looks like america, we have to have some latinos on there we haven't in memory i thought that was an interesting point. >> it is, and we'll very to dig into that at a later point thank you for being here. >> thank you, becky. on monday we'll be off, along with the markets for martin luther king day, but we'll see all of you book here on tuesday have a great long weekend. "squawk on the street" begins right now. >> goodfully morning welcome to "squawk on the street", i'm david faber jim and carl have the morning off. let's look at the future we are headed for a significantly down open after yesterday's significant sell-off as well, particularly in the nasdaq

our road map does start more or less there bank earnings this morning also blackrock,al crossing the tame the tech sector already down more than 5% for january and more declines at the open. >> omicron and inflation headwinds nearly sinking nearly 2% in december we'll dive into those numbers as well >> let's start with the overall markets and bank earnings. the brief conversation we had i thought was interesting. we are talking about the sell-off yesterday, and the nasdaq a fairly significant one. growth is not in favor right now the real question is, do you buy those growth dips or is the fed behind the curve investors have been moving into bank stocks, but today's numbers may give them a pause. >> banks and energy have been export -- spooshting the market.

it's still mostly looked like a choppy, bumpy, anxious rotation as opposed to a real exit. >> all these broader measures were a little bit down investors are being tested by this parade of hawkish fed-speak that seems to come constant lid. everyone knows the history, usually it's up 6 to 12 months before that, but we're already up 6 to 12 months, so this valuation compression in the growth stocks has outsized the facts of what's going on elsewhere, if not a perfect

counter-move higher in the cyclical stocks. >> you have a lot of people moving back. they've made a lot of money, but hope springs eternal, and i guess that continues to be the key questions as well. will the fed somehow be there if the market were to turn south in a violent way, or is powell committed to combatting inflation, at least in the way we've heard him say he is. >> that's certainly what strategists have been homing in on from fed officials, philly president, fed president harker touched on this yesterday when wilfred frost asked about it it's something -- it speaking

intertwini intertwine-iveness, and then, of course this monetary policy we've been seeing, but just to go back to the banks for a second, it's interesting to see these names under pressure and then something that call my eye was we did see an increase in autolending, but not as strong as they would would have anticipated this the the fact that demand there just isn't enough this morning as well. you saw that with the sam -- a

couple other names, so that will be something to watch. i have a ubc, and it's going to be all about -- wilfred frost will join us later on the show to update us on the call but that defense expense numbero be creating pause. we'll see what we get from the call citi, 7.4% return on common equity for the fourth quarter is not pretty jane frazier is doing so many thing to reposition the bank, but it doesn't necessarily mean that it's not going to continue to be tough. wells is the outlier, actually you see it in the market, a solid guide on the interest

margin, expense headwinds, yes, due to inflation, but they've been dealing with expense there is. >> there's a bit of a retooling at wells fargo you know, citi, i think we can talk about the chronically returns. we've just got that inefficient capital base even jane frazier's assessment was it was decent. >> you went right where i was, the second paragraph >> it means there's more to do >> yeah, it was decent it wasn't great. let's get more on this morning, we'll get his tank jeffrey, just give me your take on the three names you've been talking about.

>> i think three or four things stand out to me. for j.p. morningen, so net net of the bottom line, it nets itself out the street is closer to tip 1% they're probably more pressure than we thought, with some offset being on the plus side credit, credit trends continue to look really good. we're seeing reserve releases again, but the size of this quarter, i think people may be starting to think we've come to the end of reserve releases, but it might imply even more normalized credit trends next

year, which could be kind of upsetting. i think the expectations were probably more of a beat it's not bad, but i think you're so-called whisper number is probably so-called out there >> it's not that many trading days, but the percentage gains have been fairly high. did they go too far too fast, in your opinion, given the numbers we have seen so far this morning? >> i do not think they have gone too far, maybe too fast. when you look out at the balance of the year, capital markets stay pretty robust the interest income is turning into a better tailwind than we expected i still think this is a good environment for banks. i guess the one clear positive i didn't mention is loan growth. i mean, jpmorgan had credit card

loan growth. citigroup is close to 7% that's important, but especially on the credit card side. if you're earning 15% revenue, that's important. >> i'm curious what you thought the wells fargo, given that it's the loan name in the green it's been such a turnaround story for year now >> to be fair, my associate covers wells fargo for us, but he upgraded it a couple days ago. that certainly didn't disappoint, i think the overall thinking is xhaerl has the boat in the right direction now, and they could about a stock pick that could outperform. it's hard for me to look long

term, just with the franchises they have, i think the long-term outperformance is there, it's just it will be years you have to way or not. >> the stock is up 12% this month, but obviously a big underperformer last year just how do you characterize where they are in this process deciding how to prioritize, you know, kind of capital allocation what is the core franchise, it's almost like the old citi bank in the way it's being reshaped, as opposed to the more universal bank post '98. >> i think the key with citigroup is not so much of if, but when i think jane frazier is doing the right thing. if you go back two years, i never would have expected that, but drastic changes are called for, and she's making drastic changes. it's a matter of whether things get better as opposed to if. that's the big question.

i mean, i think if you can get some relief on the regulatory front, at least things are trending the right way, we can keep seeing credit card loan growth, and freeing up capital i think citi works, but i'm not sure if it works in the next six months, 12 months owner two yea. >> what should we be listening for in the call? >> i think on the expense side the things, that's certainly the thinking there hopefully the thinking is we see enough growth opportunities we're continues to -- hopefully it's a good story. i think another thing will be cash they have a lot of cash on their balance sheet, unlike bank of america, they haven't been putting it to work to the extent they start putting some of that cash to work. >> jeffrey, appreciate your

time thank you. >> good to be on thanks all right. still to come, weaker than expected retail sales in september as omicron cases surge. we'll have matthew boss of jpmorgan futures still to the down side, s&p 500 off 30, but still above monday's lows. nasdaq still underperforming more "squawk on the street" straight ahead

welcome back to "squawk on the street." we are expecting industrial production and capacity utilization for the month of december in a few seconds. when we like at utilization rates, the last look was the best since the end of 2019, so we want to see if we can get up as high as 77% we haven't been at 77% since september of 2019, and we missed it by a bit. utilization for the month of december expected at 77.0, comes in light at 76.5%. 76.5%. if we look at the industrial production number, we're expecting up 0.2%, and like a lot of data this morning, it's disappointed we missed there. minus 0.1% we had a solid gain the last several months, i don't see any

revisions, still standing at this point remember, keep a very close eye on 1.7% in tens. that's basically the low yield of the week, and revisions coming in, upgrades definitely takes the sting out of down 0.1% "squawk on the street" will return after tseres.he bak amazing. jerry, you gotta to see this. seen it. trust me, after 15 walks... gets a little old.

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your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire welcome back for "squawk on the street" retail sales were down last month. covid continues to impact retail's recovery can continues staff shortages. matthew, good morning to you i do want to get your tail on

this retail sales number how much of that, especially because we're getting in 40 minutes a consumer sentiment reading as well. how much of this was pulled forward with supply chain issues, and how much of this was pandemic related how much of this speaks to, if at all, the strength or health of the consumer. >> especial le when you put it telling. we're up 9%. that's actually the best holiday in nearly 20 years.

>>ed underlies tone is actually very robust. one thing we can get into it, if you want, i do see 2022, more so as a tale of two halves. more on the expense side that's interesting to me it is so strong. you have some of this stimulus and then, of course, the entire outpacing wage gains

they'll find it's hard -- harder exiting. you have inflationary raw materials that are higher, your lapping stimulus in the front half, and on top of it, the supply change is likely not cleared until the second half of the year i would say on the inflationary front, it would be value desti destinations that's actually who was taking share before the pandemic. i think you saw market share acceleration during the pandemic that would be the dollar general, your dollar tree, five below. i would put burlington, tjmaxx

and ross stores in that camp as it plays out, thinking about the next leg we haven't seen any of that kick in depending on what the next leg of this virus is, more discretionuation spending without a catalyst, so sort of caused in the middle models, and i would say it's more of a mixed bag with special retail. >> we keep hearing that supply chain issues will eat, but if they do ease they come off and inventories begin to get rebuilt, despise perhaps more softness in consumers? >> to me, look i think the front half of the

year, the pricing opportunity from the global brands can offset a good degree of the recall materials i think that as the year progresses, and the bottlenecks do ease, the opportunity then becomes the demand side as companies will lap -- my models do not embed that norm -- but i do think the mix, which is far more expensive, that the the tailwind if the demand is there, and it would be international mobility mean if post omicron the next leg continues to be less severe, i think that's the opportunity none of my companies are planning for that, and known of them are planning for that in demand i think you could end up with a year with we have this lean-in the inventory position, and margins actually do not

moderate,h every one of my models has them coming down, which would point to upside potential as the year progresses. >> matthew boss, thank you for joining us. >> thanks for having me on we have about six or so, yeah, six minutes before the final trading of the week. no trading on monday as well refer, it's a national holiday six minutes from now we're going to have a decidedly negative open we've got a lot more for you coming up, including that opening bell stay with us

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>> announcer: the opening bell is brought to you by -- we do need to take action on inflation, and it is more persistent than we thought a while ago. i've been off of the transitory team for a while now i think we need to take action i think it's appropriate to take action three is what i penciled in, but four is not out of the question,

in my mind. >> when you hear words like that, is it appropriate to buy the dips this comes up all the time that has been the right strategy in years past. >> yeah, if you think in general, when money gets tighter, when the fed is taking away the stimulus, that it's time for valuations in general to reset a bit lower, that's what it says, that's whether the valuations are most stretched, is in large-catch growth you'll see that come down. we mentioned earlier, you can look at the history, up to the first fed rate hike, it tends to do okay, but there's a big distinction between fast tightening cycles and slow tightening cycles. if it's slow, the market does better than if it's an urgent tightening anti-inflation campaign we know there's a certain

percentage of people who have always believed it's the fed i think it's still in the normal zone it feels worse than it is, and microsoft is down 13% from the high, and it's only back to where it was in october, because it was up 50% last year. that's a lot of the math that i think people are trying to get their arms around. microsoft and apple are 13%. >> roughly hashtag context. >> yes the balance sheet sometimes is stunning it was about $900 billion before the financial crisis. >> and, of course, that's in play, too. that's so much of the commentary coming out in this parade of fed-speak we've gotten, the timing of everything timing of potential drawing down or shrinking of that balance sheet. it's just been a week, guys since we went through three potential interest rate hikes so

now the possibility of four. >> yeah. well, we're going to get to that and we'll get started with trading here for the day [ bell ringing ] >> right here at the new york stock exchange the big board, robinson capital celebrating a recent listing premerger spar etf a pre-merger spac etf? why wasn't i informed? add tess nasdaq, it's mentoring month. >> so it's already listed. >> we have our three indexes we have the spacs that, of course, have listed themselves

but not yet announced the deal we have those that have announced the deal, then post deal the only one that is at least a bit above is the actual spacs that are out there without having announced the deal. it is one of speculative parts of the market which has been hit rather hard. >> yeah, gutted. we've been in that motor for a while. what we have seen i think is some of the pressure that's been on the no-profit story type of growth stocks. you know, just rough numbers, the nasdaq 100 went up to about 30 times forward earnings, down about 27 1/2 before covid, before this huge ramp, it kind of topped out around 20-ish. that's just an idea of we're mostly just unwinding a bit of an overshoot to the up side. then in the short term, morgan, as we mentioned earlier, the rotation has been -- that dynamic has happened so quickly,

that's looking a bit stretched if you look at people who are studying how fast these my graze tend to happen, that needs a rest so i think the market has to digest that possibility, is it a time to buy the growth stocks? or is everything going to be under pressure for a while >> it's also worth noting, mike, that while financials have rallied since the start of the year, energy has just trounced everything else. it's up 14%, and it's up again today, slightly, within the s&p 500, so that's a, what, more than doubling, almost tripling of the gains we have seen in financials, despite the fact we are having this conversation about a fed tightening cycle the fact you have seen the dollar index ease, because of course, that's its own story around reopening and there's just not enough supply to countermand the demand in the

oil markets. i want to go back to the spac conversation for a minute, though, a key areas we have seen so much selling has been the space names, which have gone public via spacs in recent weeks and months virgin orbit actually did its first orbital launch, deployed seven satellites to orbit since going public at the end of last month. shares are down 9% right now just general we're going to be speaking to the ceo and cofounder of planet labs in the next hour, too, which also had a launch of its satellites via spacex yesterday these are names that are in some cases down 40%, 50%, 60%, which really speaks to, of course, what we've been talking for days now, higher interest rates, a fed tightening cycle, the fact this has led to a drastic rotation, but also these

thematic and speculative tech names, and space fits right into the narrative, david >> there it is look at that, morgan, virgin galactic, one of the great performers amongst the early spacs, with branson and chermoth, so if you hung in there all the way. obviously they sold a lot, if i recall. >> yeah. >> but there it is, back below ten bucks. of course, mike, that's not the only pick latif growth name, or even the growth name that's gotten hit badly up a bit -- i wouldn't call it a rebound, but hanging in there this morning. >> that's sort of in the initial spill, to some degree. i think just catch up with names like shopify even back in february of last year, that was an aggressive peak

it did nothing for months. that's been one of thinks de namics so that really was -- they were the first in for punishment. we'll see if that means some of the selling has dried up really it is the banks pressuring the impacts, down 6%, just given up a lot of this recent run pretty -- you know, you hate to say it was predictable, but everyone was saying they run a lot. so you have a bit of a giveback. i don't know if it will undo a lot of that roe station in there. tesla is also weak you have these stocks that are given back their ramps from late last year. just in terms of levels, i was mentioning on the s&p 45.80 and change, also the 100-day average, a lot of clustering of interest we're not quite there yet, maybe

we don't get there it seems like we're still bouncing around this range we have established >> a couple things on the resource front even over the last couple weeks, it's still up 18%, for 2022. we did get a downgrade this morning at r bismt krismtrbc thy the come has re-rate d but bottm line also disney, there it's about direct to consumer

of course, ford is no longer a $100 billion market cap. did i any is also down, a downgrade from guggenheim to neutral. simply to say when he do some of the parts analysis, they throw a five multiple on it, go to $82 a share. that's below the multiple. why? it's attributed that discount to the view of a modestly narrower addressable market it's deep, but is it brought enough to attract newer viewers? >> and of course morgan at a lower price point, too to me, though, the more interesting thing, just in the short term is you do get a downgrade like this after the

stock is down 20-plus percent, and yet the stock is still reacting negatively. that's not the greatest senate that people had fully given up on >> that was exactly where i was going to go. that the note does focus on -- cost inflation, and they do note that from their standpoint, going back to the metrics you guys just brown do you did get that news from via reuters. that tesla is delaying the addition of cybertruck to 2023 ford motor and rivian are actually now going to be ahead in terms of launching their ev

pickup offering. of course, we did see foreign jump pretty aggressively, last week when it was going to nearly double, lightning electric pickup, so, yes, certainly shares under pressure. that is an interesting race in a very specific hot part of the car market, the vehicle market here in the u.s. to watch, david. >> yeah. >> by the way, need dax 100 is positive, s&p is almost flat so people have swung into the tech stocks that have been beat down >> look at that. >> already well, well off our lows that could be said for the bank, though jpmorgan is down 5% will frilled frost has been listening into the important conference call, and he has highlights jpmorgan hasn't bounced off its low, still down about 5% the reason why, when you listen

to the call is the slightly underwhelming way in which they outline how the bottom line should improve in a rising rates environment. that was already clear when the numbers came out, most importantly the net interest income and the costs, expenses would be $77 billion in the year ahead. here's the cfo kind of covering both those points. >> we do expect to increase year on year, depending on the path of rates, it may take a couple years to return to the full generating capacity of the company. we are in for a couple years of sub-target returns despite this, we are going to continue to invest we're not going to let temporary headwinds distract us. so looking at adjusted expenses, we expect refly $77 billion in

2022, an increase of about $6 billion year on year, or 8%. there was some positive news, in terms of how quickly they expect capital markets activity, which has been very strong, to normalize >> we will see some normalization from exceptional performance, but i think we're expecting that normalization to be, you know, a little bit less, like nowhere near down to the 2019 levels, partially because the banking pipeline is very ro robust we feel good but the organ in, and we've seen -- and as the monetary policy environment evolves next year, that could actually create, you know, some stalewinds for that business >> guys, actually just moments, jamie dimon was also addressing that point addressing for the

long term, but if i paraphrase it, he was saying there was lots of competition, and we want to win. he was saying back to the analyst community, then we'll do it that's really the gist of this call and summed up as well by the rotce target, which that first sound bite was we're in for a period of low returns. it's still 17%, just below for the year ahead, which jamie dimon said, by the way, i would take 15% rotce again they're doing well, just perhaps not as expected in the year ahead. >> citi's rotce was 7.4% for the fourth quarter to be fair, it was higher overall. but not a great fourth quarter for citi as well, which is still down also. >> yeah.

citi just pointed -- lots to dig through on the citi one. that call doesn't start for a while, because of the restructuring, changing in the way they were reporting them interesting one is wells fargo, which is holding onto its gains. again, we'll have to see it on "closing bell" later that's down to decent sensitivity, slightly better than jpmorgan. net interest margin was better than expected, but also a difference between good performance on costs different factors. not an increase in investment, but just that they had bad performance on costs of lathe. this wasn't as bad as previous quarters or the last year or two. >> wilf, thank you wilfred frost. mike, as you pointed out, the nasdaq is positive it lasted about three minutes. >> we'll see we'll see. it clearly was a bit of an opening save

but, you know, things like microsoft have been just for sale, not anything else. >> all right you can take a look at the real-time exchange back alternate hq, where morgan currently resides. >> yes tristate area representing here. >> yeah, i don't know when this gap is going to be filled in, morgan, between me and mike. we could throw a football to each other >> we'll see you soon. we're going to talk esg funds, why doing good is not linked to doing well first, a quick look at the bond market for that we'll do the bond report take a look at how treasuries are faring this morning. you can see the ten-year yield at 1.74. the 30-year still above two, 2.083% we'll be right back.

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the street." it's just been 17 1/2 minutes from the opening bell. we've been firmly lower to a mixed picture. s&p moving closer to the flat line, just fractionally, and the nasdaq is trading higher, about a quarter of 1%. in temples of what is bucking the downward trend, at least in the s&p right now, it's the casino stocks. they are actually the top two performers so far this morning mike, this is, of course, because we are seeing macaw's government saying it's going to limit the number of casino licenses to six. these are names that are among the six that are currently operating in macau you can see investors are taking warmly to this development out of china, despite the fact this is a region of the world that's

in such tight lockdown where omicron and covid in general are concerned. >> right, certainly part of the bear case is they would have positions eroded in macau, stocks down a ton. i think it makes sense you get a bit of relief here, a bunch of energy and fertilizer stocks in the lead today that's the story we know, but also service now, some of the cloud stocks, so finally maybe, you know, some area that got oversold, like the casinos as well, just a morning bid, we'll see if it follows through. still continue to wonder about china overall in the economy there again. forgive the pronunciation of the relatively small city in china, they have locked the entire city down over only two cases you have to wonder if they'll have to change their approach

because of the lack of economic growth or whether they continue that zero-tolerance policy. >> you know, the rest of the world, u.s. has certainly been on the forefront, okay, we're going to do everything we can to navy gait and work through this virus, but given what we're seeing with omicron and how quickl this push towards herd immunity, applied or otherwise to see china taking such a drastically different approach is fascinating and speaks to the supply chain >> because they can. also the credit situation, the property markets getting a little bit of attention on the nothingative side too. and china seems like it has a key swing factor for our markets just yet

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well, many investors jumping on the esg funds bandwagon and has that story christina. >> yes, i do so, esg focus funds we any are some of the hottest investments because it means improved returns all while doing good butted study after study shows esg investing may not be linked to improved financial performance. over 1,000 pier reviewed esg studies found that, quote, the financial performance of esg investing has been, on average, been indistinguishable from conventional investing often because they mimic industries >> such a vague, broad term that you can shovel whatever you want into it and call it esg, charge higher fees.

>> the 20 largest esg funds are largely allocated to information technology and that's the trend. with alphabet, the parent of google, the most commonly held stock in 12 of the 20 largest funds. highly cancen traited risk in one sector of the economy, making fund concentration one of the key drivers behind the recent short term outper formance of the esg fund and yet fed managers can charge more for the esg title. >> you're paying 20 extra bucks per year on $20,000 investment relative to if you invested in a fund that was esgin agnostic.

>> and investors can prepare for the funds to probably follow suit david. >> so interesting. you're ending aowning alphabet and paying more for it >> that's exact lee what it is >> it's funny. i wonder if amazon figures into that people forget what large carbon f footfront that company has i don't know if it's included in the esg buckets. >> it does microsoft is one of the second largest weighed stock in a lot of the funds i didn't see amazon on the top list but definitely microsoft. you can overlook a lot of the company's carbon footprint because esg scores are a giant score with information the company provides all the scores vary across the board. so, it depends which ratings

firm and information they're going to use and it varies incredibly >> as we continue to learn thank you. >> thanks. coming up, we've got more reaction from this morning's bank earnings. jp morgan chase, it's still dragging down some of the indexes. wellfao dog et wl.s rginprtyel 'g 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. ♪

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good friday morning and welcome to another hour of "squack on the street. carl has the morning off let's give you a look at markets a half hour into trading and so much for what the futures pointed to an hour ago we're up on the s&p and the nasdaq consumer sentiment is out just moments ago and rick has that for us rick >> thanks and also business inventories for november i want to highlight this because we know we need inventories. november inventories are up 1.3% there's been a lot of up 1.3%. 87, 84

but to find a hire month over month change, you have to go back to 1982 if you want to buy things and you look at supply chain woes, inventories are a needed essential. university of michigan sentiment expected to be 70.0 is a miss at 68.8 that's the lightest read since november when it was 67.4 and that was a 10-year low if we look at ex -- current conditions, they were 73.2 that's roughly in line with expectations sequentially lower than 74.2, our final read for december. we look at what lies ahead with respect to expectations. 69.9 that's light and sequentially following 63.3 and finally, the inflation data always important. the one-year outlook at 1.49%. keep in mind it was 4.9% in november and that was the highest since 2008

so, we equalled that and if you look at infive to ten-year outloorks 2.9%, the last jump has jumped to 3.1% to find a flb higher than 3.1 go to 2011. call it a 10-year high we had misses on the data but whether you look towards pricing, been the big story moving into 2022 inflation, inflation, inflation. morgan, back to you. >> thank you we are 30 minutes into the trading session. we will get to the bank earnings in just a moment but here are three other big movers that we are watching. speaking of pricing, we're going to start with suherwin-williams. people want paint. raw material availability and adding to the costs. you can see shares are down 2% company is getting ready to raise prices

and disney getting down graded and lower for direct to consumer disney down 12% and down another 2.5% this morning. finally, we're going to end with boston beer, siting supply chain issues and warning of growth concerns for the truly hard seltzer brand. this is going to drag some time. down about 50% over the last 12 months david. >> we will get back the banks now. jp morgan, wells fargo and city group. you can see wells is the only out liar in terms of the response to its quarter. joining us is our head of equity strategy and big bank analyst. what stood out from these earnings reports u perhaps

what do you think is most reflective of the overall sense you get from the industry? >> i would say the one thing that jumps out is expense growth you saw that in wells fargo and j.p. morgan's numbers. even when you pull them out, expense growth was still quite high and the guidance that j.p. morgan gave was much higher than expected it's the mode of reducing expenses so, their outlook was quite good >> yeah. so, let's talk about that j.p. morgan expense guidance. what do you make of it and what does it say for the course of how this year is going to go one would think they benefit on the net interest margin side,

potentially, from the same environment. >> your ror right. the benefit all the banks are going to see -- in fact morgan identified net interest revenues, dealing with spreads from goods and assets, that could be up close to 10% because of the rate increase to your question, a clear indication that it's effecting the banking industry and very clearly in this guidance the other part of it is that banking requires enormous amounts of investing and that's the other area this company continues to invest in a combination of labor and technology cost driving expenses not just for jp morgan >> what's priced init this group in terms of the number of rate hikes at this point? obviously, there are b

beneficiaries to varying degrees. have we seen the upside for that yet or not >> i think so there has been pricing in of the fed funds rate increases and moving up as we speak, as you know even the futures market has changed rapidly in the last six weeks. i would expect the bank stocks have priced in at least two or three fed increases. will we get to this time next year, will people be talking about another three, four, or five fund rate increases and that's not priced in, obviously. the upward trajectory in short-term interest rates. nobody knows for sure when it will end and we think this is going to be very beneficial to the bank stokz. >> so, i guess i have two questions for you. the first is given the conversation we're having, the

fact you have so many names under pressure today, where do you see the greatest buying opportunity on this dip? and how does this set aus up for the rest of the banks reporting next week? >> i thik you're going to see similar on the expense side. and as we saw from the j.p. morgan numbers, loan growth is picking up they talked about the pick up in commercial lending, which is a real positive. and we've seen that in the hh data as well you're right citi group stock is down today they've made enormous announcements about divesting in mexico and i think you'll find as they shrink the profitability and with the valuation gap being so wide, that could bethe real opportunity here

we also know that the asset sensitivity is wells fargo is the strongest of all and will benefit from the rise in prices. >> you're a believer in citi he termed the quarter decent not a ringing endorsement. >> it's a good comment i would say when you look at the valuation differential between them and their peers, i think that's the compelling factor because they're trending at such a discount the sentiment on citi is so negative i think you'll find when they have their investor day in march and continue to deliver on the strategies they're putting into place that people will start to embrace it this is more for a longer-term investment >> and that is an important day, investor day in march, as you pointed out. thank you as always. appreciate it.

with stocks under pressure have bounced off the morning lows nasdaq trying to come back from yesterday's big loss joining us is fidelity investment and research founder. good morning to you both interested to here where you think we are in, i guess, several transitions the market has undergone. stepping down the rates of earnings growth and gdp growth and that's reflecting what stocks we like do you think the overall mark is going to be able to navigate this still without too much damage or more pain to come >> i think it will but clearly the market hasn't had all tail winds last year 48% earnings growth, massive liquidity tail winds, it had low interest rets.

a very large input we had three major drivers driving the stock higher for 2022, obviously the liquidity is going back to the sea, where we're getting neither the fiscal impulse or not likely as large as what was expected last year. obviously the fed is raising rates. bond yields are up earnings are still growing expected to grow 8 to 10%. and we're in that phase of the cycle where the market performs in line with earnings but not much more than that. pes expand because the market anticipates the recovery we're in a different season of the market cycle where multiple expansion really is not -- we really shouldn't be expecting that if anything, we should expect multiple compression

then it's just up to earnings. 8 to 10% means an 8 to 10% year, which after a 27% year in 2021 and 116% return from the march 2020 lows. i don't think we can complain about that >> no. although, 8 to 10 usually isn't cliking higher in a steady fashion. adam, in terms of your theme that you're looking to capitalize on this year, the market has rushed from one extreme to the other in terms of styles and structures. what are some of your favorite ways to counter punch? >> hey, how are you doing? in terms of themes, i think there's several in the market. i think the software that's sold off, you're looking for ones

with positive cash flow. our work shows the kind of growth year stocks that tends to have positive cash flow and margin expansion so, maybe a salesforce.com i think bio tech is over sold, particularly midcap bio tech it was out 45% last year and a tape off 27. i think the lazy way to think about it is the terminal values impaired by rising rates but they don't generate cash for several years after they start anyway i think innovation got mispriced. kwab like health care services, mike they grow the revenue faster, yet, they're cheaper in health care service in particular than they a ought to be for that. energy was our top pick.

and i still think there's a lot of up side in oil sensitive securities i think there's idiosyncratic ways ma maybe zilo down will be interesting. maybe you can buy a couple of restaurants, that as things reopen, look interesting i think there's a number of diverse opportunities. i think there's things on the short lisch and we can go through those if you want. >> i definitely want to go through those. we love when folks name names. but you just talked about interest rate cycles i think last time, if i'm recalling correctly, that we spoke to you, a couple of weeks ago, you were suggesting we may see no rate hikes. we've gone from messaging to the market three rate hikes to potentially even the possibility of four, depending on the fed official maybe five if inflation lasts. are you going to stick with the

forecast >> i don't forecast. all i know is people are out of their minds if they think the fed is going to raise four or five times this year and nex year i'll take the under. i think perception, 1224 as really good change i doubt they'll end up being as hawks. maybe they can do zero, maybe one. but if they're looking at full employment, explain to me how 61.9% is full labor employment and we'll see. but i think a lot of things will flush out in the next 12 months. and i just continue to believe that the fed are not the dumb ones they have access to all the information. and i doubt they'll raise reates a ton.

>> we've looked at ways to determine what it's going to mean for longer term rates what is your read in terms of how much hedge room there might be for the fed a lot of financial conditions, how they react are going to matter but as you look at the yield structure, what is it telling you? >> it doesn't matter so much where the fed starts matters where it ends. expecting the fed to endthal cycle that hasn't even begun buteneded at around 2% if inflation, which clearly is going to have some base effect said in the coming months, revurts back down to say 3.5%. from 7% to 3.5, which is double from what it was precovid. if that's where we're going to

be in two years then the fed is going to be very accommodative in real terms. i think that's something to consider ee either that's really constructive and we're going to remain in a extended midcycle environment. a year or two years from now, the fed's going tomove the goa post and say we're not going to end in two, but three. to adam's point is maybe neutral is the nigh restrictive and in an economy highly fein angsalized, maybe 2% is all the fed can do doesn't matter as much as where the terminal rate is and financial conditions play a large role the fed looks at the real economy. and the financial conditions

index and there's several of them, are still at their loosest, basically, of all time. >> it's going to take the fed up >> i don't have time for you to go through your sector short ideas but give me one. i don't know if it's low-quality work from home stocks. industrials. >> i guess i'll take the low quality work from home stocks, things like peloton. we had sam, one you appointmented out, as one we don't like things that overturned during covid and as the world reopens, will slow. i think the kwd idea is they can get the double whammy of lower estimates if we're right >> from 150 to 30. still got more room on the down

side >> i think so. so, stocks down a lot you can still short them quite a bit i mean it's the same logic anyway, i think there's a lot of those lower quality work from home names that had still out performed quality reopen if you think all through the economy as we slowly reopened more, some of the quality businesses ought to out perform. a year ago peloton was purgt -- sorry, zoom was worth more than morgan stanley it was definitely an exaggerated v valuation for the work-from-home names. >> they over shot. >> good to see you guys. see you. >> as we head to a break, here's our roadmap for the rest of the

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welcome back to "squack on the street." many of the vaccine and therapeutic stocks are under pressure in today's trade. our don shoe is taking a look at the action socially distanced onset >> comfortable here as i'm sure you are. we're socially distanced but close. let's look at what's happening with the bio tech etfs they trade differently because the they're weighted differently the biggest stocks get the biggest weightings the spider etf is more equally rated. as you can see here that equal

weighted index is down a lot more and indicating that many of the biggest names out there are holding up relatively well compared to the other bio tech brethren and cousins if you look at the reasons why some of the big covid-19 campaigners, the people making a lute of the treatments, vaccines and what not have been doing very well over the course and these are three, by the way, of the five biggest stocks in the market cap weighted stock. but the concern is this last three months here. if you look at that over the last few months, many of the vaccine makers have seen some declines in the near term. moderna specifically down 37%. the partner for pfizer down 20% and nova vax down 26% as well. keep an eye on those vaccine makers

they could be a big drivers of performance. back to you. >> no doubt. thank you very much. as we head to a break, we're keeping an eye on several casino stocks as mucow says they're changing to six. all solidly higher between 9 and 15%. there's more coming. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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with vitamins and minerals for immune support. bank investors not the only ones feeling pain lately crypto almost 40% off highs as across the space continue to sell off what is driving that and joining us to discuss it all. ian, i know you track a lot of the trading dynamics within crypto, the sentiment, the positioning. what's driving flows

what's it telling you right now in terms of why we've seen this pullback and then where it might go from here >> good to be back right now we're seeing lots of uncertainty when it comes to equities when it comes to interest rates, inflation and fed, they're taking capital off the table and throwing it into others. we don't see it changing anytime soon unless there's a big catalyst to space. >> so, essentially it's just behaving as another high beta risk asset that's linked to the fortunes of the equity market and worries about liquidity? there's not a lot of long-term drivers behind this. >> but they've takenflate into

other asset classes. there's lots of capital flowing. because right now. the interest in the space are looking for other block chains most feasible and easy to use. and seeing lots of capitol >> it does seem as if there's always a rush for the next thing, the next solution where does that leave bitcoin ultimately you don't think the down side is finish said. what do you think it means for the price and the overall public engagement with bitcoin. >> it's simply a stored value. they're flocking to web three, the next environment this gap is causing new developments to inenter the spa.

for instance, we hold the vallee pretty well. we average price for yacht club has gone to 400 k in a month there are other areas in the space with alpha >> blue chip, n, if ts thank you more much for that perspective. appreciate it. >> been a volatile week for space stocks, with places like planet labs and virgin galactic making big moves on the other side of thibrk.s ea don't go anywhere.

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welcome back here is your cnbc news update at this hour. russia says it's dismantled the revil hacker group russia's domestic intelligence service says it acted at the request of the u.s they claimed responsibility for several high profile attacks in the u.s. ukrainian governments have been hit by a massive cyber attack. it says ukrainian, all your personal data was uploaded to the public network and russia has been behind similar attacks in the past. south korea says a launch of two short-range ballistic missiles earlier today poses a threat to new york's neighbors and the international community.

and they're expected to go to court again just three days before the the auts railian is set to begin, hecantaled his visa because djokovic is not vaccinated against covid and the saga continues >> thank you well, if you've been watching at all, you know it's been a volatile few days for technology stocks. the nasdaq is well off the nilgsz lows. hit that very first minutes oaf trading. josh lipton has more on the sector josh >> let's dig a bit deeper for the nasdaq down about 5% this year. up 21% some big movers this week. microsoft on track for the second weekly decline.

a big gain in 2021 when it surged more than 50% amazon on pace for the third negative week in a row 10% now off its 52-week high the smh is poised for a weekly gain but under the hood, you can see invidia on track and down about 8% this one surged about 125% taiwan semi is up about 15%, on track for the best week since may 2009 and have a look at the flagship ark fund, down 15% so far this year. in the past 10 months, down 45%. they pulled the 352 million. >> we're going to look at space stocks seeing volatility pairs into the conversation with

josh also in part thanks to very specific company news. case in point, planet labs and spacex's latest ride share mission. this is the first such mission under a multiyear, multilaunch partnerships tween the two companies. you can see them trading up almost 8.5%. will marshal joins us. great to have you back on the show >> thanks. great to be here >> so, in terms of the deployment we saw yesterday, 44 new satellites called super doves. how meaningful is it to the company and the growth proposition, given the fact i know you're looking to grow double digit percentages >> it was a super exciting day yesterday. we connected with them straight away

they're the latest and greatest submarines they join about 200 fleet in orbit and enables a daily sc scan what doesn't matter is it's exciting that we're partnering with spacex and what really matters is how it's creating value to our users for example, we just expanded contract with them you were just mentioning the third missile test in north korea. the data is relevant for them to track it we work with the biggest companies to improve crop yield. and you know, data is used by google and it's what thisdata from th

uk liked today is to create more value for those users. >> goldman bounced back because goldman see shares double, saying you're sitting on a mine of david one of the things they talk about in this analyst note is the opportunity, not only around offense, which you touched on but with commercial businesses and industries as well how large is that opportunity? how quickly can you tap into the commercial industries and piece of the business verses the defense business i know is already there. >> the commercial part of the business is quart space. last year revenue was mostly civil for the government and commercial was the majority of the revenue.

agriculture, as i mentiont we see $100 billion opportunity and a huge data set. we've got all this machine learning to extract value out for the users. we see a huge business opportunity in every one of the markets we're going after. each more than a billion dollars. and it would take many years for others to build that daily scan. we're in a unique position to go after that opportunity >> company went public since then we've seen things fall 25% part of the draft and tech stocks given the conversation you and i are having, do you find it frustrating that investors haven't come around and warm to

what you're putting in front of them do you feel like part of your job is to educate wall street and investors, ent, if you can >> and the investors should look to them to provide expert opinion. but i'm focussed on building the business we just discussed a massive market and if we do it well, we're helping track deforestation, helping with the coral reefs and insuring protection of them we've had a number of countries recently start protecting them we need a fantastic team and capital and we have both it may take the market a little bit of time to understand and we have to prove ourselves. we're focussed on executing and

the market will do what it will do and we'll come to understand. you're part of the spacex launch given there does seem to be more competition for smaller satellites such as yours, costs keep coming down are you speaking to other potential providers? >> we've laurned on ten different markets and will continue to have partnerships with many rocket companies we have seen almost a 10-fold increase in the number of satellites being launched over the last ten years we just saw 100 yesterday. it's about 1,000 satellites a year for the last couple of years. but also under the hood, if you look at the number, about half of the satellites in orbit today

were just spacex and planet alone with their observation fleet. we just collect over 500 satellites launched over the history of the company in ten years and that's 60% launched over the 10-year period. it is also true that it's largely being driven by a couple of companies we're driving this sector. >> shares of planet up almost 10% right now. >> thank you >> and another look at the bank and other financials out with earnings citi spaul losses. black rock with $10 trillion, giving back some of last year's gains down 2%. we'll be back in three minutes

welcome back to "squack on the street." omicron continuing to reek havoc on live events our next guests recently announcing the postponement of their january 2022 tour. joining us, founding band members of guster. welcome back to the show, gentleman. great to have you on, although i wish it was under different circumstances. it was last march you came on the show and you were talking about your new documentary at the time and how you're navigating the pandemic and the fact you weren't able to tour. and at that time you talked about the fact you're targeting january and february this year to tour in a more meaningful way and here we are déjà vu where you're having to suspend the tour, at least for the time being. talk us through that praugs esand when you would hope to start putting the gigs back in

the books. >> it's like omicron has entered the chat, sort of thing. we started the first dates came up april of last year. i think we thought we were going to -- this was a -- we had a long runway to do it and obviously we're reacting like everybody else. and i think even two months ago we felt pretty good about this happening. so, it's a big disappointment and right around december when this started happening,we had to take a hard look if this is going to be safe or fun or rewarding or lucrative or any of those things it didn't seem like that was going to happen for us >> yeah. adam, i want to get your thoughts on this it's been -- i can't believe we're entering our third year dealing with the pandemic. we've seen fits and starts of opening live events.

the process of putting a tour or certain dates on hold, what does that look like to navigate where your fans are concerned? is there, dare i say, a playbook in place to go through the variants and this process? >> i think every band, is differently. there's no playbook and that's one of the hardest challenges is we're all -- even within our own band we have different ideas of how to go about it when we look to the outside world of music to see what other bands are doing, it's all over the map. some continue to tour, some stop and not planning to tour for a year unfortunately, very difficult to navigate it's been hard for us as a band because we live in different states and we haven't seen each other in a while we're working on music remotely. i was looking forward to getting back together with my band mates and playing music and seeing our

fans i guess i'll have to wait a little longer. >> recently wrote about concerts themselves on a special night with the right story telling in place, comingling and the energy it can be a single expression of shared humanity. how much do you think your audience misses it >> we were having an internal debate of whether we should do the tour or not. and i put up a thing on our twitter and said how comfortable would you be going to a live constrt on a scale one through ten. the vast majority, vast, vast majority said we really don't feel good about this we're one, two, zero, three. and i think it was thinking about that and that quote about energy that was really the deciding factor for me was we're going to be stepping into an energy where everyone's worried, saying is

this a risk? and that's really what it came down to is i didn't feel i could stand up there at a microphone every night and say we're so glad we're here because i wasn't sure i felt that way what's a story going to a show, if the into a show you're scared, maybe just kick the can down the road a little so when you're not feeling fear to go into a rock concert. >> i'm curious, adam, touring is so crucial to musicians in this day in age and streaming and the music industry has changed in recent years i mean, we're seeing a lot of publishing sales right now and musicians getting creative with how they're looking to make money in the midst of another variant of this covid epidemic or pandemic, i should say. how are you guys approaching that how are you thinking about things like, i don't know, the metaverse, for example >> we haven't entered the

metaverse yet. but we laugh, but i actually know somebody who is buying out the old venues that closed and it makes sense but we have not, honestly. we're focusing on music that we have been able to record during this time and getting that timing right and releasing it. and we honestly are hoping to be able to tour very soon it's just the timing of this tour was perfectly wrong like right as omicron peaking this tour is launching we have to delay it. but we're really looking forward to playing and i think we will be soon. >> hopefully it's a matter of weeks or even days we look forward to an update when that happens. ryan and adam, thanks so much for joining us >> thanks. >> ryan sounded so smart i wonder where he went to college. as we head to break. take a look at the biggest ll laggers -- >> do you know

>> of course i know. he went to tufts >> dollar tree, lululemon, zoom video. we'll take a deep dive on tech this next hour on "techcheck." we'll be right back. stay with us

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another quick check on the markets. s&p 500 down less than 0.5%. the dow downhr qrt teeuaers of a percent. we're back in two minutes.

welcome back senator sanders going after another billionaire that >> senator bernie sanders have not been afraid to start a fight and this time is bernie versing blackrock. he wants blackrock ceo larry fink to step in and stop the protest at the coal mine in alabama. workers have been on strike for almost a year over pay and benefits and blackrock is the company's largest shareholder. >> we have perhaps the largest private equity firm in the country managing $10 trillion in assets making billions of dollars a year in profit paying ceo $30 million a year and say we can't intervene to make sure that kids, children of the miners don't go hungry that's the kind of pressure that has to be placed on these ceos and these large corporations

>> it's a strategy sanders has used before with some mixed results. he called on warren buffett last month to intervene in a labor dispute at a steel company owned by berkshire hathaway. buffett declined to get involved and then the beef with jeff bezos over the minimum wage. amazon raised starting pay after standards introduced a bill that would bpenalize the company sanders says he counts that as a win. >> people are sick and tired of the kind of corporate greed that we are seeing. people on top right now during the pandemic are doing phenomenally well. while working people are struggling, many are dying literally as they're forced to go to work in the middle of the pandemic so, this is not a complicated issue. >> now, there is one thing that sanders and fink agree on. that is the urgency of climate change but sanders says he's not worried about alienating a potential ally in that fight guys, we did reach out to

blackrock and warrior met for a response and we'll let you know if we hear back. david. >> elon, thank you well, as we watch the broader market starting to sink a bit and we were down sharply at the very beginning of trading and came back rather sharply and now you can see, 0.4% is the loss on the s&p. that will do it for us on "squawk on the street. have a great weekend, everybody. "techcheck" starts now. happy friday welcome to "techcheck. i'm john fortt, carl has the morning off. nasdaq near the flat line after a short-line bounce. was this just a bounce for tech. later a rare downgrade for