good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick with joe kernen and andrew ross sorkin the dow ended with dow down by 66 points but that was well off the low. if you were watching this yesterday, wow, something to behold the dows with down as much as 118 points and up by as much as 226 points during the session, so a lot of action throughout the day. the s&p and nasdaq also closed off in the lows. they were down by 1.2% and 2.25% respect actively again, something to watch throughout the session this morning things are looking pretty good if you're a bull u.s. futures up by 350, nasdaq up by 291.

anything can happy in the meantime the treasury market looks like the ten-year is up. the two-year as well again, that fed meeting is going to be a biggy today, andrew. >> it will it will. as was this piece of news last night, which might provide a bit of a firewall to the market. we will see. which is microsoft earnings and shares higher. the company reported earnings of 2 $.48 per share the current quarter estimate guidance came in higher than expected as well the demand remains strong across much of the business, and another good quarter for one company. we saw a bunch of companies last week didn't have the same kind of performance, and i don't know if that's -- if this is now

weeding out the good from the bad. >> it was such a weird reaction after the bell though. i couldn't figure out why shares were down so much because most of the news, just about every line, they beat expectations on. the guidance they gave on the call was even stronger in terms of the current quarter but that was a weird reaction after the bell iwuh thinking if that's the standard that every one of these tech companies are going to be held to, it's going to be a very rocky season, but the numbers are up 4%. >> the numbers are off the chart, not necessarily really active to expectations, but just the absolute numbers, looking at we use a lot of computers apparently and a lot of those computers use windows. $50 billion. anything over $50 billion in a quarter, people don't have enough windows yet obviously it's the cloud and azur and services. did you see how slowly the games

business was growing and software >> like 11% of revenue, i think at this point for the company. and it's going to be a lot more. >> that's going to be a rocket ship, you figure, you would think. >> right. >> i'm going to have to play a game, you know what i mean because it sounds like fun. >> i have a new one for you. >> really? >> yeah. you'll like it because it's like the jumble wordle >> do you play it on the phone >> it's an app on your phone because of the way you like words look, it's challenging, fun, but -- >> scrambling them >> no. it's like a hangman-type thing trust me it makes you think you'll like it. >> i'm the bottom 5% of "wheel of fortune" players. i can pronounce the letters are up but i -- >> how is that possible when

you're so good at the jumbo? >> i don't know. i can't do it. >> even i can play "wheel of fortune. >> my son, my wife, i'm sitting there and i'm like -- there can be one letter missing anm still like -- >> i finally found a game i can beat you at. >> everyone can beat me at that. mean whooim the "jeopardy! be in like -- we're off topic. >> really. >> in six years we're going to be talking about amy. >> we are. >> she's still going to be winning. she won $60,000. here i am talking about tv again, andrew. i did see it she bet 25 on final. final was so easy last night texas instruments, let's talk about that. i know while i was watching "jeopardy!" you were poring over these numbers, right margin, basis points, expense. >> you think i'm such a nerd i'm not that much of a nerd. >> are you out

i don't know what a guy like you is doing in a period like this because you are working it, and you're not out where you would -- were you out last night like with sarah palin >> sarah palin >> she was there other night and then got covid i thought you now. i'm reading the tap lloyds at 2:00 while watching "jeopardy!" >> i know the whole palin drama. >> you do. it was at elio's in the last 24 hours. takedown. the company's outlook came in higher than expected. and then on a call the company says it plans to place additional emphasis in industrial and automotive businesses, serving chips to two areas hit hard by the global

shortage good idea. i don't know we've got five-day inventory did you see that story >> that's the story we going talk about right now. >> it is >> yes we used to have 40 days enthusiasm we have less than five days when talking about the chips. the u.s. commerce secretary warning that they're down to five days. compared to 2019 when they had 40 days of chips this makes us susceptible to problems that might crop up. the secretary is urging congress to approve the u.s. innovation and competition act, which includes $52 billion in spending to boost domestic chip production even if they were to approve it at this point, you wouldn't see anything that took place until about 2025, so the commerce department with this report is basically saying there's not a lot they can do about it right now, that it's going to be up to

the private industry to communicate and find out where the shortages are, where the real gap is between supply and demand demand is up enormously and the supply has not met that. i think i read supply is up about 17%. we've not seen any increase in supply the department of commerce says this is a problem through at least the end of this year and we can't tell beyond that. we saw earlier this week, we had intel on talking with us the ceo pat gelsinger about the new plant they're building in ohio, and that will be great, but they won't be up until about 2025. >> then you start to think, do you want to start to subsidize this industry in a meaningful waying and are we doing it at the right time nobody knows it may be that demand isn't the same situation three years from now. >> but i think this is an issue of security. at some point we do want to have these chips manufactured here in the united states. and if you can innocent faiz

that, i think that's probably an important thing to go ahead and do it didn't make sense to build it here otherwise, and we saw the problems that's gotten us into there are chips in everything now. i think automobiles are one of the real shortages, medical supplies is having serious arias. those are two areas the commerce department is look at. >> expect to pay higher prices it's going to cost more to do here. >> higher prices and not to mention the potential shutdown if you have less than five days' supply, you have shutdowns, which probably drives up inflation. that's why you see such high automobile prices too. >> any time you get an earnings report from one of these companies, you think, oh, my god, they didn't hit if you don't have the supply issue, you can't gauge what the actual demand is. >> right. >> it muddies the water. >> and the commerce department in this report was also suggesting that some of the

middle men, the companies that get these chips and turn around and supply them, they were going to be looking to gouge them, jacking up prices. you were paying three times as much for shipping on some of these things you're going to see higher prices regardless. >> in my next life, i'm going to a middle man of something. they don't have do anything. >> not me. i'm going to be the agent. >> you blame them for everything they're sort of these shadowy figures who are just there. >> like i said, i'm going to be an agent. >> i know they want us go to break. one comment on the semi-conductor thing because we never talked about it enough you look at tesla. if you really look under the hood to understand why they've actually managed to deal with the demand issue in the way others have not, they reprogrammed the chips i won't say they reprogrammed the chips. they did reprogramming so they

could use other chips that were actually available this is something the other auto makes couldn't do because they didn't have the people or jeers to do it they weren't initially planning to use them. there was inventory. >> there were chips that were available and they were very good -- this is why they're so good at this he went out and found there were chips that weren't being used, but those chips were different look there's different types of chips and they started to change some of the programs so they would work on certain chips. >> you know you said if you look under the hood did you do that on purpose i don't think you did. >> i don't even know i have my watch on it's 6:10 in the morning but it's a nice -- >> yeah. i'm going to give you credit for coming up with that.

you said you look under the hood. >> as you know, i'll take whatever i can get coming up when we return, the fed meeting and returns on earnings we're getting you ready. you're watching the one and only "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairdbusiness.com. ♪♪ your shipping manager left to “find themself.” leaving you lost. 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

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welcome back to squawk bochlkts we have a lot on

today's agenda we've got another business day for earnings we're going to hear from at&t and boeing it's going to happen before th opening bell on "squawk box. before the close we'll get an update on intel and tesla. you get a combo there. the federal reserve concluding its policy meeting today it's expected to signal an interest rate hike as soon as march. that's what everybody is paying attention to they'll have to decide how and when to back off the balance sheet. expect the wind-down to begin as early as may we will see. meanwhile investors have had to digest roller-coaster moves. joining us to help decipher what comes next, we've got rich ross. we've also got greg branch greg, i'm going to start with you. >> sure. >> what are you thinking and

what are you thinking we're going to be hearing from the fed? i don't know how much you think that's even going to mat earth this point it's been such a weird and wild week. >> yeah. i don't think we'll hear anything surprising from the fed that we hadn't anticipated the posture will remain hawkish as we expect the inflationary pressures to continue over the next quarter and likely into the mid-spring i don't expect any of them to abate until may. so the stance is cautious from here there are top-line concerns not only due to omicron but due to potentially softening consumer demand as we shift from fiscally supported consumer demand. >> right before i go to rich, greg, what do you do about it what do you do

we're so far from the bottom. >> right i think there's a pathway in the middle somewhere you look for safety, companies that have sustainable demand no matter what the macro environment is, no matter where the demand is coming from to prove they can sustain it like microsoft which performed in an environmental where pre-omicron and during omicron and certainly will after omicron you look for defensible margins, those insulated from inflationary measures. some of that is in cathie wood's world and some in value world. >> i have to get to rich i've got the charts. what are they really saying? >> i think internally with evercore that the fed put it currently speaking well below the levels i it's taking the starch out of an overheated equity market we're sitting on almost mythical

support here across averages when you talk about that 50-week moving average you're right on the number on the s&p 500. you're around 43.50. the nasdaq has had amy nor valuation, minor the bigger trends remain intact, but, again, consistent, i think there's still a reason for cautious structurally. you have a market deeply oversold overdue at a 10%, 12%, and a 10% panic is in the air. all of that is typically consistent with a short-term low. this isn't a consistent backdrop, andrew. >> you call it mythical support. why? >> i'm getting emails from people who trade every corner of this market. you know, there's no atheist in the foxhole and everyone's a technician when you get something like this. what get use into a trade must

get you out, andrew. that's why it's important when you look at the s&p 500, you have to define the trend since march, parliament hill of 2020 that's almost two years since we've seen the s&p double. breaking down from the lower level from which we bloke out, the rally that started this historic move, that would be your first sign that something has changed. and i think clearly most of us can agree something has changed. >> but it sounds like there's optimism in your air is that what you're saying this is the tail end of the correction is that what you're -- >> in the short term there's reason for optimism. monday we saw the historic reversal it's happened 10, 11, 12 times in history, andrew when we think about the time it's occurred, 2001, 2002, 2008, in neither of those years did similarly historic reversals off

the interest day lows mark a durable investment low there are two comparisons here one is a trading narrative, an oversold market that's about due for a correction and one that may have taken on too much damage structurally to continue this set it and forget it one-way trend to the upside. >> anding greg, how much of this -- and jim cramer made this point yesterday, is it a fung of all the spacs and other companies that went public that, frankly, had no business being in the public market over the past 24 months >> yeah. look it. i think that ties to something we just mentioned, which is the narrative, which a lot of that upside in those companies wasn't based necessarily on fundamentals even the colloquial things on sale in some cases isn't based on fundamentals. if you're making that statement because a stock price is reduced, it doesn't take into

context its historical multiple comparables, and it doesn't take into consideration the prospects of has the company improved or is it deteriorating? it would be hard to make a case that the future movie business is better today than it was in 2019, yet it's trading twice the stock prices sure, it's down from the 60s, but at the same time it's not on sale if the future prospects are diminished i think we have to take the stocks and look beneath the covers i remain cautious due to the bottom line and topline challenges as well as corporate earnings that we're going to see from the majority of companies in the next few months there will be some that power through that with strong top line, defensible margins, and no deteriorating correlation to a rising rate. >> greg and rich, i want to thank you both for helping us through this this morning. we will see where this roller

coaster goes today joe. >> all right,andrew. coming up, ark invest cathie wood defending her investment thesis we're going to show you her method to investors. right now as we head to break, here is a look at the biggest winners in the nasdaq 100. tesla is at the top.

all right. at&t just reporting earnings the numbers came in at an justed 78 cents a share that was better than what the street was expecting $41 billion versus $40.4 billion that the street was looking for. cash from operations, $11.3 billion. capital expenditures of $3.8

billion. capital investments, 4.8 and cash spent, 4.7. in terms of the subscribers, hbo and hbomax, they had 74 million subscribers. i think the company preannounced back on january 5th that they expected around 73.8 million just around there. they also added more than a million fiber subscribers as well looking very quickly at the guidance what they're talking about, they say for the full year including warnermedia and zander, the company is looking for consolidated revenue growth compared to $153.2 billion i ee also looking at adjusted earnings per share of $3.10 to $3.15. i think the street was at $3.21. they mentioned 2022 free cash flow in the 23 billion dollar range and they they'll be giving more numbers in march.

right now it looks like the stock is up more than 22 cents joe? >> 7.8% yield at that price. ark invest's cathie wood weighing in on can the recent selloff and unprofitable hutting her flagship what she's urging investors to look beyond concerning the recent volatility. >> we do believe innovation is on sale and we do believe that it will be really important for investors to get -- to move toward the right side of change given the amount of disruption that we do expect. >> wood said it's very important for her investors to keep a five-year time horizon her flag ship fund is down 25% so far this year it's just hard to argue that you

want to be on the cutting edge where innovation is. it just depends on what you pay for it, your entry point, but if you look at all the things we've talked about the last three, four, five years, it's all the new companies. nobody has made much money investing in the old state you've been okay, but you can't help, you know, investors -- the inclination is to want to get in on some of these unbelievably cutting-edge technologies and companies, so i understand what she's saying, but it's down 25%. a five-year time frame is hard to do. that's a long time it's a long time. >> again, i'd point back to the article. i think it was a bloomberg article that was talking about how warren buffett and cathie wood had the same return over two years. they just got there in different ways if you were doing slow and steady or real high up, real high down. >> warren stayed with the staying companies that and apple. >> yeah, but it took him a long

time. >> apple power. >> yeah. but, you know, better late than ever on apple, but on some of the others, not really embracing all the innovation, but -- >> admittedly so saying he doesn't understand most of those higher technology names. in fact, when he did invest in apple he said it was because it was consumer name at that point and he under frostood from cons demand what was happening. when we come back, free masks and testing. that's how they plan to keep guests safe at the super bowl. american suppress leading the charge, up8. a by 9%t the end of the day

good morning and welcome back to "squawk box" here on cnbc let's show you where the markets stand. right now things are looking up. it's been one roller-coaster

ride all week. the nasdaq looking like it would open up nearly 60 points higher. we've got a lot of stocks to wear shares of stocks, take a look at where they are, earnings and revenues beating estimates with the company's earned giensing coming in well below expectation. the revenue growth, that's not a chart you want 14%. becks. >> thanks. the student loans services giant rave nav yent reached a deal to cancel the debt of 66,000 boroughs. that totaled 1 president $7 billion and make a one-time payment of $1.45 million to the states

they're still up since the start of the pandemic. spectators at the super bowl in englewood, california, will be given kn95 face masks to ensure covid protocols are met and the county's orders don't dictate the types of masks they wear but workers have been urged to use the higher-quality masks to protect against omicron allattendees will need to show they've been vaccinated or recently tested negative, and they plan to offer free covid testing at sofi stadium so people can get results before entering that venue. and related covid news, elton john has tested positive for covid. his shows yesterday and today in dallas have been postponed his representatives say he's fully vaccinated and has experienced only mild symptoms heechls expected to resume his tour on saturday in little rock,

arkansas i have a couple of thoughts about elton. i've seen his place in venice. not too shabby and i'm not talking about california and who knows his original name? full original name >> i used to know this. >> i didn't know i knew michael landon, eugene orowitz. elton john's original name is reginald kenneth white he changed it to elton hercules john not kidding. like that. it's cool. what's your middle name? hercules why? >> that's not a bad one to pick. >> why not if you're going to pick a name. >> pick a good one. >> mine -- maybe i'd go joe adonis kerner. is that taken? >> no. go ahead >> okay. >> adonis.

thank you. >> it's like calling a tall guy shorty curly, a bald guy. adonis joe adonis. >> i like it it's good. i'll call you that, adonis. >> okay. >> when we come back, we're going to get ready for fed day we're going to tell you what markets say about rate hikes this is something the markets are going to be watching very closely. every twitch of his eye, every blink. that's probably what they'll be reading into. and then later this morning we have blackrock's rick rieder. he's going to join us on why he doesn't think we'll see four rate hike this year. that probably puts him in the minority and a reminder you can watch or listen to us live any time on the cnbc app

welcome back u.s. equity features looking good 366 points looking at the dow. they had a big selloff the dow close to basically unchanged. we had a pullback on the nasdaq. nasdaq doing well, getting back most of yesterday's losses. >> yesterday's losses, i don't know where that gets us. probably still down 14%. >> right the nasdaq and then under the surface, if you look under the hood -- i'm

going to start using that. >> i like. >> >> you see stocks down a lot more than the averages. >> right, right. at least there's this today. fed day. fed chair jay powell is going to signal a rate hike in march. that's not good news but anything else he says is joining us now is ian cheffian ian, i'm a little relieved you're here. i thought we were going to miss you when you tweeted out you were joining us at 11:30 eastern time. >> apologiapologies. it's been a very confusing day. >> we're glad you're here. this is something the markets are watching really closely number surprise they're going to signal they'll be starting to raise rates in march i think the bigger question is anything powell will say that the markets might be able to read into when it comes to how quickly they're going to be raising rates on r what they're

going to do with the balance sheets what do you anticipate is in the air? >> i think the fed can't be in the business of throwing gasoline on the markets, so i really hope he will say is, look, our discussions about a balance sheet will continue, we haven't reached any firm decisions, we're not going to be rushing into anything, and we're going to continue with the slowdown of the accumulation of assets through march as we've already said, so no change in the pace of the current situation and no announcement of speed or start date for the runoff this will be in contract to what some of his contracts have said over the past couple of weeks. we have had a bunch of comments like they'd like to see an earlier start to the runoff and a faster runoff and everything is easier because the market's in better shape. we've seen the consequences of that in the last few days. i think today will be a meeting where they will reflect upon this damage that they've done,

albeit unintentionally, and try and calm things down a bit. >> best laid plans, that's probably exactly what jay powell ishoping to do, but when you'r speaking and taking questions and when you have everybody watching your every move, i guess the market could read into just about anything that happens. if he does what you said, how do you think the market lee acts? >> i think they'll flip back to the economic data and the march meeting, the quarterly fed meeting, which is when everyone expects they'll raise rates. i don't think that expectation is going to range. the next round, i'm thinking of january sales and retail sales and a bunch of other numbers, this i oar going to be pretty soft the headlines are going to look pretty weak. they'll scale it back for an aggressive fed this year

we've seen expectations go from two to three to four to five and some talking six or soerch a very short time frame. i think that needs to be dialed back i don't think that was ever their intention. i'm sticking with three. there might be the idea of doing four i think the expectations have run away from themselves in part because of the fed's comments. by the time we get around to the march meeting, maybe things will be a bit calmer and less hysterical that doesn't mean the markets get completely out of the woods. we've still got a lot of valuations on tech stocks in particular, and the end of free money is going to make a material difference at least for a while while other things can catch up i don't think we're going to go to where we were the last 18 months where it's been a steady climb up that's not a steady thing. ultimately there's going to be a rupp-off but i really hope they can delay a bit longer than the market's thinking and not do this until

the conditions are accommodating for them, where they can do this without killing the markets because after all, the balance sheet, it's their creation there's no external decision it's kind of arbitrary to some extent i think they can afford to wait. i don't think inflation is going to be as deeply embedded as some people do. and i think they'll raise rates, taking stock, and wait a bit. >> you're kind of getting into the two levers that they have. first of all, it's the rate hikes. that's the easy one for us to get our heads around and we've been familiar with for years and years and decades. the balance sheet is a lot harder to understand you know what happens when a rate goes up by a quarter point. you doan know what happens when you take a trillionion dollars off a $9 trillion balance sheet. that's a thing that's a little more morphous. you hinted at the idea there's not extreme pressure for them to start doing that i think they want to

and we're still only talking about at most estimates -- steve liesman had on yesterday the consensus is maybe they're looking at $3 m$3 trillion shruk off the $9 trillion balance sheet. $3 trillion looks like a lot until you say $9 trillion. what is that going to look like with the rate hikes? >> bearing in mind nobody really knows how strong the economy is going to be, there's a gazillion different forecasts. so all of these forecasts and balance sheet runoffs are contingent with what happens in the real economy i do sem pa thiz with the feds any banker who's happy with a balance sheet that's nearly 35% of gdp, they're in the wrong job. and the idea that they're printing money is a normal response to an economic slowdown is very dangerous, and i understand why they would want to be out of that expansion sheet business, but timing is

everything with banking. i just think that the sudden rush of talk about doing it faster and doing it quicker and everything will be easier this time is very dangerous it's -- the consequences are clear to see in the markets. >> there's so much cheap money out there. it's kind of hard to say, well don't take it back in a way that's going to hurt the market because no matter what you do when you take it back, it's going to bring valuations down maybe it brings them back to earth in a way that's rational and that should be happening that's the tricky part is what did that big fat balance sheet do where did it create bubbles? how do we maybe shrink the bubbles without popping them horrifically but with an economy like this, there's a very good argument that they do have to start doing that why would you have that much liquidity out there? >> sure.

i know i have no doubt the valuations have been massively driven by the balance sheet. it was the right thing to do at the time the economy faces an existential crisis, and you have to throw everything that you possibly have at it that doesn't mean you have to take it all away in a heartbeat. it needs to be a judicious process that's managed so it doesn't trigger a crash. i have no issue at all with the idea that valuations have to come down. multiples have to come down. but we don't need to engineer that comedown in the space of a few weeks or in a few months it can be done over a much more extended period because what we don't want is a sudden crunch in stocks to filter back into the real economy because that's really what the fed cares about. they're not in the business of carrying profits or equity investments. they don't have a target for any of the level indices but they have a very clear idea they don't want the market to weaken so much and so quickly it feeds back into weakened economic growth and it threatens their

employment mandate they've got a really difficult juggling act they're not going to go away they can be deferred for a bit they shouldn't be sitting on a $9 trillion balance sheet any longer than they have to, but it's a hard job to start it. >> it is we'll see a little more of it today, how they plan to do it. ian, thank you for your time. the biden administration taking steps to supply europe with energy in case of a rsiusan invasion gas prices jumping up and more on that story coming up next

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the united states is in talks with energy producers to supply europe if russia invades ukraine. checking on energy prices this morning, oil and natural gas are in the green joining us now for more is john, again capital founder and cnbc contributor. just thinking when energy prices are up we call if in the green unfortunately, it causes everyone else to be more in the red, john. i don't know whether we feed to pick some different colors, but this is a real quandary. and we said europe, which is dependent on russia. but, really, i mean germany got serious issues can you go into some of those, john, for people that might not be following that closely? >> yes, joe. and thank you for having me on nobody roots for high energy pricesch they root for trillion dollar apple but not $100 crude for sure germany is beholden to russia

that they really put themselves in a position of vulnerability probably like no other country this talk or this hope the rest of the world could somehow supply germany and europe with cargoes of liquefied gas is just fanciful thinking, unfortunately. we can't run a berlin siege airlift with natural gas if the volumes are just too great to put it in perspective all of europe gets more gas from russia than the total amount of u.s. natural gas production, by about 50%. so there's just an impossibility factor there and the other issue is that lng liquefied natural gas is very expensive especially relative to pipeline gas i know everybody's hating on the nordstream 2 pipeline and the reason for that is obvious, the geopolitical risk, but there's no competing with the gas you get out of the ground, process it minimally, run it through a

pipeline as opposed to liquefied natural gas which gets out of the ground, super cool i'm talking liquefied mr. freeze cold, put on a ship, sailed far away and when it gets unloaded has to be defrosted like meat out of the freezer and then gets to your pipeline and then gets to your burner tip so i think the complications with lng are pretty apparent europe has got a huge problem here, and we can only hope at this point what's going on with russia and putin is pure bluster and this thing ends with hopefully without a shot fired but with a lot of chest beating by the russians as they pull back and declare victory >> what -- when did this happen with germany and why did that happen? so that no more nukes and the country is totally comfortable being at the beck and call of

vladimir putin in russia did they think about this when they were getting into this soup, john >> if there was ever a country that shouldn't forget its history it's germany, but it appears, joe, that they have you know, all of europe, you know, the japanese in a way are to blame for this to a degree because the disaster at fukushima when that tsunami tidal wave came and knocked out the backup generation to the powerplant because the backup generation was put outside, talk about not planning right, just got everybody off nuclear, you know, wrongly. and of course the green movement in europe also shuns some of these fuel sources and yeah, you find yourself then in a real hobsons choice of natural gas or going back to diesel fuel. and that's the problem for everybody. because with the limited natural gas supplies out of russia for germany and europe they're going to have to fall back on diesel fuel generated production.

that is already putting a squeeze on global diesel fuel supplies driving up the price in europe, and it's starting to drive up the price here because our diesel fuel can easily be exported for use over to germany and europe and then lo and behold there's the daisy chain fair for everyone why do we have high gasoline prices why is this an issue for our diesel fuel and our truckers over ukraine and russia? it's because with natural gas getting cut off all the other stuff gets used. it's called fuel switching >> now, we don't have that much time vladimir putin knows this and knows thateurope can't -- basically cannot align with us if we decided to take a hard stance they really cannot -- a cold winter would be very, very frightening for people in germany if putin makes a move. they're handcuffed they cannot really strategically align with any type of effort to

stop them going into ukraine >> they're already burning furniture potentially, it's that bad. he's got them right where he wants them >> you think he knows this and this is part of the calculus >> is that a rhetorical question, joe? >> we've got to go i guess it is >> no, bat man, mr. freeze >> no, i know but schwarzenegger played mr. freeze in batman. i like frozen as i said. all right, john, thank you that's frightening, frightening scenario that you're painting. andrew >> we've got two big hours ahead. we're just moments away from boeing fourth quarter results. we're going to bring you the numbers and instant reaction

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futures pointing to a strong open ahead of the fed. we'll get you up to speed on what's moving markets this morning and what you can expect for the session. dow up more man 400 points right now. boeing set to report quarterly results. we've got the numbers and ininstant reaction coming up and the market's wild swings the influence of the retail

investor as well we'll speak to tasty trade ceo tom about the wild swings and who may be left holding the bag. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. we're still about 2 1/2 hours before the market is set to open and we'll see what kind of roller coaster ride we go on today. the u.s. equity futures look like they're going to open up higher, much higher on the dow, close to 400 points higher now it's 388 points. and the s&p 500 looking to open a little over 66 points higher tell you everything making headlines at this hour one of them is this, rising mortgage rates are taking some of the momentum out of the housing market the mortgage bankers association

saying mortgage applications fell 7.1% last week. that came as rates rose for the fifth straight week with the average 30-year mortgage up 8 baesz points to 3.72%. a year ago it was under 3% president biden is going to be hosting chief executives of major u.s. companies at the white house today in an effort to ramp up support for his build back better legislation or whatever version of it comes next gm's mary barra will be among the ceos in attendance today the spending bill has so far failed to gain sufficient congressional support. it'll be interesting to hear from those ceos and what they come out in support of meantime we're just a few minutes away from boeing's quarterly report the jet maker expected to post a loss of 42 cents per share on revenue about 16.6 billion, and we'll watch those numbers and bring you to them as they hit. right now it's time for stocks to watch.

and don chu is here for that of course >> earnings driving a lot of the action and also the premarket so far. we've got a number of big names out that will drive some of the sentiment and maybe some of the rebounld we are see. we'll start first of all on stocks to watch here with what's happening with at&t. because the telecom giant which has seen a very tough year over the last 12 months is up about 0.5% after earnings results just came out in the last half-hour or so. at&t comes out with better than expected results generally speaking revenues driven in part of strength of its warner media unit some disappointments with regard to their post-paid wireless subscribers, those people who pay a monthly bill all of that in total as we're still digesting the numbers has led to about 0.10% to 1% gain. also watching what's happening with microsoft after the bell

yesterday, the massive computing software cloud giant comes out with results that, yes, beat analyst estimates but initially slid because of some current concerns that their azure cloud computing unit was showing some slowing growth quarter over quarter. although the outlook for microsoft's cloud division is looking better for their conference call. so microsoft shares adding about 3.5% by the way from here to here down roughly 17% from the record highs. and then the stock that a lot of folks will be watching throughout the course of today into the afternoon is tesla. right now the third best performing stock in the s&p 500 premarket today ahead of its earnings results after the closing bell right now tesla shares you can see they're up about 7% for the last year. tesla, by the way, is always one to watch not just because of the strength of the business over there but also because of the

volatility in the stock. and joe, by the way, just to give you an idea right now the options market is pricing in what could be around an 8% move in the stock up or down after earnings so tesla certainly one to watch. earnings are after the bell today, joe back over to you >> do the math 8% of that is going to be -- it's going to be a pretty big number i guess you just do the math thanks, tom. well, the fed statement and fed chair powell lean hawkish or dovish or fly close to what the market already has priced in senior economics reporter steve liesman tries to game out the possibilities. >> a consensus has been reached at the federal signal, a march rate hike but the fed has some leeway was the overall impression so look for the fed saying something like, quote, it

may be soon be appropriate to raise the policy rate. that's language used in the past beyond that there are considerable uncertainties take a look at the consensus here it's right now priced by quarterly hikes signaled by the feds saying rates are likely to rise at a pace to be measured. dovish tilt saying there are no preset course not determined yet whether or not we're going to hike more. consensus on the balance sheet, there were single balance sheet reduction likely by the summer but no agreement on the amount the hawkish tip would say substantial amounts this year, the dovish tilt none the fed has an inflation problem and the sell-off and higher rates is what the fed actually needs to help bring inflation down unlikely to deter it from the focus on inflation i think the most likely result

is the market being dissatisfied with the lack of clarity or specifics. i'm not sure the fed has figured yet or agreed on the road ahead, joe. >> just thinking about exactly what happens, and we've been through it so many times, steve, and that is the notion that the fed paints itself into a corner and has the best of intentions to try to exit this strategy and the biggest concern is that they're unable to once they start. and we've seen it again. you get some market volatility, and i thought ian shepherdson made a great point it's not they're were aetd about the market going down. it's not their job to protect wealthy people it's the feedback loop that the market goes down and then the economy gets impacted by a weaker stock market, so they have to keep that in mind with the other mandate they have for full employment. you've got to have two mandates, but they're almost mutually exclusive. it's really, really difficult.

and i'm justwondering once the get started if things don't go smoothly will they be able to follow through on these plans? >> you know, i think they can play it meeting by meeting i think ian is right up to a point, but, you know, the big discussion right now in the market, joe, is, you know, where is that fed put strike price which some people say is a defined or official thing, other people -- and i'm sort of including myself in there -- think it's more of an uncertain thing where the market falls a certain amount and the fed starts to get spooked by that. i think they're going to try to move along here with the market in mind. but, joe, the inflation rate is 7% a year, and it has that issue to deal with first and i forget who said it to me but someone said to me powell is not going to be the fed chair that squanders 30 years of fed credibility on inflation i think that's in the first order, and i do think some of

these high-flying stocks are going to be, you know, potentially, what do you want to call it, fall out from that effort they have to do this, and they have to get the policy in the right position and i think it's going to have more tolerance for the least volatility and down side when it comes to the stock market. >> well, that's the point. and even we heard about these billionaires that, you know, world's smallest violins, they've lost billions of dollars. it's like they just made billions of dollars based on the fed to some extent being in the earlier position so if, you know, the fed giveth and the fed taketh away. they should be comfortable maybe with a little of that. you've got all the political ramifications, too politicians don't like the punch bowl being taken away especially going into a mid-term and another presidential election. >> i think they hate the inflation worse but i want to get to your point here of do you

know how much we're up if you came in at the pandemic low? >> we were 300 on the s&p. i remember that day. >> 93% on the s&p, 98% on the nasdaq we are off since the all-time highs, 9% on the s&p, 16% on the nasdaq and by the way, we're still up 30% from the pre-pandemic high so you're absolutely right, joe, there's a lot of wealth still built in here. and it's like becky was talking to ian in the last hour. i was listening to that. you know, the expectation in the fed survey is for them to take a third off of the balance sheet over three years okay where does that leave you? still at a $6 trillion balance sheet. think about your basement, joe i don't know if you've been there but i have if you take 3 feet of water out of your basement and there was 4 feet in there you've still got a foot of water. the point is there's still going to be a lot of liquidity around

even if the fed sheet does that reduction. >> why were you in my basement you said i don't know if you've been in your basement what i've been there >> the water in the basement >> thanks, steve >> i'm waiting for the invitation >> i had a party down there. were you at that >> i'm available to play music at any party you invite me to. >> you should be the entertainment and like i don't recognize a single song that he's playing thanks, steve. >> you don't know these kids know this music these days they're all over it. coming up when we return nasdaq ceo is going to join us

to talk about all this market volatility, the tech sell-off sus.the company's quarterly relt that interview is coming up next right here on "squawk box. i may be close to retirement, but i'm as busy as ever. careful now. nice! you got it. and thanks to voya, i'm confident about my future. oh dad, the twins are now... ...vegan. i know, i got 'em some of those plant burgers. - nice! - yeah. voya provides guidance for the right investments and helps me be prepared for unexpected events. they make me feel like i've got it all under control. [crowd] yeah! because i do. ok, that was awesome. voya. be confident to and through retirement.

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"the wall street journal" just reporting that mutell has won the license to produce toys based on disney's princess line-up and the frozen franchise. this is huge shift actually a case of matell winning the rights back from hasbro after losing to them in 2016 and that was a huge deal because mattell's partnership goes back to the '60s. they had that princess brand for a long time. with this new deal they're going to start selling princess toys in 2023. they'll be managed by the same group in charge of barbie dolls. hasbro will reportedly retain the license for disney's star wars franchise this is so a big deal, and comes with the ceo of mattell taking advantage at a time when hasbro had just lost its long time ceo

brad goldner that was a shocking thing that happened mattell ticked off disney when they created their own line of princesses i think they were called after ever high or something >> this is just an amazing success story for mattell. >> it is >> i don't know if we can look at the stock price what he's done under his leadership. >> he shored up the whole company. >> started at the company in 2018 i don't know if you can go back and show a chart it's something >> the company was in disarray mattell was focused on barbie because it had so many problems with the barbie line really weren't paying attention to the disney princess line. i remember michael eisner talking to "the wall street journal" back in the late 1990s. he came to a wall street journal board meeting, was talking about how the princesses were a $5 billion franchise for disney at that point with all the different licensing and different things they had from it

so it's a huge, huge part of the business, really important and big deal for mattell and taking a look at the stock now over the last couple of years >> physical things and i thought the end was in sight, but it's never going to be not with little kids. and you like to play with those actual physical things, but wouldn't you think if you don't migrate to mostly a cloud-based computer gaming thing you're going to be left in the dust >> not in my house we have so many of these toys. >> you do still. >> everywhere. >> i'm going to say something really weird i can remember 15 years ago i found a computer i used to play barbie games with my daughter, barbie horse, barbie this and they were really cool. they were already migrating to it back then but it never went away the physical barbie never kid go away >> now it's american girls, isn't it

>> i went to an american girl great big convention >> i've had tea with the american girls dolls >> you have? we do that in our house. >> let's go back to nasdaq related stuff because the nasdaq came out with fourth quarter results just moments ago and they beat on both the top and bottom lines joining nous tew break down the report in this week's market swings adena friedman, ceo of the nasdaq we've been there every step of the way as you've opened up some new vistas and new businesses other than just what the nasdaq is known for but we do want to get back to that because i know you've got some probably positive things to say competitively about the ipo arena and how the nasdaq has performed. you're humble when you say it and i do know you want to get to that let's talk about the results themselves, and different for

the people at home who may not all the things you expand to separate out the businesses and how they perform >> we're really pleased with the year end results really all of the businesses that we have really contributed to that growth and as you said we are known for our foundational markets, and we're obviously thrilled to be the market that we are here in the u.s. and in europe but we also have a very scaled technology business today. we talk about our arr, ended the year about $1.7 billion. and that really comes from our listings as well as from our soft bear businesses and our investment analytics businesses. we're really leaning into a lot of gray secular trends in terms of banks managing their anti-financial crime programs and the technology we have to serve them institutional investors really modernizing their work flows and

work flow solutions we have for them in addition to of course the listings business and all of our solutions we offer our corporate clients as they navigate the markets themselves. so all of those really contributed nicely in addition to our technology business where we provide technology to markets around the world and then of course the markets had a seminal year last year, which of course has been to our benefit as well. >> we have said it i don't know how many times it's been the worst start of a year for nasdaq listed companies and then if you look at the price of your stock as well it's almost a direct reflection of what we have been seeing since january 1st or late december what do you attribute that to? and i know ceos also say they don't watch the stock day by day, but you are -- it does affect how people feel about the prospects for the nasdaq, for your company, for the nasdaq stock itself >> for a ceo who runs stock

market i do look at the stock i have to admit. but at the same time what we really focus on is how we perform for our clients. and i really think at the end of the day if we do a great job for our clients, if we therefore have a competitive process or competitive wins in terms of the number of ipos, if we serve our clients really well with the solutions we offer around anti-fin crime and investment work flows and provide markets around the world that allow them to operate successfully, we do a great job at all of that, that will obviously accrue to the long-term stock price of nasdaq, and that's what we're really focused on again, i think 2021 was a lot of momentum of what we can achieve. >> you know i've been a skeptic of all the misalignments in the process, not to say there's no

world where it should work but that we had a lot of companies potentially come to market that frankly had no business being publicly traded companies. and how do you think about that now? and we're seeing the air come out and investors are getting hurt by it and have you thought about it a year ago g >> well, i would say, andrew, five years ago we were talking about how there weren't enough companies going public that investors weren't able to invest in the growth of business and new industries forming, new technologies coming out and they were being choked from those inve investment opportunities we actually have 15% more operating companies listed on nasdaq than there were even a year ago, and spacks have become a vehicle for those companies to tap into public markets. i also would say it's important when you think about newly listed companies to look at them over the long-term, and even if the first year performance is not what investors expect, i think are the companies meeting

the expectations they set forth when they went public? are they continuing to lean into the trends, the secular trends that are going to drive their growth and are theye executing well? those are the types of things to focus on today when you have this kind of market turbulence is really getting back to the fundamentals of those company. >> you think if we look at a chart of all the spacks that went public in this vintage five years from now, if you bought a basket you'll outperform and be a winner >> well, i think if you look at the spacks that do acquisitions and actually combine with companies and actually bring operating companies to market, they're bringing operating companies to market at different stages of their life cycle the fact of the matter is nasdaq supports stocks in early stages of their revolution as well as the largest companies in the world. and there's of course a risk reward calculus you have to do on every single one of those

individual stocks, and not every stock is going to perform perfectly. not every company is going to execute perfect perfectly, but at the same time to give investors at least access to the growth trajectory of those stocks to allow them to make that selection as to whether or not they think they're good investments and instead of not just offering them as a choice because they don't feel public at all, i think i'd rather see them in the public markets and allow investors to make informed decisions. >> adena, as far as ipos, i don't know if there's been a wall, but we use something what we call a bacon indicator here, and i haven't seen bacon in the nasdaq and that might be covid related. or is it the business is actually slowing down -- because when there's a good ipo, there's bacon. >> i would say this we've had nine operating companies go public so far including tpg.

i had some bacon that morning. i also would agree covid made it we had to adjust -- >> affected everything >> we have seen companies say i think i'll pause my ipo plans and come back in four more months >> all right, adena, thank you i'll be here every day, so if things change i'll be the first to know. and i will bring that to our viewers in terms of the possible -- >> whether or not you smell bacon. i think that's a good idea thank you. >> oh, boy, the bacon indicator. when we come back we've got boeing's results stick around we'll be right back. time now for today's aflac trivia question. what year did microsoft go public the answer when cnbc's "squawk box" continues you coach right.

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now the answer to today's aflac trivia question. what year did microsoft go public the answer, 1986 shares closed on itsiray fst d of trading at $28.

welcome back to "squawk box. breaking news. we have the q4 results from boeing, and we've got a big miss and the top and the bottom line. the bottom line a charge or several charges resulted in a massive loss of $7.69 a share. the street was expecting a loss of 42 cents a share. but keep in mind a number of analysts are hearing for the first time about some of these charges. they speculated that we'd see

some 77 dream liner charges perhaps not to this extent so you've got a loss of $7.69 versus loss expected at 72 cents. the revenue coming in lighter than expected in the fourth quarter. but it did have positive free cash flow in the fourth quarter of $494 million. that is the first positive free cash flow quarter for boeing since the first quarter of 2019. let's talk about those charges and the bulk of these revolve around the suspended dlivgys of the 878 dream liner. they are taking a charge, two charges. one for $3.5 billion for customer considerations and delayed deliveries and another $285 million for abnormal production costs and by the way those abnormal production costs have now been bumped up for a total for the program of $1 billion up to $2 billion, meaning that the total charges and costs for the 878 as they try to work out this

situation with getting the inspections approved by the faa so that the planes can be delivered, that now tops $5.5 billion there's also a charge of $402 million in the fourth quarter for the aerial refilling tanker as well as 2$220 million for asset impairment add that all up you get charges of basically $4.4 billion. the 787 dream liner is an issue that ceo dave calhoun addresses in a letter that has just been sent out to employees. and basically he talks about the fact they're working through this process to make sure they get the right inspection process that will be approved by the faa and that they can resume deliveries in his statement to employees dave calhoun says i view the financial impacts of this work as a long-term investment in a program that has significant runway ahead we are taking the time now to ensure we're position well as wide bodied demand recovers. don't forget we're going to be talking exclusively with dave

calhoun coming up on squawk on the street, a little after 9:00 a.m. this morning you don't want to miss what he has to say, but that's the bottom line, guys. you have some massive charges in here, which is why you see the company losing $7.69 per share in the fourth quarter when the street was expecting a loss of just 42 cents per share. we should point out on the 737 max they did increase production as expected in the fourth quarter going from 19 per month in the third quarter up to 26 per month in the fourth quarter, and they say they're on track to hit 31 per month as expected some time early this year. guys, back to you. >> the street obviously digesting this news. right now the stock is off by about 1.3% now it's down by just half a percent. dow had been been up about 400 points because microsoft has given a significant boost to thing. we'll see how the market continues to shakeout.

as we're sitting here watching it just turned positive. does it sound like a kitchen sink kind of quarter >> ng i so to a large extent and the important thing here, becky, is they're not giving a new pushed out delivery expectation on the 787 dream liner. look, i think the stock would really be down if they came out and said you know what, it's going to be third quarter, fourth quarter they're not doing that they're not dwgiving any changen their guidance the expectation in the industry is that be see the 787 dream liners resume deliveries or deliveries are resumed for those aircraft some time in the april or may time frame. if that still the case i think generally the street looks at this nobody is happy about these charges but they say okay, there's not more bad news here there's not something like here we go again, it keeps getting kicked out further into the future >>still, stick around. let's bring around now sheila

aerospace and defense analyst. that loss i know you weren't anticipating, nobody was but you kind of knew these charges were out there what do you think when you hear the level of charges, know it's something that had to be done at some time? what do you take away? >> i put it in the bucket, becky, everything boeing wants to forget about 2021 and those charges weren't in our numbers but they were somewhat expected boeing hasn't delivered a 787 in the last 15 months so that's why they're taking those charges. it's one of the aircraft they had trouble delivering along with the max i think they reiterated their guidance going up 31 a month on production in 2022 were a little more skeptical on that. >> part of the problem obviously is china, not giving the clearance yet to some of those aircraft and the other problem got to be airlines themselves are in so much trouble with the

huge declines in business with covid, which what does it take to turn that around, and where do things stand with china >> sure. so the 737 max is a narrow body aircraft used for domestic travel domestic is what we're seeing trends in. what we've seen with the max so far is that boeing has been delivering to u.s., europe and latin america. it's compprising 90% of deliveries thus far, but there are only 44% of the backlog. china is missing which is 20% of the backlog. and asia is 40%. they haven't seen the travel demand as much of the world and they're not taking in the aircraft so some of that is the china trade, and, you know, it's convenient as well that their traffic hasn't picked up as much >> the charges definitely impacted the loss per share much greater than anticipated

but revenue for the last quarter was light, too was that a concern or because of everything you just said you can write off this quarter and look to what happens this career? >> i think we have to look forward to 2022 and 2023 and beyond you know, we had massive free cash flow losses in 221 although they did generate some positive free cash flow in the fourth quarter. we have a big turn, about a $10 billion swing. so we have $6 billion of free cash flow generated for 2022 and another $10 billion in 2023 and that's as boeing unwinds this inventory of 737 max they have sitting and the 787. some of our assumptions is really one max delivers to china and the rest of asia pacific, and then 787 we're assuming deliveries resume and the issues with faa are sorted by the april time frame but without those two things i think the stock is going to kind of stay rounded. >> hey, sheila, it's phil.

i have a question for you. when do you start getting nervous there may not be an order from china coming anytime soon and at what point do you look at your models for future production plans and say we can't see them increasing as much as we originally thought unless we see an order from china for the max let's say within the next nine months, a year, year and a half. at what point do you get nervous as an investor about china and the lack of orders >> so, i'm not so worried about orders the backlog is pretty good i'm worried about aircraft intake we have this neat company we use military video equipment that we track how many 737 fuselages boeing is actually building. boeing is building at a faster rate than airlines are actually taking in terms at the point i get nervous is probably around april if the 787 don't start

delivering >> we're running we've got to go. would you buy the stock here or not? >> buy it because it's 50% off the lows and still lots of runway to go but turbulence in the meantime >> all right, coming up experts -- experts, use that in the loosest possible term warning of the potential threat of cyber attacks if russia were to invade ukraine. details after the break. acock cio hear what he expects this afternoon when we come back. upgrade to the iphone 13 on us.

strategists are beginning to sort through the possible cyber war ramifications of a russian invasion of ukraine, and there could be significant threats to american companies this is an important story eamon javers joins us now with more this is getting weird. >> it is getting weird we saw this warning from the department of security telling infrastructure providers russia retains robust cyber capacity

here and the entire cyber community is trying to figure out exactly how this would look if russia invades ukraine. the expectation that i'm hearing from people now is that they don't expect there would be a massive russian cyber campaign against the united states right from the get go. they think the russians would try to keep anything they do in the cyber realm contained to ukraine at least at first. but if the united states retaliates then all bets are off, and you look at escalation scenario he played out the scenario that's worrying him. take a listen. >> if they make a move and the u.s. starts to push sanctions, that will cause then russia to look at using in my mind potentially hackers to go in and make things happen and the problems they can create are along the lines of what you do with ransomware but without a key, get in, encrypt networks,

cause a problem. and we've seen what those problems could be like >> so what general alexander is talking about there is the attack on ukraine back in 2017 he's likening it to ransomware except you don't get a key back. so there's no one you can pay to get your assets back that's the fear. he raised in our conversation the scenario ofseveral colonia pipeline attacks happening at the same time, and he said this would be the russian way to put pressure on u.s. public opinion to try to convince the biden administration that retaliation and sanctions against the russians simply aren't worth it economically and politically so you get into this sort of back and forth cyber campaign that could happen, and that's where the concern about escalation and the united states getting drawn into any potential conflict comes but the expectation is the russians would keep any cyber attack they began with focused very much on ukraine so as to not have any spill over effect and not draw the americans in at

the beginning, becky >> so these rules of engagement we're kind of making this up with cyber attacks at this point. and when you said the back and forth meaning they'd attack us but we'd simultaneously attack them >> yeah, absolutely. so you look at the united states already talking. we saw president biden talking yesterday about sanctions on russia, perhaps sanctions on vladimir putin personally. so that would be potentially the u.s. response. then does russia match that with a cyber campaign and what does the united states do in retaliation for a cyber campaign and go up the escalation ladder that way how do you get off that escalation ladder once it begins the united states is clearly signaling we're not going to send troops into ukraine to defend ukraine we might send troops into other countries in the region to sort of draw a line militarily, but how do you stop that escalation chain from going too far from the ladder that's been a question for theorists since the early days of the cold war. now cyber is just another component of that. >> you don't want to start the

escalation but it's either that or rollover, so i guess you're stuck between a rock and a hard place. >> right >> that's exactly the challenge. and then what's the blow back for american companies and for the american public? >> scary stuff eamon, thank you coming up on the other side of this break we're going to talk about trading platform tasty trade because it's seen two of its busiest days ever from its users in the wild swings of this market. well, they continue to be a very powerful influence and we're going to speak to the co-founder and ceo after the break, find out what's actually going on behind the scenes. in the meantime take a look at futures right now powering higher, dow expected to open 224 points points nasdaq throwing things at me? up an, as cfo it's my job to be ready for whatever's next. open 60 points higher. back after this.

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welcome back to "squawk box" this morning it has been a bad few weeks for the markets but even an worse one for some of the hot trades for retail check out shares of buzz etf which tracks the sales of social media and news articles. some reports saying it may have been retail investors buying the dip and powering the midday rally yesterday. trying to figure out what actually happened. tom is here, the founder and co-ceo of trading platform tasty

trade. do you buy it? you see the flows, tom is it retail buying the tip, or is it institutions >> you know, i'm glad you asked the question because it's really a fun topic for me retail investors account for about 20% of the order flow, but they make up about 80 plus percent of market direction. and most people don't really recognize that or realize that, but retail investors do make up market direction so i do think that a lot of the rally or the little bit of the come back in the market the last couple of days when it has rallied, it's all been retail. i agree. >> so one of the things we're seeing here and i'm looking at some data this morning showing that surprisingly i would say lever tech etfs this is like tqqq and things like that enjoy the largest flows on record at the same time we've had the market going the opposite direction. how do you explain that? >> it's actually -- it's an

interesting phenomenon and the reason it is because retail investors like i said since they make up so much of the market direction, you've got to realize that the majority of the buy-in that's generated by, you know, high frequency firms, professional market makers, things like that and they're not interested in direction. they're interested in scale. so retail investors drive direction, and institutional investors pile on. the retail investors have kind of that contrarian sense and also speculators, risk takers. it's usually the person managing their own money looking for that little kind of contrarian edge, and i think that's what you're seeing right now it's actually a good sign. that speculative kind of -- that speculative mechanics that's built into most retail investors i think that's the really positive thing >> but we have the impression and maybe i'm wrong in saying

this that oftentimes it's retail that gets left holding the bag and that the, quote, smart money is taking advantage of and i don't want to talk retail the dumb money but that's the way it's been setup for years if you read the narrative >> and the narrative is wrong. that's the optics, but the narrative is wrong the retail investors, there's a reason that the institutional investors generally underperform the bench marks, and it's because they're slow and it's because they tend to follow it's the retail investors that tend to make the turn, meaning it's the ones -- they're the lead investors and sometimes like in the case of some of the meat stocks and things like that it doesn't work out. but when a retail investor senses, you know, that the market is oversold, they're the first ones to go in and buy. and that's exactly what you saw the last cup of days >> so do you look at the last two days as a floor, a bottom, some form of capitulation?

do you see this as a stair step that continues to go down? do you see this as a rocket ship that goes up for all those on reddit who believe we're in for -- there are some real optimists out there that think this is one of the greatest buying tupts by the way, kathy woods would say the same thing >> yeah, i don't look at it as it's a rocket ship getting ready to take off. i do think the market was grossly overbought and i think it needed to correct itself. i also don't see this as the beginning of a crash or anything like that. i think we may still have some room to go and there's been some real selling you've got to look ininternals of this market, a fuel of the core stocks that have carried this market the last couple of years obviously they've had some nice sell-offs here most retail investors have been buying stocks down 50, 60 and in some cases 80% in those cases, yeah, i like it.

i like those stock i like buying here specifically because volatility is high so that means you have a very decent sized expected move coming and i think that's a very good risk reward. >> tom, when you look at a lot of the companies that have become public over the last two years either through traditional means or through a spack i think something on the order of 30% or more of them have no earnings. and you've seen the air come out of a lot of those companies. and we were talking to adena friedman earlier, i've been skeptical -- one of the things i've been skeptical about is that the retail investor fullies the incentives around some of those type of transactions so i wonder how you look at those stocks today are those buying opportunities or just reaching some form of reality? >> well, i think you're right on both cases i think they are reaching some form of reality. i think the problem with the spack marketplace and to a certain extent some of the ipos

last year was that companies were allowed to set their own price and investors also didn't really understand the diluted nature of spacks so i think a combination of those two, and now they kind of seek their own level price wise. so i'm not saying the spack stocks are cheapier, but they're clearly not as inflated and frothy as they were before so they're a lot more interesting. like we've bip buying a lot of the beaten down stocks i'd say in the last couple of weeks just based on price, nothing else so i think you're right on everything -- >> tom, we've got to jump real quick, 30 seconds how correlated do you think the crypto market is to the nasdaq right now >> well, i think give you the exact number it's about -- it's somewhere between 0.22 and 0.24. and it was hovering around zero for most of the last couple of years. so it's a lot more correlated to the down side and a lot more correlated as it becomes a more of a traditional asset now, but

it's still nothing like, you know, nasdaq and s&ps or anything like that >> great opportunity or not? >> i think price still has a lot more down side, but risk reward wise i like the digital asset marketplace. i love defy web 3 and the future of kind of decentralized finance. >> tom, always good to see you appreciate your perspective. coming up, microsoft big numbers on both the top and bottom line. we're going to dig through the numbers that you need to know when we return

good morning futures pointing to big gains at the opening bell to major averages we're coming off another head spinning day on wall street. the focus for the markets today, the federal reserve. investors are awaiting the central bank's latest rate decision and commentary from j. powell how close are we to a late liftoff? blackrock joins us to talk about all that and more. and earnings season really ramping up we've got results from boeing, at&t and so many other corporate giants we're going to bring you the details as the final hour of

"squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with bethy quick and joe sorken i think we'll do it today, maybe we'll stay up. >> the markets >> yeah. what do you think? >> what do you think about staying up >> there are days when we kind of have this dead cat -- dead rock bounce -- i'm sorry to all the cat lovers remember last week but we've done some serious work on the down side recently >> i think there's a big question to what j. powell says

later. my guess he's going to walk a fine line and not rock the boat and he's probably good at it at this point so odds are he'll be able to pull that off. but anytime you're doing something live, if you say something that people read into, if you look the wrong way -- >> should watch some old tapes of allen green span where everyone was like, what? >> there's an element of which he wants to talk the market down i imagine he sits and watches this and he can't be that upset about it >> no, i think we've seen something. i don't think he wants to be penned for the reason the market is coming down, right? if investors look at things and say the fed inevitably is going to be doing this is one thing. if they sell-off because he says something with the wrong inflection, nobody wants to get tagged with something like that. >> he can't control supply so what's he trying to do

he's trying to reduce demand how do you do that you make things harder to do i can't imagine he's looking at this and thinking unless the market did tumble in some crazy horrific way i think he's thinking i'm doing it right. >> you're saying this with the benefit of 1,000 point rebound and 800 point rebound. i guarantee we'd be having a real different discussion about -- and that's still on a percentage basis nothing on the dow. but -- >> that's why i think he's got a lot of room to move. >> anybody who looked at their portfolios yesterday or the day before you were in for a rude awakening, you know? and even when you know that this is going to happen, even when you're a long-term investor and ride these things out it's still no fun looking at the statements >> between inflation and where your 401k is in 2022 november it's already bad the only democrat who did run for election is nancy pelosi

she's like living in a lalaland but we don't want to talk about that let's talk about treasury yields and see where they are right now. 1.78%. and that, you know, that's been part of the i think the calmness has been engendered by that. if we were at 210 right now i think we might be in a different place in the equity markets, too. gone through 1.9 through 2 >> look, it's a trick. you want to do this. you want to pull the liquidity you don't want the market to crash. it's a pretty tricky -- a tougher than the trapeze shall we say anyway, let's get you caught up on some of the other stories investors going to be talking about today. first off new quarterly results from boeing. reporting a much wider than expected loss than the street was expecting, but there is a catch. boeing took a bunch of charges they weren't anticipating. they knew they were out there but didn't know they were coming this quarter came into the tune of

$4.4 billion in charges related to a number of company issues including delivery delays for its 787 wide body jet. but the company did generate pchb positive cash flow for the quarter. you can see the stock is up by about 0.7%, up by 1.5% maybe, we'll see where things shake-up. obviously it's a big deal because it's a dow component and as it goes so goes the rest of much of the market don't miss an exclusive interview at 9:00 a.m. eastern time on squawk on the street and at&t also out with earnings. the telecom giant beating analyst fourth quarter estimates. they were helped by strong growth at the company's hbo max unit a lot of things to look through here it was earnings and revenue also beat expectations. free cash flow $8.7 billion. the subscriber numbers for hbo and hbo max we knew were going

to come in right around 74 million, it came in just under that they are talking about earnings of $3.10 to $3.15 versus the $3.21 they were anticipating make sure not to miss another exclusive interview next hour with at&t's ceo. this comes after partners pulled out of the project in the last several years. >> thanks, becky we're just a little under 90 minutes away from the opening bell, and at the domino don chuchise, joins us with a look at the top market earners. >> first of all i would say this

the biggest market pregainer right now the s&p 500 has to do with earnings. it's corning corning is a maker of optical fiber, computer networking equipment, that sort of thing, also display glass for computing usage. it's up 8% right now, comes out with better than expected profits and revenues out this morning driven in part by some of the strengthin its optical business as well as its kind of display business as well and its first quarter profit guidance coming in above estimates and full year revenue guidance above analyst estimates as well. so corning which has seen a pretty decent decline of late up right now. another thing driving the trade not just in the nasdaq but also the s&p is a lot of premarket gain in some of the semiconductor stocks

texas instruments up 4.5%. they're all up roughly 3 to 5% at this stage. a lot of computer chips will be a focus for investors because those chip stocks have been some of the more volatile ones. one of the places to watch here and andrew kind of mentioned it i often put the most popular ticker searches from cnbc.com on my twitter feed at the domino as well as highlights from the top 50 tesla, apple and amazon are always in that mix as well i want to highlight today the nasdaq 100 futures are the number one most searched yesterday and has been very popular the last cup of weeks. the reason i bring it up, joe, is because we don't often see a top ten showing from a futures contract on our website, but we are seeing it now and maybe goes to show you, joe, just how much

more interest there is as the nasdaq has almost touched that so-called bear market territory over the last few days here and whether or not there's more interest in people just saying is the nasdaq a buy at thi level or is there more down side ahead, joe >> pretty good they let you do that do they know you do that >> they do know i do that. >> cnbc.com. that's pretty good info. >> it is good. i will say this, we have a lot of information at our disposal a lot of this stuff is proprietary, the exact numbers and what not what this does tell you, though, a general theme, an idea i can also tell you there's also only one crypto currency in the top 50 and that's bitcoin. i thought there would be atheorem in that mix as well but it didn't crack the top ten. >> have you thought about monetizing that somehow? >> knowledge and data is power >> thanks, tom

microsoft first sinking on its second quarter earnings report dan shooting into the green. julia borstin joins us now to break it down. >> microsoft beat expectations on the top and bottom line growing 20% and 21% respectively but then the stock dropped it was a hair above expectations but not beating as some analysts had hoped. during the earnings call, though, the stock popped higher an revenue guidance from cfo amy hood with a range above consensus for fiscal third quarter expectations that was driven by accelerating strength in microsoft's azure cloud division, projected revenue for the division between 18.75 and $19 billion. that was above analyst estimates of $18.5 billion the ceo did warn about the potential impact from foreign exchange and supply chain constraints, but they were

positive on the growing advertising and security businesses and on the heels of the act division blizzard deal and particularly bullish on the potential for the meta verse and for gaming >> that's where we've doubled down in terms of our consumer category creation. and, you know, we see the intensity of usage and the business model diversity around games. but increasingly the economics is also becoming much more softer like. so we see more good demand signal across the stack. >> he also talked about bringing the meta verse to teams and making the workplace a shared, immersive experience as well this morning analyst reaction is coming in, and to just give you a sense of what they're saying the ubs note was titled the march guide saves the day, a lot of commentary about that accelerating azure growth. and look, 93% of analysts had a buy rating on microsoft going into this earnings dose, so not

seeing a lot of ratings changes. >> we probably shouldn't try to, you know, ascribe anything to what happened initially, should we, julia? that's a fools errand. it's hard to say what do you think people initially were responding to >> well, so i actually think that the reason the stock dropped, and it was a pretty meaningful drop there is because there was kerp azure had not beaten by enough and they were really worried that the guide was going to be much less than anticipated, and right now this quarter there's so much emphasis on what the outlook is for calender 2022 and focusing in on the fact that though microsoft to beat it was kind of the wrong divisions that it beat, not the division that the analysts were so focused on. so i think hearing that guidance was a big, you know, sigh of relief for all those analysts with biratings on the stock. and i think there is a sense microsoft could set the tone for the rest of the tech sector, but

ale have to see as these earnings reports continue to roll in. >> i don't know, andrew, you're talking but you're not on camera and your mic is not on it looked like you were saying really good stuff. >> very briefy, i wanted to know if you heard any tea leaves on the act division blizzard transaction from a regulatory perspective. it's down and that's a real delta not just on a straight arbitrage time is money situation. >> i haven't heard much, but i do they think that 18-month time line that is a relatively long time line for these things, but the $3 billion break up fee think at least going to get through. and i think what's so interesting listening last night

you can hear him talk about how gaming is going to be big, gaming is going to be valuable but you can also hear how strength in gaming can help support their meta verse efforts when it comes to the enterprise. so you can sort of get a better sense how their gaming investments are not just about, you know, solely selling games and products to gamers but we'll see what regulators think about this one >> gaming is important becky made that point. i'm one for one for wordal did you get your first >> i did but it took me all tries. and i still make stupid mistakes >> but i two vowels in the first one and should never do the same letter twice i'm learning, but i'm one for one and i don't know if i ever plan on not winning. >> so you're never playing again. >> victory i love the smell of victory in the morning. when we come back we'll have much more on the markets

the futures up across the board sharply this morning, the nasdaq up even bigger on a percentage basis. it's up 308 points with the s&p up by 63 the gainers including the hard hit tech sector. plus lateran interview you can't miss we've got rick reider ahead of this afternoon's fed decision. stick around you're watching "squawk box" and this is cnbc

welcome back to "squawk box," everybody. the nasdaq is leading the major indexes higher in the premarket. if you check things out just on a percentage basis it is up by more than the dow although all three major averages up pretty significantly this morning the dow right now is by 377. if you look at the top stocks in the nasdaq 100 you've got microsoft lee leading the way. no surprise after those strong earnings last night. texas instruments up by 4.75 nvidia and tesla both up as well of course we'll be hearing more

from tesla later this evening. >> want to continue now with some big tech in this week's volatility in the sector as we get ready for more megacap names. and we're going to be getting earnings that will continue into this week. and the senior research analyst at newburgh, good morning to both of you. microsoft holding up quite well, and the question is, you know, whether you look at this market it's clearly a market of which names are going to work and which ones are not but a lot of people are living in the index universe and the question right now is is it cheap, barbara >> well, you had a nice decline in pe multiples, but i would say for the average tightening cycle you probably have another third to go before you an at rate cheap signal to go all in. >> a third explain. >> you need another two multiple points, another two points in multiples to get down to

something that would be relatively cheap for an aggressive fed cycle the bounce is probably going to be a bounce that probably leads a bit lower until you see the peak in inflation. so we think that probably comes later this year, probably somewhere around the may or june time period. so a little bit more to go until the down side. >> barbara, as you know timing the market is -- seems to be a fool's errand for most what are you telling clients they should be doing exactly >> we're actually holding onto our positions. we are out of our u.s. small cap and midcap positions and also giving ourselves some degree of freedom with credit to go back into it if things get a bit better later on this year. but for right now we're holding on our positions and we're giving ourselves some room to buy some things that are beaten down in the smaller may cap

universe this year >> dan, what do you think of that a third more to go >> andrew, when we look at the market we see a lot of opportunity at current levels. and if we think about the technology sector, the same underlying drivers are in place. look at the innovation and the growth in key areas like the cloud, mobile, really this build out of the digital infrastructure we saw last night the durability of microsoft's platform such as azure which remain healthy if we look at apple later this week sure supply chain is going to remain a factor for them and many others in the very near term, but we're seeing a continued broadening of the revenue drivers. iphone remains very healthy, services, wearables, a lot of innovation in areas like the mac. and then if we look out into next week with amazon, the e commerce business certainly has very difficult comparison in the near term given the strength during the pandemic. but the amazon web service

platform which targets enterprise customers remains very robust. google which also reports next week are alphabet. their google cloud platform which focuses on enterprise customers remains healthy. youtube is very strong search continues to remain robust, so we see a lot to like at current levels in the sector. >> so what -- are you buying right now? >> yes, we're buyers of these names here right now, andrew we see opportunity over the next 1 to 2 years of course i and all of us appreciate the near term dynamics around supply chain are going to remain difficult. if we think about interest rates and inflation, yes, interest rates are likely to move higher but even were they to be 3% on the ten-year, historically when one things about it in that context, they're still very, very low if we look back over the last decade the innovation and growth have mattered more than rates. >> right, but dan to the point barbara is making and i want to

get back to barbara on this, part of this is a multiple story, and it's not just an earnings story but a multiple stor, and whether you think the multiple has rerated and reached the floor of this rerating >> dan responds and then barbara responds >> andrew, i think that's a fair point on multiples and something we monitor and think about very, very carefully in the context of our overall investment framework. i think what ends up mattering more if we look out over the next 12 to 24 months is that in some cases the earnings of these companies are actually understated because they're investing a lot now and we're seeing some fruits in the case of microsoft with azure. and so to think through the multiples is of course an important part of the equation but if the growth and the earnings come through even in an environment where you see lower

multiples, i think these stocks can outperform i think there's additional shareholder value to be created during that -- the next 1 to 2 years. >> barbara, final word to you. >> the tightening cycles and when we're trying to tame inflation you generally lose about four multiple points you've only lost about 2.5 multiple points so you've got at least another 1.5 to 2 to go and this correction is being caused by the fed changing their -- excuse me -- the fed changing their tune in terms of having to fight and be an aggressive inflation fighter it's not going to be over until either the fed is able to step back from their aggressive tightening or you get a peak in inflation. and we do see the peak in inflation coming later this year, probably in the may to june time period >> barbara, dan, want to thank you both appreciate it. >> thank you >> what do you think a third to go?

>> you know what, andrew, we -- if you've got to do both timing and direction it's just i've learned. you know what someone just wrote in, andrew, and i said i resemble that remark, i'm already a middle man i'm a financial middle man i don't do anything. i don't trade stocks, i don't sell things. we're financial middle men we already have the best job in the world. >> joe, you're a principal, my friend >> we're lucky we don't have to make a living being right about things like cramer or something. i don't want any part of that. i like highlighting both sides is what we need to be good at. coming up, blackrock'srick reider on rates and today's fed decision plus florida's placing some big bets on electric pickups and mustangs, but there's another type of vehicle

that ford is helping will jump start its ambitions. when we come back phil lebeau are going to bring highlights this conversations with jim foley on what to keep in mind. you're watching "squawk box" on cnbc indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

new details this morning on ford's push into electric vehicles phil lebeau joins us now with more

hey, phil. >> hey, joe, we're talking about commercial vans, and know it's not as sexy as the f150 lightening or the mach e auto makers are likely to see their biggest gains at least over the next couple of years. and here's why we're showing you here the ford pro e transit van. these deliveries start over the next few weeks maybe the next quarter here they already have orders topping 10,000 including a large order for 1,000 from wal-mart, more than 300 customers including wal-mart have already placed orders for e-transits. and for ford this is critical because the commercial van market is one that they have long led both here in north america as well as in europe here are the market share numbers from last year according to lmc autoimative you see ford well ahead of ram when we talked to jim farly yesterday we talked to him about

why commercial vans are so critical for the growth of electric vehicles. here's what he had to say. >> selling these customers dopeo charging, having them interact with our software on the energy management every day, doing the same on our financing products that we were very underrepresented, having a whole service network especially doing remote service for our customers, this is whole new business for us. >> and potentially a very lucrative one not just for ford but for all the auto makers. recurring revenue, that's what you want to see. and that's what you see with commercial vehicles. in terms of ev sales in the united states we've talked about this for some time, tesla dominates. but we're talking largely consumer retail here the commercial side of the business is far smaller than the consumer retail end of the business for ford remember they report their q4 results next week we'll hear from jim farley about where they are in their strategy of ramping up ev sales and then when it comes to

electric vehicles don't forget after the bell today, guys, we'll hear from tesla. and the most important part of the report today, not the numbers. we know they're probably going to report a sizable profit for the fourth quarter it's what ceo elon musk says during the analyst call of the company's product road map that's what people will be focused on >> all right, phil we will be paying attention where the focus is thanks when we come back, a must-see interview with backrock's bond kick, rick reider investors waiting with baited breath for powell's remarks after today's fed decision rick is going to break down the llnd market, the stock market, te us what he's thinking right now. don't go anywhere. "squawk box" will be right back.

we have talked a lot about interest rates in just the first three weeks of 2022. the ten-year yield right now off its recent highs but still up close to 20% of the eryear and contrary to what's become a popular opinion on wall street our next guest says he's not convinced we're going to get

four increases from the fed this year joining us noato talk markets, rates and a whole lot more is rick reider, the head of the firm's global allocation team. and rick, we need you today. this is a big meeting coming from the fed everybody we've talked to recently seems to think the fed is going to be more and more aggressive but you're not even convinced we'll get four why is that? >> by the way i think it's unbelievable at the concept of student body left, student body right. if you think about where we were last year remember there was nobody who expected the fed to raise rates into the fourth quarter of '23 or maybe a lot in '24, '25 i think the fed has got to get off emergency conditions i think it's got to get to neutral, but then i think they've got to look at the data. listen, first move and i think we'll hear from the chair today you've got to start moving interest rate higher probably in march. by the way, sorry first move is

you have to reduce the qe. you have to get out of the qe program which i think is taking too long and then we'll talk about can we drain, and this will come more into the summer, can you start to drain some of that excess liquidity you put in the system? listen, along the way we're going to get a lot of data there are going to be a lot of cards turned over the next couple of quarters, few months and it's going to be interesting what the economy does. if you look at what we had the last week or so some of the data is softer. i think the overall composite print was the weakest print since the summer of '20, the industrial production number, the regional surveys, the empire survey, the richmond survey. we were operating a break neck speed in terms of the nominal gdp last year was over ten we haven't seen that since the '80s you're going to have nominal gdp

at 7-ish, maybe higher than that but we are moderating. will we hear from the fed today they've got to move to the next stage that they've really got to break the economy? when we have an economy more balanced i don't think you need to go to that next step where a lot of people have moved to that at this point. >> a lot of people have gotten to that because some of the data points we get are inflationary points, ppi, cpi, inflation is running at like 7%, and that's pretty scary you're looking at the highest levels going back for decades. if those numbers continue to hang in, it may not matter what some of the other numbers say because maybe the fed falls back on its first mandate, first and most important mandate making sure that inflation doesn't spiral out of control. >> so it is completely fair. by the way, the mandate is price stability, and i think they've got to make sure price stability. clearly inflation is stickier than anybody anticipated at this point. i think you've got to break it down where we're going to be -- we're going to get some high

inflation prints the next cup of months and you've got to think about where are we going to be in the summer where a cup of things happen some of the supply chain which has taken longer will start to come off a little bit or ease up a little bit you've seen this rapid increase. my sense is you're starting to see some inventories build in some places, you're seeing it retailers in terms of inventories build. listen, i think inflation is going to start to moderate towards the back half of the year and you've got to think where is inflation going to be stickier wages, no doubt, rent, no doubt. you think what can the fed do and some of inflation is driven by the supply side the fed has a reasonable job and when you put liquidity in to modulate demand to see how some of the supply pressures come off, to see a few more cards before you act aggressively i think is the right thing and so try not to, you know, to break inflation you've got to keep the recovery moving but to try to break inflation

it's a high wire act and i think you've got to be thoughtful how you execute that >> you're right. it's just when you look at some of these things we heard from the commerce department with this report about the chips, electric chips they don't think that problem is going to get fixed anytime this year, and that's going to mean high prices for things like autos where the supply has been down or we just haven't had enough supply to keep up with the demand, stuff like medical supplies. i just feel like they're going to have keep an eye on that. by the way, maybe there are other things they can do maybe the fed can do these rate hikes at the same time they start bringing the lusquidty down even that, that's the big unknown factor we know it helped on the way up and definitely inflated a lot of prices we know what a quarter rate hike does we don't know what the equivalent of taking a trillion dollars off the balance sheet does, and that's going to be something kind of holding the markets, too

>> i think that's right. by the way, the liquidity when you put the nominal gdp we saw that listen, i think there's something really important i think that when you were -- you know, i think the fed could have tapered and tried to land the plane a bit softly into where we are today, and listen, it didn't happen for whatever reason, it didn't happen it didn't land the plane softly, however, dropping the plane out of the sky, braking and put it in reverse can be really dangerous because you can shock nominal gdp down you can get that participation rate higher. the fed we can talk about how hot the labor market is today, and it's super hot but there are more people who can enter the labor force. there's no reason to destroy the recovery when quite frankly it's very tangental how much interest rate can impact inflation

particularly on the supply side. so my only point being get to neutral, and it's a two step process. get to neutral, pause, see where you are and interpret how much more you'll have to go i think a lot of people in the markets have said we've got to skip neutral and go right to tightening and that i think has to be modulated with let's get to neutral and see where we are and that takes a period of time. that will take months to get to neutral. >> let's talk about what this means for investors because this is what everyone is trying to figure outright now given the week and given we've started the year what do you do right now you think there's going to be a lot of volatility to come. but you're not convinced this is the the time for long-term market holders to jump in and buy. why is that? >> i think the volatility is still there. we can debate the pace of which the fed is going to go we're in a tightening regime whether that's for emergency easing to neutral it is still, you've got to think interest rates are going to trend higher. i think we're going to 2%, ten

year, by the way i don't think we're going much higher thanimate. but we're in that sort of framework. you've got geopolitical situations which you all have chronicled we've got to keep an eye on, and you've got an economy starting to transition some areas of it so being a bit conservative. and when you're investing you think, okay, what are the things working for me, what are the hedges i have? interest rates aren't great to risk assets, the dollar tricky it's not a great hedge what do you do you've got to be a bit more careful, run more cash in your portfolios part of what we were doing the last few days is think tactically, what has really gotten beaten up i think the year will still end with equities higher, and you think about it, okay, so where have you compressed things enough you start to put some money to work, you know, all along the line, though, i've got to run a moderate data because of volatility is still going to be high and managing the risk around that is not easy. and the liquidity in the markets is the lowest i've seen in a

really long time >> when you say you think the markets will end the year higher you mean higher from here or higher from where we started the year because there's a big difference >> fair point. i think higher than when we started the year i don't think it's hard to get there when you think about the dynamics i still think earnings growth this year -- let's say you have a 7-ish percent nominal gdp, you take operating leverage, stock buy back it's not that hard to get to 15% earnings growth can you have an equity market that still ends the year, you know, up significantly from where we came into the year? yeah, i think so i don't think the valuations would be that high you check equity premium risk today and look at where inflation was in the '70s and '80s it's actually very generous

to that period of time by, i think earnings are going to -- like we saw yesterday i think the earnings will be good enough not like last year, but they'll be good enough to propel a market i just think you've got to be careful the next couple of months >> one thing that's actually held up in these first weeks of the year has been high yield bonds, junk bonds, but you don't like them. why not? >> i don't i don't hate them. i think growth is going to be good i think cash flow is going to be good quite frankly i don't think they've held up well, held up well for a period of time because the world has needed yield. when you back up interest rates so the five year treasury gets back to 160 if i can get 2.5% to 3% now in some of the real estate financing, if i can get

to 2.5 to 3% i'd rather go up in quality and not pay for yield that's just thought -- the spread is not interesting now when you push the interest rate higher and continue to push it a bit higher from here now i can get yield in it. think about how we saw yield at zero so you can do some other things today to run more balance in a portfolio and take a bit of equity risk. >> really good talking to you this morning and hearing what's on your mind, and we hope to see you again soon thank you. coming up, jim cramer and his first take on what's shaping up to be another wild trading day. then morgan stanley global chief economist seth carpenter previews for the feds. stay tuned you're watching "squawk box" live from the market site in times square. has failed to take off. because it hasn't removed the endless mundane work we all hate.

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down to the new york stock exchange where our good friend jim cramer is hoping to make some sense of these crazy markets. we've got microsoft obviously, i don't know and then we had barbara on earlier who said may be a third to go. that means we're already two-thirds in. but where are you this morning >> i mean, look, every stock except for jp morgan has even

beaten and raised. what was really egregious was last night people, the headline saying microsoft missed including azure and then some firm came out and said azure was bad, and then you actually listened to the call and you realize it's an amazing quarter, maybe one of the best ever and i just find it revolting that people are doing these headlines. you take a look at j&j yesterday ped lines people say it was bad, stock goes up 5. the ceo best quarter in 37 years he says stock up 14. can people just take a breath, listen to the call and make a decision before they blow it out? i mean microsoft i love the call and the big cfo comes on and makes it even better than i thought and people were selling 274. andrew, can we stress upon people if you're doing that, if you're just using the headlines you've got to go right now to draft kings because they'll give you money even if you're wrong

>> is it the humans or is it the robots that are playing these -- >> yeah, the robots write the headlines because there's no real people involved it's too expensive and then people actually take them -- andrew, i'm right. and people take them seriously and i say to myself who is spending billion billions of dollars acting on headlight -- headlines written by machines. by machines. they match the language and come up with a plan i just think it's just a travesty you know, we deserve better. stocks are $274. listen to the conference call. american express 60% of the people took part were millennial's you don't find it out from the headlines. they're trying to get the lan language right i think it's a travesty. people have to learn they have to listen to the call, andrew. >> i know we only got a minute, but i'm hoping becan talk spaks for a second

you made important points on spaks. it's worthy to talk to our audience there's been a lot of debate about spaks over the past couple of years a bunch of companies have become public, obviously. there's a question whether they should have. >> do you think gary made a way after ibm reported there was a day separation of the two jobs he has. i don't care there's an ipo process they do a job. there is scrutiny by the sec versus this blank check. i have a great plumber i've used him for 25 years if he thinks i'm going to give him a blank check, forget about it i like him okay >> but, jim, i have to tell you, i feel like i've been screaming from the rooftops for, you know, 15 months now about the incentives that are misaligned and what you get back in that environment where retail

investors often say -- >> no, andrew, you don't understand. >> this is an opportunity to get in get in early we want access to this and actually this democracizing the system. >> democktizing. >> it's the worst thing. i think the worst part you're dead right. absolutely terrible, terrible i've not paid you the credit you deserve. but i will tell the spak people i actually am not going to be jimmy chill when they come on. there's no more jimmy chill when it comes to spaks. go through the process you're done. you come on our show and come on with the nonsense and you're done i'm going to explain what gary gensler wants. you make the bogus projections and lose a lot of money from people you have no home here where i am okay because i'm not going to put our viewers like they want to. in dollars in dollars. >> jimmy chill not chilling this morning. not chilling this morning. >> not chill when it comes to

spaks! no chill. >> we'll see you in justa couple of minutes. i have to take my chill pill right now and reminder, you can always get all access to jimmy chill, whether he's chilling or not at cnbc investing club point your phone at the screen now. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq,

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investorsers across wall street will be paying close attention to their tvs between 2:00 and 2:30 p.m. eastern time this afternoon when the fed reveals the latest interest rate decision when chairman jay powell beginning his post meeting news conference joining us now is seth carpenter. a global chief economist at morgan stanley i'm looking at your in-house notes. they're pretty -- do you think maybe that they're going to, i mean, they've already started talking a little bit tougher do you think they're seeing things that caused them to feel that way and may be realizing they're behind the curve you point out something what you're expecting here. i hear it from my trainer.

stay positioned for belly under performance. what is belly under performance. >> that's fantastic. i think powell over the last several months has gave up on the idea that inflags was transitory in the sense it was going away quickly he talked about a weekend where he looked at the employment cost index and changed his mind and going with interest rate hikes if you look at the reality of the inflation data, they've been high for a long period of time they have been turning the corner yet to come down. i think that's one clear point and, you know, they have interest rate at zero. they have been buying lots of bonds for a long period of time. so i think full on the combination with inflation staying high is not the place to be they said we have to switch back i think the question becomes how much and which tools for the belly under performance,

you know, interest rates over the next few years have to incorporate the market's expectations for fed rate hikes. the market is just looking for four rate hikes this year. more next year i think as more of those expectations get built in, especially on depending on how chair powell talks this afternoons you can see the two to five-year sector in the curve sell-off that's the belly under performance. >> okay. okay so i see what you're saying. you think that the terminal rate that we're talking about right now, it doesn't seem historically very high if you went to business school or to get a ph.d. in economics and you look at where inflation is and the fed's balance sheet and the past 10 years of accommodation and think 2.5% will do it, all bets are off for what we know about the economy

could 2 or 2.5% be the terminal rate >> so terminal is a funny word it means the end if we're at the end of -- what i'm not sure i think the peak rate for the cycle. the argument in favor of that being peak for the cycle is go back to 2018 i'm old enough to remember 2018, i know you're young, joe the fed was unwinding the balance sheet and raising short term interest rates. when the target rate got to a range of 2.5% risk market started to spread. we saw it come down. and the fed turned around and reversed course and built it down to 1.75 is that as far as they would need to go if the economy continues to expand? if we didn't have the covid shock, i think that question is not at all settled but i think they need to be cautious in that sort of 2.5 range. >> okay. i see.

as far as recent history, that might make sense i guess, you know, it's what we need to deal with. seth, we don't have enough time. we have to be out at 9:00 a.m. i would like to talk to you more because i don't -- i want to understand more about this analysis hopefully we can see you again soon. >> yeah. >> thanks, seth. i think we're done, guys make sure you join us. >> yeah. >> squawk on the street is next. good wednesday morning welcome to squawk on the street. i'm karl consistent nia. futures are solid on this day as more strategists say buy the sell-off that the fed will walk back some of the hawkish expectations. and microsoft, abbott, vix below 28 road map begins around with turn around or bounce for stocks. futures point to sharp gains as investors await new tea leaves from the fed