good morning futures under pressure after yesterday's selloff in tech stock. 350 points in nasdaq it dragged the dow down. it then threw in the towel nasdaq led yesterday leading again today. a pandemic milestone in cases. covid cases plunging fda now giving the green light for the pfizer vaccine for kids 12 and older. fallout from the cyber attack that shutdown one of the largest pipelines in america it is tuesday, may 11th, 2021. "squawk box" begins right now. good morning

welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. we start with the selloff. joe mentioned it at the top. this was something to behold nasdaq down 2.5% it finished the day at the session low. you look at the big names that were dragging things down. tesla down 6%. facebook, netflix, amazon and apple and alphabet and microsoft. all of the big names down by more than 2% facebook down by more than 4%. check out the new york faang index. facebook, apple, amazon, netflix and google then the next five and most fre fr frequently traded stocks alibaba and tesla and twitter. that market was down 3.6%.

that was the worst day since march 18th shows you how the big cap stocks were really the ones drags things down. if you look at the equity markets this morning, technology is taking it on the chin again no rebound in sight. nasdaq is looking like it would open down 166 points that's a bigger point drop than the dow. dow obviously is a higher level than the nasdaq. that means a big deal with percentages. looking at that dow. nasdaq down 5.2. nasdaq down 170 points that is putting pressure on other indices. s&p futures are off 30 look at the treasury market. treasuries with the big pressure on yields friday after the jobs number was weaker than anticipated. 10-year fell below 1.4%.

now it is indicated at 1.36% that is the yield for the 10-year. all of the stuff that is down doesn't mean everything is down. we have been talking about inflation. still popping up everywhere you look if you look at the "squawk stack" that is a look at everything that is higher. corn futures down slightly corn is up 50% for 2021. a bushel costs twice a year ago. those prices were higher yesterday as well. 50% for the year 2021 sounds like a big deal. if you look at lumber prices, they are up 50% this month another high yesterday with four times the typical amount you pay for lumber that is making its way into all things the consumer sees home renovation projects and house prices really sky rocketed to the point you can't believe the quoting cquoting. copper up 1.4%

copper found in homes and electronics and then crude oil prices are sitting at the highest level we have seen since 2018 soy beans and pork massively higher prices over the month and year to date then new high as well i don't know if you have seen this new car prices up 10% these are the types of things consumers are seeing everywhere they turn. >> you didn't say used cars, did you you? . >> i did previously owned cars? >> pre-owned get on board people in that industry would never say -- barely used owned by someone else. it wasn't a lot of use >> certified pre-owned cars. >> my point was lumber p workin

through the different markets. i was a commodities broker corn was always $3 a bushel. $7 is unbelievable how much corn? corn fed beef. that's what you want this goes all the way through the meat complex that ripples through a lot with soy, too for livestock. that's obvious i'm making that point that will ripple through when we talked to drucker today, i'll talk about that in a second with his wsj piece transitory maybe. maybe. certainly commodity inflation. i wonder what gold has perked up still amazing that hasn't been more of a red flag

>> part of the reason is it is hard to get workers. not a shortage of pigs it is harder to get workers to do things like get the trees and get them cut and down. harder to get workers to be there in the processing plants stuff you never want to look and see how it is made it is interesting to see how much of that goes back to having people on the jobs and how much of that goes into wage inflation. it really kicks in we will see. >> meantime, one of the things that may help get people back to work is this news. fda approved pfizer's request to allow the covid vaccine given to kids aged 12 to 15 not necessarily the kids are going back to work, but their parents would do so.

on an emergency use basis. the cdc meets tomorrow to review that data. if approved, the shot could be rolled out to kids this week pfizer said it expects to apply for use for kids, toddler to infants, by november if all goes well, by christmas, assuming you can get to herd immunity, you can get all adults and kids vaccinated. i believe this vaccine for 12 to 15 is similar to those at 16 and older and adults i believe it is the same formula. same amount. you go to the youn, same formula, but different amount joe? >> yeah. they got great immune systems. they do. i'm a little bit envious except wh you get the second shot my body was gone that i'm not doing anything about

that younger people's immune system fever and aches and pains and in bed and everything maybe that is a blessing or a curse? i'm not sure not having the side effects. >> you think great something's working. >> exactly makes me wonder. new warning. this is great. extended interview with stan druckenmiller at 8:00. i have another piece with stan a lot of stuff he is saying. new warning from stan druckenmiller. new op-ed. the fed shouldn't be in emergency mode after the emergency passed the distortion is fed induced of

long-term interest rates for the economy. we heard from shelton that there is no price discovery when you control the yield. they also say there is big political pressure in the not too distant future that will require the fed to stop enabling fiscal and market excess we will talk to stan about this at 8:00. it has to do with the independence of the fed. enabling the fed to keep the trillion dollar programs the recovery we have seen since the pandemic lows in the stock market and in the job market we've got 70% of the job losses quicker than any recovery in post-world war ii. it has come back more than any and we're talking about 32 months before the fed is talking about hiking rates they normally would think about hiking rates probably right now given where we were in terms of the labor market and gdp and

everything else. we'll let him tell you all of this stuff at 8:00 i think we have a lot of time with stan today. it should be interesting he has interesting comments about the dollar as well i looked at it yikes. he is a currency guy you remember with soros and the british pound and everything else stan knows currencies. >> interesting how this will play out in the market overall stan talks we listen. >> the nasdaq is concerning. up 4% for the year now it has given back a lot of the gains so far yesterday i don't know, i think elon musk -- is that the bell ringing? is that part of it >> peak? you wonder. >> dogecoin to the moon on "snl." the richest guy in the world

i don't know >> equal of putting an athlete on the cover of "sports illustrated," you're saying? >> yeah. "business week" is better. end of the bond market at 21.5%. then the stocks at 8100 on the dow. i miss that. they don't do that "time magazine" is pretty good, too. let's get an update on the ransomware attack that shutdown the largest fuel pipeline in the nation president biden says there is no evidence that russia's government is involved they have some responsibility because evidence the hacker's ransomware is in russia. the attack is financially motivated. colonial pipeline hopes to restore service by the end of the week gasoline futures have jumped after the hack was revealed on friday they have since come down. brian sullivan was talking about this in the last hour on

"worldwide exchange. he talked about how it is playing out. there are some places where gas stations don't have supplies i think he was citing gas buddy. in virginia, 7% of gas stations have seen problems with supplies at this point. end of the week, does that mean thursday friday saturday night you wonder what happens. it is concerning we heard the hackers apologiz apologizing. saying they would be more cautious in the future who they attack complicated stuff. it brings lots of questions up about the nation's infrastructure at large and how secure we are with those things. how much we are spending on security and privacy measures. that is something we will be focused on for some time >> they said we are not political. we just want money. >> we want money >> it's weird that inflation is

front and center and someone tweeted. it tells you something when the lead story is corn it wasn't the lead story we talked about it how does this oil -- >> corn, lumber. >> remember the '70s dealing with jimmy carter, number one oil happened at same time. it is a perfect storm. we were worried about inflation. now a pipeline shutdown. weird. the coincoincidence. >> same thing with the panama canal. the supply chain issues and the panama canal was bogged up there were questions if -- >> the suez. >> suez. yeah the suez canal it is baffling when you see the issues and it is murphy's law, right? anything that can go wrong, will >> it is one of the corollaries

that we're seeing. the guy who wrote "perfect storm. we use that a lot. the guy who said the mother of all -- saddam hussein. they last forever. you know the best one? jumping the shark. if fonzie hadn't done that on "happy days. andrew, you remember joumping te shark? becky. when we come back, we will get into the heart of what went wrong yet with tech fallout. later, don't miss the ceo of ibm. he will join us in a first on cnbc interview arvind krishna has big changes at ibm they have new technology that is

out. we will talk to him about so many things. eaer interview at 8:30 a.m. stn. the efficfirst on cnbc intervie. "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. carl. but we need something better. that's easily adjustable has no penalties or advisory fee. and we can monitor to see that we're on track. like schwab intelligent income. schwab! introducing schwab intelligent income. a simple, modern way to pay yourself from your portfolio. oh, that's cool... i mean, we don't have that. schwab. a modern approach to wealth management. flexshares are carefully constructed. to go beyond ordinary etfs. and strengthen client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information.

read it carefully. for a prospectus containing this information. read it carefully. ♪ ♪ ♪ cisco. the bridge to possible.

another day, another chance. it could be the day you break the sales record, or the day there's appointments nonstop. with comcast business, you get the network that can deliver gig speeds to the most businesses, and you can get the advanced cybersecurity solutions

you need with comcast business securityedge. every day in business is a big day. we'll keep you ready for what's next. get started with a powerful internet and voice solution for just $64.90 a month. and ask how to add comcast business securityedge. call today. investors dumped big tech stocks yesterday

apple and amazon slid yesterday. tesla was down 6%. joining us is greg branch with us and dan flack greg, we had some false starts and maybe also false stops with w we had a few of these with interest rates go up and it reflects in big tech cap one day it will mean more than a buying opportunity or a pullback are getting close to that day after yesterday and this morning? >> i don't think so, joe we have two things happening at once here. we have to get through them until we get to what i think is a powerful earnings driven back half as you rightly indicated, inflation is one of those. the weak jobs report on friday and the economy responded to that and then the supply constrain

and not demand constrain as you indicated, as inflation rises and threat of yields rising hits the market, that will have the largest impact on tech the other thing we are dealing with right now in terms of tech and growth is we are just starting to hit the period of the top. we weren't forced in the stay at home in a meaningful way until the second quarter we are hitting that at the same time the market is continuing the strength and trends and persistence that the companies benefitted from. the markets will need or wait and see if that strength is persistent as we emerge. >> dan, you noted the selloff in tech i don't know if it is getting more frequent or sometimes sharp

corrections are the best kind with the bull run. do you see worrying signs of the action we're seeing in tech and nasdaq >> joe, i think we will have concerns in the near term around growth and rising interest rates. we look at the longer-term secular trends with mobile and cloud and buildout of the digital infrastructure those trends will remain healthy. what is going to matter in my opinion is the companies that are able to innovate and create value for their customers will t ultimately create shareholder value. google and youtube is strong the cloud platform is strong another name like nvidia which has attractive growth prospects around this secular trend of artificial intelligence.

data center of gaming and one other one is a company which you know of is qualcomm. obviously well positioned in the world of 5g and internet of things and attractive global prospect and longer term aspect with auto. a lot despite the near-term choppiness >> greg, what about the growth value balance? 51/49? 50/50? 80/20? you have a preference? >> i don't know if i can dole it out at an exact number i will say we are entering a period with inflationary pressure as secretary yellen started to indicate last week is they are considering a change in postures

which benefit from higher yields and higher interest rates. companies benefit from higher inflation. a lot of the commodities companies can pass on pricing to end customers. lots of companies in the value retail space i don't know if there is an exact form i believe estimates are light in the back half. when we emerge from the period of concern and inflationand what the fed will do and signal will get to the back half performance story. >> dan, do you look at both monetary policy and fiscal policy and just at some point say this is going to be an issue in the future? if not, why haven't we been doing this all the time? i think 30% gdp we added on to the debt in the last year or two

years. does that ever come home to roost? maybe we should have been doing this all along spend our way into possrosperit? >> joe, we do include dynamics in fiscal policy when we think of the rates and where were they 20 years ago interest rates are still quite low. that may be a factor in the near term fiscal stimulus, obviously, having money pumped into the economy. we will see impacts there. i think what will matter to the companies and a lot of the technology sectors with the ability to innovate. even in the face of inn nflatio and higher interest rates. the companies able to create what is a key part of our digital future and those are the ones with amazon and amazon web services or ecommerce.

joe, those are the ones that can continue to prosper in terms of the near term which is clearly a risk, but longer term growth for these companies. >> greg, these fiscal and monetary issues are not just short-term issues, are they? >> not in a sense. i do believe despite the inflationary pressure we see now and we will see dovish policy through the course of the year we talk about higher corporate tax rate we talk about higher dividend taxes. things of that nature. we are talking about how do we pay the bill for some of this. as one would guess, the policy is being proposed thus far target those who benefit the most during the pandemic like dan, i don't have long-term

concern. we are baking those numbers in the long-term outlets with the sectors and companies. >> all right you guys shouldn't watch at 8:00 druckenmiller has long-term concerns that's what makes the market thank you. greg and dan thank you. see you later. all right. when we return, more than $1 billion of art is up for auction in new york this week. cryptocurrency made its big debut. robert frank has more. and today, a look at how companies are addressing the pandemic you can register at cnbc.com/healthyreturns. we're back right after this.

[ humming ] alexa? play "ooh la la." [ "ooh la la" by cherie playing ] the moxie showerhead speaker. only from kohler.

in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

welcome back to "squawk box. the spring art market facing a key test with traditional pieces and nfts we have robert frank with the latest >> reporter: good morning, andrew more than $1 billion of art and nfts going under the hammer in new york sotheby's allowing in-person bidding. christie's is all virtual and phone. and the auction houses have more than 25 works priced at over $10 million. the star is the rare skull painting estimated over $50 million. it could fetch more since a

similar works sold for $110 million in 2017. christie's offering a picasso portrait at $50 million. and the warh lily is likely to fetch over $40 million. andrew, you mentioned crypto so s sotheby's is accepting crypto. christie's is selling nine crypto pixilated and worth up to $9 million andrew, one is 10,000 and only 9

are up for auction that is a big prize. we will see who comes out to bid. >> what about accepting coins for all of this? what can i pay here, robert? >> reporter: you can pay in bitcoin or ethereum. apparently, i asked, no dogecoin will be accepted at the auctions this week. it has to be bitcoin or ethereum >> i can pay in dollars if i like >> reporter: of course >> the world has not moved off the world moved on i feel you can't pay in cash any more >> reporter: the auction houses will always accept dollars >> by the way, i assume, that is interesting. do they take the bitcoin and ethereum and turn it into dollars or do they pay it to the artist in the form of the

crypto >> reporter: with beeple, they took it and sold it in dollars they turned it around. they have a coinbase account it is a quick turn they don't hold it >> nfts would be different i imagine. robert, great to see you joe. coming up, we have fallout from the ransomware attack on the colonial pipeline. brian sullivan has the latest next. and as we head to break, here is yesterday's s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business our people and network will help keep you connected let's take care of business. ca.

okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need. some say this is my greatest challenge. governments in record debt; inflation rising, currencies falling. but i've seen centuries of this. with one companion that hedges the risks you choose and those that choose you. the physical seam of a digital world, traded with a touch. my strongest and closest asset. the gold standard, so to speak ;)

people call my future uncertain. but there's one thing i am sure of...

good morning welcome back to "squawk box. we have been watching the u.s. equity futures the selloff yesterday is continuing this morning.

look right now dow futures indicated down 185 points it is the nasdaq that we're watching closely this morning. nasdaq off by 2.5% yesterday if you check it out this morning, indicated down by another 170 points this morning. that is big pressure on the nasdaq s&p futures are down 34 points right now, let's get to the latest on the ransomware attack that shutdown the vital fuel pipeline on the east coast brian sullivan joins us with the latest brian, watching this closely hopefully we're going to get to the point where it is turned back on. before that happens, there is havoc played out specifically in virginia >> reporter: virginia and north carolina and parts of georgia, becky. the real-world impact. let's blast through and you can fire off questions colonial pipeline wants to reopen most of the pop ipeline y the end of the week.

parts of the pipeline came back online yesterday it is impossible to know where we stand the ceo of colonial told the white house they do have control over the pipeline and the systems, but will not restart until the threat is over it seems likely based on the little information we're getting that the threat may not yet be entirely over. to your point, becky, the real world impact is felt here we go north carolina declaring a state of emergency because impending gas shortages. some gas stations reporting no gasoline to sell in fact, gas buddy posting this last night virginia, according to gas buddy, at midnight, 70% were sold out of some grades or all grades of gasoline in some cases, it is 93 or 87

oc octane some gasoline journalists are reporting. if you see a gas station owner gouging, send us a picture of that no reason to gauge if they can get the gas, they should pay the market rate also outside of cars, american airlines adding a stop to a planned nonstop flight from charlotte to hawaii. the plane will land in dallas, becky, to refuel and change planes i spoke with a pilot buddy of mine who says they will fly into charlotte and offload fuel from the plane back to the airport and then take back off some place else reverse of what you normally see. oil tanker rates in the ocean are spiking. maybe they will come across this closing two of the three units

the slowdown of production here is an rbi, becky. the colonial pipeline web site is now down. if you go to colpipe.com you get a 502 bad gateway message. i don't know if they are redoing their web site or this is some other element to this. i sent it to eamon javers. real-world impact. not even the colonial pipeline web site is working. there you go >> you said you were emailing with colonial people over the weekend, i wondered if the email systems worked if you shutdown like this, does it take down the whole system? what we don't know, brian, have they paid the ransom demanded? how are they getting the systems back online? it seems like a huge problem to then go through and try to make sure you are secure once you

have been infiltrated. how do you make sure the system is secure? part of what they were doing is shutting down to prevent any way the bad guys or hackers could cause havoc within the system once they took it over. >> so many questions it is what power did the crooks, criminals, hackers, have over colonial systems all of the pipelines now it is not like the old days with a guy with a wrench opening it up you probably saw some of those people now it is all software if you take control of the software, you take control of the flow we don't know the extent of the threat colonial pipeline has not said the power. we had a guest on "worldwide exchange" plalay it out, becky. this is not some little pipeline this is the american jugular

pipeline 50 million people rely on this commercial airports. air force, army bases. they rely on the fuel from the colonial pipeline. if you are a hacker and you say, hey, let's go after a pipeline in the united states, let's try to shut it down and raise money. you got to be pretty brazen to go after this. i was thinking it is like to jaeamon javers' earlier analogy. if you rob a bank, you go after a bank, not the u.s. mint. this is a political target despite the bizarre apology. dark side said we are not a political organization when you shutdown that to 50 million people, hard to see it any other way. >> yeah. brian, i saw that guest. i loved her point. this is a sputnik moment and

realizing how much we should spend on security on the corporate and national level that is important. brian, good to see you talk to you soon. >> back to the wrenches. >> the roughnecks. that's one way see you later. joe. >> real infrastructure problem is this. instead of spending money on the other stuff, maybe we should shore up the grid security and everything else. it is expected that the journal saying the real infrastructure problem is manifested with this colonial pipeline. becky, did you hear brian use for prerjorative ding-dong knu knucklehead. you don't want to go when you get a call -- coming up, the biggest stock

movers surge of demand for golf gear next later, don't miss our interview with investor stan druckenmiller. you know what i want to ask if he has a family llc. he is up to date on the archegos at edward jones, our 19,000 financial advisors listen and work with you to create personalized investment strategies to help you get back to drafting dreams and building your future. edward jones. it is time for investing to feel individual. you did it. a steakhouse with a vegan menu...

that serves dinner at 4:30. personal assistance just a text away. one of the many things you could expect when you're with amex.

coming up, the push to rehire after the pandemic. we will dig into the troubling trends by the april jobs report.

that's next right here on "squawk box. our systems fill buildings and homes with healthy, clean air. we detect and put out fires, and help people stay safe and secure inside. our innovations keep foods and lifesaving medicines cold and fresh until they reach those who need them. at carrier, we create solutions to help you build a brighter future...

welcome back to "squawk box. women continue to leave the work force. joining us with more is ylan mui. >> reporter: women leaving the work force is the problem in the pan pandemic the jobs report under scored how hard it is to get them back. 165,000 women quit working or stopped looking for a job last month. the men who joined the work force was double that flub

numbers. women accounted for all of that job cuts last month. they lost ground in trade and transport. down 44,000. warehousing was down 20,000 women. child care remained a challenge. that is preventing women from getting into the game and the white house says that is an argument for expanding benefits for parents, especially moms >> everyone recognizing without a solid infrastructure without that scaffolding of people in the economy, people cannot get to work people have seen how vital the jobs are >> reporter: it is not just about the schools and day cares reopening. the deeper problem here, guys, is women may not go back to the same types of jobs before and that is creating a mismatch of still skills that could take longer to heal in the economy.

>> okay. ylan, i appreciate it. we will continue this conversation a bit because our next guest has a window into what is happening with workers tom gym bimble of lasalle netwok tom, i don't know what numbers to believe p anymore what numbers do you see? what do you see anecdotally? >> i think march was an aberration and april is accurate if i said we would have a quarter of a million jobs a month, we would be excited we look at march with a baseball player with 60 home runs and next season 45 then you think 45 is not good. 45 is good 250 is still good. the margin was crazy we look at this and say the economy is still growing there is some real issues that ceos are worried about with the

stimulus being too much. we'll see where that goes. there is only so much we can handle we should be thankful for 250,000 jobs >> when you hear arguments made right now about folks who don't want to go back to work or the argument is employers are having a hard time finding employees who want to go back to work because they are getting benefits from the government that are more, effectively, than paid does that ring true or false >> it is true. you cannot discount the fact that companies are having a hard time finding people and benefits are more than what they're making we can argue for days that wages should be higher for certain jobs or why married couples, women are staying home to take care of kids, and not a shared responsibility between husbands and wives. we can make those arguments for forever. the facts are is we can't find jobs and people are turning them down because they are getting more money from unemployment

not everybody. i don't want hate tweets and emails there is a portion of the public that wants to stay home and enjoy the benefits >> the president said if you had been offered a job at a reasonable wage and turned down, you shouldn't be el eligible fo the unemployment payments. do you believe there is a way to enforce that >> there is a formula that can exist that says if you are making x and take a job for y, what is the delta and unemployment benefit should that happen with the u.s. government managing it no i believe for unemployment insurance to continue and something for incentive for people to go back to work and take any job this is not the great depression this is not people flipping hamburgers who are accountants

people are in their homes. we are not evicting people or repoing cars the government is a giant safety net now. for us to see the future, we have to figure out i way to redo the unemployment insurance problem. >> okay. let's talk about it. i'll make you policymaker for the day. some of this will roll off eventually if you were in charge today, what would you do? >> i would say if you take a job that is 50% less than what you were making for all of the previous year, then you are entitled to x amount of unemployment payments. if you don't take a job at all, at all, you are at a very small percentage of what unemployment will pay there should be incentive for people to go and work retail and go and work construction we will have infrastructure bills passing and people will go through a hammer why more men are in the work

force than women the job may be gone as technology evolves what you did before may be in a customer service department versus something else. people have to realize just because you can't get the job you want, doesn't mean you don't have to work at a lesser paying job. that is evolution. we have to adjust. >> you make the argument in certain cases and you look at them and you have to say to yourself, this is not a living wage this is too low. we were talking yesterday with the wages in pennsylvania. a preschool teacher in some cases is making under $15 and $14 an hour. >> so what we're saying is how many people can do that job? that is where supply and demand comes into play. if you can have an 18-year-old kid that can be in a preschool and baby sit kids. i'm not judging them that is how it works from the supply and demand model. if there are more people able to

do the job, that drives prices low. salaries lower right now, if we can't find people that naturally that should increase wages. the fact that is not happening and that is an interesting problem we are facing. we really are lacking in elasticity it is not an internet company or services firm. the day care can handle only so many kids. you have that big of a wage to do it. all of a sudden, you want to pay preschool teachers $25 an hour, but you now it is to have your kid go to preschool. instead of $500 a week, it is now $1,200 a week. that is a dynamic and that pulls more people out because they will not make enough to cover that that is the dynamic and people don't want to talk about it. >> tom, we have to run i'm sure you have lit up the internet with this conversation. this is a longer debate to be

had. thank you for joining us this morning. i appreciate it. >> i look forward to it. stay healthy >> you bet becky. thanks, andrew s still to come, a big lineup. stanley druckenmiller and ibm ceo arvind krishna "squawk box" will be right back. get 0.9% apr financing on the 2021 rx 350. experience amazing, at your lexus dealer. i think you're going to like it here. umm, why is everyone... throwing things at me? look, as cfo it's my job to be ready for whatever's next. that's why i have my finance team, randomly hurl things at me. it's also why we use workday. it gives us insights, so we quickly pivot our strategy, people, planning, you name it. sorry, sir. i will aim straight at your next step. see that you do. would you like some coffee?

workday. the finance, hr, and planning system for a changing world. ♪ cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ new projects means new project managers. visit letsmakeaplan.org to finyou need to hire.ssional. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a short list of quality candidates

from our resume database. claim your seventy five dollar credit, when you post your first job at indeed.com/home.

america's most important oil and gas pipeline moving closer to restarting service. this as the white house eyes additional steps and some gas stations start to run dry. the latest from washington is ahead. getting the big apple up and running again. as restrictions are lifted, a look at what new york city needs to do to get the economy back on track. it looks like there won't be a tuesday turn around as selling sticks around with tech taking the biggest hit. futures are lower this morning we have what you need to watch at the opening bell this morning as the second hour of "squawk box" begins right now. ♪

good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. it looks like the nasdaq will open down 166 points nasdaq down 140 points s&p 500 is down as well. 30 points. we have earnings out from palentir technologies. quarterly profit of 4 cents per share. exceeded estimates with the growth numbers of 49% from a year ago data aincompany of growth of 30o more through 2029. interestingly, and we are looking at the stock now moving. it is off 4%

that is better than where it was. it is coming down a bit. we will keep our eyes on palantir joe. thank you. here is what is making headlines. children aged 12 to 15 could receive the vaccine from pfizer as soon as thursday. the fda approved the use of the vaccine for that age group many could be immunized before the start of summer camps and ahead of the next school year. the white house says it is directing government agencies to help alleviate any shortage of gasoline results from the colonial piper line attacks colonial pipeline has been shutdown since friday. they hope to have the systems restored by friday. and better than expected quarterly results for simon properties shoppers returning as the pandemic is receding something went wrong the company cut the full year

profit forecast. it said it didn't expect a return to 2019 occupancy levels until next year at the earliest. a warning out from stanley druckenmiller. in a wall street journal op-ed, it says the fed should not be in emergency mode the warning of the long-term interest rates is risky for the economy and fed itself the political pressures in the future that require the fed stop enabling the fiscal and market excesses now we will talk to stanley druckenmiller about this at 8:00 a.m. eastern in the exclusive interview. if you wyou want to study up, i in the "wall street journal" op-ed pages. prices are going up for just about everything across a number of sectors steve liesman joins us with new

inflation data head of tomorrow's cpi report. good morning, steve. >> good morning, becky the inflation data followed by cnbc hitting all-time highs. the leading edge of the expected inflation surge with up side risk with the cpi report cnbc partnered to look at inflation data straight from the web from price desk. running at 3.9%. that is the highest since the series began in 2009 there was some moderation in transportation created by rising food prices. you see the cpi closely. tomorrow's consensus of 3.6% looks comparatively low. all of this is before any possible impact for the disruption of the shcolonial pipeline this is one of the series of indications flashing red and we track national federation

of independent businesses reporting 36% of small businesses plan to raise prices. the most since april of 1980 yesterday, the fed's consumer expectation report is hitting 3.4% the highest since september of 2013 three-year expectations also rose rise in prices is expected by the fed and most fed officials said they think it will be temporary. that could be true in the meantime, mcdonald's franchise owners warns that rising costs, especially wage costs could force them soon to increase the cost of a big mac that will hit home for some, becky. >> yeah. people will see it everywhere. i know restaurants have had to raise prices for lots of things re they are dealing with. steve, as quick as we gather the information and you have been scraping the web for the new way of finding these price updates

i think the price increases are coming faster than that. you hear in places that would not be on the web things you could capture. my brother and sister-in-law were looking to build a deck the price they got from the guy that came out last week was twice what it was a few months ago. they are talking $60,000 because the price of lumber has jumped that much in a month. >> right what is interesting about your question is you hit the achilles heel of every single inflation indicator. every the high-tech data that we're following. not only embedded in the cost of the deck is higher lumber costs, but also higher service costs. nobody does a good job as far as i can tell in the price series a lot of the service costs are computed we are watching that carefully, becky. you know, goods prices can rise and fall, but commodities are

bought and sold. a commodity is easy. service is something different if we have a lasting inflation problem, you want to watch service price. that is the place where it will be and hit home and something more permanent than goods prices which go up and down with supply and demand >> do you think the fed has a good handle on that? what indicators do they watch if it is not the cpi or what we are talking about? how do they get their arms around how big a problem inflation may be and if it is transitory >> they are watching all of this i'm at least someone in the druckenmiller camp i said this several times. they should ease off on the asset purchases earlier than intending to powell is playing a high stakes game here. he really wants to get that inflation number up to 2%.

he thinks the only way to do it is to aim for inflation above 2% for some time. druckenmiller thinks he is dead wrong on that. i think there is an argument on that, at least on the asset purchase side with the 120 billion. fed looks at all indicators out there and their indication is once you get through the impulse from the latest fiscal spending as well as rolling off the supply disruption, you get some cooling of inflation >> steve, thanks a lot great to see you we'll check in later. >> pleasure. coming up, the reoptening of new york is continuing more restrictions are lifting. coming up, we talk to the chairman of the state board of new york bill rudin talking about the possible rebound. before we head to break.

a check on the markets nasdaq is what we are watching closely after the rout yesterday. "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. ♪ ♪ ♪ ♪ ♪ ♪ i really hope that this vaccine

can get me one step closer to him. to a huge wedding. to give high fives to our patients. to hug my students. with every vaccine, cvs is working to bring you one step closer to a better tomorrow. in business, it's never just another day. it's the big sale, or the big presentation. with every vaccine, cvs is working to bring you the day where everything goes right. or the one where nothing does. with comcast business

you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities. new york city set to fully reopen in july office landlords are preparing

for workers to return. that means the commercial real estate market which was doppler radar dormant for a year is now picking up office space and residential buildings. joining us with the rehe opening is bill rudin. chairman of the rudin management company. it seems like forever, bill i will ask a pointed question. have we built back better in new york city? i'm in the middle of times square i'm ready for anything at a any time is de blasio building us back better >> the answer is definitely yes. thank you for having me back on. i was on a month ago when we discussed many of these issues i think, you know, led the conversation that we were heading in the right direction

a month later, there's no question that we are heading in the right direction. just on lumber which came out. june 7th, our major tenant, blackstone, in the building i'm sitting in, are bringing people back on june 7th you see goldman sachs and jamie dimon and jpmorgan chase and others all starting to have a race to get people back sooner rather than later which is fantastic. we are building back better. building behind you that we own, we're building it back better. putting in new lobby and mechanical systems and filtration, amenities space. signage. this is what companies want. we are doing it downtown and in a building at eighth street. we did it in brooklyn. others are doing it. we are providing the new

buildings and the infrastructure and technology and wellness that companies are looking for and they're responding we have seen a 30 times increase in tours over the last 30 days going back to february tour velocity is incredible. tenants are responding they are taking advantage of price discounts and taking advantage of the buildings which is putting in the infrastructure obviously, you know, last few days, stock markets have been bumping around we had an incredible stock market that is driving people to realize the pandemic is in the rear-view mirror and we're looking forward. >> bill, that is it. the rear-view mirror we're all hopeful. are you just counting on herd immunity or are you going to have testing and take

temperatures or ask to see that people have been vaccinated? how do we do that? just assume it's safe to go back in the water or take precautions? >> no, no, no. the conversations we have been having with the major tenants like blackstone and other companies, we have temperature checking a daily form that everybody needs to fill out to tell their employers they had their temperature checked. we do testing on a regular basis with our employees i think other companies do the same thing we are encouraging, not mandating, but highly recommended people get vaccinated we offer incentives. days off, personal days. we are seeing the city and the building behind you is a testing center there will be a vaccine site in

times square broadway is opening in the fall which will help the restaurants and create the vibrancy for the city museums are opening. restaurants with the outdoor space. the city will be better than it was pre-pandemic with the outdoor dining i think people feeling safe coming back into the city. >> bill -- >> a lot with the quality of life >> bill? >> yes >> let's talk about the quality of life and safety right outside of where joe is sitting at this moment, three people were shot in times square in daylight. killings are up by 17% year over year at this same time shootings, shootings, which i think is possibly more

important. up 83% year on year. 83%. 416 people have been shot at in new york city. what is the business community say about this what does the business community want to do about this? we're in the middle of the mayoral election you talk about getting business back shootings up 83% forget about covid i don't think anyone feels safe. >> first of all, what happened over the weekend is tragic how the p.d. responded it is all over the news now. there was a woman police officer vogel who responded and grabbed the child and put a tourniquet on and got her off to the hospital we do respond immediately with the tragic events. andrew, these events not just happening in new york. same weekend, shooting in miami in a mall. shooting in phoenix. shooting in massachusetts.

shooting in colorado this is a national problem we have to deal with it. i think an interesting point is the mayor has appointed former chief of patrol terry moynahan he is in the city hall that is where his office is to be the coordinator of p.d., homeless services. other agencies, sanitation, to deal with the quality of life issues it is an 80-person team spread out over parts of the city yes, there is a crime issue we have to deal with. what i think is going to happen is as more people start coming back into the city and walking in the streets and going to the restaurants, that's going to help in terms of reducing crime. the famous urbanist and sociologist william white talks about what attracts people most

is other people. we have to get people back into the city we have to make sure the police officers are doing their job i think they are we have to get the guns off the streets. we have a political issue. >> bill, do you have a mayoral candidate you are supporting "new york times" just came out and endorsed kathy garcia. >> yes >> who are you supporting? >> we're supporting the candidate that is going to deal with quality of life expressed their views that they understand that economic development create taxes, that help fund all of the social services there is not one particular candidate. i think there are several very good candidates that understand that you have to -- that business and real estate, we're

not the enemy, we're part of the solution and making sure that our city continues to grow so we need somebody who has a vision, understands looking to the future, make the tough decisions in terms of development, getting education, crime, housing and do all the things that make this city great. and you're already seeing it happen and that's the point that i was making before. people are coming back >> bill -- >> there are more condominium contracts signed up to this date, nearly 70 -- sorry, 700 than there were all of last year our residential leasing is up. commercial activity is up. so in spite of all these facts, andrew, that you raise that are totally legitimate, there are people coming back to the city and they're seeing past -- >> so you mentioned at the top -- >> go ahead, becky how are you? >> good, how are you you mentioned at the top that people are coming back and

taking advantage and employers are taking advantage of some of the lower rates they can get from the commercial space at this point how big of a discount do you have to offer to get things done at this point? >> it depends where you're looking at i think the beauty now of the city is it used to be mid town downtown now it's mid town, mid town south, far left side, lower manhattan, brooklyn in the navy yard downtown brooklyn. long island city the bronx. make tenants opportunities they can find buildings that are close to where people work i think it depends where you are. there are sometimes very little discount and sometimes 10, 15% discount work letters, incentives are going up on the residential side we used to give a couple of months -- a few months free rent we're starting to reduce that because demand is picking up and we're seeing people come back

into the city. >> hey, so, bill, just a philosophical question eventually, maybe it just takes time, so new york gets to its previous preeminence and above that or like the nature of work or like the nature of business travel, it's permanently changed and it never gets back to that i know you're a real estate guy and you're optimistic, but honestly, it may take time to get -- to actually supersede its previous position? or it will or it won't >> i think it's going to take time we also have to be very cognizant of what we just went through and we have to i cmake r people can get vaccinated. the city and the state vaccines in the subway system, in offering incentives, but i think as more and more people get the

vaccine, i think over 60% of the state has been vaccinated. we're going to get back hopefully start off build back better, we're going to get back in a better way. the city has changed you can walk out, have outdoor dining all year round. you can get back to experiencing the culture institutions that make our city great. you can hopefully in the fall get back to theater. so. >> i. >> thank you good to see you. >> thanks, guys. good luck.

>> his thoughts on the fed policy policy >> the special interviewiving w. it was and inspiration. but somewhere along the line cars just got boring. you deserve a car that thrills you. like sports cars with three pedals. trucks that take you to incredible places. colorful crossovers. and cars loaded with technology. and there's a car company that believes that too. one that has been delivering thrills for over 80 years. this is the new nissan. ♪ ♪

keeping your oysters business growing this is the new nissan. has you swamped. you need to hire. i need indeed indeed you do. the moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base claim your seventy-five-dollar credit when you post your first job at indeed.com/promo cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪

- grammarly business turned my marketing team into rock stars. (diana strums guitar) maya swears by grammarly business because it keeps her work on brand and error-free. fast and easy. - [announcer] learn more at grammarly.com/business.

spin off of it sources say. >> it's broken by the first. "squawk box" returns

in business, it's never just another day.

with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it. comcast business powering possibilities.

dominic chu. >> 2% of the premarket >> these make it nearly around 37% of the nasdaq.

it's a popular investing and it's kkk. >> the day trader. >> tesla. >> all of this here. keeping it a healthy return.

for that particular rerntu keep it right here "squawk box" continues - i'm sure you've heard how grammarly improves your writing, but let me tell you how grammarly business helped my sales team. look at simon. since simon's team started using grammarly business,

we've closed more deals. with suggestions to sharpen his writing clarity and overall confidence, simon's pitches always stick the landing, which leads to more of these and these. learn more at grammerly.com/business. cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financiallan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ visit letsmakeaplan.org to find your cfp® professional. the first survivor of alzheimer's disease is out there. and the alzheimer's association is going to make it happen. but we won't get there without you. join the fight with the alzheimer's association.

new projects means new project managers. you need to hire. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a short list of quality candidates from our resume database. claim your seventy five dollar credit, when you post your first job at indeed.com/home. - grammarly business turned my marketing team into rock stars. (diana strums guitar) maya swears by grammarly business because it keeps her work on brand and error-free. fast and easy. - [announcer] learn more at grammarly.com/business.

we have sylvia jablonski with us and victoria fernandez, chief market strategist at cross mark global investments. people are really starting to pay attention to this move out of technology. do you think this is cause for concern at this point? >> well, i'm not sure i would say it's cause for concern i do think you have to pay attention to what's going on in the markets right now, but we really feel like the markets have just kind of gotten a little heavy to use a word of one of my colleagues the months leading up to now, we're seeing the trend higher. we've had a strong earnings season you look at the eps growth

we're going to be double what expectations were a couple of months ago i think the market has gotten a little bit heavy having a pull back having a little bit of consolidation is okay. we actually think tech sector led by some high flying names to the down side, maybe that's getting to a bottom right now. if you don't own them, it could be a buying opportunity be at this we really like looking at more secular growth names it can still be in the tech area a name like nvidia or adobe, we don't think there's cause for concern for the entire sector. >> why not >> well, i mean, as i was mentioning, we're longer term investors at cross mark, right so there's a lot of people trying to make the trade and you can get in trouble trying to make the whip saw event. if you look at the trends that are going to happen longer term whether it's around data infrastructure, whether it's around 5g, cloud space, more people work from home and

companies really need to build out their i.t. infrastructure, we think there are long-term opportunities there. yes, there is a pull back. yes, there is a pause and consolidation. that's okay. longer term we're still going to have apple, we're still going to have microsoft which are two of the largest names in our portfolio. we have the shortage in trips and we have some seminames we look at nvidia. automation, ai, that's not going anywhere any time soon that's only going to build that gives them growth going forward. we think there are opportunities. still in the tech sector if you still want to be in that area, although obviously the reopening trade is something that a lot of people are focusing on as well >> sylvia, when you look at this and kind of track the flows into different etfs, if people are pulling money out of the tech focused etfs, where are the funds going? >> victoria makes a great point.

i think some of the flows are going to start coming back into the etfs because they're down but where have they been going i think they're going to some of the broader based consumer discretionary. i think they're going to energy. financials some of the economic reopening trades, industrials and home builders has been crushing it, particularly in the past few months i think that's off of this covid transition additive market to build on victoria's point, if you're a longer term investor looking at 5g semiconductors, anything that touches innovation, technology, digitization, these are not going away and i think these are good dips to buy >> sylvia, just in terms of following momentum, normally that would be a call for saying the funds will continue. are we in a situation where every time you see a pull back, particularly in some of these areas and sectors that have done so well for so long, every time

you see a slight pull back, people rush back in and there's enough money on the sidelines to prop things back up? >> i think that's a great point. that is a lot that's happening we have a lot of fiscal stimulus saving rates are at all-time highs. they're not earning a whole lot in the bond market i think the cash will eventually flow back into the market. i expect the volatility. we've had stellar earnings and forward looking fear of the 10-year inflation. these are normal ebbs and flows. if i look at apple, microsoft, amazon, some of these names that are pulled back 10% or so, in my mind this could be a good place to think about a bottom and put some of the cash back to work in equities. >> yeah, especially when we talk about inflation every day. if you have higher inflation, cash sitting in the bank may be about the worst place to be. victoria, let's talk about another stock you like

master card. you mentioned some tech centered stocks why master card? >> we like to look at the financials from a different perspective. we think master card and visa, we own both of those names in our portfolio. those are great ways to play the financials obviously as economies are reopening, people are going out, spending money soon they're going to be buying tickets to concerts, going back to the movie theaters more, eating out i'm in houston so we're open for the most part. as other cities start to open, card usage is going to work well the last week of march credit card usage was up double digits from just a couple of weeks prior to that. it tells us people are out there spending we know the consumer is sitting in a really good spot with their household balance sheets we've seen the savings rates going up 25, 26% we think this is a way you can

take advantage of reopening but it's a longer term trend that will continue. >> sylvia, victoria, thank you to both of you good to see you. >> thank you, becky. coming up, the white house's response to a ransom wear attack that shut down 5,500 miles of pipeline sully called it the jugular of our pipeline in the u.s. check out the price of gasoline right now. we'll be rightac bk. in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7.

every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

another day, another chance. it could be the day you break the sales record, or the day there's appointments nonstop. with comcast business, you get the network that can deliver gig speeds to the most businesses, and you can get the advanced cybersecurity solutions you need with comcast business securityedge. every day in business is a big day. we'll keep you ready for what's next. get started with a powerful internet and voice solution for just $64.90 a month. and ask how to add comcast business securityedge. call today.

here' the ceo of mongo >> i had the benefit of amazing role models. they dealt with diversity, adapting to norms and taking risks. that was seared into me. i started my first business when i was 131 it allowed me to build a global business where i could connect with different people from different backgrounds, cultures and norms. for that i am eternally grateful

cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ keeping your oysters business growing visit letsmakeaplan.org to findhas you swamped.ssional. you need to hire. i need indeed indeed you do. the moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base claim your seventy-five-dollar credit when you post your first job at indeed.com/promo

welcome back, everybody. want to check in with eamon javers about the colonial pipeline shutdown and the response from the white house. this is something they're taking seriously. >> reporter: yeah, they should they hope to get most of their operations up and running by the end of this week, this situation has emerged as a major diplomatic flashpoint between the united states and russia president biden said he's going to take it directly to vladimir putin. here's what he said. >> i'm going to be meeting with

president putin and so far there is no evidence based on -- from our intelligence people russia is involved although there's evidence that the actors, ransom wear is in russia. they have some responsibility to deal with this >> reporter: so biden there suggesting the russian government has a role to play in solving this ransom wear problem overall. meanwhile, we got this very strange moment yesterday where the hackers actually posted a note on the dark web seeming to express some regret for the social consequences as they called it of their actions here. take a look at this statement that was posted by darkside, the group of hackers identified by the fbi as the bad guys here they said from today, we introduce moderation and check each company that our partners want to encrypt to avoid social consequence in the future. not at all clear what's going on here this is very unusual behavior for a hacker group these are ruthless criminal gangs and here they are

expressing some concern about the external consequences. it may be that this group simply bit off more than it can chew in terms of the size and scale and the political ramifications from it they insisted on the dark web they're not political, affiliated with any dark web and they're in it for the money and that's why they're changing their ways going forward still, this is spy versus spy stuff, andrew, and we just can't figure out exactly who's who here you have to expect with criminal gangsters somebody is lying. >> before i let you go, eamon, do you have any sense how many people it takes to do something like this? >> no. it's a large organization. dark side is ransom wear as a service, which means that you think of them as sort of the evil twin of a silicon valley firm they develop the malware and they farm it out to other affiliates, other criminal gangs who then exercise the attacks. >> but is this, you know, 100

people, 1,000 people, 4 people what do you think we're talking about here >> it's a lot. you know, my guess, this is just a guess, you're talking at least dozens involved in the development of the malware and separate groups involved in rolling this out this is a very professional organization that has -- that have got a call-in line, they've got a help desk, services for affiliates, offer discounts on certain things they operate like a company so presumably they're staffed like a company. >> okay. eamon, it's fascinating. it's scary all at the same time. we're going to continue this conversation now with more on the pipeline's fallout, i want to bring in sue gordon she served as the national deputy chair and she spent three decades with the cia sue, if it really runs and operates like a company, why has the u.s. government not been that they've got some

experienced hands. remember their criminal element. even though we don't have direct attribution to the russian government, it's unlikely that if they're in russia they're doing so without some awareness. so i think the issue is i think what president biden was suggesting, put pressure on russia to bring their criminal element to some sort of responsibility do i think that will work? i don't know but i think it's the right first play. >> how many people do you think it takes to develop this type of malware and how many people does it take to implement it? >> it's a significant enterprise you need to develop the malware, you need to continuously develop the malware, you need to establish the intelligence base to know what companies you're going after and how you attack them and then they're trying to

pass themselves off as a legitimate business with ethical standards and call-in lines. not 1s and 2s. i wouldn't being surprised if it was hundreds. >> okay. so you're a ceo of a major pipeline infrastructure company in america you wake up. you see this happening what are you supposed to be doing? not if it's happening to you, i'm saying now proactively to get ahead of this for the future >> okay. so several things. number one is just make sure you've got a great cyber team and you're always taking care of cyber hygiene. two, ransomware and ransom attacks are near epidemic. up 300% this last year you need to prepare for that, and what that means is have good awareness of your data and have it backed up somewhere so if cyber criminals come in and scramble your data you can say

thanks for playing, we'll go and restore from an updated set. and then i think there's some good news in this, have good contacts with the government what's good about this is you saw colonial report it, so that's another thing for your ceos if you experience an attack, don't try and deal with it yourself bring in the pros from dover there's really good evidence that we're -- >> sue, is there any instance in which you pay the ransom is there any instance where you say, you know what, i'm paying i need to just get my -- i know there are ceos out there who when this happens, a they don't want it to be public b, they realize how much it will cost them and they say paying the ransom is a better deal. >> it's a fraught path to pay the ransom i understand the impetus here's the deal. if they have penetrated your network, you have no idea whether they're going to stay. you pay the ransom this time, they turn it on again.

so i get it, particularly for small companies, and this is one of the areas where i really think we need to get involved with both legislation about data sharing and really work on our digital infrastructure so the smaller companies have the ability to put their data in the cloud. >> what's the highest risk industry right now to this >> i think this attack is our worse nightmare. it's an attack on the infrastructure that threatens to go from digital to physical. they didn't shut down the pipeline but they're a second away from that so power transportation, communications, financial and health care, those industries need to get with the program and start protecting themselves >> sue, it's always good to see you. we appreciate yourperspective and insight on what is a very tough issue. >> joe coming up, the man, the myth, the legend, wow, that's a

big buildup, stan druckenmiller, duquesne family office his take on market, crypto and much more. that's not all and then the ibmceo is going to be on ar vind clish na arvind krishna

in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

good morning it is 8 a.m. on the east coast futures are in the red get ready for a power packed hour of "squawk box. first up, billionaire investor stanley druckenmiller on the cryptoc cryptocurrencies, a new warning on policy. the first tv interview on the ibmceo don't go anywhere as the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. i'm joe concern new england along with becky quick and andrew ross sorkin

u.s. equities in the red the dow down 160 points after giving back 200 plus point gains yesterday. it dropped precipitously 2 1/2% if that qualifies as precipitously. there are other things happening, andrew. other business stories it might involve the pipeline. >> the owner of the cyber attacked colonial pipeline says they hope to restore service by the end of the week. its process is based on a phased approach the fuel line that runs from north carolina to maryland had been restarted and was operating under manual control much of the pipeline is still down and the fbi pinned the intrusion on a group called darkside russia saying it doesn't bear responsibility for the attack. meantime, l brands making the

move to spin off victoria's secret rather than sell it bath and body works and victoria's secret. that move after coming after bids for victoria's secret were short. the fda green lighting pfizer's covid vaccination for children ages 12 so 15. it is seconded by the cdc. kids could be receiving the shot this week. pfizer and biontech said in march a trial of 2,000 adolescents showed side effects generally consistent with adults, what they experienced. could be seeing even more news on that front very, very soon. in the meantime, i want to get back to joe. he's got a very big interview. first, stan druckenmiller, ceo of duquesne family office. he wrote a new op ed in the wall street journal in his words, the fed is playing with fire clinging to an emergency policy after the

emergency has passed chairman powell courting asset bubbles and, stan, in the past you have pointed out that the fed has stayed a little bit too long i think after the financial crisis with emergency accommodation. you seem to have taken your criticism up to a new level to the point if you combine fiscal policy that we're seeing with the monetary policy, it's the scariest combination in the post world war ii period in your view >> certainly the most radical policy i've seen let's not forget that ben bernanke at the peak was doing $85 billion a month. we are now back to normalization on gdp we're above trend on retail

sales. funny, last year at the economics club around this time i said that a v recovery was a fantasy. i couldn't have been more wrong but this is all about risk/reward. i understand why the fed and congress did what they did at the time i think it was the right decision on a risk/reward basis but when the facts change, you have to change the facts have changed dramatically since then. yes, i don't think -- i can't find any period in history where monetary and fiscal policy were this out of step with the economic circumstances not one. >> stan, you talk about how quickly the job market has come back you pointed out retail sales a lot of other things that are almost pre-pandemic levels in normal situations you might think that the fed would be talking about an interest rate hike right now and you point out it's 32 months the other statistic i saw you point out, i don't have it right

here, but the amount of asset purchases that the fund has -- or that the fed has orchestrated just in a very brief period of time, it eclipses what we did through the whole financial crisis for the seven, eight years of the financial crisis. >> in six weeks last spring we did more qe, more purchase of treasuries than we did the entire time, from 2009 to 2018 frankly, joe, i don't have a problem with that. we were in a black hole. no one knew where we were headed what i have a problem is the fed is expected to do 2.5 trillion after vaccine confirmation and after retail sales reach trend and were above friend. so the black hole didn't occur, that's wonderful we're all happy.

but we're all still acting like we're in a black hole. could your producers bring up the chart of retail sales? is that possible >> yeah, i think we've got them all ready that we can bring up >> it's the third chart. >> there it is u.s. nominal retail sales. >> okay. so if you look at this, this is e chart of retail sales in the last 20 years. they grow 3% after the great financial crisis it took six years to get back to trend. if you look at the current recession, it's like nothing we've ever seen. a sharper decline but then within six months you were back to trend level check one, that's the first stimulus package that's the one i have no problem with i think it was the right risk/reward right at the bottom. look at check two, check three

when they're coming. not only are we back to trend, we're 15% above trend. put that in perspective. retail sales grow at about 3% a year so we are five years worth of demand above trends there's some pull forward here away from travel but it's not 15%. so when you look at this chart and then you look at the fed policy and all of the stimulus, then talking about the hole we're in, i just think it's totally inappropriate. >> can we just talk about the -- and then i want to -- do want to get to some of your worst case scenarios. i've never seen you talk like this before. let me get to this and then we'll go back to fiscal policy which is being enabled to some extent by the fed and that's going to reflect back on the fed because the pressure's going to be from fiscal policy to stay like they are. so it's like a vicious circle, but let's talk about the dollar.

85% are still done in the dollar you pointed out in a recent speech that you think we've crossed the rubicon. are you comfortable saying what you said there, that for the first time in your career you think we lose reserve status at some point >> i'm comfortable with it that's my central case as you know, joe, i can change my mind but, yeah, you said that to some extent the fed is enabling the fiscal transfers? it's not to some extent. they couldn't be doing this without the fed. the fed is monetizing their activity i mentioned all the qe after vaccine confirmation and retail sales. we've had 850 billion of direct transfers. 575 billion of them came after retail sales were above trend. 575 of the 850 billion i'm old enough to remember the bond market vigilantes

i used to be one of them without the fed buying i don't know what the exact number is, i think it's 60% of all the debt issue, the bond markets would be totally rejecting this so they are enabling this massive expansion in fiscal policy and the problem is if you end up getting inflation and frankly even if you don't, the debt is going to be so big you remember i did my entitlement talks eight or nine years ago, that's all happened except for one thing, the interest rate level. so we're right now in the crux of when the demographic -- when the baby boomers accelerate in terms of getting medicare, medicaid, social security, that stuff. right as we're doing that, we just put 6 trillion of new debt on again, all enabled by the fed. these guys could not be doing it bond rates would go to a prohibitive level. my issue here is in the future

as we go forward, if you look at -- do you have chart five up there? >> let's get it. i think we can do it which one? >> it's federal spending social security, major health care programs. federal spending as a percentage of gdp this is the cb this is not me. they're saying if 10 years go to 4.9% which is their normalized projection, the interest expense alone will be close to 30% of gdp every year that's basically what we just spent on the covid emergency in the last year. there is no way we can afford to have 30% of all government outlays be towards government interest expense what will happen the fed will have to monetize that when they monetize it, i believe it'll have horrible implications for the dollar and that's why i said in that speech that i think

it's more likely than not within 15 years we lose reserve currency status. can we go to the chart on the dollar specifically? because i think this is really important. last spring in the midst of an equity market meltdown, and i've been trading for 40 years and i've never seen anything like this, right in the middle of an equity market meltdown, the bond went down 18 points one day. everybody thought it was macro traders like me and others that rejected the implications of the c.a.r.e.s. act the fed did a deep dive and by hindsight, foreigners sold a trillion dollars a trillion, of treasuries overnight as we were proposing the c.a.r.e.s. act they've continued to sell treasuries ever since then why is that important? because for 20 years treasuries have been the go-to asset of

foreigners to hedge global portfolios with. in every case whenever you had a problem in the equity market or the world economy, they fled to treasuries and they fled to the dollar last spring that was violated so since then they've continued to sell treasuries. so what we've gone from is for 20 years an average flow of 500 billion a year into treasuries from an outflow out of treasuries so when you have a $700 billion current account deficit, our estimate for the year, you need capital to flow in to offset that if you just erase 500 billion in flow and you turn it into an outflow, you'll see the dollar if that's true, why did the dollar not go down from march to july very simple. who was the biggest beneficiary of covid obviously the massive digital transformation companies

google, microsoft, not so massive but zoom, those kind of names. what country dock nated in terms of those names united states of america so the $500 billion outflow out of bonds was offset by an inflow into our equity market by july they had become -- that had become pretty much in the market the vaccine profile was starting to look better that is where the dollar peaked. as that offset started to diminish as you know, joe, the vaccine tends to cause a rotation out of growth stocks into value stocks. our big advantage over here are the growth stocks so that's why i think the pressure on the dollar is going to continue. >> yeah. for now anyway we've still got that innovation, stan. i worry about that as well i want to get to something

that's just as amazing to see it in print from you and that is when we do lose the status as a world reserve currency, it's going to be hard to find a replacement because in china there's a lack of trust in the currency of a foreign dictatorship obviously and then europe's a mess. your best guess is that a crypto derived ledger system will be invented and that that will become the reserve currency of the world? >> okay. let's not get too carried away >> i know, but that just sizzles. sell the steak go ahead >> i knew crypto was going to come up in this show, okay, so it's okay. but one of the lines about the dollar we've all heard 100 times the last ten years is we're the cleanest dirty shirt in the room there's no alternative and it's true, that is what has

been our strongest case for the dollar europe is a complete mess. who's going to trust the chinese so it can't be them. and i've been groping, how does that resolve itself? well, probably don't remember this, joe, but five or six years ago i said that crypto was a solution in search of a problem, and that's why i didn't quite crypto the first wave because we already had the dollar what do we need crypto for well, the problem has been clearly identified it's jerome powell and the rest of the world central bankers there's a lack of trust. so sort of groping for an answer for a central case, a best guess and it's hard to make a forecast three months from now, much less 15 years from now, i think the most likely -- the most likely placement would be some kind of ledger system invented by some kids from m.i.t., stanford, some other engineering school that

hasn't even happened yet that can replace the dollar worldwide. i don't know what it would be, i just know if the fed is forced to monetize the debt, remember, all in the name of raising inflation 30 basis points, i really don't understand why 1.6% inflation could man date a price stability as a national tragedy but, okay. if they want to do all of this and risk our reserve currency status, risk an asset bubble blowing up, so be it i think we ought to at least have a conversation about it if we're going to monetize our debt and enable more and more of this spending, that's why i'm worried now for the first time that within 15 years we lose res reserve currency. >> i know judy is watching we've had judy shelton on talking about the lack of -- or the complete consensus of the

fed. do you think that is a problem how is this happening? there's no one saying anything disagreeing with the consensus at the fed neel kashkari made some comments about all you hedge fund guys are complaining what the fed is doing and he doesn't have any pity for what you are doing. what hedge fund guy is complaining about what the fed is doing right now in terms of their investments? i hear you warning, but in terms of your investments, have you had a tough go of it recently, stan >> well, i don't know who neel kashkari's talking about we were up 42% last year and up 17% this year so they're certainly not hurting my trading strategies i think i made those numbers because of the fed, not in spite of them. i have six outside money managers who are up a lot more money than me.

i haven't heard one person complain about their business with regard to the fed i mean, a monkey could make money in this market so, you know, i don't know -- i literally don't know what he's talking about. with regard to the consensus of the fed, i'm just confused you've got a lot of output people there as you know by the fed's own projections, we have the most favorable output gap in other words, production relative to capacity forward looking in history i assumethere's still a few people around, i don't know who they are by the fed's own projection again, the most extreme gap between policy projections and what the taylor rule would call for, but i'm not inside the fed. i don't know why there's a consensus. i don't talk to anyone there

it seems so obvious to me. i've been wrong before in spite not being in the market in april and may and being dead wrong, i adjusted. it seems the fed made a very reasonable bet last march/april. i'm glad they did what they did. >> stan, i love what you said about how even a monkey could make money in these markets. everything has gone up it's been the everything bubble, but the stuff you're talking about is pretty scary. i just wonder with all of these

concerns about what comes next, does that change your perspective on the stock market? is there a point where you say you have to get out of it or where you might even short some situations >> becky, that's the big question i have no doubt, none whatsoever that we're in a raging mania in all assets i also have no doubt that i don't have a clue when that's going to end i knew we were in a raging mania in '99 and it kept going on and if you had shorted tech stocks, say, in '99, you were out of business by the end of the year, but we are still long the stock market we're not as long -- nearly as long as we were four or five months ago we're still playing the game we've shifted a lot of our relative bets into commodities, into interest rates, into the dollar all those shifts occurred last

say august through october when it became clear to us that the recovery was going, but i will be surprised if we're not out of the stock market by the end of the year just because, you know, the bubbles can't last that long but i really have an open mind and right now treacherously we're still playing the game to some extent. hopefully losses, if i'm wrong and the stock market comes down before i think it's going to, our other asset categories will benefit enough because to some extent they would be the cause of the stock market bubble popping. >> hey, stan, you made some interesting comments, both about the dollar and then crypto, but i'm curious about where you stand. you suggested that there would be, you know, some kid that was going to create this next, you know, crypto blockchain ledger does that mean the cryptos that exist today don't fulfill the

requirements that you think we'd need in the future what does that say about a bitcoin or an ethereum then? >> first of all, andrew, that's a very good question i'm a 68-year-old dinosaur who's historically used gold as a replacement for fiat currencies. i'll take a shot at that it's going to be very hard to unseat bitcoin as a store value asset because it's got a 14 year brand. it's been around long enough and obviously there's a finite supply obviously ethereum has the lead in terms of smart contracts, commerce, that kind of stuff yes, my guess would be -- and thankfully i'm not betting on this one way or the other, andrew, but my guess would be you remember facebook was not the first social network, it was number 11. yahoo invented the search engine and marginally invented speedier

technology we all know what happened with google versus yahoo! it's just not probable in my mind that ethereum is going to be the ultimate winner and that some kid somewhere because don't forget, some of the best and brightest of kids coming out of engineering schools are all going into crypto. the quality of the competition that's going to come against the incumbents in this space is going to be brutal that's why i think it's too early to call who's going to be the winner in terms of the payment system, commerce, that type of stuff as opposed to store value where i think it is going to be tough to unseat bitcoin. >> stan, you mentioned you missed the v-shaped recovery or calling it now it's in place. you showed some charts do you think that the stock market rebounded so quickly because it smelled out that

incredibly quick rebound or is it because of the fed and all of the cheap money and then as a corollary to that, do you think actually some of these covid-type names or plays are actually higher than they would have been if we hadn't had a pandemic and maybe the stock market itself was higher than it would have been because of all the cheap money? >> the answer to number one, modestly i absolutely missed the bottom but i did not miss the recovery i had adjusted my entire portfolio by the end of may. it cost me dearly not to be exposed from april to may. to be fair,i also wasn't exposed from february on the way down but i think that answer is probably both, joe free money we all experienced. once they crossed red lines in terms of back stopping, once we saw the amount, yes. then i think in terms of the

recovery, it's had more to do with the rotation than it has the stock market itself. as you know, joe, we started very city subtle rotation from august to october, which has accelerated now out of the covid beneficiaries into what i would call reflation beneficiaries, reopening stocks, economically sensitive stocks you asked a third question which i've forgotten what was it? >> it was whether some of these have -- >> yes, i think they would have been higher than they would have been if we didn't have covid no doubt. that was an easier statement to make a month ago than today. when you look at what happened to zoom and some of these other names, a lot of that that's been accounted for in the last month and a half i don't see a situation in 2000 where the bubble stocks earnings collapsed. i think the whole problem here is price and the fact that so

much money has been parked in these names and kind of stay longs and it's coming out as we've reopened. >> stan, 15 years is a long time and, you know, we'll watch slowly as these things -- >> hopefully you and i will still be alive. >> i know. we'll watch this slowly play out. just looking at what you think are some financial asset bubbles orchestrated by all of this easy money, is there something that could trip that up in a much more -- kind of a scary scenario and something that causes not necessarily something in 2008 but a slow, steady climb and interest rates starting to go up is there something that could cause a real significant break on the horizon in your view? we could never say there's

not -- >> the most probable and the elephant in the room is inflation becomes so obvious that the fed has to move, and the longer they wait to move, the bigger the bubble will be and the bigger the reaction. so if they raise rates, say, three years from now as opposed to three months from now, we'll be paying in three months. if they kept the bubble going, it would be a much more dire consequence. that would be the most probable problem, i'd say, is what it always is, is the fed gets mugged by reality. frankly, i think they've already been mugged by reality but they're ignoring it. but if they start to come around to some of the views i've expressed, that would pop the bubble >> stan -- >> the other problem is taiwan. >> taiwan. that's interesting we've got about two minutes left and i just wanted to ask you quickly. you in the past have said you don't have a problem with higher

capital gains rates and that might not be the death nell for financial assets, et cetera. looking at everything we're doing -- i also saw you mentioned we shouldn't be coming down on the medicare eligibility, we should probably be going up on medicare eligibility to maybe 65, but just in terms of all of these proposals from the biden administration, whether it's taxes or the size of the entitlement spending, is there something that really bothers you there or scares you there? >> i would just say the transfer payments that we've had as opposed to investment, i don't have a problem with infrastructure but as you know, we're talking about 6 trillion and less than a trillion will have been infrastructure when i say infrastructure, i

mean infrastructure, not how they're defining it. that bothers me. taxes i don't have a problem with unless they go above the level where they would raise revenues i think it's not very smart to raise taxes if it decreases rev revenues, but normalizing capital gains i don't have a problem with as long as their own department doesn't project a decrease in revenues but the big problem, again, is creating fiscal dominance. in other words, you get in a situation where the fed's main objective has -- and, frankly, policy makers in general has to be not just focusing on the debt as opposed to managing cyclical variability in the economy as well as good growth strategies >> yeah. >> that's happened, as you know, to some of the emerging market countries. >> trying to think of that fed guy that became sort of the poster child for bad fed policy back in the -- you were around

for it >> yeah. i think the one thing we haven't talked about that i really can't emphasize enough, what were the two worst economic experiences in the last century in the united states? they were after the 2009 bubble busted and after the housing bubbling busted. what has been the most egregious situation globally after the bubble bust in japan this wasn't because inflation was too close to zero. that happened because you busted an asset bubble. why we're risking busting an asset bubble not to mention monetization much fiscal dollars over 30 basis points of inflation, can i just say that inflation hurts the lower income more than it does rich people. you've read the story in the wall street journal about the woman who switched from fresh vegetables to frozen vegetables because she can't afford them? i can promise you i'm still

eating fresh vegetables as most of the wealthy still are so i don't even understand why they're rooting for inflation. it hurts the poor. it hurts the lower income. if you bust an asset bubble, i promise you the people are going to get hit the hardest are my kids in harlem and the lower income brackets, not the wealthy. >> quick half hour i would ask you about gold and what happened because it's obviously not that there's not inflation concerns but it's been, i guess, replaced to some extent that was your go-to for fiat currency it's not anymore maybe another time, stan >> thank you so much for having me >> you're welcome. >> my new year's resolution was not to be on tv this year. didn't work out too well but i just -- i think this is really important stuff and we ought to at least have a conversation about it i don't have a monopoly on the truth, but this is something we ought to really be thinking about the risk/reward of these

policies. >> thanks for all of your time, stan let's do it again. don't be a stranger. >> thanks, joe thanks, becky, thanks, andrew. >> thank you stan druckenmiller. >> really great to see him this morning. a lot to think about it. if you missed that interview, you have to go back and watch the clips from it. when we come back, we have an update on the top premarket movers and then another can't-miss interview with i ibm ceo arvind krishna what he's been doing, big technology breakthrohsndug a more stay tuned, you're watching "squawk box" on cnbc

esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.

at carvana, we treat every customer like we would treat our own moms, with care and respect. to us, the little things are the big things. which is why we do everything in our power to make buying a car an unforgettable experience. happy birthday. thank you. we treat every customer like we would treat our own moms. because that's what they deserve.

coming up, ibm ceo will be with us. stay tedun, you're watching "squawk" right here on cnbc.

this is how you become the best! [music: “you're the best” by joe esposito] [music: “you're the best” by joe esposito] [triumphantly yells] [ding] don't get mad. get e*trade and take charge of your finances today.

ibm's global annual conference which is called think kicks off today. the company's going to be announcing advancements in artificial intelligence and quantum computing designed to help businesses push further into the 21st century. this follows ibm's recent unveiling of the 2 nanometer chip technology at a time when there is a massive shortage of semiconductors worldwide joining us is arvind krishna arvind, thank you for being here this is our first time to have you on "squawk box." want to hear a lot about what you have planned, what you are doing at ibm why don't we start with the new chips. this is really special technology two nanometers is so small it's

basically the size of a human strand of dna. you talk about huge increase in power and doing it with less energy ibm is not a chip maker. how did you do this? how did this come about and why? >> first of all, good morning, becky. it's a pleasure to be here with all of you on "squawk box. when we think about chip technology, while we do manufacture chips, we have always been deeply engaged in the advanced r&d of chips. chips form the basis of all computers so we care deeply about this for advances in 5g, on ai, on quantum computing, which we did hear you mention all of those so then when you come down to this, the world's currently at 7 nanometers 2 nanometers gives us a chance to be 45% better performance, 75% less energy and more

importantly, fuel all of the advances we need in order to make whether it's main frames or quantum computers or ai chips. they come to market through our partners i'll mention two, samsung and intel who will take advantage of all of these advancements we have made and then take them to market through their fabrication plants, but in the end getting assured about semiconductors, making sure we are on the ledding edge of technology, making sure we make data centers much more sustainable and all of the advances we want on 5g, ai, quantum is the reason we keep investing in this. >> are these chips going to be manufactured in the united states because there have been huge concerns about the chip shortage around the globe and our own supply chain here in the united states >> short answer, becky, absolutely yes we have been urging the government to move forward with its chip as wells creating a

national chip semiconductor center we believe this is going to enable a lot more manufacturing within the united states and many people will be able to take advantage of that. as we urge the chip stock to pass, we believe people will put up more of these plants in the united states and we already heard a few companies talk about doing that and then we can fuel it with our 2 nanometer technology that will let them be at the leading edge of manufacturing and that will benefit all of us. we talk about economic shortages and that's a real problem, not just this year but probably for a year or two to come. it's not just automobiles, that we talked about a lot. the chip shortage will impact computers, will impact k-12 education, consumer electronics, health electronics it is something the government should take quite seriously which i believe they are from our conversations with them.

then we urge them to pass the funding so the manufacturing can come back on the united states premises >> aarvind, ibm talked about being a big player in the cloud. it's amazon, microsoft, google who are the big players. i know you've shifted your strategy to what you're calling the hybrid cloud what is that what does that strategy mean what's your plan >> becky, thanks for that question when we look at hybrid cloud, we believe that many of our clients, whether it's enterprises or governments will use multiple public clouds they will have some of the computing in their own data centers. so the environment consists of multiple public clouds, their data centers and many of the service properties if that's the environment, believe there is a lot of value in having a platform that can

straddle across the different environments and that is why we focus on the hybrid platform that goes across these that is why when we think about the hyper scalers of amazon or microsoft, we partner with them. that's why it's not competition as much as a partnership we go straddle across those with a hybrid cloud latform that's why we acquired red hat because it brings us the technology to come across these environments then you worry how do you monitor them, how do you secure them, develop quickly across them i believe that we bring more than 2.5 times value to our clients compared to a singular one of those approaches alone. that's why the hybrid cloud has been growing for us. we turned the numbers at 30% for the last 12 months and we believe that that will continue to be a strong, strong value proposition for our clients. >> am i right to think that that's kind of the old adage if you can't beat them, you join

them you're partnering up with companies that you used to compete pretty bitterly before >> becky, i think it's more a question of realizing where the market is. meet our clients where they are and help them modernize to go forward. believing that they will use only one entity we believe is not appropriate for our client set. that said, there can be many properties probably much, much smaller clients who could be happy. it's less a question of if you can't beat them, in thinking what brings value for us and our clients. >> let's talk a little bit more about performance. in the most recent quarter that you reported the revenue results for the first quarter took a lot of watchers by surprise. you came in with numbers that were better than anticipated and you show growth after four quarters in a row of declines. what is wall street looking for? what are you hearing back from investors after those better than expected numbers? >> becky, i think wall street

looks first of all for growth, revenue growth to be clear that's number one. under it it has to be revenue growth in the areas people care about. in this case, it's caring about software and it's caring about services those are the two areas that look for the growth the most but i believe that the quarter really reflected the actions that have been underway for the last 12 months one, we are very focused on hybrid cloud and ai. that means by definition things that are not in those we should not have in the company. we announced the spin of kindrel, management infrastructure businesses. both of those, the focus and the spin have an impact on our results. three, investing organically and inorganically. increasing focus on r&d and go to market. we have done 11 acquisitions over the last 12 months and lastly we are also increasing our focus on our ecosystem and partners by investing in them. i think all of those things have played out a little bit to help us in results in the first

quarter. we continue to expect they will play out more and more as we go past this year, through the spin and into next year. >> let's talk about one of those issues and that's trying to increase the partnerships that you have with people there's been a lot of thought around this. there's been a lot written about this it's more than mba speak coming out of your mouth when you talk about this ernst and young came out and said, yes, they are doing partnerships with you and they mean it this time. these are not just headlines you're putting out this is a serious change in the dna of ibm what are you doing to make that happen what are some real examples of that >> becky, let's look at eny. if you look at eny, not the taxation and accounting side but their consulting side, historically you would have said we might stock partnership but we tweet with each other

when you tweet with each other there's a feel as you go to market you never do partner you step back and say, who's going to help our client get through regulatory compliance with various financial aspects to regulate this eny has far better expertise and prechbs in that. when it comes to implementation of an i.t. system and moving somebody to a project line, maybe we have better expertise on that. if you partner up in front of a client, then you can say, let's take these five or ten or 15 really large financial clients towards a hybrid cloud journey eny gets their piece of it we get our piece of it we could have gone after a pie, small pie, tried to get 80% of it or you can make the pie 10 times bigger and we get 20% of that. that's why the eny goes.

>> there are similar store siemen and palantir. slumberge, you give them the product and we step back and we said, let's look at their business, not so much the nike shop only. they make a great technical suite of software. they make billions of dollars upon it. if they go only in a single public cloud, then you are constrained to those customers that will take it. if you go to the book implementation, that's a lot of cost we worked with them and say, let's get it on. that allows you to go and deploy whatever their clients want. so whether it's clients in eastern europe, africa, clients in the far east, clients in north america, better to choose

a public cloud in the country, whether they choose a private implication, i believe it doubles it and as they get market share increases and we go along with them. that requires an investment up front of two years or so and tens of millions of dollars. two clients, eny, let's see if we can create a win, win, win, win for us and eny, the client and get the benefit later rather than try to get an immediate gratification. >> it requires an investment up front but it requires a pretty big cultural change. if you are looking down the line with a bureaucratic structure, it's not easy to make that change how do you do that how do you say this is something that's going to happen and then follow up to make sure everybody

goes along with it even if it doesn't necessarily benefit them in terms of what they're going to get paid this quarter or this year >> well, really interesting question, becky, because in the end as distributed and as large as us with presence across more than 100 countries as well as more than a few lines of hundres and as well as more than a few lines of business, that becomes the execution side of it one i have a director report of the response of the eco system he comes in and you can to us about what the eco system. that messagen spreads down to the bottom of the company. and they begin to understand that two, the ability to co-invest, not just talked about delayed gratification but actually co-invest means you could do things you just couldn't do before and that a partner couldn't do with anybody else so there is a little bit of self selection. people will want to to down the path, see more and more success,

more more authority and more and more empowerment and it goes there. but i think also people love to win. so as these stories get out, as people see that we're exciting not just ourselves but our partner and end client i think they a all want to be part of that success and you have got to reward failure also sometimes somebody might spend three months trying to work with a partner who decides not to you can't then have a penalty on those people don't necessarily reward them but no penalties all of that. increases risk taking, sharing stories of success and picking people who want to go down the path and the actions we have under way and proper incentives of course too to make sure they do get rewarded along the journey. >> let's

ai, artificial intelligence adoption during the pandemic and what you anticipate coming from this because of the pandemic. >> during the pandemic we found over the last 12 months that ai adoption, i use the word pause it was around 31% and kind of stayed there the reason i believe is not that there was real pause people went so much to thinking about resiliency, thinking about collaboration tool, thinking about remote work and they have to go focus on that over the last 12 months to make sure they can have a productive and effective workforce as the pandemic force worked to go remote now that we are threw that we see incredible interest in ai and all they can really think of how do i support the experience of my end customers better how do i make my employees more productive how do i take complexity and cost out of internal operations and go focus on those aspects. and as you begin to think about pulling it across all these

areas, and infusing it into the enterprise, we believe that is going to rise from the 30% up into the mid 40s i'll make a bold prediction. same day as electricification happened a century ago ai is going to infuse every single business process in this next decade and that is where ai is going to go and unlock the productivity we all want >> arvid, great talking to you today. we appreciate your time and we looked forward to seeing you again soon. >> my pleasure thank you, becky okay thanks becky we are watching kathy woods arc innovation etf today it is now dropping to its lowest levels since november. i want to get straight over to headquarters and talk to jim cramer about that.

what to you do >> i think you wait. the stock market is going to tell you what's going to happen. i think there will be a bottoming out of the ones that aren't really affected by the highest multiple to sales, which is an arc innovation and also pcs, a very good piece about how pcs have peaked. stocre down soh at the opening. but you can't in these companies that were just driven by momentum think about what happened to that stock over this period. it's just been swept away and announced revenues that i bought for very unimpressive. you are focuses on tesla there i think that's another one a classically positive memorial day trade believe it or not but we know we're very far from memorial trade

tesla could bottom anything could bottom today. one thing i would caution is the weakness is in the pc and high multiple to sales and the people who are shooting against woodstock. >> but if you are an owner of arc, are you selling arc oar thinks there is an opportunity to buy into ark? >> i think the people who have a five year horizon and those may be the right stock for five year horizon, they are not stocks that -- actually i have to tell you've looked at the stocks. i don't like the companies it is not like i don't have a five year perspective. there are a lot of those companies i just don't like. but some i think are very good so i think that it is an interesting aamalgam she has such conviction as we saw, she has such conviction that she can't change.

why is stan druckenmiller great. if the facts change, he says i will change. well the facts change for a lot of kathy wood's stocks but she did not change true believers, i guess you can take a five year i think we all kind of who have been around know that a five year is often an excuse. >> two quick questions one related to palins here might put bitcoin or explore crypto currency on their own balance sheet. i actually thought their numbers were better than some expected. >> i think they were looking for this big number. there was a whisper number that was substantially higher should it be down this much? i don't know, down yesterday putting bitcoin on the sheet square did that. go by square >> and we're going to you in a second

but you saw druckenmiller say he might be out by the end of the year in the markets. >> and then he said he might not be he was investing the opposite of his philosophy, which is absolutely fine. i think the fed is overstaying its welcome. but j pal thinks this is the way to put people to work. and i'm not gonna -- j pal's been pretty good i too try to separate. you can invest positively even as you think -- >> we're going to see you in a couple minutes looking forward to all of that what a big show today. "squawk on the street" coming up right after this quickbreak. in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next.

comcast business powering possibilities. you need a financial plan that can help grow and protect your money. an annuity can help cover essential expenses in retirement. have the right financial professional show you how...

this is what an annuity can do.

good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber red cross asia and europe and now here at home more talk of inflation china ppi up 68 runs hot tesla tumbles about 7%. >> plus th