to the selloff is facebook parent meta. falling 24% overnight on the weak earnings and disappointing f forecast plus, travel nightmare flights canceled today this is a massive winter storm rolling across the united states it is thursday, february 3rd, 2022 "squawk box" begins right now. good morning welcome to ""squawk box" here on cnbc joe and becky will join us live tomorrow with a huge lineup of special guests including at&t's ceo john stankey. let's get to the markets it is an interesting session

with the facebook news equity futures are at a lower open t open dow down 125 nasdaq down 338. the facebook effect. not just facebook, but the fallout of the social media stocks because of the report last night feeling the impact treasury yield is 1.769% right now. stable here, mike, at this point. >> the bond market has to stay out of the way we had this nice bounce in the equity index for the s&p it is up 8% from last monday's low. it regained more than half of the january direction. the strength and speed of the bounce is positive nasdaq composite up 10%. now giving back 2% of that it is interesting that the facebook is a huge miss and massive down scale of guidance comes when the market was at

that point of saying we got to the reflex bounce higher obviously, andrew, we have days to find microsoft with great guidance apple did well paypal and alphabet was actually improved sentiment toward facebook going into last night's numbers. >> right we'll have amazon. we will see what that is you look at spotify which is also getting hammered. >> paypal. >> what i can't figure out is for the past four weeks prior to earnings, all we did was say it's the fed, it's the fed, it's the fed. and then it is a strange see-saw thing and we forgot about the fed. now we're back to remembering that earnings could be real and the fed could be real at the same time. >> i don't know if it is

necessarily aggregate earnings for this quarter or next it shows what we thought we figured out is the post-pandemic run rate for these digital businesses was slower. they pulled forward a lot of demand other issues with facebook and the other advertising relate companies that we thought were absorbed what we got is not necessarily they had valuations with paypal. >> how much do you think facebook story is idiosyncratic story? it is taking place which is almost divorced with the spending, by the way, from what is happening elsewhere >> some of it is idiosyncratic as we mentioned at the top of the social fallout shares of snap and twitter falling. the impact of the changes of the

operating system and how companies are able to target ads. some is a facebook specific story with the ship within the lower rate with the short-form video which is the trend with tiktok that is weighing on it then there is a larger industry issue. >> i was going to argue facebook would tell you it is the most exposed to the operating system. twitter and this is the part i don't understand twitter wasn't that exposed to the problem. twitter shares get hit >> the other piece is and i know this is a jarring aspect of facebook's report was they cite factors. their advertisers, marketers, small and medium size businesses, have margins

squeezed and that is easy to cult cu back on. i think it is absolutely a combination of all these things that they threw into this one quarter. we're several quarters in to dealing with the privacy settings on ios and it seems like they are contending with it maybe we get to the specific details with facebook. shares plummeting. it is interesting. as soon as the report came and guidance, they were in the 250 from the jump and through the call earnings shares at 3.67. daily active and monthly active users fell short of estimates. facebook lost daily users for the first time in its 18-year history. facebook said revenue in the quarter would be $27 billion to $29 billion. the street was looking for over

$30 billion. it brings the growth rate at the low end to low single digit percentage year over year. facebook is hit about a number of fact ors. the privacy changes. that could result in the $10 billion revenue hit this year. inflation and the supply chain issues are hurting budgets people are spending more time on the reels videos you mentioned spending there are two sides to that. $10 billion in spending or losses on the non-core businesses whatever the metaverse universe is it spotlights how profitable the core business is more so than people thought. >> spotlighting how much they're losing on the metaverse. >> investing. >> investments as you call it. investing for the future a $3 billion loss on that and

compare to google's $1.5 billion on moonshots you have the stark comparison between the two. especially when the earnings are b back-to-back and valuations and which is better and which one gives you growth if facebook says we see 3% to 11% q1 revenue growth that is not growth for growth st stock. >> i have a moonshot metaverse question how are investors supposed to think about those? are they lottery tickets >> call options. >> historically, over the last several years, when there are new companies at market, people have been excited to invest in companies that make no money on the assumption in five years they will. i find it fascinating. i find it fascinating that mark zuckerberg, about six months ago, decided to go public with

what these quote other bets really are and what that lottery ticket looks like. does that mean people are now betting against that or is this something else i happen to believe they almost written off the metaverse as a straight up lottery ticket and we see in the market this morning is more function of the here and now >> i think probably right, but lottery ticket is the wrong way to think about it. metaverse is the catch-all for whatever comes next. whatever platforms might be replacing this stuff we make all our money on one reason the heavy spending and i think people are confused by exactly what that money is going toward and the name change if it conveys the idea this is the bet the company type of thing and we feel our core is enough in jeopardy and we make the bold bets, that is not great. facebook ended up in a lot of

value investors. those people will say buy back a ton more stock don't talk about tomorrow as much as you are right now. i don't think that jives with the culture at facebook. >> i think the here and now, if it were stronger, andrew, you would get a pass on the money you lose on metaverse. that would be seen as a call option as opposed to a call option on a business faltering facebook has transitioned in the past mobile transition. we have seen it with the move to stories. each time they come out stronger with revenue growth. this is not necessarily the time to do that in this environment >> right i think it is a moment in time and also a technology transition with stories they neailed the stories piece, but not the reels piece. it looks more like tiktok and

less less advertising what do you call that? dooms scroll >> the point of tiktok is it is not doom scrolling is it distraction? >> i find myself doing it with reels a lot. what i find myself watching are tiktoks from a-week-old. >> yeah. >> anyway, we should pivot to the other big story of the morning. spotify shares are falling company reported a msmaller loss than expected. monthly activity users beat estimates and paid subscribers 16% year over year daniel ek addressed the controversy with joe rogan he says this was a learning opportunity and there is still work to be done. we will have more from that conference call late nr in the

show in the meantime, a statement saying crosby relsaying they wil join neil young and pull their music. we will have an interview with daniel ek this morning later on. that stock getting hit as well >> good story here in the earnings what do you pay for a growth stock that is not growing anymore? that is what spotify told us with no material net ads in 2022 versus 2021. if you stay static and not growing, what valuation does it des deserve? we see 8% decline pre-market >> the issue with meta, it is not a proven business model yet. it is oh, we're making it up on the back end people pay more revenue and p

proprietary content. >> what does that say about the streamers in the world everybody is trying to build subscription businesses. we talked about is there a ceiling on these businesses in terms of the number of people that will buy and the price they pay. >> there's a ceiling somewhere, presumably it isprobably going to be like every industry the top two players take most of the economics and the rest of them pay to participate. it is really tough to see. >> spotify is one of the top two. >> music is different. audio is different relative to video and how easy it is to monetize. we will see. >> that interview will be interesting. >> yes, it will. coming up, it is a busy day for economic data and central bank's steve liesman will join

us and the s&p down this morning and dowalong with the nasdaq is down as well. we will have an interview th robert davis this morning you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by truist securities experience expertise. execution. why i have my finance team, randomly hurl things at me. it's also why we use workday. it gives us insights, so we quickly pivot our strategy, people, planning, you name it. sorry, sir. i will aim straight at your next step. see that you do. would you like some coffee? workday. the finance, hr, and planning system for a changing world. ♪

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a day full of key economic reports. investors need to pay attention to we have steve liesman with more. hey, steve >> reporter: good morning, michael. data reports in central banks give us a better idea of where we were and are and economy and policy is going. jobless claims at 8:30 that could suggest we're on the down side of the economic impact of omicron surging data productive in the fourth quarter flat labor costs that could show worker productivity rosa e along with h the factory orders expected to

climb with the fallout of boeing orders and at 7:00 a.m., the bank of england is expected to announce the rate hike with the boe moving, it raises pressure on the european central bank and president christine le garde to respond. she is expected to hold the line on rates and the earliest call on the ecb rate hike in december, maybe. hearings for the fed nominees for president biden will take place in the senate. the views of sarah bloom raskin on the bank regulation for climate change is expected to draw fire. you heard that from senator toomey yesterday on "squawk. and all three support the drift toward tightening or provide opposition to that for the fed that it is time to withdraw that

stimulus mike >> steve, you mentioned the ecb is the laggard of rising rates at the end of december what is the potential for the markets? you had the ecb tighten in 2011 which was a wrong way move what about letting it go way too long >> reporter: a couple of things. the ecb holds down its rates, but it keeps a cap on how far the u.s. ten-year can run. i have seen that come down we missed the opportunity for the party here i think we had three days of a positive german note it has been barely positive to get the party hats out and we missed that. anyway, it also has tighter u.s. policy provided a bit of strength to the dollar that will help the fed fight inflation. we are watching all of these differences around the world to

see how it ricochets on the u.s. in general, i think it is positive at the moment given we have a bigger inflation problem than europe that we're moving faster than they are. >> our cycle is a bit ahead in most respects. steve, thanks. >> thanks, mike. okay we are going to go to washington this morning where the house is debating a bill which includes billions in funding for chip makers ylan mui has more. >> reporter: this is a sweeping legislation to tackle inflation and spur innovation. it has a decent shot of making it to the president's desk the bill includes $52 billion to shore up the domestic semiconductor industry ibm and micron has been pushing hard for this. there is $45 billion to

authorized to strengthen the supply chain it creates a new office for the commerce department. then there are the climate provisions including up to $8 billion to the international green climate fund for the next two years. there are plenty of add-ons. the big increase in the merger filing fees and limits on the use of foreign drones by the federal government and $500 million to combat misinformation from china especially. the version of the bill was passed by strong bipartisan support. house speaker nancy pelosi has the votes to pass this bill without their help because this is a major priority for democrats. especially since build back better is now on the back burner back to you. >> okay. ylan mui, i appreciate it very much we will see what happens here. thanks

melissa. more fallout from the nfl lawsuit. another former coach said he was paid to lose games details next. tomorrow, don't miss the very big lineup from the at&t pro-am at pebble beach john snktaey and discovery ceo david zaslav "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. i may be close to retirement, but i'm as busy as ever. and thanks to voya, i'm confident about my future. voya provides guidance for the right investments.

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market hue jackson made similar allegations for the cleveland browns the owner was happy while he kept losing. jackson lost 31 of the 32 games in the first two seasons with the browns andrew >> amazing story the terrible issues of race in the nfl, but the other allegations about effectively paying people to lose. pretty remarkable. it will tie up a lot of the owners in this owners we talk to on air and have their own businesses and raise all sorts of questions of how they run those businesses. we'll see. >> now the games are fodder for betting. everybody has known about tanking for a long time, but how the league thinks about it >> and in the age of draft kings after everything else. if you are playing that? how do you think about that? knowing the owner may or may not be tanking amazing. coming up, merck is set to

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good morning welcome back to "squawk box" here on cnbc a check on the futures no price indicating for a lower open the nasdaq is down by the shares of facebook which is down 20%. this is the biggest one-day decline on the books for facebook if it holds nasdaq losing 356 at the open.

andrew, earnings absolutely pharma merck is out with the owner and meg tirrell isandrew, looking at the fourth quarter revenue coming in at $1.80 per share. revenue was $13.52 billion ahead of the $13.16 billion that a analysts were looking for. estimates is $56.1 billion to $56 billion. and giving a range of $7.12 to $7.27 a share. the company also slightly reducing the top end of the forecast from the covid-19 drug. now looking at $5 billion in sales in 2022. they forecast up to $7 billion

there. a lot to dig into. nobody better than robert davis of merck rob, thanks for being with us seconds after the release crossed the wire tell bus about the quarter. >> thank you for having us, meg. it was a challenging year in 2021 for all of us, i'm proud of what we accomplished at merck. we had a strong year in terms of growth you pointed out 24% growth in the quarter. 17% growth in sales for the year the business delivered if you look at it, it continues to be the strength of what we see in the portfolio as we continue to deepen the portfolio and moving into ehrarly lines o therapy and expand into the drug which is a treatment for cancer and making a difference in people's lives the continued strength in the vaccine business led by gardacil

across the board, all of our growth drivers are delivering. when you made a lot of advan advancements we are happy coming out of 2021 and the growth in 2022 >> reporter: it looks like keytruda may have been light of expectations what drove that? gardacil is a beat coming in at $100 million ahead of what they were looking for. what was driving gardacil's growth >> if you look at it, keytruda grew look at it for the full yquarter. that was relative from the u.s. and international. that really was more due to timing than anything we see in

the fundamentals we had advance purchases that were exaccelerated in the third quarter that affected us as well as the fact that we had a big impact from foreign exchange if you adjust for those items and look at the trend, the business actually continued to accelerate and grow. it is really doing well and gardacil is a phenomenal story people recognize this is a vaccine cancer or cancer vaccine. that is fuelling the growth. we have seen phenomenal growth in china it is the number one drug in that market. >> reporter: and still seeing within the anrange you have givn narrowing it to $5 billion to $6 billion. how is that drug shaking out as you deliver more around the globe? >> we are in line with the

original guidance we gave. we gave the guidance of $5 billion to $7 billion. that was cumulative over what was a portion in the fourth quarter which was $950 million the incremental 5 to 6 as you look at 2022 we are in line with what we expected it to be. this is really based on the strength of what we are seeing with the number of strategic purchase agreements in place we have agreement was over 30 countries. we delivered product to over 25 counci countries. if you look at 2021, we delivered 4.1 million courses in the last couple weeks of december after we got emergency use authorization in the united states we're on track to meet the full commitment of 3.1 million courses in the next few days and on pace for 4 million courses delivered globally as we speak all in all, it is off to a strong start we will have to see how the

pandemic evolves and what happens with omicron we have shown the peer review works against omicron. it is important against that variant. we have to see how it plays out and the initial update we feel we're off to a good start. we have to see how the year plays out. >> reporter: will you be tracking how well it will do with the real world with the data you showed 30% reduction of hospitalization and death. 90% reduction of death in the trials can you show what this can do given in the real world? >> i want to emphasize the last point you made if you look today, despite the fact, we are in the united states, you know, the wave of omicron is moving through, we are still facing over 2,000 deaths due to covid a day. the fact that molnupiravir

re reduces death by 90% we could have an impact which is important. you talk about the real world evidence we are looking at the drug and how it is performing there is a study in the uk, the panoramic study, will give us important information and we will track it as we roll the drug out around the world. over time, we expect more real world data to see how the drug is doing >> reporter: also, the animal health business. that was a driver. this has been a question for merck for a long time. you plan to keep the animal health business? it is en vogue for pharma companies to separate p the business >> i appreciate that we think the animal health business is a strategic growth driver for merck it grew 16% in 2021.

we are set up to continue with strong growth for 2022 we invested heavily in the business with capacity and expansion and business development and driving their pipeline much as we drive the human health pipeline. both working together. i continue to believe this is important to merck you have to look soberly and objectively at the portfolio as i look at it today, this is an important business for merck. >> reporter: how are you looking at m&a bio-tech valuations have been bad for the sector recently. does that make targeting more attractive to you and what areas are you looking at >> for us, we always focus on what we can drive and how we can accelerate our internal pipeline we recognize we need to augment that through business development. that is an important part of our strat guy. we will continue to pursue that.

you point out the deal of a multibillion dollar drug we are looking at science driven with the fit that we can bring real value we will continue to pursue deals like that and in immune knowology which is important as you think about the autoimmune diseases. those are examples the valuations are changing. it is too early to tell. the market needs to figure out if this is a permanent reset or temporary prove. the move. there is a lot of cap available in the space there will be less going forward. we have to see how cash moving into the case as people are investing in 2022. we will see how it plays out i think there could be

opportunities, but it will take time to see how it evolves >> reporter: all right makes sense. rob davis, thank you for being with us this morning >> thank you very much for having me. we're excited where we are headed in it 2022 and beyond >> reporter: back to you meg, thank you thanks to rob davis. earnings out this morning. we should hear from eli lilly. adjusted profit of $2.49 a share. lilly is expected earnings of $8.65 a share. the stock not doing too much pre-stock. andrew. thanks, melissa. dow's honeywell has the numbers out. and tomorrow, joe and becky here with us from pebble beach we have ceo john stankey of at&t

and discovery's david zaslav the topic will be the ouster of jeff zucker of cnn a lot to discuss and breakdown tomorrow a conversation you can't miss. "squawk" coming right back >> announcer: currency check is sponsored by interactive brokers. professionals gateway to the world's markets.

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welcome back u.s. equity futures are under pressure s&p 500 is set to be down 1% nasdaq is where the loss is down 336 points more than 2% after facebook's big miss and lower guidance. honeywell reporting. adjusted quarterly profit at $2.09 a share. one cent above estimate. ho honeywell's full year outlook with the challenging operating environment due to a number of factors. supply chain constrict shares backing off 3%. shares of oil giant shell is

rising overseas in the uk. a profit in 2021 it is announcing a buyback program for 2022 it will increase to 25 cents a share in the first quarter we're watching shares of qualcomm falling by less than yesterday's 6% run up. the company reporting 3.3% per share. the company guidance coming in above expectations the company's ceo is on "mad money" tonight. coming up, the wnba is announcing the capital raise we will have the former investor "squawk box" will be right back.

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winter weather taking a toll on air travel. airlines canceled thousands of flights for the secre second ti w week more than 2,300 flights have been canceled yesterday. airlines and other travel industry groups asked the biden administration to drop covid restrictions for travelers from abroad it was justified by the pervasiveness of covid in all 50 states increased immunity and higher vaccination rates. it will increase travel without increasing the spread of covid the uk will drop the

restrictions one week from tomorrow. we have news wnba announcing the capital raise and the first for the women's sports partner nike making a significant equity investment. investment joining us right now to discuss what this means for the future of the league is the wnba commissioner and also wnba legend sweet cash. this is the first time you've done this and taken outside money. what led to it this is a significant moment for the wnba we're trying to fuel the next stage of growth for us having investors step up and believe the future of the wnba and like nike like you

mentioned, some of the existing wnba and nba owners you see on the list so we've all seen the reports less than 5% of all sports media coverage and less than 1% of all sponsorship media dollars go to this sport so sponsorship is going to help move the needle. >> i'm curious when you think about the league obviously the players, players units have wanted to increase the number of teams. there's obviously the marketing side of it what are you hoping this all looks like five years from now >> what i'm hoping it looks like five years from now is a sustainable future i think cathy has an amazing vision i think the women of the wnba and wpa are hand in hand lock in and step and want to move this forward. i hope five years my niece in

high school can be dreaming. outside investors are great and that's important, but the women who have also helped build this league it's important for us to stand alongside this next generation >> cathy, what do you plan on doing with the money what will the money uhallow youo do >> the outside investors are strategic absolutely input advisers, get a different look about how the landscape is changing around whether it's media, whether corporate sponsors will come in and support. we have so much opportunity to globalize the game, expansion. we have the opportunity to blow up our digital footprint and think about what direct to consumer means as all sports properties are thinking about that it's really a lot of growth

initiatives, sports betting, innovation, optical tracking and really ultimately marketing our stars into household names both here in the u.s. and globally and ultimately building those rivalries and making our content something compelling to watch and something not to miss. >> cathy and swin, that's the tipping point. oftentimes basketball and other sports men get compared to women. how do you get it close to even just the mind share of the public what do you think that ultimately requires, and do you think it's possible? >> yes, i absolutely think it's possible and again, we're not necessarily trying to compare ourselves to leagues that have beenaround 75, 105 years. we're trying to grow and get an

economic model like swin said that is sustainable for the future and the next 25 years for the wnba look very different, and that's what these investors are buying into and seeing the vision for this is a growth property it is a real sports and entertainment property coming from a long career of business when i came in, i said we're not being treated like a real business, and that's what we're trying to effect now with this access to capital. >> i was just going to say for me on the wnba side as an executive i think it's really important that we understand the nba also had a growth process. and i think in today's society we expect for everything to have happen right now but you have to have execution, you have to have vision it's important for us day to day thinking about a sustainable future of the team and the league and all of that in general, but i think we have to

keep in mind where the wnba is now and how we keep moving forward is going to be by people enjoying what it is. it is entertainment. it's fun to go to a game it is fun to see these women engaging on social media they have a platform now they have a voice, and they're using it >> swin, do you think it's fair when people compare the games? >> you know, andrew, basketball is basketball, right but i think it's unfair to compare the wnba where it's at right now to the nba where it's right now. i tell people this all the time you need to go to an w nba game, watch a game and then you can think whether you like the product or don't i'm not saying everyone has to like women's basketball but i think there's a mind-set out there and easy to say, okay, women aren't like the men. if you love basketball, you love

the game get out there and watch people compete at the highest level. >> absolutely. cathy and swin, i want to congratulate you we look forward to following your progress throughout and look forward to having you back soon >> thank you coming up, stock futures pointing to big drop at the open especially for the nasdaq. we'll dig into facebook's big miss and a dramatic move in the stock. that is next and tomorrow don't miss a big line up at pebble beach. among the highlights at't&s ceo and discovery ceo. "squawk box" will be right back. could be danny. guess it's on maggie. should we have another one? talk to us about retirement today.

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shares of the company formerly known as facebook sinking. we'll break down results and get market reaction. the chip shortage is far from over. that's what the commerce secretary is saying about the situation. she'll join us with her plan to fix the issue. and the nasdaq was set to have its best week in a year but meta and other big tech names are now weighing on the index. we'll break down the charts and find out if a sell-off is in the cards as a second hour of "squawk box" begins right now.

>> good morning and welcome to "squawk box" right here on cnbc. we are live this morning on cnbc and i'm andrew along with melissa lee and mike santoli in for joe and becky who are out in california tomorrow we're going to be having a live interview from the at&t pro-am at pebble beach. we've got john and david, and of course the big news josh zucker losing that job. and down 332 points over that facebook news. i want to get straight over to dom chu who's been looking at all of this morning's premarket movers >> we'll save the big impactful one for last year. earnings are still very much a

part of the picture here let's start with industrial many people know honeywell. with mixed results with regard to its previous quarter, but it's some of the guidance we're getting for the full year in 2022, so again mixed results for the quarter. honeywell shares in focus up about 0.5% over the last year. it's been pretty range bound today on the heels of earnings next up we have qualcomm nonetheless the shares are down 3% as you can see here just in the last four or five days we've run up about 17% from the lows we've seen last week so a lot of anticipation going up there and we were right up against just about 3% below the highs we saw for the 52-week period

qualcomm may be one of those more indicative stocks and we have to course about meta platforms, the company that owns facebook it's down now 21, 22% of the premarket trade after it comes out with results that were generally more mixed for the previous quarter but it was some of the user growth metrics that came in below expectations and some of the forecast for current quarter revenue that disappointed investors. and some investors and analysts and looking toward the company's pivot to the meta verse and how much it's costing. and all of a sudden its pivot to video content, instagram reels, trying to compete maybe with tiktok and youtube mike, i know you've been watching this play out this whole morning am at about 22% we're talking roughly 180, $185 billion wiped off in this particular move. it's actually more than the size

you just mentioned of at&t >> yeah, piled on that value since about last february, and it's gone in kind of an instant, dom. thank you very much. breaking news from the bank of england, raising interest rates for a second time, a quarter point to a half a percent right now is the new rate, and they're also talking about unwinding some of their qe programs as the bank of england tries to fight inflation in the u.k. we'll have more on that. but back to facebook just when you thought the tech sector may have been safe out came meta earningsch and the shares bringing other social media companies down with it joining us now to weigh in the head of internet research at isi. great to speak to you. let's place this in context. is it really a sign of this company entering a sudden maturity phase, or can they get

through this >> we do know there were some factors here really strong last quarter, too, and that's the apple privacy changes, and there are some macro challenges most marketers are going to have to deal with. facebook had developed thanks in part to apple a really wonderful ad attribution targeting tool. they're going to take longer than i thought and it's going to be a bigger impact than i thought to work through that i like the stock here. i'll buy it on this correction, but there's no question it was a flop >> when we talk about the ad targeting tools have have been diluted with this privacy change, i just wonder how much of it is a matter the oldest

clishe in advertising you're wasting half your budget but you don't know which half. is it not really great money spent well in the first place? >> i think marketers are deciding to take their dollars somewhere else where's that google google's got this wonderful tail wind now and had it for a couple of quarters. also on youtube is really just demonstrable of course there's tiktok i don't know how many times they mentioned tiktok in their script last night it may have been 35 times. i i will say this with some context this remind me of the cambridge analytics scandal facebook dealt with in 2018. and when that happened this company went out and just trashed its forward guidance i do give them some credit i think they're probably overtalking some of the threat

here, but it's this combination of macro factors, tiktok emerging competition for users and usage. all of that's boiling into that flop >> you mentioned the transitions facebook has and you might consider this its third major change if you count the shift to mobile advertising which they got basically condemned for not getting. at the time they eventually got it, and then we saw revenue accelerate subsequently. the same thing with stories now we're at this other inflection point. are we counting facebook out too soon with this 22% drop, or are things different this time around iidary say in terms of the market and where facebooki as a company >> it's a good setup you have. the market is clearly throwing facebook out, but in addition to that companies obviously more mature now than it was in those last investment cycles, and there is tiktok.

the market is right to near term freak out and react negatively to the flop. for long-term holders one of the things that keeps me in here is that we're # like a turn away from 17 times earnings that are based out in 2018. i do think this company can recover. there's no question there are head winds what's the world like on the other side of this, in the back half going to '23. i think they'll be able to recover to 20% i've got a pretty healthy 20% to 30% earnings growth. you can buy this thing as a discount you make money buying these when they're dislocated i still think facebook's high quality, meta is high quality. and two other points, the competition is there from tiktok but primarily to the instagram asset. and then there's still these other option plays that meta has like the meta verse, so i think there's still more cards for

facebook to play we'll stick with the asset, stick with the buy even though we think it's going to be dead money near term. >> mark, we were having a debate in the last hour whether this is idiosyncratic, meaning it's specific to facebook or do you think underneath it there are some broader trends we should be pulling out from this, we should be extrapolating, thinking about twitter. is it idiosyncratic or is it something else >> anybody who is very lever to using idfa, identifier for advertisers that apple provided prior to the privacy changes used to have a lot, is going to go through a lengthy transition. that's what facebookis telling you. that's less of an issue -- a nonissue for interest. it's a very small issue for twitter. so it is idiosyncratic but only to a handful of names.

facebook's at the top of that list and then there's snap >> i was just going to ask everyone is freaking out about the cost basis for meta verse and how expensive that really is should that have been a surprise, though, given all of the signaling we've seen from mark zuckerberg on that issue? go ahead >> yeah, go ahead, andrew, your point's valid. i think they've gone out of their way to signal this our estimate with this is it was going to be something like a 6 billion loss hold investment cycle. turns out it was twice as much as we would have thought that was last quarter. we already knew this was a big chunk of change. look, the meta verse is going to take years to prove out. i think for facebook it's already out there. you want to find an example in the meta verse just go on robox. there also is this risk if social media goes virtual and facebook is not virtual, they're

in real trouble. >> for the first time perhaps ever made comments publicly about web three and the meta verse. and i'm wondering if you're an investor and i know investors don't have to choose between the two, but these are in contrast and they seem to be in different trajectories how do you view one versus the other? >> i think google is less of a play on the met verse. there's no reason why they couldn't develop that over time. the real option value for google is something we haven't talked about in a long time but i still think it's there you have to shift the marketing budgets away from facebook towards google the question investors have to ask is that temporary or permanent? my guess is that's going to be

temporary just as in the past marketers try toify those budgets across the two platforms and then pick a few others i think marketers will refer to that call it in a years time do i need to buy it now or buy it when that trend recovers? >> mark, you mentioned obviously the stock as it's going to open here is going to be trading at a discount to the market they still have a close to $4 billion buy back authorization at the same time they spend super heavily on whatever the future is going to bring also you've said they trashed their forward guidance in the past, back in 2018 is there any way there's an incentive for this company not to look as bulletproof economically and financially for regulatory reasons to make it seem they just can't dominate and they're under threat as well >> yes, i like that sort of cynical, skeptical take on what facebook is doing. i just think that one of the

problems always along the way with regulatory pressures on facebook is that it assumed it was a monopoly, and obviously it isn't given the rise of tiktok and i wouldn't be surprised if there was just a little bit of that as in the sentive behind facebook trashing its guidance at the same time there's no question tiktok is rising in terms of users and usage growth, and facebook needed to react and probably should have been investing much more than they did. that's the one silver lining here for facebook goals. i think they took some of that regulatory pressure off the table last night >> on the other hand, as they separate out the businesses the court actually looks more profitable than it did before. mark, thanks a lot i appreciate you running through that with us >> thanks, mike. coming up after the break insiders of pinterest have sold now more than $7 million in stock over the past two years, a smart move the stock has fallen by two-thirds over the past 12

months some other investors may be less happy. who's selling and the strange gifting by insiders as well. you don't want to miss this. that's coming up next. meantime, take a look at futures this morning we are in the red. the nad dack off more than 2%. nasdaq's biggest losers this morning facebook, moderna, biojen "squawk box" coming right back "squawk box" coming right back with all ork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates a moment visit indeed.com/hire -capsule! -capsule! -capsule! capsule saves me money on prescriptions. capsule took care of my insurance. capsule delivered my meds to my doorstep. capsule is super safe and secure. get your prescriptions hand delivered for free at capsule.com

welcome back to "squawk box. we've been watching futures very closely this morning should be a very, very interesting session. the most weight is being felt by the nasdaq down by 343 points. we've been talking about facebook or meta all morning but also keep an eye on other large megacap tech stocks because they're all feeling some pain to some degree this morning we've got apple and microsoft down by than a percent this morning. and amazon down 3% check out crypto, obviously a risk long barometer, and across the board we're seeing declines down 4% on either and down plus 2% on bitcoin. >> meantime pinterest stock has gone from roughly $89 to $25 in the past2 weeks. and rutherford joins us with a pretty interesting and unique on the stock, and it is

complicated to say the least, robert >> a little complicated and some very large numbers, andrew pinterest shares as you mentioned down 6% over the past year, down another 9% yesterday in advance of those earnings today. the ceo and insiders cashed out more than $700 million in stock back when it was trading a lot higher he sold $100 million in shares last year, $240 million in 2020. he sold at prices ranging under $20 to $86 a share almost all those sales were part of a prescheduled stock selling program and some were sold to pay taxes on options exercises he still owns about 8% of his company and his net worth once as high as $4 billion now down to about $1.5 billion. and you have other executives also selling the chief financial officer, chief legal officer, other cofounders cashing out 246

million in shares last year and just under 500 million in 2020 if you look at this year the selling has continued, the cfo selling 200 million worth in january. the co-founder evan sharp selling 3.5 million in january the company did not respond for my request for a lot about facebook this morning. take a look at mark zuckerberg he's been consistently one of the top sellers of stock for the past two years he sold $4.6 billion last year, and in total over the years he's sold over 17 billion most of that for his philanthropy, so andrew, a good reason to sell for mark zuckerberg, but still a lot of selling. >> you take all this as a high sign for the investor class? i mean, the question about insider selling has always been is this a sign that investors shouldn't be invested in these companies, or is this really a diversification effort, right? >> well, we'll have to see what the market does this year, but

historically insider selling especially at the levels we saw last year 170 billion, that was more than twice the ten-year average. when you see it that high historically insiders have been very smart sellers selling at or near the high. so we'll have to see but right now they certainly look smart selling last year >> that they do. >> there's a lot of reasons, good reasons to sell usually it's not because they think the stock is going a lot higher we'll see if it comes to pass this time. coming up one segment, two takes on meta. john ford joins us with this morning's on the other hand segment. and later commerce secretary gina raimondo will be our special guest. she says the chip shortage is far from over but there's a solution "squawk box" will be right back. time now for today's aflac trivia question. who is the m.i.t. professor who

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who is the m.i.t. professor who created the worldwide web consortium in 1994 the answer, tim berners-lee. the computer signicist is also credited with cofounding the worldwide web in 1989. facebook parent meta losing more than a fifth of its value after hours as investors try to make sense of slower growth, lower profit and drop in worldwide users. has the company lost its way or is it an emotional after shock from january john fort is here to weigh in. john >> facebook is fine. this was a bad earnings report don't get me wrong revenue and earnings both came up short, and facebook looks like the awkward parent trying to learn the new dance the kids are doing with its reels product copying tiktok remember a month before ipos bought this little fringe app for photos, instagram for a

billion dollars and the ding on facebook was it didn't get mobile and would be left behind. well, facebook figured it out and fast similar story with messaging and video. facebook figured it out. sometimes when we get a surprise stock move we amplify the facts to match the move. facebook didn't just have a bad quarter. it was disastrous. they have a core business, a smart stable of engineers, and a young motivated founder in control. this isn't the end of the world. it's a bad quarter during a strategic shift. >> isn't it odd, john, the four months the company changed its name and now the core business looks kind of shaky. >> well, on the other hand, facebook could be in serious trouble this time. hear me out. facebook is facing some of its toughest challenges ever google is beating facebook in e-commerce ads tiktok is taking share from facebook and video engagement.

lawmakers are desperate to use facebook in their re-election campaigns and bash it as big tech run amok. unlike the mobile transition ten years ago or the messaging transition eight years ago mark zuckerberg can't buy a smart start-up this time to zoom ahead. facebook has two choices one, it can build experiences so amazing that consumers leave youtube and tiktok and embrace facebook instead or two, it can build a future platform where apple doesn't control the flow of targeted user data, and they can call it the meta verse i don't know which is less likely to happen, but what is likely, shrinking user base, shrinking margins and a stock under pressure >> those scenarios spell out a weight for investors either a weight for investors to spell out its core business or a weight for ininvestorers for the core business to hand the growth baton to the meta verse. >> but isn't it relatively cheap

here at the same time? >> yeah. >> you've got these crazy market moves. i mean, if you liked it when it's up 20% do you like it when it's down 20% with all the same rosters, players and the other founder on the other hand? >> when trading starts this morning facebook will be worth less than half of google, which is just staggering, john, and gets back to this really amazin knee jerk reaction -- i don't want to say knee jerk. it might be warranted. >> maybe alphabet comes down, too. it's a strange time for the markets. >> thanks so much. still to come the commerce secretary ginna raimondo on the ongoing chip shortage and concerns about inflation that interview is next and tomorrow on "squawk box" do not miss a big line up from pebble beach along the highlights at&t ceo.

now as we head to break take a look at the leaders and laggers in the dow this morning. we'll be right back.

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futures setup for a negative open the s&p 500 is tracking down about 1% it's up 3.#% this week so far, also up about 8% from last monday's low you see the nasdaq down 338 points more than 2%. facebook dragging down a lot of big tech stocks not just meta at this point, actually amazon is among those weaker of course it does have an advertising business as well, and that was one of the pressure points of the meta report. apple down 1% relative outperforming netflix which has missed a couple weeks ago and alphabet down 1.4%, though up 7% or 8% on its own very strong results, stark contrast with what meta was able to show. treasury yields firming up a little bit the bank of england raised its official short-term rate up to 0.5% yields are getting a slight lift on the idea this inflation fight is back on

the ten-year note at 1.8, two. year note at 1.17. oil backing off just a little bit off those kind of multiyear highs. back under $90 for brent, natural gas up huge yesterday, down about 6.4% as we get through this cold snap coming up commerce secretary raimondo the decision on interest rates, and then is a sell-off in the cards? we'll talk technicals, key signals to watch with cardo worth. and again the futures tracking for a down open. don't miss a big line up live from the at&t pro-am at pebble beach tomorrow among the highlights at&t's ceo john stankey and discovery ceo

welcome back to "squawk box. chip companies reported their best year ever in sales but the white house sounding the alarm on semiconductor shortage. president biden warning this isn't an economic issue but also a national security issue. joining us now with what the administration plans to do to increase chip production in the

u.s. secretary gina raimondo is here this has been a challenge for the past two years, and i think there are real questions how long it's going to persist, and what it really takes at this point to change the dynamic. >> yeah, good morning. thanks for having me it's been a problem long in the making as you know silicon valley was created, we created the semiconductor industry here in america. and over the past few decades we've just allowed ourselves to fall behind. and now we just candidly we just don't make enough chips in the united states of america on our shores when the president says it's a national security risk, he's exactly right. and the reason is this, andrew we don't make any of the world's most sophisticated, you know, smallest leading edge chips in the united states of america somehow we've allowed ourselves to get into a position where we are utterly dependent on taiwan for those chips.

and those are the very chips that you need in art financial intelligence, high end computing, communications, military equipment so the bottom line is we need to invest in america rnd in chips, but really we just need to stimulate the production of more facilities here in america >> so what does that really mean and what companies do you think can drive this because ultimately what i think we're talking about is subsidizing private industry to go do this in a way that they haven't before to make this a more profitable enterprise and something that's more attractive obviously intel is doing it. there have been subsidies provided to them, but do you believe there are other companies in this country that actually have the know-how that is competitive with what's happening inside of taiwan, for example? >> yes, i do by the way, america still leads the world in design and software

and the tooling and the equipment to make the chips. so, yes, i do. by the way, there are other companies around the world in our ally countries, japan, south korea, taiwan, who we believe will -- we want them to put operations, expand their operations in america. >> by the way, to that -- to that point, though, there has been a question about taiwan's semiconductor. and if you believe long-term that that company and that country represents a national security threat, right, long-term if you believe that china may one day either take over taiwan or something of that nature, how do you think about leveraging that company in the context of what we're trying to do here in the united states >> yeah, it's something we think about. by the way, that's why we need american companies and other companies to -- you point out

exactly why we're working on this so hard because we are dangerously dependent on one company, tsmc, in one country, taiwan, which as you correctly say in a fragile situation i do need to say this. you asked me how we're going to do it. we have an opportunity right now literally today and tomorrow there is a bill weaving its way through congress, the america competes act, the chips act. and congress must act. i don't know how anyone in the house doesn't vote yes on this tomorrow if you're serious about competing with china, if you're serious about investing in american competitiveness, you have to vote yes on this bill. the vote's happening today or tomorrow in the house, and in that bill is a $52 billion appropriation to do exactly what we're talking about, which is work, you know, with private companies and public-private partnerships to incentivize them to develop, create, establish

labs in america. >> i want to switch gears and ask you about tiktok, the public comment period just ended and you're reviewing public comments about proposed regulations that could increase the oversight, government oversight of apps, mostly foreign apps that could be used by foreign nationals, foreign actors to obtain data and maybe pose a security threat to people in the united states what does a time frame look like for those rules, the executive order to investigate this issue was issued back in june. and if this is really a national security threat shouldn't we be looking to have these rules, which would increase oversight sooner rather than later >> yeah, thank you so you are correct that these apps like tiktok do pose national security threats, and we want to protect data, protect

the data of americans. so we are in the middle of this pros we're moving with urgency. i don't have anything to say at this time. we're reviewing the comments we're working on establishing and then publishing a new rule and a new policy so it's, you know, in process working with urgency, and, you know, we'll update you as soon as we can. >> part of the proposed oversight would be to be able to review the source code i'm wondering do you view this as potentially laying the ground work for a ban on tiktok wholesale in the united states is that one possibility? >> so it's premature for me to say anything more than i have. as i said we're in the middle of this comment period. we're reviewing our policy so i'll ask for a bit of patience until we're done. i'll just say we're looking at it very seriously. and mean we need to -- with new

technology comes new threats, comes new needs to have more protection on america's data >> madam secretary, i want to just come back to chips for a second and i want to mention a company that the administration, the biden administration doesn't seem to want to mention that often. but it seems to be coming up more and more in conversations even around chips which is tesla and elon musk. they seem to have a much -- i say they -- tesla has seemed to navigate this chip shortage basically more than any other company in america because they ultimately took what chips they could find and rewrote the software and there are some people in the technology space that say actually you should be calling elon musk to help you when it comes to chips is that something that would be on offer >> listen, i'll talk to anybody, absolutely, whether it's him or anyone in industry who could help us solve this problem and

smooth out the bottlenecks, absolutely look, i think the reason if what you say is true, tesla was fundamentally started as a tech company, right and so they operate like a tech company. the auto manufacturers don't have as long of a history ordering semiconductors. and so it's newer to their supply chain and when covid happened, you know, they stopped ordering chips as they did most of the other things in their supply chain, and obviously that caused serious problems so i think if you were to ask the auto ceos they would say they're learning a lot, learning quickly about how to manage their chip supply chain. by the way, an electric vehicle has about 2,000 chips in it compared to less than a 1,000 chips for a vehicle. auto companies are, frankly, still gaining experience about

how to manage this part of the supply chain i will say they're innovating in a rapid rate i've done a lot of convening bringing together auto company ceos and chip making ceos. and as a result of those convenings you're seeing auto companies develop these partnerships you see ford and gm connecting so tesla, you're right, but i think the auto companies are learning quickly and innovating in these partnerships. >> i'll open and just ask on the larger issue because a lot of people are watching it, and you probably read the articles is there something happening between the administration and tesla? because they don't -- tesla doesn't seem to have a seat at the table when it comes to electricvehicles, auto industr issues and clearly they are the most successful electric car maker in the country by a square mile it's not even a question they don't even get mentioned by the president.

he doesn't seem to be able to say the name tesla or elon musk. >> so nothing that i know of i don't think so and as i said i'll go anywhere, talk to anyone to learn anything that will solve these supply chain issues particularly with chips. and would welcome anyone's know how and feedback we need partnership. i was with the president last week in the white house. he hosted a dozen or more ceos to learn and listen, and our message to ceos is help us get in the game, provide partnership as part of your civic patriotic duty >> that was viewed as a snub, madam secretary, by elon musk who subsequently tweeted about it particularly in the discussion of evs. tesla makes evs here in the united states. they're one of the most tech logically forward companies in the united states. should elon musk be expecting your phone call then

it sounds like the line of communication is now open between the biden administration and tesla at least from your side >> yeah, absolutely. look, none of this is personal these issues are way too important for anyone to have, you know, feelings hurt. like, let's just do the work and as i said anyone who has good ideas or is willing to help us, absolutely we want the help. >> commerce secretary, we appreciate your time this morning. we wish you lots of luck with it and hope you come on back very, very soon. >> thanks, guys. >> thanks. great to see you all right the ecb rate decision is out. steve liesman joins us with the details. hi, steve. >> hey, mike, yeah they left interest rates unchanged it's the first look i have here, and let's see what else they said here. the pandemic emergency program in the first quarter of 2022 at a lower pace than the previous quarter they had said that

previously, and it will discontinue net asset purchases at the end of march 2022 i believe that's new, so that's a little bit of movement by the ecb on the issue of asset purchases. we had some movement earlier today, mike, in some of the asset markets. hiking by 25 basis points and saying that it will also start to reduce its balance sheet. i saw u.s. yields higher you had mentioned that it's within the range of the ten-year i saw stocks run a bit higher on that news, the dollar maybe a touch weaker and foreign yields also higher. i think the story leading into the press conference here europe had a little bit higher inflation than had been expected in the january flash report. and we'll see how christine

leguard addresses that and whether or not she's pulled by what's happening in the bank of england and u.s. towards a faster move when it comes to either its asset purchases or its rates. what i lost saw there from mark chandler is about 30 basis points of tightening is priced into european markets over the next 12 months, which is a little bit but sort of shows the bias of where things are going mike >> yeah. and i guess in the ble vote someone wanted a bigger hike, so the yields in europe and u.k. and elsewhere lifting on a lot of that. developing overnight cnbc obtained a letter that apple sent to lawmakers that takes a shot at facebook over its privacy practices. >> good morning, mike. apple is throwing some shade at facebook as it tries to defend itself from legislation in congress that would force it to open up its app store.

in a letter obtained by cnbc apple touted its new transparency app tracker as evidence of its commitment to privacy and security it didn't name names but it warned that other tech companies may not feel the same way. the letter says american consumers are increasingly concerned about the data collection practices of large social media platforms, and it cautioned that congress could inadvertently make it easier for big social media platforms to avoid the pro-consumer practices of apple's app store and allow them to continue business as usual. so this clearly appears to be a reference of facebook and change as one of the reasons for its earnings miss, and apple appears to know that, too. the letter also says some companies that rely on collecting and selling consumer data have been frustrated by that feature consumers have benefitted from the program. the senate judiciary committee will debate today. apple here trying to shift the blame to other big tech targets because washington likes to lump all these companies together,

but, guys, now they appear to be turning on each other. back over to you >> all right and of course, you know, those issues very much at the center of what we saw with facebook thank you very much. coming up, we'll talk technicals plus much more on meta's weak earnings and forecast that stock down 20% this morning. now another stock to watch, amc entertainment. the company announcing a deal to sell $950 million in bonds with the proceeds used to pay off higher interest debt the movie theater operator had been paying 10.5% on debt incurred in the early days of the paem wh e w btndicitthnede carrying a rate about 7.5% "squawk box" will be right back.

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just when you thought the tech sector may have been safe outcomes meta earnings nasdaq futures are tumbling on the back of the disappointment joining us is carter worth good to see you. what are you looking at? >> well, i mean, i think it's a testament to how risky stocks are. think about this, talk about a 20% down at the open and we know netflix just did that. that is an issue commodities don't do that unless you're weather related consider this before we look at some charts. what we knowis that the nasdaq 100 which is where all these big names are is running on a

13-year streak with positive gains total return the dow jones industrials never achieved that in its history nor is the s&p so is it full presumptively. the first is a chart of the qqq from the beginning of the '09 period and it is a perfect cham, absolutely perfect, up and to the right north by northeast we know we had a draw down and we bounce back the middle of the channel, the next chart if we were to simply go to the middle of this channel we had not one down year total return in 13 years that would be a 25% decline. you can see that circle. and the bottom of the channel, of course, is lower than that. the question is streaks are meant to be broken, record are meant to be broken this has been a great record,

but when you have assets like this dropping like that, that is not a sign that all is well. >> carter, i wanted to ask you but you often talkabout wall street and analyst sentiment on a stock going into a quarter or big move in the case of meta there are 52 analysts that cover meta 42 have either a market outperform or buy rating how does that inform you about reading the charts and mean the fact wall street is so off sides on this one, so many people got it wrong going in >> well, it's a hard business for all of us. we know that but i mean the think is remember 5% of all ratings, thousands and thousands of ratings are sell ratings. and so mostly people hold buys even when their price target is just 1% above, sometimes they won't take the buy off but when you have consensus around something that, frankly, wasn't that cheap or expensive, it was a market multiple, that's

the problem with all that. it's very gray it's why i often refer to it as the funny mentals. hey, maybe facebook was cheap but i guess it's a little cheaper when it opens today. >> and of course, carter, after today we're looking at amazon. we've got most of the biggest components in the markets reporting. will you have a better sense and feel for the charts because of that >> well, i would say this. that if you -- if you look at the market in its totality, we know that it has had a great run. we know that it is complacent and that once the earnings are out of the way and for the most part they are, the real question is for the market to advance or both in some proportion, you need to earnings growth or multiple expansion or some form or blend of the two. so from here what is the path for great earnings growth matching or beating the numbers we've just seen, which have all

been quite good and/or multiple expansion? that's the problem and charts are saying that we're at the top of the channel and market is full >> one last quick question, carter and that is on semiconductors. you talked on fast money about the bounce you would see in smh. we had the negative reaction to qualcomm reports although we had a good day yesterday for semis in general for amd has your view change snd. >> it's interesting. semis and the bounce, thanks for referring to that, the question is does the bounce give back some or all of what it enjoyed semis have a different characteristic in the sense they're not quite as loved they're not quite as broadly owned as thee names that we know, apple and microsoft and amazon and facebook and google and so they're -- i think they're on a long-term trajectory, and they have yet to

even recoup their relative losses from the dot com peak okay, coming up investors hitting the pause button on spotify this morning after quarterly numbers showed a slow down in subscriber growth. music and podcast streaming service also dealing with some musicians unhappy with podcaster joe rogan's views on covid we're going to debate the issue and find o wt uthait could mean for the company's ad revenues tax advisors, the works. what about technologists? 40,000 strong, baby. we'll be able to hit our projections both fiscal and astral. this company sounds great. big hour ahead think, agnes? looks like it's unanimous.

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good morning futures in the red across the board. we're seeing pain especially in the tech sector. that's because of the meta melt down shares of the company formerly known as facebook fall off a cliff on tough fourth quarter results and disappointing guidance we'll have a complete wrap up of all the news and numbers and the big question, are the company's best days behind it? plus we've got new earnings, economic data on the way and the latest on rates and inflation from the bank of england and the european central bank. the final hour of "squawk box"

begins right now. good morning and welcome back to "squawk box" right here on cnbc. joe and becky are off today, but they're going to be with us tomorrow when the at&t pebble beach pro-am they're going to be speaking live with at&t ceo john stankey and the discovery ceo. lots to talk about that big merger and of course jeff zucker being pushed out of the company yesterday, part of the conversation i imagine we'll be discussing with them tomorrow. meantime u.s. equity futures at this hour, dow down about 58 points if we open up right now, the nasdaq looking to open off about 320 points the s&p 500 off about 46 points and all of that on the back of this, the stock of the morning, facebook parent meta is dragging that nasdaq lower and we're going to get a wrap up on the latest quarter in just a moment. first, take a look at treasury yields as well i want to show you where things stand right now because you can

look right now at the ten-year note and we're up at 1.797 shares of spotify this morning they've been plunging. music streamer posting fourth quarter results. investors may be focusing on the company's decision to no longer issue annual guidance as well as artist boycotts thanks to misinformation allegedly from podcaster joe rogan. these are guidance coming in for the first quarter just about in line, and you don't want to miss an exclusive interview happening today at 10:00 a.m. with the spotify founder ceo responding to all of it >> mike, has been taking a look at the indices recent moves and excluded some key market moves outside the u.s. what are you watching? >> melissa, obviously the facebook decline and the sort of blast radius of that miss are going to be felt mostly in the tech sector, in the nasdaq it's about 5% of the nasdaq 100

and only about 2% of the s&p it's interesting it comes just as we had this very sharp bounce which is completely symmetrical really with the last leg of that decline. we have formed this "v." this is exactly the area up around 4,600 where we talked about yesterday it's going to be a little bit tougher no matter what happens now we have this challenge are we going to see a more rotational type of response where you have things outside of internet maybe take up the slack. right now really not that dramatic a move just yet in the s&p 500 etf especially when you consider the heavyweight of things like amazon and facebook pressuring it at this point. however, outside the u.s., a couple of interesting things we talk about the bank of england raising short-term rates today. the u.k. market has been outperforming the u.s. on a year to day basis now, it's a catch up move. obviously the u.k. had

underperformed last year, but it's kind of a value oriented market a lot of banks are commodity related and got very cheap toward the end of the year and it's emblematic what's going on this year that's also true in european financials compared to u.s. financials the german ten-year is in positive territory a lot more yields across the whole complex or higher, and you see european financials on a year to day basis remember of course it's just four or five weeks, really good margin of out-performance and again a catch up move. it's not necessarily something that's been leadership backed from last year >> key to understand in terms of the make-up of the markets you were talking about more broadly because they don't have such a heavy tech component as we do here they're much more financially focused. and that means an out-performance of the markets at large >> absolutely. it's much more of a value -- it looks like the u.s. market decades ago where it was a little more consumer,

pharmaceutical, commodity related and of course financial. so that's been the reason that the u.s. has had such great out-performance. and we have a growth index we have a tech growth index, and now that's in the very short-term is causing some pressure on the u.s. >> all right, thanks for that, mike andrew >> let's get back to the biggest story of the morning and that is the plunge in meta shares after the company's fourth quarter earnings julia borstin joins us this morning to explain what happened julia? >> well, quite a plummet in those stocks facebook -- excuse me -- meta shares losing a fifth of their value this after meta beat on the top line but it saw a rare miss on earnings just its third eps miss in its company's history. this as its reality labs divisions cost grew from prior quarters topping $10 billion for the full year. and the company's outlook was far worse than anticipated meta guiding between 3% and 11%.

down from 20% growth in the fourth quarter and 35% revenue growth in the prior quarter. the company laying out three key factors impacting ad impressions and price growth ad targeting and measurement challenges and a period without those impacts, inflation and supply chain disruptions impacting advertiser budgets and foreign exchange head winds facebook which is meta's, of course, core app also showing stagnating growth where fewer monthly active users than expected and declining daily active users ceo mark zuckerberg saying he's now focusing on short form video reels which he says is the fastest growing content format which is more lucrative because they show fewer ads at least for now. >> people have a lot of choices how they want to spend their time and apps like tiktok are growing very quickly

and this is why our focus on reels is so important over the long-term. >> the company also warned that these head winds will continue saying they expect both increased competition for peoples time from the likes of tiktok and a shift of engagement within their apps towards those video services like reels which he warned mopatinetize at a low rate >> is there anything on the reels front which is an interesting issue using tiktok or twitter or what not, is there any thought there's a way to increase the margin on those ads or to increase the frequency of them, or the whole service doesn't work >> absolutely. no, no, absolutely, andrew this is one of those newer formats, and this is how it works for facebook they figure out a new format whether it's stories and instagram and create a similar in facebook and monetize it very

slowly he did say they're working to figure out how to add more ads to that reels format but do it in a careful way so they don't turn off users because they're overwhelmed with ads this is the way people are communicating and we have this shift from tech to photos and video and now very short form video is the method de jure, but he said they are working to increase the ad rate it's just right now they have to do it very slowly to avoid overwhelming the format with ads. >> julia, another question i was just going to ask you is part of this is a function -- or part of their troubles or challenges seems to be a function of apple changing the way its ios system works. how specific do you think that is to facebook we talked about you can watch twitter which i thought was less reliant on that. their stocks come down, snap has come down. how much of this is a facebook situation, a broader situation, and how much of this is exactly what apple, by the way, wanted

to happen? >> well, look, i don't know if apple wanted to be in a battle with meta, facebook, but i do think this is a situation that is impacting a range of different companies. the question is just how much is it impacting each of them? youtube we understood was going to be impacted less than say facebook pinterest we expected to be impacted quite a bit they have other issues as well snap is interesting and we hear from snap after the bell today, and snap shares are down dramatically on this news. snap -- we did not think snap was going to be impacted so much from this idea they say we're working on it and have it under control, have different work around and then this past quarter, the third quarter snap said we had a bigger impact than expected. so each of these companies have different work around and also have a different level of impact snap based on last quarter's results i think there's concern they'll very much be continued to be impacted by this apple issue. >> julia borstin covering all of

it, appreciate it. great to see you thanks coming up, several new pieces of economic data including jobless claims as we await tomorrow's unemployment report from the labor department but next much more on the meta melt down. is the latest earnings report a sign of tough times ahead? 'll debate it. 'll debate it. "squawk box" will be right back. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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welcome back to "squawk box. the futures right now ahead for some declines at the open. the dow industrials holding up relatively well down just 87 the nasdaq is where the pain is, down 350, more than 2% lower facebook dragging some other stocks down such as amazon take a look at those stocks that are under pressure this morning. in addition to meta and amazon, asml, biogen, and honey well honeywell is an earnings mover this morning revenue came in light thanks to supply chain and other issues. those shares down a bit more than 3%. we do have some breaking news here. president biden says a u.s. counter terrorism operation in northwest syria has killed the leader of isis in a statement biden says all americans involved in the operation returned for it safely

the president said he'll deliver remarks on the operation later this morning andrew >> okay. meantime take another look at shares of facebook parent meta because it has just been -- i mean it's like a cliff it's like a cliff. the drop coming after the company posted disappointed earnings, gave light current quarter guidance and said user growth has stagnated all this raising lots of questions. and stock, by the way, off close to 22% the company's best day is behind it that is the question of the morning. joining right now is venture capitalism kevin o'leary good morning to both of you. i'm going to start with kevin. you have been a facebook bull for a very long time is this one of the great buying opportunities of your lifetime or is this something else? >> in a nutshell i would say it is a buying opportunity so the answer's yes this company has been public

almost ten years i look at it as a point of indexing about eight years ago or even seven years ago it became a standard indices not to defend the stock or what happened in the quarter but when you get index you end up getting 3% to 6% of a mandate. and you see this all over the s&p. you find facebook and etfs, sovereign funds and everywhere because there's really nowhere else to get an aggregation of this many billion users in one equity now, here's the question after all of this last night, and i must tell you i was on a call with some investors in europe and very late at night in the middle east because sovereign funds own a lot of facebook, and they stayed up late for this and we were on a zoom call and our phones are on mute but they vibrate. i knew facebook missed its numbers when i heard everybody's phone must be 22 people on that

zoom were buzzing. and one of them went to the cnbc app and british guys were talking, all around the world we were listening to this so we had a discussion what happens next for unt 80% of them they're going to average down. you're trading just under 17 pe. the company missed its earnings. it's the third time in basically a decade every time that occurred it was a buying opportunity now, if you believe that the world has ended and digital advertising doesn't matter and a billion users around the world aren't important and advertising is worthless, then you sell the stock here, but i don't. i use this product in my small businesses every day, and yes this is a horrific quarter i'd argue if you listen to zuckerberg's call yesterday he threw in every element of the kitchen sink he really trashed his own stock, and i think it's setting up for quarters ahead where he'll overperform hopefully. one last thought, the meta verse.

by the way, you have to believe in a curated meta verse if you believe in advertising digital dollars. because i'm not going to be p & g and/or anywhere else and stick my store beside a smoke shop that may be something to think about going forward. >> hey, adam, you believe that mark zuckerberg threw the game, threw the quarter, threw everything at it here? >> i have so much to say about what kevin just mentioned. good morning, everyone first off i think it's funny they changed the name to meta. i will say what i think. there's a fundamental change here to their business which is allowing privacy in consumers and that is something i think is here to stay and that is something we have to pay attention to people are freaked out they do not want to be tracked as i think about my kids who are 4 when they are 20 they will be shocked there used to be a time

companies had consumer tracking. we're buying more. we're used to buying from home we're trying new things digitally so i'm very bullish on advertising. only i think the future will belong to companies mainly using context as a signal, and that relates to companies at google, for search, what am i reading on the open web, amazon, what am i buying those things are things i believe will drive huge growth for advertising -- >> adam, i know people are saying you're talking your book but you look at facebook and look at a reels feature or even a tiktok, do you believe fundamentally the way those products work it's harder to integrate advertising into them and still have the functionality and value proposition to the user >> i think it's harder but i don't think it's the main gap

they have. they'll figure it out. eventually they made money from stories, and when they launched back in the day facebook has great people and very smart people and i trust when it comes to formats of advertising on those experiences they'll figure out the main thing i'm not sure they'll figure out easily is privacy, user tracking and the lack of context which companies like google, amazon and the open web have >> i want to ask about google. it's down by more than 10% spotify in what has been the covid misinformation concerns involving podcaster joe rogan, here's daniel eck on the company's q4 call. >> we don't change our policies based on one crater nor eon any media cycle or calls from anyone

else >> so you buy this do you buy this is a platform or are they a broadcaster >> music is a different business, andrew this is commodity business you have lots of competition from google and apple. spotify made a pivot a couple years ago in the podcasting which has issues, because the more controversial you are as in rogan's situation, the more you aggregate users to listen to it. and at the same time you could alienate some of your platform content. and that's happened with joni mitchell and neil young. frankly, i must tell you i've had a chance to meet with this company. they run a dashboard system and aggregate data successfully. they know by the minute who's listening to what and for how long i would speculate frankly the amount of time spent on sarz in the '70s is practically

irrelevant in terms of the context of the user base they're trying to monetize its relevance >> when taylor swift and adele and drake if they ever raise their hand and say i've got a problem with this all of a sudden spotify has a problem >> i don't think that's going to happen, andrew they have management in place that looks at free cash flow the bigger issue for investors and i would argue this whole -- you know, all this media around the world is a net benefit for spotify because it's controversial and it's getting people to think about the platform and perhaps you're going to see usership uptick from this because the content issue is not going to go away. i think the major stars do not give up cash flow because they're managed by people that focus on free cash flow. and thank goodness for that. so call me a skeptic, but i don't think this hurts spotify at all whether it's a good long-term business it's yet to be proven i don't see major cash flows

coming out of it because it's still aggregating customers, still spending money to acquire them and that's not a good business model for any of them. >> one is that on the podcasting side part of the investment thesis for spotify is not just a self-play it's actually an advertising play for them and whether you think there are going to be meaningful advertisers going to step away from podcasts. i think tesla will eventually show ads in the car. so i think they have a huge opportunity because users love their platform to engage with it, and the advertising platform is too big to skip it. and i agree what kevin said it's a huge market opportunity for them because it's in peoples

minds now. it's not easy to dislike spotify. they're great. we love them i do think they'll make a change it's one thing to put explicit on a four-letter song. no one is going to die from that but anti-vax and anti-mask and all those things, that can hurt people, that should go away. >> when you say they're going to make a change, what do you think that change looks like >> i think they're going to edit things that exist on spotify that are not in the realm of it's a four-letter word. you know, my kids should not hear that. not a big deal if that happens the down side of someone listening to that is potentially hurting them or killing them i think the good thing for him he has history on his side. he's seen facebook this is not the first time we're doing this >> hey, kevin, the other piece of this is the subscription business it looked like at least in this last quarter there wasn't growth on the top in terms of new

sellers. what does that say about all these media companies racing after streaming? you talked about the customer cost of aqua acquisition, it il you jump off hbo, jump onto show time, then go to net -- what does it say about all the investment in this space >> i think what's going to happen across all these platforms i don't care if you're facebook or spotify or netflix, you're going to have two different price points this will probably happen in spotify as well. and then you'll have a price that's an entry level price and includes ads the demand for advertising is insatiable i look at my 35 private portfolio companies. our number one spend is facebook after all of this, and we're trying to find ways to target ads. even with the privacy issue there are technologies now that

let's you focus even on facebook data you have to merge with one of those company we're now using to target and get more focused and get better yields after apple shutdown what we were doing on facebook with privacy it's not over yet, andrew. if you have users you have power. >> it isn't over yet, but this segment is we're going to have both of you back i'm sure, very, very soon we appreciate it and if you want to see spotify's ceo daniel ek he's going to be joining squawk on the street we're going to have the ceos of at&t and discovery on "squawk box" tomorrow. melissa? coming up, much more on the markets and stocks making the biggest moves ahead of the opening bell and another reminder to tune into "squawk box" tomorrow andrew mentioned we not only have the january jobs report but also can't miss interviews with the ceos of at&t and discovery stay tuned you're watching "squawk box" on

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coming up, breaking economic data, new jobless clms aaind productivity numbers, they are next "squawk box" coming back with that and so much more after

this

here live from cme hq with breaking news. comes in very strong at 6.6. this is very, very good news but do remember the problem is that is in the rearview mirror we had

minus 5.2, which was the worst productivity level since 1960. so we are going to bring that back a bit and just stand alone 6.6 the best since, well, the high-water mark post-covid which was the second 2020. unit labor costs up 0.03 and if welic at initial jobless claims expecting 245,000, 238,000. 238,000 and that's versus a slightly revised 261,000, which means it is down 21,000. if we look at continuing claims 1.628 million, darn close to expectations that follows 1.672 million so we're lower but we're not at the lowest level in either metric, 188,000 from early december of last year's the low-water mark for continuing claims well pre-covid, echoes

into the 1960s, and of course continuing claims the last week of last year came in at 1.555 million. so even though they're better or as expected, they're not at the best levels. and productivity is good news because we really got walloped on productivity year over year making this come back should be something to be happy about. productivity is the magic bullet to the u.s. economy. melissa lee, back to you >> rick santelli, thanks steve liesman joins us now with more steve? >> yeah, i really like the claims number, and i'll tell you why. a bit lower than expectations, i'm hoping what it shows is that we're on the down side of some of the impacts of the omicron surge here actually, i think i lost my microphone there a little bit sooner than expected and hopefully the other data

follows suit here. the productivity search tells us what that we're getting by with higher inflation and a worker shortage by getting more efficient. and rick is right, you need to think about the third quarter which was negative, this quarter which was positive and ask the question how much of the productivity gains we've seen in this economy where we're at gdp levels but millions fewer workers how much that holds onto the economy and that could be potentially long-term good news. maybe not good news for your meta investors today but long-term on technology and other issues that matter for the workplace and how we live, the idea we hold onto some of this incredible productivity. >> steve, thanks steve liesman. mike energy bills in the u.k. are about to jump dramatically brian sullivan joins us now on a story he first reported back in early november u.k. is where a lot of things are coming together. higher energy costs, inflation

fighting, rate hikes >> yeah, it's all happening at the same time. and what's it's going to do, mike, is result in a pretty steep drop in the quality of life for millions of people in england. i hate to be so blunt about it but that is just the truth all right, here's what happened. every six months the u.k. power regulators known as off gem adjusts its rate hike caps, how much can power producers raise their rates? it happens in the bigger of october and it happens april 1st. well, as of april 1st off gem just approved the biggest ever price hike for power companies in the u.k they're going to be able to raise electricity prices to consumers by 54% that is on top of a 12% hike approved back in october this is being done because more u.k. power companies risk going out of business -- they've already had about 20 that have gone under -- unless they're able to pass along the higher prices they are paying for their power sources. that is namely natural gas

remember england has been desperate to buy natural gas in the spot market and is paying huge premiums to do so that's because u.k. policy makers in 2017 closed their only natural gas storage spiel, so they shut it down and they have almost no stor and have to buy it it hasn't been a problem until now. you factor in wind and renewables in the northwest not producing the kind of power the u.k. needs when it needs it or where it needs it. only about 15 million british households are on floating rate and not fixed rate plans i can't overstate this that means those families many of which are much lower income could end up paying $1,000 or more per year and this could set one in ten british families into what they call energy poverty, maybe having to choose between

heating or eating. now, the u.k. government today quickly trying to blunt the impact of these higher costs they're offering up subsidies like 200 british pound discount on energy bills, 150 pound tax rebate, 150 pounds for local agencies to try to help lower income families. so basically, mike, the government is trying to help consumers out because poor energy policies the government made has led them to make price spikes on those consumers. are you tracking that? >> yeah, i think so. i mean obviously they're trying to chase this higher i guess the question, let's say they get the support package through and maybe it blunts the impact for now is it for the next several months this is going to be the level. but is this going to be the peak for them in terms of the cost? obviously it's going to depend on things like natural gas prices, but what are we looking at further down the road >> probably another hike next october. and i'll tell you why. so many of these power companies and utilities, mike, have lost so much money, maybe billions in

the hole because they're paying the price. they can't pass it along until now that even if they get this -- they're going to pass this 54%, and trust me every utility in the u.k. is going to raise prices by that 54% they don't have to, but i promise you that they will -- they're still going to be in the hole unless things dramatically change and power prices dramatically drop. they are likely to raise prices again in october, which means there could ultimately be a 12% last october, another 54% april 1st if you get i don't know a 20% or 30% hike next october theoretically, mike, we could have a situation where millions of families in the u.k. have their energy costs double in a 12-month period. now, this is sort of happening here in the united states. not to this level because their system is different. but if you look up in boston

right now as i've been highlighting on twitter in the morning, their wholesale electricity prices are still in the triple digits. last january they averaged about $45. they haven't been under $100 that i have seen in a number of weeks. they can't pass that all along, but you and i know someone is going to have to eat it. utilities are going to have to eat it, maybe a bail out from a tax pay the tax bayer and the consumer are going to have to eat it just like in the u.k. right now. >> yeah. i guess sometimes state by state you can get rates reset and things like that but, yeah it's not as much of an across the board process over here you can't switch to another fuel source that's for sure >> using oil in boston to heat homes. >> to heat homes for sure. familiar with that no doubt about it bob, thanks very much for all of that coming up jim cramer with his first take on what's shaping up to be another big day for the

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cancellations hitting 2,300 yesterday and more than 4,000 have already bip canceled today, this all according to flight aware. meantime airlines and other travel industry groups have asked the biden administration to drop covid testing for vaccinated passengers traveling to the u.s. from abroad. the group said the move was justified by the pervasiveness of covid cases in all 50 states, increased immunity, higher vaccination rates and treatments it said removing the requirement would greatly support the recovery of travel in the u.s. and globally without increasing the spread of covid. the u.k. plans to drop its covid tests here for vaccinated passengers one week from tomorrow so we will see what happens. when we come back, top stocks to watch ahead of the opening bell plus much more on meta's impact on the markets today, that stock off 20%. off 20%. you're

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it is time to get down to the new york stock exchange where jim cramer joins us now. and there is dare i say one topic and one topic only that i think at least the market is fascinated by which is meta and what it means and whether this

is some kind of amazing buying opportunity or some kind of terrible inflection point. >> no, i'm going for the former. i think it's a little like 2018. i know this is probably out of fashion. i have total faith in mark zuckerberg i think zuckerberg is going to be able to pull off both the meta verse and also deal with the apple privacy problems i think he's a fierce competitor he has decided that tiktok is who he's gunning for he wants people to be able to create their own product on reels i think he'll succeed he hasn't even begun to monetize a lot of other things and in the meantime unlimited firepower i think mark very much recognizes this is not an existential moment this is strategic and competitive moment and i think people who view it as existential are going to be proven wrong >> how doia look then at snap which we're going to be hearing from how do you look at what's happening at twitter if you're buying meta are you buying those, too? >> if you're just in -- if

you're an app the privacy problems with apple are going to be very, very hard to surmount it's going to take the whole year to be able to work through it they don't have -- they don't have zuckerberg. i mean, i've got to tell you this guy is driven beyond all means. he is not going to stop until tiktok comes in second these other ones they have -- they do have the existential they have to figure out how to get the advertisers, and they have to figure out how they can beat tiktok. now, twitter you can say isn't competitive for tiktok but as mark said it is competition for time you know what, look, andrew, there's some people you have to bet on and if you go back to 2018 to that horrible summer break down, the august to late july break down no one thought these guys could come back. >> you're talking about betting

on people you have a big interview coming up with daniel ek and spotify the earnings off by about 10% this morning what do you think? >> harder. harder because i think that people were not expecting such i'd say wishy-washy guidance for first quarter at the same time you have the rogan problem the way i've been positioning my questions this morning obviously we do that beforehand is to be able to alucidate the notion that worldwide growth is still very, very good and ahead of netflix when it comes to what people are thinking about the near term future i'm inclined to like that one. i can't say that yet about meta. i don't want to give up on these stocks i do think we need to start thinking about whether average users have any money, andwhat is a real user and what is a user that we don't care for? >> and then finally, by the way,

we've got john stankey on from at&t tomorrow, big merger, big interview given the josh zucker news at cnn. you want to weigh in >> it's interesting. when i was reading there are people who are fans of jeff and they just view it as being i'm a fan of jeff. that's how i am. i'm a fan of jeff. i don't understand the full story. it seemed like a way to be able to get rid of jeff i think that's a mistake but he did green light "mad money. i'll never forget that i don't know about personal stuff and i try not to opine. >> i have great affection for jeff zucker, as well we'll talk to them tomorrow about it i think it's the first time we'll be hearing from them. >> i look forward to it. >> all right we'll see you in a couple of minutes and remind everybody they can check out the cnbc

investing club by going to cnbc.com/jointheclub squawkbox has breaking news. (. yeah the ecb having a press conference today yields rise globally, actually, steve, the german 10-year up to 10.1% and the futures backing off a little bit. >> yeah. and christine will guard making some headlines here. anonymous concern that the ecb about the inflation numbers. she said there was a thorough and in-depth discussion. those inflation numbers we got in january from europe that show they were hotter than expected and hitting a new record look more in-depth at inflation in march and, by the way, asked by our own from cnbc in europe whether or not two rate hikes were correct she did not say rate hikes were unlikely like she had last time.

any decision will be gradual she said it's set to decline in 2022 price rices have been more wide spread the economy, she said, will pick up strongly. the higher energy costs could be a drag on growth a lot of this has moved stuff around this morning. we saw a little bit weaker in u.s. stocks and higher in foreign yields a little bit stronger on the euro i wonder now as we were talking about earlier is it time to think about, thinking about thinking about the ecb may be raising rates this year? i don't know we'll listen to more of lagarde today. >> that has been the quick reaction and the possibility is out there that lagarde did not dismiss the possibility and for sure the markets are repricing in that direction. german 10-year above .1% it's actually about two-year highs, as a matter of fact. >> yeah. and clearly, steve, with europeans looking to raise rates or poise to raise rates higher

soon that removes that anchor effect on u.s. 10 year yields we're seeing them creep higher this morning 1.82% compared to this morning it's been a move of at least five basis points here in the past hour or so. >> yeah. >> absolutely correct on that effect i want to take a quick look at the dollar, which i would suspect, yeah, a little bit weaker now down below 96 in the 95.9 range as the euro strengthens. the playing chicken. i don't know we'll have to listen for more clarity from lagarde on the issue whether or not she feels like she intentionally say it was not likely this year is it part of the signal intended this year certainly when -- says with anonymous concern on the board about inflation, you've got to,

you know, sit up straight and put your shoulders back and say, oh, wait a second. maybe something is afoot here. >> for sure. and u.s. 10-year not as high but not far below. joining us now -- thank you, steve. liz young head of investment strategy at sofi liz, good morning. weigh in on the picture. we've been trying to digest this likelihood that we're going to be in a world of incrementally tighter fed policy, central bank policy in general. at the same time we're decelerating, if nothing else in terms of earnings growth and gdp here where does it leave us we had the 10% correction and the bounce what next? >> what i think we heard is inflation is certainly a global problem. it's something that central banks around the world are going to have to combat this year. they should combat it.

'02 seeing like financials and energy lead the way. that's a contrast to last year where we saw tech as the one that lead the way in up-and-down markets. it's more evidence there's a rotation under the surface i think the rotation sticks this year and investors need to get used to a new environment, which means setting expectations differently. and one of the things, as a strategies that usually talks about making broad allocations, it's a little bit uncomfortable to say this, but that broad beta allocation isn't really working this year. you have to be a lot more choosey about your spots you have to choose names that are going to do well in a rising rate environment or at least be insulated from the volatility. you can look at faang and the divergence going on in that smaller group of stocks. you can't buy it outright anymore. >> right i mean, there's massive differentiation going on among those groups we say that the rotation will

stick. i mean, we've seen energy as a massive outperformer year to date almost to the exclusion of the rest of the market is that what you mean that type of dramatic divergence is sustainable? >> i don't know that the dramatic divergence of energy is sustainable. it makes me nervous how quickly energy has run up. i think we okay at the levels of oil but i don't like how quickly we got there i wouldn't be surprised if we see volatility around the energy trade. rotation i'm talk abouting is more one looking at what i would consider short duration equities instead of long duration equities we've seen a little bit of a bounce after the tough january in the nasdaq. i don't necessarily trust the bounce i don't think it's something we're going to see tech stocks

and communications stocks go straight up from here after a little bit of a rough patch. i think the rotation we look at by sector and even the rotation outside the u.s. is going to be something that sticks this year. how fray guile is the tech trade is you thought it was fray guile at this point we're seeing big cap tech. amazon is posting today. they're feeling some pressure this morning. >> yeah. the word from guile, i would refer to rallies in the tech trade as from guile. we see an uptake in the nasdaq or the cues that's from guile. we get a little bit of news in oneagile we get a little bit of news in one name we know financial conditions

will tighten the story will not change. the tech rallies will be fragile in the next few months. >> energy -- it sounds like you're questioning the move in energy it seems to be a consensus here. everybody likes energy all of a sudden. >> it's easy to like it when it's going up. energy has done well from a sec kl expansion a place where the recovery is getting a little bit older, right. not necessarily ending but as things are sort of growing up rather than growing old. it sends it to a hider level. >> outside of tech and earnings season is pretty far along now there's a skew toward lower guidance very few companies have raised guidance for the current quarter. you have had a spade including

honeywell this morning and i believe sigma. in other words across the sectors, there's a little bit of moderation do you think it's a first quarter soft patch in growth because of omicron and other factors? or will we have to deal with a typical year when earnings estimates start at a certain level and then kind of get whittled down from there >> yeah. hipg companies are being conservative this year there's so much uncertainty. we're seeing it across sectors we have to remember we're still in q42021 earnings season. that's the fourth quarter above 20% growth that's sort of what we're used to whereas when we hear earnings in 2022, things will be much more subdued but in a more normal level. so you think about maybe 10% earnings growth for 2022 usually it comes in a little above the estimates. i think the estimates are conservative we're also going to have to get used to hearing about less earnings growth than we've seen

for the last 18 months >> yeah. 10% would be a win we'll see it settles out, liz, thank you very much. >> thank you. >> all right a final check on the futures this morning nasdaq looking down on the back of the meta news dow about .5% now. the s&p off a little over 1.5% thank you to melissa and mike. make sure you join us tomorrow a big show ahead from pebble beach. sq"squawk on the street" begins n now. yields are higher. bank of england hikes again. we think it's good news on jobless claims and q4 productivity vested more than a year road map begins withet