. good morning stock futures are lowest since march of 2020. we will show you what is moving this morning and pfizer expects to ask as soon as today for authorization for its covid vaccine for kids under 5 years old. we have details ahead. the land grab in video gaming and microsoft's deal for activision, now sony it is tuesday, february 1st, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin joe is off today we will start with the markets the first day of february. we have a new start. people want that after the month

last month the week yesterday was something to be hehold we will see if this continues. dow futures indicated down by 82 the s&p down by 15 the nasdaq off by 34 wow. what an end to the month huge rally after the disappointing month for the bulls. you saw a brutal number overall for january. nasdaq down 9% s&p down more than 5%. that was the worst month for both indexes since march 2020. the gains we saw yesterday in the nasdaq was up 3.4% with the gains, it dragged that market out of correction territory. just managed to ink out a loss of less than 10% for the month we will take that as a victory if you have been watching what is happening let's look at the treasury markets. yields have been climbing.

giving back a little bit 10-year at 1.76% if you want to look at the squawk stack, we have other numbers as we start the new trading month for february russell 2000 did well yesterday. it was up by 3%. for the month to date, still down 9.66% that dragged out of correction territory with one day trading yesterday. dow transports were up 1.5%. what was the real performer if you were looking at the month to date the energy complex wti was up 17.2% for the month natural gas up 30.6% that is in the span of one month. that is something to behold, andrew >> yes, it is. i want the pancakes. i'm distracted by the graphic. >> it's not doughnuts.

>> we've got several headlines to tell you about on the covid vaccine. fda granting full approve approval for moderna to market the vaccine under the name spike vax. that's what they will call it. pfizer expected to ask the fda to authorize the vaccine for children under 5 years old that request could come today. it is likely to ask regulators for a two-dose regimen reports say regulators are eager to review the data and authorizing shots for young children as early as the end of february we will see how quickly that happens and what debate happens in the country about it. >> you mean the three-dose regimen meaning they haven't decided if they get boosters down the road? >> so far, they are only seeking the first two shots. not seeking for the booster.

i think there is more data that they are hoping to come in on that obviously a debate about rack se vaccines for al dults and children >> we were looking at the stock charts moderna is stunning with the fall yesterday at this hour, the worst performers for the month in the s&p moderna was the worst performer. i don't know if that is how it closed the month it was running a close race for the lead among the biggest l losers we are watching shares of peloton today. according to internal documents that were obtained by cnbc, the unit is run by the ceo john foley's wife for the fiscal year that ends in june, the company forecasts more

than $200 million in annual revenue. it expects closer to $150 million. that unit is a small part of the business, but gives another glimpse of the surge in the pandemic peloton declined to comment because they are in a quiet period after the february 8th quarterly results. we have seen this with companies that did well in the pandemic. pulled growth forward and people are getting back out there >> a lot of it we talked about it we were one of the families that bought a treadmill we bought the treadmill they pulled back on >> are you still using it? >> you started buying the treadmill and then you started buying the clothes that is part of it now if you are not buying a new bike or not buying the shoes all of it. >> are you still using it? you were using it for a long time on your calls >> yes no, no we never gave it back. to their credit, they put a

password protected system and changed the way it works so hopefully it is safer. we try to take care. >> are you exercising on it every day? >> oh, boy >> not that you sent it back are you using it best intentions. >> we use it religiously i know there are people in the audience who think this is crazy. i haven't been to a gym in two years. this is the gym for me i use that and i do all of -- yes. that is how we managed i know people go to indoor gyms. to each their own. my wife would love to go back to barry's. >> the boot camp >> yes barry's boot camp. that is what peloton is trying to replicate at home. we have other news this

morning to tell you about. ubs with the drop of quarterly profit the swiss bank set a target of $6 trillion of assets across major divisions. the first update since the ceo ralph hamers took the job in november of 2020 are you going to indoor gyms >> no, but we have a peloton and an elliptical. i'm trying to be outside mentally, i'm better off if i do a walk or jog outside. i hate the outdoor time. we sit around for three hour notice big empty studio with no windows. it is a good thing to get outside and get sunlight mentally, i need the outdoors. i should tell you about the video game land grab heating up at this point. you know about the deal we talked about a couple of weeks ago. sony has agreed to buy the company that launched microsoft's first xbox

sonyis buying video game developer bungie >> i think it is bungie. >> for $3.6 billion. bungie developed a popular game halo that everybody knows about. microsoft bought the company in 2000 it split off in 2007 microsoft retained control of the halo franchise bungie produces the popular game destiny. the latest of three big transactions announced in january. including take-two to buy zynga and then microsoft to buy activision blizzard. and talk about heating up fast this makes it likely all of the deals get through or is this something that is going to draw more regulatory scrutiny >> those are smaller deals i don't think the take-two and zynga deal with cause alarm.

>> the microsoft argument or does it make it tougher if other players are teaming up and getting bigger >> i think it probably works in their favor to some degree i think it is the size and scale and to the degree regulators look at microsoft and activision deal you don't look that hard at that part because under the traditional reviews, the issue is they are thinking about this in a different way hard to know meantime, we have another deal and we should say full disclosure everybody knows i write for the new york times this is a new york times deal buying wordle. it shot to popularity when becky started talking about it on tv it is bolstering the company's game unit which hosts crosswords and spelling bee the unit had 980, subscribers

it remains free to play and there will be no changes to the game becky, you talked about the history of this game it was created for one person. it wasn't created for all of us. >> i don't know the story all that well. the guy created it for his wife or girlfriend because she liked to play word games this was a love letter to her which is amazing that they can do so well and then turn it into the viral credation it is and th sensation that is a big pay day for them go this is the way to express your love and be rewarded there is karma for you >> what i don't know and i thought about it by the way, i did not make calls about this i don't know the answer to this. there are lots of apps on the iphone you referred to one once >> i play to practice.

what word is the app it let's youlets you play as ma times as you want. >> this is copied of something else i wonder what the ip is in terms of ip protection around games like this i don't know how it works i think there is a lot of traffic the new york times will gain because they will now have the domain >> what is another bumble bee game i think the thing that is amazing is you can play with the app all the time the thing that is cool is it is once a day it is a social sensation i have my mother playing this. i have people all over the place sending me scores every day. you try to compete against each other. you can play one puzzle a day you can play it and you can tweet or text or whatever you want to do to send results to other people you are competing with it is the social interaction when you don't get to see people

that we had during the pandemic. it helps you stay in touch with people and interact that way the apps don't do that the apps are great do i i do it once a day. >> there is an article that says based on the algorithm that after six years, i think, they will run out of words with five letters. the question is do they turn it into six words do they make it six words or five chances six letters. >> once you start going these things, you recognize patterns and you are smarter about the guesses. j just like "wheel witof fortune" where you use the most commonly used letters it is fun to say you got it in two or three it is the same with any puzzles. you get better because you recognize the clues that come

back >> sadly, you know this, i should admit it. i'm not smart enough to play these games. we talked about it i can't play boggle. scrabble i don't have the mental fortitude for it >> you may have a slight bit of dyslexia >> i always thought that you know me with pronouncing names. >> i'm not joking. it is tougher with anybody who has dyslexia to play these games. you could do it with practice. anyway, when we come back, ubs out with earnings and the stock is soaring we will bring you the numbers after the break. in the meantime, check out the futures in the red dow futures down 25. nasdaq down by 17. also, later this morning, robert jordan takes over as the ceo of southwest airlines today he is joining us at 8:30 a.m.

eastern time this is a first on cnbc interview. we can't wait to hear from him stick around "squawk box" will be right back. >> announcer: this cnbc program is sponsored by truist securities might have a better finance system than we do. workday. how do they make better decisions faster? workday. it's got to be something workday. i think i got something. work... hey, rob, you're on mute. hello! hey, rob, there he is. workday. the finance, hr and planning system for a changing world.

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welcome back u.p.s. out with the quarterly earnings adjusted profits at $3.59 a

share. revenue beating the streets forecast the stock is up 7.3% right now the company is raising the quarterly dividend to $1.52 a share. that sis a hike of 49% carol tomey, the ceo, thanking the employees for the efforts in the holiday season she talked about the strong momentum for 2022. a dividend hike says they are having faith in what they are doing right now. also says that if you are looking for a dividend yield, look at u.p.s. $14.78 a hike in the dividend andrew i want to get back to the broader markets. unless you like to get back to the broader markets.

>> i was trying to toss away we will talk about the broader markets after the rally. nasdaq jumping more than 3% and managing to avoid logging its worst january ever also drak integging out of recollection territory missing it by that much. for the month, all three indices are down this is the busiest week for earnings this season, will the rally hold joining us is mona, the senior investment strategy. mona, let's start with you we are looking at some nervous investors. they managed to pull things back from the depths instead of pushing deeper do you anticipate we will continue on this upward path or do you think we are back to where we were a week ago based on earnings? >> thank you, becky.

it has been a positive sign to see the stability in markets we are making up the technical damage we did last week. we are holding on to the lows that we saw last monday. we are above those at this level. we're hopeful that correction, perhaps, is behind us. as we move forward for the next few months, however, we do think we will be hit with bouts of volatility as the fed prepares to take on this inflation fight it has told us it will do. they will probably be a live meeting starting march and the next four meetings or so keep in mind what we have seen is valuation de-rating story we have seen that play out we have seen higher parts of speculative parts of tech and valuation parts of tech and growth generally sell off more than the broader market. keep in mind everything, interestingly, have held up. 20% earnings for q4.

we are still looking at 9% earnings for 2022. to us, this is a valuation de-rating story more than a fundamental degradation. >> important difference. in some frame, no matter what numbers you put up, it may not be good enough. >> exactly markets have not been kind to those who have missed, but having those that beat nicely as we have seen in the last week or so we think as we specifically are more generally getting to the back half of the year, we think some of that, you know, anxiety is behind us we may see the supply chain issues ease and the inflation come down. if we get the pent-up issues in the economy come back and we could have a led recovery as we head toward the summer months and back half of the year. that environment, we should see areas of opportunity and value

cyclical sectors and parts of the growth market more robust and cash flow positive international and em have that exposure in the markets and could do well. there are so many areas to think about that could be relative out perf performers >> does that sound like you are saying away from technology, mon isn't tha a? that is not for stocks like tech stocks >> we remain positive on the higher speculation we could see bouts of volatility as the fed starts its cycle and balance sheet reduction as well. you will probably pick your opportunities in tech that include some of the things we're seeing enterprise spending in hardware and software mobile payments. parts of the semis could benefit from supply chain easing all of those things have legs

still in the second half of the year you know, some of those come from the tech sector better valuations and more robust cash flow in particular >> danielle, everybody is trying to figure out if we're out of the woods at this point. you have been watching technical issues closely what do you think? >> for me, it is all going to depend on earnings when we are going into the week, we have so many companies coming up we have amd that is critical for the semiconductors we have google and amazon. when you look at google and amazon in particular, they will have a massive impact on the nasdaq and the fact of the matter is both of them have about $100 to $120 expected move if either one of the companies do anything but disappoints investors, they could easily break those january lows and br bring the nasdaq lower i'm looking at the markets as having stabilized.

we are holding the january lows. those reports are very critical and if those fall more than expected, they could easily break that support and bring the nasdaq lower >> you think there is more car n nage ahead >> for me, it depends what we see over the next day or so. if you look at what happened with microsoft and tesla last week, the companies had strong reports. the index held up intraday the moves quickly faded. so for me when i look at the way investors reacted already this quarter to bank earnings and reports, if you look at google in particular, it does well on earnings and post earnings that means expectations are very high so, while i'm bullish and i like google

they typically do well on earnings when you have the high expectations, it can be jittery. amazon, you have the holiday quarter. expectations will be high there as well. >> danielle, thank you very much danielle shay and mona, thank you. >> thank you >> thank you okay coming up when we return, equity and opportunity. we will look closer at black spending power after the break news just out involving southwest airlines blackrock reported a 5.5% stake in the carrier coming on robert f rd'sir d as ceo. you don't want to miss that. we're back after this. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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what about technologists? 40,000 strong, baby. we'll be able to hit our projections both fiscal and astral. this company sounds great. what do you think, agnes? looks like it's unanimous.

welcome back to "squawk box. time for the equity series frank holland has more >> reporter: good morning, andrew black spending power reached $1.6 trillion in 2021 the growth exceeding and lagging other ethnic groups. latinos with a 388% increase in spending power others see an increase in net worth. black americans have seen net worth fall by 14%. with the s&p gaining 27% last year, the value of u.s. homes increasing by 31% last year. many asking the black community to rethink how it spends

>> save money to purchase the most important assets you probably will ever own your home. that, to me, is equally important. i put it right up there with arguing or campaigning for or supporting for voting rights. >> i would love to see us spend more in the stock market instead of buying the hottest new thing, buy the stock of the hottest new thing. that is something you can also pass down generation to generation >> homeownership is the biggest wealth builder and in the black community it has fallen 3% since 2000 annually, black families accumulate less wealth and save 75% less the racial gap is $11 trillion back to you. >> frank, the stats are startling and fascinating in so many ways. do business lead over leaders ht

stop the trend >> some is allocating more capital. things like houses and stocks and bonds. other reasons are systemic that is why one of five black families have negative net worth. red lines in housing disparities in education other issues that will take a long time to address. >> frank, thank you. i appreciate it. thanks, andrew when we come back, bob johnson will join us to talk equity and opportunity. we will talk media deals and markets. all that coming up in the next hour. as we head to break, let's look at s&p's winners and losers from yesterday

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good morning welcome back to "squawk box" on tuesday morning. let's show you the futures we are opening in the red. dow off 47 points.

s&p looking to open down about 11 points. we have news out, becky. news out from at&t we are learning at&t is spinning off the interests in warner media to discovery 100% interest in the pro rated distribution at&t shareholders will get 0.2 shares of warner media discovery for every share of at&t they own. shareholders will get stock representing 71% of the new company. warner bros. discovery will own 71% of the company it is expected to close in 2022. maybe the new news, tat&t board approved $1.11 a share the company goes on to point out this is expected to be among the higher dividend yields in corporate america. the yield is coming down as they are spinning off the big part of the company. that has been the question stock was yielding 8.16%

paying a quarterly dividend of 52 cents up to this point. new dividend is $1.11 per share. i talked to the ceo. he talked about what this means. what they hope this does is puts the company in a healthy conditions to continue to pay down debt which they needed to do for a while the debt there is still running north of $160 billion. mid $160 billion that will come down substantially. they are getting $43 billion in cash they are expecting debt to $120 billion. the big yquestion is what will happen to the dividend you see the stock off 1.6% right now. the company says keeping the dividend at $1.11 will allow them to make sure they are continuing to fund the company they have cap x of spending $24

billion and de-lever and pay down the debt. that is the big story. retail investors and those that flocked to this because of the dividend it paid they expect the yield to be 6% verizon pays 4.76% t-mobile and turner don't pay a yield. comecast pays 2.2% this is something people are watching and wondering what would happen with the save of the company. spinoff of that portion of the company. i think they looked at this and wanted to make sure it was done this way to give the retail i h hope investor their decision if you want to keep it, you can d keep it or sell. they thought it gave more flexi flexibility. andrew, there was concern if

they did this differently with a spin, they could face technical difficulties it would require discount of ownership. it would give room for the arks to come in >> what kind of conversation they had over the years about the dividend there has been a question about continuing invest in the business on the relative basis of the way verizon or t-mobile sprint they lost ground over the last couple years they have spent more is the dividend the piece for the retail investors >> in that is the question the company will spend the day explaining this to investors and getting the story out and seeing what they think about these things telling them the reason for why they are doing this. the cap x. at&t, for a long time, was the biggest cap x spender of any

company in america they spent more on investing back in. i don't know they're number one at this point. they are still talking about significant expenditures $24 billion. they don't have to spend on content. that is warner bros. discovery you have to keep the network up and spend on the future of those things they consider that a pretty important priority dividend is a priority because of the base of shareholders. they expect a high dividend payout >> i was trying to look to see how much they spend. they spend about the same as verizon. they are in the league in the same vicinity verizon may spend less >> berkshire spends a lot. at&t and randall stephenson

talked about it because of what they were pouring back in. it is something you have to do when you run any of the big network companies. no way around it that or a railroad >> the investors have not been happy about it they may be spending the money, but all of that money has not worked to their advantage. you look at verizon and t-mobile stock. if you own either of those, you would be a materially happier person about all of this over the last ten years if you lay the charts over each other -- to me, it is a sad story given the nature of at&t. >> i think at&t would point to it and say we skiltill own the majority of warner bros. discovery. you get a piece of this. they own 71% of the new company afterwards discovery will own 29% of the

new company. with the spinoffs with the di directv and the rest, they want the shareholders to still have a stake. that is the story they have told the cfo will explain this to investors today. we will have the first interview with john stankey on friday. also david sazlov. we will sit with both of them on friday the stock is down 1.5%. in the meantime, fed watchers raising the watch for tightening some new survey data says cooler heads may prevail. steve liesman has more >> reporter: the cnbc flash fed survey, becky. we did it after the fed meeting

to see if the response changed they are not as hawkish on rates for five or more we will get to that in a second. among the 38 respondents, they are looking at three hikes are built in and debating a fourth the average fund rate of 1%. next year, the three built in and fund rate at $1.85 there is little support for a 50-point rate hike in march. managing director of russell investments say we think that the fomc's hawkish pivot will sustain hiking through the first half of 2022 we believe it will allow for the softening of the hawkish stance. it is for a decline to 4.2% this

year 2.9% by the end of 2023. it comes with the belief inflation welcome down respondents look for more balance sheet runoff than the prior survey look here. the average looks for the balance sheet to begin running off in july, which was the same. the total of $460 billion this year up from 3$380 billion befor the meeting. that grows next year to $930 billion. by the way, that total is also lower. it had been 2.8 in the prior survey the fed may prove the hawkish view of rates to be correct. it is also possible the fed will do somewhat less on rate hikes and more on the balance sheet. that will determine whether inflation -- all determined if inflation comes down becky, the story here is they are leaning more on the balance sheet. i think you heard that from

esther george from kansas city >> is that something they think will be effective on inflation as well or is that something they think will tamp down the markets to some extent >> they have to think it is also going to be effective on inflation, becky in the fed's mind, kwquantitatie easing is a substitute for rate cuts they go in and buy assets and there's no science to this that's why the fed is wary of it and they want it on background and auto pilot it has to be part of the inflation fight here to reduce the balance sheet and to obviously stop qe. it is all part and parcel. this group, at least, thinks the fed will lean more that way. by the way, becky, it may be interesting for you to know. the reason we started the fed survey, i don't know, ten years ago, is because there is no way out there to gauge or not at the time, the markets view of the balance sheet side of the fed

policy here we are back to the reason we started which is the balance sheet thing is complicated and i'm sorry about that it is just as important to know where the fed is on balance sheet as rates >> steve, we have to run for anybody who thinks the fed that's maintain lower rates because the government borrowed so much, the balance sheet is a better alternative than raising rates that costs us more money we have to run save that for another conversation steve, thank you. we will talk about the omicron cases with plunging cases in the northeast citigroup and other banks planning to bring workers back to the office this month after the delay of the omicron surge over the holidays. we have tom gimble and reporter lydia moynahan here. good morning the big question is how easy or

hard is it going to be to get everybody back in the office, tom? >> we will resume where we were p pre-thanksgiving we will have a hybrid week tuesday, wednesday and thursday. you will have wall street and the tech companies on the west coast that do four days a week or no days a week. people are coming back are you are seeing it with omicron which is the best thing to drive people back into the office. >> why do you say that >> so many people that you know and i know that everybody knows got infected and got sick. thinks they got it whether they got tested or not, the cases were mild, and now they are plunging. leadership feels people are immune from getting terrible cases of it. let's bring people back. if there isn't another strand, we are going back into the office and with what you guys have been talking about all

morning, if rates are going up and we are seeing the changes in the market and volatility, that companies will want people in the office to have more focus to make sure profits don't suffer >> lydia, you have your ear to the ground what do you think culturally is happening here when you have been on the broadcast, there has been a younger generation, on wall street, that doesn't want to go back to the office is that still the case has anyone gotten tired of not being at the office? >> you are right, andrew it is interesting. senior management allalong those going in through coronavirus. it is the younger employees saying we're worried about covid. we're worried about it we don't want to go in that is broiling senior management with the anecdotes we heard of the highypocrisy of th

events and not going into the office she was worried about going into the office, but sitting at madison square garden with 50,000 of her friends. one not going into the office and then bumps into him at the christmas party at club tao. the younger people have the upper hand it is a hot labor market my prediction, andrew, it will be wheeled away and another cubical put in its place as the labor market rebalances. >> so, lydia, are we now convinced this conversation we have been having for the past two years of the quote/unquote future of work, the future of work is exactly what it was two years also ultimately when it's over if it is over? >> if it is over -- look, it is interesting. one issue working from home is

work/life balance. those are not the same it is interesting this presentation that went viral a couple of years ago that banking is causing them stress they couldn't eat. they were doing that working remotely when you are not going into the office, especially in banking, you are spinning your wheels you don't get guidance you would get from the boss. you pop into the office and ask for guidance that is not happening. i don't think you would have seen the powerpoint presentation put together if people were in the office there would have been assessment >> tom, final word to you. i agree with virtually everything lydia said. it is not except for this, but the idea of the whole other community of people who think actually, including business leaders especially on the west coast, who think they can have more access to more talent across the country if they live this remote distributed work

world. is that the case or not? >> you know, i don't want to be wishy-washy, andrew, it is the case for someand not the others we have seen leadership would rather have talent great talent or average talent closer to an office if not the headquarters other talent closet an office if not the headquarters so they can have teams working clollaboratively what we're going to see moving forward is that the best of the best are always going to have more luxury, and we realize through covid, through zoom that you don't have to be in the office, but we also haven't seen the economy going through a real bear market in a remote setting, and we have the stimulus and everything else pushing us forward, and i'm not sure we're ever going to see that happen because leadership is going to bring people back. but, yes, the short answer to your question is if you really want great talent you'll have

flexibility. for the rank and file, ube back in the office three days a week. >> so the tape makers control the situation still. that's not new thank you guys both. appreciate it. all right, when we come back, the count down to jobs report is on, and inpredictions say the economy may have lost jobs in january. we'll get a read on small business job growth right after this man 1: hey, i see you cancelled your order. what's up? man 2: don't blame me. it's those search results. man 1: you can't believe this trash. we've delivered for you time after time. man 2: sorry. boss says we've got to cancel. vo: in today's world search results count more than ever. if your search results are unfair or misleading, call reputation defender today to join tens of thousands who have improved their online reputation. get your free reputation report card at reputationdefender.com or call 1-877-866-8555.

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it is jobs week in america, but before we get the government's january numbers we're going to get a read on small business job growth. and that's from paychecks and ihs market marty, this is a pretty important number because there could be a lot of noise in it just from covid, but overall what did you find? what happened to the month of january when it came to small business job growth? >> becky, we're still seeing the eighth consecutive month of really strong job growth particularly in small businesses here and wage growth, 4.4%, up from last year, so wage growth

really accelerating and continues to be well over 4% that really means something, and, you know, you're seeing it across the board but the west is the strongest, the southwest, you know, texas, arizona, florida, this is where you're seeing the biggest job growth. and those wage increases, leisure and hospitality leading the pack with 11% hourly wage growth the only omicron impact that looks like we see in january is hours worked are down about 8% so i think people are probably missing some working hours, but overall not a big impact >> what do you think happened? is this a return to more travel, more people going to some of these places is this just the idea that businesses are paying up because they've got to get the workers back in and workers are responding to higher wages what story does this tell? >> what you're hearing is they are responding now as we talked over the last couple of months some of the things drying up per se, the

child tax credit that was really impacting 30 different households and giving people with young children $300 to $600 per child per month. that has dried up, that's stopped. you're seeing things, people come back, the inflation that's starting to drive people back into the work force as i think jim cramer mentioned yesterday new york city hot right now, higher job growth than we've seen in months. >> wage growth of over 4.4%. you have i think five states that had hourly earnings growth above 5% what does that tell us about the future of inflation, whether it continues? >> well, you know, it's pretty tough to turn the wages back, so i think that kind of inflation, wage inflation is here to stay it's interesting it's very much on the low end, so you're seeing the youngest generation getting the biggest wage increases which isn't probably surprising. it's starting jobs, that starting hourly rate is the one that's up the most, over 5% in many cases, and you're seeing the higher level jobs more

tenured people actually still under 3% so the overall average is a bit deceiving. it's high on the front end and a bit lower on the more tenured people >> thank you for your time andrew coming up, it is robert jordan's first day in charge of southwest airlines he's going to be with us he's now the cpa'somny ceo it's his very first interview. it's all coming up straight ahead.

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futures pointing to a lower open after a strong two day rally that took some of the sting out of a losing month for investors and preview some of the big tech results that kick off tonight. russia accusing the west of whipping up tensions over ukraine. the growing concerns and what it could mean for the markets if russia were to invade. and exon mobile set to report quarterly results the number and exclusive interview with darren woods. the second hour of "squawk box" begins right now

good morning and welcome back to "squawk box" right here on cnbc. joe is off today take a look at u.s. equity futures at this hour we do have some red arrows across the board the dow looks like it'll open down about 86 points a bunch of numbers to tell you about this hour and a number of earnings reports coming out this week at&t currently estimates that shareholders will receive a little less than a quarter share of warner brothers discovery for each at&t share they now hold. the exact number to be determined at a later date meantime, pfizer and german partner biontech reportedly seeking fda approval now to use

their covid-19 vaccine in children under 5 years old that's according to "the new york times" that says that could happen as soon as today. the paper says emergency use authorization could come as soon as the end of the month. wordle, the popular word game that surged in popularity, the price not disclosed but "the seattle times" d-- the times did say -- there is a word merger, is that five letters >> no, merge would be five >> but the issue is they're going to put it on their website. i think they're going to keep it free, not behind a pay wall. the reason it's been able to have this viral nature is because anybody could play slap some ads if you want but don't ruin the viral nature of

it let's again to don chu >> first of all, i don't wordle. anyway, let's start off with the big mover this morning it has been volatile of late and we got a bit of a bounce yesterday and the kind of recovery we've seen. and that's shares of tesla because the electric vehicle maker continues to be in the headlines. this comes on the heels at least a little bit in part due to a recall of nearly 54,000 vehicles tesla puts out there due in part to a software feature that may allow a beta software, a test software piece that may allow the car to roll through stop signs and intersections as opposed to coming to a complete stop, which obviously poses some kind of a safety risk in certain situations but that bit of news there, a couple of other things leading

to unbalance 3.1% decline. still holding. also watching what's happening right now with shares of ups, earnings out and basically ups package delivery, cargo freight, big bellwether for the economy comes out with better than expected results overall driven no surprise here by a surge in demand for e-commerce type companies and shipping rates you can see they're up about 7% of the trade and over the last year up about 39%. so a big move higher for ups and then peloton, we got news yesterday broke the news that peloton could be slashing its growth forecast for its apparel unit by the way, that aparnl unit at peloton grew to a $100 million business during the pandemic from 2020 to 2021, now the

growth is allegedly pretty much slowing down we did see a pretty decent bounce over the last couple of days here with that volatility but still down about 81% over the course of the last year, guys back over to you >> okay, thanks. at the domino meantime let's talk about some big tech earnings they are in focus this weekend and could set the tone for markets. set to report on wednesday with amazon expected on thursday. for more on big tech earnings and whether they're a buy ahead of all this we're joined by the managing partner and portfolio manager and also a cnbc contributor. i think that's the question. we're going to see what the numbers are. the question is do you want to bet on them ahead of the numbers? >> i think when you look at a google, andrew, you look at cloud which when you look at microsoft and the demand, i think those are going to be good numbers. can youtube is going to be the

important part for google. we like the stock. i own it it's trading 23 times earnings, ton of cash. if it drops i think i have more. i think it's a phenomenal business going forward when you mention google you've got facebook or meta coming up the other one really interesting for me is qualcomm qualcomm is trading 15 times earning now. apple just announced really good earnings the beauty of a qualcomm is they've diversified their business now so i think there's some opportunity here and if some of these pull back for nonfundamental reasons it's a good time to get in. >> how do you think about meta and in particular how do you think about amazon obviously two very different types of businesses. >> you've got to break it down when you look at meta one of the things there is what is the operating leverage, and what are

they doing with, you know, instagram and whatsapp and i think you've seen over the last few months they're really focused on those, and i think if those show really good organic growth the stock can really reflect it meta is trading with a much different story. they've got supply chain, wage inflation, cost inflation. however, i think their operating leverage is where they're going to show they can really perform. i think the cloud business is going to be really well there, too. i think you've got two buckets there. i think amazon has a lot to show, and i think meta has to show different growth rates and cash flow margins. >> but let me ask you about this on amazon. you've said they've got to show and it's a show me story there's part of me that wonders whether a lot of investors will look through they're going to say to themselves the real story is in

six months from now. >> so they've had that benefit in the past. i think the question here, andrew, is some of this inflationary pressure sticky are wages sticky as we all know amazon started raising wages for everybody across so what is the operating leverage there, and will the business then be fruitful based on the amount they're expecting? so that's where i think the amazon story is going to be. i will tell you if the operating leverage is there they will definitely get it because amazon when compare to the faangs, the opportunity is there >> if you could only own one, what's your answer >> okay. so first i always tell people it'd probably be qualcomm out of

those and then i would say google, meta, amazon in that order. >> in that order, okay always great to see you. we'll see what those numbers are. we'll see what they show us. i'm sure we'll talk to you later this week. appreciate it. thanks when we come back, tensions remain high between russia and the west with a possible military confrontation still a concern. we'll speak to the brookings director of research about that, get his thoughts on what he thinks happens next. before we head to a break, though, let's get a check on the markets this morning dow has turned a little weaker into the red, now down about 92 points. same story for the s&p and the nasdaq down 33 on this first trading day of february. "squawk box" will be right back.

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fbi director wray delivered a major speech on chithese corporate espionage at the reagan library on monday night eamon javers joins us with the details and why we should be worried about this good morning >> good morning, becky fbi director wray used his speech last night at the ronald reagan library in california to spotlight a threat on chinese espionage he calls more brazen

and more damaging than ever before the director said the fbi has more than 2,000 investigations open now into the chinese government trying to steal information or technology. >> there is just no country that presents a broader threat to our ideas, our innovation, our economic security than china the chinese government steals staggering volumes of information and causes deep job destroying damage across a wide range of industries. >> wray said the chinese used intelligence officers to target specific information, and they obtain it from sources inside companies citing a recent source in which the company was able to stop a penetration effort by an agent of the ministry of state security intent on stealing advance yet technology and he said the chinese government has deployed vast hacking capabilities toward that

same goal. >> chinese government hackers have stolen more of our personal and corporate data than every other nation combined. the harm from the chinese government's economic espionage isn't just that its companies pull ahead based on illegally gotten technology, while they pull ahead they push our companies and workers behind >> and becky, despite the advanced technology that's employed by the chinese cyber spays director wray said they often use a deceptively simple technique to locate and approach potential sources in the united states he says they just go on linkedin >> so don't take these linkedin requests to kind of match up in your partners group? i didn't take one the other day. >> linkedin is sort of god's gift to spies and investigative

reporters. you can get a whole org chart of everyone inside an organization and they post on [ ground, capabilities and it's an incredible data source. i use mine all the time. i literally accept everybody to request me on linkedin >> maybe stop. maybe don't do that anymore. eamon, you're talking about companies trying to fight off a nation state, i mean that doesn't seem like a fair fight in any way, shape or form. what can the united states government do to help some of these companies that are being targeted if you look at a boeing, if you look at some of the banks? what help can they expect or should they be getting >> well, what christopher wray said last night is the fbi is there to help them he cited the case where the company worked the fbi, worked an employee that had been targeted there and they said they provided that employee some fake documents to send to the mss agent. in that case they were able to arrest the agent overseas,

extradite him to the united states he actually went on trial and was convicted in the united states that's the model of public-private partnership he's talking about, but it's really difficult. he's speaking at the reagan library and said this is a much more difficult problem than the united states faced dealing with the soveiants because the chinese is much more sophisticated, the economy much more vast and integration with american society, the number of chinese who study here and work here, all the business relationships back and forth, all of that is much more elaborate than it ever was with the soviets. >> eamon, thank you very much. speaking of the soviets, rurussia, we're going to be talking about the crisis on the russia-ukraine border as president biden and others have tried to predict russian president putin's next move. it's also been roiling the markets. if you're looking at gnat gas up by 30% just over the last month. we welcome michael ohanlen, the

chair in defense and strategy at the brookings institution. in his latest piece for the hill he writes there are several reasons why putin would threaten ukraine but not invade the country. and mike, that's pretty interesting and something we'd love to dig into you think he's making these threats right now but won't actually go through with the invasion >> hi, becky that's my best guess of course you have to plan for the possibility you're wrong and do more to deter him just to make sure. when putin's taken other actions previously in military terms, he hasn't given us two months warning. you know, he moved intocrimea right after the soechi olympics when the world was reveling in that ambience. when he went into syria in 2015 he moved in overnight. when he went into georgia 2008 they didn't give us two months of notification. so i think what he's trying to create is the exact anxiety and

fear we're all feeling to signal to us he can do this if he wants, but he probably won't because the payday for him is potentially enormous, but if we're all afraid he could it's going to change the conversation that's i believe his strategy. that's my best guess >> he wants us to say, okay, we're not going to take this as a priority, we will get the message and kind of back off and leave ukraine where it is for now? >> yeah, i mean, permanently perhaps. i think he wants a whole different arrangement. it's not as if we were about to take ukraine into nato anyway, but we've had a promise we would do so going back to 2008 when president bush coming out of the bucharest nato summit convinced other nato countries to make this a conditional long-term offer. someday you'll be in but we can't tell you when. sort of like painting a giants bull eyes on their backs

he publicly requested an expedited nato membership. i think that's part of what provoked the crisis. i'm not trying to defend putin but i am simply saying if we're moving into his back door with an alliance it's sort of a somewhat natural and predictable reaction he would up the ante at that point >> mike, we've been watching the markets. energy is the one sector that's taken off. everything else kind of fell pretty significantly over the course of january, but natural gas, wti up significantly by 30% which is nuts to think in the space of one month it does that. it's because of what's happening with putin right now, and yesterday the white house was meeting with qatar to try to figure out ways to get more of their gas to europe. what i don't understand is why anybody is surprised by this, why germany, why the rest of europe has left itself in this position to be so beholden to russian gas knowing putin has no

problem using this >> germany has had this philosophy of be willing to apply sanctions or have a military deterrent at the same time you try to get along with russia they like the sweet and sour approach and they haven't built, therefore, as many lng terminals or alternative sources of energy as they could have and meantime they're trying to move to a nonnuclear green energy system. you put all that together and means you're pretty exposed in the meantime i think we need to develop a strategy or tell putin we have the ideas in place to build a strategy to expedite the transition away from russian oil and gas. now, that's nothing we can do right now for all the reasons you just mentioned with the markets so tight and gas prices already up 30% but you can build a plan you can start biltding more lng terminals. you can start allowing at least short-term production of oil and gas in the united states there are things you can do if you're really worried about world war 3 and europe you should be taking the energy

situation more seriously >> we just heard what michael wray was saying last night, what christopher wray was saying last night, just the idea that china is really the one we have to watch when it comes to cyber issues you've got putin making all this noise and russia kind of a big focus at the moment. you mention the idea of world war 3 coming out of europe where do you think as someone who surveys this entire landscape the biggest issue is going to come in 2022? >> i still think putin is as dangerous as china china has greater capacity, ten times the population, much faster growing economy, very good hi-tech sector, et cetera, but i still think putin is more disruptive individual. his outlook is more angry. he's got more of a chip on his shoulder he doesn't like what's happened in the 20 years since he became president in terms of -- 22 years now in terms of nato's movement to the east of the united states actions as sort of a sole super power, and i think

he wants to up end a bit of that global security architecture, whereas i think president xi wants to put a chinese face on it but largely build on the system that has essentially been the goose that lays the golden egg for china. so they'll steal but won't fundamentally try to change the national order otherwise i worry more about putin. >> mike, thank you we appreciate your time and we hope to have you back soon michael hanlin from the brookings institution. >> thanks, becky >> fascinating discussion there. coming up when we return, some huge guests coming your way including bob johnson, mobile ceo will be with us, and tech investor dan niles how to play this environment we're trying to make sense of. a look at this morning's leaders and laggers in the s&p 500

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welcome back to "squawk box. going to take a quick look at futures this morning things have turned around on the nasdaq a bit we're now in the green, just marginal the dow though looking to open down about 70 points right now, s&p 500 off about 9 points let's show you the ten-year note and sort of explain what's going on this morning. we're going to flip the board around right now if we could for a quick second, show you where things stand there here we go 1.739 is where we are. and if you look at wti crude we're going back and forth wti crude is now at 8758

and talking about oil, becky, and oil prices we've got some news >> we do exxon mobile out with earnings that beat the consensus estimate of $1.93 revenue looks like it was a little light of expectations but there are only nine estimates of revenue from the street versus 21 estimates when it comes to earnings per share it does look like 84.9 billion versus the 91 billion the street was expecting, but that is a huge gain from where we are last year talking about those gains in oil prices. last year the company had $46.5 billion in revenue last year that quarter for this quarter the most recent quarter it was $84.97 billion. you're talking about the price of oil just substantially increasing as a result the company's been able to really strengthen its balance sheet. they say they paid down $20 billion in debt. they did say that the structural cost that they've been trying to

take on they've reduced by an additional $1.9 billion, and that increases the total savings to about $5 billion versus 2019. you check things outright now that stock up by 44 cents to 76.40. the incredible increase you've seen in oilprices played out you see it with exxon's earnings this week just taking a look what that company has been able to do. the chairman and ceo darren woods is going to join us this morning at 8:00 a.m. eastern time to talk more about the results, what more he sees and the expectations not only what they're doing with the company but where they see oil prices heading as well because that has been something to watch. wti just over the last month has seen gains of 17.2%. the company talking about natural gas in the upstream business up from 63% in the prior quarter, oil equivalent

3.8 million barrels a day. when we come back rlj company's founder bob johnson telks about build back betr and much more. "squawk box" will be back after a quick break.

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welcome back to "squawk box" this morning here to kick off cnbc's coverage of black history month and share his take on the racial wealth gap is bob johnson, the founder and chairman of rlj companies and founder and chairman of the bet network and we showed a piece of tape of you and piece frank collins ran earlier in the 6:00 hour sort of introducing this whole topic and issue for this month my question to you is if you could wave a magic wand and talk about this before and try to end the equality and maybe limited especially when it comes to the distinction the inequality the

black community seems to suffer from, you would do what? >> well, first of all, happy new year to you guys it's been a while since i've been on. >> we've got to see you in person >> blame that on omicron but anyway, here's the thing, if you're going to address the looming wealth gap, i mean a gaping wealth gap, ten times wealth gap spread between black and white americans and white america, median wealth -- that means black wealth is about $17,000. so what i look at is what can you do to increase black wealth? and that means you've got to put more capital at the disposal of black business men and women who want to create jobs, create

wealth, create growth opportunity. and to me that's what was missing in the build back better act. it was -- it was broadly defined to put capital, transfer money into the economy from everything from climate change to child care to family leave it was never targeted to the issue of how do you close the black wealth gap and closing the black wealth gap is not a job it's not giving us more consumption money to spend it's giving us more access to wealth stanability and that's why i'm proposing to boost that, which has been introduced in the congress that would set aside $30 billion for companies or individuals who would invest in minority owned black owned businesses and under that tax preference they would be treated, they would be given an inducement or

incentive if they invest in black owned businesses at the time those businesses were valuable and they begin to sell their ownership they would get a tax deduction. that to me is the most significant way to direct capital to black businesses. >> and you've talked over the years about reparations as -- as one approach to this has your view evolved on that? >> it's evolved in this. the idea of reparations and the way of closing the wealth gap can work it's just simply put more money into the hands of black americans as i guess a repayment for slavery and other kinds of economic systemic discrimination over the years so, yeah, transferring money will work. it works all the time. the problem is no one in the democrat's side or republican

side is going to implement a full reparations package so i've sort of put that aside >> and where do you stand now on build back better as an overall package? i remember you were critical early on >> well, three things like i said of build back better. really first one is the cost and the cost -- not only the cost but where that cost is allocated. i'm not convinced build back better the way the cost is allocated, transfer of government money programs is going to close the wealth gap. the second thing about build back better, it doesn't go into opportunities where you need not spend money to close the wealth gap. for example, i've been pushing on this network as you guys know auto affordability which would reduce dramatically black cash out of their 401k accounts when

they change jobs if we mandate it that all companies and their financial record keepers were engaged in implementing auto affordability, we would put over a billion over a generation into the pockets in the form of retirement savings for black americans. doesn't require transfer payment, doesn't require tax all it requires is the government and corporate america and the financial record keepers, some of whom already joined in like vanguard and the like, and we're talking to all the other large record keepers, fidelity if this country were to adopt 401k affordability black americans would have retirement savings for homes, black americans would are retirement savings for their children, retirement savings for their

lives. oats simple to do, but it's not in the build back better act and it's targeted to low income wage workers, people with $5,000 or less who tend to cash out, lose -- as you know you pay taxes when you cash out of your 401k account, and also you lose your appreciation of the sas et. so it's a double hit to black workers and low wage workers that can be solved simply by putting into -- into motion what we've been trying to do with the auto affordability >> hey, bob, while i have you here i wanted to also get your thoughts on a cup of other things including the world of streaming you made your career and your fortune in the tv business, the business of course has completely now transformed itself when you look at what's happening at netflix and what's happening at disney, and we were just talking earlier about this at&t warner media transaction

and the spin-off there how do you see this all playing itself out where do you see the winners and where do you see the margin? because one of the things that i think has gotten a lot of people nervous is you looked at those margins on netflix and the others and people started to get a little -- a little more anxious about what the future holds. >> well, let me just sort of for transparency let you know i'm on the board of discover. so i just wanted everybody to know that, but to the issue of streaming, streaming is really a business model that says i have to spend tons of money on content. i have to spend tons of money on recruiting subscribers and maintaining the subscribers because the biggest issues you face are the cost of content it'll always keep going up and the church that comes when subscribers decide to take a

pass after they subscribe because they may not be interested on watching what's on the streaming services now that requires a lot of cash, requires a lot of creativity and how to generate the content on how to hold your subscriber base and there's only a few large companies that can sustain that model. ability to deliver compelling content and the ability to spend and market to generate a subscriber base not only nationally but globally. so that's the way i see it, and so my feeling is after you get that what i call the top three, most people would know who they are. the next are they going to play this long game to stay alive and hope that they can compete it's a challenging business model, and it's one they're only

going to be like i said in my opinion they're free winners >> bob, we'll see who those winners turn out to be i think if everyone may be right and there are a lot of challenges ahead, we apologize about your connection. we're going to work on that as awell. and we do hope to see you in person and mr. omicron has not been helpful but looks like he may be at least going away at least temporarily. >> you can count on me showing up the next time we're together. >> you bet thanks >> take care, guys thanks, bob. when we come back we're going to talk about taming inflation. we'll speak to peter krause about the markets, the feds and what the feds should expect in the coming months. and another big line up for you. we've got mobile's chairman and ceo darren woods, talk about earnings, the company's restructuring and more and southwest airlines ceo robert jordan this is the new ceo, and he's

joining us to talk about what he sees plus it is a big week for the big tech numbers we'll be hearing from dan niles. he'll give us his expectations for meso of the names reporting this week. "squawk box" will be back after a quick break. ts. blasphemy! fear not. these advisors managed one of the largest mergers in history, creating billions in value. billions? plus, they have experts in global trade. this merger shall be a boon for our spice business. and set a course for growth. here, here! friars, send word at once. yes, m'lord.

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share. revenue came in below forecast but as we pointed out there's only nine forecasts -- nine estimates that come from the street versus more than 20 estimates that we got earnings per share, and they do have a pretty wide variance in terms of what they've been anticipating street right now is giving credit. darren woods will be joining us this morning at 8:10 a.m. eastern time and this is a pretty important time to be talking about oil oil, energy, has been the one sector of the market that was really strong in january while all other sectors seemed to pretty much crater we'll talk about what they've seen with oil prices which were up substantially for the month, too. in the meantime ups reporting a drop in quarterly profit but did beat the street's expectations and also setting a target of $6 trillion in invested assets in major divisions. it's the first major strategic

update since the ceo took the job at the bank back in november 2020 and that stock up this morning by 6.2%. and there's ups also out with quarterly earnings and came in with an adjusted profit. that was a big beat over the street's expectations of $3.10 revenue also beating the forecast, and ups raised its quarterly dividend, get this, to $1 152 per share to $1.10 joining us right now is peter kraus. haven't seen you in a while and i would love to just get your take on everything that's happening here what have you been telling your clients to do? >> hi, andrew. nice to see you, becky we've been pretty clear on the

fact we think inflation is not transitory to take a word from the fed. i think the fed obviously came to that conclusion as well in december we think that inflation is going to moderate for its current high levels of 7% we do see some lessening of the supply chain you've seen that in some of the reports actually coming from companies talking about their year end earnings or quarterly earnings and we think for the most part the long rates will continue to rise and the short rates will continue to move up as the fed moves interest rates i think you would unnecessarily ruffle the markets, but you'd certainly expect to see the three 25 basis paints perhaps in the coming months. >> when you -- peter, go back on a question what were you doing about it

were you as smart as bill acerman appears to have been for example on effectively hedging these increased interest rates >> won't comment on the relative intelligence of the two people you were commenting on, but, yes, i think we were thoughtful about trying to reduce our duration i think that was something we felt pretty strongly about and thought that rates would go up and that would be a challenging place to be in your portfolios i still think if you're thinking about what to do in your portfolios over the next 6 to 9 months you've got to be mindful of having a lot of duration exposure and you've got to be mindful even having short-term liabilities or short-term assets that have floating rates because spreads are going to continue to increase i don't think spreads are stable here they're not going to tighten, so there's real risk in a fixed income market and allocating more to equities actually makes some sense or actually buying assets to respond to inflation

of course commodities are another tier, but real estate is an interesting plis to be. >> so one of the places that historically has been looked upon favorably when interest rates go up are banks, financials you've lived in this world for a very long time is it going to be the same case this time? >> we've already seen it i mean you look at the indices, they're up 50, 60, sometimes 70%. i think a bit of challenge for banks from here on out is what's going to happen to their earnings why will the earnings continue to grow at the rate investors want them to grow to benefit these stocks because interest rates will rise the yield curve may not steepen. the yield curve steepening will have more impact on the bank's balance sheet. how fast will loan growth be how much faster can it get that's not clear it's going to accelerate from here, and they're at very low provision

levels so we don't expect to see them taking provisions down so i think banks will do okay, but they're not going to, you know, tear from here >> and what do you do about tech i mean this has been the question you look at the afghans we've got -- we've got so many faangs reporting this week. we don't really call them faangs now. >> obviously as people assess the equity risk premiums we've seen significant reductions in value, but at the end of the day when investors actually pay less for a company whose earnings are growing faster than another company, though, they're going to pay more for a faster growing company. i think tech is certainly a good place to invest, but you have to choose the companies where you're going to actually have

faster growing earnings and probably faster growing cash flows, so the challenge in tech has been that companies with no cash flows, no earnings just fast raising surprising sales, they have had extremely attractive valuations. that's been under pressure, and that probably stays under pressure companies in the tech world that have fast growing cash flows and fast growing earnings they're going to succeed and be valued well and improve in value. >> peter, you mention real estate how are you playing real estate? some people obviously going out and buying homes and buying commercial spaces and the like others are buying wreaths. >> it's hard to play well. there aren't many multifamily

wreaks au au offices are probably under pressure for a while will office owners actually have the ability to raise rents even in inflation over time they will, but in the short run that's questionable. what happens to hotels when covid actually recedes, hotels probably do better, but the place nice to own real estate or a good place is to look for places where rents are stable, rents are rising and where inflation is going to be reflected in those rent increases, and multifamily is a very interesting space to invest in >> okay. peter, it is always good to see you and get your perspective what's going on in the markets we look forward to seeing you very, very soon. >> look forward to seeing you guys when we come back, a big hour here on squawk. exxonmobil out with its earnings and starting today southwest airlines has a new ceo, and bob jordan is going to join us to talk about that new role, the

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good morning take two. we begin the second month of the year with futures relatively calm, but a big head of steam of

stocks coming out of january new earnings this morning from exxonmobil and ups we're going to bring you those numbers. and an exclusive interview with exxon ceo darren woods wool tell us about the corporate restructuring the oil giant just announced? and cleared for take off this morning, southwest airlines got a new ceo. we're going to grill him on customer demand, 5g sig nal flight and so much more as the final hour of "squawk box" begins right now good morning again, and welcome back to "squawk box" right here on cnbc i'm becky quick along with andrew rosorkin. joe is off today you can see right now a mixed picture. we've been in the red for most of the morning, but right now

innasdaq futures are up about 9 points down futures down by 5 and s&p off about 8. we're coming off an incredibly wild month for the major indexes. the nasdaq could have gotten a lot worse. at one point yesterday it was down by more than 11% for the month. if it closed there it would have been the index's worst ever january. but by the end of the day the tech sector was up by 3.4% that allowed the nasdaq to avoid the fate of ending the month in correction territory right now the index is down but by less than 10% so it's 9% and change. huge move yesterday, huge rally on the last trading day of the month. we should show you what treasury yields are doing this morning. right now the ten-year is yielding 1.5%. so it's a little lower yesterday and when we were at 1.7%

and we should also take a look at crude oil wti gaining more than 17% last month. that was its best showing since february, and that's nothing compared to what we showed with g nat gas. >> we're going to talk about some of the top stories other investors are going to be watching today oil giant exxonmobil reporting but there aren't as many revenue estimates as there are eps predictions. and also announced resumption of stock buy backs. the corporate restructuring will create new business units and we're going to talk about this in a couple of minutes with exxon ceo darren woods the other big earnings mover of the morning announced a 49% dividend increase. you can see shares up trading

higher this morning, plus 7% higher and fedex shares moving higher as well after those ups results. the word of the day meantime is merge. that's because "the new york times," full disclosure i write for them, announced the deal to buy the popular word game wordle we don't know the exact price. the paper said it was in the seven figures. and breaking news this morning, at&t announcing that it plans to spin-off its stake in the warner media discovery communications combination to its shareholders when that merger is completed later this year shareholders of at&t will receive 0.24 shares of warner brothers discovery at&t shareholders will wind up owning 71% of the new company. discovery shareholders will wind up owning 21% of the new company. and at&t also said it's going to

change its annual dividend to $1.11 a share after that deal is complete that compares to the current pay out of $2.08 obviously the street not reacting well to this this morning. stock right now down by about 5.5% retail investors in at&t have long kind of held onto that dividend and really seen that as a point of pride, but the stock was yielding more than 8%, and that probably tells you they thought the dividend was unsustainable, too i'm getting word how unsustainable this morning the $1.11 a new dividend and probably why the stock was off today. >> an iconic american company. i was looking back to the stock based on the same price it was 2004 so that's not even an under-performance. that's just across the line. and a lot of things have happened since then. a little under 90 minutes away until the opening bell on wall

street this morning. don chu joins us with a look at some of this morning's top pre-market movers. >> let's start out with one of the original mean stocks out there. amc entertainment always a popular one. this morning amc shares up 15% and one of the main reasons why is because amc basically reported preliminary results for the fourth quarter, and those preliminary results show a better than expected outcome for not just the revenue side of things but also some of the growth trajectories there. however, revenues significantly higher than the same period in the year prior because of the pandemic but also because you're seeing a bit of a trend improvement and amc entertainment says things progress significantly and those preliminary results are what's driving the amc entertainment

trade up 15% right now and some of the best performing stocks in the premarket and most active ones are semiconductor stocks, maybe no surprise there. they've seen a big bounce. near 3% gains for nvidia and then semiconductor ticker up about 1% as well so those semiconductors very much still a focus here for many traders. as we do here on this third hour of squawk a search of the most popular ticker searches. within the top ten i will point out, becky, the number one most searched thing is back to being the ten-year treasury yield but the most popular single search up 0.03% right now and netflix and spotify very

much in focus for those up grades we saw over at citi yesterday. i'll send things back over to you. >> thank you, domino when we come back three big interviews you don't want to miss first up we're live and exclusive with the exxonmobil ceo darren woods straight off the company's fourth quarter results. then robert jordan joins us on his first day on the job and we'll be speaking with noted te iesr chnvtodan niles. don't go anywhere. "squawk box" will be right back.

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wifi hotspots from coast to coast. so no matter what big event comes up, your team can be ready for what's next. get started with fast and reliable internet and voice for just $64.99 a month. or, ask how to get a visa prepaid card with a qualifying bundle. welcome back to "squawk box" this morning show you futures still ahead of the market open and dow down about 25 points, nasdaq looking higher, closing the red before close to 30 points higher. the s&p 500 off about 3.5 points exxonmobil reporting fourth quarter results just a short time ago, beating on the bottom line by a big margin and also announcing a resumption of stock buy backs. last night the company announced a significant restructuring that will among other things combine refining chemicals into one business and elevate exxon's low carbon unit into another

business the company also said it's going to be moving its corporate head carters into houston, texas just outside dallas joining us to take it all over is exxonmobil's ceo darren woods. why don't we start with the earnings because there's a lot to get through first off, though, the earnings coming in at $2.08 a share almost $40 bill yp more you earned in the same quarter a year ago part of this is a story revenue just jumping as we've seen oil prices go up but there's more than this that fits into the story. what are you looking to as the biggest highlights >> thanks, becky it's nice to see you again the market has been a big help with respect to our earnings performance, but more importantly, more fundamentally, it's the work we've been doing

back through 2018, 2019 with the organizational changes we've made and moving into 2020 with the cost reductions and 2021 those trends continued wave got structural costs by almost $2 billion in 2021. that was on top of the structural cost reductions we made in 2020 and $5 billion of structural cost improvements and the new organization have helped us get a better line of sight to the markets, you become more effective and see that manifest itself in our earnings performance. so very pleased with the quarter and year a recovery and very pleased with the work the organization has done to deliver a foundation to take advantage of this market as it recovers. >> why are you moving your headquarters and doing this restructuring because with the restructuring it's said there won't be any additional layoffs? >> first job we had to do is we had 11 operating companies

we had to reorganize those and get them along value chains which would allow us to start leveraging the synergies that exist in these, removing redundancies in duplicity and taking the best of the corporations and applying it to the most important opportunities. and so that synergy that we're getting is going to manifest itself in effectiveness and that'll drive cost down. we anticipate as we go forward we had $2 billion cost reduction in 2021. we expect a similar level in 2022 and a similar level in 2023 so that reorganization is making us more effective in the money that we spend and the work we do we've had the redundancy we took in 2020 was a difficult thing for the organization to go through. we anticipated some of the efficiencies to come, and so

basically made sure that step would accommodate a lot of the work we're doing going forward we're seeing it play itself out as we move through the next couple of years here >> the headquarters in irving is called the god baud. why are you moving the god bod down >> we don't call it the god bod. we as take a global products organization this change is establishing a technology engineering business, all these service delivery organizations are supporting our base business as we consolidate those activities the corporations plays a more important role in delivering business results, and we feel like we need to be down in with the rest of the businesses working hand in glove to deliver the results we know this corporation is capable of delivering >> so are you moving to houston?

>> yes, we are >> no, you personally, are you moving your family >> yes, we personally, yes, i'm moving to houston. >> let's talk through the fortunes of the company because if you look from december to february your stock has followed what wti has done over that period of time obviously you guys have gotten much more stream lined, but the question's going to be do you chase these oil prices higher. maybe your answer is what dure doing with the share repurchase program. the company earned $23 billion in 2021. you're going to be putting up to $10 billion back in to additional share purchases what does that tell you about where your focus is and where your top priorities are? >> becky, i think you've got to think about this in a longer term context as you know the investment cycle in our industry is fairly long you may recall we talk about investment levels we are making then considered more at the bottom of the cycle.

and that was our strategy to build a foundation and support the growth we're now seeing. and so the foundation that we delayed in 2018, 2019 and those investment levels are now paying off in high market the worst thing you want to do is chase the market and chase the group. that's when markets get heated and your investment returns start to drop. so we think the approach we've been taking is going to pay off as we go forward and comfortable with the investment levels we've made and comfortable with the growth we're seeing in our base business >> there are some predictions oil is going to jump past $100 a barrel is there a point where the numbers gelt so high it's hard not to chase some of those very

high valuations? is there a point where suddenly you say, okay, we need to drill more >> if you look at where those opportunities are in terms of the short-term cycle it could take advantage in the short-term and price movements and really in the unconventional business we lay this foundation i talked to you before a very unique approach to take advantage of our scale and setup a manufacturing process to efficiently drive production and make sure we're bringing the best technology to bear results in the highest level production. we're going to stay within that construction in terms of making sure that the dollars we're spending are resulting in the most reduction, and so that capital effectiveness is key priority we've got some room to move that as we need to advance and look at opportunities to do that. but we won't go out chasing high prices because we know how that story ends >> what are your own internal

estimates about where your oil prices are headed given what we've seen with the tensions on the russia-ukraine border. >> i would say it's tough to call and frankly don't try to predict short-term prices. we tend to look at fundamentals as you know and think about longer terms think about the investments we make and the time those investments are required to pay out and so that's how we think about it obviously we're making sure that the business and the things we're doing in the short-term are robust primarily to the down cycle, and also at the same time we've done the work to make sure we can reliably capture the opportunities that come with an upcycle. so that's how we think about it and just way too many variables and way too volatile >> darren, as part of this restructuring you're also the change in the company to three business lines you're going to have oil and gas production in one, chemicals and refining in a second business, and then you're elevating the low carbon business into its own operating unit, which is pretty

significant. it tells you what you think of the future for those issues. as we see administrations come and go how difficult will it be for that low carbon unit to kind of keep a straight line focus? how reliant is it on policies coming from administrations? >> so i think, yeah, your observation is right in terms of the importance of that business. you may recall last time i was on the show i talked about the importance of our strategyof positioning the company to balance resource allocation and investments as this transition is recognizing the uncertainty associated with it and the variables we see playing out not only here in the u.s. but all around the world frankly, that's one of the advantages we have is the global footprint. so as you know policies and emphasis and support is changing all around the world we've got a global footprint that allows us to invest where the opportunities are. and so my expectation as a low

carbons solutions business will be a global business the portfolio of products that we are advancing today have a very global footprint. there are a number of governments around the world who are interested in working with us, the number of partners around the world interested in working with us to bring the technology and other skill sets we have to bear to help them reduce emissions and obviously irrespective where we are in the world we think it's a great opportunity for us >> the biden administration has been pretty clear that it wants to see more low carbon solutions. it wants to move towards, you know, a better future when it comes to green issues. but they've also been asking opec members to pump more, to try and make sure the pressure on gas prices and oil prices comes down have they appealed to you to pump more in the meantime?

>> we've been talking about this little challenge how you continue to meet today's demand for energy while working to transition to a lower carbon energy system, a global lower carbon energy system and striking that balance is challenging. i think what usee in the press with the administration is that challenge coming to bear we're seeing that today in europe, in fact with the cold weather coming in and some of the challenges and so we've been real focused on that i think the markets are working and that's the good news as supply and demand get really tight. we don't have enough supply out there and incentivizes investment we're certainly seeing that on the oil side of the equation the challenge on the gas side of the equation is the capacity and projects in place to convert that natural gas into lng and ship better around the world that has a much better time cycle and so i think will take longer to rebalance the markets in that space. >> so basically when an

administration from this country or another comes to you and asks for help, what do you tell them, this is long-term issue and not something that can be fixed overnight? >> in terms of help given the role that energy plays in society and our national security standpoint but from an economic well-being we have a pretty good dialogue with all administrations. that's certainly true of the current administration so i see the role we have given the experience our company has and the global footprint we have to share a perspective how we see the markets developing and where we see opportunities or challenges and make sure that the policy makers not only the administration but congress as a whole understand the implications of some of the policy decisions they're weighing off and how that can manifest itself and the potential unintended consequences that's a dialogue i've been having in this job, frankly, and continued in to biden administration >> right now it's pretty difficult to find tal nlt. every industry is facing that

challenge. unemployment falling to low levels, more than 10,000 jobs available for anyone who wants them at this point what are you doing in terms of the talent search and with the reorg like this does that present you with an opportunity, a challenge? are people worried about layoffs? >> so i think we're immune to what we're seeing as the broad economic trends with people resigning and the challenge to find folks to fill jobs. i think, you know, with this in mind and the work we're doing in planning for this it's actually taking advantage of that market dynamic and stretching ourselves to make sure the talent we've got and as we get more efficient and reduce our footprint that, you know, we're well-positioned to do that we don't see the need for a lay out going forward and basically stretching ourselves to theects tent we have and seeing if we can't bridge that gap as we move forward in a more efficient organization in the meantime we're hiring for

the skills we need and i think very fortunate in finding the talent we need have having success in bringing them into the company so it's a tough balance and fairly dynamic we continue to evolve that but i think a lot of hard work is paying off in the organization to strike the right balance. >> you know, darren, earlier, i said exxonmobil shares this month were mirroring what we saw in wti prices. i sold you all short on that measure. exxonmobil shares up 26% for the month of january, for the year to date. that compares with a gain just 17% for wtis so i should correct the record with that. i want to thank you for being with us on this busy morning making time for us it's good to see you, darren coming up on the other side of this break, the meta verse land grab, who's buying hundreds of millions of dollars worth of virtual property and why is snoop dog so important in the market? yep, snoop dog we're going to talk about that

and later investor dan niles joining us about his tough start in the year especially on the tech sector. stay tuned you're watching "squawk box" right here on cnbc ur medicationr free. go to capsule.com. we handle your insurance. all you have to do is schedule delivery. go to capsule.com to get started in 15 seconds today. ♪ music ♪ ♪ dream, dream when you're feeling blue ♪ ♪ dream, dream that's the thing to do ♪ ♪ music ♪ when you see value in all directions, you add value in all directions. accenture. let there be change.

welcome back to squawk there is a big time land rush going on right now but it is nowhere near your house. in fact, it's nowhere where near any of our houses, in fact

robert frank joins us with a heck of a story. what's going on? >> well, good morning, andrew. facebook's new meta strategy has caused a run on real estate in the meta verse sales of virtual land of the meta verse platform topped $500 million last year right after facebook's october announcement monthly sales went from $15 million to $133 million. sales in january still holding strong over $86 million. investors, start-ups, big brands, all pouring money into this space selling for 4.3 million. the buyer was republic realm they are a meta verse real estate start-up that is developing 100 islands called the fantasy islands. it sold the first 90 in just one day at $15,000 each. one of the recently resold for $270,000 then you have token.com a

canadian company and paid over $200 in land it is planning to lease space to big apparel and luxury brands and talks with investment banks and consulting firms to media companies to sell ad space and with real estate it's all about location prices near dragon city, vegas city and its red-light district are more expensive and in the sandbox buyers all want to be neighbors of snap dog's mansion upcoming parcel next to him selling at $5,000. and atari selling for $843,000 andrew >> okay, robert, i know there are people watching this and they're thinking this is crazy and just insane and just doesn't make any sense at all. but here's what i want to ask you. i've now spent some time in the meta verse i think i get it sort of, but i

always thought actually the benefit of living in the meta verse if we were going to live there at least for some part of our day is the idea effectively you can teleport from one place to another so actually the idea of location, location, location shouldn't matter i should be able to go from one place to the other and bop around so i don't really understand how being next to somebody's comb or being in some neighborhood actually matters i could see memberships maybe, and this is like a gated community. i could see this idea you pay to be in some kind of community that you could teleport, and maybe that's what we're talking about here, but i don't get this zero proximity issue in terms of space and time can you help me? >> in a way, andrew, and this is a fundamental debate even within the investors in meta verse real estate there are some who say it's all

about location, that if you are close to something including they're making oceanfront real estate and this company in canada tokens.com is buying oceanfront real estate and then there are others like republic realm that like you it doesn't matter location. you can teleport anywhere, you can go anywhere. and so what they're saying is what's important is what you actually design and the functionality of what you build on the meta verse. and so the actual parcel of land or where that parcel of land is doesn't really matter. but even republic realm would say if you're close to something that has a huge attraction whether it's, you know, the atari development that people seem to be interested in or snoop dog's mansion, if there are a lot of people congregating in that area they'll notice something that's on your parcel. so you're absolutely right this is big debate even with investors in meta verse. >> i don't get it. that's the whole benefit of

being digital, and if i wanted to build my own view of the ocean, there should be exponential ocean views and beachfront property in that respect. i do get the community thing which is there's certain communities which would be gated, if you will but that to me feels like a membership club or something and i can't figure it out. i don't know >> there's that and there's also the ability to create endless amounts of platforms and land. and so, you know, in the real world land has value because they're not making anymore of it in the meta verse there's an endless supply >> bingo bingo was his nameo. that's where i land. robert frank, thank you. we're going to have to do a whole special on this or something. it's very hard to get your head around all of it >> it is splitting hairs i think the whole thing sounds stupid paying real money for virtual land maybe virtual money for virtual

land, but real money a stretch, especially big time real money >> you're using crypto >> if you're going to spend $843,000 on a virtual house, you've got problems. you're basically, you know, lighting your cigars with $100 bills. anyway, when we come back southwest airlines ceo robert jordan will join us live why is today so important? because it is his first day as ceo of the $26 billion company don't go away. quk x"ilbeig bk."sawbo wl rhtac we're getting destroyed out there. we need a plan! i have a plan... right now at t-mobile customers on magenta max can get the new iphone 13 and t-mobile will pay for it! upgrade to the iphone 13 on us.

welcome back to "squawk box. this morning major u.s. airlines hopeful as the omicron variant subsides the public will get back to traveling. joining us right now on his first day on the job no less is bob jordan, the new ceo of south southwest airlines bob, today we hear today marks 34 years since you've been with southwest. we want to wish you a very happy anniversary and happy first day overall. >> it's hard to believe it's 34 years, but it's a wonderful company and time flies that is for sure thanks for having me today >> well, we're glad you could join us on your first day. i want to understand where we are as you see it in terms of the travel landscape and drill down in term of understanding how you think things might evolve or change under your

leadership right now airlines still trying to deal with the omicron variant, and that component of it and we've also seen these weather delays throughout the country. and so how -- you know, how far are we away from getting back to what felt like some semblance of normal >> you know, if you look back at the fourth quarter we were actually really close. demand in the fourth quarter was terrific especially on the leisure side southwest airlines we had revenues 88% of 2019 now, our business, you know, demand is still down about 50% so i believe that the omicron variant was an impact. i think it was temporary the impact came and went away fairly quickly i'm very optimistic in the return of travel, that's for sure >> in terms, though, of hitting employees, your ability to hire employees, the cost of employees, the cost of moving planes around, we've been dealing with all these weather

issues and clearly, you know, sickouts and other things how far are we away from getting back on that front to normal >> you know, the labor market is unlike anything i've ever seen in my 34 years, and i think you're going to hear that from every business we never struggle to hire southwestire line. it's an awesome culture. we hire awesomeeme we're looking to hire a lot of folks. we hired 1,000 in the first quarter. we're hiring 8,000 here in 2022. we're behind getting staff is the key right now i would probably tell you we have 35 to 40 aircraft we're unable to operate simply because we're understaffed >> and how is the this issue of wages changed given how tight the labor supply is? >> you know, the wage there's no

doubt there's wage inflation that's for sure. we've had to move our entry, our starting several times most of our operational entry level jobs we moved down to 15 and in the process of moving that to $17 an hour. and in certain armts even more competitive like at denver it's $20. but that's what it's going to take the rates are moving up, and we're going to remain competitive. and i'm confident we will get staffed. >> when you look at some of the investments you're going to have to make in planes and technology and all of that you made some comments recently about really trying to adjust for this future what does that really look like to you >> you know, we've got so many opportunities in front of us we will -- we will take in all likelihood 114 aircraft here in 2022 the more efficient max that will replace the ng which is a great

story, we've got a great order book with boeing in front of us. we've got a lot of opportunities. it's going to take 125 aircraft just to restore the network back to where it was pre-pandemic because we opened 18 cities and invested in hawaii and it's going to take 125 aircraft or so to do that. beyond that we're getting engaged in phoenix and nashville and baltimore and others there's a host of growth opportunities in front of us so i'm excited about our future >> what's the cap x going to require? you have talked about back end technology, customer tech nalg on on the apps, wi-fi on the plains and electric plugs in the plains which you folks don't have a lot of airlines do have now. >> we've got a wonderful technology department. we just finished the largest technical software project in airline history, which is a new

technical operation system but we manage our cap x. we manage it year to year. it's a little lumpy with aircraft here, but we've got planned investments in particular what i would call modernizing our operation. as we head to 5,000 flights a day and a fleet of 1,000 aircraft we have an opportunity to be even more efficient around our terms and tools, and that will help with our cost. we've always managed it, and managed it historically and manage it going forward. >> we were just talking with the ceo of exxon, darren woods we watched the price of gasoline as you know go up and up let's talk about how you're thinking about that and potentially hedging it >> we had a really good hedge in place, you know, as we always do it's harder to work the hedge these days because with volatility it's just expensive to hedge but we've got a great hedge here in 2022.

we're building a hedge in 2023 i think the book value right now is a billion dollars but there's a wide range of calls for crude oil right now. most of those are bullish but you've got some bear calls as well so we'll just manage through it like we always do. >> what's the bob jordan betting line on fuel costs >> you know the -- fuel affects us all, so on a relative basis we're all going to pay roughly the same thing as airlines for fuel it's hard to say what's the bet for the economy and inflation and potential for recession and rate hikes but i suspect we'll stay sort of roughly are we are for a while, but really it's very hard to tell and we'll manage through it >> i want to talk about pricing. i was on price line the other day. it's fascinating

if you want a ticketin the nex two weeks, cheap, cheap, cheap if you want a ticket three months from now, it is sky high. so what are you expecting especially as the summer and fall come? >> well, we've had in particular in the fourth quarter our yields and our pricing have actually held up really well, and that's at a climate where, you know, business is still down relative 50%, so i've been actually really happy with our yields and our pricing. the airline industry is always very competitive a lot of that depends obviously on our plans and others plans. but i'm hopeful. number one, we're going to compete no matter what we've always been able to win, and i -- i feel like we have a -- we've got a good yield story in front of us but we'll have to see. >> and then as you look at the world hopefully in a

post-omicron landscape -- and i hope we can get past it but maybe something -- >> we all hope that. >> your predecessor got in a little bit of hot water -- more than a little bit -- for suggesting that customers and others may not need to wear masks on planes and probably shouldn't. what's your take on that long-term? >> you know, the mask kind of is what it is to me i -- if you sort of look past the medical advice around a mask, at some point i want to get away from them simply because it's hard for our terrific employees to show their hospitality when they're wearing a mask all day they love to interact with our customers. they love to show their fun attitudes, and it's just hard when you're wearing the mask i think obviously we'll follow the cdc. the cdc you've seen some changes recently in terms of the quarantine guidelines, those kind of things i think the cdc will do the

right thing and follow the guidance but i'm hopeful as you look forward to the summer into the rest of 2022 we'll see the masks come off, but it's not our call here at southwest airlines >> bob jordan, southwest airline's new ceo on day one we wish you well and hope you'll come on back and make it a regular thing. thanks >> will do thanks for having me today appreciate it. >> good luck thanks gain. when we come back on the other side of this break jim cramer is going to join us and investor dan niles joining us with his biggest market take-aways from what was a bruising jan for t theech sector don't go anywhere. squawk returning after this. ♪♪ care. it has the power to change the way we see things. ♪♪ it inspires us to go further. ♪♪

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let's get down to the new york stock exchange and check in with "amjim cramer jim, i've been anxious to see you this morning because we've got a new trading month, something new to look at we managed to avoid the worst situation that we were facing yesterday with the nasdaq closing up by about 3.4% it pulled it out of correction territory. what happens now are we still in the throes of this up and down, or do you think things have stabilized a bit? >> i think we're in the throes still. i feel a lot of the analysts have come out of the foxholes a lot of people saying things are good my problem with that is we are still very much in an inflationary world where we'll have tomorrow could be a story about 50 basis -- anytime you get one of these scores no one

is saying we've got it port situation under control. no one is saying we really have covid other than in the new york area -- it still comes up constantly and so i end up thinking, well, do i want oil to go up because i want exxon to go up? do i want oil to go down because i want the fed to be on my side? i go that almost every industry needs inflation at this point because they had inflation at their own cost, and now they need to put through price increases. i just feel there's not enough -- there are not enough good things happening other than oversold bounce and analysts coming out and saying this is the time and that will last for a cup of days but then that's it. >> the mood of the market right now seems like this rewriting. where it doesn't matter when the earn is going to be but what the street is going to give them credit for we had this conversation with steve liesman earlier and talked about maybe we won't get five

rate hikes, but the fed will do a lot of issuewiss with the bale sheet and shrink it significantly. we've never seen the shrinkage of the balance sheet like this >> there it is we've never seen it, so i think that's going to keep people on the side lines. n periodically very episodically look, i am in favor of companies that make things and do things that we really feel are good about, as long as we don't have an influx again of ipos and spacs, we may can settle down, becky. i mean, finally, the end of the endless drain of capital that comes from the garbage that the street's been puffing out. that has to stop if that stops we get a reprieve. going through we have this fabulous spac index, and you can't even look at it. anyone who buys these things, you're just taking your life in

your hands. >> i'm glad to hear you say that i heard one this morning and i'm thinking what in the world, that sounds like a dangerous place. >> bar pass. >> we're going to see you in just a few minutes. >> great interview with exxon. >> appreciate it, we'll see you in just a few minutes f. you haven't already, we want to remind you about the new cnbc investing club with jim. you can point your phone at the code on the screen it will take you there directly. if you haven't signed up yet, you are missing out. a big-time rally in tech share s yesterday was the only thing that saved the nasdaq having its worth january ever. starting today we're going to be getting earnings joining us is dan niles, the founder and senior portfolio manager of the isatorio fund when things got down to about 12%, you said maybe that was time to jump back in now you're thinking there could be some more rough patches to

come does that sum things up correctly? >> absolutely, becky i mean, if you go back and look at time, bear markets, which i define as, you know, periods where the market is down say closer to 30%, and there's about ten of those episodes since 1920, you go back and you look at those periods, you end up with these big bear market rallies in between so the most comparable period, i think, is when paul took over 1980, you had a selloff that started as he started to battle inflation, and the market went down 27% over a period of 21 months, but you had six rally in the s&p of 8% on average while you lost 27% of your money if you look at the three pretty high inflationary episodes, that's kind of what happened each time. you have these big rallies in between these drawdowns, and at the end of the day, inflation remains high the fed hasn't even started hiking yet or cutting their balance sheet and letting it run

off, and that's still in front of us and valuations are still near record levels, and so you combine all of that and slowing growth because of high energy prices, high wages, high rents, and i think it's way too early to say that this is the bottom, so obviously i thought it was a short-term bottom just given the oversold conditions. >> you are looking for best performers to come from wherever they've been coming from for the last month or two. oil prices have really been on a rise you are looking at u.s. oil, which is the united states oil fund and etf as your top pick for right now. how high do you think oil prices are going to go? >> well, unfortunately, i think they're going to go higher for two simple reasons one is i 100% believe by the end of this year we'll be talking about covid much like we talk about the flu. it's a pandemic, the flu kills 30 to 40,000 people a year it's an acceptable risk to living life.

if you believe that, then hopefully by this vacation time next year i'll be sitting on a beach in hawaii having taken a flight, staying in a hotel, and that's going to drive the demand of oil up. at the same time environmental concerns are going to keep drilling permits down, and so that's going to restrict supply, and there's not a lot of spare capacity in opec plus either so i think oil prices are going to remain really high because of it, and that's going to keep putting pressure on inflation in addition to, you know, 3 million more jobs than unemployed, which will keep pressure on wages and, you know, 2 1/2 month supply of unsold homes, which is going to keep pressure on home prices and drive rents even higher a year from now that's kind of how we think through the inflationary pressures in oil in particular. >> i always think of you as a tech guy, but your top picks fo the year are first this oil etf

and second is regional bank etf before you get to a single tech stock. i guess that's again the rates going higher and that's going to help the regional bapnks the best >> it's a combination of two things number one, we came into this year december 28th we were on cnbc saying we expect a 20% selloff in the s&p 500 from peak to trough when all is said and done driven by higher interest rates, higher inflation, and that environment tech gets hit the hardest because they've got the highest multiples with many companies not having any earnings. if you look at the regional bank index, i think two really positive things. with free money going away from both the federal government and the federal reserve, people are going to have to go to banks to get loans. that's going to be great for the regional banks and so the second part is obviously if rates go up, you can lend at higher levels. that's going to help them out quite a bit. and the reason we like the regionals is you're not going to have to deal with capital

markets being sluggish if the s&p does drop. there's not going to be a lot of ipos and a lot of these deals coming out the big money centers are going to have to deal with less m&a, et cetera. with the regionals you don't have that. it's how much can you lend at, and how many loans do you put out there. >> in your top five picks you round it out with cash you think there is going to be pressure that there will be better times to buy in, that stocks will go lower from here, but there are two tech stocks you like, you've got meta and google as the two you would put money in why is that? >> i think that two of the reasons, we like growth at a reasonable -- last year it was growth at any price. count on it making a ton of money 20 years from now and buy it at $10 billion valuation. this year it's how much cash flow do you have how much profits do you have if you look at google, they benefit a little bit from reopening, hotels, airlines, vacation spots, et cetera, the leisure industry, it's not

advertising. that's about 10 to 15% of google's revenues. if you look at apple's quarter in particular, the services piece really was a lot better than expected. that's driven by google. google is close to 20% of apple's net profits for what they pay to beat the default search engine. that sort of gives you a preview that google's numbers are probably pretty solid. if you look at facebook, the nice thing is they already guided for this year when they reported the september quarter, and people are looking for about 2 to 3% profit growth because of the massive investment they're putting into the metaverse if you're positive on the metaverse, that's the play. >> dan, it's great to see you today. thanks for these very specific calls. we'll track it and we'll see you back here again soon >> thank you very much, becky. all right, andrew, that does it for us this morning we will have more squawk right back here tomorrow mniorng in the meantime, you've got "squawk on the street" coming to you after a quick break.

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good tuesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber coming on the heels of a strong two-day rally nasdaq's up almost 9% from the january 2022 low our road map begins with signs of a muted start to the new month after closing out the worst month sinc