from the report, it's thursday, january 28th, 2021, and "squawk box" begins right now. >> good morning, everybody welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at the u.s. equity futures yesterday was a pretty interesting day, and by interesting i mean down. if you were watching what happened, the dow was down by 2% s&p down by 2 1/2%, and the nasdaq was big loser down by 2.6% dow was down by about 633 points, and these are pretty significant moves. in fact, both the dow and s&p have given back all their gains for this very young year still the month of january, but we've seen significant gains through the course of the year, gave them back for the dow and nasdaq we're looking at red arrows once again. dow futures indicated down by

53 s&p off by 14, and the nasdaq looks like it was set to trade down by about 141 points this morning. let's take a look at what was happening with the treasury market by the way, the losses that we saw yesterday on the top line, nothing compared to what you had seen going through with the big stocks we're going to talk about those in a moment. quickly you'll see that the ten-year note is still hanging in above 1%. barely, but still above 1% for now. andrew. >> thanks, becky let's start this week and talk about some of the big stories. stocks, of course, the biggest gamestop right now can't stop talking about it. as joe just mentioned, this was a stock that had dropped in overnight trading after that reddit group that had been hyping it briefly went private the moderators said they were unable to ensure the content property after the discord banned the group, wall street bets from its servers. discord said the group continued to allow hateful and

discriminatory content after repeated warnings. the moderators say if you gather 250,000 people in one spot, someone is going to say something that makes you look bad. discord saying that they did not ban the group over either financial manipulation or anything of that sort. you're looking at the stock now at $484.94 and it's just, i'm speechless, and i remain speechless, and it's hard to understand. in an otherwise down market, so take it for what it is and there's something remarkable about watching the little guy beat the big guy, sure but that assumes the game is over, and it's not clear that the game is even remotely over. a look at other big movers that have been hyped on reddit, you're looking right there at a full screen of them, blackberry is at $24. it's now down a little bit amc entertainment, we have

talked a lot about that. getting confused in some cases with amc networks, yesterday for a brief period bed, bath and beyond, which had been hyped and pushed up nokia, down 50%. it had been pushed up across the board. we have a huge lineup to cover what we're calling game stop mania, and the potential shift on wall street about power, what it means, what it says, what regulators may or may not do reddit cofounder, alexis ohanian is going to join us in an extended interview, and he has thoughts about what's happening in the community, and we'll talk the regulatory implications, jay clayton is joining us, we're going to talk about the social movement aspect with mike nov novogratz, and mark cuban says he loves what's going on with wall street bet reddit, a lot of debate and conversation this morning, joe >> crazy

crazy twitter commentary i only got a little. you probably got a lot some of that stuff. >> i got a lot >> would you characterize some of that as hateful >> sure. you know. >> i read the weirdest stuff you guys usually get your advice from the yellow stone club i'm like what the are you talking about. >> i saw that. >> i realized that's some hplac where hedge fund guys go it's about all of these people that are just giving it to the man by bidding gamestop up to $40 billion of market cap. that's the way to do it, but they made some money, andrew, and they're writing in, you know, i paid my mortgage, and i bought a new car, boomer how's your 3% ira doing. okay >> i like what boomer, boomer

doesn't mean baby boomer, boomer means wall street establishment. >> it does mean baby boomer. i see suits all over the place everybody's calling everybody a suit, hey, suit, we're killing you suits. >> there's a fair argument that's being made here >> i don't like hedge funds either it's satisfying to see that. >> the market shouldn't be just for professional elites. truth a lot of what we do every day is try to democratize what the markets are, and allow so many people to participate the question and it's hard to say allowed because it effectively, you're almost saying, you know, that people are being stupid on the other end of this, and there's a lot of people who may be stupid on the other end of this who are making a lot of money right this second the question is whether at the end of the day, when the music stops, who's holding the bag

>> right >> and my worry and i think our responsibility is to talk about those things. >> nobody thinks gamestop is worth $40 billion. it's a vehicle to squeeze the shorts it's just a big huge shorts. >> everybody likes seeing the hedge funds get it nobody is going to cry for them. what concerns me is watching guys like chamath send, you know, the masses into this, and you know, what they have done has been kind of funny to watch at this point, but you don't think gamestop is worth this, and i don't think when chamath got out of his bet yesterday, when he sold his gamestop shares, my concern is who he sold them to and how long they stay in it nobody is going to argue gamestop is worth it, including the gamestop executives. >> makes me worry that tesla was the first short squeeze that was gamd samed. >> elon musk took pleasure. >> makes you question valuations everywhere as mohammed pointed out, guys who need to liquidate, because

they're losing their collective asses, these shutters are sort of, i don't know whether they're a preshock to something bigger about the overall market, and it all comes back to the fed. none of this is possible without the fed, and it makes you just wonder about everything. >> i would feel better if chamath and some of the guys wh were telling retail investors to buy the stocks, i would feel better if they stayed in these stocks, let them ride it out it's not going to be a big deal for them to lose a few hundred thousands dollars there. >> when they rush for the exit, that's going to be what andrew is talking about, and there's something about sticking up for the little guy, not if you're greasing their skids to bankruptcy when all blows up that's not helping the little guy, is it >> and the other question, though, i am hearing that some -- there are professional investors as you might imagine who are jumping on the train,

not because they believe in the stock, but they're trying to jump on the momentum train when it is over, do the speculators blame themselves when the stock comes down, it's going to it's impossible to believe it doesn't. i give you my fairy tale ending. i have a fairy tale ending my fairy tale ending is that the company issues more shares they raise billions of dollars they take those billions of dollars and somehow transform themselves into something that they're not today and magically, fantasy land, they dgo from bein netflix dvd by mail, to netflix streaming service and gaming land. >> the chewy guy got this all started i think with that hope, and how do you describe the hope for tesla? describe that as replacing every single internal combustion engine in the world with cars charged up with solar panels.

>> tesla is down 5.8%. their earnings weren't that bad. >> they made $700 billion for the year, and they're worth 815 billion, that might have something to do with it. >> i think it has to do with the idea that people are getting nervous and realizing some of the momentum trades may not continue to go the way they're going. people start to ask questions about these things if you had seen the numbers three weeks ago, i doubt the reaction would have been the same. >> apple makes a lot of money, and sells a lot of stuff and has great profits and a great future we got to talk about all of this can you believe that the first ten minutes is about gamestop, would you ever have believed that in your life. >> but it's not. it's such a bigger story, how wall street works. >> and walking dead networks it's about headphones, nokia. >> sticking it to the man. >> it's about the fed.

it's about fed. >> sticking it to the man. or maybe sticking it to yourself that's the word. >> suddenly i'm the man, i have never liked the man but i am the man now. >> all right we're going to continue to talk about this and much more, but when we come back, we'll talk a little bit more about tesla shares following sharply we'll dig through the quarterly results next and extended interview with reddit cofounder, alexis ohanian and gamestop mania we'll talk about what he thinks is happening behind some of these huge stock moves we'll be right back. t-mobile knows the new year brings big news!

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welcome back, everybody, tesla shares selling off as the company released fourth quarter last night phil lebeau joins us right now he has more on this story. >> i was listening to you guys talk i think one of the reasons you're seeing shares of tesla under pressure today is people are looking at the stock and saying you've had a heck of a run, especially over the last year but what can we expect for 2021 and the guidance for 2021, well, yes, they missed on their estimates in terms of a profit that was shy of expectations, $0.80 a share versus the expectation of a dollar one a share.

their production is what people are focused on and their deliveries for 2021. they are going to start production by the end of the year at the gig factories being built in berlin, germany, as well as austin, texas. when you look at how many vehicles they delivered last year, a half million, people were expecting them to give guidance of let's say, 780 or 850,000 vehicles this year all they would say is that they expect deliveries on an annual basis starting this year to grow by at least 50%, and maybe much stronger than 50% this year. and one other interesting thing. here's elon musk, one of the last questions on the conference call last night asked about how long he will remain in charge of tesla. here's what he had to say. >> i expect to the ceo for several years, so there's a lot i'm super excited about doing, and i think it would be hard to

leave a lot of these great projects halfway or partway down i expect to be running the country for several years into the future obviously, you know, nobody is or should be ceo forever. >> one of those projects is the technology for full self-driving vehicles, and he says they are making progress, and they expect to have new iterations of the beta format that they're testing with a number of drivers around the country and around the world and that they will continue updating that, and perhaps later this year, we could see the full self-driving technology, you know, out out to a number of vehicles obviously that is an option you would pay for. it's not something they are going to do out of the goodness of their hearts. as about driving revenue on a repeat basis for the tesla owners thi this is a company that people are looking at and saying, if you could sell more teslas, you

would, but you are constrained by battery production, and right now they are limited to a certain extent that's why people look at tesla and say how many vehicles can you deliver this year, and when do we see a lot of these things people hopeful of seeing happen, when do they actually takes place. >> you can't get anywhere talking about normal metrics and valuations what was the yearly profit >> what was the yearly -- i heard you talk about for the year, was it 700 million, and i know a lot of people are talking about so much of that is being driven by the zero emission vehicle credits, and that's a big part of this but that is part of their business. >> i didn't even say that. i'm just saying do the 780 million, whatever it is, based on 800 billion market cap. it doesn't have normal stock market type valuations

there's a lot built into the stock. future success, societal, just a million things, the self-driving stuff. it's all in there, and maybe that makes sense i mean, i can certainly argue for tesla, more than some of these other things, but then after watching all the other -- the fe fphenomena with other st happening, i go back and say how much of the fed and the free money, and how much of the fluff and speculation was evident in things like tesla, and bitcoin that we're seeing move further down the risk spectrum we're going to yell fire in a crowded theater. now, bring on gordon for more on tesla, let's bring in a major tesla bear, gordon johnson, ceo, and founder of g and l research. if you weren't an analyst, running a hedge fund, you would have been broke so long ago from tesla, covering your sthort, and borrowing none, and losing

billions of thdollars, but you' not, you're an analyst, and you have been making the case for 6 or 700 points that tesla shouldn't be at these levels do you feel like it's going your way all of a sudden given these other things we have seen, gordon >> i do. and you have to look at what's happening with gamestop. what's happened with gamestop over the past four days is essentially what happened with tesla over the past year you have essentially, you know, guys coming in, and using call options which allow you to purchase much more stock than you would to press the shorts. with respect to the quarter, you know, the quarter was extremely bad in our view. if you look at what happened, their gross margins fell by about 400 basis points guiding 2021 to car shift, and they said they're going to have about a million cars of capacity they're going to be

significantly below. you look at what happened with respect to the overall revenue situation, right, in the fourth quarter they shipped 41,000 more calls than the third quarter but a profit down $30 million. shipping more cars, making less money because they cut prices 15 times, in 2020 to move volumes listen, they are not production constrained. that's a major misconception their capacity as of last quarter was about 840,000 cars, they sold 499,000 for the full year, so they're not selling out their capacity, and they're losing significant share in europe and china, again, despite the price cuts, and again, you're seeing with respect to their margin deterioration and the fact that they're, you know, making less money, it's not panning out for them i think a lot of things we have highlighted are coming to fruition it gets a lot worse as we look

through the rest of the year. >> gordon, i just think the comparison to the gamestop, what we're watching there, is kind of strained, though, would you agree? i mean, gamestop started with a valuation down in single digits in terms of, i don't know, was it even worth a billion at the beginning. it was worth maybe over a billion. now it seems extended. maybe, maybe not but it's way up at 35 or 40 billion. this is an $800 billion company that obviously makes a great product, you see them everywhere, and it has a great story to tell about, you know, just you saw president biden yesterday was climate, and john kerry, climate climate climate, so i don't know if you can really make that comparison, but you think it's part, it's cut from the same cloth. you think what we're seeing in tesla had already happened, and now we're seeing it move out the risk curve to other companies?

>> joe, it's 100% happening. soft bank said we brought billion dollars of call options to four stocks higher and they specifically mentioned tesla the fed effectively putting money the into market and effectively lowering the cost for market makers to lend out call options has allowed this to happen you allow this to happen over a year, if gamestop keeps going, it could go to 800 billion my point is, yes, this has happened, and it's been stated that it happened soft bank said they did this one other thing respect to tesla they're tlesless than 5% of glol cars out there they lost money. you take away the credit sales, they lost money again. >> think of what they do when they start taking more of the market share, gordon look at that half full, not half empty. a lot of growth still possible

we love having you on gordon, we'll have you on again. >> absolutely. >> and maybe put someone on the other side, we'll get, i don't know, one of our tesla bulls on the other side we appreciate it, thanks andrew joe, when we come back, we'll take another look as you might imagine, a look at the reddit mania around game stop. reddit cofounder, alexis ohanian is going to join us for an extended interview later this hour it's a conversation you do not want to miss later we'll talk to the former s.e.c. chairman jay clayton about the regulatory implications and here's billionaire, chamath palihapitiya talking about short rules yesterday on the "halftime report report". >> when you look at gamestop, a normal person would say how can you have 136% short interest how can you be short 40% more shares than exactly exist.

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welcome back to "squawk box. facebook shares, they are under pressure again take a look at where things stand right now. earnings and revenue beat estimates but the company warned changes to apple's privacy policy could hurt its business ceo mark zuckerberg said apple's policies would impact his ability to target ads and questioned apple's motives, saying they track apple's compe competitive interests. this is something we knew was coming but didn't know how much it would impact facebook and we'll see. joe. speaking of apple shares, or apple, the shares are falling sharply, despite blow out quarterly results that saw apple revenue top $100 billion for the first time ever in a single quarter. josh lipton joins us now with more stay at home boosts for apple like we saw for microsoft, i guess, josh. >> so, joe, $111 billion

that is how much revenue apple just generated in its fiscal q1. that is a new record, better than expected. as you mentioned, the stock did slip on the conference call, cfo did caution that growth in wearables will slow in the current quarter compared to q1, and services business is going to face a tougher year over year comparison, and this report comes after a remarkable run here remember, heading into the report, stock was up more than 80% in the past 12 months. i did catch up with ceo tim cook we talked about his iphone franchise. it jumped 17%, better than expected, $65.6 billion in the quarter. cook saying of his new phones, they're full of features that customers love, and they came in at exactly the right time with where 5g networks were, between the advances on 5g and the camera, customers love the models, customer satisfaction is liter

literally off the charts cook telling me when the final numbers come in for those phone shipments. you're going to see we gained share. great products at the right time, and great growth in others as well, cook said ipad, higher than the company average, mac, higher than the company average, wearables and home accessory, higher than the company average. strong across the board. back to you all. coming up, reddit cofounder, alexis ohanian will join us in a couple of minutes. we'll talk about the rise of the wall street bets group and the wild stock moves that we've seen in stocks that they have hyped shares of gamestop right now up $103 at 451. we'll be right back. i made a business out of my passion.

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back to "squawk box," we have been watching the futures and after a significant down day dow down by 630 points, a decline of 2%, and bigger declines for the s&p and nasdaq in terms of a percentage basis this morning, dow has actually picked up a little bit of ground

it was down before, now indicated up by just over 16 points, s&p is still down about 4 points and the nasdaq indicated off by 81. right now, it's time for today's squawk planner we have lots of earnings before the opening bell we're going to be hearing from mcdonald's, comcast, and three airlines, american, southwest, and jet blue american airlines ceo doug parker will join us at about 7:30 a.m. eastern time to talk through their results, and it's a big day today as well. we're going to be getting our first look at gdp for the 4th quarter, expected growth of 4.3%, a significant slow down from the third quarters 33% increase, didn't misspeak there, 33.4% increase that number hits at 8:30 a.m. eastern time, and comes with weekly jobless claims. coming up, a big lineup to talk about, the gamestop mania, probably get in trouble for calling it that. reddit cofounder, alexis ohanian is straight ahead and in the next hour, former s.e.c.

chairman jay clayton will give us his thoughts. we'll be right back.

welcome back to "squawk box. two quick stocks to watch this morning in addition to game stop and the other story stocks las vegas sands reporting a bigger than expected quarterly loss the company's ceo saying the co covid recovery process is underway, and things are getting better there, they're saying now. take a look at levi strauss, their shares dropping, earnings and revenue topping estimates but the forecast for the current quarter disappointed investors, and you're looking at that stock down 4 1/2%. becky? >> up next, andrew, reddit's cofounder alexis ohanian is

going to be joining us for an extended interview on the wide moves in heavily shorted stocks that were started by a public forum on reddit. yeah, that's right it was the rise up against the shorts movement. we're going to talk to alexis about what he thinks about that and what he thinks as an investor find out what he's doing that's after this very quick break. my retirement plan with voya keeps me moving forward... even after paying for this. love you, sweetheart. they guide me with achievable steps that give me confidence. this is my granddaughter...she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. come on, grandpa! later. got grandpa things to do. aw, grandpas are the best! well planned. well invested. well protected. voya. be confident to and through retirement.

welcome back, everybody. as you probably know by now, the wild move in gamestop over the last week was fueled by the wall street bets group on reddit. that online community rallied retail investors to execute a short squeeze that forced at least two major hedge funds to close out their positions at losses that's what the hedge funds tell us joining us is alexis ohanian, the founder of 776 and the cofounder of reddit. you're really the guy that

unleashed all of this. it's really good to see you. you're an investor who's been thinking a lot about this, but you have been watching what's been happening with reddit, and just give us your thoughts on this how have you seen this play out? >> sure, and to be clear here, you know, i'm no longer on the board of reddit. i am not here to give financial advice purely as an observer of these internet trends and having gotten a final receipt thanks to cofounding reddit, you know, this is a culmination of a lot of energy and a sort of kizmat situation. a lot of things lined up chamath was on here summing up a lot of the sentiment, future governor of california, and i think the thing that for me has been so clear is that this, like a lot of things on the internet that really go viral and take on a life of their own, has become something much bigger, and i

think even just looking at the comments around the internet is something that's very personal to a lot of people, and a chance for, you know, joe and jane america, the sort of retail buyers of stock to flex back, and push back on these hedge funds, and i do think this is a seminole moment. i don't think we go back to a world before this because these communities, they're a by product of the connected internet, and whether it's one platform or another, this is the new normal, and we've watched the internet now over the last ten, fifteen years, thanks to the rise of social media and all of this infrastructure, really bring a bottom up revolution we have seen this across media we have seen this across so many different sectors, and now it is happening to finance, and i mean, it's nothing short of remar remarkable and i really do think

this is the start of a new era for how we're going to sort of -- how whistle're going to perceive the public markets and the interaction of consumers with it. >> hey, alexis, i am all in favor of the pendulum swinging and going back against the greedy guys. i mean, i don't know if you remember the corporate raider guys, yvmichael millkin, and the bunch. my dad lost his job in the 80s because the reserves were worth more than the stock, fired everybody. i'm all in favor of stekicking to the guys who have been sticking to everybody for a long time when i watch this, i worry about the retail investors following chamath's bidding, other people's bidding, he got into the stock, and got out of it before he came on yesterday to talk about how he got out of it. i don't know who he thought he was selling the shares to but i doubt it's the short sellers.

>> look, i think what's really remarkable here, and look, i have been on here over the years talking about things like bitcoin, which, you know, i'm obviously still considered to be pretty long on i think we're seeing cryptocurrency is one example of this bigger story where i think people are looking for more opportunities to have more influence over every part of their life, including in many cases, very importantly, their money, their investing, and the access to knowledge, to information, to world class technology to process all of those things is getting democratized anyone. the user who kicked us off, an account called roaring kitty who did the analysis on gamestop and published it it seems absurd until you watch the video and see he has been thoughtful about it, and he has a ridiculous moniker

he's the original hero in the story that it has been built around, and i think the thing that has been really eye opening for me is to see for how many people this is personal. like i said, there are stories from the registration, from '08 and the after math that were being told, you know, during occupy wall street in zuccotti park, and that was a time when the spinternet was in its infan, and we're seeing a new reality this is without precedent, and obviously everyone should be making, you know, they should be thoughtful about where they're putting their money and investments, but i do think this is a drastic shift, and i don't know where this goes from here other than new systems emerge to start to adapt to this new reality. like there's a part of me that sees this in wall street, and they would as an investing block, they could outperform a hedge fund if they raised, you

know, capital of their own the menu is open with this combination of technology, and ubiquity of connected people sharing insights and opinions and, you know, i hear you, and i think it's an important thing. there's an important role to be played for protecting the little guy, it's just so many little guys are saying clearly they felt unprotected for so long, and this is a way to vote with dollars. >> yeah, again, i'm all in favor of that sentiment. i guess, when you see gamestop run up to such an incredible levels, though, it makes you start to wonder what comes next. i know you had been reaching out trying to see if somebody could introduce you to the ceo of gamestop, did you ever get that introduction >> no. but the -- you know, i think there is something -- there's something to be said for the fact that this is -- this is

going to be a path forward for how companies will have to think about their relationship with the markets and a world where i do think the trends seem clear that retail investors are going to start to become a larger and larger percentage of market trading, and we saw it go up during covid as more people were getting idle and robinhood accounts were making it easier for people to get started. even the role of the ceo, and elon musk is obviously one who has done this very very well, is to have a different kind of relationship with the market because it's actually about this kind of community building that looks a lot more like a type of community building we're just not used to from ceos. but i do think the precedent is there, and i think this is the model for what it's going to end up looking like. >> alexis, how do you think about the idea of fundamentals in this context.

historically, look, i could argue that hedge fund managers would go have these idea dinners together, and they would, in truth, actually, gang up in the same way, maybe, i don't know if in the same way but they would bid up the shareso of something, and argue about what the case they would be making would be, and typically they thought the company might be worth 10 or 20 or 30% more than whatever it was trading at, let's just say it's very rare they would do that and believe that the company was worth, you know, 500, a thousand times what it really is. there arguably were some numbers that made some semblance of sense, and i think at this point it's very hard to make that argument in this context >> yeah, well, look, and i'm not here to make that argument i think what was an interesting point and what resonated with me is the fact that so much of what's happening now thanks to the internet is happening in daylight, and i do think that part of it feels more -- i mean,

it is more transparent it feels more authentic. it feels more genuine. i was ranting about this on twitter because as a species, like, we have spent hundreds of thousands of years really relying on the few people around us in our family units, in our tribes, like, you know, we have been hard wired to be very communal in that way and this idea of institutions of ivory towers, whatever you want to call them, across industries, not just finance, that's a pretty new convention in the history of our species, and as long as you're willing to agree or as long as you're willing to accept what i believe to be true, which is that online communities are as strong or evenmore strong than offline ones, that you can recreate these senseso of community and tribalism and sort of confidence, even with total strangers on the internet, that gives you more sort of

compelling evidence or more compelling feedback than, you know, some nameless, faceless expert who supposedly knows better than you, and that's been the story of the last ten, fifteen years. >> but alexis if all of these folks, or i don't know if all of them, look, a lot of them, made a good deal of money, paper right now. some have probably cashed out along the way. if there are real losses f it goes from $400 back down to call it $30, $40, $50, there will be real people with real losses that have real mortgages the hedge fund managers -- >> yeah. >> -- maybe they have a mortgage on their second or third home, maybe. they're not really losers in all of this. and so -- >> yeah. >> -- if there really are losses, does this become a movement or do people say this was a one off mistake even >> the challenge is this is

truly leaderless and there are so many examples of this around these moments that happen online that go viral. sometimes it's very silly, it's just a meme, other times this clearly has potentially very real world repercussions i think the problem is we're at a point where -- and i just -- i see these comments consistently now, whether it's tweeted at me, what i'm just reading online, like there is -- i think for a lot of people it's a statement it's almost a kind of political statement, i don't know, but you're right there are very real consequences here that folks may not be prepared for and really should be but by and large i think this is going to be the start of a conversation not the end because it is so organic, i don't see any part of it that

just disappears. i think this is part of the new fabric of markets. >> i'm listening and, i mean, it sounds to me like a way to justify what could end up to be some really bad behavior, and i hear all of these high-minded comments you're making about what's generating this, which could be nothing more than a glorified pump and dump. it was started in chat rooms and is not motivated by high-minded getting back at the an motivated by pure greed. people are making a lot of money. other people make a lot. i have seen it in the pass with iomega, pazer, presstech and it's different because it's somehow representing occupy wall street and we're pushing back against the man? i mean, it just sounds high minded i heard chamath say it you're a billionaire, he's a billionaire. >> i'm not a billionaire. >> maybe you're not -- maybe

with serena. i don't know whether you guys have consolidated finances or not. you will be i will say at this point. it's nice to attach all of these high-minded social implications to what we're really seeing that really is just a twitter -- not a twitter mob but a reddit mob that decide to do this we need probably some legislation that doesn't allow you to short the outstanding -- >> that seems very reasonable, yes. >> you see what i'm saying you say this is all about hundreds of thousands of years of community, that's what this is about, not just a glorified pump and dump getting gamestop which was half a billion up to $40 billion? that's the right way to do this,

alexis >> i can't say right or wrong, but i do think, look, it's impossible to generalize an entire movement of what's now -- i don't know how many people have been involved in this at this point, but at this scale, right, i can't generalize all of them there is a clear trend line here and i think -- i think we've seen versions of this over the last few years i think you've seen echos of this in lots of challenges against main street media. you can imagine -- i could argue there are threads of this behind the rise of the populus right. i think there are threads of this behind -- this was a rare time on the internet when aoc was agreeing with some hard core silicon valley libertarians. there is this sentiment that can't be escaped, and i can't -- certainly can't speak for any of these folks, but on the whole it's clear to me that this is -- this is a gesture and in america, in the united states,

you know, we vote with our votes and then be we also vote with our dollars. i think this is an example of the latter in a lot of ways. >> alexis, regulation question this came from something that alex stamos who ran security for facebook said online i don't know if any laws are broken this time, but reddit now has a problem. it is the home for a community of hundreds of thousands of people who have demonstrated the ability to move billions of dollars at the urging of most a couple of dozen anonymous accounts what do you make of that what does that mean? >> well, so i'm definitely out of my depth in terms of the regulatory standpoint. i can't speak for reddit as i said from jump, this is new territory and i think the thing that the american public on the whole wants is to know that these systems, especially the --

one of the most powerfully argued in the country, which is finance, is one that is -- and i love hearing -- i'm surprised that i heard the word regulation already, but that is being regulated and being governed and looking out for americans, regular folks. many feel like it hasn't. >> what joe mentioned -- go ahead. >> quelwell, and at the end of day we're seeing emerging decentralized technology, we talked about cryptocurrencies. the bigger macro trends are moving more and more towards giving individuals more empowerment so i think, you know, we -- these communities bleed across platforms they are your neighbors. they are your cousins. they're people and, you know, they transcend platforms it's really -- it's identity

in the same way we could be talking about k pop fans or vegans, this is a sense of identity and community that's bigger than one space. >> how will you feel if momentum turns quickly and some of these stocks go back down as quickly as they came up burning some of those neighbors and friends? >> i mean, that -- i think with every -- every -- every bit of this along the way, i think that's been one encouraging sign, there have been so many folks tonge remind, myself included, it's very important to make informed investment decisions. i can't presume what everyone is thinking look, i really, really hope that as we work through this we are bringing accountability and we're also respecting the fact that this is -- this is new territory and the genie is not back in the bottle you know, retail investors are

going to be -- they're going to play a much, much bigger role in the public markets than they ever have before you know, their connectedness is never going to change. that's the new normal now, disconnected internet. >> alexis, thank you so much for your time. realize you guys are in australia getting ready for the open we appreciate. early in the morning for us, not early in the morning for you appreciate your time >> sure. thanks >> good to see you >> thank you, becky. what a great conversation. when we come back, two big hours ahead. we are awaiting results from mcdonald's we're going to hear from our parent company comcast and american airlines. we'll bring you those numbers. the former head of the sec right after the break.

the short squeeze rolls on the latest on the movement, the potential power shift on wall street and the rolf regulators former sec chairman jay clayton will join us first on cnbc another big day of earnings. comcast, mcdonald's and american airlines all reporting results we've got the numbers and the market reaction straight ahead. plus, apple's blowout quarter, but the stock taking a hit. are we in a super cycle wave of device upgrades by customers and should you be a buyer of that stock? that story and much more as the second hour of "squawk box" begins right now.

cnbc's parent company comcast says earnings came in at 56 cents a share compared to an

estimate of 48 cents comcast saw record broad band additions during a quarter that's highlighted 33 million customers have signed up for the peacock streaming service over the first six months and most of those metrics all above what expectations were various breakdowns cable has been a bright spot especially through this period but remember there's theme parks, which actually broke even if you back out a charge, which is amazing since only i think california's not open. i think orlando might be open. some interesting things, guys, in the cable operations. i don't know whether you're able to know this even though revenue is down, ebitda was up because there's no -- the expenses are so much lower and i don't think we actually saw that in the broadcast division, but some

interesting metrics in terms of what we look at when we look at comcast. that is usually ebitda or cash flow and most of those metrics were above expectations you can see right now the stock up just a little bit we'll see if that changes as people delve into these results. did you see anything in there? very interesting. >> one thing that jumps out at me, joe, they're making the comment that the decision to reach some of the titles on paid video on demand was profitable "trolls world tour" and "new age. i paid 20 bucks each to watch them they said fast and furious 9 and minions 2, they will bring to audiences with the hybrid model. these are the changes we'll see because they were pulled forward by the pandemic. they're happening a lot faster because of the pandemic. >> yes cable network revenue decreased

6.4% but adjusted ebitda increased 22.4%. so down to 2.7 billion in revenue but then a 22% -- >> because none of us are traveling. none of us are eating out. >> reflecting lower revenue offset by lower programming and production expenses. i'm just -- should we feel really productive? i'm feeling really productive. i'm feeling proud. didn't happen with broadcast that's more normal broadcast revenue decreased 12% and adjusted ebitda decreased 24.3%. that reflected lower content and advertising revenue. but as usual, what's really performing is broadband, which is amazing during this period. >> yeah. best year ever in the meantime, mcdonald's also hitting the wires and kate rogers has been looking through the numbers. kate, what can you tell us >> reporter: hey, becky. good morning

mcdonald's missing on the top and bottom lines this quarter. eps coming in at 1.50 this morning. revenues also slightly below at 5.37 billion coming in at 5.31 billion. the u.s. business showing strength u.s. same-store sales better than expected increasing by 5.5% benefitting from strong average check growth we see it across all day parks mcdonald's pointing to investments with the travis scott partnership and promotional activity like the return of the mcrib. they ended with same-store sales up 0.4% in 2020. that's notable in the challenging environment. global comps 1.3% decline. they fell 7.4% in international operated markets and fell 3.6% in international developmental licensed markets

comparable guest counts remained negative across all segments the company adding restrictions as a result of covid-19 have carried into 2021. impacting most of the key markets outside of the united states, particularly those with fewer drive through restaurant locations. the company expects some restrictions in various markets so long as the covid-19 pandemic continues, guys. back over to you. >> kate, thank you we should also tell you about two big reports in the transportation arena american airlines out and tesla reporting after the bell yesterday afternoon. phil lebeau is here to break it all down take it away do you want to start with the latest ones? >> let's start with american airlines, becky. share of american airlines indicating higher after the company reported better than expected numbers after the fourth quarter a loss of $3.86 a share. the street was expecting them to lose $4.11 revenue just a hair over $4

billion. the estimate was for 3.88 billion. when you look at the metrics within the fourth quarter, daily cash burn, $30 million liquidity at the end of the quarter, $14.3 billion the q1 capacity down 45% no surprise there. that's pretty much what most of the airlines are guiding towards in capacity. q1 revenue roughly in line with what the rest of the industry is expecting down 60, 65% we'll talk about these numbers as well as the outlook for when american might get back to positive cash flow in 2021 they're not giving guidance in the earnings report but we'll talk with ceo doug parker. that is a cnbc exclusive coming up in about 25 minutes let's shift gears and talk about tesla reporting after the bell last night the company's profrtd of 80 cents a share fell short of analyst expectations of $1.01 a share. deliveries not giving explicit guidance for 2021, simply saying

we expect over the next several years to have an annual increase in deliveries of 50%, though it could be much stronger than that in certain years, including 2021 this year, by the way, guys, by the end of the year you will see the first deliveries of the cyber truck. here is ceo elon musk talking last night on the conference call about what he expects from the cyber truck. >> think it's going to be an incredible vehicle if we get lucky, we'll be able to do a release at the end of this year. i expect volume production in 2022 >> the cyber truck picks up volume in 2022 i'm showing you this, a chart between tesla and general motors roughly trading in tandem, an andrew if you look over the last month, on the conference call elon musk was asked about hydrogen fuel cells and that technology which is one of the future technologies that general motors is developing. he referred to hydrogen fuel

cells calling them crazy on the conference call. andrew, back to you. >> phil lebeau, as always, our tesla expert we appreciate it this morning. meantime, we have other news to talk to you about big tech earnings coming after the bell facebook shares under pressure earnings and revenue beating estimates. the company warning that changes to apple's privacy policy could soon start to hurt the business. ceo mark zuckerberg said facebook's policies could hurt them and questioned their motives. they clearly track apple's competitive interests. facebook warning a reversal in pandemic trends could hurt business in the coming quarters. company also by the way saying it's going to try to limit political news in some of the feeds, which is also an interesting part of this larger regulatory debate. meantime, shares of apple in the red despite blowout first quarter earnings however, apple did fail to provide guidance the tech giant reporting the first quarter over $100 billion

in revenue with sales for every product category rising by doubledigits joe? >> okay. thank you. thanks, andrew. coming up, the read ddit rebellion against shorts here are some of the names that have skyrocketed gamestop, amc entertainment. we left off amc networks is that different? who cares. nokia, blackberry, koss. former sec chairman, jay clayton, joins us after the break to discuss the movement and the role of regulators i was getting koss mixed up with that great wsiebte the daily coast. we'll be right back.

welcome back to "squawk box. we have been covering the wall street reddit issue. chamath addressed the role of regulators in this environment >> i think this is an example of if you are going to so massively over sell a company to the extent that you're selling 40 more shares of that company that don't exist and all of a sudden other folks are like, hey, wait a minute, this is going to get

squeezed and they buy it, that's a smart trade. retail saw it. wall street missed it and they paid the price so maybe to your point, scott, what regulators should do is say, hey, wait a minute, how could we let companies be 140% short? that doesn't make sense. maybe that's what should happen. >> joining us on the phone is former sec chairman jay clayton. thank you for joining us i think we're all grappling with trying to understand what's happening here, what it means for the markets in a larger way. you just heard what chamath had to say what do you think of that? >> look, andrew, you are grappling with it. let me say, i've been able to tune into the show over the last 25 minutes you're doing a great job grappling with it because there are many issues at play here chamath identified one of them, our stock borrow market, short interest, how that's monitored look, let me make a point here, in terms of short interest being

monitored, the u.s. markets are probably the most transparent, but there's always room for improvement. that's an area where i think there is room for improvement in terms of modernization of how the short -- basically how the short market operates. we can get into that in detail it's just one of many good points that have been made over the last several days as people have watched this situation. >> so, jay, if you were in the seat today, i know there's a transition taking place. gary gensler has been nominated for the role you used to sit in, what would you be doing about all of this? would you be doing anything? >> well, look, let me just say gary gensler knows markets very well allison herringly, she knows markets very well. more importantly, you know, the 4500 men, women of the sec, they are certainly monitoring situations like this all the time and i have confidence that they are looking for specific

misconduct but they're also looking at what this means for regulation overall i'm not going second guess i've had my time in the seat but i have great confidence that allison and her team and gary, should he be confirmed, are going to do a good job here. there are things your segment raised a lot of issues here. there is a laudable sentiment that people want to be connected to the economy, they want to participate. there's great danger here. any time stocks depart from fundamentals, it will turn eventually and people get hurt i just want to say, look, professionals in this marketplace, people who serve retail customers, they ought to be dotting their is, crossing their ts and seeing whether leverage is appropriate. i've seen people pull back on margins. take a breath. these are times where you need to take a breath as an institution and ask yourself, am

i doing everything right andrew, i can make one more point. >> go ahead. >> no, i was going to say what do you think of the issue of -- go ahead >> one more point on that is we have new flows in the marketplace. the participation of the retail investor has changed how money flows in and out of the market and where it flows and institutions and money managers should be updating their risk model to take account of that, as well as our current monetary conditions >> so, jay, the thing i'd ask though, this is the hard part, it's almost a philosophical question, should the professionals, if you will, be trying to protect the little guy? because part of the whole philosophy here, if you believe it, is that the little guy could have the same advantages to have -- to use margin, to use leverage as the big guy, and i'd also just say one other thing. i was just tweeting during the

program by somebody who is an invector in gamestop who says you think, meaning me, every investor in gamestop doesn't know we can lose money dude, we know. we just don't care prepared to lose every dollar invested to try to beat down those hedge fund, and i can't use the word politely on tv. but there's something else at play here beyond being a -- well, we would have used to think as a traditional investor here >> look, andrew, sentiment of wanting to be involved sentiment of wanting to parti participate, i applaud that. i applaud retail investor, i'll underline investor participation in our marketplace there's hallmarks of that. there's also hallmarks of what looks like traditional boiler room activity. you can't just take the good and ignore the bad or look at the good and ignore the bad.

people who have obligations to customers is to make sure if there is that bad, you root it out. so sentiment to want to participate and be on an equal playing field, 100% agree with that any time there's departures from fundamentals as i said is the opportunity for people to get hurt and there's the opportunity for fraudsters and bad actors to take advantage of it we have to make sure that's not happening. >> jay, let's try and address some of the anger from the retail investors who feel they're getting the short end of the stick and the hedge funds get protected. hedge funds don't have to tell us about their shorts because it protects them from the short squeeze. we know their longs. we eventually know their puts and their calls. if a hedge fund comes on and says they are closing out their -- let's say their puts, we don't know if they're then

initiating shorts expecting that news will drive the stock down we will never be able to find that out because of the way the regulations are set up should that be addressed >> you make a point that's fundamental and none of us should forget it if you are doing one thing and saying another or you come on and say something and then immediately shift course, that -- that's inappropriate behavior in many cases it's unlawful and nobody should be doing that. whether it's traditional pump and dump, you know, more sophisticated forms of manipulation, that's -- should be rooted out. so there's no question about that and whether the transparency we have in our marketplace around particular positions is appropriate, something we should be continually examining so like i said, i think the u.s. market in terms of short positions is probably more

transparent than any other, but as things change, there's always room for improvement. >> hey, jay. i'm just wondering what the solution looks like in your view because none of us really like regulation and i'd like to just say just let it fly. let it go. let everything happen, but to me, you know, having been around, you remember -- i know you remember iomega, presstech, you remember all of the names from the past, suddenly you have a -- kind of a -- alexis owe hainian, you ascribe those high-minded intentions to what in just reality doesn't look that much different than a lot of people getting together, deciding -- maybe hedge funds do it, maybe that's part of the problem, they're getting back at these guys you're ascribing all of these high-minded motivations to what looks like a classic pump and dump, to running something up

well above fundamentals. as you say, invariably people can get hurt i don't think everyone can afford to lose all of their money to make a statement. i don't know how they're going to feed their families after they've made that statement. what does alight touch regulation look like to you to try to address this? >> look, joe, it's hard to disagree with anything that you just said, you know? you understand the sentiment what you see in reality is something that worries you because it has all the hallmarks of past situations where ordinary people have gotten hurt look, i heard people say, hey, i understand the risks, i want to take them. yes, that's probably true for many but it's not true for all again, i think that bringing sunlight to this, people understanding beings what's happening here, that it is

likely to change any time there's stall up and down, people are going to get hurt be careful in terms of regulation, look, like i said, we have a different situation here in terms of flows than we've had in the past and we need to think about more transparency in the flows in the marketplace so people can see it that's clear. >> so what happens, and i don't know how systemic this all is, and i think the fed has a lot of complicity in this, too, but when people lose their collective butts in one area, to get liquid they sell completely different stuff. if this got totally out of hand, could you see this being a threat systemically to the markets? >> yeah, look, i'm not -- i'm retired from the systemic risk analysis, but i will say that i -- look, again, i appreciate

the dialogue around this, the transparency on it and the questions like that that you're asking, joe, because, again, when things depart from fundamentals, it can be in an isolated area of the market. you know, you focus on it or more broadly, you know, you always have to be asking the questions, i go back to the risk models if you're running an institution, you're running a hedge fund, are your risk models appropriately calibrated for the reality of today, the availability of credit, the flows, the like. that's what i would say to the institutions >> hey, jay. i want to just show you a clip real quick from alexis ohanian can we play that >> whether it's one platform or another, this is the new normal. we've watched the internet now over the last 10, 15 years thanks to the rise of social media and all of this

infrastructure really bring a bottom-up revolution to so many industries we've seen this across media we've seen this across so many different sectors. now it is happening to finance and, i mean, it's nothing short of remarkable. and i really do think this is really the start of a new era for how we're going to sort of -- how we're going to perceive the public markets and then the interaction of consumers with it. >> jay, is this a one off or is this a new normal? >> well, let me start with a broad point, andrew. there is an important broad point here that is now more than ever if you're not connected financially to our economy as an individual, you're at a disadvantage so at a broad sum -- we've seen that if you don't have a bank account. if you don't understand credit if you're not connected, you're at a disadvantage in today's modern economy i completely understand that sentiment and want people more

connected. as you drill down and get more granular and you talk about sort of collective public action around particular public securities, like i said, it starts to have good sentiment, laudable motivation but you could say the activity looks a lot like traditional boiler room conduct. where the line is and the like, you know, that's one of the things you have to look at so laudable sentiment, important, broad point but when you start to see things depart from fundamentals, again, we should all look at that with great caution. >> jay clayton, we very much appreciate you joining usthis morning, helping us try to think through this remarkable situation in the markets and we hope to have an opportunity to talk to you again very, very soon. >> always a pleasure thank you, andrew. >> thank you talk to you soon >> becky >> thanks, andrew. great conversation to be having with jay clayton this morning.

i have a feeling we will see additional regulation coming. when we return, we're going to be talking to american airlines ceo doug parker the company reporting quarterly earnings a few minutes ago we'll be speaking to doug in just a couple minutes. time now for today's aflac trivia question. michelle gass was a former starbucks marketing executive before taking her current role as ceo of this retailer. who is it? the answer when cnbc "squawk box" continues i crutched out to the mailbox and there it was - a medical bill for twelve-hundred dollars. i had no idea i'd have to pay that. that's right. it's hard to know exactly what your health insurance is going to cover, so you gotta protect your blind side. aflac! aflac pays you money directly to help with expenses health insurance doesn't cover. really? aflac. get help with expenses health insurance doesn't cover. get to know us at aflac.com.

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welcome back to "squawk box. phil lebeau joins us this morning. >> reporter: let's bring in doug parker, ceo of american airlines doug, your stock is indicating 15% higher this morning after you reported better than

expected numbers for the fourth quarter. let's not sugar coat this. it was a rough year. worst annual loss ever for american airlines. give me your assessment in terms of where business stands right now. >> yeah, thanks, phil. first off, you're right. it was definitely the most difficult year in airline industry history for american and the entire industry. i've never been prouder of a team than the american airlines team and what they accomplished in 2020. our team was out there keeping the country running, keeping people moving that needed to move we carried more customers than any other airline in the united states we did it safely we continue to do that because of that we have great confidence as we continue to move into 2021 2021 is going to be a year of recovery, that's for certain when exactly that recovery happens, i don't know, but we're prepared for it. we're able to withstand whatever period it may be because of all the work we've done to restore

our liquidity and cash position. look, we enter 2021 much like we ended 2020, with people still not ready to move about like they have in the past but that will happen. there's a vaccine out there and as those vaccines get distributed and into arms, there will be a recovery again none of us knows exactly when that will happen certainly sometime in 2021. >> doug, your cash burn in the fourth quarter, $30 million a day. what are you expecting in terms of cash burn for the first quarter or even the second quarter? >> it will be similar. the first quarter is going to look a lot like the fourth quarter, we think. demand is pretty much the same and the fourth quarter -- i'm sorry, as we started this year as we ended last year. it ramps up as you head into the summer a bit but, again, there's not going to be real increases in demand and therefore cash burn levels aren't going to change much. i don't think at any of our airlines until demand levels come back. na first quarter we expect will

look a good bit like the fourth quarter. >> some competitors are saying they see optimistic trends in terms of advance bookings when they look into maybe late spring, early summer what's your sense in terms of where people at least right now are comfortable saying i'm going to book this trip. lord only knows if this pandemic has died down by the time i'm going to take it, but i'm going to book it right now >> yeah. first off, i should note people aren't booking their travel that far in advance, haven't for quite some time. the bookings we do see, while they might be up, we are really careful about making sure everybody understands how small they are at this point in time, even for the summer. we are seeing, like i say, the summer uptick a little bit mostly seasonal. certainly nothing more than that where we see those bookings continue to be leisure destinations, national parks, beaches, things like that.

>> sure. >> so business customer hasn't returned yet we don't -- again, i don't know exactly when that will happen. i can tell you, we survey everywhere we can. we follow search everywhere we can. we have a team of people all the time trying to monitor when we think it will come back, but that data is entirely dependent upon when vaccines get distributed and when people feel comfortable. i get ten months people ready to travel ten months straight, people keep telling me that. once people are comfortable, it will come back quickly there is huge pent-up demand to travel we hear it everywhere. we see it in the surveys no one is going to travel until there are things to do when you travel and until the vaccine has been distributed, pandemic's been largely eradicated. >> doug, last question because we're running up against the break here. >> sure. >> vaccine passport, do you think that would make

international travel come back even quicker when it does start to come back >> we do and, indeed, we've worked really hard to put in place with verify just that for our customers. so it is an important part of international travel in the future and one that i think will give the customers a comfort and countries a comfort to open their borders again. we do believe it's important we've worked hard to get it in place and we're ready once people are ready to start traveling internationally and we open up the borders. >> doug parker, ceo of american airlines joining us. thank you very much. guys, the bottom line is this. what we've heard from doug and other airline executives, the same thing they believe it's going to be a quick return in terms of travel when people feel comfortable, when the pandemic calms down the question is when will that happen in 2021 becky, back to you. >> it's kind of out of their

control but it's the same thing we all feel. i think we all want to travel and get out there again. like doug said, you have to be able to do it when there's something to do on the other end of that play phil, thanks for the interview the stock up better than 20% this morning. when we come back we'll talk apple and facebook and we're on gamestop watch once again this morning. that stock initially dropped in the overnight trading after the reddit group that's been talking all about it very briefly went private as moderators said they were unable to ensure reddit's content policy now it's turned around gamestop at this point up by 32%. $465, latest trade another one of these short squeeze stocks we've been talking about, amc entertainment. that company says they will issue 44.4 million shares as a group of investors opted to convert $600 million of convertible debt taking advantage of the price spike you've seen. right now amc down by 2%to

1951 coming up at the top of the hour, investor mark cuban will talk to us about all of these moves and chmu more. "squawk box" will return after a quick break. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere.

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welcome back to "squawk box. comcast reporting results and adjusted earnings coming in at 56 cents a share compared to a consensus estimate of 48 cents record broadband additions during the quarter 33 million customers have signed up for the peacock streaming service over the first six months you're looking at that stock now at about $50.23, up 3% almost 4% now. joe? >> thanks, andrew. technology is having a big impact on the markets this week in more ways than one. very big earnings from the two biggest names. apple and microsoft not moving the stocks much. they're using technology to punish short sellers and rocket some other stocks higher which is the more important tech story? jon fortt will tell us in on the

other hand hey, jon. >> reporter: joe, apple and microsoft earnings are biggest by far apple is telling us we are seeing a super cycle with this iphone 12. despite the naysayers, apple delivered a 5g phone at the right time around the world, including in china where revenues were up nearly 60%. and tim cook told our josh l lipton the numbers could have been bigger if not for supply constraints on 129 pro and consider that with microsoft results on tuesday cloud up 50% pc and gaming businesses outperformed small and medium business, which has taken the worst hit from the pandemic, showed clear signs of a rebound. for investors paying attention to fundamentals, remember those, that's really important information with implications across your whole portfolio, that is, unless your portfolio consists of gamestop, amc and

bitcoin. >> investors must be tempted to wait a while for microsoft it didn't go up 4,000% so they just wait for the opportunity? >> reporter: on the other hand, what is happening with gamestop and amc is important for the global markets it's not even about the companies themselves if you think gamestop deserves a $24 million market of what's looking like it's going to be 10x versus a week ago, i can't help you the short squeeze is important in a new way, the little investor is using technology and team work to create wealth i'm not saying this is a good or a bad thing, i'm saying it's important in the same way it's important that groups are organizing in parler, bypassing the expected channels and busting into the mainstream conversation our existing rules aren't ready for them regulators aren't ready for them

whether it's short squeezes or bitcoin, the markets better get ready for what tech is enabling. that's really important. >> i don't think people are short bitcoin. i'm not sure about the comparisons there, but i understand certainly the ee ebul ebullience 24 billion since we're up to almost 500, i think you've got to do a little math there, jonny. you know what i mean it's 24 plus not quite 12 but maybe another 12 we're getting up there another 50%. and what you say is correct, it's not about gamestop, it's sort of a vehicle to stick it to the elites and the shorts. >> reporter: and that's the connection to bitcoin, joe it's not about just the short squeeze, it's this idea that people are using technology to talk about not even necessarily develop a thesis, though there's some of that going on certainly with bitcoin, but talk about

what action they're going to take in the market and then have the impact as if it were one or two minds with billions of dollars at their disposal. so the markets, we're just hearing from jay clayton a little while ago, regulators have not been ready for this >> right. >> you've seen this play out even across congress and the legislative branch everybody's not ready. it's time to get ready because the impacts are showing up for sure. >> it's kind of cool to be able to make 10 or 20 times your money from being in a chat room and all deciding to do something and be then feeling like you're part of, you know, the resistance and occupy wall street and mother teresa all wrapped into one i mean, to feel really good about a classic pump and dump. i mean, it's unbelievable to feel so good about yourself while you're doing it. >> the justifications come fast and furious. it reminds me of the scene in what was it, oceans 13, when they take the casino by rigging

all the games and all the people who just happened to be winning as a result, you know, they're so happy they've got their own justification about why they think it's happening, only the viewer knows the backstory. >> 20 times your money, you don't need a noble cause to do that, but they've got one. thank you, jon fortt coming up, we're going to talk about speculative moves in a lot of names there is american airlines, up 7. is it earning? then we actually -- some of us actually saved gamestop. why, i don't know. they're spelling it in the teleprompter for us, gamestop. >> just to explain on american airlines, i'm looking through this when they said it it was 20% when we were talking to doug parker that's a big move for american airlines there is something getting pointed out to us coming from the desk on this, that given the news cycle, there is a lot more short interest in american airlines than its competitors.

we saw a decline in short interest yesterday during the rally. could be interesting if this is another one of the companies that has a lot of shorts in t they put out the earnings, stock goes up 40%. kind of follows the pattern of what we've seen with gamestop and others >> walking, quacking duck. that's exactly what it is. if it's walking, quacking, swimming like a duck and the water is rolling off its back, that's why it's up 46%, american airlines what's it all mean for the broader markets? we'll talk to mohamed about that the futures right now, they're up or 0.er yesterday downve60 we'll be right back. they have a better finance system than we do. i feel like they might have a better finance system than we do. workday. how do they make better decisions faster? workday. got to do something. workday! i think i got something. work... hey, rob, you're on mute. hello. [all] hey... there he is.

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"squawk box. mike santoli yesterday's little selloff did take us below what had been this really orderly grind we were rotating from big cap tech into cyclical stocks and back again it was keeping the market back into this path you saw some cracks into that trend with the shakeout as people sold a lot of the big winner growth stocks in order to cover some losses on the short side that was part of the dynamic take a look at the micro cap etf. the russell 2000 russell etf biggest holing in the 1200 stock in etf is gamestop obviously it's distorting all kinds of market measures and etfs we did have this big pop

yesterday. the highest since october. if this actually kind of spikes and comes down a few points, it could mean the market is settling down. it shows you the traction control in the market's vehicle is now lit up. it could be rougher sledding, guys >> mike, stick around. we're going to talk more about this right now joining us to add to the conversation is gabriella santos gabriella, maybe we'll see a little bit of the slowdown not if you check out what we saw. american airlines shares up 45% a minute ago after the earnings -- the loss, i should say, was a little smaller than the street had been anticipating this is another company taking off. what do you do what do you think? >> so i think our take away is that this behavior, speculative trading and its impasse and individual stocks and broader market is probably not going away any time soon if you think about the forces that are driving it from dem ocratization

to investing to a ton of liquidity. what we're doing is we're adding it to a really long list of potential risks and market volatility inducing events for those risks we always have a piece of our investment allocation that's dedicated to safety or protection but we're not changing our fundamental base case or risk-on positioning because we think this is not at all about fundamentals and the fundamentals are still improving and suggest a risk-on posture for the year. >> gabriella, let me just ask you. for investors not part of the reddit movement, don't know what's happening, if they own this and they look up and the stock is up by 50% would you tell somebody to sell and get out of that? what would you do? look, i'm not going to argue that wall street ever is really rational or makes sense. there's always something crazy going on but this is new

extremes >> so the way that we think about it is in the short term stock prices for individual companies or for the broader market can be driven by a whole variety of things, by sentiment, by speculative behavior, but over the long run the prices of stocks should be driven by fundamentals or earnings when we think about our allocation to individual companies, we have to think about whether the price movement is merited by fundamentals or not. then we can think about whether it's appropriate to keep that stock or to sell that stock. but i think it's going back to our playbook, which is all about long-term fundamentals driving stock prices >> mike, you've been watching wall street for a really long time what do you think when you see moves like this? i mean, i can look back at different speculative sort of frenzies none of them ever seem to end well. >> well, ultimately certainly not, although also, you know, i think people understand what they're probably getting into

with this. it's an amplified version of what has happened throughout history on wall street, where you have this herding behavior, stampede, short squeezes people thinking it's another investor's trap and then the story line that develops around it i don't think anything is fundamentally new. the market caps are probably bigger right now we can kind of ramp these things to a significant market cap on several days worth of this type of stuff what i find interesting is this general premise that there's somehow this vast amount of short, nefarious activity going on and we're going to root it out. this is not a heavily shorted market they're finding stocks that this applies to we're going to clean out the shorts and that's not necessarily the most bullish thing for the market going forward. >> somebody was pointing out 25% of american airlines was shorted. >> right you have these companies that have shorts but the broad market's not the case. >> mike, gabriela, we'll talk to you soon

>> thank you >> andrew? coming up when we return, another huge hour of "squawk box" ahead mark cuban on "the game" stop saga

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good morning earnings data flooding in from some of the biggest companies in america. we've got numbers from mcdonald's, comcast, american airlines and more. those follow last night's results from wall street's mega-cap names including facebook, tesla, and apple iphone maker scored a record breaking order here we go again, gamestop jumping in the prooe market now cracking $500 a share. investors looking to squeeze the shorts who's making money, who's gotten crushed, whether or not this is the dawn of a new era on wall street a special interview with mark cuban. the final hour of "squawk box" begins right now

good morning welcome to "squawk box" here on cnbc very quiet very quiet day on wall street. dow's up 10 points we're going to try to find something to talk about. i'm joe kernen along with becky quick and andrew ross sorkin here are the equity futures. up 3 anything else going on god. >> yes >> american airlines we could spend the next hour on it. >> holy cow. >> stocks coming off the worst day in three months. losses yesterday wiped out yearly gains for the dow and the s&p 500. total market volume at the highest point since 2007 close to 24 billion share. most of them game ststop -- no,n late 2008 during the height of the financial crisis

becky? >> this is entertaining at least. keeps you -- something to watch. it is something to see the real questions are what happens underneath it all? billionaire entrepreneur mark cuban says he's a big fan between what's playing out they have helped bid the stock up massively last night cuban tweeted, i got to say i love love what is going on with #wallstreetbets. all of those years of high frequency traders front running retail traders, now speed and density of information even my 11-year-old traded with them and made money. mark is the owner of the nba's dallas mavericks mark, i want to hear your thoughts on this >> sure. >> again, i love the sentiment of being able to stick it to the hedge funds and what the hedge funds have been able to do in some cases has been really, really bad news, but if you're manipulating market prices, i

don't see how that's a good thing in any see ncenario. >> how is this different than any brokerage firm does? >> it's not. it's nod got for the brokerages to be doing it when you see moves like this, it's a little crazy. i wonder what doug parker is thinking i wish we could get him back on to see what he thinks about his stock being up better than 50% i would think that makes a company pretty hard to run, too. how do you live up to those expectations now. >> they're not expectations. the reality is, you have to run your company and do your best. it doesn't change the fundamentals of the company at all. so many respects it's window dressing if you are an owner of american airlines, if you're an owner of gamestop hopefully prior to all of this you owned it for a good reason and you believe in the company and all of the ma manipulation -- not even manipulation, all of the swings

in the price of the stock is just mishigosh if it's a good company, it's a good company if it's a bad company, it will end up going out of business the people who bought it to speculate, some will make money, some will lose money that's the way the market always works. the only thing that's really changed is the speed and the density and the reduction in friction for smaller traders to trade. that's the only thing that's changed. >> yeah. look, it's good news in terms of crowdsourcing, being able to have the same heft that some of these really big whales have on their own. if you can get this together but we don't know who some of the people on the chat boards are in reddit who are saying these things do you worry that some of the wall street guys could get behind that, big guys, and manipulate those things? >> yeah, but it's not manipulation it's absolutely no different than what has always happened, becky. these folks are picking things, heavily sorted stocks.

they'll go to low float stocks because they know they can flex and show off and let people see what's going on. but look at it the other way what if they go after companies that are really good and -- or maybe smaller companies that are -- have a great social mission and get people not just to buy them en masse and quickly so the stock price sky rockets but also to hold on to them more and cryptocurrency turns, huddle them so that that company really can grow based off of the valuation of that stock. you know, so i think now it's just a flex. they've picked the right place to show off with the heavily shorted stocks and, you know, hopefully they'll go to good companies too and help them grow and we'll see a positive side of this that hopefully will have long lasting effects >> look, i think one thing this definitely does is shines a light on some of the behavior that regulators should step in and take a look at some of the behavior by the hedge funds. if you're able to short more than 100% of a stock, if you

don't have to disclose your shorts ever, if you can do one thing and -- you know, say one thing and do another, i think that there could be a call for additional regulation coming on that what are your thoughts there >> i mean, if you're misleading, right? if you're pumping and dumping to the up side and if you're shorting and misleading people to the down side, yes, that's obviously something regulators should look at you saw the stock, there's a big on it. you're paying a percentage on the stock and loning it out. as someone who's shorting it high when the big is high, you know what you're getting into and you know exactly what the risks are. you just hope something like this doesn't happen but, again, it's not the first time that low flowed or heavily shorted stocks have been targeted it's just very visible and it's not the normal suspects doing the targeting. there are many hedge funds that have made a lot of money over the years targeting heavily shorted stocks i don't think this is anything

different, it's just the people who are making the push aren't who we expect them to be so that's why i like it you know, when you bring people out of nowhere to really show the inefficiencies of the market, it's a good thing. >> mark, let me ask you this though. >> sure. >> we all talk about the market trying to be efficient, trying to be rational usually when people invest in things they are hoping to make money. you have a group of people in this case, this is the part that i'm just struggling with, who are effectively online saying we don't care if we lose money. in fact, we expect to lose money as long as we, quote, unquote, beat the hedge funds that's one group of people there's another group that are riding on top of that, possibly professionals but also possibly others, retail investors who actually need the money, like they need it to pay the rent and maybe i'm a polyanna, maybe people think i'm trying to protect the little guy and they think that by trying to protect

the little guy you're trying to protect the hedge fund manager, but i'm grappling with this because i remember after the financial crisis the media was blamed the media was blamed for not blowing the whistle loudly enough now you blow the whistle and, you know, the folks online say, we don't need the protection how do you square all this up? >> well, a couple things there one, you know, most people who spend their money on stocks these days are not investors, right? and most of the trades that are taking place are algorithmic the days of, okay, you know, give me a share -- i gave my son or daughter a share of ibm i hope it's going to be worth 100 times by the time they're 30 years old, those days are long gone most buy to speculate and trade than actually invest if we want to talk about changing rules so we reward investing, buying, holding, buying companies for their

intrinsic value, that to me is a different discussion as long as we're allowing companies to trade stocks in milliseconds, how can we expect this to be an investor's market? until you change that, you can't change what's happening with wall street. >> and i appreciate that the question that i would ask though is do you look at the numbers, for example, on gamestop and think it's realistic and think there's a fundamental value in it -- >> i think gamestop has a good chance of going out of business because all of the trends are against them then again, i keep going back to this when you allow -- when the average holding period is, what, now in seconds instead of minutes, we can't talk about investing, you know? investing? investing? this is not investing, right this is speculation and trading. when we allow high frequency traders to trade, you know, to

locate their servers, you know, and use such advanced technologies that the only thing they're looking for is to trade off a beat against others, we can't talk about investing this is not an investor's market, right? it's a technology driven market and in this particular case the technology that matters more than beat and proximity is the lack of friction and the speed and the density of trades from individual traders like to. >> mark, do i keep hearing we're seeing bad behavior so you answer it with bad behavior? there's a lot of wrongs in the markets right now so you need to address those wrongs with more wrongs >> no, that's not what i'm saying, joe. >> graham and dodd would be rolling over in their graves right now. >> of course they would be >> if they looked at what gamestop is valued as a way to stick it to the shorts who are elitielitists, he been gaming the system for so long, it seems like you're justifying it and two wrongs

don't make a right. >> no, that's not what i'm saying at all. i'm saying these are the rules we have set. when you have given rules and you have to be willing to accept the behavior that those rules enable if you want to change the rules and say, okay, you've got to have a one-day holding period for any stock, you're going to have more investing and less speculating. some might argue the market becomes less efficient with these rules you have to live with the consequences. >> with all of these, spacs, ipos, gamestop going up, i've lost track, any of this have you worried about the fed and the verne snmt. >> of course, i hedge the heck out of my portfolio. absolutely it has me worried when you have such low interest rates and we're seeing speculation everywhere as assets have inflated, you've

seen it across a whole range of assets, whether it's cryptocurrency, whether it's trading cards, whether it's nonfungible tokens, whether it's housing. when you have such low interest rates, you're going to get appreciable assets inflating and so it creates a lot of concern because when interest rates -- if and when they do go up, who knows whether it's years or decades when we'll see 4 or 5% interest rate again, then people will have different decision criteria and that will certainly displace -- i don't want to call it a bubble because it's reality given the interest rates, there will be a deflation of some sort and depreciable assets and it's going to be scary when that happens. >> hey, mark, would you feel any differently if the crowdsourcing that was taking place was kind of taking a bear turn on this and sticking shorts after people >> no. no, not at all i mean, to me when someone

shorts a stock that i own, it's a beautiful thing, right if the company does well, then they're going to have to buy that stock back at some point. of course there's certain circumstances where the company is trying to do a secondary, raises money, that diminishes their capacity, i always looked at it please short my stocks because i'm trying to invest in goods companies. if they perform, at some point they'll have to buy them back. >> your point on what the regulators have to buy is a good one. the average holding time is 40 seconds or something stupid right now. >> yeah. it's crazy. >> what other things do you think they should be looking after, aside from making a longer holding period? >> i haven't given it a lot of thought so i don't have a good answer for you, but we have to decide what we want in our market do we want this just to be an open -- this is just a very liquid market, here are the

rules, whatever comes along we deal with it or do we want to encourage investing again? and you do that through the restrictions, right? you can talk about taxing, and i know -- i forget the exact name for taxing trades, but if you're going to tax a trade that's held for less than a minute, i think that's not necessarily a bad thing to consider. that freaks out a lot of people, but i think we become stronger as a country when we have investors rather than traders and even stronger when even those traders are not algorithmic. as we go forward with ai and ai gets more advanced and natural language processing gets more advanced and we use more sources to -- as inputs for those trades, we're going to have -- there's going to be other times when we get significant moves one way or the other in a stock or group of stocks that we can't explain. and this could be even worse

because we won't know who's behind it or even why the black boxes, these networks are making these trades so if we don't make the conscious decision legislatively to say, look, we want to have investors rather than traders, and i get the argument that all of these algorithms create liquidity, that makes it easier, these things couldn't happen, wall street bets couldn't do what they did unless there were algorithms balancing liquidity, i don't think that matters i don't think will i quit at this is the ultimate goal of a market of stocks. >> look, you just said we need to get back to investing we need to make it so that people start investing again and then in the same breath you go, i like what's going on with this chat room stuff, running these things up 8,000% i don't see how you can say both if we want to get back to that, just answering the status quo with even more insane logarithmic moves, i don't see

how that helps when our goal is to get back to 401k, stocks over time are a way of building wealth for your family and for your financial future. >> it's like changing the rules in the nba or the nfl or the nfl for pass interference or replay for pass interference. whatever the rules are, people are going to use them to their advantage. the way the rules are, this is what we should expect. this is nothing out of the ordinary with what we're seeing right now. it's just the natural culmination of the way the rules are written. and so if we want to get back to inve investing, then we have to change those rules so as long as we don't change the rule book, great i'd rather see the little guy start to have an impact than only big brokerages and hedge funds. every single day there's a call made at a major brokers who tell

their clients and you've got a broke kefr r-- broker rage they make a call and they hope people will jump in it this is a similar stock. >> while i've got you here, the lakers tonight will they cover with the 9 1/2 over the pistons, do you think >> you know, i don't know if i'm going to buy any gme today i'll have to make that decision later. >> give me a sure bet for tonight. give me one sure bet for the trail blazers/rockets. clippers/heat. warriors/suns. >> order a pizza, you'll enjoy it that's a sure bet. >> all right >> mark, we have to go real quickly you said your 11-year-old traded stocks what did he make money on? >> he bought two shares of

blackberry and two shares of amc. and i had to -- i made him tell me why he liked those stocks let me just tell you, he got all of his information off of tiktok every bit of it he got off of tiktok and that's why he was aware of those stocks. >> brand-new world mark, always good talking to you. we'll see you later. >> thanks, guys. take care. >> okay. thanks so much meantime when we come back, mohamed el erian is going to join us. we're seeing spikes in american airlines, koss and gamestop. so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position. you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪♪

extreme volatility this week not necessarily -- not yesterday the dow but mostly in a lot of these stocks that have high short interest, including gamestop, amc. this morning add another name to the list really, a blue chip name american airlines. it's the most shorted of the major u.s. carriers and we're watching those shares surge following reddit board mentions and american's quarterly reports. talking about overall market risks from all of the volatile trading. mohamed el erian, president of

queens college cambridge i wanted to talk to you specifically today, mohamed, about this phenomenon that we can add, maybe some of the others recently, whether it's spacs, ipos, bitcoin, whatever you want to look at. are you troubled by what we're seeing with gamestop and some of these other stocks, mohamed? >> i am troubled, joe, because it is enabled by very distorted financial conditions look, there's four levels to this element you've been covering them. one is the pure hedge fund versus retail, antiestablishment. the second one is a change in market structure the third one is the interest of regulators and politicians and then the fourth one is the one that really has a lot of market implication is this the beginning of the accident we were worried about

because of overleverage, over excessive risk taking or is this simply another buy the dip opportunity for market participants as hedge funds degross. that is the key element for your 401k the other stuff is really interesting, but the bottom line is do you believe this is the canary in the coal mine or is this another buy the dip opportunity? >> right it wouldn't be a causal effect -- it wouldn't be causation, it's just symptomatic of what we've seen i certainly think -- i mean, i can blame the fed on the front end and the back end i blame them on the front end forex as ser baiting the inequality that people believe they don't get a fair shake, the elitists, the game is in their favor because they were the asset holders in the last ten years. savers made nothing and anyone that had assets has been enriched, even during the

pandemic we've seen how well the top end was done the fed orchestrated that. maybe it wasn't their fault. they're responsible for that now the endless printing we're seeing to try to juice the economy is what has inflated all of the bubbles i wonder like you do whether this is, you know, representative of an unraveling of a lot of different markets. it scares me. >> yeah, it scares me too, joe i've been talking, and i wrote a book about it in 2016, the only game in town, be careful of the unintended consequences of relying for too long just on central banks. you just talked about them that's why chairman powell didn't want to touch this yesterday. he did not want to go anywhere near this, okay? because he knows that this is a really complex issue and his hope is just hand off to fiscal policy so we can stop worrying about this.

that's not going to happen you've got to worry about what are the consequences of distorting markets for so long let's not forget that behind all these shorts of 100% plus is rock bottom interest rates and a bun dant liquidity the availability of leverage is completely in the interest of the person wanting to leverage the likelihood of accident is high remember august 2007, it started small. keep an eye on this. i'm not saying this is a major market accident, but i'm saying if you care about financial stability, you've got to look at this really carefully. >> you're right. high buy no one ever talked about it until it happened. cypress, no one talked about it until it happened. it could be something small, i guess, and we remember when hedge funds, if it's big enough, whether it was a long-term

capital or something like that, if enough of them need to liquidate good stuff, then the good stuff starts going down, too. then that can feed on it self. do you see something is a small string being pulled on that could unravel, mohamed that's what happened yesterday contagion. remember the word contagion. if you are in a losing position, if your broker's calling you saying, hey, your margin call, you've got to make some cash, what are you going to do sell what you can sell what do you sell, your most liquid instruments we saw that yesterday, the market as a whole gets hit, including the most popular names because they're the most liquid names. then a few stocks come up. behind that are people covering their shorts and having to raise capital in order to do so. so that is a typical contagion where something small up here creates something big up here. the big question is will the buy the dip mentality save us?

will people think this is yet another opportunity? i don't care about why it is that market hedge sold off, i'm just going to buy it so keep an eye on this it's going to be fascinating the next few days, but there are broader financial stability issues we must not forget. >> should we all just take a -- an armchair view of what's happening or is there a government agency to look closely and monitor everything are there any type of circuit breakers or anything that you could see that could be employed here to make sure that this doesn't turn into something more serious? >> so, first on the first one, just like we had a book on the flash crash a year ago, we're going to have a book on this this is too good a story not to be a book or even a movie of small retail versus big hedge funds, what's behind all of that so on the second issue, you've heard me say this over and over

again. risk doesn't disappear risk used to be in the banking system the banking system got regulated a lot more the markets started de-risking also the banks but the risks didn't disappear it morphed and migrated to the non-banks. i don't think the federal reserve understands what's happening to non-banks enough. i think in general that is not a sector that's sufficiently understood so the regulators have got to do a massive catchup. >> well, that -- normally that's not something that any of us -- if you want markets to sort of self-regulate, what does that look like? andrew -- maybe andrew wants in. go ahead, andrew >> i had a question and i thought maybe you could help educate me and you could help educate the audience about the world of short selling because one of the arguments around gamestop has been that 140% of the shares outstanding have been

shorted and people look at that and say that unto itself is stock market manipulation. i question to some degree whether it is or it isn't, in part because at least as i understand it, i could own a sh share, you could borrow it, right? you could sell it to somebody else that person could then borrow it and sell it to somebody else and down the road. so it's -- to some degree it's almost unlimited the question is whether that really should be considered manipulation of sorts. >> yeah, i wouldn't consider it a manipulation i mean, that is simply an outcome of the rules that are in place, and there's different ways of putting sand in the wheel to stop that from happening. the regulators have decided not to do that you could raise margin requirements there are tools we have and the regulators have decided not to do that. you know, the reason why actually the retail investors

who have gotten on to this and who have been able to communicate so much better, i mean, there's so much better communication going on right now is because they have recognized when it is 140%, it doesn't take long to figure out where the pain trade is. the pain trade is you make that thing move when you have 140% short interest in a stock, believe me, the pain trade hits pretty quickly. what's happening in american airline now shows that they're expanding the strategy you've got to be careful, okay you've got to be careful, okay at some point the longs also have to get out. you've got to be careful this is not as easy a game as one would like it to be for the small investor >> right everybody's taking issue with calling it a pump and a dump because nothing's been dumped, but we'll see if someone does finally take a big dump. anyway, thank you, mohamed becky, i said that for -- we've got some data. thanks, mohamed. >> mental image i'd rather not

see. thank you, joe. steve liesman is standing by with breaking economic data. what can you tell us what numbers do you have so far? >> reporter: so far i've got the claims number update 847,000. a bit below the estimate of 875,000. the prior week revised up to 914,000 from 900,000 i had gdp at 4%, which is a touch below the estimate of i think it was 4.2 or 4.3 depending on which estimate you use. i'm looking for the full release tables which are not out quite yet in terms of how we got there, but we have it at 4% and the prior month at 33.4 i believe is what i saw there. guys, let me see if i have any other headlines here that's all i have right now. i'll come back to you in a little bit with additional data. i'll remind you as part of the conversation you're having i asked hal and gamestop he said

it was not monetary policy pushing up stops, but the expectation for vaccines and fiscal policy were the two things he mentioned. he also raised the question whether or not and how it would help the economy if, indeed, the fed rolled back and tapped monetary policy. becky? >> steve, thank you very much. all right, thanks. still to come, hearing from someone i'd like to get a quote from we'll see if i can reaction from henry blood get and mike novogratz, reaction to the market madness check out the moves if you don't believe us we'll be right back. you packed a record 1.1 trillion transistors into this chip i invested in invesco qqq

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coming up, who's getting hit the hardest in the surge of gamestop shares. we've got that story for you when "squawk box" returns. that stock up by 30% we've seen it up by more we'll continually to watch

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welcome back to "squawk box" this morning want to get to the story dominating the markets this week that is the surge in shares of gamestop and the battle broken out between groups of individual investors and wall street. leslie picker joins us >> reporter: andrew, that's

right. mascot of the wall street bets movement is gamestop, the enemy is hedge funds the battle over profit the little guys appear to be winning, at least this week. according to data from goldman sachs, they show that tuesday was the worst day for fundamental long short hedge fund alpha on record down nearly 2.4% in a single day driven by a squeeze in concentrated shorts and selloffs in crowded longs. we should get yesterday's data today. it is expected to be even worse. melvin capital, maple lane all down double digits former sec chairman jay clayton said institutions need to start updating their risk models. >> the participation of the retail investor has changed how money flows in and out of the market and where it flows. institutions and money managers should be updating their risk

models including our current monetary conditions. >> not all hedge funds are the same there are large quants pouring through data from reddit, twitter and other sites. trading on the sentiment is helping fuel the short squeezes even more, guys. >> before you go, we're seeing reports that robinhood is restricting purchases of some of these stocks, including gamestop and amc. we have not confirmed this, but we are working on it i just want to mention that. again, i want to be very clear we have not confirmed it dave portnoy tweeted saying the following, it turns out robinhood is the biggest frauds of them all democratizing finance for all except when we manipulate the market because too many ordinary people are getting rich again, i want to caution that we have not confirmed that robinhood has made these moves or taken these steps do you know anything about this?

>> reporter: i don't know anything about this in particular, but it would follow t.d. td ameritrade. they made a similar move they restricted trading in gamestop, amc and other stocks not too surprised that robinhood would follow suit on that front. but to dave portnoy's point, it's not going to be a popular decision but it's one that i would assume comes amid fears of potential regulation, potential scrutiny on what's been going on those platforms. >> what do you make of this? this goes to the whole idea should the companies be trying to, quote, unquote, protect the public does the public need protecting? there's a very unique issue here >> i mean, they're probably worried about protecting themselves when and if there's a piper to be paid. >> of course. >> i will say dave portnoy continues to tweet this, too

he just tweeted either robinhood app allows free trading or it's the end of robinhood this was the guy that was the clarion call for robinhood and everything that goes along with that i can understand the company's getting concerned about what responsibilities they will hold if there are retail investors who get really hurt by this. what liabilities they have on these issues there's probably -- i don't know what to say to say these people aren't adults and can't trade. >> i'm not going to weigh in on whether it's good, bad or otherwise, it just adds to the drama. >> right. >> watching this all play out, it just -- okay. here's the -- you know, when we update the latest news, here's the latest that's robinhood possibly, i mean, it sounds like it, but we will confirm it as you say it, andrew, sitting back and watching this play out i may have some -- david tepper is going back and forth with me here so i'm going to make sure i

can say this on the air. he may have some comments here. >> i'd love to hear his thoughts on this. we'll go to break and then come back with this >> let's do that right now and we'll come back. hopefully with david tepper's comments we're going to stick with gamestop and the spikes we were seeing with amc, bed, bath & beyond the biggest story on wall street and over water coolers and over zoom in the new covid pandemic universe voatave a debate with mike nogrz and henry blodgett that you do not want to miss stay tuned, "squawk box" returns after this only from kohler. sofi made it so easy to pay off my student loan debt.

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breaking news. david tepper told me through text, i'll embellish this, it was partyon.com in 1999 that screwed the shorts, now it's gangup.inc it didn't end well in 1999 when the dotcom bubble popped been there, done that, old stars. on the phone he wanted to emphasize that, you know, maybe you trade this, maybe you go with it, but just -- if you are playing this game, be careful if you're long because a lot of times when it gets up to these valuations and it's what we've been saying all along, andrew, and becky, if it turns, it can

turn sharply and he said if you want to -- he's been around in these markets a long time and he's got scars to show from things like this that was his point just be careful if you are trading. if you're long, just know this isn't totally knew maybe it rhymes historically it's not a repeat of the past, but it reminds him of 1999 he has the scars he kind of intimated he had scars all over his body which gave me a visual he didn't like. >> lots of visuals. >> it's figurafigurative >> the one thing i would say, his words of warning are -- should be heeded and, look, doesn't mean you can't do these things, but don't be betting with money you can't afford to lose don't use leverage because that can give you trouble if you're riding with it, having fun with it, enjoying it, okay, but don't be betting with money you can't afford to lose that's the lesson that people

should take out. >> yeah. yeah >> okay. we're going to -- >> how about the irony of the portnoy robinhood stuff? that's where -- >> right. >> -- robinhood has -- >> that was originally his platform of choice i think he changed platforms of choice though. i think he went to another platform that was sponsoring him at one point we're going to continue this debate right now and talk about what we're seeing in gamestop and other volatile names with a guy who knows a lot about 1999 and some scars to prove it insider founder, blodgett and novogratz. henry, does history repeat itself >> yes, absolutely when i heard alexis ohanian say this is something completely knew, it's small folks combatting the big institutions, it's such an echo of what we heard in the 1990s as david

tepper was saying. it was exactly the same story. a new mechanism, chat boards yes, we removed even more trading platforms and making it even easier to trade that will accelerate this. this is more than just an echo this is a repeat of something we have seen again and again through history. and again through history. >> and before we get to mike then, how does it end then >> i think we know how it ends, call up some stock charts from 2000 to 2002 and you get a picture very much how it is likely to end and i remember sitting in my office in 1998, which was two years before the peak so it can last for much longer than you think, watching a stock called ktel, an old sort of music retailer from my childhood then that suddenly did exactly what gamestop is doing, and it was this new thing, it was exciting, it was some reflection of the future plans of the company, all of the

stories around it, and it went right back to where it was beforehand so that is the scenario that i think is very likely for most of these stocks and i would just urge anybody who has not been through this before, to echo the three of you, and david tepper, and mark cuban and alexis ohanian and pretty much everybody, please don't bet more than you can afford to lose. >> mike? do you agree with that >> yeah, listen, the conclusion is pretty similar. i have a friend call me yesterday, oh, my god, i bought amc, and i called him up, sell it instantly, if you got it on the short squeezes early, great for you, but we have the little guy, taking it to the hedge fund managers and three legendary investors out of business but you're now at levels on all these stocks where you're guaranteed, i'm not sure in a day or two days or five days or two weeks but you're guaranteed to lose money if you hold them, it is a game of pass the parcel.

what is really interesting is how much volume is trading gamestop traded $25 billion of volume yesterday there is turnover. new people buying from the original guys that squeezed this thing. what is also interesting, this is where i disagree with henry is, there's an anger, i spent an hour last night, on the reddit chat and it's shocking how angry, right, there's a nilism that's going on which i do think is reminiscent of the time i think we saw it at the capitol building i think we saw it in black lives matter protests. people are crying for system change this is generational this is millennials and gen-z's screaming at boomers saying you screwed up our planet, you screwed your up our economics and screwed up our future and screw you. i think there is a lot going on here besides the squeeze that is societal but from a markets perspective, sell, and sell soon. >> mike, one, just one follow-up

on that, which is do you believe that the professional investor is now co-opted, if you will, the protests, if you look at the volumes. >> certainly, listen - >> wall street is now playing this and will ultimately be taking advantage of the retailer once again >> one of the legendary investors, told me during the asian crisis, that you got to pick on a cripple, and you know, what happens, once these big hedge funds were short, and it was public that they were short, all of the other hedge fund, what were they short, let's push that and what were they long, let's sell that. it's a dog eat dog out in the hedge fund space it's not hey, let's take care of our buddies. these guys are fighting it out so you don't have that volume all on retail. and now you're going to see people put on big short, retail and hedge funds. $23 billion, means $23 billion of people buying and $23 billion

of people selling. and so things like the xrt, the retail index, which had a four standard, five standard deviation move and great short for someone with dry powder and stay with it listen, you will see a lot of money made and lost in the next three or four days there is deleveraging moving on. risk managers tapping people on the shoulder and saying in this new volatility regime, get your risks down sell longs and cover shorts and the guys ahead of the game with dry powder will capitalize. >> henry, invariably, as you know, there will be finger pointing when this is all over and rarely do speculators blame themselves how do you see this playing itself out and if you were a regulator today, what would you do and recognizing that so many of the retail investors say don't regulate us, go regulate the hedge funds, that's why we're doing this in the first place. >> well, first, i would say let me say i agree with mike about

the anger that's out there and i think it's sort of being forced on to this, to explain, it and i think the important point, wall street is on both sides of this. obviously hedge funds, also are in these forums, they understand what's going on. of course they're going to take advantage of that. hedge funds kill each other all the time, in your show, andrew, billions, if you want to see this in action, you traumatize it incredibly well in that show, that's happening, and also pull up the shareholder lists of all of the company, they're all big institutions, so they're doing extraordinarily well in the middle of this so there's that, but i think the other point that you made, absolutely that finger pointing, everybody should go out and read john kenneth gollgrave's the short history of financial euphoria, 90 pages long, it will take whatever an hour to read, one of the things that you see always after episodes like this is severe retribution and finger pointing and it is, it is publicity, everybody goes after everybody else, and then there are regulatory actions, and

legal actions, and then the system gets changed, and that will almost certainly happen here, too. so i think you're extremely smart to talk about it, and i think that anybody who is watching this, and not expecting that that's going to happen should again read that book. >> mike, if you're investing in this marketplace today, though, has the world changed? is this a new era? at least temporarily when you - >> listen -- >> when you look at the investment in a particular stock? >> i think the long/short hedge fund paradigm has been put into question here a little bit and certainly the market neutral on short funds when three of like the best investors over the last eight years literally go down 30, 50, 70%, they're investors, right, listen, people aren't going to feel sorry for them but their investors, pension fund, institution, you know, cities and why are we putting money in this stuff and so i think the hedge fund industry will have to take a

look at itself it is a huge endorsement of private equity hey, we don't mark our stuff, it's longer term and so you're going to see these shifts because of this carnage that's happened. listen, in the long run, this is chairman powell's doing, right this is all liquidity. and when you give people checks and when you keep pumping money and buying it, in, all kinds of different assets and we have created a speculative culture with low interest rates. >> here we, are mike and henry blod of get, we appreciate you for a conversation, a debate, on all of this as we continue to try to make sense of it. that is all for thus morning make sure you join us tomorrow, "squawk on the street" is coming up after aho bak srtre

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good thursday morning. welcome to "squawk on the street," i'm carl quintanilla with david faber and john ford, jim cramer has the morning off futures swinging around, the story remains the war between retail and hedge funds as the s.e.c., reddit, david tepper, all weigh in today it's an enormous day for corporate earnings and macro we will get to all of that the road map begins with the reddit revolution and the short squeeze. continued volatility and tesla records its rs