higher by 5% the business software maker catches a tail wind because of the investment in bitcoin. as of earlier this month they owned close to 7 2,000 bitcoins. it's now buying more it did something similar last december bitcoin playing in their strategy >> microstrategy turned into macro strategy it looks like we are done, andrew. futures look strong. we hit 50. >> futures are strong. we want to honor arnie swaurnson. a great life a life well-lived. >> he did. we'll miss him yep. >> good news morning welcome to "squawk on the street." i'm carl quintanilla with david faber and mike an telly.

bullish vaccine data u.s. case loads continue to fall ten-year-year-old, one and a quarter. and oil near 60 in the deep freeze we begin with the surge in futures. stocks are set to add to last week's record levels at the open a natural gas rally and a spike in oil prices. we'll explain the impact of that cold weather in texas. later bitcoin hits a record high topping the $50,000 mark this morning carl, wback to you. guys, a lot to unpack this morning. we'll begin with futures obviously. mike, it's going to be interesting to try to separate some of the spikes that we're seeing in energy from the broader reopening trade. obviously we mentioned yields. the president a moment ago tweeting we're going to break that goal of vaccinating 100 million in the first 100 days. that's all good news and equities reflect it. >> they do you know, i think not much has come along that would disturen this view that we're pretty much in an accelerated path toward a

fashion of reopening in the spring you're doing better than expected on cases. and if you look at the treasury yield move, that's just right along a trend that's been in place for a few months now it's hard to say that that's anything like weather-related. i don't think it's just oil prices kind of bumping the inflation expectations that's kind of showing you the markets in general are incrementally relaxing as we go along. almost day today ratcheting higher the question becomes when have we kind of reached the moment when we've kind of figured it out and priced it in that's hard to say because you know, right now the market is really just kind of feeding off those same forces and part of it is momentum but what's been interesting to me is how if you just capture the s&p 500, the vast bulk of all equities, it's been orderly. and this kind of well behaved up trend as opposed to the wild stuff you see going on alongside of it. right now it's very much a don't find the tape. don't fight the fed market for

the moment even though we can sort of see it becoming a little bit of an everybody is already in the pool type environment before long >> yeah. david, speaking of the wild things going on alongside of it, you got page one of the journal this morning talking about junk bond yields hitting levels that at least historically have been associated with no default risk. so this is starting tocreep up into not just mainstream media but the top of mainstream media. >> we talked about it fairly recently as the yields fell below 4% on average. that is fruly historic when you think about it i can remember the dawning of the high yield market and michael mill kin in the 80s creating helping to create that market, and obviously, it becoming a very important area of capital raising for so many companies, but i can never remember a period where mike, you're paid 4 % or less on average. we've talked about this. i think it was last week when we noted carnival cruise, i think they raised 3.5 billion and a

little more than 5.7%. i'm working off memory but i think i'm in that year six-year paper unsecured the numbers come in in terms of the willingness of buyers to step up in the fixed income markets. again, attesting to the lack of supply, i guess, for lack of a better term in terms of anything with a decent yield on it. >> right and we're in a world where it's almost as if capital is not scarce to say the least and how do things get valued in that type of environment when capital really is free flowing and plentiful and the perception is you're backstopped by somebody along the way, whether it's the fed or something else investment fwgrade yields, peope were saying on an inflation adjusted basement, if you're an investment grade borrower, you're paying zero yields are at or below zero. that changes the equation. it doesn't alter the fact that equity valuations are elevated,

maybe that means forward returns over many years or going to be restrained but it's hard to say what the right price to pay is for equities that earnings teams is going to grow, dividends are going to grow over time when you're willing to pay 4% to high yield borrowers, get it from high yield borrowers >> david, i noticed i max shares in asia overnight. even this morning, they're going to open at a post pandemic high. you got the state of new york broadening eligibility for the vaccine. goldman had a note over the weekend about pent up savings or what they're calling forced savings in american households 1.5 trillion and going to 2.4 trillion 11% of gdp by the middle of the year assuming there's no more things to derail the economy they think a fifth is spent in the first year it's one thing to call the antics on the sides of the market wild, but i mean, it does reflect the thought we're going to be seeing the consumer return

in ways that are going to be historic >> yeah. listen, and that's a key point here i mean, we make note of as i think we should, the areas of speculation we see that we haven't seen in some time or at least that are somewhat different than what we've seen, certain areas of the spac market or special purpose acquisition corporations, deal after deal being priced and then deals being negotiated. whether it be bitcoin at 50,000. again, there are many who can explain it, whether it's certain stocks, mike, as i look at that have had incredible moves and it's not just the back and forth on gamestop. via come and discovery, up over 55% for this year. and yet to carl's point, you've got pent up savings. you've got this idea that americans are going to get back to doing a lot of things they vice president been as we start to at least see light here with vaccines being administered at a more rapid pace with the virus

thankfully receding. we're concerned about the other variants that are more transmisable, and with 1.9 trillion perhaps potentially getting ready to come in if the biden administration is successful in getting its program passed through congress. wouldn't be bipartisan, of course, but they could do it if they wanted to through reconciliation, and they could be coming fairly soon. >> there's no doubt that market does best when it's getting help that it maybe doesn't even need. it's sort of more than covered in terms of the downside risk whether it's in consumer spending or corporate credit as we've been talking about i think that explains where we are. does it mean you can just extrapolate it out from here for? the pent up savings number has been kind of a staple of the bull case for months you could look at it in checking balances it's not some kind of fancy proprietary estimate it's there and part of the bull case since we've been talking

about this for months. you're up 16% in six months. the market itself has really i think overachieved in the near-term. it feels and looks a lot like i could throw all the different years out there, but in 2017 where everyone said is anything going to disturb this market, give it pause? what we did see in late january, early february is when a massive stampede of volume is equal to 5% to 7% of overall volume coming from eight stocks going up or down 50% a day, that was enough to create positioning shock. now there's a market where almost nobody is short cash supplies are low and nobody is really kind of clenched up in advance of some kind of an unwelcome blow that's the backdrop. it doesn't mean the market has to quit going up but that's the setup for the next several weeks >> under that thesis, you're not counting on whether you want to call it reddit or some other

label. the marginal buyer being the retail participant you don't think that's a dynamic, similar to the way we saw it in the late 90s >> i think we do have that i think that's been well in motion for a while it is happening. it's concentrated in certain parts of the market. i think there's some academic studies saying smaller stocks are way higher than they would be if not for the retail flow. i think you're seeing ramping up equity infos in aggregate, investors are heavily allocated to equities. in you look at retail balances, they have their highest allocations to retail in many years. the market is up do you need to add more to it? and so i think that's part of the equation but there's no doubt that retail is more pricing sensitive. they sort of buy more what they know, and it's just sort of a less kind of rigid quantitative algorithm discipline flow in this market. i think that does create more

bang for its buck in terms of moving parts of this market >> yeah. let's talk about the energy picture. millions without power obviously very tdramatic weather especially down south. brian sullivan has more on what we can expect in the coming days >> hey, carl what we can expect is more cold weather. the cold front, nearly a record cold front is not going anywhere it's playing havoc with texas's grid it's just texas. oklahoma, louisiana, but texas is the focus texas not only the biggest energy producer but also the biggest emergency consumer right now about 4 million texas households have no power or are in the face of these rolling blackouts. what's happened is that the demand for power to crank the

heat has outstripped capacity and supply so some of these contributors have had to go on the open market and buy up natural gas or electricity at massively inflated rates will that trickle down to consumer bills i don't know to be blunt, but the whole sellers are buying it at 10 or 15 times in some cases or more what it goes for on the open market you can see people burning wood to keep warm 4 million without power. a lot of companies do it about 40% to 50% of their customers getting power at one time. then shifting it to other homes, trying to make sure some homes get power for a certain amount of time to run the heat before they have to shut it back down that's the idea of these rolling blackouts, if you will aep, texas about 40% of the customers with no power. center point energy, huge in houston, last numbers on their website about 55% of their

customers do not have power. it's one degree in dallas. 10 degrees in houston. wind turbines are frozen some natural gas pipelines are struggling and no sign this is going to ease over the next couple days. and we are getting word people have lost their lives. you run out of heat, a lot of people perhaps on the street or don't have adequate home, and we are seeing some fatalities because of this serious story. it's going to cause a lot of questions about why the energy capital of america is having trouble producing enough energy to keep people warm. >> that's what i wanted to get to you with, brian there's stories outside of texas. i see ford right now is going to be idling f-150 production because of natural gas ups is going to be shutting down the louisville hub for a while on the texas front, what do you make of the questions that they somehow decided to go it alone

on the grid, didn't cooperate with other states, didn't invest in protecting turbines the way they should have years ago because they didn't see this kind of weather being a normal thing? >> i'm sure there's going to be anger. there's going to be discussion there's going to be plam there's going to be finger pointing i think you're right to all that the electric reliability council of texas, not looking like it's too reliable on the reliability part of their name, manages about 90% of the energy going across its grid. there's going to be a lot of blame focussed on them this is something we don't think about very much, do we it's like the containers last week you just turn the lights on and it tends to work sometimes a tree is down in the neighborhood or there's a storm. this is cold weather this is not flooding this is not a hurricane. it's been colder in texas. not in 30 years. but on valentine's day i think it was 1895, i wasn't around, by the way, they got 20 inches of

snow in houston. so it's not as if there's not some historical precedent for these grid managers or whoever they are, infrastructure gurus to say what happens if -- what happens if it gets this cold or what happens if the waters rise two feet or whatever there's going to be a lot of frustrated people, but right now it's just about making it through. i'm not exaggerating people on twitter are hitting me up saying we're sitting in our car because we can get heat in the car running the engine, and that's kind of the sad state of where it is right now. >> yeah. i'm looking at tweets from the mayor of houston saying what you just said. we don't oversee ircot managers the electric grid saying it's not something he can control natural gas, give me a quick take on what we can expect there longer term. what this might mean, if anything, given you follow that market closely

obviously a lot comes out of texas but a lot of it finds its way around the world >> it does and okay, if we throw the natural gas board up, you'll see that natural gas is $3 buy some wholesale contracts, you'll pay $3 and change there are people on the spot market paying 350 yesterday. that's about the highest number i saw. if you have a contract obligation to deliver gas or power whether it's theoretical or on paper, you still have the obligation, you have to go out and buy it in the spot market like anything else we talk about, are there's talk of wholesale electricity prices up 1,000% to some people. natural gas, 350 to 450. oil about 3 million barrels a day offline. and i'll just wrap it up with this the previous conversation you guys were having, okay and i've gone to 15 states in the last four months, driven or flown. i can assure you that the rest

of the country, a large part of the country is not living like we're living hard to explain, but i'm sure if you've gone to florida or have friends there, they'll tell you, and i only bring that up because i think demand, if you look at traffic indicators in miami, they're higher than they were last year before the pandemic. atlanta, very close. there's a huge part of the country which i won't say is normal, but it's not like what we're experiencing here, and i bring that up only because i believe energy demand may be higher than we think it is over 1 million people flew two days in a row a couple days ago. i was one of them, by the way. everybody is masked up and there's a lot of -- i saw a lot of senior citizens on these flights. i asked a woman in her 90s she's in a wheelchair. i stood way back, masked up. i said were you vaccinated she said yes, and she was going to fly her family she hasn't seen i thought there's going to be

tens of millions of people that are going to be vaccine economy that are going to bust out sooner than we think, ithink that goes to energy demand and goes to power prices >> yeah. i mean, that's one reason why j.p. m sees this oil super cycle in the coming years due to underinvestment but also the surge in demand. it's going to be fascinating to watch. a lot more from brian during the source of the morning. brian sullivan on the texas freeze a bunch of other calls this morning. upgrades of google and downgrade of american express. futures steady to start off a shortened week we're back in a minute your daily dashboard from fidelity -- a visual snapshot of your investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity. you packed a record 1.1 trillion transistors

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another record high for bitcoin. up more than 60% since the beginning of the year after quadrupling in 2020. tesla matched a car, paypal. some of the major firms investing or integrating crypto into their business model. and then sheila bear and bullard accentuating the risk. >> certainly accentuating the risk, if, in fact, the thesis here is bitcoin becomes this autonomous global means of exchange and it threatens

existing currencies. to me, i'm not sure that's what's animating the story at least in this moment clearly it seems like it's diversification. it's momentum. it's displacing gold for whatever you thought gold was, whether you thought it was kind of a follow or this great hedge or a speculative asset that's the first step in what bitcoin is trying to supplant. whether it makes sense or not or the best design thing or not, you have buy-in and then things like microstrategy where just kind of like laundering bitcoin for public stock investors basically if you can't or don't want to own bitcoin, you have a stock that's now a proxy for it and you can do it. it's on the nasdaq as opposed to worrying about the rest of it. i think we're in a self-reinforcing mode of the feedback loop we have going right now. there's no right or wrong trace. that's kind of the way it always comes down

>> yeah. you know, look at that stock chart, mike. there's a lot of movement we can put up that would look somewhat similar to that. interest fwlingly -- why don't come back to the market after this break, carl >> yeah. we'll get to it. the opening bell is about eight minutes on this tuesday. don't go away. ♪ chocolate, peanut butter, cookie dough! ♪ ♪ scoop! there it is! ♪ ♪ scoop! there it is! ♪ ♪ scoop! there it is! ♪ ♪ scoop! there it is! scoop! ♪ ♪ shaka-laka! shaka-laka! ♪ ♪ shaka-laka! shaka! scoop!. ♪ ♪ choco-laka! choco-laka!...♪ geico. switch today and see all the ways you could save. ♪ sprinkles! ♪

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it has encouraged other people to take the time for each other. ♪ ♪ we have sad news to get to this morning mar marriott telling us their ceo arnisorenson passed away

he was the third ceo in the history of the company and grew it to become the world's largest hotel operator he is survived by his wife, his four kids, our thoughts are with his mi afalynd his loved ones. arne serenson was of 2 years old. to defend against dark forces attacking your organization, you need to see in the dark. to have the wisdom to understand multiple cyber threats. the precision focus to end attacks instantly. on computers, mobile devices, servers and the cloud. join the world's leading companies in our mission to defend. cybereason. end cyber attacks. from endpoints to everywhere.

names this morning shares of southwest will open positive at the open as they not only might say that february was a little -- sorry, january was a little bit better than expected on operating revenue and the guidance for load factor in the coming weeks better than expected february guide 60 to 65. prior 50 to 55 so we will be looking to see if the nation's airplanes get a little more crowded. >> yeah. i think that fits right in tune with what the overall message of the market is. people assuming we just are spring loaded to sort of unleash travel plans we don't know if it's going to

come to pass the stocks not as far down, not southwest, but the other legacy carriers are not as far down in terms of total value as you would just think by looking at the stock charts because they've issued so much equity and debt over the course of it. but it doesn't matter until we're talking about something close to normalization until we're talking about the path there. i think that this is still going to be that type of story also, by the way, there was a time we'd be talking about fuel cost where oil cost, but i think we have a room before we have to get into that. >> right and same thing with restaurants and minimum wage some of the longer-term issues on the back burner david, i see norwegian did extend some suspension of services a lot of that is due to european restrictions that have been elongated because of some of the variants over there. and then fox does have a story this morning that some of the nevada casinos are upping indoor capacity from 25 to 35 that's all the piece

>> yeah. well, again, we've thankfully got good news here in terms of the virus in terms of new cases and hospitalizations we're down and down sharply. to levels we haven't seen since kind of early, mid fall, let's call it at this point. and obviously we hope that continues. the experts as you well know continue to say watch out for the other variants can we vaccinate as quickly and enough to avoid the easier spread apparently that some of them have? >> there's the opening bell, guys absolutely and the s&p filling in at the bottom of your screen. keep an eye on the vix which did sort of flirt around with 20 on friday, mike currently 25.57 there are. but we'll see how much volatility traders are looking for, especially in the coming months >> it's been reluctant to get into 20 mark i don't read too much into it after a three-day weekend. there's a little bit of a rebuild. but the vix futures are telling you there's really a lot less

tension than there has been for a while. the other part is it might not be really telling you everything about the people's mood or their willingness to hedge because -- as i said before, the shorts have been covered across this market there's low cash levels. there's retail call option going on in the market, and i think the one outlet for that is for a lot of professionals is simply just to hedge the index as opposed to individual shorts that can get squeezed. maybe that's why it's been more elevated than you might expect everyone keeps talking about if it cracks below 20, there's another category of systematic buyers that say the coast is clear. whether that's going to happen, i have no idea that would be the only category of investors that is not david, yet, in this market pretty heavily. >> right i mean, it's interesting usually you'd expect the vix on an up day. we're accustomed to not seeing it up so much.

>> exactly now it's a little bit of retaking a little more of the room we lost on friday >> yeah. guys, stocks in particular to watch this morning we mentioned palantir which we want to get to and the lock up there. something people are keeping an eye on i want to get to m&a and core logic. it's a company i've been following for some time. our viewers may recall when senator ka nay got in there, took significant position, moved to replace board members and made a bid to buy the company. then it was in the 66, 67, but it forced the company to put itself up for sale we did get a deal but now we've got another potential higher bid there. not potential. it is higher, the bid from co-star. co-star all along had been thought to be the most likely buyer of the company and so it was somewhat unexpected when they announced the deal with private equity at $80 a share in cash. for the last couple weeks since that was announced, there was an expectation that co-star would,

in fact, come back and they have. all stock deal it's interesting their initial bid which they have told us but we also kind of knew, was also all stock there was an expectation perhaps they would use cash, but they haven't. it's .1019 it did equate to $95.76 at the open we'll keep an eye on their share price. it did appear to be moving lower and i want to see if it has. i assume has and the overall value of the bid is not that it represented a 17 % premium. they're talking about significant synergies and by the way, speaking of people familiar with the bid itself, they tell me why no cash well, we're going to redeem on closing. $2 billion of core logic debt. we need cash for that. and they're also talking about making significant investments to deliver on the synergies which is going to as well require cash two reasons why the deal does not as might have been expected when they were thought to potentially come back here, why

it does not contain any cash it's a very highly valued stock. of course, that may have given core logic's board some pause. there was also concern about anti-trust risk and the fact that it would take longer simply to get those approvals if you get a second request, it could be as much as a year the merger agreement only in place for a year they're going to pay a 330 million deverreverse fee. but overall, guys, this would appear to be a significantly higher bid, even with co-star stock down over 5% core logic shares are moving up significantly. unclear exactly what the back and forth was around the end of the auction, so to speak and why this bid was not made as part of the initial auction for the company in the in the letter the company press released, co-star does indicate they thought they had a handshake deal at 86 and change

all stock. only to find out 24 hours later that they had lost that to $80 all in cash. we'll see what's next. the word is as you expect from core logic, they'll study this and make a decision as to how to move forward one would expect, mike, that they will choose the co-star bid should the private equity firms not come back with a higher offer. >> it would seem so. to broaden it out, this has been a very quiet sector, sub sector to the market where it's data and information you tillties for a specific industry that's done well the index providers and financial services, it's sort of fascinating how this is a weird little group that i can see why private equity would be there. it's thought to be tough to replicate and data only becomes more valuable apparently >> yeah, and so star has been a strong performer as well one reason it's in a position to

offer all stock and be valued the way it is. it's 50 to 60 times trading and there is a question as to whether that is sustainable. even with significant fall on the stock price, the current bid would seem to be above keeping an eye on shares of palantir i think we mentioned that or i think don mentioned at the end of "squawk box." reporting earnings and the stock was up dramatically another thing people have been focussed on is the lockup. the lockup expires in a few days i think it's on the 19th according to the s-1 it expired on the 19th. and there's an awful lot of shares out there conceivably that will suddenly be unlocked i'm looking at remaining 1.863 billion shares to be sold after the lockup period which would appear to be close to expiring >> and keep in mind, this was

one of the companies that has existed for a long time in private hands before it came public that often is a situation when you have equity spread widely throughout the company you have this idea there is a wall of potential. people have been there a while and waiting for it on the other hand, the pattern has been that whatever selling off and happens in anticipation of the actual lockup expiration date and the market figures that out. we'll see if that happens here the stock is up so much since the initial listing that it's sort of playing with house money there, i think, on all sides >> guys, obviously energy is the leader this morning for reasons that we discussed in the earlier half hour. ordinarily david we'd probably talk mobility and autos with jim if he were here. we mentioned the shutdown of the f-150 plant in ford because of the snow but auto nation, another fresh

all-time high. on squawk earlier they said the horse is out of the barn they think 20% of vehicles sold in 2030, basically nine years away, will be ev as we see continued reports this morning about tesla looking at plans to start building in india. it's a global phenomenon >> it's amazing. and to reiterate, though, and given especially what we heard from brian sullivan earlier in terms of oil and watching that, it's not as though it's going to dampen demand for oil right now. but we can imagine a world in which that will be the case. although, again, oil executives tell you listen, we're investing less now than in 2013. we need to continue to invest otherwise we're going to have a shortage even with a lot of demand going away as a result of so many automobiles that will be out there and be electrically powered. but gm, we talked about it so

often. the stock up almost 30 % 29 % so far this year. ford is up 30% this year and they are doubling the performance of tesla which is only up a pal tri 15% again, all of this on the promise of the continued expansion of ev market from what is still a very small place but an addressable market that's enormous >> tesla close to 10% off highs. had a ridiculous run from november into the new year working off some of that but it's clear that the market no longer feels as if tesla is the only way to play the ev theme. it's giving credit to gm and ford to some degree for being in tune with that trend i would also say, though, carl, i mean, 20% ev market share by 2030 that would qualify as the bear case for tesla right now you talk about the estimates of people who really love the stock and want to justify the valuation.

40% in five years, i think so i think it's a very low bar to say what's it going to be 5 million cars or something? and in nine years. total ev if it's 20% of the market that's nothing and it better be bigger than that if the hopes are embedded in tesla and are going to come to fruition. >> yeah. maybe mike's underpromising with the intent to overdeliver. but to your point, tesla's underperforming gm for the year. it's underperforming exxon for the year to date yeah to david's point, it hasn't done a lot since january 1st. the other thing i wanted to mention were financials. not just because of the spread and what we're seeing in bond yield but also the story about goldman and marcus invest and the idea that you can get a rob adviser for $1,000 >> it's very interesting to watch their continued efforts there. also, bringing those numbers way down in terms of what they're willing to pay on the marcus

accounts i'm familiar with that but marcus is an important effort to keep an eye on although, not to take away from what has been the success of goldman in other areas and it represents a small overall percentage of anything there in terms of revenues and/or any profitability. but it will be interesting to see how successful they are in sort of robo advisers to the extent they can do that for people going after the middle market which is not something you would anticipate goldman would have done even not that many years ago, but they are still making an effort toward it mike, i wanted to come to you quickly on another company that has some financial components of it it's berkshire, of course. i think we're getting a 13 after the close today. i believe it's the first time in at least four or five, maybe even six years where they cited confidentiality on accumulation of a particular stock that we are now going to learn about, i believe, after the close today

unclear what it is your old employer barren has had a number of names it might be. again, we like to point out in the 13 fs, they're back ward looking. people still follow mr. buffett there. >> he still indulges the conceit that he needs confidentiality. what's fascinating i think about the public equity holdings of berkshire is apple has grown to so so much to overwhelm everything elts it changes the equation in terms of what can move the needle on that part of the operation that's a good problem to have. i think he's from the low last year, the apple position probably went up ten times whatever he might have lost in airlines everyone wants to talk about selling airlines at the low. he made multiples of it by holding onto apple at this point, carl. >> yeah.

well, it will be interesting to see what happens this morning if it's coming. guys, overall, record highs across the board in the ten-year now 1-2-6. let's get to bob >> good to see you 3 to 1s anding to declining stocks i'm waiting for that to expand a little bit it's been a fairly small group look at the sectors. this is the reflation trade when you get energy stocks move up. you get bank stocks move up. you get the russell 2000 move up and the star of the year, semi conductor stocks there's the reflation trade overall. as i said, the new high list is fairly small one consistent sub sector on that is semi conductors all throughout the year every day. microsoft, teradyne, broad materials, broadcom. texas instruments again today. down the list. there's your most consistent list of sub high sub sectors but bank stocks, the laggard of

2020 pending new highs jpmorgan is one of the few big large cap ones pnc is there goldman sachs. regions financial. there's a smattering of below the radar super regionals hitting new highs as well. banks moving up. small groups of mega caps hitting new highs. alphabet, microsoft, paypal hitting new highs as well. it's a fairly small group in the megacap group. the big three themes moving the markets are all firing on all cylinders. the roll out is accelerating and the vaccine, that's the most important thing. the stimulus is go big is winning. it's going to be 1.5 to 1.9 trillion somewhere around that. it's not going to be below a trillion that's what the market believes an the earnings 2021 numbers are accelerating and it's not the q4 numbers. they were good the market doesn't move on the

q4 numbers it's the 2021 estimates moving up goldman increased the estimates. they're a thought leader here. they upped their numbers to 2% to $181 for the full year for the s&p. the consensus now is 173 it was $165 just a few months ago. here's the most important thing. you can see the numbers keep going up and up for 2021 because everybody realized the analysts have been underestimating the extent of the economic recovery. so the consensus pe right now is 22.7 that's an awfully big number the goldman number brings it down to the 2020 level the numbers coming down and the multiple pressure may be declining. everyone is concerned about inflation. the fed does not seem to be concerned. oil at a 13-month high copper at a 9-year high. lumber at record highs and of course, we've seen that yield curve steepening those are issues the market wants to believe are, but is not affecting the stock market right

now. maybe somewhere down the road. what's really amazing is just what we have been seeing in terms of records we have hit ten record highs in 2021 my thanks to my old buddy sam for pointing this out to us. this is only happening 11 times since 1929 the s&p has hit ten all-time highs. in the past the s&p is up 10 of the 11 times it hit new record highs with an average gain of about 16%. so we -- the past is not necessarily indicative to the future there is a principle of investing to go on but it certainly is a very good sign that with a start like this, historically the full years have tended to be on the up side. carl, back to you. >> all right bob, fascinating thanks it's a really good day to welcome back rick santelli to talk about bonds and currencies. rick, we missed you. >> i certainly missed cnbc and the markets.

that's for sure. although, i was watching and paying close attention let's look at the year to date chart of tens and 30s. right now we're trading 126 in a ten-year note yield. that's up 34 basis points. 30-year bonds are up 32 basis points at 165. if you look at bunds, they're at the 8-month highest yields at minus 38 ponder that. minus 38 is the highest yield going back to june oflast year when it comes to the yield curve spreads, they're all steep tens minus twos the steepest in four years go back to tax day of 2018 lumber prices, if you look at a 20-year chart, nour not going to find much higher historic prices with regard to lumber. we know the story there. everybody's conventional wisdom was wrong as to how housing and building would progress, especially after the summer weather rebaited in the fall in

colder months. and a year to date chart of the dollar index in early january it traded a 34-month low right above 89. it bounced a bit but is hovering close. the biggest question everybody is wondering, where are ten-year note rates going to go to that let's go to the white board. this is a very interesting chart. it basically starts and stops around july 12th and 16. those double bottoms, until they were violated when we made the all-time low yield of 50 basis points in a ten. this is the resistance in yield you should look at now that we're getting close to 130 carl, david, mike, back to you >> all right rick, we'll check in with you later. alphabet, qualcomm, microsoft and others protesting congress about in vinvidias calr arms for now stocks at record highs back in a moment

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mentioned this earlier in relation to berkshire. tonight is the deadline for

other funds to file their 13fs leslie, we followed this it's backward looking. it's never been clear to me why we care that much about some hedge funds given their performance. there is an extra element with the reddit crowd that may sort of choose to focus on some of them and what they own >> i would say that's the new thing about this quarter it's not new per se, retail investors have been doing this for as long as we can remember, but you're right it's something that happens four times a year today is the deadline for 13fs, hedge funds investors reveal their holdings through s.e.c. filings. the disclosures are dated and positions are limited to long calls and puts no short positions are revealed. but this time there is increasing attention drawn to retail investors who have been scoping out these filings for clues about where the so-called big guys are putting their money. perhaps the more intrepid ones

are seeking out vulnerabilities that they can profit from. that happened with melvin capital. if you recall, when a reddit user posted about the firm's puts on gamestop last year, the beginning of what turned into a notorious short squeeze on the stock and 53% losses for melvin in january as a result it's become apparent on the long side, too, when silver squeeze was trending on twitter. come entraitors on the reddit forum urged others not to follow suit because hedge funds for long silver etf could benefit as a result of that squeeze now, some hedge funds have already released their 13fs the last friday. some are trickling as we speak right now. this post disclosed a sizable stake in intel and spac holdings bridgewater took stakes in gold miners today we will see the bulk of filings that show holdings as of the end of december. after witnessing what happened last month, it's likely that

many hedge funds have changed their positions in the six weeks since december, but some maybe not, guys. >> busy day. get ready for a lot of reading all day long, leslie so glad we have you with us to help us through it that's leslie ckpier as we wait for more filings another hour of "squawk on the street" continues in a moment. dow's up a 100 grandparents! we want to put money aside for them, so...change in plans. alright, let's see what we can adjust. ♪♪ we'd be closer to the twins. change in plans. okay. mom, are you painting again? you could sell these. lemme guess, change in plans? at fidelity, a change in plans is always part of the plan. my retirement plan with voya keeps me moving forward... even after paying for this.s? love you, sweetheart. they guide me with achievable steps that give me confidence. this is my granddaughter...she's cute like her grandpa.

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♪ good tuesday morning another hour of "squawk on the street." i'm carl quintanilla with david faber and morgan stanley record highs on this tuesday as we begin a shortened week, obviously, surrounding the reflation trade, reopening trade, and bitcoin 50k getting attention and deep freeze in the energy squeeze down south. our roadmap with markets in the green after fresh highs friday investors continued to watch for signs of more stimulus. >> and next, oil prices on the rise as texas is slammed by winter weather we will get you the latest this hour and what that could mean for producers. >> and finally, mike roman is going to join us to discuss the outlook for the company and, most importantly, new esg

targets, including, carl, going carbon carbon-neutral by 2050 >> whoa, that's going to be interesting. meantime, we start with the markets and check in with mike santoli. we get closer, mike, to some anniversaries, a period where stocks were really topping out before covid hit we start lapping some very interesting comps. >> without a doubt this coming friday is literally the anniversary of when we reached the high point in the s&p 500 before that covid collapse what is interesting is that the current environment is similar to where we were in february of 2020 in some respects. the s&p was up 16% in the six months before that peak. it's up 16% in the past six months you see the 18-month chart, six months of boring up trends, six months of the most dramatic plunge and comeback in market history and six months of uptrend. high yield spreads down towards 3% that's the spread between high yield debt and treasury yield.

all that stuff seems very much to rhyme as well as the debate, i think, right now is are investors a little bit too bullish? do we have too much dominance of megacap growth stocks? what about the speculative activity in the early days of spacs a year ago as well that's a similarity. the differences, we reset the cycle. flat yield curve back then, talking about full employment, profit margins peaking that's different now because we have redialed back to early cycle and the fed back then, people thought maybe they would start hiking in a year's time, maybe a year and a half. right now it's not even on the horizon at least in terms of formal expectations. i think you have a push/pull bet between where we are now we will probably not get a massive external shock the way we did a year ago. >> mike, what stood out over the weekend, goldman put out a note and said s&p profits are back to

pre-pandemic levels but the number of s&p companies that are profitable is now below half, a minority are profitable. then wages and salaries in the country are back to pre-pandemic levels with 9 million more people out of work so inequality esituquation crees in. >> it does the markets prism, that is room for improvement. essentially, we have basically a few carrying the many in some ways, both in the stock market as well as in the economy, and there is room for improvement. and because you have all of those people unemployed, that sets the fed agenda, which is until that changes, until we get towards a tight labor market again, they will let the kids play, so to speak. >> something different to me is the fact that before the pandemic we were talking about an inversion in the yields curve and the fact that that was a harbinger of a future potential recession. we got that. it wasn't, i think, anything anybody expected at the time due

to a pandemic, but a very different situation when you look at the yield curve today. >> without a date. everyone was kind of watching the sands fall through the hourglass thinking the cycle was about to expire. what we got instead was a flash recession and a massive proactive in a way, or at least vastly reactive, quickly reactive policy response that in a way might have set the template for how policymakers deal with downturns in the future all of that have stuff completely turned everything upside down and it's true. we are probably back to peak earnings this quarter or next in urs terms of the run rate and stock price are higher perhaps because of those other factors. >> that one-week chart puts it in perspective thank you. plunging temperatures causing some major unexpected consequences in texas and in a number of other states, brian sullivan not just texas oklahoma as well i am seeing tweets throughout. it's throughout much of the south and -- southwest of the nation

>> it is and, dave, rattling on, i want to sort of go back and forth with you i know you were doing it i was doing it different networks at the time you remember the enron power squeeze back, i think, in 2000 >> yes. >> where they forced people to go buy into that market? you remember that? >> i do. >> it was, like, that sort of gamestop-ish well, the same thing is happening now. i just got a text from an electricity trader, which there are not many by the way. there was just a trade done ercot north. $8750 per megawatt hour. a normal contract for march is 40 >> what is going on? there are, obviously, shortages, but what is happening in the market there who would be willing to pay that kind of a price?

>> anybody who has to. so that trade just occurred. it was one trade, but you think about that, guys 8750 megawatt hour versus a normal contract is 40. who is going to have to pay that i don't want to speculate, but i will say this. i will be careful what i say, david. there are companies out there that sell you, you own the faber household and they will say why don't you forget about your normal power company, come with us for a fixed rate, you pay what we pay. and they will go in the wholesale market at nate and buy cheap electricity and you feel good and save money. now they are having companies are having to pay those prices so you wonder what is the faber household bill going to be >> right well, i am still on -- aren't i still on the fixed price isn't the cost to the actual provider >> not if you're on the you pay

what we pay, right there is some -- >> i see what you are saying got it >> so if they have to go to the wholesale market and pay 4 cents a kilowatt hour, you are happy because the rate in new jersey is 12 cents, they are paying $87 a kilowatt hour. i was trying to figure this out. i am not an electricity trading expert that just happened you pay what we pay. there is going to be companies, dave, that are pinched and i hope there is not households that are pirjed. honestly, i hate -- it's going to sound insane, but if you are on one of those plans and you have power, this electricity trader i talked to said shut your breaker off there are 3 million, 4 million people without power you want to make sure if you are on one of those plans, watching cnbc now because your power is on and you are on one of those plans, you might want to dial back safely because that bill

could be just insane all right. i want to move on to something else and read you a statement. forgive me i am looking down because i am actually reading what did i do with that statement? here we go here is the statement. here we go the winter freeze greatly strained the ability of the texas electric utilities to provide reliable power to customers record and near record low temperatures were felt throughout the state that's not today that was november of 1990, guys. this is not new. every ten years texas gets crushed. every ten years they have some problem with electricity delivery we they had 110 years ago, i believe it was everybody rattles their saber but we are not getting anything done texas going through a lot, and i am going to keep digging into it, guys that pricing story i think is the one to watch because there is going to be people and companies that are just going to get crushed. crushed from what's happening in the electricity trade market,

which we have never, i don't think, talked about in 20 years. >> it has been a while thanks trying to get our viewers up to speed on how some of that pricing structure works. rbc capital markets and cnbc contributor helene kroft we have so many headlines. what brian is talking about, mexico trying to say when they are going to get power back. you have shutdowns from various corporates what's the bigger story to you right now? the impact on oil output or the electric grid? >> i think the question is with the extreme weather event what is going to be the duration of this crisis. i mean, it's unprecedented in terms of what we are seeing in terms of the demand side and in terms of the supply side we have this demand shock. brian was talking about it he has 4 million people now without power and you have the simultaneous, you know, shut-in

of production. there are reports this morning that we have 2 million barrels of permian production offline. associated gas production offline. i think it's important to keep in mind is that we could have these weather conditions ease the next couple of days. we have these discussions when we have weather events about is there going to be long-term damage, what is the duration of the crisis so i think it's going to matter when weather conditions improve, when we get an improving story in terms of prices >> do you think to brian's earlier point that this is episodic, it happens every couple of decades, does it change the discussion of infrastructure in general at least in texas long term, or is this something that comes and goes and we just move on >> we are seeing extreme weather events and i think it is raising questions about what is your power supply going to look like. we have winter bonds also down as well, and the question again over the summer in california with the wildfires is what is

your electricity mix and can you deal with the weather events what is going to be the mix that you need to provide stable supplies of power going forward. so i think it's going to cause that kind of discussion that we were having over the summer in california like, can you rely so heavily on renewables, what is the role of natural gas providing electricity. i think it will keep those conversations going. i think the key thing is, how long are we looking at this weather crisis is there going be long-term damage is this going to be a situation that starts to ease in the coming days. >> i have also seen reports about solar being impacted in texas and, obviously, that's a state that is a big provider of solar energy as well i also have so many questions about those electricity price spikes and what that means for utilities because some utilities in the country are very regulated and some are not nonetheless, when i look at that price on natural gas, 312 right now, i mean, obviously, natural gas tends to be volatile and moves with the weather

how sustainable is it above $3 and given what that means for other commodities like coal? what does that do, i guess, to the electricity mix? >> i mean, our base case for, you know, q1 was averaging, like, 2.77 this is certainly higher than what we anticipated. i mean, we see it have a high-case scenario 3.15 for gas. i think the interesting question is going to be, you know, do we get a situation where is this the beginning of extreme weather events for the winter? is this a sort of one-off situation? i think that's going to be again determinative how do we get out of this weather event. is this something next week we are talking about back to the '70s in austin, or is this weather event longer in duration. >> that's all it's going to end up being i looked at the weather for houston. it hits the 50s and 60s in a couple of days are we going to stop talking about this as a news event by then >> well, it's interesting, it's

already going to have more weather events we think about the wildfire discussions that we saw in california over the summer, and that led to a lot of debate over renewables can you transition to 100% renewables when you have these extreme weather events what do you need as a backup what do you need for the base led? even if we get out of this event and get a return to milder weather conditions, you know, i think the discussion about what is your energy mix going to look like and what role can renewables play, what the role of natural gas, that will continue as biden is focused on this energy transition. >> yeah. let's shift gears and talk crude for a minute 13-year highs, talk about the impact of production of oil here in the u.s. in places like texas or north dakota and oklahoma you follow this closely, all those heightened tensions in the middle east right now. we have got the houthis in yemen going back and forth with the saudis how much is that affecting oil

prices >> i think one of the big catalysts for crude prices this year was the decision of the saudis to unilaterally cut an additional million barrels a day of production. they really wanted to give a shot of adrenaline into the market but i that i that the geopolitical risk is underappreciated we have a significant deadline coming up this month the iranians said if sanctions are not removed by february 21 they are going to halt at nuclear facilities we are not seeing progress in terms of negotiations with iran. the iranians keep ramping up activities i think the iran issue is something to keep an eye on because the nuclear clock is ticking there and their proxies are still doing significant events in the region like you mentioned with the attacks in saudi arabia by the houthis. >> helena, a lot on our plate, especially in your universe. we will talk to you again soon >> thank you

after the break, mike petters joins "squawk on the street" to talk earnings, shipbuilding outlook, defense spending, so much more we'll be right back. stay with us mercedes-benz suvs were engineered with only one mission in mind. to be the best. in the category, in the industry... in the world. lease the gla 250 suv for just $399 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

america's largest military ship builder huntington ingalls seeing record sales in 2020 despite the pandemic mike petters, ceo of huntington ingalls. great to have you on let's jump into earnings and we

will take it from there. as one analyst put it, your results last week were a blowout quarter. you have a record backlog, 46 billion, a huge chunk is funded and yet looking at the stock it is trading at a disdowntown relative to peers. saying something given the fact that the defense group has been range bound. what do investors need to know, need to take away from the huntington story that perhaps is being missed right now >> i think the biggest issue right now is building confidence in the investment community that we continue to be able to execute well it took us a little bit when the pandemic crisis kind of started back in, for us back in march. it took us a little bit to find our footing. we have now found or ur footing a couple of really good quarters we have a line of sight with the backlog and we can become very predictable over the long term it's just a matter of continuing to show folks that we know what

we're doing. >> yeah. the company was impacted by covid perhaps a little bit more than some of the other companies in the industry last year in terms of absenteeism at the shipyards. safe to say that we have turned a corner and recovery is afoot >> yeah. it took us a couple of months, as you alluded to. it took us a couple of months to figure out how to do this because you can't build ships at home you have to actually do that inside the facilities in close proximity. and so working our way through the protocols and all of the things that we can do, we found our stride even though we continue to have cases in our employees, we are able to manage that and able to drive forward and make the schedules that we need we have adjusted our risk registers for all that and now we are excited there is vaccines coming available we need to see more of them, but they are coming available. we are starting to see some of our employees getting them and we think that that's a way to

fight back against the pandemic. >> i want to get your outlook on defense spending and what that's going to mean for future shipbuilding and the size of the fleet. >> well, as you know, before the -- in the last administration there was a big focus on the external world in terms of trying to drive allocation of resources, and there was basically a conclusion that the navy had some primacy for the future of our security i don't think the outside world has changed much, but i do think that the new administration is going to take another look at it but i think if there is -- they will come to the basic same conclusions. they may be changed on the margins, but basically the navy, i expect, will continue to have a primary role in our national security posture going forward for the administration to be able to do the things that it wants to accomplish. we feel pretty good about that overall levels of defense spending, if you ask 20 people,

you get 20 different answers inside of that subset, we believe the navy is very well positioned. >> yeah, i think brohmen schweitzer put it flat is the new up in terms of that top line for future defense budgets in terms of what that's going to look like, i know you have been making significant investments autonomous capabilities. we talk so much on this network about unmachnned vehicles. what is that going to mean from a military standpoint from, i guess, a sea faring standpoint >> well, we have made significant investments just in the past year to expand our footprint in the unmanned space, unmanned vehicle space, particularly in the undersea unmanned space we acquired high droid a year ago, back in march, and we have made a couple of other acquisitions along the way that strengthen our autonomy. we made investments for unmanned manufacturing, unmanned vehicles

and portfolio manufacturing can do that there. so we're all in on it. the question is how do you mature the technology to a point where it can actually have an impact on the concept of operations and the strategy that the pentagon is putting in place. and so all of those things have to kind of mature together the first piece of it is maturing the technology, and that's where we're going. >> yeah, whether talking to you or now or i have had conversations with northrop grumman and lockheed martin, this seems to be the future of defense contracting and weapons programs, autonomy, artificial intelligence i just wonder what that's going to mean, how quickly we will see that roll out and be deployed for the military what are we talking about in the future here specifically >> i don't know how long it's going to talk. you are talking about maturing the technology so you have confidence it's going to be reliable and be able to perform

when you need to push the button to do that and you are probably not going to move away from something that's tested and proven until you have confidence in that reliability and that capability those things are all on their own track, and so our piece of it is let's go mature the technology and demonstrate the capability. >> mike petters, thanks for joining us. >> always good to be with you. thanks let's get to our "etf spotlight" this morning. we are taking a look at the i-shares expanded software etf, igv. it is up more than h45% over the last year. continuing to power higher amiddle the pandemic what has, as we have learned, been beneficial for many g businesses microstrategy, those shares are up enormously the last year. it has to benefit from substantial investments in bitcoin. the price of which did break briefly above 50,000 bucks for the first time this morning.

as of earlier this month, microstrategy owned close to 72,000 bitcoins. but the stock has reversed, as you see in the early going here. "squawk on the street" will be right back

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as we head back to break, take a look at shares of advanced auto parts, up 1.5, almost 2% this morning, full year results that saw annual net sales surpass $10 billion for the first time wbrk down the numbers with ceo tom greco after this break. stay with us we will be back in two new projects means new project managers.

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here is your cnbc covid update at this hour. the daily count of new u.s. covid cases has dropped to levels we haven't seen since mid-october. 54,000 cases yesterday the fourth straight day the number below 100,000 the holiday weekend may be

partially responsible for the low count. also public health officials are concerned that cases will rise again in the coming weeks as more con stageous variants spread around the country. and another factor depressing the case count and slowing vaccination efforts may be the unusual winter storm that has hit many part of the country not used to snow, ice, and cold temperatures, including arkansas, where the national guard has been called in to help and even though millions of n95 face coverings are being produced, many hospitals don't have enough of them. an "associated press" investigation blames federal failures the past year while some take vitamin c or zinc for the cold or flu, a study by the cleveland clinic says it provides no help for people with covid symptoms back to you, morgan. i hear this the antioxidants vitamin c are great for your skin. >> they are good for elasticity.

thank you. advanced auto parts out with earnings this morning. same-store sales up almost 5%. tom greco, thanks for being with us. >> thank you. >> i am looking at your results here you surpassed 10 billion in annual net scaales for the first time ever. some of the shifts in buyer behavior in covid-19 was actually something that benefitted the company last year what did you see in terms of some of those, i guess, factors or changes in buyer trends, and how long do you expect that to last >> well, for sure last year was probably one of the most disruptive years we have ever e seen in terms of consumer behavior when the pandemic hit, how people repaired and maintained their vehicles changed more people started to do work on their cars themselves you saw that in other sectors like home improvement.

on the other hand, the professional side of the business, which is the largest part of our business, where people take their car to be repaired professionally, that lagged because of remote work and miles driven being down. so we were, obviously, when we got 60% of our business professionals, 40% diy, we benefitted on the diy side, but professional are lagged. this year we expect the professional business to bounce back. >> yeah. i am looking at your outlook and some of the things that you factored into it increase in total vehicle miles driven in the u.s. from 2020 but expect that to remain below 2019 i guess give us more details on that forecast. >> sure. last year miles driven were double digits across the country. the interesting thing, geographically, it was different. the northeast and mid-atlantic parts down 20% the southeast and southwest were

down low double-digits so we would expect as the vaccinations start to roll out, as people tstart to return to work, some of those geographies impacted last year by remote work and people staying at home will improve that's exciting for us because we have a lot of stores in the northeast and midatlantic. essentially, the march-april timeframe there was a huge shock, and then gradually miles driven started recover through the year they are still not back to 2019 levels we don't expect them to be back this year, but beyond 2020, which will be good. >> mr. greco, long-term question for you. i wonder how do you think about positioning your business for the changes that are taking place in the sale of automobiles? obviously, right now ev not very large, but we imagine five, ten years from now that will not be the case i wonder from a parts perspective from a maintenance perspective, does that change the way you go about doing business

>> yeah. for sure, david. right now, as you say, it's above 3% of the total population of vehicles. there is 280 million vehicles on the road so you still have the vast majority of the vehicles in combustion engines even within electric, hybrids are a bigger factor for us they essentially have two of everything over time as evs grow we will have to reposition the aftermarket itself is one that is zillow for a long time and we will have to look at that at the right time. for the foreseeable future, there are a lot of cars on the road we will be able to repair through our current mechanisms. >> meantime, we are seeing this semiconductor shortage royal automakers right now i wonder if that is having ripple effects to you and your business >> no, not at the moment not yet. >> okay. in terms of the supply chain right now, what have you seen

impact-wise, inventory level-wise i imagine you expect a recovery to take place there this year, too? >> yeah, no, definitely we have been seeing challenges there obviously, a container shortage. we tried to get out in front of it our team did a terrific job working with our agent-based suppliers to get out in front of the inventory situation. we brought some -- pulled some forward into the fourth quarter and we got off to a terrific start. we started the year with low double-digit growth. you have to work around all of these variables, the container shortage, chinese new year, all of the things that major companies are dealing with at this point but right now we are very well positioned from an inventory standpoint and doing wiell. >> as more locations open up, what will that mean in terms of policy for vaccination are you considering mandating your workers get vaccinated? >> we are not mandating it, but we are going to provide it free

of charge. we are strongly encouraging our people to take the vaccination from the very beginning of this pandemic we have said that we are going to put the health, safety and well being of our team members and our customers first. and we have been investing in them through the past year to ensure that. we feel that builds trust not only for our employment brands, our team members, but for our customers. we want our team members to feel safe coming into work every day and our customers to feel safe coming into our stores and we are benefiting from that investment because our health scores are up, turnover is down, and our net promoter scores are up for our customers, which is all something that we will build long-term growth. >> tom, thank you for joining us today. >> thank you for having me well, the stocks are on the move again today this after a sharp drop from highs last week. this morning, remember, it is a nst deal to reverse merger in a see, tilray, stock is up more

than 50% there is a lot more "squawk on the street" coming up.

as a record amount of money flows into stocks, a top strategist sees a troubling trend. go to tradingnation.cnbc.com to find out what it is. more "squawk on the street" coming up.

welcome back to "squawk on the street." the gains are modest today enough to gain record highs in early trading and they are led by the so-called value oriented sectors underperformers for much of last year like energy and financials you see they are the ones leading the way higher the financials getting help with bank stocks like comerica, first republic, wells fargo, bank of america, among others. long-term interest rates are the highest levels since march of last year and that rise in interest rates is seen as benefiting some of these banks that have traditional lending activities

keep an eye on this. the spider bank etf has reached the highest level since september of 2018. bank stocks a big focus. david, back to you guys on "squawk on the street." >> september of '18? man, i didn't know that. thank you, dom. after this break, mike roman talking esg's big announcement from the company not to go anything for the stock price, but we still want to hear from him we'll be right back. some say this is my greatest challenge ever. but i've seen centuries of this. with a companion that powers a digital world, traded with a touch. the gold standard, so to speak ;) ♪♪

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. 3m will be investing $1 billion to achieve carbon neutrality 3m's chairman and ceo mike roman. good to have you i wonder, you guys had already been sort of on a plan, you know you had 2015 before lot of other companies, you had goals you set for 2025 so why the need to update and add? >> yeah, david, thank you for having me on again good morning you're right we have had a plan we have had goals in sustainability, environmental leadership we are excited about the announcements we are making

today. i would say the commitments and goals behind that, that build on some of the goals that we have been targeting over the last decade it's really to step up our leadership to invest $1 billion over the next 20 years to achieve carbon neutrality by 2050 importantly, bend the curve and make a difference in the beginning of that, that time period really to step into it and make a difference and improve on our greenhouse gas emissions and bending the curve on our water use 10% reduction in 2022. 20% in 2025. longer goal, 25% by 2030 making investments and returning higher quality or better quality water from the use in our manufacturing. so these are a step up on those goals that we laid out over the last decade that we have been targeting and we have been on track to for our 2025 goals. this is a big step up from that. >> it is, and it's a notable one, and i would assume one that will be lauded by many again, i wonder, and please answer, why?

>> well, this is something that's critical to 3m. it's long been a fundamental falu to be a leader in sustainability it's critical to our customers, employees, shareholders and the communities that are a part of we are a global manufacturer we have manufacturing operations in 29 states the united states. this is something that has been a hallmark of 3m, a value for us, a leadership responsibility. it's been important to our business and our business success. it's been critical as a manufacturer that we are eliminating waste and providing leadership and sustainability. it is something that we expect of ourselves and certainly our stakeholders broadly expect of us as well. >> does it blunt the criticism of the company or the concern among some in terms of something we asked you about many times, p and a halves, the water pollution and things of that nature

>> it's another example of what i talk about, proactively managing pfafs, our environmental responsibilities it means doing things, going beyond what is expected. going beyond our regulatory requirements, stepping up, providing leadership it's one of the best ways we can manage pfafs and some of the uncertainty is get out in front of it, proactively manage with these goals, reducing water use, improving water quality. it helps us with pfafs, helps us broadly in our environmental goals. >> mike, what does achieving carbon neutrality look like? how much partnership, technology, things like carbon credits? >> yeah, morgan, it was really important for us to have a plan. be able to leverage our innovation, our expertise and have something to commit to. so this is really about us making a change in our operations over the next 20

years. and as i said, bending the curve in the early years, making a difference this is investments that is more heavily weighted in the early parts of that 20 years to start to deploy new capabilities, new be technology, engineering, using innovation to change our processes, drive what we have been always been focused on, greater efficiency in manufacturing operations, eliminating waste at its source. we redoesed greenhouse gas emissions out of our factories over 60% since 2000. this is building on that deploying the capital deploying the engineering capabilities of people that are going to make a difference and keep that improvement going and drive innovation in every part of our operations process technologies, our products, all of that will be what drives us there will be partnerships it's important we are using state-of-the-art technology today we will partner with other companies and bring new technology as we can develop it and deploy it. so it goes beyond our -- [

inaudible ]. >> oh, no. >> driving changes in our factories. >> yeah, mike, we lost you for a moment there i think you can still hear me. >> i can. >> you are talking about a 50% reduction in carbon emission over the next nine years, by 2030 do you have a line of sight to that is some of this coming with technology that doesn't yet exist, or do you know how you will go about achieving that each year? >> david, i would say for both our carbon goals as well as our water goals, we have line of sight to the changes that we are laying out so the 50% reduction in carbon by 2030 and the 80% by 2040, we have line of sight to the changes we need to make and what it will take in our operations, in our products, in our design to make that difference. this was an important part of our commitment here. this is not an estimate that we hope to achieve. we have line of sight to that. and we will striving to to

better we think there is opportunity as we develop new technologies and partner, as i said, we can make a difference but we have line of sight to the bending of the curve in both carbon and in water to reduce that water use to, to improve the quality of water from the sites. it was important that we had an engineering plan, that we had the math behind it that would make the difference. as a side all discounting your motivations here, mike, i wonder, how much does the street need to give the stocks credit for this kind of thing? how much benefit do you see from the investment community >> well, it is important esg and leadership in esg and companies like 3m is important for investors. we see efficiencies coming from our leadership in sustainability, productivity, new innovations that our customers are looking for. so there is a business case around growth, around productivity, around efficiency. in addition, it really is about being a strong partner with the

community that we're a part of, a manufacturer in multiple locations around the united states so it is something that will enable us to be successful in business i think it will play out as a strong business case for us and something that will benefit our performance as the company in how we grow and how we deliver on that growth >> a little bit here i realize you talked about this post-earnings a couple weeks ago. but what we're seeing in terms of the n-95 masks, i know you are producing tens of millions a month. still, we got reports, here's one today by the a.p. that some hospitals are still continuing to face shortages for these masks. what is it going to take for that to change, in the meantime, i know you are policing this, there are all these counterfeits out there as well? >> morgan, there is a lot to do in this, making sure we get n-95 to the front line healthcare workers and first responders

our focus continues to be on producing and deliberating n-95 respirators. we are working in partnership with both public and private part iners to get that product to where the needs are greatest, making sure that we continue to make progress and we have been making progress on the logistics with those partners. it's to better distribute those respirators that we're producing. so it is still a focus that we need to keep on and because there is more that we can do around we have to do as you talked about, continue to address the counterfits and even some of the price gouging that have been going on until recently, it's important for us to step up and make a difference in that as well so there is more to do here we're making more than ever before and we'll make sure we do everything we can to get it to where the needs are great. >> yeah. a lot is out of your hands, you pointed out in how it gets distributed. back to this announcement and the idea, of course, of pursuing carbon neutrality over the next

29 years do you see it as an opportunity as well, given, of course, the history of this company, to potentially invent some new things or have some new services that are going to be available for other companies that are similarly pursuing strategy that will significantly reduce their carbon footprint >> well, an important part of it will be innovation for us, innovating in our products and what they require in the manufacturing process. david, about third of our intellectual property is in our manufacturing operations, in our process technologies we would expect to continue to innovate there, to make a difference we see that as a way that we can move ahead and it's something that as we learn, i think there will be partnerships there will be shared learnings about how to take manufacturing operations like ours to carbon neutral and what it takes to bend the curve at each step of the way. so it is something we will be working with partners on certainly, we will be working with innovation to make a

difference >> certainly, with bad weather is facing so much of the country right now. we are reporting on electricity, price spikes, energy price spikes and factor in the fact that we have seen other commodities jumping in recent weeks as well, whether it's steel, tin, copper, some of these other materials. i wonder in your terms, what you expect ins of costs for some of those raw materials that do go into manufacturing >> well, i would say, morgan, we said this since the beginning of the year we came out in our q4 earnings call, i will look to the year. we reinstated guidance and the backdrop remains a lot of uncertainty, uncertainty first and foremost due to covid and how that will play out also with weather impacts as a part of that, and part of that focus on incertainty is in our

supply chains. how can we manage our supply chains in the face of some of that uncertainty, the weather adds another dimension to that it's something we will be focused on in the coming days managing, while inflation, we are on the watch for inflation we see it starting to tick up in some places. i highlighted logistics on the earnings call as one of the earnings that we were seeing some inflation it's something that we're on the watch for and with ongoing impacts of the pandemic as well as weather, we'll be closely focused on that. >> finally, mike, since the quarter, we've had a couple of large companies, basically, say that the traditional workweek is dead, salesforce, spot spotify, telling workers they can go remote indefinitely. does that calculate on the trajectory of what office supplies may do? >> well, office supplies is one of the businesses we talked about. that has impacted in the pandemic

it was impacted due to the shift to working remotely. now it's something that we are focused on in innovation what can we do to meet the needs of this new future of work it's something we are dealing first hand with. we have still half our employees around the world working remotely and as they come back to the office, as they return to the workplace, it will be different, there will be different approaches to how we work in the office, when we work in the office and how we work remotely around the world all those things are going to impact the office marketplace and it's something that we see as a part of our managing in the uncertainty that we face right now, also as an opportunity for our innovation as we move ahead. >> mike, appreciate it a wide ranging discussion there, obviously, focused on your new announcements on carbon reduction. we'll be following it closely. appreciate it. thank you. >> thank you, david. >> all right, by the way, so

far, we have been talking this morning. watch the ten-year you see this took out the march high of 125 and change we're back to 127 now. so the chart will tell you, you got to go back to almost a year ago, late february when we were in the low 1, 3s, that's one reason perhaps we are seeing equities ba tte lile skittish as we are off of session highs. coming up, a packed hour of "squawk alley. that continues in just a moment. ♪ from a resume data base claim your seventy-five-dollar credit when you post your first job at indeed.com/promo

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