prices during the quarter. how stock is reacting and interview with the ceo it is tuesday, may 3rd, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. here we go let's look at the u.s. equity futures. yesterday things were deep in the red. averages closed higher after you saw buyers come in at the dip. nasdaq was the best. we have modest advances. nasdaq up by 12. s&p up 4 points. treasury market is where the real tension is.

10-year yield just dipped below. it was trading above 3% this morning. now at 2.981%. the 2-year yield at 2.7% a lot of changes happening everybody awaiting the fed meeting and decision after the fed meeting. andrew thanks, becks. energy giant bp reporting a big jump in first quarter profits. climbing to the highest level now in more than a decade despite the decision in february to divest the 20% stake in the russian oil. the charge of $24 billion led to the paper loss of $24 billion that the company stopped after the profits in the account additional $2.5 billion share buyback. we will have the ceo with us on the program in the 7:00 hour.

a lot to chew on all of the geopolitical issues and price of gas. >> oil is higher this morning. i saw it at $104 big moves you are watching with commodities and yields it will be interesting times >> will be >> maybe it will do work for jay powell. >> jay grant will be on. he has interesting things to say about the quandary that the fed finds itself in. let's talk chegg slashing the sales forecast. the company ceo says students are taking fewer classes and the ones they are taking are less rigorous with fewer assignments. that sounds good >> wine making

>> nothing i don't have to pay back my loans. prioritizing earning over learning delayed school clorox expecting lower sales for the quarter. cited higher costs and commodities and manufacturing as well as logistics. employees at amazon warehouse on staten island rejected the union effort one month after the fulfillment center was the first to unionize 618 against to 380 in favor. results still need to be certified by the nlrb. the amazon labor union representative will challenge the outcome. possiblitive news in one case fr

ae amazon, but not so >> this is another issue if you look at the vote far more voted against it than for it far more people didn't vote than people who voted for it. there are 1,600 employees there. this is where it will come down to the line. all of the national headlines and riding on a few hundred people again, apathy is the biggest vote it is time after time almost more people don't vote than vote in some of the elections they have, too. >> what do you do? do you think a non-vote is a vote against the union or for the union? i look at a non-vote as likely against it than for it it is not really against it. >> right it is hard to see the challenges that come on these things when you have twice as many people who voted no and twice as many people, almost, who didn't vote. you will see challenges again

and again. it does catch headlines. this is an important time for the labor movement they will do this whether it is store by store with starbucks or whether it is warehouse by warehouse with amazon. they are taking on the biggest of these there is something where the labor union is complaining of howard schultz by saying the additional benefits coming in won't go to the scores that unionize until they negotiate a contract. they are filing against him and saying they are threatening to not give benefits to the stores. this is played on the national level even though these are smaller stores or small warehouses where a few hundred people are making these decisions. it is played on the national screens. >> howard. howard -- tough to virtue. i feel for him

it is clear where i stand. that's all you need to know about me howard, on the other side of things as good a person as he is. hard for him to come down on this one. we've -- >> why do you say that >> go ahead, andrew. >> a side comment. it's okay. i'll take it back. i'll withdraw the question >> the hardest part -- >> which wasn't a question >> -- the hardest part that howard faces >> he faces a lot of challenges to redo the store. >> the hardest challenge is one of the things he built into the culture which is unique is he used to say and a great line if you could have -- if could you effectively make your employees feel like they were getting more than they ever

thought they could, they would give are their customers more than they thought they could the question is in this environment, once you baseline that, he did all this first. other companies did not do this. other companies got all of these benefits the last two years. >> that is why labor unions have fallen to below 10%. there's a lot of codified laws that prevent the abuses that unions used to address it is now illegal anyway now once you get past that, you deal with compensation and benefits companies are, if you have a better compensation and benefits plan, you don't have the dues and political issues that go with the union look at the stigmateachers union at this point? it is almost self defeating. there is a reason.

it is a free market. why has it declined from 35% at one point? now below 10%? it did not happen because laws were passed and people said you can't be in a union. it is the way it has happened. >> i'm unclear about how this relates back to howard schultz >> really? i just think howard has -- he's conflicted on this normally he would be -- as i said, i said it right? a side comment hard to be virtuous when you are a ceo and it is push comes to shove. north normally you like to come down on the woke side of things, that is the union side. >> i was reading the quote this morning. he cannot run a progressive company and be a union buster. >> it is simple, andrew. you are feigning naivete

>> it is hard to raise off the base now that has come up wages are higher it is a more difficult situation because wages are so high. benefits are strong at these places especially the last few years. retailers and others increased the benefits plans and everything they are offering not just amazon, target, walmart. the things that howard schultz did first. now other companies are coping it the situation is improved. i don't know how he jumps and takes it to the next level it is interesting. we will continue to watch it. in the meantime, as you watch interest rates climb and inflation climb, we will tell you about an investment option we told you about before the i-bonds backed by the government they don't lose value. they earn monthly interest on the rate that changes every six months they are tied to inflation

i-bonds backed by the u.s. government the return rate on the bonds is 9 9.62%. that rate return will last through october of this year individuals can purchaseup to $10,000 of i-bonds every calendar year. you cannot redeem them for a year you can cash them in within five years, but you lose the last three months of interest before the sale it is a great investment you can buy $10,000 directly or $5,000 with a tax return it is getting better all the time the one place you know you can be safe as you watch higher inflation. coming up, speaking of inflation. the fed meeting. advice from experts, we use that term loosely, throughout the morning. including richard fisher and jeremy siegel and this gentleman, paul tudor jones.

and then glenn hutchins. you are watching "squawk box" on bccn >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com of the.

today, the fed will start a two-day meeting. expecting a 50 basis point

increase we have jim with us. jim, your take is the fed is well aware of the misstep, perhaps, in under estimating inflation and whether it was transitory or how long it would last you say there is an institutional pride that is driving the fed at this point which risks the fed actually being too tight to try to show they can handle inflation and they overshoot is that where you are now? >> approximately the fed, i think, realized the error of the ways in the fall it continued to implement what we call qt the purchase of bonds for that purpose. they continued to do qe through march when it was running at 8%.

the months of 0% interest rates and the rest of the qe was the fed not wanting to admit out lou loud the market would take the first loss the fed is a bureaucracy it has a sense of self esteem that i think is driving its policy now it does not want to go down in history as the fed of 1970s. it is a very important motivator. >> we remember historically what happened they will come, jim, and give a range of the neutral rate and i don't know maybe they change that rate. somewhere between 2% and 3%.

the rule is a perfect world. it would be difficult to actually enforce the taylor rule from the stanford professor? the taylor rule would put the fed funds rate right now at 10.5%. no way we're headed to 10.5% if we went to half that, that could present a risk to growth >> sure. i think the taylor rule means to compare desired inflation with the existing inflation desired gdp growth with what we have it is a rule of thumb. not so longing ago, the term of the influence of monetary policy as profound. what is notable, the funds rate we have and the 10.1% that

professor taylor would impose. there are other signs as well of the redundancy of the dollars in the system the fed runs reverse repo facility the banks have no place to put except the fed to earn 30 basis points a year before taxes these are the difference with the taylor rate and funds and the sheer size of the reserve of the reverse repo thing it gives you a sense of how extraordinary loose the fed has been this is a unique episode it is truly -- it is something for the ages >> it is worse for a number of reasons. not the least of which -- i

don't know what it says about asset values we know in hindsight how much money was sloshing around. i don't know how much air is still under the assets take your pick you also think it will cause the fed to raise rates quickly to try to head off about stagflation which is the worst if they do it fast or quickly, will they not have to go as high as -- is that what they are hoping if they don't do quarter point increase >> on wall street, there is a phrase he/she missed his or her market mystery market there is a chance the fed missed its market the inflation like a virus is, in fact, rooted in the body finance. i don't know there is also the risk that i think is a strong risk that the

fed in its belated hurry to lift interest rates is going to force financial -- owing to the build up of debt over the years and the misdirection of capital that is upon the manipulated interest the back story is the interest rates is the market economy and most important of the prices of capitalism they have been an instrument of public policy. they are not discovered in the marketplace. it is this distortion of basic price we use in discounting cash flows and an investment hurdle rates and credit risk. the distortion that is now in play you know, in a way, the fed in trying to protect its image and

its reputation reminds you of xi jinping who is locked in the corner with zero covid once bureaucracy gets an idea in its head, it is hard to reverse it. >> jim, we are running out of time quickly, how negative you are about the outcome and what does that mean? are you at a taylor rule >> no, i think we are in the mist of the value restoration project on wall street skimming off the whipped cream >> not the end of the world? >> zero interest rates and zero commissions. it has been a wonderful two years, but it is going to be less wonderful in the immediate future >> we massy survive. jim, thank you >> you're welcome.

coming up after the break, demand for office space is soaring. we dig into the trend right after the break. don't miss this coming up later. investor paul tudor jones is joining us at 8:00 a.m. with the market voluatility and where th market is headed "squawk box" is coming right back esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim.

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welcome back to "squawk box. demanded for office space is heating up again diana olick is with us i thought the hybrid model was with us? >> no.

after five months of stagnation, offices demand jumped 20%. that is according to a new report it is monthly index tracks tenant tourism in markets. it is the forward indication of leasing. despite the surge, demand for office space is 2/3 of the pre-pandemic average experts say we need demand exceed norms top office gainers are boston, l.a. and noew york city and d.c it is led by employers calling workers back a survey found 36% said return to office was under way. 26% said it would be by the end of q2. 13% said it was up to workers. 10% were still uncertain office occupancy was only 43%. that is how many people are in

the office in april. that is a pandemic high. what does it mean for the office stocks boston properties. hudson pacific sl green and realty trust are all still below pre-pandemic levels these reits have come back jbl which invests in office buildings are now well above pre-pandemic levels. it will be interesting to watch as the office recovery takes off. if we will see the office reits return andrew, people are going back in you're in. >> i assume most of the purchases, this is a longer play for office this is not just about now this is about businesses saying this is the future >> reporter: yeah, absolutely. there will be different types of offices. we will see a lot more of the hoteling of office

you don't have your own desk, but rotate offices may needless space companies may require less space because workers are coming in two or three days a week not the five days to the exact desk we will see how this plays out >> okay. diana olick, thank you becky. thank you. in omaha at the berkshire hathaway meeting over the weekend, we got a chance to catch up with dan gilbert. this is the first time i had seen dan in years. he is recovering from a stroke he suffered in 2019. he is doing well he is working hard every day we talked about the tight housing market and what he sees today. >> intethere's no inventory we have to build more homes in the country. there's a period there years ago where we averaged about 2 million new net household formations in the united states

every year that's immigration plus leaving the nest minus deaths. now it is lower than that. still not enough inventory there's a time the builders stopped building so i don't know what we do to send builders out to build p more houses? >> as you know, dan co-founded the online sale stockx his plan is to ipo this company this year. >> stockx is an interesting company. we're working on a public offering that will hopefully happen this year. >> it is the sneaker company >> sneakers. it is the stock market of things sneakers was the first item. we do a lot of other stuff women's handbags, watches,

computer equipment regular stuff like collectibles. >> stockx is what dan says is the most interesting project at this point he is doing a lot of rehab he is rehabbing three days a week and working two he is working hard on rehabilitation he looked great. great to sit down and talk to him. the first time back at the berkshire hathaway since 2018. he is back out and getting around >> long process. >> it is >> he is coming a long way. >> it was great to sit down and talk to him. you can get the extended discussion on squawk pod this week it is available wherever you listen to podcasts. when we come back, we will talk about the deals on wall street and pfizer is set to report in the next few minutes it is down 1.3%. as we head to break, let's look at the s&p 500's winners

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with a 2-year price guarantee. call today. good morning welcome back to "squawk box" live from the nasdaq market site in times square. futures have turned redder than we saw at the top of the show. you have to give at least some credit to the bulls yesterday for turning that thing around mid session. it wasn't a huge gain, but it looked like it could get out of hand after what we saw on friday we are sinking again it's tuesday it must be the first day of the two-day fed meeting which will end with everyone thinking at least 50 basis points. they would not do 75 we would have a better -- they

would have prepared us for that. >> australia raising its rates for the first time in 11 years you will see this happening around the globe. >> yeah. warren buffett reveals that berkshire hathaway has a 9.5% stake in activision blizzard it built the stake after microsoft planned to acquire the stock below the 9$95 a share price. here is buffett on if the deal would clear regulatory hurdles >> we will see if we go beyond 10%. if, you know, easily be up a few dollars. it is still a $95 deal we don't know what the yield will do or 30 other jurisdictions will do. one thing we do know is microsoft has money. it takes that one risk out of it >> it deal makes up one of three he taking place on wall street

right now. there is also elon musk purchase of twitter and jetblue in the bid to buy spirit airlines we have dan and aaron with us. dan, let's start with you. what are the odds you think any of the deals go through? >> there are pretty good odds. it goes in descending on order mus buffett is making a big bet here the bigger picture, one of the big tech companies that the democrats and ftc and doj don't seem as interested in. doesn't mean khan won't go there, but not as interested in microsoft. >> descending order. rank it down what is second >> elon and twitter. that is not anti-trust thing that is totally elon deciding to

back out you have to discuss some of the down stream pressures on what it means for tesla with margin calls. i think the least likely is jetblue/spirit they said the opposite it is not about the money. we don't think we can get it through. in part because of the existing government lawsuit in terms of jetblue and american. >> aaron, would you agree in that ranking order that it is the difficulty of things to go through? >> actually, i think if you look at where the market is pricing risk twitter is pricing 75% to 880% f odds stand alone value for where the company would trade assuming the deal terminated today. twitter is pricing 75 to 80 odds activision is somewhere in the high 50s to 60s. that moved up five points after berkshire hathaway's annual

meeting. i would agree that jetblue/spirit deal looks the least likely here. >> the big question is, i think dan laid up nicely is it elon deciding not to do it or washington deciding not to get involved aaron, there has been a feeling just a general feeling on the street that you have to look out with the administration looking to make a move and looking to make its mark and that's created something over the deal of deal making to begin with is that a fair assessment? are they circling to make a mark >> without a doubt so far, we have seen they talked a big game, but we haven't really see them pursue creative novel theories lina khan is one short of having majority at the ftc.

that would perhaps allow her to pursue more. they talked a big game and we haven't seen it yet. >> dan, you sounded optimistic why is it trading at a steep discount >> i will not say why. the argument he said democrats will have the majority on the ftc with the vote on microsoft and activision the reason i'm confident in the deal is it is a tough case they may have a novel theory that may be the place to try it. it is a tough one. if you go after microsoft on this and you lose, it weakens you when you go after the companies again they expressed interest in. amazon, facebook, google, et cetera this this is not the one it they

will swing at given a chance they would miss. >> aaron, that is a fair point if you want to make an example of things, you don't want the first one to fall on its face. it makes it tougher whenyou do go after somebody. >> that is true. the head of the doj and lina khan and the ftc are clear they are willing to bring cases forward and willing to lose. the democrats think we need tougher merger enforcement laws. we will not get a law passed which impacts merger enforcement any time in the near future. that could be a reason to bring deals and lose our laws are ineffective i would say for investors why is this trading at low deal odds. it is big tech and acquisition for the administration, bigger is better right now. you have to have conviction on what lina khan will do

the deal is with the ftc that is tough. if you are buying here, you have to really buy it and be willing to hold it through a potential litigation and when you are in front of a judge, it can never really be better than 60/40 odds that's the rule of thumb. >> afaron, that is a tough stance would you tell companies don't even bother? no matter what happens, it will take too long and change the focus of the companies if you know you have to litigate every deal that goes through >> i don't think you have to litigate i think as an investor, you have to be comfortable owning through litigation we are seeing that right now with united acquisitions for companies, we see them incorporate higher likelihood of litigation it is contemplated you see that in the negotiations

in the merger contracts. >> you think the discounts stocks are trading at right now are fair although it is a steep discount, don't get sucked in? don't buy on this? >> the buying and selling, that's up to the investors i can say where markets are pricing risk and the main concerns are i think right now we're pricing risk appropriately for what is really a significant regime change here and in a new direction for any trust enforcement. >> gentlemen, thank you. aaron and dan, good to see you. >> thank you >> thank you all right. coming up after the break, pfizer set to report we will bring you the numbers and reaction on wall street. later, don't miss the interview with paul tudor jones in the 8:00 hour we talki inflation and markets and more

you can tch waus anytime on the cnbc app

pfizer reporting quarterly results. meg tirrell has the latest hey. >> a beat. earnings at $1.62 on adjusted basis. versus the share of $1.47.

analysts looking for $23.9 billion. the company stating the full year revenue forecast to $102 billion in revenue despite impacts from foreign exchange. guidance lowering to 6.45. effected by a change in the accounting for r&d the product lines as they are reiterating the covid vaccines for the quarter, it looks like a big beat for the covid vaccine more than $13 billion. analysts were looking for $10.5 billion. a miss on paxlovid $1.9 billion is what the street was looking for.

a slight miss on the breast cancer drug. you are seeing pfizer down at 3% in the early trading we will have albert bourla at 1 1:00 today guys >> meg, thanks we'll take it at 1:00. thank you for bringing us up to date i hope pfizer doesn't benefit from vaccines for covid for all eternity it would be bad for pfizer, but maybe there will come a day, meg. coming up, australia's central bank raising interest rates there by more than expected could that be the fed plan for this week? we will talk about how to protect your portfolio next. portfolio insurance? i don't know a company make the t a better place? ♪♪ what if it's a company of people working beside friends and neighbors?

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. welcome back to "squawk box. take a look at the futures right now. we are in the red right now, dow down 54 points the s&p off about 20 points. let's talk markets and how to protect your portfolio joining us is head of north american investment at citi global wealth management good morning to you. a lot of folks are trying to figure out if there's something they should be doing with their portfolio, ahead of, during or after this meeting >> it's a complicated question and hard to have conviction in these markets. one of the thing weise saw yesterday, the ten-year crossed that threshold, which means that we touched real, positive real rates for the first time in a long time. one of the things we've been doing within our portfolios is

raising quality, not only the equity side, but now we're starting to see value in asset valuation, in the yields that we're seeing and the chance that we may in fact hit peak rates. we have high conviction that it will happen. with that, we think there's value in creating that diversification and the asset allocation is back >> so bonds are back, baby where? >> so, again, i'm going to talk about quality here, because it's not all bonds are back the investment pieces at this stage, given the uncertainty, given the volatility, we basically have a pretty equal strategy when we look at what we're doing within our equity portfolios as well as our fixed income we see value in treasuries, in investment grade and in unis

it's up about 90%. and so we're very comfortable adding that exposure to diversify our portfolios >> what do you do on the equity front? there are still a lot of folks hanging onto some stocks, including faang stocks and nasdaq stocks. are these falling knives that continue to fall or is just everything on sale? >> so let's talk about where we've added exposure, and then i'll touch upon the question on technology so where we've been adding exposure, and this has really been a story since q3 or q4, strong balance sheet, durable demand and the ability to grow earnings, even with so pressures that we're seeing. interestingly with the s&p down about 14%, the nasdaq over 22%, these companies have actually held up pretty well, all things

considered, down around 7%, when we look at that specific area of dividend growers on the tech question, one of the things i will say, i think for a really meaningful turn around in tech we will need to see strong messaging from the fed, and potentially a u-turn look for quality there because when you look at what's happening under the surface, the nasdaq's down 22%, but you have let's say 30% of the underhighing stocks in the nasdaq are down of60% or more. there definitely is carnage there, but we're telling our investors to look at the profitable futures and not the call options >> is this going to be a great moment because all of a sudden this will be one of the great advantages, when things are in trouble? or is this just a press the pause button >> so there's two things to think about there. we have seen a lot of demand for

alternatives, particularly within private equity, as well as hedge funds again, it's more about portfolio diversification, adding hedges when it comes to hedge funds on the private equity side, when you're dealing with all of these short-term pressures and the volatility that we're seeing, it's much easier to take a long-term view, and private equity provides that, particularly in some of the areas, what we call our long-term unstoppable trends, so when you're looking at areas like hyperconnectivity, there's interesting opportunities to may the long game and take that long-term view as to what are the long-term secular growth tends >> kristin, we appreciate it thank you for your perspective this morning >> thank you you've got good news? >> yeah. >> i like this news. >> we still do that. one of the last holdovers of fun on the show. no, kidding.

shares of coampari are higher. citing momentum in its brands, including, mm, aperol. wild turkey, not so much, that's kind of scary. it also benefitted from a strong recovery of on-premise consumption in europe. people are back out i guess. sales in the u.s. went up 6.6% despite what are described as tough comps. and in italy, it is nice to sit in the sun and have an aperol spritz >> i don't like them they're bitter >> you can get them with campari and. find something you like, and you'll definitely like the second one when we come back, a huge lineup on the way to talk about the market volatility, everything, including richard

fisher jeremy segall, and glen hutchens they're going to be here, stick around we'll be right bac

i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones welcome back to "squawk box" right here on cnbc, along with joe kernen and becky quick take a look at the futures this

morning because we have red arrows across the screen right now the dow looks like it would open down about 125 points, nasdaq off about 50 points, s&p down about 15 points, and we have the ten-year flirting oh, so close with 3% right now. >> we are actually above 3% a little that's part of the volatility. add to that a flood of corporate earn earnings making headlines. pfizer at $1.62 a share. revenue was better than expected they cut its forecast because of an accounting change that stock up about 18 cents hilton benefitted from a rebound in travel demand, despite some negative impact from the covid-19 omicron variant earlier in the quarter, however, hilton

issued a lower than expected quarter. and dupont had been looking for profit at 57 cents per share it offset cost for raw materials. the stock down 3.8%. a two-day fed meeting, and the latest fed survey. i mean, did you sleep at all, leaseman steve liesman joins us now was it a kid on christmas eve? oh, my god, what, santa, were you able to sleep at all last night? or too excited >> no, joe the fed, as you know, section

pe expected, give me your evaluation thereof here's the deal. the fedex p expected to rate hi. the process is going to end in recession, most believe. 100% chance of a 50-point base hike will be announced tomorrow. 9 90% chance they do it begin in june this is six months earlier than the previous survey. and there's terminal rate, 3.08%. that's expected to be reached in august 2023, four months earlier than the previous survey, and 72 basis points higher than the march survey so here's the new outlook for the fed, which is anywhere from 60-80 basis points higher at

every point than it was in march 2, 0 march. 233 by december. despite the massive and unprecedented shift in outlook between meetings, these respondents are below. respondents still think on average that the tightening process does not end well. 57% it will result in a recession. and 10% just don't know. among the 17 respondents calling for the recession, the safrnl f average is for it to start in august 2023. one says it's going to be severe so the recession call remains elevated but not screaming for the next 12 months the average probability rose two points to 35% for europe

it's 53% the trouble comes beyond the next 12 months where respondents do not believe the fed can pull off this soft landing but rather create a recession are you still happy, joe >> it's just that the, okay, we understand what the fed's dealing with, so we can sort of handicap recession based on what the fed's going to do. then throw in putin and covid and all bets are off it's very difficult to know with these external things that could have a huge impact on it, steve. i do think we need to come up with a different term than the terminal rate. it just sounds so final. and are you -- >> bad time, yes >> you are talking about the terminal rate causing the death of an economic expansion >> right >> a terminal rate causes a, so it's just all motrbid >> since you're a fan of

science, like i am, there's heisenberg uncertainty principle that we have to apply to this. can you have a recession when everybody knows it's coming? right? which is 18 months down the road, can it be avoided, because everybody is predicting it, or is it created by everybody predicting it. if everybody gets concerned, pulls back a bit, can you avoid some of the excesses that create recessions it may be unavoidable, given how much the fed has to go up. what causes a recession? high inventories if companies don't get caught with high inventories, people plan for something down the road, it may not actually happen because it was predicted because it was expected. >> there's consumer edge that goes into that too, the idea that this is like trying to turn a steamship. it's not done smoothly or easily, and maybe once people stop spending they change their

habits and consumer psychology and how you go along with it yesterday roger ferguson said he believes a recession is unavoidable at this point. it's the first time he's kind of thought that he's adjusted his thoughts over the last couple weeks, seeing these things build up. i'd love to hear your thoughts on what he had to say, steve, i was wishing you were there to hear the conversation. >> i think i did listen to it, or at least most of it and it's hard for me to differ a lot from what roger thinks i guess the way to sort of tell the other side of that story is, this is the most unusual recovery we've ever had, right you have this very high inflation, but you also have, if you listen to some of our reporters here which i know everybody does seema modei's going to talk about the rebound in travel. frank holland's going to talk about a rebound in business investment you're still coming and crawling out of this covid slow down,

which gives the economy a lot of momentum you go into in with 11 million job openings we're going to get another report on that later today that's 5 million or 6 million extra job openings compared to the normal run rate of the economy. it's a little hard, plus you have good corporate balance sheets, good household balance sheets right now i think there's a chance we avoid this recession i dutifully report what's in our survey here, but i think overlaying history on what's going on right now creates some, i think, possibilities that things end up differently than before >> yeah. heisenberg, just, you know, breaking bad totally changed everyone's yield of the uncertainty principle. but it is impossible to determine the position and the velocity in the act of measuring it >> act of calling the recession

could cause it not to happen, joe. >> it's kind of an application of it. you know the most famous heisenberg quote, steve? the first drink from the cup of science, you find an atheist, but at the bottom of the cup, you find god think about that >> i hlike that. never heard that before. >> it's really good. it's heisenberg. >> i thought were you going to say my name. see you later. >> okay. coming up, we're going to talk about bp. the stake after russia's invasion of ukraine. we'll be joined after the break to discuss it all. before we head to the break, though, let's get a check on the markets. "squawk box" coming right back (vo) some bonds last a lifetime. some bonds inspire confidence,

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welcome back to "squawk box" their morning. energy giant bp reported a big jump in profits climbing to its highest level in more than ha decade it comes despite the decision in february to reduce the 20% stake in russia's rosneft.

shares heig shares right now are up. joining us is bp's ceo good morning to you. >> good morning. >> let's talk about these earnings but also where you see prices going and the geopolitics of all of this this was a remarkable quarter. do you anticipate in terms of, is this a straight line in the same direction you think for the rest of the year >> well, good morning, andue, a the backdrop is clearly the, what's happening in ukraine and the russian attack on ukraine and obviously, a real tragedy for people on the ground and obviously the impact on energy prices and the cost of living crisis for many people around the world. and that's, you have seen our results. we talked the decision to leave

russia within 9 6 hours. operations are strong. trading had a good, a very good quarter, and our convenience business had its best first quarter in history, so is it a straight h straight line for the rest of the year it depends on what the outlook is for the rest of the year. we concentrate on running the business as best we can, and right now it's running very, very well. and that's what allowed us to announce that share buyback this morning. >> when policymakers ask you about your own decision about getting out of russia and whether sanctions should apply in terms of how the eu should approach this, you tell them what >> i think there's been broad support, certainly from our shareholders and from governments with the decision that we took we were, i think, the first company to announce a decision to exit russia and certainly, at

this scale so broad support for what we have done. our job is to provide the world with the energy that it needs. and that's what we have been doing each and every day, and have been for a long, long time. but even more so in the last several months we've seen probably, andrew, the greatest volatility we've seen in history in many ways in the energy markets in the first quarter, and our job is to make sure that the system rebalances, that the system flows. we're working hard to remove russian moll cueecules out of o system and governments have to balance how to get russian molecules out of their system but at the same time providing for their people. >> there are going to be calls as i know you know in the uk and maybe around the world for wind fall taxes on the amount of

these earnings you tell them what >> well, look, if i look at it here in the uk, where the topic is hotly debated, first of all, it's obviously a decision for governments. the second thing i would say, andrew is it's only 15 months ago we announced our biggest loss in history pause of low oil prices we're here today with high oil prices the question becomes what do we do with the profits. we do three things we reward our shareholders through dividend and share buybacks and they are pensioners, people who are drawing down pensions. so we are rewarding them through that decision this morning the second thing we do is invest, we invest in the united states, in your system there we are bringing on the argos

system and we're investing in the u.s. in accelerating the energy transition, whether it be in fleet charging for hikt for elec vehicles we pay taxes in every jurisdiction that we operate in around the world, and that will continue and when profits are higher, we pay more taxes that's what we are doing with the funds we generate. >> let me turn around. if you were a policymaker in this moment, who said to themselves, i need to get oil prices down because this is not good not because they don't want to you have profits, because it flows as you know, to everything around the world in terms of cost it is what is responsible in some big way for inflation what would you do? >> what i would do is do what we are doing at bp, quite frankly and that is our job, and what we

call our strategy, which has become an integrated energy company, our job is two things number one, our job is to provide the world with the hydrocarbons that it needs today. it will continue to do that for some time, and our job to help provide that with the lowest emissions possible that's job number one. and job number two, and it's not an either/or it's an and. we're involved in accelerating the energy transition. we need to acknowledge the oil and gas is crucial to the energy system of today. we need to make sure there is sufficient investment into that so that we can get the energy tri lemma sorted and at the same time, we can invest and will invest and are investing in accelerating that energy transition. at bp, 40% of our capital in just a few years will go to

nonhydrocarbons, up 3% from 2019 that's what i would encourage people >> the federal reserve is going to be meeting today as you know here in the united states. if you were in that meeting with jay powell and thinking what does this economy in the united states look like and frankly, around the world look like over the next 12 months, and let's have a conversation about the price of oil as an input into that price in terms of what that spreadsheet looks hikelike, you would tell them what >> there are far more clever people than me in that room. our role is to provide the world with the energy it needs, at least help provide that. that's what i'm focussed on. what i would encourage are policies that do two things. policies that acknowledge the role of hydrocarbons in the system crucial that we have investment, crucial that we encourage investment just like we're doing in the gulf of mexico today and

the u.s. and secondly, we need policies that encourage the energy transition we do need that to happen. that is the best way to get energy affordable and secure and make the energy system of the future cleaner >> if he called you up on the phone and said look, we need to put an input here on what the price is going to be of gas that at the pump, over the next 12 months, you'd be telling him what, it's going to be at $103 to buy a barrel of wti crude $170 what's the house, house estimate inside bp right now? >> i think we both know that trying to protect the price of oil is a very difficult thing to do what i can do is describe to you how we see it today and what we see today is a world where there's a million barrels a day of russian crude off the system which may double this month when the sanctions really come into

effect you siee relatively low spare capacity globally and a number of uncertainties what's going to happen to global economy, what's going to happen in iran, in libya, with the zero covid policy in china. these uncertainties. so what i can el it yotell you i expect volatility to continue in the months ahead and all things point to prices being strong as they currently are in the months and years ahead. i can't priedict a price for yo. by definition it would be wrong, but what i can point to is volatility and relatively strong prices for the medium term >> we appreciate you being on this morning thank you very much, talk to you soon >> thank you very much, andrew when we return, we'll talk about what investors should expect from the fed as it gets ready to kick off its two-day

meeting. richard fisher will join us to talk about powell's next move. check out share of clorox this morning reporting stronger than expected sales growth, however, it was the earnings report that fell lower than expectations. the ocstk down by about 2% "squawk box" will be right back. meet jessica moore. jessica was born to care. she always had your back... like the time she spotted the neighbor kid, an approaching car, a puddle, and knew there was going to be a situation. ♪ ♪ ms. hogan's class? yeah, it's atlantis. nice. i don't think they had camels in atlantis. really? today she's a teammate at truist, the bank that starts with care when you start with care, you get a different kind of bank.

welcome back to "squawk box. let's talk about a developing story and one that's likely to shape the country's social discourse for decades to come. the supreme court appears poised to overturn roe v. wade. >> nbc news has not confirmed the draft opinion, but the document would amount to an unprecedented leak, and it could change in the coming months, but the leak draft opinion released by politico indicates that the supreme court is poised to overturn roe v. wade

the document is reportedly authored by justice samuel alito. in it, he states that we hold that roe and casey must be overrule this is not the final word from justices, but if is raising concerns advocacy groups say overturning roe v. wade would be a devastating blow to women and a setback. meanwhile, others who support ending abortion say if the draft is in fact going to be the final ruling, they say they applaud the court's decision now overturning the landmark decision would allow states to outright ban abortion. both democrats and republicans have criticized the leak, calling it an unprecedented and rare move. a spokesperson for the high court has no comment, but it important to note that this is not the final decision from the supreme court, and a final decision is not expected until late june or early july, andrew.

>> we appreciate it. an issue that is likely to become a big one for businesses as they of course try to figure out how and whether they will either speak out or how to deal with it, as you very well know there are a number of companies that even in the past couple of months have decided to pay for people to leave states where they can get abortions and the like and of course we see when politics and business merge what can happen, because there is been retribution as we've also seen in florida and georgia when companies do speak out joe? >> thanks. big lineup still ahead this morning. we're going to talk to richard fisher the kwwharton school, and north island chairman, lynn hutchens his hair still parted in the middle that's my question here's a quick check on markets. you're watching cnbc, and this is "squawk box."

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ahead, let's bring in richard fisher he's a senior adviser to barclays and is a cnbc contributor. the ten-year pushing above 3% yesterday for the first time since 2018 market knows that the fed's going to be moving pretty aggressively do you think that there is more that they will hear tomorrow that will surprise them, or do you think they've kind of figured out where the fed is >> i think the thing people are waiting for is to see how they plan to trim the portfolio will they have to actually sell a security so that's, i think could be an unknown, we'll see, but they'll have to lay out more specifics in addition to the portfolio

>> do you think it will be more aggressive than the march minutes indicated? that we could be getting to a pare down rate of $95 billion a month and it could start this month? >> i think the trim part of it, that is the portfolio reduction or titration is already pretty clear what the numbers are the question is the timing, the speed. they've almost got $2 trillion in relatively short-term treasuries that they can let leak out at a determined pace, but mortgage-backed securities, they're all bunched up ten years and longer, there's a little less than 2 billion. that's the key we'll have to see.

i i've no one has been as transparent as jay powell. the question is, what might they do in the future, what are they going to indicate. >> if you're focussed so much on the mortgage-backed securities and they do aggressively start selling those mbss, what happen to the housing market? >> it's a very difficult decision it's one of the reasons some of us on the committee led bit richmond fed at the time did not want to get into mortgage-backed securities because it inhibits price discovery. we're about to discover what the real price is as we go tru hrouh time, and i would expect those rates to increase. >> sharply >> not necessarily sharply

they're not going to pare that back aggressively. they've already made it clear the amounts they would like to move but we would have to see how much the market adjusts, and b, they may be putting things out into the market place. >> it seems hlike it's never an easy decision when they have to raise rates. they're doing it to tamp down inflation. they have to do that, but there are a lot more moving pieces this time because of all these things mortgage-backed securities and beyond and you've also got world events, what's happening in ukraine with russia, the supply chain. that's a lot to kind of balance, too. are they up to the task? >> i think they're up to the task these are very capable people. powell's a very capable chairman let's not forget, the s&p, which you're showing , bottomed at 66,

the bible. it's been bumpy. but now money costs something, and you've got to measure accordingly. i don't think the fed's going to lose sleep over what happens in the equity markets unless it becomes total chaos. they have a problem that's exacerbated by ukraine and other developments, and that is inflation. and now we have a wage price spiral that needs to be stopped. and we're lucky. we're probably going to have 3.5 unemployment when it'sannounce on friday. so we know that the employment picture is strong. and they need to tighten and quell inflation, and i brelieve they'll do it. >> roger ferguson joined us for the first time yesterday, and he said he think it's inevitable that we're a heading to a recession. are you in that same camp? >> not yet, but i do think we're

going to have a slowdown the first numbers is not likely to be repeated in the second half, but we'll see. i'm here in sunny morocco, marrakech, where everything looks absolutely beautiful and the dollar is strong here that the people that come up to new the streets are not asking for local currency anymore they're asking for u.s. dollars, feverishly >> we saw the central bank of australia raise rate overnight for the first time in 11 years because inflation is obviously a global problem do you think the dollar's going to keep getting stronger you've got the bank of england meeting on frei friday, too. >> where do people go in size when you're afraid united states. we are, as i've said many times, not just the -- we are secretariat given everybody

else so yes, i've been saying this for quite some time. when the dxy got up to 103.46, when it got tup to 99, i said we're going to get stronger and stronger it's not clear that it hurts the u.s. economy because we a consumption-driven economy, given that we can get what we wish to buy to consume >> i know the fed is not a political organization, and we like to think that politics don't play part in this. to this point, the biden administration seems to be pretty supportive, that inflation is a problem, and it's the fed's to figure out. no one likes to see higher interest rates, because the result is to hurt people at the bottom of the spectrum you've got an election coming up, do you think things get more heated when the fed raises rates like it needs to but make force

an uncomfortable situation >> the one thing going for us now, we're fully employed. so the employment statistics, which is what the white house usually worries about, regardless of republican or democrat are very strong here. and secondly, it's my personal view, and this is my personal view, i've never discussed it with mr. powell. he doesn't owe president biden anything if i were in his shoes, i would take note of the fact that he didn't want to reappoint me. i beat him on the hill i got the votes, and i will do what is necessary to fulfill my mission and my duty as federal reserve chairman soy so i think if there is political pressure, i don't think jay powell, knowing him as i do, would yield to it. i don't think we in any way give in to political pressure >> richard, we had jim grant on,

talking about the taylor rule and where it would, if you used it, where it would predict a terminal, and we love the term "terminal rate", because it's just so final and perfect. but he said it's ten and change. so what, that, obviously, that's a pie in the sky type idea it could never get to ten. is there a fisher rule where would the fisher rule put the terminal rate right now, and how would you calculate it >> i think john taylor would say, at least the last time i heard him say it, was 5%, and maybe it's been up since then. but i think that's a decent level. we'll see. there is now, as we've recognized once begin, there is a tradeoff between unemployment or employment and inflation. we're seeing it right now. and i think they may have to go much higher. the question is, what is the speed and over what time frame

there are two variables. to get to a real rate above zero, maybe that's what that number was, but i don't think it's that high >> did you take a ride on the marrakech express? >> i did >> honestly? >> there is an express train it's nicer than amtrak it's more efficient. it leaves on time. it's clean, and they were playing marrakech express >> no, they weren't >> yeah, they were that's so cool >> a great song, great time of good old csn looking through the world with the sunset in your ieyes a little spf may be needed >> it's a beautiful place.

he's been in poland, he's been helping the refugees, the chairman of care i hope you get to talk about that >> we are. he was just there a week or two ago. >> thanks, guys. >> i'll go riding on the marrakech express. >> meantime, we've got a couple headlines to bring you this morning. chairs of avis budget are higher the car rental company beating by a wide margin to pent up travel demand. chen then check out shares of pfizer, $1.62 a share. revenue also bert tter than expected the average rate on the popular 30-year fixed started hitting 5.55 on monday, according to

mortgage news daily, the highest level since 2009, nearly all of the major housing markets in the u.s. are less affordable than they have been historically, and affordability is near its worst point on record. plaque black knight shows 95% of the biggesthousing markets in the u.s. are less affordable than their long-term levels and 40% less affordable than they've ever been. think about that "squawk box" coming right back after this

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a lot of news out from biogen >> they've begun a search for a new ceo, replacing the current ceo who's been there for just more than five years she is going to stay on during the search for the ceo and to help with the transition so no ceo chosen yet the search is just beginning, but theis comes as biogen goes

through the process of getting a drug approved. it's taking $275 million worth of charges from inventory writeoffs from the drug and substantially eliminating the commercial infrastructure around it it does have another alzheimer' drug in the pipeline and they are forging ahead on this alzheimer's pathway and potentially contributing to the ceo departing. now it's up 1% >> we don't need a five-year chart, we need a one-year chart is what we need. 468 the high

ready to break under 200 a lot of that is from the great hope inspired by the alzheimer's drug and then the death nknell for it that shows you the pain that biogen shareholders have been feeling the last year or so. alzheimer's, it almost reminds me of sepsis, not really, it's much worse and scary and it's such a huge tax on the health care system and so important that we find something that actually, either find the root cause of it or at least narrow it down better than we have and find something other than just, you know, half measures for it be great to find a cure. that's why when you hear about, you know, outside profits, it's going to be expensive, and it has been expensive to try and deal with some of these chronic

diseases that affect the health care system so much. >> yeah, we've seen biogen and eli lilly invest billions of dollars unsuccessfully the plaques in the brain toleadt real problems with alzheimer's >> thanks, meg when we come back, market historian jeremy segiegall will join us. "squawk box" will be right bac

futures right now, 50 on the dow, nasdaq down 24. let's bring in, i guess he's kind of legendary, i would say jeremy siegel, director of finance at the university of pennsylvania wharton school of business we've had you on for years and years, professor the a one point, and i would not use it in a disparaging way, but you may have had the market of a perma bull lately, we've had you on, and you've been as concerned or at

least expressing some of the risk associated with the market, as much as i've ever seen for you, but then when i try to get you to say you're bearish, you're never really long term, you never really say it's going to last for years. it's always sort of a temporary thing that could mute returns in the near term, and you're still there i think. >> and i think that's history. all the dips we've seen in the market, you know, we can talk about whether there's going to be a recession or not, we've gotten all of the recession in the market has always boomed afterwards so if you're a long-term investor, you know, should you try to time the market, no, you're apt to do the wrong thing if you try that. >> it's facing us front and center we do have some things that historically would be negatives for equities the fed's going to meet and probably go up 50 basis points, and they're probably not going

to be finished we already had one quarter, probl probably a one-off for gdp more and more people are saying we might have one in the next 18 months or so so there are concerning things are we at a point where you'd already start buying or would you wait for further weakness >> well, as you know, joe, i've been warning about theis inflation for almost two years now, and i've seen the monetary burst that we've had the last two months i've seen a slowdown in that monetary growth it might be associated with the beginning of the tightening and rise of interest rates that's the most important thing in getting this inflation under control, but i still think there's a holot of inflation in the pipeline and the fed will have to go further the market has a pretty aggressive fed

the journalists are going to ask a lot of questions they're worried about a recession. should you tighten, and he says the market, the economy is still strong enough and we have to take care of inflation so i think he's going to be on the hawkish side tomorrow. but let's talk about what you just said. first quarter, we did have negative gdp i think it's going to be revised less negative when we get all the tadata, but nonetheless, ea beings earnings came in pretty good. it usually goes up after adip. that's no reason, i think, to sell a long-term asset if you're a long-term investor >> inflation has a lot of causes, and you've mentioned the fed a couple of times. let's say the fed did have something to do with it. we also note it may and lot of

stimulus check also something to do with it and overspending in terms of the fiscal spending, but there's no doubt that closing the economy, reopening the economy, covid, supply chain issues, that all played into it, and i'm just wondering how much of it structural and likely to last, and that would be from the fed, i guess, and how much of it is going to ease sothat maybe we're, you know, maybe we're not in for a five-year period of wage price misery. maybe that's not in the cards. >> well, you're perfectly right. the fiscal stimulus came along with the monetary stimulus the fed just didn't stand in the way. the government was, you know, basically printing money the fed was buying all the bonds that the government needed, and people were putting all that money in their bank accounts, and that's why 2020 was biggest one-year increase in the money supply in 150 years that we had data it was better in 2021 and looks

a lot bet are in 2022, so i don't think it's necessarily going to be a five-year. but we know, going back to all the research, there's a 12, 18-month lag between the push of money and the inflation. that's exactly what we've had. so that we're starting now, i think it's going to be a year before we're really going to see the fruits of lower inflation. we're still going to have a higher inflation for the next 12 months we have to make sure the fed doesn't overplay its hand, gets panicked oh, my goodness, the medicine isn't working all at once and then goes way up that's a danger. i don'tly think it's big, but e you've been so far behind, we know how the pendulum moves, you go oh, my god, i've been so far behind, now you really have to push on the brakes we don't want that

there is lag anti-inflation is not going to work right away. there's a lot in the pipeline, but if you start right now, we will get it under control. >> how long have you been there at penn? >> 45 year >> did you know elon musk when he was there did you -- >> no, i did not >> does he attribute all of his business ak cumen to jeremy sieg until. >> i am not sure he was in my class. and warren buffett was here way, way before, i guess i was still in high school when warren buffett was at wharton >> a paper, a business paper that elon musk graded for a u-penn student sold for about $8,000, and he deducted two points for the guy using a bad word the guy said, the guy said the

excrement, used the real word, and elon musk said minus two he did he's a prude, as we all know big graduation coming up next week >> yes, there is >> big, big. >> absolutely. >> hopefully we'll see you down there. >> maybe we will we'll get together thanks, joe. coming up, our exclusive interview with famed investor, paul tudor jones and glenn hutchens is going to join us. stay tuned squawk coming right back after this

good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin we are down but not out. we were down triple digits earlier. now we're down about 33 points 31 points on the dow, s&p down three and change, and nasdaq

indicated down it's one of two fed days, tuesday and wednesday. we'll find out tomorrow about what jay powell and company are going to do. people expecting a 50-basis point rise in rates, but we were above three on the ten-year, we're now back down 2.95 we've been above, and a little bit below. >> in the meantime, earnings out just a short time ago from pfizer covid vaccine sales came in higher but the company did lower its guidance the stock off by about 1.75% on the product lines, pfizer reiterated that its covid vaccine forecast would come in at around $32 billion and said that its covid anti-viral forecast would come in at about the same at $22 billion.

don't miss our interview with albert bourla. and the federal reserve kicking off its latest policy meeting today, the central bank widely expected to raise rates by 50 basis points the war in ukraine has spooked investors. joins us to talk about all this and so much more, legendary investor, paul tudor jones, chief investment officer at tudor and they are raising money to fight poverty in new york city they have provided more than 3

ha3 340 million dollars. if you could be a fed whisperer, what would you be telling jay powell right now >> oh, i'd be saying, look for another job. i think this is one of the most challenging periods ahead for the federal reserve board in its history. and it's certainly something that we, i don't know if we've ever maf gaited anything like this certainly, not in your lifetime or becky's lifetime with the other codger, joe, on this group, he probably remember it is like i do, because i think he's my age, but we've never seen anything hike this since the '70s so it's really uncharted waters. l like to think of it as a crosshatch ocean you know normally in the ocean you have one swell that moves one direction.

h occasionally you'll have a swell moving in one direction and another crosshatch, in the other direction. imagine trying to navigate that when you're in a boat where you're dealing with the swell this way and this way and this way and this way and that's what we've got right now. >> and what is the captain of your ship, that you're the captain of it, how are you navigating it? meaning, to the extent that you're setting up your portfolio to try to get around these swells, what are you doing >> it's really hard. normally, i've got a lot of very strident ideas on things again, it's really hard. i'll give an example so, if you look at how much financial conditions index has tightened just in the last month, the only other times that it's tightened this month, and just to remind everyone, financial conditions index is a

composite of the stock market, the dollar, credit vspreads, and it's a very good indicator of the general strength of the overall economy. a good proxy for it. so it's moved so much in the last month the only other two times i think it exceeded it were in lehman brothers in 2018 as well nas in march of 2020. '81 and '82. right after the crash of '87 right after 9/11 i think twice in 2002 towards the bottom of the bear market. and then, three times in 2008. and then march of 2020 during the pandemic so every one of those instances were all associated with cuts,

federal reserve board cuts within 2 4 tase on average. literally some of them within two or three days. now all of a sudden we've got the same kind of reaction in the markets, which is a clearly a risk off, cred spreads have blown out. >> stocks are down 13% in the year the dollar's up significantly. all that normally has provoked or evoked a fed response of cutting rates, and yet we're probably on the cusp of 200 basis points of rises in rates by mid september so it's, it's uncharted territory's where we're going, and -- >> but you, do you look at that, and say to yourself that a recession is coming? do you say everything's on sale? i got to buy things? do you say i got to short this

market what, i know you say you don't have strident view, but you must be telling. >> you don't want to own bonds and stocks. >> you start with that it's going to be with a very negative situation for either one of those asset classes you can't think of a worse macro environment than where we are right now. for financial assets and, again, one of the reasons, i think one of the biggest differentiators is look at the level of overvaluation that we were both in rates as well as, as stocks. >> so that's one reason we've still, the fed still has to raise rates to get inflation under control. heck, we had cpi greater than 8

o% ma maybe it comes down 4. >> announcer maybe it comes down to 3% it's why i wish we could go back to those halcyon days of sub 2% inflation where you didn't have to worry about the value of your money. you didn't have to worry about what you were doing with regard to pay raises, and you didn't have to worry about a whole pricing of variety of things that all of a sudden become that much more important. and trying, again, to have a normal business. when you don't have to think about when inflation's 2% and under. i think the biggest lesson that we've all learned, certainly,

central banks have learned with experimentation they did in 2020, be careful what you ask for. sub 2% inflation is a much better problem to have than inflation above 2% it's very difficult to calibrate once it escapes like it has now. that's a scary part for jay powell is the genie's out of the bottle and we've seen, in the history, when tgenie's gotten out of the bottle, it's very hard to put it back this there. no, i wouldn't want to be in his seat right now >> but if you don't want to own bonds, and you don't want to own stocks, what do you want to own? you want to own oil? a commodities thing to you what's the -- >> you put me in a tough spot, because i don't want to be the purveyor of gloom. if you look at the '70s, there

was virtually nothing that you could own that had a positive return gold did a round-tripper commodities did a round-trippers stocks pretty much went nowhere. bonds, and, you know, had negative returns over that period so i think we're in one of those very difficult periods where simply capital preservation is the most important thing we can strife for i don't know if it's going to be one of those periods where you are actually trying to make money. hook w look where we are right now. negative 5% real rates that's unprecedented we've only see that two or three times in history one at the end of world war ii and twice in the '70s, once in '74 and again in '78

i wkeep coming back to the '70s it was a really, really challenging time for anything. it was a fantastic time for macro, for my business you had rollercoaster rides all the time where you pretty much ended back in the same spot quite often so if there was a strategy that i would want to employ right now, if someone put a gun to my hid head i'd say simple trend-following strategies are not too popular today, they haven't worked really that well for the past decade. they didn't work when central banks were at zero rate. they'll probably do really well in the next five or ten years, because we're probably going to be in one of these stop-start patterns with central banks. remember, they've got, they've got these clashing things.

inflation on the one hand, slowing growth on the other, and they're going to be clashing all the time so i think we had four different fed clhairs during the '70s, because no one could get it right. they tried everything, right we tried wage and price controls, which didn't work. we tried that for a period of time and finally, you had to bring in the closer, paul voker, to absolutely crush the economy in the middle of another inflationary binge in '79 and i don't know if we'll get to that point, but i think there's huge volatility >> yeah. >> a huge volatility. >> we had buttons fall, for the record, are you quite a bit

older than i am. >> i look so much prettier, though >> a matter of months. you're a matter of months older than i am. and i resemble that remark, codger, too. so i'm on the record i do resemble that you would say that paul, i just want to ask you quickly, then, pabecause you've been positive about crypto and bitcoin. and in an environment like this, when it's obvious these are speculative assets benefitting from all this free money, how on earth can you not look at bitcoin and say what am i thinking this could be a giant speculative bubble, and then my question, therefore, is, is it a symptom? of this giant bubble sore it an anti-dote or answer to what caused the bubble in the first place? >> joe, i'm just going to tell you. my third daughter says, is that man going toannoy you again? why does he always annoy you

and -- >> have i annoyed you. >> no. she says he always asks you the hardest questions. are you going to do that again >> this is not hard. actually, here's what i was going to start out by saying if you ignore paul tudor jones, ignore him at your own peril you are not always right, there's not many guys like you i really want to hear your answer on this i'm bullish on bitcoin i don't see how can i be >> first of all, thanks for the question it's a great we. here's what i see. i see this generational divide and it's, it's a digital divide. and unfortunately, joe, you and i are probably on the other side of it, though. i think we're both scrambling as fast as we can to understand it. if you look, and i see it all the time in our rooms, my kids'

friends. if you look at the smartest and brightest minds that are coming out of colleges today, so many of them are going into crypto. so many of them are going into the internet 3.0 it's hard not to want to be long crypto, because the intellectual capital, just the sheer a intellectual capital that's ghoo going into that space, and clearly if you think of the absolute dream of crypto, it's a boardless internet you have brock chain as the verification code to allow anyone the internet to instantly connect because the blockchain verifies who they are. and that opens up just huge possibilities. clearly central banks and central governments are not

going to necessarily be huge fans of that particularly when it comes to using cryptos as a medium of exchange that's the number one thing holding it back is the fact that you're not going to get buy-ins from government, because they lose the ability to control the creation and the supply of money. having said that, in a world where we're starting to de-globalize and breaking down and actually probably going in reverse, that ability to have the boardless, that ability to have a store of value outside of having your mundy nominated wlrks it's in rubles or dollars or yuan, it becomes very attractive so i have my modest allocation to crypto. i have a trading position on top of that, that goes from

fully-invested to zero, and i'd say right now i'm modestly invested, and i would think that it's going to have a bright future as we roll through these rate hikes at some point in time a lot of it depends on what our central bank does. a lot of it depends on how serious we are about fighting inflation. i kind of think that when we get down to it, and that might be september. could be november. i mean,que easily be at 2.5% rates in september, right, that's just 50 a meeting for four meetings. there will be a different world. you'll now have, you'll now, the cost of owning crypto, gold and other inflation hedges will be, will be more significant and it will be interesting to see whether that's enough to quell inflation. if not, they're going to have

another leg higher, or if the fed stops short, you're going to get another leg higher in inflation. just one divergent comment i was at dinner last night with the head of a really big conglomerate in the states and they're known as an energy company, but they have just a multitude of investments, and he made two really important points one was they're not investing in energy because the esg concerns are so great that it just makes them want to stay away from that space. and they can't get credit. because banks don't want to fund that because of esg concerns. so i thought, well, i thought that was very telling. it makes me a lot more constructive on oil and commodities than i was before i heard that and he also mentioned, because

they have some businesses in russia that the lag impacts of inflation are just now really starting to manifest themselves. so much of what we saw at year end with rising wages, supply chain issues, they're actually just now starting to push through and will continue to push through over the course of the next couple months so if you look at the history of inflation, there's an effect where there's a big lagged effect of it so i think we're not going to see clearly inflation's not accelerating, it's de-sell rating, but i think it's going to be much harder to tame than we think, and take much longer, and it's going to be much more challenging for financial markets as a result. and if we stop short, like we did in the mid '7 0s

remember, we had an inflation bulge in '70, another that looks just like now at the beginning of '73, end of '74 the fed hiked enough to put us in recession late '74, then they stopped and we got that massive inflation bulge in the latter half of the decade and again, you're going to have to really watch what central banks do here. how serious are they about truly killing inflation. >> hey, paul, you mentioned esg. you started just capital i wanted to ask you about the headline of the morning around the country, which is this draft opinion that would effectively strike down roe v. wade, and how do you think business is going to react to it, and how, if in fact it goes through, how business should react to it. we've seen companies around the country speak out on lots of different social issues.

in certain cases paying to have their employees go to other states for these things, for abortions and the like this is an issue where 70% of the country is apparently, when you look at the polls on the other side of where the supreme court is and what kind of pressure companies are going to have from their own employees and also from customers. >> well, i have to admit i haven't had a chance to really form an opinion on that. i don't mean to duck the question i hope they don't overturn it. on a personal basis, i haven't had a chance to really get my head around companies should react. i keep thinking that's much more of a personal issue. yeah, i don't want to try to comment on that just yet i i hope they don't do it. that would be my personal opinion. can i just say one thing >> yeah.

>> one thing i siee f yosee, ift to define poverty in america, the easiest way to do is to find a single female, head of a family one paycheck earner and trying to support a family. if you wanted to solve poverty, would do everything we could to encourage a two-parent family, with two paychecks supporting a family so i've always thought that that's our goal, to actually beat poverty so i want to make sure that a child many cocomes into a lovin situation where they have everything that's going for them, two loving parties and that as kind of the way i look at the whole thing. we've just got to encourage that

as much as we possibly can because that's how you beat poverty. it's that simple >> what's your rea, thction, th, maybe more broadly to what's happening in florida governor desantis taking aim at disney over their position about his position we're seeing companies, as we said, speak out on these social issues but then in many cases have some sort of political retribution that actually has a business impact, and how do you think businesses are going to react as a result of that now? >> it's, again, i'm torn on this issue, because on the one hand, i keep, i know that businesses need to be involved, certainly, on a variety of issues, such as making sure that their employees, most important is making sure that their employees are living above the poverty line and paying a wage above the poverty line, but i know from

our polling adjusted, there's a whole host of issues that americans think that companies should be talking about. it's, and, again, i look at the fight between disney and the governor there, and there are arguments on both sides of the issue. again, forgive me. i'm just not, i'm not informed enough to really speak to it that much. >> let me ask ah you a final question, which is robinhood, which you started so many years ago and has done so much remarkable work for the city of new york the big benefit coming up next week if there was one thing you could do with robinhood now. what would it be >> i think we just got to keep on doing what we're doing. the benefit next week, our centerpiece is going to be on child care

boy, since the pandemic, we've lost 1500 child care centers in sno new york city. and they're just so, so important. and the reason they're importantimportan is a working mother, single-parent mother has to have a place to take her child so she can earn that paycheck and get her family out of poverty. and child care centers, we note benefits of early childhood. here's an interesting fact that i didn't know. you can forecast prison beds, incarceration rates, isrates, 1s from now from the number of third graders who can't read in a county, and the reason why 1901is 90% of a child's cognitive

ability is formed by the age 5. that's where they socially vil and so many of their mental fact ulgts are developed during those developmental programs so we think that child care has a t9-1 payoff. our benefit, next monday night, we've got an unbelievable benefit, john legend, clarl cha puth

and to quote one of my favorite lines from one of my movies that joe will remember. this could be the greatest nate nigh of our life. it's going to be awesome and we've got a bunch of really wonderful surprise announcements that i think will be big for new york city and i hope everyone can go to robinhood.org and contribute or buy a ticket and come it's going to be a beautiful night of rejuf make, i think >> paul, we commend you on all the fgood work you're doing you gave us a lot to think about with the plamarkets this mornin >> >> thanks so much, have a great day. >> the other line, paul, after

kicks those guys out, seven years of college down the drain. >> thank you, sir, may vi have another. >> i remember when i annoy you i love talking about investments and trading, though. we're going to talk a lot more about the market's wide ride recently, and the interest rate hiking campaign that the fed's expected to embark on. north island's glenn hutchens will join us ndeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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dropped by double digits, and now's back up 25 s&p futures up by 24, nasdaq up by 18. tells you a little about the volatility we've seen recently we do have the fed meeting kicking off. as we've been talking about this morning, kicking off a two-day policy meeting investors expecting a 50-basis-point rate hike and a lot of talk about what they're going to do with the balance sheet. joining us glenn hutchens, a former director at the new york fed and on the ex-paecutive committee of the boston celtics. it's great to see you in person. >> i've never been so happy to even see joe >> do you have room on the plane an extra ticket? >> i can get you an extra ticket, joe. >> are you optimist snick.

>> >> we have a great team. i'm an optimist about our team >> took care of the nets, that's for sure >> all know the nets came back at the end i heard there was more celtics gear in the arena. >> a friend of mine, i wish him well, if there's a successful nba team in the new york city region, and they were terrific hosts to us. but it was great to win. >> so you are optimistic about tonight with the celtics how are you filing about the markets these days? >> that's an interesting question i've been listening to your show this morning i would think there's much more reason to be long-term

optimistic there are two points i would make if you assume as i do that there's a high risk of recession which is the point steve liesman made today, it's the type of recession that has historically been shallow and brief, because it's one caused by increases in interest rates as opposed to the balance sheet recession in 2008, tw 2010 and we have a very strong underlying economy even though the print last time was nominally 1.4 negative, in the mid three positive because of the underlying economic activity i think the economy's strong so i think, i'm concerned about recession. i think that's probably my base case, but i'm not concerned about a deeper long recession. the second thing is paul was talking about the '70s, and i would remind him that apple and microsoft were founded in the late '70s. and some of the greatest

economic, some of the greatest companies of all time came out of that time period. today entrepreneurs are getting up, they're going to the office. they're working, they're building great products, investing in the future, creating net new innovations i'm very optimistic in looking at this from the technology point. we'll get through this >> comments were made over the weekend on twitter that caught a lot of attention, including jeff bezos, the pay sibasic point isu are looking at technology entrepreneurs who built their innovations on the 13-year pull run. he thinks the unlearning is going to be painful. it's not cheap just because it's down 70% you're right, great things are built in these areas, but you might see valuations crash >> sure. if you look at some individualized company

just looking at the nasdaq great to be back at the nasdaq, too. important part of my business history nasdaq is basically where it was about a year ago. it's down by a lot we've gotten down to about spring of last year. so we've given up about a year, i felt pretty happy a year ago in terms of the value of my portfolio. there are individual companies that have suffered a lot worse than that. last time i was on i said be careful of the foamy end of the market place those things have gone down, which is not hard to predict the and look, there's, right now the private markets move more slowly than the public markets, because they don't have to mark the market every day so there is still meaningful overvaluations in some of these, sherman investing, that will eventually correct itself. but if you are in the very early parts of a venture investing, if

you invest at $130 million valuation at 100 and the company goes to 10 billion over time, that doesn't matter that much. do i see excessive valuations? yes. do i think that net new innovation can, if you make the right investments can burn through that over over time? i want to be one of the people who didn't get discouraged in the '70s i want to be one of the people who found the apples >> if it hasn't hit the private mark yet, do you think the pain in the public market, we've taken our licks at this point, or is this just the beginning of something else to come >> as you know, i think more in terms of longer term trends. >> i know. >> than the momentary stuff. so look, the thing, over the course of the time period since

1980, by the way, i'm about the same age as paul and joe >> you're older, too >> but only chronologically. essentially, i went into business by the time prime rate was 20%. as an investor and over the course of that time period between now and then, as the interest rate went from 20% to basically zero, the buying equities on leverage was one of the best trades in history value of equity goes up as cost of debt goes down. if you're long equities, you're a borrower i think that's reversing itself now. of the 6% to 8%, i think my guesstimate is about half of that is transitory and half of that is systematic and quasi inconsistent i see a 3% to 4% nainflation.

real rates on top of that, could you see real rates of 5% in the middle of these curves as that lasts through long time, that could put significant pressure on equities over the medium term i don't think we'll have the same kind of tailwinds my view is you have to doubling down on innovation the way you get past that is not just by playing a long-term arbitrage game a lot of the kinds of assets people have bought to diversify over the course of the last 20 years are divorcecation. if you put them in the old economy on lefverage you'll do worse. >> equities market is not the place to be. bonds market is not the place to be >> i'm not thinking about,

listen paul jones about equity markets. individualized, the old economy on leverages is a very bad place to be. and what i think is the new economy, with upside from innovation is the place to be. >> and so you're not talking just about the markets but areas in general places. there's plenty that's still going to happen here this is no longer the time to be indexing >> that's probably right, but don't forget that wealth is a relative thing all right, and so paul, as paul said, capital preservation is kind everywhere you want to be i want to be thinking about. and if you, if you had bought, i haven't looked at the analysis in a while, but if hundred bought equities in advance of the major crashes and held for 20 year, would you have been net better off than not holding them so i don't think you should go

short the equities markets what i'm thinking in terms of exposure to long-term growth equities, i do believe in the entrepreneurial capacity of american business to figure out how to solve these problems. i just think if you're trying to outperform those markets, which is what i try to do, that it's going to be thoohard to do it thinking about it financially. you'll have to think about it as an innovator, creating something new. the sum of all is zero, right. >> right >> except from innovation. >> let's talk about another problem you're trying to help with you just came back from ukraine. you were there with cares. you were raising money to help people desperately in need at this point what did you see is this. >> cares was created roughly 75 years ago to provide relief to war-torn europe after world war ii, and now we're back 75 years

later. having now, today we work in refugee camps in syria, yemen, myanmar, and all of a sudden we're back to europe i think that tells you something. i met a, in addition to looking at the work we do, i volunteered at this border and met buses as they came in, one from mariupol and one from kharkiv i met a gentleman who got off the bus who was a scientist, 85 years old and told me in 1941 i fled, i went to russia to flee the germans. today he says i'm going to germany to flee the russians those are the book ends of his life and it's a geopolitical tragedy. i'm not, i met another woman who had everything in storage. she had her mother, her dog and backpack and that's all she had left and she look at me and said why won't you stop him

referring to putin the good news here is the world community is rushing to help you see huge number of ngos are repurposing themselves to get to europe, cares one of the main ones world central kitchen is doing a terrific job you see volunteers coming from all over the world to pitch in and you see poland being willing to welcome with open arms and absorb a number of refugees that could at some point equal 10% of their population and so there's a lot of humanit humanity out there as well it is a humanitarian crisis of enormous proportions >> glenn, you mentioned, why don't we stop putin, the whole idea of him potentially going into a nuclear -- >> of course. >> attack is there and it's frustrating markets at this point, too. when you think about this. >> that's thing that's most

worrisome. if you think about inflation, we can figure this is probably not permanent. >> the supply chain. >> we'll fix those but the part that, the most worrisome is this geopolitical uncertainty that's enormous. and also you look at china, again, another huge geopolitical uncertainty at this point. i was recently in singapore, and met a lot of people who were exiled, exiles from china. and what's threatening there, you hear people talk for the first time about analogies to the cultural revolution in terms of the abrogation of human liberties. soy think the geopolitical situation is the one that creates the most uncertainty it's not something that business people can manage. and it's not something that our economic policymakers can deal with >> this is obviously more important. but i really wanted to talk about buffett and munger,

vis-a-vis bitcoin. i don't know if you saw his comments and you're a similar age of those guys >> i'm 30 years younger. >> no, but what do you think >> i think people misunderstand what cryptocurrencies are. first of all, currency a failed analogy. it's a new mode of commerce and a new paradigm of computing that transformational >> why don't they know this? >> i don't think they studied it >> i don't either. >> look, i think they've got a reflec reflexive reaction it's not about money it's not about the money supply. >> right >> it's even not necessarily about the assets it's about companies using technology to get together and to commerce >> now it's been done. through math and energy and the internet, and it's powerful. >> that's not just it. it's important but it's exactly

right. the de-centralization of the community. it creates the capacity for people to organize themselves to to commerce that is transformational in the cost of the commerce by taking out the hierarchical middleman, and which is a new paradigm of computing because using your own individualized computers to create a computing network >> it's probably where these two things >> use leads to investing. you shouldn't invest in things just because they're there but because there's a commercial proposition that gives them value. >> the '70s stash, if you can get it, then can you get the, if you can get it, anyone can get this >> i'm not going to rise too that, joe. i had a great '70s, '70s was

great for me >> must have been. >> we've talked about important things, but who has to step up tonight, you think >> the time. >> >> the whole team. >> it is a great of the above. >> we have a really, really good team and i think -- >> did you watch the lakers show >> yeah. >> that was -- >> i get a chance to meet red before he died. >> he was something. what a winner. i wouldn't want to be around him if he was losing. >> if you would like to donate to the ukraine crisis fund, you can visit care.org and we pria yr apecteoutime great to see you "squawk box" will be right back.

let's get down to the new york stock exchange, jim a lot of times you get tired of fed speak and you look at other things, the real economy, real numbers from companies i don't know how we avoid it today, necessarily, jim, biogen is sad, where the stock is, what happened with the alzheimer's drug that is closing down the infrastructure for making the drug another -- the landscape littered with failed alzheimer's drug candidates. >> yeah, it's a towel throw. the work i do with a couple of companies -- of charities involving brain work indicate that there's some very good

results coming from lily david ricks is not a promotion, unlike biogen where they were promotional. i like everything i hear from behind the scenes with lily. just on the kind of billionaire analysis that i hear on air, i know these guys and they're fantastic guys but we're doing a much more granular job they can denigrate the market, but the idea is if you can find lily that has an alzheimer's drug, geez, it's a chance to make money for people. >> the worst thing we can do is tell people that everything is bad. because not everything is bad. >> that's what i was going to ask you. paul tudor jones saying both the equity market and bond market, it's a round trip. making the analysis of the '70s. the question is, whether you think it's true today. >> okay, so i come back with diamondback energy, i come back with devon, i come back with --

yielding 9.77. oil in his scenario should be going up there's no reason why i think it should go down it's tight supply. why not look for that? why not give people that rather than three on the five-year. and i think the answer is, they don't do this stuff. it's pedestrian. the work of devon, that is pedestrian and it's prosaic and i like the pedestrian and prosaic i'm not bothered by it but you got to do it it's about trying to figure out blocking and tackling your offensive linemen. you're not a wide receiver and i think it's our job to try to find things that yield 8% or 9% where the yield is solid and can be protected inflation so i don't know -- maybe i'm too granular maybe it's s&p, forget it, bonds, forget it

as a matter of fact, you at home who have $42,000, you forget it. i can't. i can't do that. >> all right, jim, thanks. good to keep that in mind. thanks m bk jt coleusa up ofinutes

investors are about to find out if demand for cars are still running hot. here's more.

phil >> still running hot, andrew take a look at the expectation for april. a sales pace between 14 and 14.3 million, and, yes, demand does remain strong in fact, the average transaction price is close to a record high at under $45,000 auto inventories are also gradually improving. we're way below what they should be but they are improving as the chip supply improves take a look at toyota, honda, ford we're going to get numbers from them today and tomorrow. april auto incentives remain low because there's that much demand out in the market. when it comes to gm, tesla, we get those on a quarterly basis we won't get those numbers today. overall, a gradual improvement in auto sales. guys, back to you. >> okay. appreciate that. keep an eye on tesla elon musk making an appearance at the met gala talking about twitter with his mother as his date but we're up against a hard

break. final check on the markets right now. dow opens 65 points higher if we open up now. still a half-hour to go. ten points on the s&p. 39 points on the nasdaq. and we got the ten-year note flip the board around real quick. i don't know if we're going to have time to do that we're either out of the pool or in the pool. >> positive. >> i didn't go -- >> i don't know -- >> make sure you join us tomorrow "squawk on the street" begins right now. ♪ good morning, welcome to "squawk on the street. i'm carl quintanilla with jim cramer, david faber is in l.a. bulls are trying to extend yesterday's big upside reversal and corporate earnings include disappointing guidance from estee lauder, clorox and others. our road map