidate. we have mike allen co-founder of axios. >> good morning.

>> let's talk all of this through. the president raising an enormous amount of money at the same time of the increasing questions if he should, frankly, remain the candidate. >> here is something that's not speculation in the spirit of the show and reality. this is the set of numbers where president biden has the wind at his back. how long has it been since we saw a set of numbers and said this is great for president biden? the money edge is real. you mentioned $42 million in january. a couple of other numbers for viewers. $130 million in the bank. here is the one that matters most. last year, presidedonald trump $50 million on legal costs. at a time when joe biden is rolling up the money, the trump organization had to spend it on places that are unprecedented for a campaign.

as you say, president biden today is headed out to my native state of california for fund raising in culver city. he will be in the ritzy address in america later this week in los altos hills for a fund-raiser. >> mike, can you talk about an enthusiasm gap, if you will, inside the democratic party about president biden and whether you think that persists or does that change? i'm curious, do you think another candidate emerges or is that crazy speculation? >> yes, yes and no. there's no question with the enthusiasm gap any democrat will tell you that. i can tell you they are hanging their hat on the state of the union address justover two weeks from today on march 7th. this is a time to really change that. a teime that president biden wil own the stage. you remember he crushed that

state of the union a year ago. we saw his vigor. we saw his great reception to that. over the next two weeks or two days, you will see a build-up to that speech. you will see the president starting to show his face to the country the way he wants to show it for the election eight and a half months from now. two big events that will set the table for election day. the state of the union. the biggest thing that president biden controls by far. the other thing that no one controls is the supreme court ruling on who or not the trump trials go ahead and how quickly. those are the two tectonic events between now and the election. >> you saw ezra kline? any chance of that? ezra kline says at some point president biden should end the

bid and pass the mantle. you hear that in places you would not expect to hear it. >> if you are the candidate, you don't want to be hearing that. the biden campaign strongly believes between now and november that people will see that the economy is benefitting them like we hear on the show every day. people are not feeling that yet. they hope the world will be stable and people will see that the world would be more stable with biden as the case they will make and bring us back to the money -- one more figure for br at the top. each side, when you count the committees and campaigns, each side will spend roughly $1 billion. democrats spend $1 billion. a lot of it, not telling us joe biden is awesome, but donald trump is terrible is the democratic message. they believe that will carry the

day when they get to election day. >> we all had relatives we have seen at that point in life. it is undeniable if you look at the president from a year ago or two years ago or five yearsi ag. watch any tape. watch as he exits air force one or the helicopter. five more years, mike, that's undeniable. it is undeniable. i think it is putting a lot in the case to be made why would he step down? it is one of the greatest jobs to have with prestige and everything else. he would want to stay. there is a time when it is elder abuse and the party is telling him wake up and act like you're spry and act like you are not forgetful. this is all on your shoulders. i think it is elder abuse at this point. five years from now, it will be mind blowing what state -- you can see it. it is not about age. it is about the state of a

person. we talked about warren buffett earlier. people are different. warren buffett at 94 versus -- >> speaker pelosi. >> you can see it. two years ago, i was watching it the other night. oh, my gosh. the differences are stark. >> joe, i just gave you the gist of the biden ways. the gist of the trump case is that age will not change. what will not change between now and november? the president is not younger. what do they control? they control how he looks. in the run-up to the state of the union, i'm told axios is up with the piece. biden's reset moment -- >> that's asking a lot. >> let me ask you a money question. a spending question. there's an argument inside the biden administration that i've heard multiple times and i'm

curious if you heard it. they will not spend all of this money probably until after the convention. they would not begin really going after trump until september. >> they are thinking of somebody else. >> the idea is their view is not enough americans -- they blame mainstream media for this, because they are seeing trump on the day-to-day basis. if you loop these together over and over again, that the american public would be outraged and the polls would be different. what do you think of that? >> andrew, your sources are correct. that fits in with part of the big thinking of the biden campaign. you go to wilmington and talk to them as i have and they will tell you we are focused on the poll today or the segment today, but what matters to us is the bottom line on november 5th. it is building to that. you are right, of course, the

spending will be back loaded. the narrative that you are saying is very important to them. they are frustrated. >> it is the coverage thing i cannot figure out about the spending plan. i don't know the better strategy. if the narrative continues at the pace it is and when you have jon stewart saying the things about the president and the white house cannot be happy about that and the question is do you need to start spending now and you can argue it is a mistake. at the same time, the narrative about his age and it will not change the narrative about his age. >> mike, "the new york times" today with the burned out antian anti-trumpers because he is out of the spotlight. that is what you are saying. as we hear this navalny who dies

in russia and somehow comes back to him. when things like that happen, then the outrage can be back easily. you are right. we have not seen much of him and he is not on twitter. >> it does require a strategy that's all around trump outrage. that is true. >> you want to let him win the primary. >> i understand that. mike, final word to you? sorry. i know we are supposed to be the questioners. >> this is the big debate. will trump be seen as a defendant again and again? will it help or hurt? plenty of republicans say it helps. >> mike allen, thank you. >> thanks. >> some of the stuff is not good. atlanta stuff.

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welcome back to "squawk

box." i'm dominic chu. real estate is a huge area of focus with the forecasted path of interest rates. real estate has been an under performer the past year versus the s&p 500. it is the third smallest sector out there not really significant at all with the overall sa&p picture. according to the castle systems which tracks return to work trends, they say 52% of office pace is occupied the week ending february 7th. reits have been in focus because of things janet yellen spoke about with the shift in work patterns with the pandemic and commercial real estate loans coming due and putting stress on

the properties commercial wise. we decided to run a screen looking at office real estate investment trusts with positive price performance and coverage from ten or so analysts. broadly covered and more well known in the industry. out of that screen, a few of the names that popped up having decent upside prices were office focused reits like cousins in the sun belt region. price up 16%. it is 12% below the analyst target price. alex alex alexanderia is up 13% over the last 12 months. 20% upside to the target price. kilroy is up 12% in three months. down 19% from the analyst target price. keep an eye on the office reits in the next coming quarter. keep it here. we have more on "squawk box"

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in "the wall street journal" op-ed, our next guest explains why he thinks the merger can benefit us. are we at a point in time with the current regime, lean acon al, we have seen mergers and some are good for consumers and

some maybe not so good for consumers, but i can't believe you need to make this case to dispel what seems like a conventional wisdom? >> yeah,the fact is that there has been a regime shift on that, and i don't think it's just lena cann, she's moving the ball in favor of skepticism about mergers, so it's important, of course, that regulators remember and judges, as well, that there are tradeoffs, and often mergers are very important and efficient form of integration, and we have seen it in different ways, especially in the mobile market. >> it seems like common sense would tell you, that if you have two companies overlapping in a lot of ways and both spending a

lot of money on expenses and those cannot be passed down to consumers, if they were able to get together and work together, and it seems you shouldn't have to explain why that could help consumers? can't we look at the history of the eu and the different way they look at competition, where they will actually look to see whether the employees of another company are what they care about, and not the customers of the combined companies, and we see how much more nimble our system is, and we see it's probably better for an economy, can we not? can we not see the record based on different concerns? >> i think you are exactly right about that. if you go to european conferences and don't talk the

way we do in america and actually look around the table, you will have a lot of experts and economists and policymakers talking about the fact they are not getting the investment and innovation. they are very concerned about large-platformed companies based in the united states and they have lots of actions against those companies, and that's not just parochialism, but in a competitive sense that's where they have to go to look for large successful enterprises. that doesn't do well in terms of a long-term growth, and the united states is actually making that point. the problem on the other side is we have a way of looking at the united states and saying wait a minute, the large scale is a problem here, and they don't see the problems of the different policies in europe and other places around the world that, in fact, bottle up the innovations.

those deliver very important efficiencies to consumers, and make new very effective and productive platforms available to entrepreneurs and innovators. if we are going to look past at those dynamic aspects of the marketplace, and if we go from four markets to three with mobile providers, that's presumptively suspicious. >> i see things written out, professor, as, you know, our young people, now 50%, 60% think socialism is good and we have not done it right. nothing is surprising any mmoret this point. we have to run. we have to make some money. thank you, sir. "squawk box" will be right back. ♪♪

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good morning. a holiday shortened week for investors as we are ready for key economic indicators, and we will get you set up for the week ahead. plus, big tech joining forces to combat ai election interference, and how they plan on thwarting deepfakes. and then walmart numbers out shortly. "squawk box" begins right now.

good morning and welcome back to "squawk box" on cnbc live from times square. i'm joe kernen with andrew ross sorkin, and becky is off. the numbers we saw last week, they have the dow in the negative to some extend, and we have the nasdaq down almost 100, and the s&p down almost 20. treasuries out, that's part of the problem, and big moves with the cpi, and the ten-year almost back up to 5%. walmart out with its numbers and courtney reagan joins us as she tries to look at that.

>> walmart reporting adjusted of 170, and also topping amazon. still the world's largest retailer by sales. the full year earnings range is with expectations. the retailer also increasing its annual dividend. u.s. comparable sales for walmart grew 4%, and u.s. net e-commerce sales grew 17% below the 23% global e-commerce rate, and it's a metric that continues to keep growing. walmart noted it crossed $100 billion for the year, and i

spoke with the cfo who said, quote, ties something a very important part of our business, and noting it grew more than 33% globally last quarter and adding it's changing the profile overall, and while last quarter he was more confident prices were moving towards deflation, he says it's now less likely, adding last quarter we were seeing trend lines down and to the right, and now prices are more stable than three months ago. he said the two of the strongest days ever were the week before christmas, and noted they have seen strength since the holidays. he noted consumers are being choiceful, using discretion with larger ticket items, and putting

fewer items in their basket but shopping more frequent. >> the stock is up for now. we will see where it lands as the morning progresses. thank you. >> earlier we had home depot reporting quarterly results, and the shares were above estimates of $2.77, and revenue of 34.7, also above expectations. however the store sales fell, and comps were down 4%, missing the street's estimates. for the full year, the retailer expect to grow 1% with 12 store openings, and comps still expected to fall. stock has been on a good rebound recently, but it's down this

morning. let's talk markets. the economy and more. joining us now, a chief economic adviser and president of queens college at cambridge university. i don't know what that told us last week. nobody thought the move all the way to 2% was going to be a straight line. we know about, you know, progresses made. you get a little bit of a setback. it's not just a straight line, but was it more troubling than that? we knew that. was there something more troubling in those numbers? >> i think those numbers just confirmed how pumpy the last mile of getting to 2% will be. you have seen expectations move tremendously. joe, two months ago we were pra pricing in six to seven cuts. today some people are even saying we may get a hike. i don't think we will. it shows you how much the

conventional wisdom has shifted and that's because consistent with what you just heard from walmart, people realize there's goods deflation and service inflation stays sticky, which means getting to 2% is going to be tricky. >> would it surprise you if we got only two rate cuts this year and it didn't happen until the second half of the year? is that looking more likely now? >> no, i have been in the three cuts starting in june, so two cuts wouldn't surprise me. my hope is that the fed realizes they have to think much harder about the soft landing, it's going to be much longer than they would like. which is to say 2% should not be

the immediate target but the much longer term target. the glide is going to be longer than expected. we expect to see growth, and that's allowed for a softish lap landing. it's also serving as the locomotive -- >> it's kind of the goldilocks. we love the soft landing. does the fed need to slow the economy? they can do that with interest rates, and then we could be in the path of the possibility of a hard landing? >> the question is how long do we stay in the restrictive territory. this economy is slowing, but it's not slowing into a recession. that's something that is really

important for the well-being of the economy, for the well-being of the global economy. the risk is, joe, that the fed ends up in restrictive zone for too long. that's the risk right now. that's the potential policy error. very different from where we were when you and i were talking in 2021, when the fed was anything it would be transitory, and now it's the other way around. >> if we are really in restrictive erritory, we have been there for a while. why haven't we already seen that reflected in the jobs number or the gdp? >> we have first seen it in inflation. inflation has come down sharply. why haven't we seen it in gdp? turns out we have an exceptional economy, and there's more resilience and balance sheets were stronger than people expected at the corporate and household level. it turns out we are an

incredible agile economy. it turns out we are starting to promote more and more future in the tkradrivers of growth. the uk recession. germany, recession. china, struggling. the u.s. has been able to navigate this period of tighter interest rates well, and it's something that we hope will continue. >> i just don't know how to view that, if the rest of the world, you know, we can be, you know, the exception to the rule or join everybody else eventually. you don't think that's likely that we will just be the last to actually see a slowing economy? you think we continue to maintain our preeminence? >> to be clear, i think we will be a one to 2% growth economy. i don't think that we need to

fall into recession unless we get a policy mistake or external shock. joe, household balance sheets in the u.s. were much stronger than the rest of the world. why? because the fiscal transfer was stronger, and it helped growth last year but will not help growth this year. we will not grow at the 3% base in the fourth quarter, and we will go to 1% or 2%, but there's no need for us to fall into a recession. >> we will see. the fed has to take down the mission accomplished banner. we're still in the process, and it's a work in progress, right? we have an election coming up. >> that would be a big mistake, to think the mission is accomplished. >> thank you for missing lunch for us. that's what we should say. coming up on the other side

of this, major companies joining forces to prevent ai ectleion interference. and then we will talk to carlos travers from stellantis, when "squawk box" rolls on. that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. encore energy, america's clean energy company, now in production in south texas. energizing america with reliable and affordable uranium for nuclear energy fuel from our environmentally friendly extraction process. encore energy.

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welcome back to "squawk box." 20 companies including microsoft and google committed to preventing ai interference in the 2024 election. joining us with more on this and all things tech, somebody i have admired for a long time, the editor at large for "wire" magazine. do you think we will be talking

about this and say it's not working in a couple months from now? >> it's a light lift to sign your name to a paper, which is what these companies have done. the word voluntary appears, and they will do their best efforts and some of the things they mention on the paper is things they will put under way, which they can't complete in the election year, and some can, but they would have to stop different kinds of behavior to clamp down on deepfakes, and it might have them holding back their offerings in a way they may not want to do. we will have to see how drastic the measures they will take.

it's nice that they are well-intentioned. we will have to see how it plays out. >> you understand better than most, and what is it that you think ai can do that would really have the hair on your back go up? >> that's a great question, because some people have their hair on fire. the fact is that misinformation is part of our ecosystem and it's being used and abused consistently. we saw it in the last election, and it's everywhere. the real danger is the system gets flooded and people can't tell what truth is. a lot of the misinformation following the russian playbook in 2016 is basically meant to get people disgusted with the

system, and people running for office with a real message can't sell the truth. i think that's a problem this year and it's going to be a bigger and bigger problem as ai prau sraeudz the ecosystem. >> and leaders led by sam altman says please regulate us, and it's great and super scary, and it's rare you see executives do that, and some say it's a defense mechanism against

regulation? >> it's a twofer. it's both. they say we have intentions to police our systems, and we signed this paper and have other promises we are making to the public and to our customers and to those that will see our products in action, so we're going to do the right thing. we want regulations in order so everybody else has to do the same thing, and for smaller companies they may not be able to do it as well. i think they are both well-intentioned, and also this works out to their favor. >> sam altman, a big report in the last two weeks as he's off in the middle east trying to raise several trillion dollars, and that's with a "t," and given the massive needs for the ai world, and i imagine open ai specifically? >> we're not sure exactly what

that $7 trillion means. it's not coming from a single investor, and it's to fuel an ecosystem of $7 trillion to come up with an infrastructure that will be able to deliver many more chips. in sam's view we need a quantum leap in the number of chips we have. right now nvidia has their feet on the throats of all of these companies. they all have to deal with nvidia because they have the best chips. if you are training an ai system, you need these chips because they are looking at winners and losers. sam sees the middle east as a source of fund for those found raez, and guess who will be owning all of these or who will be the big investors?

it's ironic. >> advanced microdevices, you can pick up for a cheap $280 billion if you have that kind of cash lying around. would you be better off effectively buying somebody that already exists and try to build off that or building your own system and your own foundries yourself, because you think there are legacy issues? >> the second part you hit on it. why not start from scratch? the dawn of a new era, and i am not talking about sam's thinking, and so why not create the infrastructure we will want to see in ten years, in 15 years? every time we turn over everything to ai, and ai will

start making the decisions for us. >> i am thinking about facebook and google, and when you look at the legacy players in the tech universe, and then you think about ai, who do you think the winners ultimately are going to be, and who may be the losers? >> i think of the big companies we see now, there's probably going to be one which doesn't grasp ai properly. they are all in it now. they are going to fall behind. >> when you look at google, for example, which you wrote so eloquently about, and you look at where they are in the race and they came up with a new version of gemini, and some people said that's not ready for primetime yet? >> it's early in the game. google does have the horsepower and talent to be among the top competitors. i am not ruling google out. it's a long race, and google is well-armed, really, to fight

this fight. i wouldn't count them out by any means. >> where do you put zuckerberg? >> well, he thinks he wants to cut everybody else off at the knees and slow everybody down, and he's behind at the track but he has been able to pour oil and slow everybody else down, and it's a clever strategy built of necessity because he really can't compete directly with the companies. >> i want to thank you. your next book might have to be at the ufc, though, because i feel that's where all this is going. >> we will have to see. thanks a lot. >> did you see that over the weekend, by the way? >> no. i saw the twitter stuff where he was looking around -- >> that was not a deepfake. that was real.

>> he looked very uncomfortable being -- >> i thought he looked very comfortable? >> no, on the twitter, they had all kinds of funny memes. coming up, some surprising new data telling a different story than the one you might be hearing about the financial shape of consumers and their credit card balances. be detures right now continue tounr pressure on the first trading day of the week, which is only a four-day week. we'll be right back. e skin-tigh? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart! (♪♪) our therapists give their all each day.

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welcome back to "squawk." and capital one buying discover financial services in a all-stock deal. shareholders will receive shares, and after the deal closes capital one shareholders would hold 60%, and "the wall street journal" reporting capital one plans to keep the discover brand. it's one of the biggest financial deals in a long time.

and the number one issuer or under writer in america over citigroup. i wonder what folks in washington think about this, because if you think about the discover network and being able to take the visa customers and putting them on to this network and what it does for visa and mastercard? they may like it was they could say, some of the regulators, saying, hey, we have competition. >> that's the way the market is thinking. this is an old sears -- >> in the old days. at one point, part of morgan stanley and -- >> did you ever hear of the diner's club? >> never had a diners club. it's interesting to see what could happen. >> i am surprised england has -- how many customers? >> here's the question.

the hard part, the hard part is going to be for warren buffett. i said this before, warren buffett owns 3% of the company, and he has long been an advocate of american express. he would walk around with a green card. by the way, still has the green card. i don't think he has the platinum card or went up to the black card. he, of all people, could be going around with that card, and he's going to be now walking around with a discover card? and still on the board of -- >> do you have a black one? >> no, no, no. i think you have to be invited into that sort of thing. >> yeah, i would have to buy in. but i am a big fan of the platinum card. i think it's a great value play.

i know people think it's expensive, but you can get your money back, easy. >> you know, apparently, this is happening, and buffet can pay every month. >> yeah, rising consumer credit delinquencies is a major risk to a soft landing, and steve liesman joins us with new data suggesting the problem could be stabilizing. >> i think he's a black card carrier -- >> i am a platinum guy, andrew. i would love to hear the math on it. i don't use the airport lounges, but maybe i should. guys, some signs of stress earlier this year in consumer credit brought on by the higher interest rates. the latest data we are looking at from equifax suggests the credit cycle could have topped out, and the duh elinquency cyc

it's unchanged over the past three months at a level just a bit above or below, depends on the cat gore kegory, the long r average. people were right earlier this year to worry, but that's no longer the case because the data has stabilized. look at autos. they were unchanged through the final quarter of 2023, and the same is true for real estate loans and bank cards, and that is at the 2009 level during the great financial crisis. and household balance sheets remain healthy. here's the irony. the silicon valley bank collapse could be responsible for the better data today. banks across the spectrum tighten credit standards, and pulled back on limits, and

keeping the numbers from being worse than they might be. you could have some lagged effect of higher rates. then you have the normalization of student debt payments and delinquencies that has not shown up in the data. but if these numbers do top out where they are, it would mean the consumers could extend the expansion, and won't be pulling back. it will help some folks who think delinquencies might bring about faster rate cuts from the fed. i don't think we will have a situation where the fed needs to cut rates urgently because of the credit data. >> you are telling us the delinquencies are stabilizing before -- the economy never had

shown signs of slowing, steve. >> that's a good point. you had this surge earlier this year, and people were wondering, okay, are we going through the prior prepandemic levels or are we going to stabilize here. in the last three months, it has been flat as a pancake in every single category of debt, which means, you know what, if the consumer is not tapped out and if people are really concerned about, oh, there's a trillion dollars of debt, the number is not important, it's the duh lynn 81 see rate that is important, and it's the ability to service the debt. and the mortgage rates, they refinanced to, they remain low and they refinanced for long periods of time. when you look at the economic cycles, you can't divorce your look at the credit cycles. business may be going through something different right now,

which is worth watching. consumers seem to be in decent shape here. >> do they have money left from the pandemic stuff? is that gone or not? >> joe, i would like to answer that in a way that is definitive, but i cannot. if i had a buck for every-time an economists wrote they have run out of pandemic savings, i would be rich right now. it seems like there's more there than people thought. plus, as you said, people are employed and there's some saving going on, and i don't know why, joe, but everybody thinks everybody else is studpid, and am not sure that's the case. >> right. right. all right. thanks, steve. when we come back, the ceo of stellantis, the automaker to art.ev mke later in the show, we will talk to lael brainard who will be with us. we have a lot to discuss with

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shares much global automakers, stellantis, is at an all-time high as the north american market is getting in

the ev game. joining us on set with our own phil lebeau. take it away. >> i know you have questions when it comes to evs and their expansion around the world. when you look at the auto market, but not just the auto market, but the economy in the u.s. how comfortable are you? >> people want safe, clean and affordable mobility and we are here to offer that and to serve. i am quite positive about the market. i think people will continue to protect their freedom of ability, and there's no better advice than in an automobile? >> is it going to be an ev, a hybrid? the ev market is slowing down in terms of the adoption rate here in the united states. does that continue through at least the rest of the year and several years? what do you see? >> what i see is to make the ev

spark, you need to align a certificate number of stars. you need, of course, clean energy. you need to have very dense charging network people can see so they erase the anxiety, 500 miles of range, that should be enough. and you need affordability. what is at stake is affordability. that's the major star that is not totally aligned with the three other ones. >> is that the supply chain, the main issue? raw materials? >> we need to be using raw materials for the battery cells, which are not scarce. we have to double the power density of the battery cells so can you have a smaller battery with less weight and less costs. >> he's shaking his head over

there. >> we have a lot to do. we have a lot to do. i don't need anymore anxiety. you mentioned a couple kinds of anxiety. you have to understand why consumers feel this way. >> sure. >> you have to. you have to get to 500 miles. when is that going to happen? >> it's going to happen this year. >> the density of not having to worry about being able to find a charging -- at this point i would still have anxiety. i am getting anxious talking to you. >> don't do that. >> it's not good for everybody. >> it doesn't help. i think the carmakers are bringing a range that should remove that anxiety, in addition to the fact that you need with your eyes to see where the charging units are. the charging units need to come to the customer's journey without you having to look at them, when you go to the supermarket or mall --

>> we're a long ways from that happening here in the united states. >> i am either going to buy a nice car or a tesla, and that's still where we are right now. i don't want to buy an electric jeep. >> i know this year, stellantis is going to bring to the u.s. market only, eight new evs, and then by the end of the year there will be 48 ev models, which is half of the total portfolio of the company. >> consolidation within the industry. you told me out there it's coming at some point. when you look into the future, when is that? when does that happen? >> it will be triggered by a simple statement everybody will understand. we have to find a way to sell evs at the price of ices. that's quite simple. to fix the affordability problem, we need to find a way

to cost our products, and that's going to put extreme pressure on our companies. not only on the supply chain -- >> in other words, if you can't do it you are not going to survive? >> somebody will. and the guys who are ready to offer that in the world, not in the u.s., but in the world are the chinese. >> do you think there's a merger to be done with the chinese? do you think the u.s. or europeans would allow -- >> i am saying the chinese have a 30% competitive edge on their evs, so they are able to sell their products with one segment, and that's solves the profitability. >> all the governments are putting a tariff on that. >> yeah, inflation inside the bubble will make things worse rather than better. this company has seen the japanese invasion in the '70s,

and then the koreans. what i can tell you is they are able to sell their evs at the price of ices, so we need to hurry up and do our homework. of course, the governments can protect their companies with a golden share, and that's absolutely fair. this being said, if we don't fix this for the consumer, recognizing the lever is the safe economy and vulnerability. >> we have only a minute left. i want you to tell these guys what you told me outside. i said look into the crystal ball and tell me what you see in terms of consolidation. tell these guys what you see, looking down the road. was that ten years you were looking down the road? >> given the pressure on the affordability, ten years down

the road possibly around the planet there will be around five big carmakers around the world, and stellantis will be one of them. i am confident of what our people are doing. congratulations to them. >> if you look at major automakers, how many would you say we have legitimately around the world? 15? 20? >> that's too many. >> you pick the five that will survive. he says it will be stellantis. does toyota survive? does honda not survive? what happens with gm and ford and volkswagen? >> yeah, it's a mess. >> i think it's an interesting prediction. >> there will be four cars -- we already got that with the teslas. we got four and there's four colors, and i don't want to live in a world like that. >> not only will you have a lot of colors but a bunch of

different flavors -- >> listen, you better not put porsche out of business. >> why not buy a maserati -- >> they are not real anymore. >> that's an aggressive statement. >> i like the grand cherokee, by the way. you are a wrangler guy, though? >> my daughter. very soon you will have the new chrysler coming in, or the dodge -- you will not have uniformity. there will be others. >> where do the tech companies play in this? there's a view apple will show up and some of the other guys will do something crazy. do you think it's part of this, or no? >> we are on the current path which is to transform our companies, we are going to be on the right pace for those people to be not interested by our

business, because after all our business is super complex, super complex supply train, and the pricing, and it's the super complex business. capital intensive, and not always profitable. why would those giants come into the business where it's not as rewarding as the one they have today. what is their motivation? they are not coming. that's what we can see today. >> wow. >> thank you. >> my pleasure. >> fascinating. ls expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business.

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jpmorgan asset management and state street global advisers announced plans to withdraw from climate investor group, climate action 100 plus, renewing scrutiny of usng investments, for a closer look, let's bring in florida cfo, jimmy patronus, and new york city controller, brad lander. >> let's get ready to rumble! >> no way twhhese two guys are having breakfast after this.

number one, they're far away from each other, which is a good thing in this case. jimmy, i was just totally skewering brad in a fun way before i came back on camera, telling him, look, that the worm has turned! we -- it's over! it's over for deisg. let's just get back to milton friedman. let's do things based on -- everything else follows. if you run a company effectively, you'll take care of all of your different constituent groups. you don't need to virtue signal to get to that point. >> 100%, i totally believe you look -- brad, you're good for the florida business model. right now, the billions of dollars that are coming into florida, 1,200 people a day are fleeing your state. and you can't turn around the problems of new york city or the state of new york overnight. at least our problems.

>> you can just look outside, the city is doing fantastic, and the challenge we have is so many people want to come and live here. that's a great problem to have. but we both have the challenge, as coastal places that like, the seas are rising, and temperatures are warming, and you can pretend it away for a few minutes or maybe a few days, but you can't pretend it away for years. so, like, i'm charged with investing the retirement funds of new yorkers that are going to expect those funds to be fthere in a couple of decades. and real estate will be underwater in a couple of decades. and if you just choose to ignore long-term problems, try to pretend them away, sure, maybe you'll persuade the world's largest asset managers to walk away from their climate commitment, but it doesn't change the fact that climate risk is financial risk, and you're going to suffer the consequences. unfortunately, we are, too. that's why we're going to push back. >> jimmy, i mean, i wouldn't even know where to start. i'll let you start with it.

but we know since -- wait a minute. since grant was president, since grant was president, the seas have risen 8 inches. by 2100, i think we've gone from a millimeter a year to 2 -- and since the last ice age, most of the sea level rise was thousands of years ago. >> this is fantastic, you're just proving my point. >> go ahead and google sea level rise. you're talking about 11 inches -- >> by caving to climate deniers. that's what's happening. >> i would say -- i would say the term "denier" is something more serious than this issue. >> you're approving my point! >> look, brad, look, you're the last guy on the esg "titanic." the >> jimmy, you're a climate denier, too, right? and last week, you're the world's largest financial companies caved to climate deniers. that's just what happened. >> look, the climate issues are real, but they're not man-made,

okay? mother nature has her way of doing this on her own. look, all you've been doing is catering to these limousine liberals, by their esg policies that they demanded. and now that check has bounced. you know what, you've got pensioners that spend their checks in florida -- >> -- the sea didn't keep rising and we didn't get more frequent disasters, this would be a great story you're telling. but your viewers have to look with their own eyes. everywhere, you see more wildfires, more floods, the -- >> the only reason it's so great in new york, there are no people there anymore. they're moving out. your taxes are too high. >> -- the next thing you're saying, everyone wants to come here. we have tens of thousands of people arriving. >> explain to me why it's almost impossible to get a home in florida near the water these days? >> the insurance problem is not just a florida problem, it's a global problem. >> look, i've told you -- >> is it a globe you're living on?

>> we live on the same globe, we can't keep doing something about it. >> why would that be? >> it seems like you can. >> yes, you can get it inland and you can get it on the coast. i assure you. >> wherever we've had warren buffett on, he's told you that the incidence of hurricanes has not changed one iota -- >> tell the insurance companies. >> you don't they insurance companies combine with government regulation can screw up whether you can get insurance or not and flood insurance. >> 2023 was the hottest summer -- >> 500ths of a degree. do you think we can measure global temperature by hundredths of a degree accurately? >> if we pay attention to long-term trends, we will have a hard time guaranteeing retirement security or just planetary security. >> i don't know, but when i wake up in the morning, i'm sitting on about $12 billion in debt and and just the city of new york is sitting on $95 billion of debt. g urlfutthat hole. >> oh, my goodness.

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meanwhile, key retail results are out today. we'll bring you the latest numbers from walmart and home de depot. and two companies putting a $35 billion deal on their credit cards, sort of. it's a the stock deal. details are straight ahead on capital one's acquisition of discover, as the final 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 along with joe kernan. becky's got the day off. u.s. equity futures looking down, off about 135 points on the dow. the nasdaq off about 75 points. let's also show you treasury yields. the ten-year note sitting just at about -- you can see it there, 4.275, the two-year at

4.601. joseph kernan? >> yes? yes? i like all of those words, don't you? like heretics -- >> that was a battle. >> that was. but that's usually refined to religion. don't ex-communicate me from the church of scientology. where do i have to go? >> i don't know. >> let's get -- i would say the word "denier" for a more serious thing. dom has a look at this morning's biggest pre-market movers. what's going on, dom? what'd you do this weekend? you watch the all-star game? >> i did see some of it. the skills competition, i thought that steph curry, you know, sabrina anesku was amazing. i just got back from a week in the bahamas on vacation, but anyways. we'll start with a mix of both

more a dow component, that's retail giant walmart. shares of america's biggest traditional retailer, and biggest private sector employer, they're higher by roughly 2.75%, just around 200,000 shares of volume. it reported better-than-expected quarterly profits and revenues, driven in part by growth in global ecommerce, and advertising revenues. it also boosted its dividend payment by 9%. now, separately, walmart also announced it's going to pay $2.3 billion to acquire connected television maker vizio in an effort to bolster that advertising business. that works out to be about $11. 50 per vizio share. so walmart, up 2.5% on that, vizio shares are up about 15%. then there's another dow component and retail earnings report out this morning. it's home depot. shares of america's biggest home improvement retailer are down by just about 2%, roughly 35,000 shares of volume. it did beat profit, it did beat revenue estimates, but it's said that full-year sales growth would be roughly 1%, which was shy of the 1.6% consensus

estimate. cfo richard macphail did note that falling lumber prices and rising interest rates took a toll on home depot's business. and we'll end on the merger monday story that became a takeover tuesday one, that's capital one financial, agreeing to buy discover financial in an all-stock deal worth roughl ly 5 billion. it creates the biggest credit card issuer by loan volume. capital one plans to keep that discover brand after the deal is done. it always uses both visa and mastercard's payment networks. the new company will be 60% owned by capital one shareholders and 40% by discover, andrew. so a big deal there for discover, and capital one. you can see discover shares up 14%. i'll send things back over to you. >> okay, thanks for that. among today's top business stories, china announcing the biggest ever cut in its benchmark mortgage rate. the five-year loan prime rate,

authorities in the country trying to stabilize a struggling market analysis. shares of barclays jumping. the bank announcing a big strategic overhaul, including plans to cut 2 billion pounds worth of cost and return 10 billion pounds to shareholders over the next few years. barclays will be shaking up its operating divisions. in the meantime, we're also watching shares to have gaming giant nintendo. those shares falling over the long weekend, after reports suggested that the launch of nintendo's next game system could be delayed. in the meantime, the white house announcing -- oh -- >> we can do that. and then we'll talk a little bit and -- >> i thought we were going to talk about the white house, but we can do that in just a minute. i was told to stop, stop, stop, stop! the largest award yet from president biden's chips and science act, global foundries is going to be receiving $1.5 billion to expand production in new york and vermont. the company saying that the money will help triple capacity

over the next ten years, and the government is hiyping that potential to create thousands of jobs. joining me is lael brainerd. it's nice to see you. there's a lot to talk about this morning. the chips piece of this is just one part of it. how big a piece of it and how much do you think this is going to change the dynamic with which we have manufacturing in this country? we're seeing an incredible surge in manufacturing facilities all over the country and today's announcement under the chips and science act of a $1.5 billion grant that will help to catalyze $12.5 billion in private sector investment, malta, new york, a new fab, and really important chip production, the kinds of chips that go into cars is and led to those massive shortages

during the pandemic, that capacity is now moving here in the u.s. but also important for satellite and space kinds of applications that are important to our national security. and of course, a big jobs winner in upstate new york and also. >> how long is it going to take no become chip independent, and what do you think that means? >> so we already, as you know, an incredible downstream industry here that means that there are a huge number of designers and companies that use leading edge chips as well as current chip models. and so moving that leading edge production here, moving some of the chips of the type that

global foundries is uniquely capable of doing will really catalyze the whole ecosystem we've also got investments in advanced packaging, in innovation, as you know. we just announced a big innovation funding package two weeks ago. so the whole ecosystem is really getting an enormous boost from chips and science. >> lael, i want to read you a headline from politico, and this becomes a political problem, potentially, for the president, depending on how you think about michigan as a swing state. the headline, biden has a high-tech problem in michigan. biden sold a tax break by pumping up a michigan microchip supplier, in this case, the company was called hemlock, and left the company out in the cold. here you are promoting what's going to happen in new york and vermont, but this other company, which is in michigan, a state that i imagine you care deeply

about when it comes to the election, has a big, big problem. what do you say that? >> you know, we -- this is the global foundries announcement that the white house and the commerce department, leadership schumer have all been working on today, is the largest announcement, but it is one of many announcements, it's the largest announcement so far, but i expect to see a lot more activity in chips and science going forward. so i think, you know, you're going to see a lot of excitement all around the country with some of our -- >> what about this company, hem locke, specifically, this was a company that was cited in a speech that the president gave from the white house's south lawn at one point. >> yeah, as i said, these announcements are ongoing. so i anticipate that we will see additional announcements, and so i would stay tuned for that, but i think what we're seeing under chips and science is

announcements that are affecting the workforce and innovation and construction all over the country. so i think this is an ongoing program, so stay tuned! >> lael, in terms of the economic forecast, there was a sense, almost -- and maybe it was too magical. a sense inflation really was coming down at this rapid, rapid rate. and recently, it feels like that is not what is happening. what do you think is happening? >> yeah, i would say that you have to look at the broader data picture, and if you look at the pce measure of inflation, which is what the federal reserve really tracks, that's been down in the 2% range over the last six months, core and headline. so i think it's really important always to step back from an individual data point and look at the data picture. the data picture is strong growth, very strong employment,

but inflation trending down, coming down to its pre-pandemic benchmark. the broader picture, i think, is encouraging, but i'll say one thing, which is, we've got a lot of work still to do. some prices are still too high. >> let me ask you about consolidation, there was a big headline this morning, capital one, to merge with discover, financial. this administration, the biden administration has been particularly vocal, if not going to the courts to block a number of major deals. this would be the largest deal in the financial space in a long time. what are your initial thoughts. >> so i can't speak to any particular cases, but what i will say is the president is very committed to restoring competition across the landscape in the united states. for too long, we saw a lot of consolidation, which did not have benefits, but rather, came

at some cost. and so we've really seen a reinvigoration of the commitment to competition, which levels the playing field for small businesses. >> could you see a moment where a deal creates more competition. i could make a counterintuitive argument that the consolidation between a capital one and discover actually creates a genuine competitor, insofar as it was not before, to visa and mastercard, for example. >> you know, i can't again -- i don't want to speak to this particular case, but there are sometimes cases where that can, indeed, happen. what i would say, we believe it's really important to have a diversity of different business models and sizes across the commercial landscape and traditionally have wanted to make sure that playing field is level and that smaller financial

institutions also have a real shot e. >> it's good to bring manufacturing back, obviously. but do we consider who we actually try to help in terms of the subsidies? this global founders, obviously, was wholly owned by the sovereign wealth fund of the uae until a couple of years ago. i think they're still 85% owners. is that okay? is it the best deal we can get to bring the chips here, or is there a way to, i don't know, maybe, was there a competing bid from any other totally u.s.-based company? i mean, it's based in the u.s. now, but it's still 85% owned by the sovereign wealth fund and the uae. >> yeah, so, the commerce department works along with other agencies to do a very rigorous review across all dimensions. but as you know, national security is central to the chips and science act.

a really important part of the motivation. so they've taken into account all of those considerations. and i will say that when you look at the case for global foundries, it really is across the board, it's really important in terms of creating good middle class jobs in malta, new york, as well as in vermont. 10,000 jobs. it's really strong on national security, where the chips that they fabricate are important in areas like satellites and space systems. and, of course, critical for items like cars with supplies to general motors among others. the very chips that led to all of those increases in wait times and price increases during the pandemic, because we were overreliant on foreign supplies. >> lael, want to nathank you fo joining us today.

look forward to seeing you again very, very soon. >> thank you. coming up, a special interview with an investor pushing for change al rail road operator northern southern. ancora's jim -- an-core-a? we'll get it, jim chadwick, i can say his name, proposing his unveiled management strategy today. we'll hear from him after a break. "squawk box" will be right back. i was so inspired the other day when i heard the quote from dr. martin luther king, everybody can be great, because anybody can serve. you only need a heart full of grace, a soul generated by love. let's make 2024 a great year in service to others. let your light shine before man so your good works will be known and your father in heaven will be loved. that's the only way we can receive anestealetn ern ruron investment. what does it mean t?

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all right. let's kick it over to leslie picker. she's bringing us a special interview on an activist campaign against railroad operator, norfolk southern. there's only two of us today,

leslie. we welcome your participation. >> thank you, joe, i appreciate that. and i appreciate your time with james chadwick for a cnbc exclusive. ancora has taken an aggressive stance and releasing its management strategy this morning, which includes changes in the ceo spot and the board. good morning, mr. chadwick. so you've got a deck that you plan to circulate to investors. you've got a website here, a majority of the slate you're nominating eight directors, and we'll have some full screens that show who those directors are, and you are recommending jim barber, the former coo of u.p.s., as the ceo of norfolk southern. and you put a $420 price target, that's a pretty significant upside, more than two-thirds of where the shares are currently trading. so why this slate, why a change in management, and why do you

think they can afeffectuate the value creation that gets to $420 a share for norfolk? >> thanks for having me. as an ohio-based manager, we're deeply invested in this company. it's beyond just dollars and scents. for us, this is something in our own backyard, and i'm referring to the east palestine derailment last year. just to step back at 30,000 feet, what we want to outline here and what we believe is outlined in the deck is the case for change at norfolk southern and why it's strong. why we think we can offer shareholders an unmatched value proposition here. and i think there are some key points. norfolk southern is the worst performing operate we are and that's despite having an exceptional workforce, a great customer base. all that would be needed to be a

top-performing railroad. but unfortunately, the company has been mismanaged and the board has made some poor decisions. secondly, when you look back in 2022, the company had the opportunity to bring in a real operator to turn around the business, and instead they evaluated a company insider with no real acumen that has never generated growth and third, the quebss of poor execution and weak management were epitomized by the east palestine derailment. and even to this day, since this time, the company has had continued accidents, the tragic death of an engineered in the last couple of weeks and multiple derailments in the past 30 days. first, look at the slate we put together, and we think all of them are exceptionally strong,

and that includes governor john kasich. regulatory experts, rail experts, the management team, we think that we're proposing here is outstanding. former ceo at ups, and one of the highest regarded rail operators in the country. combinie ing those two with jam as the coo candidate, but combining those two and marrying the perspectives between those individuals, marrying u.p.s. best practices with rail principles, we think that we can drive significant value to the company. >> of course, activism in railroads is a well-traveled line, but two of the high-profile success stories from a standpoint, they involved hunter harrison, a renowned industry vet, known for really inventing and process

stilltizing. but it's not the best in terms of safety standards. it lacks the same safety rigor, and it can result in sizable layoffs. if you look at the inefficients that you're trying to solve for, how do you square these things as we reached the one-year anniversary of the east palestine derailment? >> for openers, the east palestine derailment wasn't the result of psr. what norfolk southern runs today and the way that the railroad is managed, poor safety in my opinion is the function of poor leadership. so, i think when you're looking back, historically, at what has happened with the other rails that have implemented psr strategies, we think there's been some very notable successes. i think the most recent of which, you know, according to hunter, with csx in 2017. i think part of the challenge there, as he went through

implementing that strategy was the timeline that he was pushing for was trying to make it happen very fast. and i think part of it had to do with his health at that time. when i look at what we're trying to do here, you know, and we see the presentation, this is not psr in the true sense of the word. you know, we look at it as we build on the principles of scheduled railroading, but really, as we've called it, a scheduled network or a network of the future, which we plan to detail a lot more about that plan in coming weeks. but effectively, it's taking the core principles of scheduled railroading, but layering on top of those other components, and that's where i mentioned barbara's network background, marrying the operating and marketing functions of a company, and focused on the merchandise and what you're actually pushing through on your network. but i am excited about the

opportunity to share mustore of those detail s as we go forward. >> what's currently your sticking point with the company at this stage, based on their statements, it seems like they've been engage ing in discussions, so where is the line in the sand at each side at this point that would preclude some sort of a settlement? >> it's alan shaw, is what i would say at this point. the company has been, what i would describe as blindly loyal to him. the company is the worst performing railroad. it's pretty much worse on every operating metric we can talk about since he's taken over as ceo. i think the view on their side is one of time and disaster speaks for itself. and there has to be accountability. but when you look at what's the sticking point, this company has an early nominating window. we had nominated in the last week of november, so it's been over 2 1/2 months of engagement

with the company. we have engaged with them frequently and had quite a bit of communication, butthere really has been no movement, either on the alan shaw front or on a real serious offer in terms of reconstituting the board. and so, both of those things we believe are necessary here, i think, to drive the type of value that the shareholders deserve. >> it should be worth noting, i reached out to norfolk southern representatives first thing this morning to let them know that you would be on and i haven't immediately heard back, but hopefully we'll get a comment from them, jim chadwick, president of ancora alternatives, appreciate your time this morning. andrew, back to you. >> okay, thank you for that. meantime, when we come back, sports streaming in focus. we'll hear why it's so important for warner brothers discovery, but also why the company is having some significant challenges as well. we'll talk about it when we research.

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well, this weekend, the nba all-star game aired on tbs, tnt, and streaming service max. it was a big event for parent warner brothers discovery. for a closer look at the importance of sports to that company, let's bring in our own julia boorstin of. a lot of three-pointers. >> a lot of points. record number of points. but we are, joe, still waiting on sunday's all-star game numbers, but saturday night's events including the dunk contest did show strong viewership. saturday night viewers rebounded 31% from last year's low. that's the largest audience for the event since 2020, according to nielsen fast nationals. this is a good sign of a strong weekend, especially after last year's all-star game drew its lowest ratings on record. sports rights like the nba are a key piece of warner brothers' discovery lineup. but so far, the nba isn't really helping its streaming viewership. ubs and nielsen reports that

since sports were added to max in october, philosophy increase in max's percentage of total tv viewership. this all comes ahead of the next bah's exclusive 45-day negotiating window with warner brothers discovery, and espn abc. that begins on march 9th. now, sports loomed large for warner brothers discovery, in part because of its lack of nfl rights, which is considered a key factor that could actually end up helping drive it to do a deal or some sort of m&a. and now the company is seen as having the most at stake in the streaming sports joint venture, that it's doing with disney and fox. morgan stanley writing, that for warner brothers discovery, the joint venture is perhaps most controversial in that the majority of warner brothers discovery monthly are tied to networks, not in that bundle. so, warner brothers' discovery has the most to lose if the bundle ends up driving cord cutting. so we'll be watching for that question to come up when the

media giant reports its earnings, which are coming up friday morning. joe? >> this is going to get interesting right up until we see what the name is and i never really understood that it could be equal. it seems like disney, espn is so much more to offer. and i understand how important it is to warner brothers discovery. and you know what -- remember when peacock had the exclusive rights to that -- you had to buy peacock premium, julia. i don't see the same thing happening. >> you're referring to the wild card games. yes, you had to had peacock, if you were going to have the wild card games. there are so many unknowns still. we don't know exactly when the service is going to launch. we assume it will launch before the fall football season, but specifically, we don't know how much it's going to cost. and that question of cost could really determine whether or not it drives cord cutting, or it's just seen as a new alternative for cord nevers or people who have already cut the cord.

>> we haven't come up with a decent name, either. i might not do the deal, because i don't think there's a decent name for it. i might just say, we can't come up with a good name. let's just not do this. you got -- have you come up with anything, julia? >> i don't have a name. i have a feeling it will have something to do with max or plus. that's the joke in the streaming business. everything is a plus or a max. >> everything's a plus or a max. i don't know. >> it needs to have its own name! >> espn -- espn's -- >> it can't be espn, because they're going to build their own. >> i know. i know. we've tried to come up with a name and we've been unsuccessful. maybe offer some money we can get more creative. it's going to cost a lot. >> julia, thank you. >> "squawk box" will be right back. old school hard work meets bold new thinking. ( ♪♪ ) partnering to unlock new ideas, to create new legacies, to transform a company, industry,

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welcome back to "squawk box." today, there is a new front in the battle of unions versus starbucks. this one could lead all the way potentially to the board room. kate rogers joins us now with more on that. good morning. >> good morning, andrew. cnbc has viewed a copy of an investor presentation from the strategic organizing center, a coalition of unions accusing the company's board of implementing, quote, one of the most glaring and destructive examples of human capital mismanagement in modern u.s. history. in response to the union movement. the coalition is pushing to replace three members of the starbucks board, claiming it's diminished shareholder returns, and isolated customers. the soc commissioned a nielsen

poll of recent starbucks customers. two-thirds responding that they would be less likely to visit starbucks if the company broke federal labor law. this compares to 54%, who said that they would be less likely to visit stores in the face of price increases. the presentation says the company has underperformed its peers, down 6% versus median gains of 10.6%, for a cohort, including chipotle and mcdonald's, including those since unionization efforts began through november of 2023, when the soc launched its campaign. using a different cohort and time frame, starbucks argued that it outperforms a broader peer group, which includes dominos, restaurant brands international, wendy's and others by five percentage points over the last three years. since the company announced its rein reinvention, the stock is up 32%, outpacing its peer group and the s&p. it also invested in $9 billion in partners over the last three years. the company adding in a

statement, starbucks' board is stocked with world-class business leaders, that bring the qualifications and expertise directly relevant to drive our current operations and future success. so we will certainly be watching this one, andrew. back over to you. >> thank you for that. in the meantime, how large a stake do we know does the soc group actually have? >> it's quite small, andrew. it's 162 shares, so just over about $15,000, but the soc says it has unions who have millions of members with hundreds of billions of dollars invested in pension plans, with substantial starbucks holdings, so they have the right to put this forth and we'll see what investors say. >> kate, thank you. >> thank you. >> i think there's an argument made to be -- i'm all for workers, but, look -- you can't be making proposals if you own hardly any shares in the company. the whole thing is crazy. >> it's not stopping anyone. >> i know! >> you can do it with one share. >> i know, but it's turned the whole thing into a political morass as opposed to a business.

>> right. see walmart? >> i did see walmart. stock is up. >> it's almost half a trillion dollars. very close. we're going to talk about it now, at its all-time high, or indicated there, anyway. let's take a look. the big retail earnings report this morning, walmart and home depot. walmart topped estimates, earnings and revenue expectations, it's up almost 4.5%. it says here the guidance was a little bit light. no one's looking at that. it also announced it's buying tv maker vizio for $2.3 billion, that's cash. home depot also beat quarterly estimates. joining us now, sue shadida. the charts look a little bit similar, even though home depot is down today. what happened in the last quarter to both the results, and it seems like walmart, much better and it was down in the

150s, zpst back to 177, which would be an all-time high if we can look at that. >> there are two different stories. when you look at the sub-sectors of walmart, there are categories, like, for instance, health and wellness, which continue to do really, really well. and when you look at some of the subcategories that have been experienced inflation in the last year, non-precipitation drugs, these otc drugs, have grown almost 10% year over year from a pricing standpoint. so, walmart is able to really be able to take advantage of that, it has been -- it had been with grocery, prior that, grocery prices and food has certainly gone down. so the consumer is happier, but as you get into something like cold season, and now allergy season, that's going to be something that's going to be absolutely helping their top line and their bottom line numbers. home depot, on the other hand, is really an interest rate story.

when people aren't buying homes, they're not renovating. they don't have the big projects they had during the pandemic, those numbers are going to be softer. and that's absolutely what we've seen with home depot. and no matter how home depot is doing, it seems like lowe's is doing absolutely worse. that's absolutely more of an industry issue and semconsumers just not spending. >> it's interesting. we're looking at travel, it really doesn't show it very well there. but what happened back in november to walmart? was that a macro story that knocked the is stock down? and it's made back all of that weakness and is now at an all-time high. what happened back then? what were we thinking? >> i think probably there were some concerns with what -- the truth is that there's all kinds of speculation around whether or not interest rates are going to go up or down, what the

inflation numbers are going to be, and what some of these larger consumer trends are. that consumer story is one that continues to dog everybody in the retail industry, because the consumer confidence level is still really, really weak. i maintain that it's highly correlated to a consumer's political stance, because a number of surveys had demonstrated exactly that, but for what whatever reason, shoppers aren't that confident, and that's something certainly that everybody worries about, whether it's a walmart or an amazon, and the concern is that ni they'll pull back on their holiday spending, but what we saw was something very much to the contrary, that holiday spending especially for these large multi-category mass merchants has been really str strong. >> and what's your -- do you

have a price target? do you like walmart a lot more than home depot. >> i'm a market research analyst, so i don't have a price target, but i absolutely think walmart is in a great place. this is a company that's been amazingly well run for a long time, and it is a company, regardless of the economic outlook, it does well. it does when when the economy is poor, it does well when the economy is strong, because customers have more money and they're happy to kind of spend at a multi-category retailer that has all of their needs in one place. so i think that walmart is much, much better positioned than home depot, which is more -- they are -- they're more correlated to economic circumstances, whether or not interest rates are high, they're very highly

correlated to whether or not people are buying homes. and right now that's particularly soft. >> very good. sue sharida, thank you. we didn't really giving a kudos to doug today. >> never been at levels like this in industry but shareholders have been well served to go along the ride with doug. >> coming up, all about the fed and what the central bank is inighing ahead of its next meetg. don't go anywhere. squawk box will be right back. is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues?

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you! your business bank account with quickbooks money now earns 5% apy. (♪♪) that's how you business differently. intuit quickbooks. welcome back to "squawk box." fed minutes due out tomorrow from the central bank's last meeting. cpi last week slowing and showing -- inflation rising more than expected in january. joining us right now for more on the fed and the economy, richard fisher, former dallas fed president, barclays senior adviser, cnbc contributor. we talked to lael brainerd about this earlier today. there was the sort of sense, richard, and i remember last time you were sitting here in person, we talked about where the economy was.

it felt like an "a," i think you said. but the question is -- >> a plus. >> but it's not coming down as much as some people had anticipated, is it really an anticipated? is it really an "a". >> it is moving in the right direction. we'll have some bumps along the way. the expansion continues, even into slowing. the unemployment numbers are very, very low historically. as we just had a discussion from the previous person you had on, consumers have spruced, even though they're moving down the price ladder. i think there's no need, i think the bottom line here is, there's no need for them to do anything in march, march 18 and 19 when they meet. and the question is, do they do anything -- remember, the last day of april, first day of may? we'll see, but what we are going to get, andrew, is a sense of the dot plot, as it's called, the sap, after the march meeting, and i think that's what i would be paying attention to and how they express themselves

after this next meeting. >> and how do they expect themselves to express themselves at the end of this meeting? >> i think they will continue to reiterate the words "sustainable," and if they can do that, that'll just send a signal to the market. we've gone through this silly period with market expectations, six cuts this year. so much of that is just wishful thinking, in my view. the facte fairly well. they've front-loaded more of what they're trying to refinance. a third of the u.s. government debt will be refinanced this year. it's a big number, 10.1 trillion, i believe. so there are these different cross-currents here. and i think the fed is not the only thing you should be watching here. you should be watching -- >> on -- let me ask you about

the financing. i don't know if you remember when stan druckenmiller made the argument that essentially the treasury department needed previously, i think it's hard to do now, to take advantage of lower rates. are you a believer that the government should have been more aggressively thinking taken advantage in lower rates. are you a believer that the government should have been more aggressively thinking about how to -- >> it wasn't just stan. janet yellen herself said go big when rates were nil. remember, the cost to carry now for the u.s. government has doubled and will continue along that path with the balance of risk being for higher rates, not lower rates, particularly as you move out the yield curve. so, yes, he was right. janet yellen, let's give her some credit. go big. guess what? the dealers will not accept 50-year paper which everybody was suggesting, certainly not sentry bonds. we should have issued more when

rates were -- >> there are people inside the treasury department who say this is a ridiculous argument because while the market would not have -- the market wants consistent offering effectively, and the second you say i'm selling this number of bonds at this price -- by the way, we've already done that a little bit, that might ultimately impact the price itself. >> well, that's an argument i disagree with. we had an opportunity to do two things, issue a large amount when money was near free, the interest rate was about 2%, and we had the opportunity to go very, very long which several other governments around the world have done, several universities in the united states have done, several cities have done, even washington, d.c. has done. so we missed that opportunity. that was then, this is now. we'll see how the auction schedule proceeds. remember these are big numbers.

the question is can the dealers and the market digest all this as the fed is divesting its balance sheet. >> the other big headline this morning, this capital one/discover deal. a lot of people thinking this is sort of a natural combination but thought maybe regulators wouldn't approve a deal of this magnitude. >> i don't have a view on it. the banks obviously like to be on the credit card side. so i don't have a view of this transaction. >> i didn't know with your bar barclay's hat on -- there's an argument that this is good for competition, that discover has not been a real player in the past couple years at minimum, and potential, if you start to funnel all of those capital one customers, at least some of them onto the rails that are discover, maybe changes the dynamic. i don't know. >> i think it's good for more competition and does change the dynamic.

we'll see how effective they are withha tt property. >> richard fisher, it's always good to see your perspective and insights on everything. thank you, sir. >> thanks so much, guys. >> "squawk" coming right back after this.

joining us on the markets and specific stocks. j.j. kinahan ceo of ig north america, all-time high. >> people like walmart, but i wouldn't say that it's a stock that everybody sort of loads up on. the most interesting stock to me right now is actually apple. the reason i say that is, if you think about the buy the bit mentality a couple years ago, apple was the first stock people started with. what's happening now is apple is being left a little bit by the wayside. it was usually apple and microsoft everybody started with. people are still going to microsoft in times of trouble. apple right now we're seeing more bearish activity than bullish activity which is really interesting to me. this is normally a stock, when we had the selloff earlier last week, people would rush into that stock, and it's been quite the opposite. >> i don't know about the

goggles -- microsoft has -- if you had to pick someone that ai is going to help, i'd probably say microsoft. >> certainly in that space you'd have to say microsoft. you've got the chip makers going absolutely crazy. >> what's wrong with apple fundamentally? >> nothing is wrong -- >> what do you attribute it to, the relative underperformance? >> for apple? i attribute it to -- you think about their products. i don't know that they've necessarily come out with anything brand new. it seems to be improvements of other things except perhaps the goggles. so i think that that's -- there's not that excitement around apple. if you think of apple three, five years ago, oh, my god i have to own an apple product. i don't necessarily see that. >> is this a problem for tech? >> i don't think so because you have other companies stepping in. >> ai. >> ai. the craziest stock is mci, you

look at what that stock is doing -- if people are going to go trade -- great, i love volatility, being an options trader more than anybody in the world. however, that stock right now has an implied move for this week of $134 between now and friday. >> that's not what we're looking at. you said tsmc, right? >> no. it's got an implied move of $134. a lot of people are trading it. again, volatility is great in many cases, but you have an $800 stock with a move that big. so basically you're talking about rough back of the napkin math, 15 percentish. i don't know that most people are ready to take that sort of risk. it's something that, again, you have to be careful of. >> when we had the markets break

their streak last week, not starting out good this week, did the inflation data cast a paul on regional investors? >> i don't think it did necessarily. you saw what the market did after the selloff. we came right back. i think people expected at some point we'd have a little bit of a breath, if you will -- when you're up 15 out of 16 weeks now, that's absolutely unbelievable. i think people are waiting for one shoe to sort of drop a little bit. what's going to be more interesting, as you brought up earlier in the conversation, joe, do we start to see more of these tech stocks have a little bit of issue. if we have that, that's going to be the thing that breaks people's confidence, so to speak. since we're through earnings for most of them and we're going forward, i don't know what it will be that will break that confidence. >> are investors overly bullish now? >> what's interesting, i don't think investors are overly bullish. we talked that the market is a

bit frothy, et cetera. what you're not seeing is individual investors going out and just, i have to be in, all in. there's no fomo at the moment. that's really healthy for the market. >> you maeld it in. good to have you in. that's hallowed ground. >> i feel honored to be here, thanks, guys. >> the final check of the markets. we are set up for some downward pressure right at the start here, but not as bad as it was earlier. make sure you join us tomorrow. "squawk on the street" is coming up right now. good tuesday morning and welcome to "squawk on the street." i'm scott walker with jim cramer at post 9 of the new york stock exchange. carl and david have the morning off today. let's take a look at futures this morning. do have some earnings to get through. we'll open negative if we opened right now, of course. s&p would be down by about 18, dow would be down trip digits. we'll get to a couple dow stroke