good tuesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cr cramer, a more aggressive assault on ukraine, bonds rally, ten-year gets to 171 that's about a five-week low oil at 100, you've got the state of the union address tonight we are going to begin with market volatility and the russian ukraine conflict, ukrainian cities facing intense shelling as a convoy of russian tanks heads towards kyiv wti rising above 100 on concerns of supply disruptionsand in th

rank of sanctions imposed by western nations against russia in all kiends of different forms one of those mornings we might have had stocks hardened by a bond rally not today. >> i don't think this can necessarily be an up day, but i do think that when you go down every day off of europe, the tape says please don't fight me, but what happens is that individual stocks then of companies that do well rally so you're trying to jive the incredible number from target, the amazing comments from brian cornell this morning with the futures, which say don't trust it let's sell it: and the only group that seems to really stay down, david, you're very close to this group, and that just can't stay up, and that's unfortunate. oil is the leader right now, and you really want the banks to behave, but the fight to quality is hurting them. it doesn't make sense you should be owning jpmorgan if you think

they are involved with europe. >> right europe, not russia because they're really not citi is the only financial institution that has any real exposure in terms of russia. >> mastercard or visa. >> okay. sorry. because there are 18 million credit cards and about 250 million debit cards, both those companies have said yet basically they're not going to let the russians kick them around you know, it's one by one we're seeing who is with putin and who's not. i need to see italy because italy is probably the most aligned with russia. >> the sanctions are as deep and powerful as any that have ever -- >> i've never seen anything like this. >> -- been imposed even in the course of a handful of days they've gone from what seems to be fairly strict, to incredibly. it is choking the russian economy. but it is also going to have an inflationary impact, this horrible incursion wheat obviously is up. ukraine is a huge producer of wheat, aluminum is up, i

believe. >> right. >> don't forget titanium where russia controls, what, 55% of the market that goes into a lot of airplairplane s. if they were trying to do anything along the lines of reverse sanctions, not that thild given their economy, that could have an impact. >> boeing has done -- i've seen an accumulation of things that they've done wrong, but one of them isn't titanium. they've stockpiled >> this idea that the commodities complex is moving up, inflationary pressures are building, if neanything else. back to what we focus on here, what will that mean for the markets. does it mean the fed has got to even bestronger in some way? i know yesterday you were sort of wavering on 50 basis points, but there are those who think it's going to have to be 50 basis points in march in some way. >> i would say that i mean, carl you can see this ten-year as you referenced if the fed goes 50 basis points,

we are going to have -- we're going towards the fabled reverted yield curve chrks for me is going to have a recession. which is what a lot of stocks have been saying. >> an inverted yield curve should be good for the banks, right? >> at that point, but not if the economy's bad. you don't want credit losses to come back, holy cow. >> that is a problem there's the ten-year as we mentioned, but that's on a 50 at march have basically come back down to zero. >> yes, because i think everybody feels that this is -- that what's going on in europe is a way to slow the economy now, look, i don't want to be too contrary to this, but the u.s. economy is still red hot, and it's not like people aren't shopping at target because of what they see. what they see is courage from the side of a group of people who we all should have realized were courageous, and we see an enemy. a worldwide enemy, an isolated worldwide enemy. increasingly people just say putin is crazy. >> isolated in sort of a north

korea-like fashion. >> very good analysis. >> even peter bookvar this morning pointed out even if it can with produced in russia, mares k no longer going to do deliveries it's locked in the country. >> can russia even produce as mus much oil michael gordon is the best war reporter i've ever seen, who writes for "the wall street journal. he says, look, you know, putin thought that they'd be welcomed. putin thought that there was a vacuum where the russians would step in and the chaos would stop david, that's -- you know, you can be -- you can speak more free speech in ukraine if you're russian than you can in russia >> without a doubt without a doubt, and we see that every day with protesters in russia being removed by the police there i mean, you said something quickly, but, you know, it's not something we should make light of, which is putin's mental

state. >> yes. >> it comes up all the time. you hear very different things about people's view of it, but i will tell you when it comes to even our markets, some of the big hedge funds i know are employing people to do behavioral analysis, of course, of putin, to try to get a sense as to where does he really stand. >> why don't they focus on the generals -- >> the cia has obviously most likely been doing that and trying to get a sense of that because to your point, there are questions about how rational he was to begin with in terms of launching this invasion, and what his expectations were, and then we can all see how he berates his generals, how he sits at those tableswhere he's 40 yards away from people. i mean, there's concern. there's concern. >> oh, yeah. i mean, there's a belief, now, remember, the russians raised 200 how people, considered to be the most destroyed city on earth according to the u.n., this is the incursion that putin led, but that grazny is not kyiv.

i know that neil ferguson said just because of facebook, don't think that the russians will be deterred i'm going to disagree with that. facebook being a metaphor for, you know what, everyone's watching and you just don't wage a war and then have a war of occupation with everyone watching this is not 1942 where no one knew what was happening. >> we knew rightaway this morning some of these missile attacks on kharkiv, almost instantly. it's pretty amazing to watch when we come back this morning, chevron's mike wirth is going to join us here we'll talk about russia, ukraine, oil prices and some fresh guidance on the buy back and capex. rlke a look at fautures off the eay morning lows as "squawk on the street" continues in a minute 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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oil prices as you've seen this morning continue to climb, this as russia's invasion of ukraine intensifies, of course prompting fears of supply disruptions. joining us now to discuss that and a whole lot more, in fact, ahead of their investor meeting today is chevron's chairman and ceo mike wirth nice to have you here. nice to have you in person sitting at the end of our desk, and i know you're going to begin your investor day right here at the nyc soon let's start on the main message. oil prices are near 100. you're generating an enormous amount of free cash. i would expect one of the key questions would be you can easily cover your dividend, you can cover your expected buyback at this point, you can cover

your capex and have a lot of money leftover, what are you going to do with it? >> the headline really is we're returning more cash to shareholderin s we've announced an increase in our guidance to our share repurchase program from 5 to $10 billion. we expect to distribute 50% more cash to shareholders this year than we did last year. we're simply a better company than we were just a few years ago. last year was the highest free cash flow in the history of our company by 25% we've been around for 142 years. last year was the highest free cash flow by 25% this year could be even better and yesterday, of course, we announced the acquisition of the country's premier renewable fuels provider so we are, you know, we're committed to growing the company and returning more cash to shareholders. >> we talked about that renewables deal. we want to talk more overall about your efforts to reduce carbon you talk about your investment program that's at least 20% more capital efficient than it was precovid balance sheet of course, net debt to ratio comfortably below 20% right now.

what did you start doing differently in the last two years that you weren't doing previously >> well, it's a company full of engineers. as we went through the pandemic, we had to pull capital spending down nobody knew how things were going to unfold as you go back two years ago, oil was negative at one point in time our people continued to find ways to develop assets and run our business with more efficiency, more capital efficiency, more cost fi efficiency we said 20% more capital efficient. we also committed to raeduce ou unit operating costs by 10% over the next five years. we're simply more capital and cost efficient through a lot of little things, which generates more cash, again, return to shareholders. >> the little things, what's a little thing >> the rate of drilling productivity in the permian, we can drill more feet per rig today than we ever have in the past. our ability to complete wells in the permian. we can get more completions done in the same unit of time than we ever have in the past. and so it's all about continuing

to find efficiency in everything that we do, smart engineers applying technology, particularly digital technology and information technology, which continues to enable change in our industry, and it's been history for more than a century of listing here on the nyse, we're celebrating 101 years of being listed here and we look forward to a long run in the future. >> finally, when it comes to oil prices, brent average 75 over the next five years. you said you could increase the dividend by higher rates, buy back more than 20% of your shares outstanding >> that's correct. we've got upside leverage to oil price. we don't -- in our base planning scenario assume high prices. we actually plan for low price but in a period of time where prices would be lower than what we see today, for five years at $75, we could have the capability to buy back a quarter of the company over just five years. >> one of the things that is

fascinating to me is the discussion about patriotism and production yesterday mr. monkrief who is just fantastic was talking about maybe if the president asks they would produce more the president then issues a statement saying he is speaking to the oil people. what did you say when -- since you're the largest, what did you say to the president >> well, i haven't spoken personally to the president. we're increasing our capital spending this year by 25%. last year our capital budget was less than $12 billion. we're over 15 this year. we're increasing our activity in the permian basin. we announced guidance today that increases our expected production out of the permian by 2025 to more than a million barrels a day. so we are investing in this country, we are investing to increase production, and we're doing so at a greater rate >> talk about investing strategically worldwide, pipelines are pretty maxed for

natural gas out of the permian what are you going to be able to do to get -- well, everyone seems to want to get more natural gas to europe, but we can't build these ports fast enough what happens in order to be able to take our natural gas to them and how do we be sure if we're not taking any russian oil we did take russian oil in decem decem december how do we stop that? >> it's a global market. these commodities tend to be traded and moved to the location where they've got the most value. so really unless you put some sort of specific sanctions, that preclude certain transactions, it's a global commodity. it's a fungible commodity. on gas, we need to permit and develop more export capacity we've got an abundance of natural gas in this country, can meet our needs for many decades to come. it takes years to go through the permitting and approval process and to construct liquefied natural gas export facility. in the short-term, there are no easy answers

in the long-term, policy that supports responsible resource development in our economy is very important energy security and national security are linked and i think we're reminded of that once again. >> part of his comment was that he was mystifiied that there hadn't been more of a dialogue with the white house because it might have given them some cover for shareholders who demand increased capital return do you share that view, and is there something the president could say tonight at the state of the union that would address that >> well, new administrations typically take some time to get their feet on the ground we did not have a lot of outreach and interaction in the early months of this administration and in fact, some of the rhetoric and some of the priorities were not supportive of this industry we're open to a balanced dialogue i think a balanced pragmatic approach is what this country needs, certainly what our industry looks for we can responsibly develop energy resources in this country. we're committed to lowering

carbon we're committed to protecting the environment, and we want to work with this administration and any other administration as we have over our history to achieve the goals that we share and, in fact, we have much more in common than i think we have points of difference. >> you're not the president, and i don't mean to put you on the spot, but the president seems to want to increase oil that the saudis pump. he's been no friend of yours he doesn't want to increase production here. now, doesn't it make sense to encourage production here and stop urging and egging on the saudis to produce more >> well, our country is blessed with a tremendous resource endowment and companies that have technical skills and talent second to none in the world, and we're an important part of the economy of this country. we're important for geopolitical security, all that i think this industry asks for is to have a balanced conversation, a fair dialogue about how we can contribute to the economic growth, to employment, to the vitality of industries in this

country and to work to help to protect the environment and address the challenges of climate. >> let's talk a bit about that you know, reducing carbon is something we've talked with you about previously of course you do have aspirations to get scope one, scope two down to neutral in the next 28 years at this point, but australia, which you've mentioned a number of times doesn't seem to be going overly well you're going to buy more than 5 million greenhouse gas offsets reports bloomberg after the g gorgone project missed targets what's going on there? >> we developed a large liquefied natural gas export facility in australia, actually took decades between the original discovery until the project was completed and started up as part of that, the gas that comes out of the ground has naturally occurring co2 in the field reservoir, which we agreed we would remove from the gas stream and reinject. there have been some startup issues associated with that. nothing that is insurmountable, nothing that we don't deal with elsewhere in the world, and as

we've missed a couple of the deadlines for storage quantities, and so rather than just let that stand, we're going to the markets to procure offsets to account for, that but this is a project that will work the storage there is functioning today, we've stored over 6 million tons of co2 already. it's the largest on purchase co2 capture and storage project. over the life of that project it will secure tens of millions of tons of co2. >> to put it in perspective for our viewers, if we're going to reach the goals of paris by 2050, we've got to be storing somewhere in the neighborhood of 5 to 10 billion tons of carbon a year we're at about 50 million total so we've got to up it by 100 fold do you think that that's something that can actually occur? >> well, david, it's a massive, massive challenge. it's technically feasible. we've captured co2 and reinjected it for decades, but to do it at -- >> to help with oil production,

in fact. >> to help with oil production but also to store it at this scale we need a policy framework that enable it is. we need market incentives, a regulatory framework that deals with long-term liability we need to be able to get permits to be able to build the pipelines and capture facilities, and we need to mobilize massive amounts of capital in order to do this. >> you need a huge participation from governments around the world, is really what you're saying to put an effective price on carbon that you can believe in, not to mention this pipeline system which could be incredibly costly. >> we need a partnership and balanced approach. any reasonable analysis suggests there's a big place for carbon capture and storage in addressing the greenhouse gas challenge. our industry has the capability. we take molecules from inside the earth, bring them to the surface, turn them into a usable form and get them into the economy today. we're talking about taking molecules out of the earth, moving them through infrastructure, putting them back beneath the earth in storage containers that already exist. it's all technically doable. we need a policy framework and a

financial framework that enables that to happen. >> just one quick one, what do you think about companies, oil companies that cooperate with putin? you like them? do you hate them do we out them what do we do? >> well, you know, the resources in the world are laid down in first world countries and developing democracies, countries that have imperfect systems of government and we try to respect the host governments wherever we work, it's a tragic situation we see unfolding in russia. i know a number of other companies have had to take very difficult decisions. we had very little exposure to russia as a company, but these are very difficult decisions to be made in a circumstance like this. >> what's it all going to mean for oil prices >> well, in the short-term, i think the anxieties about supply have continued to keep this pressure on prices we don't actually see signs that there are physical supply shortages appearing yet, but inventories were low coming into

this, prices were rising coming into this and the fact that geopolitical risk now shows up in a risk premium and oil markets tells you we're in a pretty tight market once again as opposed to a few years ago when missiles flew into saudi arabia and the price really didn't respond so it's a tight market, i think we're going to continue to see that until the situation in ukraine stabilizes and is ultimately hopefully resolved with as little loss of life as possible. >> yeah, we all hope that. we certainly appreciate your taking time with us. you've got to go ring the bell and get ready for your investor day. >> congratulations, of course. >> 101 years, mike wirth. coming up this morning, we're going to get cramer's mad dash, we'll count down to that opening bell we'll talk a bit more about oil, we've got atth opec plus meeting this week. more "squawk on the street" when we return. these are the bonds worth investing in. for over 50 years,

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we had five 1% swings in yesterday's action alone, looks like today might be a little less volatile. vix remains above 31, and the ten-year after hitting 171, the opening bell is a few minutes away and a programming note, be sure to watch cnbc's special coverage of this year's state of the union address, that begins at 8:00 p.m. eastern te.im when you need help it's great to be in sync with customer service.

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let's squeeze in a mad dash before we get to an opening bell this tuesday on the nyse >> this is the best quarter in five years, o'epikay? a total reacceleration, 22%, a suite of product that everybody wants. this is an example of what's the underlying tension in this market here's the stock that fell 100

points, because of the shrinking multiple, because of the fed, right, raising rates and suddenly you get the quarter do you sell it because powell's going to speak or buy it because it's so low? >> i don't know, what do you do, jim? >> you buy it. >> what you say is there are going to be winers and losers at a certain point, and workday is a winner so people are kind of shocked that it was so good. this suite of product that they have, which is human capital and finance is extraordinary, and it's in the cloud, and david, don't forget tonight, salesforce >> salesforce is tonight >> right yeah >> jpmorgan recommended it he said, listen, buy it. that's a guy who's putting his head right in the line recommends it objn the day that they're reporting, kind of gutsy, no? >> what do you think >> come on, man. >> i think salesforce is going to be good i'm worried about this one m

mulesoft division, but i think salesforce is going to be good there, i stuck my neck out >> not the first time, won't be the last >> don't you paypal me >> let's get the opening bell and the newscnbc realtime exchae is chevron celebrating over 100 years on the nyse, as the nasdaq global life sciences company celebrating its spin off from zimmer biomax. we're going to keep our eye on all of this, and sort of the impact on the consumer, certainly something brian cornell addressed earlier today on "squawk". >> that was a very encouraging interview. brian cornell is now the spokesperson and he made me feel like, look, no matter what you throw at the consumer, you put some higher

rates on, the consumer's liquid you've got great brands, the cvs tie-up, the ulta tie-up. when i shop at target, it's a place that's got big stores. it's got a circle one, a bull's-eye when i shop there, i buy their brands why? because they're cheaper and better it's kind of like costco, when you go to costco and you get the kirkland brand. >> so why wouldn't i just go to costco >> because kirkland brand is like for toilet paper. >> oh, they have different things at target i'm just teasing i've been to target. >> he knows what target is. >> yeah, i have actually >> they're extraordinary i think these brands that they have are -- you know, i went and spent a little too much money in target when i was down in del ray with my wife why are you buying these shoes you see the price? >> ir they're hideous. >> why did you buy hideous shoes? >> i wanted boat shoes because i

was going on somebody's yacht. >> usual225 is going to be awfuy close to the best level of the year cornell did talk about the consumer's ability to handle inflation. take a listen. >> we're all dealing with inflation, and we've made a commitment to make sure we continue to offer great value to our guests, but we're seeing inflation both from an international standpoint, but also right here with domestic goods. so we recognize there's still challenges with cost inflation the supply chain bottleneck, it's going to take time for that to unwind, so we've shown an ability and we've certainly dem are straited in the fourth quarter to be agile and flex skpbl del flexible and deliver great value. >> employee turnover is lower than it was pre-covid. interesting. as for the industry overall, we finally are getting retail industries back to pre-covid

levels, which means they can discount if they want. >> one thing i was amazed. this was just a crux motel where becky asked him about raising how much people are paid, and basically what he's saying is i want dignity i want dignified, i want employees who feel empowered i want employees to feel good. this is where i think jay powell is struggling. you know i feel that jay powell is secretly a person who wants to make more money, that we have to encourage, we as a nation -- >> sorry, go ahead, yes. >> we have to encourage a nation the idea that a person at target should make enough money to feed a family and have a good life. >> right. >> and that's what -- brian's not sitting there trying to say, you know what, we're going to penny pinch. he's not potter. >> no, he's not. >> he's not potter >> they're talking about, what, wages that could get up above $20 an hour. >> why not why shouldn't the american

working person who works at a register at target make a decent amount of money? it's a hard job. >> that's the positive aspect of our current economic environment. many would say, well, inflation has that pernicious effect of negating those gains for the average worker but wages are up and up sharply, and it's not just target. amazon obviously will tell you over and over again what they're paying people because they are paying them closer and closer to that number as well. >> well, i just think that we have to keep track of the fact that when we hear about wage inflation, we should be a little more -- carl, just a little more deferential to the american worker wow, they're making too much money? sorry, when we see what the ceos make, i think that there's this -- we don't want two cl classes in this country, we don't. >> we've had that and it continues to be the case far long time. i would point out over the last two years, most likely i think the benefits of the fed's incredibly large balance sheet have probably gone to the top

echelon. >> did you not think that the mayor talking about compassionate capitalism was a visionary. >> it was interesting. >> it was visionary. it's an incredible conversation. >> i was happy to hear the words capitalism. >> he's very pro-capital. >> he is, i know it makes him maybe an enemy here in new york. you got to be careful. >> guys, i wanted to talk lucid if i could for a moment. it's going to be down sharply. not going to, it is down 18% lucid, remember, isstill one o the most successful spac deal. so few are trading above $10, the price at which obviously you could have redeemed a long time ago before they even did their deal lucid obviously has been a great success, but it is down dramatically, 38% so far this year the company reported earnings. the main point of concern appears to be the outlook for 2022 production. >> yeah.

>> now a range, guys, of 12 to 14,000 vehicles reflecting what they say is the extraordinary supply chain and logistics challenges we've encountered and our unrelenting focus on delivering the highest quality products they do remain confident in their ability to capture the tremendous what they call opportunities ahead, jim, given their technology, leadership, and demand for their cars. that's not a lot of cars. >> no, if i were at ford motor, i'd be selling that rivian, by the way. i think that these stocks are a little over inflated actually, i'm going to put it in the disaster camp. didn't like the carpet, didn't like the rug see how few cars they sold in the fourth quarter cincinnati. >> yeou and i have both talked o mr. rawlinson in the past. take a listen. >> we have a focus on addressing some of the supply chain

challenges we see them to continue for the next few months, but we see an uptake in the second half of the year, so we're really optimistic that we're going to be able to resolve these. >> they're optimistic. >> it's good to be optimistic. churchill always liked that strategy. >> churchill was the acquiring -- >> that's why i mentioned it. >> you're so good, really. how do you do that >> it's a talent >> michael klein -- -- an enormous amount of money with this deal with churchill i think this was churchill four, right? i think it was it's one of the few spacs that's still trading above 10, but well below. >> you notice there's some of the pandemic stocks are a doing a little better. i think the zoom shortfall was overrated. it's a shortfall docusign making a bit of a comeback docusign mentioned positively on the zoom call.

everyone's written off every one of these stocks. we come back to stocks that have been crushed to levels that you just say, you know what? i'm going to take a flyer. >> the zoom guidance was a little bit light, they're looking for q1 $0.87, street's at 102 citi cuts their target, i don't know, ten bucks down to 139, reiterates their neutral. >> people are really struggling, and they don't feel like they can buy stocks because there's a column 40 miles long headed towards ukraine, towards kyiv. and others say if they stop that, the world's going to change i think there are a lot of people who say, you know what, target gives me cover to buy stocks workday gives me cover for tech. the only thing that doesn't have any cover are the banks, and i don't know what to say about the banks. i really don't other than that most of them are completely unininvolved, and after every one of these european down turns our banks come out stronger.

nobody cares because they're such easier dominos. >> i'd buy every one of those stocks every one that we're showing i would buy, and by the way, with some answers to hear more about citi. >> yeah, well, you're going to get them because tomorrow is citi's investor day. jane frazier's been in the job a year, i believe, almost to the day. >> probably ready to start talking to the media. >> we'll be talking -- you know, not overshadowed but certainly as we pointed out earlier, citi one of the few larger banks in this country that has any exposure to russia they are they continue to be, right, they may be kind of stuck with it, which is one reason why we'll see. you know, the investor community obviously focused on a lot more than that in terms of what the plan is. they've already announced quite a few significant things that have paired down the overall footprint of the company. >> but the book value is so higher that you'd have to think that if they got permission to

buy back stock. >> the question is can you earn your cost of capital, right? >> i don't know. >> yeah. >> no, no, listen -- >> so exhausted by citi, but many bho own the stock have not had a good run if i were jpmorgan or jamie dimon, i would be so angry that i said those things, that he lost his temper on the call, start talking about fintech. >> well, fintech frustrates him because he feels like it's a government regulated entity. he's got his hands tied in terms of doing certain things that the other insurgents are able to do, these small companies. >> it's kind of like we know who the they are who they said they are. >> i see okay guys, albertsons put itself up for sale, lack of a better term. >> just think, he came on this show, and efshe was like raving about how well the company's

doing. >> the board believes in the continuing strength of our business and the scale of the portfolio warrants deep and considerate review of all possible paths towards maximizing value creation. >> should they not have come public >> you know, usually you do something like this if maybe you got a bid, you don't say you got a bid. or you have an activist, but in this case i guess it's just ser berous maybe look at what's going on at kohl's i don't know jim, i know, it's a weird one. >> it is very weird. it's very counterintuitive, and i want to know more. at least kohl's is putting up a fight, buying back a lot of stock. >> and doubling the dividend. >> doubling the dividend. >> and i do think they've got 3.4% put out more sephoras. >> between the capital return and some of their guidance, they do guide above, does that take pressure off the whatever activist pressure -- >> i know that dus kin's already

saying no after initial review, we believe these results validate why kohl's should engage with us and evaluate credible sale offers nobody's ever happy. >> no. >> everybody's unhappy i wake up in the morning, i woke up at 3:30 this morning, i'm raring to go, but then i realized that wasn't in keeping. >> it isn't in keeping. >> it's a very anxiety producing time. >> you forget, it isn't like you wake up and you realize that maybe there's going to be nuclear war. you wake up and say, i can't wait to get to work, and then you say. maybe nuclear war. >> nuclear war would be bad. i mean, i think, you know, it would take at least a couple of days for the market to get through that i don't know what the fed will do. >> we'll try to price that in. >> for the time being, s&p did manage to go green briefly here and the dow's cut its early losses down to about 80 points still to come this morning, we're going to talk to the former treasury secretary jack lew about these sanctions that have been taken against russia

and their central bank trying to deny them access to dollars and yen and euro we're going to get bosic at 2:00 all of that leads us to power, the next couple of days wednesday and thursday on the hill we'll be right back. ♪ ♪ the bond report is brought to you by pimco, a global leader in fixed income hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

welcome back to "squawk on the street," rick santelli here live at cme hq with breaking news, our february final read on market manufacturing pmi now, if you recall our mid-month read is 57.5 it now moves down a tad to 57.3, and it follows sequentially a final january read at 55.5 that was the lowest level since october of 2020. we see a subtle yield curve steepening today, short maturities are finding more buying that might say more about the

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let's get to jim and stop

trading. >> we had domino's tonight, rich al allison is retiring. this was a quarter that was a little bit light the problem is they're going up against the halcyon times of staying home i don't know who can possibly do better i will say this, the change is to me reflective of the of the that the company, i think,is a little disappointed in how they're doing. they're used to domino's consistency. we'll find out again, it's not an easy task to come in after pandemic when you're the number one company that brings food i urge everyone to try wonder truck. they may bobby flay come to my house on sunday -- not him >> domino's this is maybe the right price, but i can say that about everything i can say that about citi. you have citi? >> yes, tomorrow is their investor day, jim.

>> how about coin base >> how about bitcoin, it's up a lot. >> that's a concerted effort by people to keep it up. >> up 10k from the low. >> my ethereum is doing better. >> let's get to bob this morning. >> we are down not by much new highs all around the world in commodity stocks look at the major movers, metals are up, we have new highs in new core, oils are up we have new highs, of course, in the big high beta names like devon, phillips, chevron tech is holding up very well since the bottom of wednesday, flattish right now there's the problem, the banks look at j.p. morgan, can you believe it 52 week low in j.p. morgan right now. and citigroup is essentially there as well. it may be on an intraday level not there, but it's sitting essentially at a 52-week low the yields moving down this happened before this, in

january we were having problems with the banks the russian markets, moscow again today. but london -- some russian stocks are trading in london, these are london numbers you're looking at these are not mistakes all these stocks 80, 90% down. russian etfs continue to trade even with parts of the market closed because there's no market opened in moscow right now there's the vaneck, that opened at $9.60 it's $10, a bounce in that early on these stocks have been clobbered in the last few days, obviously. the market wants to go up, despite this humanitarian tragedy that is occurring in the ukraine. the s&p 500 bottomed on wednesday and essentially higher highs and just about higher lows at this -- higher lows at this point. we're 220 points off of the lows

that we hit last wednesday here. i hope you were all watching mike worth this morning on chevron. this trend we're seeing, this oceans of cash coming back to corporate america, not just confined to chevron. we're hearing it day after day with company after company making announcement. chevron raised their buyback kohl's doubled their dividended added to the buyback wendy's has a $100 million buyback. hostess a $150 million buyback oceans of cash in dividends, buybacks and some cases like chevron reducing debt. i know we're all fixed on the president's speech to want and we should be, but for the markets it's powell on wednesday testifying in the house that matters. i heard threading the needle 50 times in the last week but he has to focus on slower growth, the market has come to believe

there will be fewer rate hikes than they thought in 2022. this may be a fantasy, the market can make itself believe things that aren't necessarily going to happen. it wants to believe that right now. the story for stocks in 2022, slower earnings growth and multiple compression whether the multiple compression continues is going to be dependent on mr. powell and what he says in the next few weeks. if you look at what's happening to some of the big names, i mean, some of the really big names in the last couple of months, look at starbucks, 3m, home depot, nike, goldman sachs, these stocks are significantly, a quarter, off of their 52-week highs. and most of the damage occurred in january, when everyone was trying to figure out the fed's policy path. it's not since ukraine, yes, since ukraine it's been damaged but a lot is trying to figure

out the fed's policy path which is why i insist powell is the key story for the markets this week >> thank you, bob. you're going to have a lot of numbers to play with tonight. >> i have salesforce amazing if it backs up to work day, domino's, we have to find out what's going on. it's a small oil company, merger capital oil and gas with another company that i thought was good. the thing that matters is mike werth. he is talking about trying to change this industry david you are also talking to exxon trying to change the industry david, i'm going to put it to you. for real or window dress >> efforts in terms of reducing carbon i think it's for real but i think they need to be part of a dialogue, you heard it from mr. werth saying this is going to take a while, we need incentives, governments around

the world to cooperate in a way that is likely we're willing to put more capital into this, and the challenges for carbon capture are significant, in terms of the pipeline systems, in terms of where you have to do it, direct air capture is not something that works right now, certainly not at any price that would be worth pursuing it. >> thank you, excellent. >> you're welcome. >> we did not get to talk about the impact of high gas on the consumer jp earlier said they looked at the excess savings households have, 2.2 trillion, enough to cover a 50% surge in oil and gas for years to come. >> i believe there was announcements yesterday from gm, but you keep hearing electric, electric, that is a way to be able to avoid this whole thing. >> sure is can't imagine it doesn't help sales. >> don't you think >> $4 a gallon. >> never think about gas prices again. >> where's your electricity grid coming from?

if it's coal, it doesn't help the planet. >> david, don't uncover that, we're not allowed to look at it. baseline is almost all -- >> natural gas. >> you had to be a killjoy >> that's what i'm here for, man. >> do you want to start talking about -- >> you're bad for the environment. your footprint is gigantic >> you know what else is >> what? >> nuclear war. >> speaks the truth. dow down 200 points, s&p down 13. watching the market as we get closer to the bell action. ism is coming up after the break, don't go away [copy machine printing] ♪ ♪ who would've thought printing... could lead to growing trees. ♪

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good tuesday morning, welcome to another hour of squawk on the street ukraine, of course, continues to dominate market discussion dow down about 160 here, s&p struggling to stay close to the flat line down about 7 points. coming up we have an interview with jack lew, we'll talk about everything from market volatility to russian sanctions. first, rick santelli >> we have construction spending

for january out. 1.3% this is a wild number. 1.3% is the strongest number since january of last year when it was at cycle high of 3% so that is a pleasant surprise as for the february read on ism national manufacturing, better than expected. 58.6 58.6, that's the best number since 58.8 at the end of last year because, of course, we did a detour down to 57.6 last month look at prices paid, 75.6, that is good news as it eases back a bit from 76.1 and on new orders, 61.7 61.7, that is a very good number that's the best number since september of last year now, if we look at the employment number, this is not good news. the employment number is plummeting 52.9 basically just a little light of three points above the expansion

line and it really does underscore that we're going to have some big numbers coming up tomorrow, adp doesn't include government hiring and the big jobs report friday that is going to be a market mover morgan, back to you. >> rick santelli, thank you. 30 minutes into the trading session, three movers we're watching starting with target shares soaring on earnings, posting 9% sales growth, said it's poised with an upkeep forecast to keep it going $24 an hour wages in some markets too. something to watch those shares up 11.5%. zoom, video under pressure again. now down 30% year-to-date, issuing full year guidance below what analysts predicted. the shares are down 3% right now. we'll end with lucid group plunging on disappointing quarterly results cutting the

car production forecast for this year by as much as 40% shares are down almost 16% right now. don't miss a first on cnbc interview with the ceo of stellantis that is coming up later this hour. don't want to miss that. david? morgan, we're going to turn to russia now and ukraine. the u.s. and allies have assembled the most extreme set of financial sanctions ever put on a g-20 country. but will they still be enough and what will it mean for the russian economy? steve liesman has a look at that for us steve? >> the sweeping sanctions imposed on russia hitting almost every stratum of society, the rubble is devalued air flights cancelled to europe. and mastercard and visa are blocking several institutions from their network that means credit cards are going to be tough to use there the imported goods to which many russians have become accustomed they're going to grow more

expensive and become unavailable. but it is a long way to these sanctions ending the war there are some holes out there, russia continues to earn money through energy sales the russian central bank could access m some of the foreign reserves through china and through banks in switzerland when they buy russian goods, they're going to feel impact they buy a loaf of bred in rub rubles it doesn't take price russians have endured ruble devaluations worse than this look at this, 32% in the great financial crisis, fell by 45% in sanctions after crimea, declined by 18% after the pandemic. still the ruble is off 26% since the invasion in ukraine began. these historic sanctions they're going to hit a country where its

people,historically are used t immense suffering and its leaders historically don't care. thomas graham, from the council of foreign relations tell me, quote, this is a population that could suffer through a lot and survive. and they don't have the same expectation of their leadership as people do in the u.s. and western europe with a brutal putin regime that suppresses opposition and jals critics sanctions can only go so far in changing the course of this war, david. back to morgan, i guess. let's turn to the broader markets and bring in barry banister and sherry paul good morning to you both we have major averages lower right now. barry, i'll start with you there are a lot of cross currents here, talking about them every day, whether it's the fed, whether it is earnings, whether it is inflation and, of course, now geopolitical risks with the russia invasion of ukraine. how do you cut through it, parse

through it and figure out where do you put your money to work as an investor right now? >> at the broader market level starting out in the year we thought the s&p would drop from 4,800 to 4,200 and it did. i think it'll drop another 7% before the end of the month. risk is rising across the board. emerging market, credit default swaps, measure of credit risks and emerging markets are soaring. high yield option adjusted spreads are going up, investment spreads are going up, the libor is going the wrong way and oil prices are really going to squeeze the consumer now we have food prices as well with disruptions from the baltic to brazil. i think it's just terrible what's going on. and monetary anesthesia really

can't cover it up. >> a lot there to unpack first, sherry, the bond market, what is that telling us rights now? we have the 10 year yield continuing to fall lower you can argue there's a divergence taking place between the bond market and equity market right now realize we're in the red for equities but we saw a rally over the last couple of days nonetheless. which market should investors pay closer attention to right now and what are the signals telling us >> thank you for having me i think what the market is telling us right now, you know, in the midst of these historically unprecedented times, is that basically investors should be deploying a standard investing playbook. what that looks like right now is adjusting asset allocations in your bond and stock portfolio to address inflation and understand that will bring more

volatility to a portfolio because we can see the stock and bond market go down as the asset classes rerate the environment and with regard to the stock market that means tucking up into cash flows and balance sheets that can with stand this dynamic and change an environment. share buybacks and dividends will win the day we have an opening trade for all intents and purposes we could step into the back half of this year, there's a role for small and mid cap stocks in the u.s. and insert an air bag to look at reits, private equity, commodities and unpack the s&p and stop viewing it as one entities, but different bull and bear sectors of the 11 markets today would be an interesting day to step in because the financial sectors sort of also

debating the rate hike climate so our advice to clients is to go down the middle of the road on this market right now while we all sit and watch and participate in, you know, this devastation trauma from a privileged perch sitting here in the united states and the greatest capital of democracy. >> well said barry, i'm curious to get your take on where you think the floor is here on the s&p i think your latest call is to be a shade above 4k, is that near term and what gets you there? ba barry, can you hear me >> yeah. having a little connection difficulty, but just to answer the question we had said above average levels of cash going into the year, as well as health care, consumer staples, utilities and the pure defenses that would be where i would be

structured through the quarter we'll have to see how second quarter plays out. >> so, sherry, we've got chair powell testifying tomorrow and thursday on the hill there does seem to be this sense, at least within the equity markets for better or worse, that maybe perhaps later in the year more rate hikes could be off the table, especially if you see the crisis in ukraine continue to drag on for a while here and continue to have an impact on inflation of things like commodities. how -- what are you looking for out of that testimony tomorrow and how real is the possibility that you could see the fed begin to step back or ease later this year given the fact we have all of these cross currents that we've been talking about >> yeah. thank you for that right now morgan stanley thinks five to six rate hikes this year the sequence of that could change but the reality is the fed is

going to be raising rates now it's about time line from a portfolio management standpoint i think it's important for investors to understand the difference between tactical cash allocations and the reality of what's coming in terms of the importance of basically having your portfolio inflate along with the costs of goods and services so moving the cash is not a strategy overall tactical cash would seem to make sense here but the antidote to inflation is investing, owning assets and the fed has been telling us for two years they were going to err on the side of inflation versus deflation that's where we're at now. i go back and echo my earlier comments which it's very important for clients to be surgi surgical, liquid and tactical as we wade through this

historically unprecedented geopolitical global reordering >> thank you for kicking off the hour with us barry and sherry with the s&p down about two thirds of one%, only one sector in the green and that is energy carl >> lost a little ground on the heels of the ism number. don't miss our exclusive with former u.s. treasury secretary jack lew talk about bitcoin, trying to bounce back, erase losses for the year "squawk on the street" will be right back stay with us

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bitcoin has closely been tied to equities over the last few months but breaking out today along with the broader crypto market. let's get to kate rooney with more on what is drooiving this action >> a few reasons for bitcoin's surge this week, there's a short squeeze going on, fed expectations changing and we are seeing a narrative shift bitcoin is on the global stage right now looking like a potential protection amid more currency devaluation it's seeing a surge in demand out of russia and ukraine as currencies there crumble currency pairs are now trading at a premium, that's often a sign of demand there dollar pegged coins like tetter are also getting a bid this week and the eastern european demand

is not enough for that 10% rally but it helps the narrative around crypto as the store for value. store value use case may also be spurring buying from some of the smaller individual investors data from genesis and glasnow showing a boom in wallets with less than 1,000 bitcoin and as jeff dorman tells me this morning it's looking like an inflection point some of the recent protests in canada are showing what he calls digital assets being the best protection against government and bank overreach but pointing to the institutional inflows those come on the first day of the month, that is today another factor a lot of investors have already sold. writing this morning that top buyers, or market tourists as they're calling them have been flushed out, they represent a smaller portion of the market compared to last summer. it's been dominated by some of

the longer term investors who, quote, appear to be unwilling to liquidate even if they held at a loss a little too soon to tell if it's decoupling as crypto bulls have been waiting for. >> fascinating fascinating dynamic to watch kate rooney thank you. after the break we'll speak with stellantis aiming to double revenue by 2030. we're back in two. (vo) right now, the big switch is happening across the country. small businesses are fed up with big bills and 5g maps that are mostly gaps—

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stellantis announcing big plans to transition into a major player in the ev race. joining us is the ceo of

stellantis along with phil lebeau >> let's bring in the ceo from stellantis carlos, we'll talk about your outlook in a second and a huge expectation in terms of the increase in revenue by 2030 but we want to start with what's happening in ukraine and russia. you have staff in ukraine, so the first question is, a, what's the status of your staff in ukraine, and secondly, as the sanctions are put in place on russia, how much pressure is that putting on the supply chain for the auto industry and stellantis in europe >> you're right. that's a very serious issue. since last thursday, we have set up a specific task force to support and keep tight connection with our 71 ukrainian employees. up to this morning things looked okay but since the middle of the day, we are not getting contact with

three of them. so we are trying to establish the contact by the hour with three of those 71 ukrainian employees. we have done a second thing, which is to set up a specific task force to digest, understand, and translate into business decisions, all the sanctions that have been decided by europe and the united states so we are implementing those sanctions in a timely and highly rigorous manner. and third we have decided to set a specific fund to help the refugees from this war, and make sure they get an appropriate support from us. the other three things we have done and we will continue to monitor the situation by the hour with a strong focus and a strong concern about keeping our people healthy and safe. >> carlos, you have a small manufacturing facility in russia, generate about $22 million last year. a lot of people are looking at

that and other plants from other companies in russia, and saying, why not shut it down why keep it running? why not just shut it down? >> well, anywhere, you know that the logistic flow is now extremely difficult. i assume that that will happen at one point in time just because the logistics are not operational. so that will most probably happen at this stage i think our role, as a corporation, is two-fold. first take care of our people, secondly execute the sanctions that have been decided by the political leaders, and third, help the refugees. this is exactly what we are doing. and whatever the business consequences, we'll execute all the sanctions that have been decided. and that may have an impact on our business in russia that is going to be, anyway, small compared to the business size of our company.

but, of course, we will not hesitate to do it if the sanctions reach that point and if the logistics do not allow us to keep on supporting those operations. >> let's talk about the broader business, carlos, in your investor update today you have targeted doubling your revenue by 2030, and a big part of that will be the transition into electric vehicles but you said just last week that the move to electrification is going to cost your -- your production costs are going to go up anywhere from 40 to 50%. how much of that will you be able to pass along to the customers because that's a huge bite in terms of the cost equation here. >> you are absolutely right. and that's not new we have been communicating on that theme now for several years. expressing the fact that there will be a big challenge for the automotive industry to absorb through additional productivity, those 50% of additional cost

this is no news. and, of course, we understand that we cannot pass this enormous amount to the final customer because he will not be able to afford that kind of additional pricing that means we need to do our homework over the next five years and absorb those additional costs through a very strong focus on cost reduction, this is what we express today here in amsterdam to the investors in terms of reducing the transformation costs in our plans, reducing the costs of everything we buy to our partners so all of this is going to be contributing to reducing this 50% additional cost of electrification for protecting the affordability that we absolutely need to deliver to our middle classes >> you showed a picture today of the first electric jeep that is coming out early next year and

then you roll out a number of models after that. as you're looking at this and you know the costs are going to be so high, will you have to increase your commitment beyond what you've allocated which is $30 billion by 2025? >> you are absolutely correct. we are going to start very powerfully from next year, with our ro-master large size ev. it will start from 2023 and it will start with one customer called amazon in the united states so we are very happy to do that from next year i have already committed to the fact that we would put no less than 30 billion euros on the table in r&d and cap x for the next five years. if we needed more, we can put more because, as you saw through our 2021 financials, we generated no less than 6 billion euros of positive three cash

flow with 2 billion euros of synergy. so it's excellent. we are in a position to invest, to support but, of course, we want to do it wisely we want to do it with a high sense of frugality we want to do it in a smart way. but 30 billion over five years is half, on a yearly basis, of what we are actually spending. so we have room, if needed, to go stronger. but we think with this amount we can do an excellent job to support what has been committed to the investors today which is to be able to make 100% ev sales in europe by 2030 and no less than 50% ev sales in the united states by 2030. >> thank you for joining us today from the stellantis investor meeting in the netherlands. that's an ambitious goal he has said and we have to reiterate

what they said at the meeting they plan to double their revenue by 2030, which is an ambitious goal but they say they can get there. that's the latest from stellantis when they also gave us a sneak peek at the electric jeep coming early next year. it's time for an etf spotlight. looking at the ishares bt. kno novavax is up this year, despite results that missed estimates. full year guidance was in line, the company's covid-19 vaccine has been granted authorization by 12 world regulatory agencies but still waiting for approval here in the u.s. novavax is also working on an omicron specific shot. delivery expected at the end of the first quarter. those shares of novavax are trading up about 6.5% right now. we're back in a moment

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welcome back here is our cnbc news update at this hour. new video appears to show a direct hit in ukraine's second largest city kharkiv ukraine said this video shows a russian rocket attack on a government building that killed seven people at the same time a 40-mile convoy of russian military vehicles is approaching kyiv russia's defense ministry is warning residents of the capital to leave their homes because it plans to attack what it calls military targets in the city a standing ovation at the european parliament today for ukrainian president zelenskyy. he called on lawmakers to support ukraine's application to join the eu. a different reaction in geneva a human rights forum. diplomats from the eu, uk

wal walking out of a speech delivered by russia's foreign minister and current and former officials are telling cnbc news they're concerned russia may arrest american citizens in that city one scenario is that employees of companies could be taken into custody accused of complying with sanctions you're up to date, back to you. markets in the red most of the morning here, s&p a brief trip above the flat line for now down even with mixed eco data today coming up in a few moments we have an exclusive with the former treasury secretary jack lew. stick around for that. keeping an eye on oil prices this morning and mike worth the ceo of chevron was at the stock exchange earlier, having their investor day here today.

we did ask his expectations for oil prices given the current turmoil that is in ukraine and russia >> in the short term, i think the anxieties about supply have continued to keep this pressure on prices. we don't see signs there are physical supply shortages appearing yet. but inventories were low coming into this, prices were rising coming into this, the fact that geopolitical risk shows up in a risk premium in oil markets shows we're in a ticket market once again. >> it does mean higher prices, higher prices good for chevron whose stock has performed well the last month and the last year as well. this morning in the investor day, the company said it's increasing buyback guidance from 5 to $10 billion a year. also expects a 12% return on capital and growing that, 10% a

year for the next few years, through 2026, as you see that's if you assume $60 brent at 75 the equation changes dramatically in terms of what the company would have and be able to return to shareholders after it already pays an increasing dividend and with capital expenditures as well so we'll keep an eye on shares of chevron, which are up as you see over 3% right now. morgan it's a fascinating fundamental shift in the business models for these major oil companies over the last couple of years as evidenced in that interview this morning, david. great stuff. later tonight don't miss cnbc's special coverage of the president's state of the union address, anchored by shepard smith, that kicks f ofat 8:00 p.m. eastern we'll be right back. stay with us

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amid russia's invasion of ukraine top u.s. officials extend the conflict could extend to space, warning that satellites could be a target for russian interference virgin orbit provides launch services for small satellites for commercial customers and governments. here's what the company's ceo, dan hart told me friday about this potential threat. >> russia, as well as china, have been demonstrating the ability to destroy satellites in orbit. and those satellites support our economy, satellites support the synchronization of our banking system, navigation, how we understand our world, how we understand what's going on >> so orbit air launches its rocket from under the wing of an adapted boeing 747 jet and hart said that capability to launch from effectively anywhere could make these types of threats,

eventually, obsolete >> let's say somebody is jamming gps signals or something we could put a satellite over that area and characterize it immediately. we can change the way we do space in that we can allow the u.s. government and our allies to launch from anywhere, at any time, do it unwarned so everybody is not waiting for the big launch to happen from the cape instead, satellite pops up from the middle of the ocean. from the middle of nowhere and so, it changes the whole calculus hopefully it deters people from ever investing in space anti-satellite weapons we can put them up easily from anywhere, what's the point in investing in causing mischief in space. >> when you talk about those anti-satellite weapons systems that's in part in reference to the test, the so called a.s.a.t.

test russia conducted last september. speaking to these capabilities and the real and rising threats where space is concerned you can hear more of my conversation with dan hart in the latest episode of "manifest space," which is out today i would note we have already start today see some of these impacts, if you will, of this conflict case in point we talked about this yesterday with viasat confirming to me it has been experiencing a partial network outage for fixed broadband customers inukraine and other areas of europe. and their investigation is continuing into that outage, but they believe that that was caused by a cyber event just a couple years ago i remember sitting down with sir richard brandon when virgin orbit was spun out and he was talking about the national security implications of being able to air launch

rockets and do fast turn arounds for satellites the expectations for a company like orbit is that as their launch cadence ramps up half the business will be national security and government related and the other half commercial speaking to those capabilities and those ideas of deterrents. >> meantime we had a healthy mix of sectors that were green this morning but it dwindled down to energy now looking at some of the bank stocks, dom? >> the mixed picture so far with energy the notable outperformer, the only sector in the green today the financials are the ones we want to look at to your point, the biggest laggards by far, down about 3% as a sector overall, the worst performer by a wide marin, a rage of names are leading that, you have the big banks, regional banks and credit card issuers, citigroup is down 5% in two days after

saying its total exposure to russia was more than $10 billion. it comes alongside a decline in u.s. treasury yield notes. the 10 year hitting the lowest in a month and two year the lowest since february. the dynamics, the russia sanctions, the ripple effect playing out in the bank stocks really the laggard, david, today. back to you. after the break right here, don't miss it, our exclusive interview with the former treasury secretary of the u.s., jack lew we're back in two minutes.

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the u.s. imposing these new economic sanctions against russia, the treasury secrdepartt prohibiting interactions with russia joining us this morning is the former treasury secretary jack lew. mr. secretary great to have you, thanks for your time today. >> good to be with you this

morning. >> we've been trying to document as well as we can, the corporates that are removing foreign investment, obviously the limitations on their imports of technology but also the sanctions trying to crush the liquidity of their reeserves of that rainbow which is the most forceful in the near term >> i think what's notable is the cumulative escalation of sanctions over a very brief period of time really in response to the rapid escalation of the attacks of russia on ukraine. so you saw, in rapid succession, an escalation from sanctions on the banks to -- and a cutting off of critical supplies like computer chips to the sanctioning of central bank. it's all going to have an impact let me start with the sanctioning of the central bank. russia had put a great deal of

effort into building its reserves, over $600 billion of reserves were built up in the central bank but those reserves are not going to help russia defend the ruble against devaluation if they can't access it. they diversified their reserve so it's not all in dollars, but a large chunk are in dollars, in euros, in yen. those are going to be very hard to access. so there will be some reserves they can get either the reserves that are in their own currency or chinese currency. there's hard assets like gold but those have to be converted to hard currency i would say that the $630 billion of reserves they've built up are only a fraction is now available to them. and it's going to be very hard to control the devaluation and the inflation that's going to go on in russia i think that combined with cutting off critical supplies and regular trade is going to

have an impact but just to be clear, economic sanctions, even powerful ones like these, are not the instant impact of explosive ordinance that we see every hour the news. it takes time for these sanctions to take effect i think they're going to have an effect, i think it will be rapid but it will take time. >> i guess the question would be, how much time before we see visible signals that it's slowing down the military aggression, because as you point out, it's difficult to see right now. we're beginning to see signs of long lines at atms and the impact on russian consumers, but when do you think it starts to demonstrate progress in its utility? >> clearly the crash yesterday in the ruble and in the russian stock market and the lines at banks are a dramatic statement that there is an impact. you're asking the critical

question about sanctions, when does it get to be enough of an impact to change the policy of the government that you're trying to change you know, i think that on multiple fronts this is going to turn out to have been a very bad decision for russia. invading a sovereign country and violating international law, meeting stiff resistance on the ground in ukraine, and facing enormous pain at home and not insignificantly protests in the streets of russia where protesting is a good deal more dangerous than it is in new york or berlin. i think he has an awful lot of problems that are going to impede the ability to achieve his goal here. whether that means he's ready to change his course, that's a very difficult question to answer i think the coordination between the united states, our allies in europe and around the world, has been really extraordinary. and, you know, i would say that

the administration deserves a lot of credit for laying the ground work but a lot of it is simply the reaction to the atrocities that are being committed attacking innocent populations and attacking a country with no provocation. >> yeah. you raise the important question which is the off-ramp for putin my question to you, though, mr. secretary, is what about china? because they would seem to potentially be able to play an important role here, to allow russia to avoid at least some of the implications of the sanctions. what are your expectations there, of how the chinese are going to play this >> i think we know from experience with sanctions in 2014/'15 that, you know, china did work behind the scenes to facilitate a certain amount of activity in russia while we and others were sanctioning russia i think we can expect from this

t comment comments made by the chinese government and comments around the world, that they'll try to strike a middle ground china has to decide whether it is going to stand behind the principle of international sovereign boundaries being something that they need to respect. the nations of the world that respect those boundaries are coming together. china has been, in international bodies, not voting they've been abstaining. you're asking the question, what do they do economically. i think it is an important question what do they do on the world stage? in both regards, i think it is going to increase tension between the united states and china, if china does not stand behind the idea that it's not all right in the 21st century for another country to invade another's sovereign boundaries without provocation. >> mr. secretary, you just

referenced 2014/2015, the sanctions we put in place by the treasury, which you ran at the time going back to that time period, there's been a lot of talk among experts that perhaps putin and his management of the russian economy, that there has been an opportunity for him to basically prepare for this moment from an economic standpoint. do we actually have a sense that that is the case and, if so, what does that mean for things like countersanctions out of russia and raw materials which have been, so far, excluded from our own sanctions? >> i think if i don't go back to 2014/'15, russia's central bank actually did an effective job with a weaker hand than they had going into this crisis you know, they were willing to tolerate devaluation up to a point that they defended the ruble as much as they could. they had very rapid inflation and a reduction in purchasing power in russia.

it wasn't a good thing for russian citizens, but they did manage to avoid a financial crisis i think they took from that experience that if they wanted to be ready for some new round of economic sanctions, they needed substantially greater reserves they built those reserves up, and that's why they went into this crisis with the $630 billion in reserves that the world is watching. i think the decision and international acceptance of sanctioning the central bank of russia is going to frustrate that effort in a meaningful way. it won't immediately stop them from having access to all their reserves, but they're going to have to husband their resources, which means they have taken steps that you would expect confident monetary authorities to take in a situation like this, but those efforts will be frustrated to a great extent by the sanctions.

you know, there's not an on/off switch here. you know, i give great credit to the people who have studied what happened in 2014/'15, to learn both to escalate based on the provocation. in this case, the provocations were fast and rapid succession and to respond accordingly i don't know what the response will be from russia, but i know our cyber authorities are on lookouts for attacks they should be because there is no question they have capabilities there i think in terms of the raw materials, i assume you're talking about oil and gas prin principally. the sanctions regime carved out oil and gas, candidly, to permit the flow of resources into europe and other countries, so the effect of the sanctions wouldn't hit the allied powers

that are putting pressure on russia more than it hits russia. you know, i think from the willingness of governments i europe, particularly germany, to come forward, i think what's being demonstrated is a unity that putin has to take very seriously. it means that the threat of further steps is still there the willingness to endure pain is higher than he expected. >> yes >> you know -- >> to that point, i think it was trudeau yesterday said they intend to halt imports of russian oil imports. white house said it is not off the table. but canada is lifting caps on wee wheat imports. india is concerned about the flow of grain. how can that revenue be stopped? >> i think there's certainly going to be a reduction from where they were. you know, oil and gas is a big part of russia's economy, so,

clearly, it won't draw to zero, the flow of foreign revenue into russia but right now, they need more than the baseline in order not to be in a deep hole they're going to see less than where they started out with oil and gas prices high, you know, that is something that, you know, may give them a little bit of a cushion. but i think the pain here is very real. it's not going to give them the ability to do what they need to do to defend their currency and to avoid inflation and to avoid there being pain on the russian economy. russia's economy wasn't doing that great to begin with so i think, you know, in putting a sanctions regime together, the goal is to put pressure on a government to change its policy, to keep unity in the -- on the part of the countries that have resolved to put that pressure in place. i think the balance for this stage has been struck right.

the pressure is great, and it can increase i'm confident it'll increase as the aggression increases. >> mr. secretary, in light of this entire conversation, do we -- can we begin to understand or analyze what the potential impact of this is actually going to be on the u.s., on europe, in addition to the russian economy? >> look, i think that, you know, directionally, we do in terms of magnitude, i think it's early if one was hoping to see a turnaround in inflation, clearly, with energy prices being increased because of this situation, it's going to be harder to see that progress made i think if you look at europe, there's probably more of an impact on overall growth in europe than in the united states pause because it is a bigger connectivity with russia both in terms of reliance on

russia for oil and gas, in terms of commerce, and in terms of financial interconnections so i think there's not a single answer one of the things that was true in 2014/'15, and is true now, is there is not a high likelihood of spillover to financial instability because russia is not that interconnected to enough significant financial institutions to create that level of risk. so the question on the margin, does it mean more inflation? probably does it mean some drag, some headwinds on growth? probably but i i dondon't know it is a material impact on the u.s. economy, given where we are now. a little more of a risk as you move to europe >> secretary lew, we appreciate you joining us today to break all of this down and share your insights and experience in the process. >> good to be with you i'm sorry for the subject. >> yeah. me too

we had some big earnings to watch after the bell today meantime, including salesforce, hpe, nordstrom, and amc. this last gasp of earnings season gets under way. meantime, all the major averages are lower right now you have the dow down 1% 1.3% now, david. s&p down about 0.9 of 1% we have these macro dynamics at play right now. >> yeah. interesting, listening to secretary lew's thoughts in terms of inflation, in particular, and what the impact will be. of course, what that is going to mean for fed policy, certainly something that market participants will be focused on as we sort of have gone back and forth with expectations of as much as a 50 basis point move at that march meeting you heard from dom earlier in the show. of course, the banks are notable. in particular, losses that

include almost 5% at wells fargo and 3.7% at jpmorgan, for example. we will be keeping a close eye on shares of citi. we've had investor day tomorrow. oil has to be a continuing story today, as well you saw wti up as much as 9% that'll do it for us on "squawk on the street. let's go to "tech check" which starts now ♪ good tuesday morning welcome to "tech check." i'm carl quintanilla with jon fortt and deirdre bosa first day of march, russia bears down on the capital of ukraine then some gloom. stocks 70% off the highs