fed. >> thank you both for your time this morning good to see you. in the meantime, very quickly take a look at the futures. dow is picking up some team. it's now indicated up by about 81 points. we will all be back here tomorrow -- joe, will you be back here? >> no, but i'll have a camera with me. >> tmi good luck, joe time for "squawk on the street." dow futures holding some gains despite the ten-year just four basis points. oil backing off big news today earnings from pfizer, harley, dupont peloton is slashing the outlook,

replacing the ceo. plus it was the biggest chip deal in history, the deal collapses due to significant regulatory challenges. pfizer getting a boost from covid vaccine sales. john foley is stepping down as peloton ceo, balely a wholesale restructure of the board. they do guide down on full-year revenue. foley on the call saying he has made some missteps. >> just the epitome of a boom/bust, moving fast to try to expand capacity into unprecedented demand, and then, you know, arguably having too much confidence. that seems to be the short version of the story

along the way, a lot of criticism about spending, manage, all the rest of it. you know, you just don't know what the run rate is it's a interesting shift he also still controls voting -- >> he has 40% voting listen, somebody close to foley this morning tells me this is not unexpected, that he has been interested in or focused on potentially no longer being ceo. this is not necessarily in their view a sudden move in the sense the long term was to step down and remain as, or become executive chairman of the company. barry mccarthy is taking over.

we know fairly well, the cfo of spotify, at netflix early in the gestation of that company as well you know, unclear how long he will stay in this role i haven't had a chance to speak on mr. mccarthy, would certainly love to. but certainly well regard. there's still quite a lot of people who believe in the connected fitness. but what's the level of spending this is a company that went from a billion in spend to 2 billion at a very rapid pace, adding employees at a rapid pace, infrastructure, and logistics, so much in terms of the supply chain, because remember it's not just software. it's a lot of hardware they'll have to cut that back significantly.

it doesn't mean there might not be interesting down the road, if there was a huge premium deal to be done, he might not at least take a look at it, but he again controls the fate of that company, does foley. he also spent plenty of money on himself, too, his own -- he bought that $55 million house in the hamptons, 3.5 million shares 3.5 million shares have been pledged for securing personal indebtedness, but it's not like he didn't go a bit crazy on his personal spending, enjoying what was apparently a short term enormous inflated value. >> and a fair amount -- that price is above $100 a share for the most part. it's also one of these deals

where you can't have, if you handicapped it right, on the way up, it probably just obliterated anybody who is short on a valuation basis, short on the basis that demand was going to go down, and now all the way down, if you felt like it was still going to be a company that just gets wrung out. so the down side accent waits the fact we don't really know where it settled >> blackswell capital -- a big slide deck on the like, arguing for basically every legacy media company as a strategic acquirer. no longer developing this manufacturing facility in ohio, which was announced last may that's fairly large new, and still the tread category is bigger than the bike category. here is what foley said earlier. >> we also acknowledge we have made missteps along the way. to immediate market demand, we

scaled too rapidly, and we over-invested in certain arts of our business we own this. i own this we are holding ourselves accountable. that starts today. >> they will be looking for savings in the neighborhood of $800 million from the layoffs, and basically reduction of expanded manufacturing that's the question. >> from a billion to $2 billion back down? >> it's probably also the idea of why selling the company is not job one. you feel as if there's ways to rationalize the bit, get it back in shape you know, i just feel like that's usually not the way it goes, immediately the company wants to sell at 20. you know, that's usually a tough call for now, it's about how does it get rehabbed along the way >> yeah. a lot of pedaling in their future >> turn up the resistance.

>> yeah. let's get to a deal that didn't happen as well. jim and i have spoken about it oftentimes, but it is now official, softbank reported earnings we'll have more on that later in the program, but as for that deal which would have been the largest chip deal of all time, it's officially called off we have talked on which over the last year or more about expected opposition, and what did come to fruition is regulators in the uk, regulators in china, there was no shortage of potentially opposition to it union the only ones who seemed perhaps positive about the possibility of getting it done is nvidia's cfo and ceo, but even they have admitted that this wasn't going to happen. they terminate the deal. there is a payment from nvidia to oftbank, $1.25 million

breakup feel fee here's what they had to say on the softbank earnings call -- evil government. regulatory have been showing a strong interest against, okay a block against the transaction. even with our tremendous evidence, we are terminating not much more needs to be said they'll try to take this public, that is, a.rm, and talking abou it as the largest greatest chip ipo of all time, but we'll see if it gets to the public market. >> is there a broader, you know, sense out there that softbank in general is by kind of design or necessity, a bit in trim-down mode or look to go harvest some

things >> yeah, their shares have declined 'lot of embedded value we'll get to that. you know, unclear. there was a period where they got out of operating businesses. obviously sprint and arm was one of those we viewed that way as well really they don't want to be operating things as simply they want to be focused on the investment side. this would be the only business they wholly own at this point -- i might be wrong i want to make sure the mobile business in japan where all this began, perhaps as well, but i haven't kept up as closely as you need to. we'll fill in some of those blanks this goes babbck to september

2020. >> you remember a number of years back, softbank owned a significant stake in nvidia, then they sold it. for an investor who likes to hang on, this deal would have brought them a significant stake in nvidia. and obviously, he certainly wishes he had hung on. even with these recent declines down into the 500s, nonetheless it would have been a home run investment for him he did book a gain, but not a gain that's available if you go back from let's call it a five-year period. >> not necessarily terrible, i mean, given what's happened to overall semiconductor -- it's not as if they're caught with an asset that won't have decent value in arm

then a question of regulatory con concerns. >> there was questions about they were not -- so this may have been unique, but when we talk about opposition to potentially deals, particularly in the u.s., we're talking about it because of this new regime in terms of the doj and particularly the ftc whether they're going don't opposed to deals outright simply on the base of the law that doesn't exist, but what they believe is the market power of the acquire company. certainly that applies to the likes of microsoft when we talk about a peloton deal, just the size of these companies, so it figured into

every conversation right now practitioners indicate there's the possibility of long deals this year. because they feel like they have that strategic need and it's imperative to actually do the deal that may fall into the crosshairs of the regulators >> that's why they're so fascinated there was even some discussion yesterday about frontier and spirit not because of the size of the deal, but because it's an industry so critical, and got so much federal aid. >> and what it might mean for pricing on the low end >> there's still some regret about what was the american deal years ago, and allows the consultation amongst the majors that took place was perhaps one deal too many. >> when we come back there's a ton of earnings, including a look at pfizer they do guide a bit light. a rough start this morning take a look at futures there's also depont, harley got

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xfinity mobile. it's wireless that does it all and saves a lot. like a lot, a lot. pfizer among the biggest decliners in the premarket as there's a miss that overshadows the quarterly beat hi, meg.

>> hey, mike it is the forecast that folks are focused on we did see that beat in the fourth quarter for earnings, a slight miss on revenue, but quite light as you look at 2022. a lot of folks focused on the non-covid part of the business the vaccine is projected to bring in $32 billion the antiviral drug, $22 billion, the first forecast we have seen for that analysts are expecting that to go higher as pfizer signs more deals. a lot of questions about the growth of the rest of the business and the future growth of the covid business. the conference call starting at 10:00 a.m., also, the antiramp ump is really stacked. 120 million treatment courses, 90 million will come in the

second half of the year. we could see them sign more deals around that. that could drive up the revenue appeared earnings estimates for the year but, of course, a lot of questions on the call, the future of covid business, what is happens below the growth of the covid business, and m&a, will they big buyers in stock. the stock is down now more than 4% >> if you look at the last two years, pfizer shares up almost 50%, where others are basically flat over that period. presumably is the covid-related businesses what are the key factor, or key new products or areas that are non-covid for pfizer, people that will be looking for the longer-term story. >> they've got a lot of things going on in rare diseases. they're also working on different kinds of vaccines, continues the mrna partnership with biontech.

different therapeutic areas like shingles and flu a vaccine that's not mrna, in lyme disease, cancer drugs they're working on it's a pretty big pipeline, but totally overshadowed by the success they have seen, it's vibes of gill-and-and hiv. >> meanwhile, meg, you mentioned the plaxovid slide curve we got information from the supply to the government when do you think it's going to be something that's commonplace, where if you do test positive, it's not a question, you're going to have the ant virals available? >> yeah. it's a question both of the supply, and as we see that supply ramp up from pfizer, 6 million courses available

worldwide in the first quarter so you're going to start to see that ramp a lot toward the middle and end of this year. the other question is, who can get these pills? right now they're only indicated for people at high risk. that's what the trials showed the benefits in. we need more data. one more note that pfizer put out this morning is that it's testing a next-generation antiviral as well. it's continues this. it's also testing it in kids, so we could see this expand >> yeah, it seems like the second half will be a lot more available. meg, on m&a, which you mentioned, again this idea of re-deploying the profits from covid therapies into other areas. they did that arena deal last year, the expectation is i would assume there may be more to come. >> absolutely. certainly among biotech

investors who having beaten down in the etfs, they are really hurting. investors are hoping they'll be big buyers the question is, do they continue the deals like those that you mentioned or do they do something bigger >> we'll have albert bourla in the 1:00 p.m. hour to ask all these questions. >> thank you, meg. we'll take a break here. she'll talk to albert bourla later on the ten-year continues to be in focus, yield of 1.96 we do get some relief today as there's more discussion opressure not to grow, easing up a bit. we're back in a minute doug? [ding] never settle with power e*trade.

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taking a look at some leaders? peloton is on the list we'll gelt the opening bell in about seven minutes.

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our roster of instructors is foundational to the peloton experience we will continue to invest in the content creators for the benefit of our growen numbers base we will also continue to invest through innovative hardware, software and content experience. that's peloton's john foley on the call this morning as the street reacts to the news of

management changes and cutting a bunch of investments the street as general take is incremental positive it reminds us once again they still trade cheaper that the e-commerce group. >> yesterday's bounce took the down down to 80% probably the majority of the known bad news is out there with the preannouncement, so you have maybe increased y d optionality going ahead under the new ceo. that seems to be the closest you're going to get. i don't know where 60 comes from unless you want to give it more of a -- >> one of standout in the journal piece, in which they do interview barry, the company got over their skis, thinking it was

the new normal i wonder about the universe of companies that got into the same trap >> i think most of them hired more software engineers, maybe amped up marketing spend, because they were at virtual business, as opposed to factors, we're controlling our own -- >> so a vertical risk. >> it's physical, it's vertical, it's fixed costs i think that was probably the main difference. >> yale, some of the notes point out the ohio facility broke ground six months, $400 million, something like that. >> but there's any number of these names we follow so closely. zoom comes to mind as well that stock is $451, and the low, well, not far from where we are right now. the low is 134, and you have a stock at 141. >> at the high you had to have this high expansive view of what

that product set was going to be, and how subscription growth was going to grow. and maybe it is what it is now, and we'll see what a normal pace of growth officer it might be. >> also it may be facing future competition from meta. >> that's right. >> and the metaversion, and our ability to work together, but at home. >> yeah. by the way, meta, as david said, extending its losses, now down 30% meantime nvidia as leapfrogged meta into seventh place. a lot of discussion about peter teal's decision. he was the first significant outside investor in then facebook hard to separate his motive to get into politics more actively, maybe, some argue, not believing in the future growth prospects. >> it's tough to make a read,

what it means for the business, they're in a if you face, they're hunkered down, but the fact the stock keeps going down, it's not past that -- let's get the opening bell here, and the cnbc real-time exchange, and celebrating black history month, celebrating 50 years of black women serving on public boards. so some of the other names we haven't gotten to. this habit of guiding below on eps on margin headwinds is becoming more and more common this earnings season. >> it has. to some degree, expected, most of the stocks are down a bit, so it's not as if people assume they were going to magically preserve margins the stock has opened up 3.5% on

that news, that is the give-and-take of what is already been priced in there, as the overall market dealing with the margin squeeze at the same time, yields keep flying globally, and trying to figure out what that means in terms of the economic cycle and what the fed will have to do here. >> he said, as banks lead at the open -- >> in fact, today, in the treasury curve, it's a big of a steepening action, so the two-year is still up higher. obviously the stock market is sitting back, waiting for thursday's cpi number to see if it pushes the argument in one direction or another in market implied probabilities are getting up there, to the point where after the cpi number, the thinking is the fed has to endorse of idea of 50, or really talk it down. you don't want to go into a meeting where it's kind of a

40/60 proposition on what you're going to do. that's probably what we have in front of us, as the market prices in five-plus. >> 1.95, right >> yeah. in europe they're back to 2019-level yields, which is super low, but above zero for the most part. they got there in a hurry, i think, is the real takeaway. >> the two-year as 1.317 we just say, mike, anything investors should be aware of as we move closer to two? >> i don't know that 2 is some kind of a barrier there, but one of the restrains on where treasuries went was global yields so now that you have, you know, the anchor chains loosened on yields in europe, and german yields, you know, above 0.2%, if you can get a 2% point spread, up side to t. i think the biggest question is what happens

to corporate credit as yields in general go higher. it's starting to soften up you're starting to go attention on how spreads are widening out, but everyone says from very low levels, and not at anything that would be all that stress-inducing, if this was the going rate for corporate borrowing, but that's the area that i think there's a lot of focus on >> jpmorgan nose set they have been fielding questions on the investment-grade cds they say it doesn't look as dramatic on the five-year it implies a 5% default rate. you're talking double digits. >> yeah, five -- and a guaranteed five is, well in excess of what somebody would actually predict it's really

directional trading. people are saying credit has seen its best moment for the cycle, so it probable will widen out. what we're hedging or what we already own. people also say yields for global investors in u.s. corporate debt look pretty good. that could also be something that slows down the rise and rates. oil will be one to watch. >> we mentioned we're back below 90 today we have the prospect of better talks with iran. there's this ongoing group think that maybe russia wants to de-escalate in ukraine a nice peek by reuters about producer finally moves into high-cost shale. citi last week said short december crude they believe maybe mid 60s by the second half.

>> normally they track pretty well it's not clear which one is right and leaning and lagging, but you've had a bit of a respond in the oil price the energy stocks are -- long month tum, but, saying, you know, when crude reached $90, there used to be a rule in stocks, it's not literally always true, but it seems like a strong tendency, so i'm not sure if the rule still apply to say crude, but it's interesting to go if it's a one-way trade right now. >> i did notice, guys, i don't have the note, but share of gm are down sharply the rest of the group is also down, which i look at as well. rivian down dramatically, but jon has out with a note, not particularly positive. >> the thrust of it is that

we're getting near a peak cycle for autos. he's saying probably this year into next year is when you'll have peak demand, catch-up for pricing, all those things, and therefore, when you look at gm and ford, that's because, you know, cyclicals when they trade cheap, that's not really the time to guy them >> meaning that the electric vehicle component of the company and all the rest of it can be separated off so that's a be of a rethink ingrethinking everyth know, looks great in home building, but rates going up that could be the call, if you really think that affordability will not be a problem in housing. if you think there's more life

in the auto production cycle, and kind of keep the enthusiasm in the sector for a while, then that is your long thesis at this point they all look like they're telling you the cycle is late. >> jonas not only goes to equal weight, but cuts hi tas target part of it a change to his methodology and some of the other parties. btig going to neutral on airbnb on, again, challenging comps coming out of covid, and lumping it against other companies that have come off of double-digit revenue multiples. >> i thought it was interesting, basically saying the street is given them too much credit -- the stock too many credit for being ability to hold that valuation. it is quite high it always has been people think you buy it as a massive franchise value, which

is gaining share perpetually, but yeah, the stock done a little over 1% it's down 29% off its high, so it has recognized some of that danger in near-term booking trends, which interestingly suggests a less dramatic -- than we saw in a lot of the -- >> also got to wonder if return to office really happens this time i n i know david is kept cal do you get three-month rentals in montana this summer >> firsthand experience, as a sometimes host, there's a lot of that people don't feel like they have to be anywhere in particular, and take the place for weeks on end. >> yeah, it is back to actually having what is now monthly debate about what return to office will really look like we're coming up on the two-year

anniversary, of course, of all of us going to various parts unknow some of those people still haven't come back, which is just shocking, but as omicron does go down, you know, carl, you raise the point. i love engaging on this. there is a new mindset into what the expectations you are for employees. flexibility is certainly a key one. i hear rarely of companies that have an expectations of bringing that you are employees back five days a week. >> we are the only one. >> we are. we're the only ones still wearing ties, too. you even wear them on fridays, but there's something to be said for dinosaurs, as i always like to say, 300 million years, maybe more i did want to get to softbank. why not? it's a company we used to focus on the vision fund is the largest provider of capital when it comes to venture the size of the fund itself is

enormous you recently go back a it, not that pretty a picture. you look at softbank, as a result of the holdings in the vision fund, not to mention some of the other holdings outside of that as well why? well, because of what's going on in china and a number of other things, that's a complicated chart will there, but you can see some of the key holding for the company and what they mean to it, including, of course, what has been a great accretion of value at the vision fund. even now it's up dramatically from where it was in 2020. and for a period of time where it was gaining assets. they do have vision fund 2 i think it's early to say what is going on there. you saw some of the names we're talking about, whether it's

doordash or any number of other ones, or other names they have come done in value didi, is a key one that's been dramatically hit by actions by the chinese government in particular to that company again, when you look at softbank and what masa son is saying, he acknowledges the last nine months, most tech stocks were hit heavily. and after divesting, well, their stock prices are negatively impacted by the market he says we're still in the middle of a winter storm, and the storm continues at this point. he also points to rising rates as one of the key considerations it's a question we have discussed numerous times tick lay already for companies not earning a lot of money it's an asset value of 168

billion, it's still up a great from where it was. that's overall for the company 49% is the vision fund the question is, what will happen to arm? look at dc funding i do talk about the private markets a lot. hedge funds that have benefited from the private market investments, to the key ones there. there you go tiger global, and norms. look at that number. and d-1. they're down the list there. but vision funds softbank still dwarfing them all. another 36-plus billion dollars. a lot of that going into some of those names that have not fared well, but certainly there's an expectation it will change when it comes to arm, they're talking about what they view as significant growth there in th future for that company as they now plan to take it po you can't

for next year, $2.5 billion revenue, $9 million ebitda, talking about a v-shaped recovery over 5200 at arm, to sort of go into some of the questions you had earlier. the vision fund is at least more than half at this point, softbank, and so it goes >> the story was they couldn't get you the money fast enough. >> what i won'ter, how are they marking them regularly or only at the time of a funding round? that has an impact on their own valuations you hear leslie picker talk about the tough times, but not clear to me that they're marking

those private investments at this point based on their peers in the public market, which obviously would indicate -- >> i would imagine at some point, some client would say, let's get a market mark on those things >> as opposed to paying yourself 20% on the up side on a market that's on a less funding run, which you're a key part of >> also, of course, nvidia is barely down on this news, too. less than half a percent. >> we didn't even mention oscar nominations. netflix's power of the dog, and steve spielberg, nominations in six different decades, the first. unbelievable let's get to bob pisani. a very exciting oscar season right now. the dow is up 90 points.

s&p is flat, pfizer is weighing on the healthcare sector people are watching that ten-year, folks, we're heading toward 2%. industrials have been struggling, because the earnings are tough for them they have price and cost issues. i'll talk about that in a minute china had a wild session overnight. the 300 -- csi 300 was sitting near a new low, but it's been all over the place, so let's review what is worrying the markets. remember, the big concern is stagflation. the worth-case scenarios, you get inflation and no growth. so far we're not that jobs report was very good for the idea we're getting -- we still have growth. inflation and growth is better than inflation and no growth that's one of the reasons the market has holding up so well. we're getting a lot of concern

with that inflation story, particularly in the big industrial names carry are is one that reported today. they're one of the big heating and ventilation companies in the world. it's growth stories there, revenue is up, they cited continues order momentum all of the industrials have cited very good sales overall, very good demand, but they said, productivity and price increases weren't only partly offsetting higher costs that's the problem the margin pressures you're seeing as a result, a lot of them are facing problems, getting their earnings estimates lowered a bit, because it's not so easy to offset the higher costs with higher prices johnson controls fastenal, black & decker, all of them down. it's just a simple summary of what's going on there.

you want to know more, the carrier ceo will be on "squawk on the street", and we'll get more on though productivity gains, price increases from dave gitlin we're about 60% of the way through edges season, the revenues are great we'll have $3.5 trillion in revenues, a report high. the beats have been very modest. this is more historically normal the big trend is just weaker guidance the q1 estimates have been slowly declines. it hasn't been common in the last few years, and of course it's because of the some you recollecty environment, finally, a very curies note today, just on grubhub, now called just eat. they're out of here. they announced they're delisting

from the nasdaq. the company is still going to trade in london and in amsterdam. this is kind of unusual, to announce a delisting the reason they cited was the cost savings there's an enormous cost in maintaining the compliance requirements i've seen private companies cite to me this is a problem for them going public, because the compliance costs of being public, the legal costs are extremely high this has been a bitter complaint for major corporations for many, many years compliance costs in the united states are really high here is a company that said we don't think it's worst listing in the united states, considering the costs for us that's a pretty big statement there is a $10 political onmarket cap, but this is certainly potentially an issue

for companies that have dual listing. back to you. >> bob, thank you. before we go to break, take a look at the bond report. cpi on thursday. .morrison does stuff make the market sits on its hands, but for the time being, ten-year just shy of 2% the dow has gone green for the month to date, though most of the gains here are amgen we're back in a moment do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find

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neil young is urging spotify's employees to leave in a blog post, he says to the worker at spotify, i day sandal -- i say that eck is your

problem. really it is morphing into something larger than one or two episodes of a podcast. >> i think the real key is what the deletions of the app look like, if there is really a groundswell. i notice polls have said so many people, it's unclear what the traction is. the now, the stock is down, you know, 14% this month we're only in the 8th of the month. so i think there's certain questions on pressure on the long-term business model to really emerge from this mess of free services that everybody has the same music. >> the stock is down because of the disappointing numbers, the

subguidance was below what anyone expected when they reported last week. >> and we're still on watch to see if a major music artist decides to also make it a cause celeb of their own st> when we come back david koin will join us in a moment. r left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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good tuesday morning welcome to another hour on "squawk on the street. we're live at post 9 of the new york stock exchange. morgan brennan has the morning off. we're all waiting for cpi, so in the absenceof that we'll watch peloton, harley, pfizer and more. >> we're 30 minutes into the trading session. the three big movers were watching, starting with nvidia, announcing it will not go ahead with the purchase of softbank's chip designer arm. the two companies said it faced significant regulatory actions

plus pfizer's share sliding, reporting a revenue miss don't my albert bourla first today at 1:00 p.m. on "the exchange." and we'll end with john foley stepping down, barry mccarthy taking over. this has been the story of the morning, the conference call wrapping up a short wile ago a very, very interesting move, i think partly in defense, relative to some of the investor concerns there is still an activist in the name that had been pushing for the company to sell itself, still pushing for that they say they should fetch a price tag of $65 a share, with a bunch of attractive takeover candidates, but this appears to be their way of saying, not going to do that, but how about this management reshuffle?

>> it's always interesting when the activist gets involved. >> i think his alone is 40-plus percent, i believe, of the votes. i don't really care what blackwell says, sorry, guys, because i don't get it make you'll increase your aul. as for pell otone, they're going back to a billion of spendle. somebody closest to foley this morning told me it was his plan for quite some time to step down for ceo of miskathy obviously has a strong track record. i know barry a bit through the years, certainly a serious guy so one would imagine he'll be focused on the continued hoping

for making what they believe are the prospects for connected fitness. >> i think the key lesson, as we look for what happened, and a lot of companies in covid, if you think about a model as an accordion, you can scale up like situation during covid to meet the onslaught of demand and then scale back down as things change this is the kind of company that isn't as flexible as an accordion. mike was mentioning last hour, it's not like a software company where you can easily increase it and decrease it. there's a lot of fixed costs they have to contend with. peloton talk about it. they talked about whether their tam has changed, in light of the return to work, people going back to gyms no, the tam hasn't changed, and now it's kind of essentially back on track to what we initially anticipated the tam to

be all along. >> by the way, a lot of the street is talking less about an eventual sale and more about different decisions, but the side and scope of the moves are favorable and consistent so they see it more as a continuation >> clearly the market seems to be appreciative of it, that it's not on earnings. the earnings were not positive, it was a miss there, but the stock is up 12% after being lower. i think they are initially disappointed, but now clearly after the call, they feel better about the recent shake-up and the news moving forward. >> i guess there's a hope in a few years they'll generate, but this is not on takeover prospects. this is prospects from mccarthy and to your point, the new plan. >> i think so.

they did say also on the call they have no intention of changing their dual class share structure at this point in time. speaking to your point, david about blackwell's and the ability to effectuate change turning to the broader markets this morning, the dow tries for the second day of gains. we're up about 14 points it will be a bit squirrel where. david kostin, always good to see you this morning. >> good morning, carl. >> i was reading your colleague's note and what he called the broadening of wage and price pressures. he said that growth needs to slow in fact the title of the report is the slowdown we need. relative to the post-covid

recovery do you think asset prices need to come in i think part of that analysis and discussion is the tightening financial conditions that we are anticipating that comes in a variety of ways. one is through some tightening by the federal reserve there's higher bond yields, both on a nominal and real basis. it does lead potential to lower equity prices, or another way of saying that is earnings are really necessary in order to lift share prices. so i think that is leading to a certain bifurcation, carl, in the equity market. what you saw in this quarter so far, we're pretty much toward the tail end of the fourth quarter results. what's happening so far is companies that have missed expectations have been severely punished, if you will, in the share performance, but in addition, carl, the companies that have actually beat

expectations have lowered their guidance for profits in the next quarter as well as for calendar year 2022. so i think the idea of tightening financial conditions put incrementally more importance on the growth prospects of individual companies. >> will be the key story that we're focusing on right now. >> it makes perfect sense, though i'm just looking at a chart of alphabet today, david, which as of now, has given back all of the gains on the share price in the wake of what was a stellar earnings report. i'm wondering, do you think earnings will be enough -- are you still at 5100 year end >> the answer is yes, our published forecast is at 5100. where we're focusing now is in a tightening financial conditions environment, what historically does well with tightening.

a company that would meek those >> near the i think it's one of the reasons why you're likely to see more corporate pinoffs you saw it was almost double the amount of companies allowanced last year. i think thats -- more challenging to get revenue growth

one way of doing that, another way is through corporate restructuring and spinoffs i think is one of the vehicles that companies will use. >> kind of on the flip side of this, definitely pre-profit. company that have gone through the -- i'm curious, do you it's a real discount to their intrinsic -- or at the value that they should be -- >> so that's a great question. the way we stop to that is the fact it's been a repricing of compete duration, the idea of much longer companies that are anticipated to have very rapid growth, but that i have low margins the value becomes lest

very rapidly. companies that it has acquired, with the idea that many of those companies are anticipated to have rapid growth, but low margins. i think that comes back to the idea that corporate margins are a really important issue that investors are focusing on i think that's obviously those that can achieve that will do

better, those that won't will obviously be struggling. the liquidity is another sure where things are decelerating and tightening financial conditions those are some of the challenges that the spacs are facing right now. david, you did choose to put out a report on it, and cited some of the things we've talked about. 144 billion seeking deals, and when are they going to expire, so to speak, in order to get a deal done. where might there be value it shows the only thin trading above par are spacs that have yesterday to announce a deal so where is the value in this fairly large universe?

many of them have to do a deal, we know you are likely going to be very busy the answer to your question of where is opportunity, if the idea is not every spac is losing money at the present time. many of them are are merging with the second would be, what is the timetable for that past to profitability is that something that's far out into the future? or a mere-term new hurdle. capital raised at the time of the spac that would provide more

liquidity more if you tilt the profitability in favor of that performance. they having discussion about a bigger mix of fixed long-term dead basically the argument would be we can handle some rates higher before it starts to pinch. you go along with that? i think that's limiting the risk overall. corporate buybacks, $1.2

trillion authorize the last year much of that could be executed and company completed this year, more than a trillion than before, so there's sources of demand for equities, as we would anticipate it, but the balance sheet is something that i think is important, given the broad idea of tightening financial conditions means companies with strong amounts likely to outperform >> great to see you, david looking forward to seeing you back on set. >> i would look forward to that. we'll have more on the shake-up at peloton. we're going to speak with the company's ceo on or about those quarterly results and supply change issues, and a lot more things that i can't say >> and ceo of chegg.

a lot more "ua othsqwkn e street" ahead. don't go anywhere.

a beat on the top and bottom lines, organic sales so far to break down the quarter can the chairman and ceo, david gitlin, always good to have you

join us. >> thanks for having me, david. >> you're welcome. i would like to divert to this, you're acquire the vrf, and hvac business toshiba as difficultated technology, they have a global brand that's respected, so for us it's a market that's growing at 2x, so it's high growth, highly differentiated, it's only going to continue to outpace the rest of the growth it's also sustainable. it's the perfect time for us

david, as you know, we spun from less than two years ago with less than 10 billion of net debt so we're now playing offense on the capital allocation side. we've done -- announced the 25% dividend increase, 1.6 billion share buyback, so we're in a position to have long-term value. >> on the subject of long-term shareholder value, i think you had operating margins up this despite obviously continued descriptioning in the supply chain. what would they normalize to, give you have a sense of what you -- with the supply chains and the constraints. >> you look at last year, dealing about $450 million, we

thought it would be closer to 30 we did see, you know, significant price, significant inflation, but got 80 bips, and we're still looking at another 75 bips of market expansion, so great work by the team, a few hundred millions, and driving continued growth orders were very strong last year we go into this year with a record backlog, so we're appointsed for another strong year, we're looking at high single-digit growth this year. it's back we're in the middle of these secular changes. so we like the position we have right now. you don't think that those price hikes make you susceptible at

all or they'll by pushed a bit too far? >> not right now i mean, we have to keep an eye on it. right now we're at a peak inflationary point we have tried to take a sober and realistic look at inflation. we came into this year assuming we'll see a billion of inflation this year, we have to raise prices at least a billion, so we're price cost neutral we think we're at the max peak inflationary moment, so we do have to continue to control the controllables, raise price commensurate with inflation and make sure we do everything we can. many of our markets, we picked up significant share last year, because we were able to support or -- we did have to pay a lot more for things like chips, but we made a conscious decision, let's keep separations flowing and support our customers. we did that at the expense of inflation, but we still saw

significant growth in share gains. >> dave, what gives you the confidence to say we're at peak inflation and these levels won't continue for the foreseeable future i ask, too, because a lot of your customers are contending with high electric bills and other areas of their life that have led -- so i'm curious how much longer they'll accept the costs you're passing down? >> we'll have to see we assume the inflation we executed, we assume it actually stays about at these levels through the rest of the year when i say peak, i'm assuming it's high and staying elevated for a while. would we're wrong, if it's not as bad as we expect, that will be good news, but we have priced according to the assumption that the inflationary previously, that continues through the rest

of the year. we're pretty well hedged about 70% for this year, so we have sealed it stays at the elevated levels we are controlling the controllables. so we can price accordingly. >> david, finally we started talking about two years ago at the outset of the pandemic, and we are talking about the assembly line, changes you had to make. are you back to norm at both there and are employees coming back to the office or is there a new normal >> no, i would say we are not back to normal, especially in the united states. remember, 80% of our people are outside the united states. inside the united states we're seeing elevated absenteeism levels a lot of it is driven, of course, by covid, but we are

seeing some disruption in or factories. covid has shined the light on the criticality of -- we've gone to 10% automated, we're dual sourcing critical components from 25% this year, 35% on our way to 75% we're looking at more localization and taking out some of that spa go aheadi diagram associated with global logistic. i would say outside the united states we're at good levels. it's sort of an acute issue in the united states. beer making sure we building in resiliency >> david, always good to get the update i appreciate it. thank you. >> thank you as we go to break, take a look at hardy davidson

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welcome back now time for the etf spotlight, xvi down more than 10% over the last month of trading, down more than 2% today. one name in the group to watch is novavax, sliding on a result that it only delivered a portion of doses it planned to send around the world we'll talk a quick break here. don't gonyer awhe. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq,

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welcome back the leader of ukraine challenging president putin to pull back his troops from the border if he's serious about easing tensions. the pandemic hasn't reduced u.s. births as much as expected. early data shows that births fell only by 7,000 in the first nine -- nine months of 2021, and some scientists think the government's economic stimulus checks contributed to the rebound. "the power of the dog" leading the nominations with 12 spots on the ballot. she is the first woman to get

that nomination twice, also nominated for her film "the piano. >> congratulations to netflix. peloton is reversing course. of course, replacing here is john foley on the call >> we acknowledge we have made missteps we over-invested we own this. i own this and we are holding ourselves accountable. >> lauren, initially broken the story about the degree to which they have to scale back. >> yeah, absolutely.

i think in many ways, what we are seeing today has validated some of that reporting that's come out of the company in recent weeks i'm glad you played that clip. i really think that sums up at the start of this call, he really took responsibility out of the gate, like i said, missteps he called this a humbling experience, all in all as pell oto say has had to reset its big. po el oton arguably that is grown a lot more than the company ever expected pre-covid, but the mistake that john foley really made is assumes these levels of demand would really last exponentially beyond in point in time. so that's why this company is beyond the point it's having to make the cuts. whether it's marketing,

optionally there are about 2800 jobs so all aspects are fair game i think it needs to foley said they will be working very closely together through this process. that's also grant activist blackwell's attention. they don't think what was announced today will ultimately be enough. >> lawrence been having listened so closely to the call what do you thing has investors so bullish over the course of the call we have seen it go -- was it a

fundamental basis. >> i think what a lot of people are thinking about when you see the background, right, of this incoming ceo, he's been at spotify, netflix, he really knows how to run a subscription business, right there was a lot of chatter ahead of these results coming out today about the fact that the market was undervaluing peloton's current base that's up to about 2.7 million connected fitness subscribers today. if they were to pivot, which potentially is what they're doing, and focusing on the existing subscribers, thing about getting them to buy, you know, buy new products in the future or apparel. really trying to extract more dollars from that current base, and i think that's what you're reading into a bit

what does it mean for hardware, moving forward it's slowing production to meet future demand more than the company that is done in the past, rather than hunting for future growth. remarkable to see jpmorgan's note, importantly we do not expect any changes to the roster of instructors made it into the note, which i thought was remarkable lauren, thanks, appreciate it very much. hedge fund lobby group releasing a series of proposed market structure rules our eamon javers has that for us is the strategy essentially get out while you're still ahead >> yeah, that's a bit of it,

leslie you know, s.e.c. chairman gary gensler has signaled this could be a big year, particularly around short selling, which is a is putting out its list of policy recommendations, so it's a way to have a seat at the table. the propose that's going to get the most attention is around short selling and what mfa would do is provide greater transparency through aggregated disclosure of shorts on a weekly basis. this will provide more information to investors than think before until this proposal investors would still no -- that's because the hedge funds are worried about another gamestop-type

pile-on. so until this plan you could get a sense of the level of short interest, but not specific short trades by specific firms they're also making recommendations on shortening the settlement cycle to the next day and reducing maximum fees. they also have ideas out on modernizing treasury markets, and this is likely going to be a tug of war all year. we have to wait to see where the s.e.c. lands on this in the next few months. >> eamon javers, that i can you. after the break we'll have -- you can see the stock is having a nice move today, but it is down over 70% dan rosensweig, coming up.

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welcome back che good g out with earnings beating this morning, shares popping higher on the better than expected quarter. the company has bounced back from a brutal over-correction. joining us is the ceo dan ro rosenzweig as mark twain would say, the reports of your death have been greatly exaggerated. what do you think changed? >> i want to great laid our former board member barry mccarthy he's a perfect pick for peloton. when we reported in november, we didn't really know where the bottom was school year had started, you had fewer students going to school, people taking fewer classes,

easier classes schoolwork hadn't started. what happened after we reported clearly the level of learning started, and what it proves in our mind is when you need to learn, when you need to master your subject, when you need help, you come to che good g che good g. we're the only profitable company. we produce free cash flow, 10 million shares of stock were returned last quarter, so we're in a strong position and we're super excited about it. >> what is your expectation from here the job market is still pretty strong, so the tradeoffs could still be they want to go experience potentially higher wages versus pursue, you know, additional opportunities is that something you think could be a concern moving

forward? >> we planned for that in our guidian. what our cfo said on the call is we obviously have great visibility into q1, great visibility into q2, but the second half of the year assumes no change, which is highly unlikely, but we thought it was prudent to do so over time people will come back into the education space, but i think what is also happening is a new revolution there's traditional pathways, community colleges, book camps, c chegg is relevant for all of those. we did a million and a half subscribers, and at the same time because more students are taking a more expensive package, we're seeing increases we're in good shape to take advantage of any accelerating growth. >> you talk about having visibility into the first and

second quarters, but i think many of your investors, that's where they get squeamish, are concerned perhaps you don't have quite as much visibility so what is given you the confidence you can say something like that? >> yeah. great question we debated that. normally we give guidance in november the following year. we chose not to do that, even when no one else did so what we saw was a reaction sell race of growth in q starting in sort of mid november that has continued on, and that has positive roomifications for the whole year when you just look at the internal metrics, we saw record renewal rates, record reduction of cancellations, highest take rate for the packages, and the continued acceleration we didn't expect to see growth in 2022 until later in the year,

and we feel comfortable the momentum in q2 allows us to feel comfortable about the guidance, and we're just beingprudent. >> you're a veteran, obviously of many technology companies, of the markets themselves we are in a somewhat different era. certainly high-growth company, or thus what were the multiples. how were you described by -- and what do you tell your investors from what they could expect if they do deliver on the visibility and the results you're talking about >> well, it's hard for me to judge the market you're right, it was devastating. three months ago i saw the stock drop 50% in a day. we expect that, and there's clearly rotation, but if education is your interest, we're not only growing, we're the only profitable company,

only company producing free cash flow, and a great transaction for us, given the multiple we pay. we have always been prudent about our expectations we have beat and raised for 18 straight quarters. we had one complicated quarter due to covid we dealt with it and returned to growth quickly what i tell investors is, just keep your eye focused on the fact that chegg is focused on continued growth vectors throughout the world and, look, covid hurt a lot of people it's really confusing to figure owl all of these variables, but at the end of the day you're betting on more people need to go her month -- more thing and need been more help. college children are 25, they have children, they have jobs, helping them to go online is the future and chegg represents

that i'm going to say stick with the company as they have, and they will be rewarded that's my hope. >> there's been a lot of analysis of the labor market and early rye times and how the labor pool will be sort of structurally undermanned for years to come, some argue. do you see any that would allow for a pivot back into college, in terms of aggregate demand >> a very fair question. >> colleges need to change, which means they need to be less expensive. the contend needs to be more relevant for the workforce, which is why you're seeing an acceleration, which is working with gild to training people on skills while they're at work, so we see an evolution for people having to learn forever to be successful in the workplace, and we're evolving with them the biggest came to four-year

state schools, and community colleges i think there will be a swing back to that as the economy adjusts, but i think you'll have people learning in different ways and we'll be there for all of them. that's a big deal for us. >> great points as always. dan, thank you very much for being here. >> thank you, guys i really appreciate it. still to come on ch "techcheck," we'll talk peter thiel, as the dow is up in the session. (doorbell rings) (family chattering) - [announcer] meat-itation, a sense of calm

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welcome back to "squawk on the street." stocks are mixed this morning, but we are seeing a little strength in the last few moments. s&p 500 near the session high right now. with regard to the upside standouts are financials within that group, we are seeing some notable gains and a mix of both regional and big banks as well we have jpmorgan chase also regions financial truist and bank of america leading the sector to the upside wells fargo is up more than 20%

so far this year real moment there. today's moves come as yields on the benchmark ten-year u.s. treasury note near that 2% level, hitting highs that we've seen going back to 2019. watch those ten-year treasury note yields. about 1.97%, almost there, what we saw today now, i'll send it down to you folks at the stock exchange. >> almost there, dom quick note as we head to break, the second episode of "manifest space" is online morgan spoke with rocket lab ceo peter beck listen by searching "manifest space" wherever you download podcasts and by following the "squawk on the street" podcast. first, jane wells is live from california with a look at what's still ahead in the show jane >> hey, leslie yeah, i'm at the world ag expo they expect 100,000 people out here half of cows come from california but people are drinking less milk so butter is saving dairy's

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welcome back to "squawk on the street." let's get back out to jane wells. she's live from this year's annual world ag expo that's in california looking at how farmers are struggling to meet the growing demand for butter. i love butter, jane. >> who doesn't we never get tired of it, david. yeah, i'm at the ag expo earnings this morning was incredible stock is up 8% equipment like this is a farmer's bread and butter. speaking of butter, they make a lot of it around here. americans have been all whipped up about butter ever since the pandemic started a baking frenzy supply cannot keep up with demand california is the number one dairy state. dairy farmers like joey has almost 3,000 cows he takes care of a fourth generation farmer here. land-o-lakes is paying him $20 for 100 pounds of liquid milk. that's up 50% since pre-pandemic costs for labor and

transportation are up, and the cost of corn feed has doubled. >> normally, you could make a lot of money at $20/100 weight with the cost of doing business today and, you know, all the examples i've given with labor and utilities and, you know, energy and feed, you know, it's raised everything to where it is 20 bucks and -- >> butter prices hit a four-year high in december they're about $2.50 a pound, double what it was a year ago. so you have what's happening with cold storage supplies, which is a forward-looking indicator. butter cold storage supplies are down 27% you have demand up, supply is down we'll have to see what happens if we keep baking like this, guys. >> jane, i'm surprised to see demand is strong for traditional butter when you see demand for alternative milks like oat fmmik

what's the latest, potato milk, seem to be front and center now. >> it is interesting cow's milk has continued to fall in terms of demand the big turn for butter was a few years ago when reports came out saying that margarine, which everybody thought was healthier, actually might not be healthier for you. this may actually be better than margarine. i'm sorry, you know, have all the oat milk you want. when it comes to that banana bread, we're still trying to master nothing is going to do it. put olive oil in that? not me >> no way, man butter bring it on. give me as much as possible. >> butter is better. >> nothing better than butter. jane, thank you. slather it all over your face there. it can work for the sun, as well why not? all right. i want to take a quick look of shares of meta before we go to tech check because i did see -- and, you know, it is another week here.

the stock has still not rebounded. citi takes its target to 258 bucks a share. that would be 11.3 times their 2023 enterprise value, elsleslie no rebound for those shares since the surprising quarter. >> peter thiel stepping down from the board. >> they'll have more on "tech check," of course, which starts now. ♪ good tuesday morning welcome to "tech check." today, an uphill climb leadership changes at peloton, as co-founder and ceo john foley announces he will step down. shares are surging how to right the ship, coming up. a broken arm nvidia's $66 billion deal collapses. what it means for both