will start to slow down when people get nervous, et cetera, so this is -- you know, a time when we started to see a bit of a jump more than we've seen over the last couple of months. >> jj, thank you always great to see you. >> great to see you, becky folk, that's it for us today. right now time for "squawk on the street." good monday morning, i'm carl quint that nia with jim cramer and david faber back. stocks continue to try to break out of this range. retail guidance, a key health care conference. road map begins with stocks looking to build on that the big rally friday >> plus, shares of lululemon sinking. retail lowered holiday gross

margin guidance. >> china's technology name, they will, they're getting a big boost on signs that the country's heavy-handed regulatory crackdown can nearing an end >> let's start with the markets after friday's jobs number did help stocks kick off the new year with a positive -- maybe 4300 by q2. >> i think there are two markets now. we know anything that's high multiple, forget, lululemon was a good example of that, they changed their guidance by two cents and stock plums. a company that has a multiple around the market or below anything good goes higher and if you don't say anything at all it could go higher you have to be able to put a p/e on a stock for it to go up. if not, it's a source of funds. >> in the brief time we had together last week, jim, you were saying something similar coming out of the new year is there something that changes

that calculation for you, or is this a theme that we're going to be hearing much of this year >> i think you're going to have to see definitive recognition that cloud is not as fast as it used to be that there are too many companies that are going head-to-head that the -- like you're seeing from salesforce, there's got to be more than just small cuts there has to be big cut. >> when does it start to resonate to the extent it does start to get rewarded in the stock market >> you have to look at what happened with zuckerberg we said, look, we don't have the horses we have got to make very big cuts with an open mind there would be more cuts coming that's what salesforce did and followed up immediately. look, i think a lot of companies became public in the last three, four years and competed against the older companies and i'm sure you'll talk about there is an acquisition day of some of the

private equity firms taking advantage of these prices, but, you know, carl, let's use a good example that my trust earned forever. amazon until they lay off -- not 18,000, maybe 300,000, you have to lay off everybody you hired last year. the economy is not strong enough. >> you mentioned benioff's warning we could do it in multiple rounds. the goldman reported cuts are not quite as bad as some had thought. >> no. >> we'll see what happens later in the week. isn't there a sense companies will try to do this with the smallest knife possible, not the biggest? >> there was a big problem at salesforce that was the co-ceo brett taylor don't want to throw him under the bus. he was doing what he had to do at twitter, chairman they made two giant acquisitions of slack which just a huge number of people and tableau and

huge number of people and have not rationalized it. they have multiple people even on your account and that's going to change. when that changes you'll get a 20% grower with a lot of earnings per share david, i think that marc benioff is firing the people who should have been fired a long time ago. >> you think any of this is a result of having an activist shareholder there -- they may have -- >> there's more than one. >> i've heard the same i've heard the same. more than one activist there. >> and the activists are saying, marc, you could do these changes and get earnings higher and i think marc as he was and his book tells you that, sensitive to when he was going to buy twitter and his large shareholders said, are you kidding me he's really being responsive to shareholders people responsible to the community, he remembers that the

shareholders own the company and that means that a stock that has been not a good stock could turn around -- i know it's been terrible -- because he understands that the acquisitions were not -- >> he wasn't alone in ceos who hired too many during the pandemic and growth and assumed it would be maintained for many years to come. there were quite a few i mean, really that's what we are seeing is the final reversal of some of -- even a relatively small percentage of those hired during that period by technology companies that were seeing enormous amounts of growth and getting rewarded during that period in the stock market. >> they had to do it what was so tough was that they had to play the game in order to get their stock up but then, boom, november of 2021, in their heyday, they had to make the change and, frankly, no one did. no one at all.

it's almost as if the fed made the change and these people said, we don't have anything to do with it like why -- we are not economically sensitive that turned out to be quite wrong. >> over the weekend a lot of work done on how wage growth appears to be rolling over at multiple income levels without a big spike in unemployment which, i mean, that soft landing face got a lot of oxygen over the weekend. >> i don't know what happened. i wrote a piece for a club member saying i have been so pro-jay powell, people are saying what is it between you and jay. i said, look, i barely know the guy, but i think he's doing a pretty good job and the same people who say he is too soft saying he's being tough. people just feel the need to comment. stick with commenting on the speaker race that was worth commenting on, not to us but, look, what happened here is pretty simple we got too high. they felt like the rates had to go higher. it's beginning to bite into

sales. you'll have a company like macy's which did do a guide down and you say to yourself, all right, well, we're beginning the rollover let's buy companies whose stocks are not expensive, oracle is a good example second upgrade we got. inexpensive stock and let's sell the stocks of companies that became public in the last few years you've never heard of that look a lot like dotcoms but are not losing fortunes. they're not but oracle is the kind of stock people want, low multiple tech. really intriguing to people with a very good acquisition where they just start. >> and because i wasn't here on friday, your take coming out of that number? there still seems to be a good amount of concern even though goods no longer be rising in price to the extent that they were anywhere near that. >> well, i think -- >> are you feeling better about things. >> yes, i am. >> well, i am because i think you can't just go from the crash landing is you go from high

wages to low wages you want to see leveling off and down and let's be clear, it was the ism number and the factory numbers that were very, very weak so you had market and interest rates going lower and at 10:00 you had jet fuel poured on a market. and i've got to tell you that factory number down was chilling because it said, hey, you know what, look out, this thing is working. people didn't pay any attention to numbers but collectively the stock market, wow, that's when it roared. that's when you saw interest rates go to the point where you said maybe there's not going to be a huge number of boosts, maybe 25 now >> meanwhile jim mentions retail and lululemon down in the premarket. the company does expect gross margins to decline for the holiday quarter after previously forecasting an increase. they did raise revenue guidance for the period that's the thing about these revenue guides, it's gross margins will miss but sales are okay and eps probably in line. >> well, look, calvin mcdonald

was on and i thought that kind of was in line, but in line ain't good enough. if you look at macy's really closely, i know macy's had very -- there were issues to macy's but if we're going to critique retail along these lines, what's going to happen is i think retail will be very disappointing with the exception of costco, which put out a number last friday that was gorgeous now, i mean, costco, the companies that sell the excess inventory are doing well but, look, i don't think macy's will be down huge. just wasn't as great >> are you surprise the action to lulu because the reless itself is basic and don't give you anything to get particularly negative on in terms of commentary the only thing i read is the quote from mcdonald where he talks about a dynamic macro backdrop

that's about the extent to his reference to why they'd be seeing margin guidance lower than anticipated or reducing estimates at three cent. >> if it didn't have a high multiple -- the fact that it is a high multiple you better blow it away. he is a superb executive but you cannot just do -- come on our air and say they will do a number and do roughly the number are you kidding me you got? underpromise and overdeliver he did a good number but his price to earnings multiple -- >> doesn't mean they'll go to lulu and seeing 40% off sales. >> no, but it does mean if you have a multiple no one knows how to value your stock. >> it's a good point i mean the good example is anf up today on their guide, bros is going to do okay. >> well, it's not expensive. i mean, look, we got this bifurcated market where people are excited and a little more

expensive but making a comeback. people are really excited about a company like -- give you a good example never missed no one knows how to value workday. they don't know -- i know what to pay for caterpillar more than it's selling for. >> a dynamic macro backdrop, we have one and these businesses have again for so long and don't know an keconomy like this and with the era of having no discipline being over it's sort of a question mark as to what you end up with. >> the era of no discipline, i love that. >> part of investors too, don't you think to some extent. >> david again sums it all up but the questions that were disciplined you get a caterpillar, 18 times earnings,

get a micron my co micron is eight times earnings. >> it never seems to get better. >> but it -- you say it never seems to get better. >> i'm talking about the commentary around their business. >> well, if you have samsung putting out chips below cost in order to drive micron out, i think that's a legitimate worry. have you looked at samsung prices they're losing money on everything they sell. >> all right, well, that's an issue but doesn't mean it will make things better for micron's business. >> our team -- the earnings there, i don't know, it's okay >> i mean, they're looking for comps down 0.6% and unit growth -- mcdonald's as well, we'll put the pedal to the metal on unit growth >> i read that mcdonald's story.

i read that release. they're not going to tolerate -- they may have too many people. they may have too many people. mcdonald's was good. i think people don't like -- they keep thinking there's a lot of inflation in that area but not if you take that number -- so let's sum it all up if you think that number was weaker then companies that hire a lot of people aren't going to have to pay up, so, therefore, like dutch bros' company came on and said someone else has a better job and that's been cut dramatic i will. that's how you get a stock that goes back up when you have an enterprise software company, david, when you have paycom, it's not time it's not time for them it's not time for pro-car. zoom info, too early qualtrix, not time yet >> not yet all right.

>> like the producers. i'll give you 110% of this i'll give 140% companies all like, you know, they all sold at some huge multiple and everyone was excited and now they don't want to think about it. they're upset. they're upset. they're like the cowboys fugazis. >> quite a week of football. congratulations. a lot of news out of china including jack maceding control of ant group marc shares jumped 45% and we'll get a first on cnbc interview with robert davis from the health conference in san francisco. very big event for health care this week amid a flurry of activity those futures, thiwes ek started and back in a minute inspire is p apnea treatment that works inside my body with the click of this remote.

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ant group confirming jack ma is ceding control. no shareholder alone or jointly will have control over the company and it's been a major focus of the regulatory crackdown in china a couple of big upgrades, goldman goes to conviction buy, morgan stanley ups their target by 50%. >> on alibaba. >> here we go again. they make some changes they encourage americans to come

in they get the stocks to go up then they come in and take your head off. >> alibaba earns 33% of ant and as carl said, of course, i can remember that summer we were preparing for what would have been the biggest ipo of all time in terms of potential proceeds. >> don't you see they want us back in. they want american money -- >> they've done any number of things >> how many types have they done this >> leading investors to believe that that long crackdown, you can remember, of course, was ant financial, oh, where is jack ma even though we did know where he was, didi and their move there is right after the ipo and any number of other things, they continued to get more strict, stricter over time maybe that's over. and maybe that has -- this is a sign of that, ma agrees to sort of a very fairly convoluted move to basically disseminate his

shares amongst any number of other things that will not give him voting power his equity ownership stays the same. >> have the chinese decided they don't like a lot of billionaires >> yes, i think that was part of what -- >> they didn't want to be america. >> i don't know what xi is thinking but seems to be part of the process from the last couple of years. >> look, these people are chal challenged to the regime the changes in the regime in the last two weeks were radical and i still can't get over the fact that they said no covid -- zero covid now mass covid i know a lot of companies are worried their factory is going to shut down there hasn't been a big decline -- you know their growth is suboptimal versus our. >> there was a confluence of factors, right growing public recriminations

which is surprising of course in that country, remember the protests going on and then obviously coupled with what was significantly diminished gdp numbers for china. >> i know. >> that seemed to have finally galvanized the ruler to say, okay >> how about the idea that the axis, russia and china, i think that china forgot that most of their business is export to europe and europe is trying to figure out exactly what to do in a land war. i mean, i had -- there's a drone -- well, there's a lockheed martin drone when you're two miles you have to have sight of the tank at two miles you hit then you run these guys have a 40-minute drone that wipes out tanks, but our government has not given the go ahead to ukraine to get these but everyone is trying to figure out if there should be a real war or not if there's a real war ukraine

wins because the actual hardware we have would destroy everything. >> msc asia is up from the october low. do we call that a new bull market in china? >> i can't stand the fact it's a manufactured bull market nothing has ccurred. we're stuck with a real economy. we're really trying to do something. i think this -- david, i'm sorry. i think this whole period has eliminated the notion that china is a legitimate stock market okay, here, this is a good one which is more manipulating, crypto or china? >> am i supposed to answer that question >> well, no, i'm asking -- >> because i really don't want to. >> my amazing producer, i don't know that she would have an answer either. >> because, what, they're equally -- >> my take from you you're still not a believer in chinese stocks. >> no, they suck us in and then they take our heads off and we

always seem to fall for it look, they move the stock market up i mean, does anybody think they can take the stock market to them is a play thing we're stuck with like the fed and the earnings and these ceos and all these things that are like about business. they got a communist -- hey, you know, it's like -- alibaba, let's take it up another 25 tonight. we can sucker in everybody and cramer said he didn't like it. ruin his career. that's what they do. we have duck creek technologies and they have alibaba. >> sitting there right now, i'm sure -- >> suck them in. suck them in. >> cramer is watching right now. what he spends most of his time thinking about. >> my wife will hate that. i didn't mean that there is just a propensity to believe that they have to -- they needed to take it up so they did

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futures benefitting from some corporate guidance but mostly the continued decline of short-term yields, two-year below 4.24 opening bell in a couple of moments and merck ceo robert davis in a couple of minutes keep it right here

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>> announcer: the opening bell is brought to you by nuveen, a leader in income alternatives and responsible investing. all right, let's get to a mad dash with jim before the opening bell the health care theme given jpmorgan >> want to put out the kinds of what happens out there, regeneron talks about how sales

may not be as drug on their eye drug and monoclonal antibodies, all known variants of covid-19 when you're out there you got to take the good with the bad may have something new but may have something that's lacking of their old. it's a hard conference i've covered for a number of years and got to be very, very cognizant of what wall street is looking for and what the company says about the future because they're often very different, so i just -- i bring it up as something that tells you don't jump when you hear something new is something old may be faltering. >> a bunch of smaller health care deals coming out of that conference too, carl we'll get to that when we watch them trade this morning. >> yeah, news on moderna on this paxlovid china thing got a little bit of the needle

moving some of those talks are broken down regarding insurance we talked about it friday. here's the opening bell and the cnbc realtime exchange at the big board celebrating 20 years educating la latinos and jpmorgan heminalth r conference, the most important conference. >> definitely. i've covered it. there are a lot of companies like cvs will say things and this is a good example, by the way, cvs not high multiple, okay just in time -- a good solid story and they come up and guide things up a little bit next thing you know, a little bit of gain there and then you have lulu guiding down a little bit then it gets crushed and i think everyone should look over their portfolio and recognize like i try to get people to do in the lightning round on "mad

money. if you have a stock that sales at some price to sales it's going away it won't go away like a dotcom because you have too much money but, david, these companies that are -- look, lulu wasn't big kevin mcconnell was on and announced that head and shoulders -- >> uh-oh >> a lot of companies like the bill.com, a good company, but it doesn't matter pay.com. anything fintech versus master c -- mastercard and visa the fintech companies are called the losers >> true. would you consider duck creek a fintech company? >> well, tom and vista partners are two giant puts they're like waiting -- that's a fintech for insurance. >> this is a company, right,

intelligence solutions providing offering property and casualty insurance. you can see it right there the stock is up. they do deal with vista, 19 bucks a share. there was competition, i'm told, and they announced the deal at 7:30 this morning. it's a significant premium as you see over where the stock, of course, had been previously. there were no leaks on this one, 2.6 billion. apparently very little to no debt being used. no leverage being used at least i can see from vista but you've made the point, very active in the public markets as opposed to where they had typically played the last few years in the private markets almost solely focused on software, service and, you know, sass companies. >> yes, thank you for that saying that. >> they see the value now and made this point more in the public markets, which would seem to be a positive and they continue -- these are not large deals, per se, but they're all cash, go private transactions and continue to see value.

>> what's the plan do they want to wrap them all up vista is, what, a couple companies i never really thought were all that terrific but, you know, they boughtthem and tom has put together some very good companies but i just don't know what their game plan is >> i can't speak to that as well i mean, obviously i know the overall game plan is to buy things cheap and then sell them or take the public in some fashion a number of years later. whether they put them together in some larger entity that they would then look to monetize, i don't know duck creek, i think, had sass, arr, annual recurring revenue, 169 million is what i'm looking at up 25% year over year net dollar retention of 108% and it did interestingly reported earnings last week so much for a company reporting earnings or not -- people cfocused on it bu it came days later you mentioned jpmorgan

you want to talk about your cvrs you can get in the business of valuing these that are coming from the deals sin corps pharma, astrazeneca. huge premium this company is -- i'll tell you what it does cardio renal diseases. they do have one key highly selected molecule inhibitor for that amryh getting sold albireo, these premiums are enormous cincor is up 10 bucks, nontradable. can't do anything with them basically. you get this nontradable c contingent value of 10 bucks a share, the other is cvr, $2.50

on amryt and another could be as much as 10 bucks on the albireo deal. >> albireo -- how about this one, duck creek versus vineyards, napa. >> isn't it duck horn? >> duck horn. >> delicious, by the way, napa which is hysterical. there are so many companies that have gone public we sit here, look at them and you looked at how these stocks have acted and say, okay, i see what i have to do. anything that has bought -- >> gee, maybe it isn't time to look at small cap hemingway care bio pharma companies, that said, you know -- >> i got a hundred of them do you want them >> well, that's what you probably have to do. put together a big portfolio and then you get the two or three baggers in there if you can hang on >> well, that's called bad

investing. >> it is >> yes, because you're going after companies, many of which have nothing proprietary whatsoever. >> right. >> versus, say, going after, you know, a large oil company where the price is oil is up, i mention that because it's tangible you're talking about tangible versus intangible, talking about high multiple versus low multiple talking about a rye verse to a market that we saw before the craziness but you have to have stocks go down, i mean, and stocks are going down. it's not -- david, i'm not letting you know -- hub spot, very good company. so what? there was a period where -- >> i get it. >> if it helped you code better, then let's buy it. now no one cares about that. >> it will be interesting to see this year broadly speaking ow open the capital markets are, you know, last year, of course, we saw certain areas of the capital markets say they were

closed but they were quite s stingy they were not as active as certainly we had been in the 2021 period. but we start off fairly well here obviously with some deals, we've just talked about also live nation doing an $850 million convertible senior note deal due in 2029. i mention that because live nation shares are down about 2% on the possibility -- on the possible dilution that would take place as a result of that transaction. but, you know, what i'm hearing from bankers, we've adjusted to this new world the markets have adjusted to a certain extent and we have a hope and a plan, who knows, that we're going to get a lot more business done this year. >> you think a lot of the p/e companies, big ones are set up to do deals. i thought, by the way that the blackstone brouhaha was handled incredibly well and at the end of it, i felt, you know what, blackstone has it under control but does anyone have any

firepower in that area to do deals. >> the private equity firms have all raised significant funds the question is, you know, financing markets remain somewhat unsteady. >> right. >> again, the deal -- the vista deal didn't go to the financing markets at all from my understanding? >> 2340. >> that said, you can get it it obviously impacts your return, rates are higher prices are far lower that's the question. but i'm hearing, you know, listen, hope springs eternal it's the beginning of the year but there's a lot of people who seem optimistic this is going to prove to be a better year overall for the capital markets, not just talking m&a but broadly speaking. >> if that's the case what do we do with goldman sachs when they decided to do a st. valentine's masscre and the stock is up. >> it would be one of the biggest job cut rounds they've ever had a third of the cuts reportedly coming out of trading and banking. they do have earnings on the 17th so we'll know pore by then

hopefully. >> i think david solomon said on my show if it's underperforming it's not going to stay >> well, 48,000 people they hired 3,000 younger people a year just to replenish the ranks. you do need to put it in perspective in terms of goldman. you know, my understanding technology and engineering, they continue to have to upgrade their tech stack but it's other areas, and, you know, solomon is the guy -- he thinks there's still, what, a 50% chance we have a recession might not be that deep this year >> but the fintech backhand, you know, it's a lot people involved there not making any money i don't know it's worth following they seem to make a lot of money in trading that really still -- i don't know if people will give them credit for. >> tesla is worth watching today. unwinding some of the losses from last week citi says q4 setup is getting better b of a does cut their target

back to 135 at 275. >> b of a, isn't that keeping with what mike wilson said, listen, don't get -- just don't get carried away mike wilson, by the way, he's sticking with the negative view and so he is -- he's the guy on the red hot -- >> top rated last year see if he can repeat. >> got situations like a five below, david, put out good numbers. small growth positive. >> it's not easy to get it right one year but if you can get it right two years in a row as a strategist then you are -- you're going into the hall of fame. >> how many super bowl teams have won twice in a row? it's very, very hard. >> that's really hard. >> i wanted wilson on this morning just to be able to say, look, you're really sticking with it. wouldn't this be the time to say, you know what, it's starting to go my way and i have to be a little better, more positive. >> about the pushback he's getting on his thesis. >> i know, i know. i'm a huge believer that the

guy's got -- he should get a grace period before he's -- he's been -- >> he could end up being right. >> he could be right. >> very much so. >> he could be right but, david, this is the era of good feeling. the year always starts like this remember when there used to be reynolds metals up 25% i remember calling for disney -- there's a small world after all speaking to someone on pay phones, reynolds metals up $3, short reynolds metals. >> i remember reynolds metals. you know, we talked about -- >> tin foil. we used to call it tin foil. >> shares are still down not participating amid your good feelings that jim mentioned but stock up over 4% today but down 4% for the year. he's got this trial coming up, mr. musk, in, well, he doesn't want it to be in san francisco securities fraud trial related to the 420 bid way back when

back in '18 or '17 >> move to texas >> he wants to move it to texas. >> shopping. >> a substantial person in the jury pool in this district that san francisco is likely to hold a personal and material bias against mr. musk as a result of recent layoffs at one of his companies, that would be twitter, as individual prospective jurors or friends or relatives may have been personally impacted. there wasn't that many layoff. >> there's a lot of people in california but in texas they all like -- >> they want to move it to texas. good luck with that. we'll see. by the way, when it does begin, carl, scheduled to begin on the 17th, so next week. >> more theater. >> it's going to be interesting to watch and there are some things at stake for mr. musk as well in that trial >> jim winces. >> texas guy >> near 1% gains on the nasdaq this morning jpmorgan's annual health care conference as we said is kicking off today in san francisco

megty meg tirrell. >> i have rob davis with us. >> thank you for having me, meg. >> a big question everyone has for merck, you have keytruda but it makes up so much of your business and huge question is, can you diversify away from it i think you have news this morning potentially along those lines. >> i appreciate the question, first and foremost we're really excited about the performance we've had over the last 12, 18 months, they've been doing exceptionally well, focused on addressing the next decade, if you will, beyond keytruda and i feel good about the progress we're making in r&d in our internal program but able to augment it through business development and what i'm happy about is we're looking at oncology, we now believe as we look at our ability to broaden oncology and new mechanisms away from keytruda we have the opportunity to generate greater

than $10 billion in revenue as we look out into the early to m mid-2030s from a suite of -- >> yes. >> and small molecules that cover a whole suite of mechanisms and so, you know, i'm excited. we have more to do but it shows that the engine both internally and through bd is working and starting to make real progress as i think about how do we have a sustainable engine for the company long term and might just add that builds on the 10 billion we've been talking about from our cardio metabolic portfolio as well. so really, you know, a lot more to do but my confidence today is really high as we look forward i think the company is in a great position. >> i saw one estimate maybe from bank of america it could make up more than 45% of the company's revenue over the next few years. is that accurate or through what you're seeing is it not going to be that high >> if you look and we have never given specific guidance to what% keytruda will be but it'll be

one of the most meaningful drugs that have ever been launched if you look at total revenue potential so it's big. you know, and that's important as we look forward and go out to the decade it's about expanding, extending and deepening what we can do with keytruda i want to maximize keytruda and we'll do that and i believe that the value of keytruda will have life well into the future so we're going to focus on that, but, you know, for me it's less about keytruda, it's more about the suite of total opportunity in the engine for long term and i feel really good about what we have there. >> jim, question >> i know that you are someone who is really decided we'll break with that period of pharma where we're going to pay big dividends and buy back a lot of stock. we're going to plow it into research what makes you as confident as you are that this is the way to go because i think you must understand that is a little deviant from what became a big pharma >> yeah, no, i appreciate the

question, and, you know, we are remaining committed to the dividends so we have been investing and growing the dividend but you are right from a share purchaser perspective i am prioritizing investment into the business, you know, as i look at it, if you think about growth and what creates value in this industry, it is showing you have a sustainable pipeline of innovation that benefits patients and, you know, to me, if you see the opportunity to invest in programs, you have confidence in, or to bring in business development deals to add to it like what i just talked about in oncology that is something we want to continue to do and i think that is the path to value creation and if you look at how our stock has performed in the last 12 months, part of it is the exceptional performance, frankly, we had in '22 but i think a big part is the progress people are seeing in the pipeline, the progress they're seeing in how we're able to augment that through business development and that is giving people confidence in us. i can tell you it's why i have

confidence in the strategy, but i think it's being reflected back to us in what you're seeing in the stock >> you mentioned that 10 billion both from cardiovascular and another from oncology is from stuff you've done and have in-house so this is a big business development conference. how much more should we expect from merck >> while i feel good about what we've done we've got to continue to do more and so, you know, we are very focused we have several opportunities we're looking at right now as we look into 2023, hopefully we'll be making announcements as we go into the year so i'm in no way wanting people to feel like we're finished we're very focused and disciplined. i'm still driving the company to move with speed and urgency but hopefully what you're hearing is the confidence that i do see the opportunities out there and so you are going to see us continue to do business development and as i said i think you'll see stuff as we move into the year. >> potentially major deals like the ones we've seen recently, smaller ones >> our focus is on science and i

will tell you that we think the best path to that tends to be the smaller bolt on deals and sometimes i think people want the sexy acquisition but in reality often the partnership or the collaboration brings interesting assets if you look at what we did in 2022 and there was, you know, a lot of discussion about our business development in that window, we through deals we did just in '22 have four assets that we'll be starting phase 3 studies in 2023 which will provide meaningful growth potential, probably one of the most important ones and this is excluded from the greater than $10 billion number is the personalized care vaccine we're partnered with moderna on. we think that is a big opportunity. it's probably too early to dimensionalize it yet. we're moving first into melanoma but wanting to broaden florida other tumor types. really for the first time have a cancer vaccine in combination

with keytruda that can make a meaningful difference and starts to move us to start to think about how do you make cancer a chronic situation, not a death sentence and that, you know, that's why we do what we do. that's what i'm so proud of with this company and excited by what i'm seeing with the progress we're making >> exciting results and want to talk more about that that's all the time we've got. thanks for being with us. >> thanks for having me. >> coming up, pfizer's ceo albert bourla from the conference. >> meg, so glad to have you here watch bonds today. got the two-year right around 423. june fed funds below 5 was just above 5 prior to the jobs report friday a little fedspeak but the main event will be cpi on thursday. back in a moment

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watch apple today. about a two-week high, going back to the 23rd of december constructive china headlines headlines regarding the number of iphones being made in india, surpassing last year's levels. by the way, it is the 16th birthday of the iphone unveiled by jobs today in 2007. back in a moment

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it's time for jim and "stop trading". >> j&p had an interesting note crypto needs to get serious. near and long-term considerations for the industry. coinbase can bounce. i reiterate that the s.e.c. is very, very flegtive on this group. and i think that we're going to see many people coming forward trying to race to the, let's say, to the court and before someone else does for some of these other companies and this industry must be avoided. >> s.e.c. aggressive on former mcdonald's chief, steve easterbrook. we'll talk about that later. what's on tonight? >> i've been doing utilities because there's so good.

best performing stock of this group is connicon conagra. food doing incredibly well we have to be careful because as we readjust, the companies that had high multiples, they're just going to keep going lower. every time you get a chance. >> high multiple names >> yeah. >> jim, nice to have the three of us back. >> terrific. >> we'll see you tonight, "mad money," 6:00 p.m when we come back, pfizer's chief live from the jpmorgan health conference with the dow up 116 my ameriprise advisor has helped me navigate uncertain times before, now is no different. with his advice, i'm confident i'm on track. the plan we created is for the long term. no wonder clients rate us 4.9 out of 5 in overall satisfaction. ameriprise financial.

welcome to another hour of "squawk on the street. i'm carl quintanilla, morgan brennan is back, david faber gains 1.5% lower and short-term yields. more headlines suggesting china's reopening continues along with its regulatory crackdown, even as oil retains a bid this morning. >> we are 30 minutes into the trading session. here are some big movers we're

watching two retailers tanking, lululemon warning holiday shares will decline. and macy's cautioning holiday quarter sales will come in light. we'll have more on this sector later this hour. piper sandler upgrading uber to outperform from neutral, betting increased car prices will push consumers to ride-share platforms stock up almost 5% meta continuing to climb higher in the new year as jeffries names that social media stock a top pick for 2023 saying meta will be the best performing mega cap driven by reductions and new monetization drivers shares up 1%. the second week of trading in the new year, but has the market already shown its hand for 2023 mike santoli at the desk at post

9. we've seen pieces of year-to-date treasuries and commodities. what else? >> some themes are pretty clear. one or two is a carryover. one is the underperformance of the very largest high multiple growth stocks relative to the average stock. in the last three months the equal weighted s&p has outgrown the basket the gains happened without apple, tesla or microsoft gettingy upside whatsoever that shows you where the risk seems still to be in valuation i would also say the value trade and also the foreign stock trade, people tilting overseas non-u.s. markets, outperforming u.s. markets the dollar seems to have peaked. they have lower valuations, maybe a little more earnings risk already priced in the bigger one is just a refusal to give up on a somewhat softer landing scenario earnings estimates have been coming down, as much as you hear people say profit estimates are too high for 2023.

they're lower right now than in any january the last 35 years. deutsche bank pointed that out in terms of the growth expectations the earnings estimates are coming down, but nobody is necessarily positioned or valuing assets for a real kind of disorderly downturn in economic activity just yet >> yeah, that deutsche note is interesting. he talks about bottom-up consensus looking for a fall of 2% or more, which would be the first negative quarter since the fall of 2020 >> that's for the quarter. he asks, is the bar too low? >> for the quarter we're about to hear from, the bar is almost always too low the moment before you hear the reports that is true it was really mirrors what happened last quarter. i would say for full 2023 the big question is whether the numbers have been -- have come down enough. you hear mike wilson saying, look, recession is not priced in i would say, absolutely not, recession is not priced in we've gotten the overall market to fair value. you've had people mute their earnings expectations and

expectations for economic growth at a time when the fed is more or less done in almost every scenario they're done with the meat of their campaign does this stop at fair value when you have average returns projected for stocks or do bear markets always create that fat pitch where you overshoot to the downside and then enable larger than average returns forward >> the international markets outperforming u.s. markets piece gets my attention. there was a note over the weekend, global markets basically traded sideways for the last six years while the s&p gained 200%. that might actually change it might reverse this year meantime, geopolitical risk has not gone anywhere. look no further than what's happening in brazil. we can talk about china reopening but still a lot of challenges with that market as well, europe, on and on and on is this really -- i mean, what are the, i guess, the green shoots suggesting this could actually happen this year finally? >> i would argue, morgan, first of all, you're right

people predicted this and anticipated this many times over the last decade and has not come true one is where we came from. most of the u.s. outperformance largely was about the fact we had monopoly on large platforms and meg that tech stocks the other one being it's also more of a value and hard asset-oriented mix overseas. you see things like iron ore going up, machinery stocks going up it's a value bent. financials may be better positioned that's what the overseas index, especially europe, are as opposed to here where it's a lot of software and intangibles. >> we'll see if the fed stays more hawkish than other banks, it is a gift to buy some international names. >> that's right. even now the dollar has eased back that's a tailwind. >> mike, talk soon mike santoli. want to give you the latest involving jack ma and sort of a lot of conversation overall

about chinese technology companies. shares of alibaba up 1.8%. 30% of ant finance summer of 2020, one of the largest ipos of all time it was preparing for. it might have been the largest, some $37 billion in proceeds expected very recently we got news that jack ma, who had a -- not a control position overall but a negative control position, large enough at some 34-plus percent to impact obviously the goings on at the company, has reorganized that in such a way that he no longer will have that control. his control has now been essentially diluted amongst a number of different entities of which he will not have voting control. doesn't impact his economics but yet another sign, perhaps, at least being taken as another sign as a loosening overall or the end of the regulatory crackdown that china began, in part with, when it came after ant financial.

this is a company ubiquitous with so many pay app when they came right prior to the ipo, sidelined the ipo there was discussion as to whether we would hear from jack ma again, where he was by the way, we can tell you now, he seems to be in bangkok, as he sent a picture or post aid picture from bangkok there he is. jack in bangkok. you know, again, this -- morgan, this overall sense, perhaps, as there was the reversal on the zero covid policy that this is sort of towards the end of a very significant regulatory crackdown involving some of the key technology names not just alibaba or ant financial, but didi, some viewers may remember. >> we've seen this stepping back in the u.s. by some, not all, but some of those very well-known, high-profile billionaire tech people like jeff bezos from their companies that they were so closely linked with you could argue that the stock

would trade alongside. now you could say you're seeing this with jack ma, too i think it was last year, you're like, where in the world is jack ma >> two years ago. >> yeah, we were talking about that obviously, ma is no longer involved with the day-to-day management of alibaba. but ant financial has been more opaque, given in part it's a private company, the value at which we may soon again be able to sort of get a sense for of course, this will likely raise the chatter that at some point it will prepare itself for that long-awaited ipo. >> let's talk more about it this morning, both alibaba and china tech james lee has a buy rating and 155 target on baba we had a long discussion about how china regulatory risk remains the football and lucy. how offensive can be afford to be here? >> good to be here, carl we think the regulatory impact right now is stabilizing

if you think about china regulation, it's really in four different frameworks fintech, cyber security, antitrust, and disparity in terms of labor reform. we have not seen any new regulatory framework being developed. at the same time, we have the cycle of these policies start to stabilize. from that perspective, it's a good sign. we're not naive saying there's going to be a roll back on the reversal of any of the regulatory impact from this point on stabilization on the impacts allowed business stock growing, especially considering the fact that china is going through a reopening right now. that means consumption is going to be growing. they're going to have a very supportive monetary policy we think gdp could actually grow in fy23. these are good for chinese internet companies whose revenues, a lot is based on

consumer consumption. >> when we see headlines from the pboc or the acting beijing mayor today that the covid risk has peaked and that growth will resume, do we think that that extends to asset prices? the government wants to see those rise as well >> good point. we recently spoke with a bunch of e-commerce companies in china. and we tried to get a sense, what is the consumption behavior in major cities like beijing clearly, beijing, we're more or less at the peak already what they are seeing right now is consumers are starting to buy discretionary items socially related. think about apparel, think about beauty and cosmetics that's a very good sign for the rest of the top markets who's maybe still high out of beijing, shanghai, guangzhou and shenzhen from the government's perspective, they have every

incentive to drive economic growth you think about new policy coming in, for example, for digital transformation and cloud competing, they're providing subsidies for car bon neutral, offering subsidies to governments. from that perspective, i think policy and reopening, they seem to be aligned together to drive economic growth. obviously, they'll have a positive impact on passive growth going forward >> james, given the fact that you cover some of the travel tech names as well, some of the tech platforms involved in travel bookings and what not, what does china reopening mean for some of those stocks as well >> yeah, absolutely. we think travel is the sector that will be beneficial from reopening. and we like e-comm because they have outbound travel you think with outbound travel, specifically margins are very

high two times domestic travel. at the same time, i think the company has streamlined its cost structure quite a bit. its cost basis only two-thirds of what it was back in fy19. we expect margin expansion and we like the story here consumption is another story we like i think consumption is at the end of the covid reopening we think a company like jd.com, very similar to amazon they have a combination of one p and 3p operations. at the same time, they have put their cost structure through a rigorous stage of cutting costs. that means margins is going to be expanding heading to fy24. >> it's going to be even more important to watch some of those high frequency retail sales data out of china, that's for sure. james, thank you joining us to talk about baba today and more. as we go to break, here's our road map for the rest of the of the hour, including a lot more on lulu.

compass announcing third hour of layoffs in a year. the ceo will join us on set. and don't miss our big interview with the ceo of pfizer, albert bourla, live from the jpmorgan health conference "squawk on the street" wilbe ghbackl

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believe it continues to remain as hawkish as over senior economics reporter steve liesman is here to fill us in on what really is going on. steve? >> david, good morning the fed is supposed to be listening to the data but it's sounding a little tone deaf these days wage growth slowed and inflation is down but the fed remains as hawkish as it was before, focused slowly on inflation risk with few mentions of the economic risks of its aggressive rate hikes we talked to atlanta fed president raphael bostic last week he said there is more work to do both he and esther george of kansas city say that 5% rate should last well into 2024 barkin from the richmond fed says the inflation fight isn't over those minutes on wednesday said there would be no cut, no fed official is thinking about cuts in 2023. meanwhile, ism services contracted that's the biggest part of the economy. december wage growth slowed after november was revised down

sharply. the five-month annualized inflation rate running around 2.5% the market took in all this data and here's how it reacted. it fell in two different steps from the jobs number and again the ism services number, a sign it sees both the inflation and economic weakness after taking in all that data the appearance by looking at their comments is fed officials are not data-dependent put looks like they're headed to 5% no matter what. some out there are counseling patients at oxford, their economist wrote t may take longer for organic forces to bring inflation back to pre-pandemic rate. the fed may end up having this right. inflation could be persistent and warned an extended period of high rates or they may be making a similar mistake to the one they made last year.

that's when they all nearly decided, wrongly, of course, that inflation was transitory rather than debate and different takes on data around the table all sound like they're talking from a script ignoring the data right now. guys >> steve, this note from microadvisers got my attention this weekend he noted the fed is remaining committed to a 2023 and unemployment rate of 4.06% to maintain wage growth remains subdooud, that goalpost moved farther away and noted stag nature labor force participation, labor supply is tapped out and that if the fed needs to be confident that the unemployment rate will rise before it causes rate hikes, the jobs report we got may suggest the time is still way off in the future which is basically what you just said as well it sort of speaks to this idea of maybe not ignoring the data but looking at the data a little differently than the market is >> no doubt they're looking at the data differently from how the market is. you look at the two-year note and the collective wisdom of the market decided the two-year

yield needed to fall by 50 -- by 25 or 30 basis points. and it's actually down a bit today as well. so, what they're looking at is they're hyperfocused on one aspect, morgan, the service sector inflation that's out there. technically it's the core services that means take out food and energy and take out housing. they're concerned that's the wage driven -- that's the wage-driven part of the inflation numbers. that that will not go away, morgan, they believe, until the unemployment rate goes up and there's slack in the economy >> steve liesman, always breaking it down for us. thank you. after the break, ceo of real estate firm compass will join us here on set. stock is actually popping, 8% right now. he'll talk about how he's navigating the company through housing downturn first, check out the gainers on the s&p. so far this monday morning with the s&p up just about 1% right now. it's advanced micro, leading the

charge tesla after a tumultuous couple of weeks nvidia, mah outcgrp and eqt rounding out the top five.

welcome back to "squawk on the street." real estate company compass is undergoing third round of job cuts in one yore cash flow positive by 2023 joining aus the nyse on set, robert reffkin, co-founder and ceo. great to have you back here with us. >> great to be here. >> let's talk about the layoffs, third round. what's involved? how does this move you towards that cash flow positive goal you stated for the middle of this year >> yeah, so, we had announced expense reductions last week i think it's worth noting if we would have done that a year earlier, we would have been free cash flow positive last year and if the market would have grown last year as expected, we would have been free cash flow positive what happened is the fed chair came in and artificially reduced the revenue of our industry, bringing mortgage rates from an all-time low in january to a 20-year high in less than nine months, creating the sharpest decline in real estate transactions on record more than 2008, which was

housing-driven financial crisis. >> so, when the ceo of taylor morris comes out and says on our air that the housing recession has been for a while, you agree? >> i agree but i believe we will look back at q4 as the bottom. q1 may be the last great time to be a buyer for a while we just saw that 42% of sellers are giving concessions, which is the greatest amount of concessions sellers have given in over ten years. >> it's all jerome powell's fault, is what i heard you say did you overhire at all? >> we, along with many other growth companies, built our system to meet demand that was there and expected to be there for many years, but that demand led to inflation, which the fed had to address. >> you never know exactly what the right size is, i guess, given how dynamic things are right now. but what makes you feel like you're at the right spot in terms of generating free cash flow and having the people you need to deliver on the opportunity but not too many >> so with what we announced

last week, we believe it can be free cash flow positive this year, accounting for 25% decline in the market. that compares to fannie mae, which they estimate to be down 22% this year. and mortgage bankers association, national association of realtors, believe it will be down much less. >> we talk about how you do layoffs, wore force reductions, because of multiple announcements. is it easier to do more than you think you need or to do as little as you think you need maybe once or twice? >> look, it's never easy these are friends, these are people i've known for many years. they have dreams, they have families so, it's -- it doesn't get easier over time but although it wasn't easy, it was necessary. >> but you'd rather go multiple rounds than do, i guess, too much in one round, is my question >> the first two rifts were designed based off what we thought the market was going to look like two months later the market deteriorated because

mortgage rates continued to increase over that two-month period this last is designed to be at a discount to what we think the market is going to be this year. so that we don't have to do it again. >> you just mentioned being a growth company stock's down 70% on the year up until recently, compass was seen and marketed and billed as a tech company more than a real estate company still see it that way? >> we're a tech-enabled real estate brokerage, using technology to create advantages for our agents and our company we increased agent base 15% year over year. we're growing faster than the market historically and we have the highest agent retention in the industry. >> so, just looking around the market here in the u.s. and the fact you are in so many different areas, where are you seeing strength? where are you seeing resilience? what does that mean in terms of price outlook? >> we're seeing strength in the attractive tax rates

people always want low taxes and better weather so, that's texas, nashville, atlanta, the carolinas, parts of florida. we're seeing weakness in las vegas, in parts of california where they saw some of the biggest increase in prices again, i don't see prices going down more than low single digits this year. i, quite frankly, think there's more risk prices go up than down mortgage rates will go up. >> because the supply/demand imbalance is there >> there's record low inventories across our market, excluding luxury, inventory is down 5% year over year. >> robert rifkin, thank you for joining us ceo of compass. after the break, albert bourla live from the jpmorgan health summit conference

welcome back to "squawk on the street." i'm bertha coombs.

here's your cnbc news update california is bracing for more heavy rain and strong winds. central california, tens of thousands are still without power after a storm system blew through over the weekend the national weather service says multiple cyclones could hit california today and tomorrow. in new york city, nurses are on strike at two of the city's biggest hospitals. negotiations over the weekend failed to produce a new labor contract the nurses union says chronic understaffing and low pay are the key issues in brazil, the heads of all three branches of government are condemning yesterday's attacks in the nation's capital as, quote, terrorist acts. new video shows the damage in the presidential palace after thousands of supporters of former president bolsonaro to protest what they believe falsely are rigged elections.

the jpmorgan health care conference, the largest health care symposium in the industry kicks off today. it's featuringthe biggest name in biopharma and pharma overall. meg terrill is back with another special guest. >> david, thank you so much. albert bourla, the ceo of pfizer joins us it's great to see you in person. >> great to see you in person. i think last time we were together was here in 2020, the same conference. >> those three years have transformed pfizer through the covid vaccine, through paxlovid and a lot of your other business the question now is, what is next for pfizer? what can we expect from the company this year? >> well, indeed. 2022 was, by all means, one of the most successful years in our corporate history. i think oneof the most successful years in every corporation. and i'm not talking about the financial magnitude of our success, but i'm talking 1.2 billion patients, the lives of those 1.2 billion people were helped by our medicine we were voted number one by 2600

associations of patients our success rates in clinical success rates are at all-time record, 22% clinical success end to end from first human to approval may look small to some people, only 1 in 5 succeeds but it's 11% for '22 i can go on and on about patient engagement, the impact with our ability. i thoroughly believe the best days are ahead in the next 18 months we have 19 new products most of that, 19 new products across a very big variety of medical issues that are -- that are creating medical issues to people and i think it's something that is unprecedented no one has ever done 19 in 18 months including us but i'm very confident that our manufacturing, our organization will pull it together and the

best days are ahead. >> even as you're focusing on all of that, i think a lot of people are still wondering what's going to happen with covid and your vaccine how are you modeling, based on what you've seen this winter so far, how is that going forward >> look, we're dealing with a nasty virus. if you get sick, even if vaccinated, the immune protection from those two doesn't last for long. the second, it keeps changing. that creates even more complication we're well equipped. i think technology that we have right now, the mrna, the main technology for these vaccines, came out very quickly. there's a need to change it, but that will happen the medicines we have right now, for example, paxlovid, works equally among all variants we have observed so far what is my prediction? i think it is that the in the months and years ahead, social distancing will disappear. people will not be taking any

measures i think vaccination rates will go down or stabilize around 30-plus percent. that will help, as a result, but new waves will be coming, because people will not be current with the boosters, the population as it is right now. the clinical manifestation of the waves likely will be more severe, so it will have more people in hospitals because they are not well immune population, but then the treatments will go up as a result so, we have strategy >> one place that's having the emergency right now is china >> oh, yes. >> what is pfizer doing there? >> oh, we are working with chinese authorities a lot to be able to help we are not the ones -- the health care, the cdc, the fda here, for example, and they have their own bodies we are trying to understand what is their policy and their need so far they have shown tremendous interest in paxlovid. and the paxlovid was registered

in china months ago. and we were giving -- it's now about china opening, apparently, the cases are skyrocketing from what we are hearing. so, we are sending as much paxlovid as we can our manufacturing machines are working to be able to supply them. >> carl, you have a question >> i did albert, i just wonder, the china stuff is interesting do you gauge their interest greater in a vaccine or licensing a generic version of some vaccine, or in more the treatments like paxlovid >> you know, they haven't shown any interest, as far as i know, for mrna western vaccines. but i do think that they are trying to bring their own mrna versions i can't talk about it because i don't have much information. they have shown interest in all available oral treatments, and, of course, paxlovid is the one that has 90-plus markets in the world. so, this is the one there

because of the medical profile of the treatment they have shown tremendous interest in paxlovid but we're still in discussions with them. >> why do you think there's a difference in their approach to taking your oral antiviral pill but not wanting western vaccines >> i can't comment on that it is their preference. >> i know this vaccine is not the only thing you're working on in terms of covid. you're thinking ahead to what future vaccines may need to look like for this disease. what can we expect in terms of one that offers more durable protection, more broad-based protection >> look, people want -- in order to do the vaccine want -- it's not going to be every five months so, we are working to make sure that we have longer protection and people want not to do multiple vaccines. as you know, we're working on a flu vaccine. as you know, we have already submitted and very confident we'll be approved in a few months two rsv vaccines. so we're working on combinations we're seeing if we can combine

flu and covid. so all of that, hypothetical because we are doing the experiments. all of this experiments are happening now. so, i hope we will be able to offer both, longer protection and combination products that will make it so easy that people will do. >> in the short time we have left, of course, this is a big business conference. pfizer has probably the most firepower to do business big are you looking for deals? >> we are looking for deals that add value. we aagnostic to the size we are not looking for deals that we have to combine two companies in order to justify the premium to pay to the shareholder to the other company. we need to cut costs what we are looking at is deals like the ones we did products that in our hands can perform way better than in the hands of some other companies that have less resources we made public a goal that we will buy science that we produce at least in billions of risk

adjusted revenues by year 2030 we are 40% there, 10 billion, we are, and we will continue. so, this year i expect to be very active year in buying science in our hands we'll develop into medicines that will be eventually treat people. >> albert bourla, great to be with you thank you for being here. >> guys, back to you, morgan a lot more coming up from the jpmorgan health care conference. >> we are looking forward to it's great to see you back on tv. still to come, we'll turn back on -- we'll turn back to lulu, plunging after the apparel maker adjusted holiday guidance. stock down 9%. that said, the broader markets are hanging onto those gains with the dow up 220 points and the s&p at 3940. we'll be right back. this tiny payment thing- is a giant pain! hi ladies! alex from u.s. bank!

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let's turn back to lululemon, lowering guidance for q4, drop in consumer spend hits the apparel maker's holiday spend. cal m calvin mcdonald was with us a month ago. >> we haven't seen it with our consumer we're well aware of the macro environment. we're well aware that many other retailers in the malls are heavily discounting. we have not. we don't see a need to regular price is driving our business >> joining us this morning oppenheimer with a 393 target and buy on lulu. great to have you back awfully quick trip back to october levels how surprising is this >> well, look, good morning. i think the reaction in lulu's stock is largely knee-jerk in nature just listen to calvin's comments i think this business is performing quite well. you know, some of the pressures we're seeing reflected in

today's announcement are very much shorter term in nature. so, what's happening with lulu, and this is happening across the athleisure space and across retail, product is making its way to the u.s there's a lot more product lulu, as a result of that, is over inventory i think we did see some -- some more price promotions in the quarter. again, i think that's largel short term in nature the other fact, too, we're in this transition period right now where lululemon is working off the more expensive supply chain issues they didn't say much in their press release today, but i think we're working through that we probably saw the worst there, too. behind all of this, you know, this is what calvin said in his comments, the real positive is that consumer demand for lululemon is still very strong and tracking much better than we're seeing elsewhere in the broader apparel space. i think this really a buying opportunity. >> you talk about those lingering shipping and freight

issues given the collapse in, say, ocean freight between shanghai and l.a., is this the last quarter where retailers can actually use that as some kind of rationalization for weaker margins? >> well, you know, it's interesting. i'm talking with this topic with our clients a lot. there's a lot of accounting noise here so, yes, like you're saying, in the spot market, carl, the rates have come down significantly in some cases are actually now tracking below, you know, below pre-pandemic levels. the way accounting works and the way we think about costs associated with revenues, we still have to work through that. we probably have, this is generally speaking, not necessarily for lululemon specifically, we probably have another couplequarters or so where we'll see costs make their way through companies. second half, i think that's when we start to see significant relief on the profits of these companies. >> brian, as you said, the press release didn't share much of anything, other than the data

itself i'm just curious, this color you're giving us, you know, is it coming from your own work as an analyst, your communication with the company, is it a guess on your part because it would seem to be an important component of what investors need to think about as they watch that stock down almost 10%. >> sure. i followed lululemon very closely. i went to a consumer conference in orlando this week i'll be meeting with lululemon management in the next couple of days so i'll get more color. really what i'm reflecting on your show is just the work i've done we've been talking about lululemon a lot at the holiday season the company reported third quarter results not that long ago. frankly, when i see from lululemon is suggestive of what we're seeing in consumer broadly. this is a transition period. the point i want to make sure is really clear here, one reason i stay positive on lululemon, even in today's release, consumer demand is slid consumers are buying products. i put a short note out to our clients, i think last week, i spent a lot of time with my

family in lululemon stores through the holiday season every time i went to thestores the broader new york area, there's -- they're crowded there's consumers buying the products i think that's the real message. again, lulu, the press release was short today. i think there will be further communication coming from the company as they talk about their trends >> maybe there's foot traffic. maybe consumers are still buying products, lululemon or elsewhere, and you take that and you take macy's, and i realize you don't cover that name, are we seeing consumer pushback on prices >>that's a great question, morgan i want to make sure this is clear, too i don't cover macy's i keep a close eye on macy's given its prominence within the broader retail space the point i want to make here, and we've seen this for a while, even before the pandemic, companies like lululemon, like nike, other brands have been taking market share, not just in the athletic space but in retail broadly for a long time. we're seeing this.

we see evidence of this every day, just walking the streets. we're dressing more casually lululemon is very much becoming a lifestyle brand. i like to joke, i used to buy my clothes at brooks brothers, now i buy more lululemon clothes for work again, i don't want to comment specific on macy's because i don't cover the company, but we have seen this broader shift within apparel, which is shifting much more athleisure type category. lululemon is a big beneficiary of that dynamic. >> finally, brian, given what macy's said about some of their own proprietary credit card data, macro strategists looking at the rundown of excess pandemic savings might end earlier than thought, jpmorgan says maybe q2. does that make you worry about the end of that excess supply of cash with which to go shopping >> it's a factor when i tend to think, again, the window i look into the consumer, i tend to think jobs and wages are more important

despite a lot of macro noise out there, despite what the fed is doing to try to slow the economy, what we see continued evidence is the jobs market, broadly speaking, in the united states is still very strong. from my vantage point, that's a much bigger driver of consumer spending than any residual benefits of stimulus so, again, something to watch. i think the jobs market and wages are much more important for my mind. >> yeah, unemployment at 3.5 remains resilient. appreciate it very much. talk soon. brian nagel. >> thank you very much. as we head to break, we are watching defense stocks. those are largely extending friday's losses. led lower by northrup grumman, lockheed martin as kevin mccarthy agreed to cap u.s. discretionary spending, or to attempt to secure that speakership. that could include defense cut budgets. the details and the probability, those are murky. it doesn't change, i should note, what's been appropriated for 2023

cowen doesn't believe a cut is likely but expects this will be an issue for the entire year the stocks are under pressure on all of that uncertainty. keep in mind, a big nuinrup 2022 stay with us we'll be right back.

welcome back to "squawk on the street." i'm dominic chu. stocks pushing back for the all-important s&p 500. the major averages are higher to start off this week. the tech stocks are leading the s&p 500 as you can see behind me with nearly every constituent in the positive sector territory. that includes big gains and a number of chipmakers like amd and nvidia they're the top picks for 2023 along other names. on the cloud computing enterprise sophomore side, we're also seeing some notable gains in service now salesforce, autodesk, adobe and others as well carl, i'll send things back downtown to you folks.

>> >> the s.e.c. charged mcdonald's ceo and mcdonald's. mcdornld's did release a statement in part saying mcdonald's reached an agreement with the s.e.c. concerning issues with its disclosures steve easterbrook's relationship it, therefore, imposed no monetary penalty on mcdonald's coming up this morning at the top of the hour, a lot more on jack ma, giving baba a nice bounce today along with some self-side upgrades "techcheck" begins in a few minutes. don't go away.

>> announcer: newtime exchange sector sort is spon toured by sector spds.

welcome back to "squawk on the street." stocks are building on friday's massive rally.

the dmacz inasdaq is up 2%, s&p 1.2%, and the down .75%. >> you have moderating wage growth, jobs not as plentiful but still relatively strong. interest rates all aligned that benefits growth stocks. that's what we're seeing rallying that's technology stocks take a look at the dow leaders salesforce is up 10% so far this year apple is up not as much, 2% or so intel up close to 10% or so, and microsoft is the one laggard they're down about 4%. but that's the rally here. other beaten up tech or quasi tech names have been really strong recently. have you seen meta also up 10% this month quiet rallies. look at that in the last few days moving to the upside. speaking of unloved groups, any of the broadcasting names, media and entertainment stocks warner brothers, discovery,

that's up 20%. paramount. disney had a terrible year the stock is up about 10% in 2023 you get what i mean? things start moving if interest rates hold the line. certain stocks start moving on the upside what's lagging at this point the important stuff is all the stuff that did well last years, travelers has been lagging merck has been lagging pharmaceutical stocks are notably lagging today. mcdonald's had a good year, it was lagging. caterpillar at a 52-week high, that stock is underperforming. where are we we were at 3800 to 3850. we've broken well out of these ranges we were in in the last couple of days that's certainly a very good sign remember, guys, this is all based on the soft landing. that means interest rates have to start moderating, and, of course, the wage growth we've been seeing also has to moderate guys

>> i had the dow transports to the list of rallies. up 5.7% since the start of the year but tesla getting a pop today. it's up 7.5%, particularly in the final weeks of last year, bob. sort of get your thoughts on this and whether it speaks to what we're seeing more broadly across the nasdaq and across tech. >> right just remember, these are relative value plays if the interest rates start moderating at this point, then you have better comparisons against stocks, what we call the better equity risk premium it's ridiculously low now, like on the order of 3% that's not much compensation to own stocks, just 3% over bonds no a lot of people would say, no, that's too risky i'd rather stay with the bonds if all of a sudden we stop seeing these big increases in interest rates, perhaps the stockmarket will be a little more attractive, particularly

for stuff beaten up like tesla. >> that certainly was beaten up last year. bob, thank you so much, bob pisani let's send it over to "tech "techcheck." >> good morning. i'm carl quintanilla with dear bra bosa and jon fortt 15% gains since last tuesday we're going to talk with the cfe. and a debate on coin wall street says the company will survive and even thrive and piper and jefferys says uber is a buy we have what it means. >> carl, let's kick things off with the tech rally. the nasdaq led friday's gains and is leading once again today. techs, the top sectors, high