good morning, the nasdaq coming off its third straight positive session, now up 6.7%. strategy shift at wells fargo. cnbc has learned that the bank plans to pull back from the u.s. mortgage market. details straight ahead and the house of representatives taking a hard line with china, creating a committee to address threats from beijing it's wednesday, january 11th, 2023, and "squawk box" begins right now. ♪ good morning, everybody.

welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm beck requey quick along wite kernen and andrew ross sorkin. you can see right now there are some green arrows across the board, dow up by 75 points, the s&p up by 8, the nasdaq up by 15 the nasdaq continued its snapback rally yesterday adding 1% the dow and the s&p were up by 0.5% and 0.7% respectively let's take a look at where we are. 2023 is looking much better than last year. the dow is up by 1.7% in the very few trading days we've had this year. the nasdaq up by 2.6%. 22 dow stocks are higher this year dow, intel, disney, and salesforce up by 10% since january 1st. the treasury yield is 3.6 a%

still lower than last year. the faa reportedly experiencing a computer knowledge has grounded flights nationwide we're looking into this story and we'll bring you a lot more information as we get it if you're looking on your app or you're headed to the airport right now, look again. >> yeah, but, you know -- >> nationwide. >> nationwide. take your time get it right make sure it's all perfect by the time you say all clear amazing. amazing. you know, they get a lot of criticism and airlines get a lot of criticism, but just go back 50, 60, 80 years or 100 years and tell people you're going to be flying around in these little cylinders at 35,000 feet. >> or you'll be in california in a few hours or paris later tonight. >> 50,000 takeoffs and landings, and i never want to jinx it. it's safe. it's awfully safe.

in a first major bipartisan win, house republicans and democrats overwhelming ly voted whoa will you do those initials for me i didn't do them yet we can't keep reading that we're going to focus on investigations and give an authority to call witnesses and hold -- you're doing it -- and hold public hearings it might turn -- >> hstscbus -- >> shabooey? >> you have to buy a vowel in the meantime tesla plans to spend upwards of $770 million to expand its electric vehicle

company in awe strie ya. that's according to findings that came out in texas it will house battery cell testing and a die shop among other things you can see tesla shares still down 38% over the last two months, but this morning babb up 2% apple reportedly plans to start using its own custom displays on its ipads, watches, and iphones. they're looking on reduced reliance on partners like samsung and lg which will bring a lot more of its component production to in-house they plan to switch to in-house modems they've already started to do a lot of it itself you know, when you can control the entire ecosystem, it helps.

this is along a similar vein, spending on mobile games declined last year amid rising inflation and cost-conscious consumers. according to a new report, mobile game spending fell 5% globally last year still $110 billion though. the app tracking company expects global app spending on games to drop an additional 3% this year. nongaming apps were more resilient. purchases for things like in-app subscription dating services and short ferm inorm video servicess did ride to $68.2 million. stephanie mcmahon has now resigned as the chair and co-ceo of wwe after her father vince mcmahon was unanimously re re-elected as the company's chairman she had taken over after her father retired amid allegations

of sexual misconduct wwe's board ultimately found that payments to women who accused vince mcmahon of sexual misconduct should have been booked at wwe expenses because they benefitted the company. vince mcmahon said he was returning to a potential sale of the company. >> wrestling update. >> this is like a family wrestling update a true family wrestling. the daughter is out, he's in, what does it mean, do they talk to each other? >> of course, the harassment payoff should have been put down as an expense. what kind of accountant do you have. >> that was strange. it benefitted the company. >> you can write that off. >> i'm just saying the family dynamics -- >> i'm just thinking that -- do your kids still think it's real?

i don't want to ruin it for anyone. >> it's early. dopet go there. >> i'm not going to say it they are talented, i guess it's all choreographed and everything. >> but they have some big names who have come out. you've got the rock. >> you've got mickey rourke in that movie did you see that movie >> that was a great movie. >> that was a great movie. depressing but great. >> there's supposedly a fabulous movie coming out. >> about wrestling >> with zach -- looks so ripped. >> zac efron. >> he is ripped. that's right i saw a picture of him i try. >> you try >> nothing happens nothing like that happens. >> joe, we sit in a chair for three hour as day with our job they're in the gym for three hours. >> i could go right into this role when people get really fat -- that, i think, give me a couple of months. >> a whale >> give me a couple of months.

>> there are the actors who take on that role and put on like 60, 70 pounds. russell crowe has done that. >> matthew mcconaughey. >> oh, yeah. >> it's amazing what they do let's talk about ft kb because it's back in bankruptcy court today, expecting rulings including on whether the customer lists will be made public and how or when the company will be able to sell subsidiaries to try to raise cash a new court document features names and share accounts of ftx stakeholders including tom brady, gisele bundchen, and tudor jones. we're going to talk about what the experience was like and where it's all headed

>> i guess we can reference this mike wilson is from morgan stanley. i'm still on as the first week -- as the first month goes i'm much -- did you see the european story china's reopening, energy prices didn't stifle it the recession is supposed to be very like a sure thing in europe that may not happen. but coming up, yeah, i know, we're going to talk to a couple of soothe sayers in a moment they have different opinions but in the meantime morgan stanley's mike wilson warning that the markets could be shocked by earnings misses, even though i think a lot of people have lowered it by 8%, 9%. get ready for the kickoff that happens on friday. then cnbc has details on the strategy shift of wells fargo.

we'll talk with our guest who broke the story. bcchg quk x"n awbo o cn [music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change.

morgan stanley is telling people to make plans for a winter downdraft here's what mike wilson said on "fast money" late yesterday. >> our call is mostly on

earnings and the fact that the fed is probably not going to be as reactive to a slowdown as they have been historically. normally when you see the data that we've seen, the fed would have been cutting rates. of course, that i can't do that with inflation where it is. >> wilson warned that the earnings season, which kicks off on friday could jolt the markets with many companies coming in below expectations we've got guidance, et cetera. joining us now, jackie cavanaugh, portfolio manager at putnam investments and co-founder of res management as well as a cnbc contributor we're start right out of the box. you point out you watch every day between 5:50 and 6:20, and it's not official and it's not -- you know, we haven't actually tallied it exactly. >> it's not official. >> you say you watch every day nobody's been bullish for how long at least a month, right?

every single person is bearish. >> except for me. >> exactly. >> it's unbelievable i don't comment. it's amazing how uniform the people -- i think they're all esteemed friends and smart market watchers and investors, but they've all been defensive and very conservative, and they point to the fed raising rates we know that's going on. inflation is high, we understand that it can be sticky earnings may be weak we also know that. companies have said so, and many have brought down expectations but, remember, the market was down 20%, and many stocks are down over 50%. we're not being graded on a paper but post-pandemic economics. we're graded on asset allocation and making choices about how we find stocks attractive, where to buy them and how to sell them. so it's our opinion that there are many names that are attractive we've been adding to names over

the past month some of what we did wasn't best practice because we bought things too early but to add to names like align, charter, meta, salesforce, those have been good traits because the stocks are down so much. we also own some defensive stocks like o'reilly auto, but you have to take into consideration where the market has been, and no wizard at hogwarts is going to say buy a lot of stock because this is now the time we have to make those decisions earlier and be uncomfortable with them for a while. >> you definitely have an art business on the side every single time you're on, i like the art piece behind you even more. i don't know what people bid on -- i don't know what you've got going on i don't want to know. >> would you like to bid would you like to bid, joe >> i like that one i do like that one. >> thank you i'd go with it.

>> jackie, i think you feel a little different you're almost in the camp that the fed is telling us what they're going to do. why don't we just listen instead of thinking we're smarter than the fed. but i guess how does it resolve itself, jackie, because the market still doesn't believe, the terminal rate is not 5.25, 5.5. it's well below. that every time we get a decent data point t market seems to embrace that and ignore the fed. it's going to have to resolve itself one way either the fed is wrong and they're going to have to admit it or the market's wrong, and it's going to be ugly. >> yeah. thank you, joe thank you for having me back on. i think you're right there's a disconnect between what the fed is saying and the market is doing. you know, for 25 years, we've been told, don't fight the fed that is very much what the market is trying to do i think the challenge for the market is that it's really hard to prove a negative, and so what

the fed has basically said is that the jobs market is tight and they're desperately afraid of a wage price spiral, right? and that is very hard for us to disprove, the market participants to disprove the fed believes that that wage price spiral is around the corner as long as the job market remains tight. listen, the jobs report on friday was a good report, and the wage number was tame, but we continue to lower unemployment, and there continues to be more jobs than what you would want and if you need neighbor slack i think that's the real challenge. it's hard to disprove a negative the fed is afraid of a wage plus spiral, and unless there's slack in the labor market, it's going to be hard to get comfortable to take their foot off the accelerator. i would say in response to kari's comments, there's a disconnect between what the market is pricing in and what

the fed is telling you repeatedly way theory going to do, but i don't necessarily see that all of 2023 is going to be so negative. it's very rare to have two back-to-back years in the s&p 500. i think it's happened three times since post world war ii. so i don't know that we necessarily think it's going to be a terrible year in total. we just think the challenges here in the next six to nine months are reasonably pronounced until that gap closes between fed expectations and market expectations. >> jackie, all these layoffs, was it just tech companies, pandemic plays that got bloated from thinking the good times are going to last forever? i mean these are big layoffs they hired way too many people the average run-of-the-mill company in the united states is not a pandemic play company? they're lean you're not going to see the same weakness across the board? because that would certainly make the labor market a lot less tight and the wage market a lot

less certain. >> absolutely. what you're seeing now in tech and some in finance is a pull forward of, you know, pandemic-driven demand and management teams that believe that this was the new normal and so you were resizing some of these businesses i think brian at coinbase said it we overhired the activities we saw during the pandemic was more than what we thought would continue you know, joe, when you look at the nfib numbers that came out last week or earlier this week, small businesses are still their major concerns we have to look broader than tech and wall street at the broader economy. we're just not seeing the layoffs. yes, they're in specific areas, but not broad enough yet to create the slack we need. >> we've got to get the fill on this faa story just to finish, kariing jackie

points out suddenly we're lulled into this sense of security that commodities rolled over. that doesn't mean they're going to stay rolled over either if they came back with a vengeance and the labor market doesn't cool, then it's off to the races again with the fed. >> well, i think you have to balance that with what we're seeing in the real world we know that inflation is coming down in a number of places, and there are layoffs, and they may spread but, again, we know that this is a slowdown this is well communicated. we're hearing it from companies. you have to pick the spots where you can see earnings growth over the next 12 to 24 months and when companies say we have to cut 10% of our work force, we really need to improve our margins, they're beginning to get religion about that. what was so easy in 2020 isn't necessarily easy for the same companies today, and if they make an effort, we as investors have to find our spots where, yes, we see opportunity because

stocks are down so much. so that's -- that's a little bit of a different perspective. >> jackie cavanaugh, thank you, and, kari, even if it's a contrarian accounter, there's a very important reason to watch between 5:50 and :20 you can use that information too. >> exactly. >> you're not saying not to listen to these people it's all data points. >> love the show love "worldwide exchange." i love the beginning of "squawk box." >> all right, all right. thank you, kari. let's get an update on the faa outage we told you about at the top of the program phil lebeau joins us phil, nationwide, what's going on there >> reporter: we heard from the faa that the notice-to-air systems, air messages, nodam as it's referred to by the industry, by the airlines, by the faa, this is the critical

information that all flights require whenever there has been some type of an issue with the national air service that is being repopulated. the computer which handles all of that is being repopulated according to the faa they expect to have an update and potentially to say, yes, we have the computer essentially rebooted shortly now, whether or not they have corrected all of the issues remains to be seen it also remains to be seen if we're looking at all flights being grounded nationwide. there's a report according to nbc news citing sources that all flights have been halted, though, we can tell you that if you look at some of the airport cameras that we use and other tv stations use, you see there are some flights that have been taking off at different airports around the country that is what's happening right now. still unclear exactly what the

computer outage was that caused all of the flights to be impacted, at least halted temporarily at some point, but that's what we're trying to determine from the faa again, they have indicated that they are repopulating the computer, which sendings out all of the information with the critical information, the data points, et cetera, to all flights, to all airlines once that is completed, then it becomes a question of how quickly can the airlines get back on the schedule that was laid out for the day. >> hey, phil, i imagine there are planes in the air already. you talked about some planes taking off. >> yes. >> but others may not have landed already does this impact them? >> no. well, i mean they finished their flights. it's not like they have to get down immediately they finish the routes they're on. >> hey, phil, maybe this is a stupid question. that's not a computer system that has a redundancy system

built in >> great question, becky i don't have an answer to that my sense is there is some redundancy there has to be some redundancy. it can't be that there's just one. we've seen this before i want to say three, maybe four years ago that briefly, early morning, there was an issue that essentially halted all of the flights around the country, and then it took several hours for the airlines and for everybody to get the flights going again. >> wow i guess the question of safety for the flights that are already in the air, we assume that that's safe, they just don't want more planes in the air at this point >> well, you don't if you do not have nodams -- that's the terminology if you don't have that system working, you don't take off. if you're in the air, you have to complete the flights. >> what does it mean for the flights -- the are the flights that are in the air safe, i guess is the question?

>> yes, they're safe again, this gets back to what andrew was saying. do they have to get down immediately? no can they complete their flights? yes. there's still communication between flights in the air and the faa control tower, the control towers at each individual airport it's simply that the system that is critical for all flights taking off, that is not working or it was not working. now, whether or not the computer outage lasts for a few minutes, several hours, that remains to be seen. >> what does nodam do? is it just a system where flights communicate with each other? is it a backup system? i don't understand its role. >> it is essentially it's critical for every single flight. it's required for every single flight that allows the airlines, the pilots, everybody to have all the same information regarding the national air service >> so what information -- to put

a final button on this if you're in the skies right now, what -- and this system is not working, what information would the pilots and those on the ground not have that they would otherwise want to have >> well, it's not the pilots in the air. it's more the pilots on the ground, andrew i understand people want to think of this in terms of, hey, my computer at home went down and there's no communication at all. there's still communication between pilots and crews in the air and the air traffic control towers what nodam allows is it's essentially the technical traffic cop, if you will, that allows all aircraft when they're at airports to then as they take off have all of the same information. you can't have a system with thousands of flights where some have some information, some don't. >> right. >> and that is at the heart of

what nodam does. >> i appreciate you dialing in i look forward to talking to you throughout the rest of the broadcast as we learn more about where things stand. when we come back, a scoop on strategy change and wells fargo. we're going to break it down for bau. the nk stepping back from the u.s. mortgage market that's a big, big deal we've got details. "squawk box" coming back right after this what's the next chapter? that's the real question. with fidelity income planning, a dedicated advisor can help you grow and protect your wealth,

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box. we've got some big news. wells fargo will significantly step back from the housing market this is abig-time shift from what was once the number one player in mortgages. he's here with that news

kind of a blockbuster here in terms of the mortgage matter and what wells has been doing for decades. >> i think so, andrew. good to be with you. good morning if you look back at the financial crisis, as you know, caused by shoddy mortgages, what you saw was that bank of america, which bought countrywide, which was the biggest mortgage lender in the country and jpmorgan's jamie dimon says it's too much risk and brings too much heat from regulators interest rates were low and this was a crown jewel, the mortgage business, and they stuck around. one out of three mortgage companies were bought up by wells fargo all the way up to 2019 when they still had a number one mortgage market share, and for those five or six years, they looked like geniuses

they were printing money and had the biggest market in the business and things were going great until what happened to it, the sales account scandal bringing tons of heat to them, that on top of what you saw with the interest rates last year the ceo said this is not the business where we have to be the biggest. we need to work with those who have existing accounts with us and the other mandate being the minority communities in which they're on gated to serve and serve better than they have historically. >> in terms of the bottom line, is this going to hurt or help them long time >> if you look at their major competitors among the mega banks, this is not a priority for them they serve their customers as a part of the full spectrum of other parts they have, and in that context it can be profitable you know, if you're in a

business where you're making money in the good times and you gish it all up in the bad times or it brings too much heat from the occ or the fed, you recall last month they had a $1.7 billion fine, it's not a great busy to be in in the long term if you look at their competitors, they enjoy higher valuations and share prices. as a result, i think you'll see charlie who spent 25 years under the tutelage of jamie dimon making wells fargo looking a lot more like jpmorgan chase and bank of america. >> where do you see the residential mortgage market going because over the last couple of years as you've described, i would say jpmorgan is still in the mortgage business, but i don't think they try to be nearly as competitive as some of the others. if wells gets out, they've been

competitive. does it move to smaller firms? is that what happens >> it already has. it's moved to the nonbanks or you could refer to them as the shadow banking industry. names like loan depot or guaranteed rate. for the most part chase is at a number five ranks. this sort of completes the move of banks leaving the mortgage market and creedineding shares others a lot of banks are at the end of their business line and they'll collapse they've essentially ceded the market to the nonessential players, an added risk to consumers essentially.

>> hugh son, thanks for the story. we'll be watching for details on the quarterly results on friday. we'll get those numbers at 7:00 a.m. when we come back, more companies announcing layoffs as cost-cutting measures expand we'll dig into that story next

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that started in 2022 is continuing into this year.

coinbase, amazon, and salesforce adding their names to the list of tech companies laying off workers. on wall street goldman sachs has reportedly started cutting 3,200 jobs mcdonald's is likely laying off as well. and stitch fix has announced plans to shrink its work force joining us is jason grier. he's the founder and president of grier consulting. jason, what started as a silicon valley trend is spreading across the country. what are you seeing right now? >> i'm seeing layoffs and the impact it's having on white collar workers you see the fact that job ads are way down for white collar workers, but on the other side you see them basically hoarding blue collar workers because they're wondering if there's going to be a surge and how they'll be prepared for it it's an overall recalculation. they hired a bunch of people during covid, now they're laying

them off, and they're going to see what happens with the recession. >> is this a situation where it's terrible news if you're the one who gets laid off. does this mean the fed is going to be getting toward its goal of tamping down inflation >> yeah, i think so. i think the fed is trying to meet its goal. it also means from the perspective of employees are being laid off or they're scared about being laid off is the fact that it's coming as tech sector goes, so goes the rest of the markets. when tech starts laying off, you're going to see a ripple effect in other industries. >> the difference between the white collar and blue collar workers is pretty interesting. do you think that trend will continue, that this is a situation where white collar workers were hired in bigger numbers, they were looking for more growth, but when growth goes away, that's when those jobs go away too >> definitely. white collar workers were hired in bulk, but at the same time,

you're talking about salaries, bonuses, benefits, that type of thing. covid taught employers a lot just as it taught employees a lot. it taught employers in terms of what they can get from the employees. from the basic standpoint of a ceo or executive, they'll literally say, if i have white collar employees and i get x amount of money, but if i can get the same out of three as opposed to five, let's reallocate that, get more resources for our department, whatever the case might be for the first time in a long time they find that they're actually targets of a layoff, and it looks like it's not going to stop. >>blue collar workers, do they still have a little bit of oomph when it comes to benefits? can they get higher wages or better benefits? >> absolutely.

they can get a little bit of a bump listen, we're not talking a $30,000, $50,000 bump. we're talking incremental changes and money from a standpoint that employers understand if there's a boon in the economy, we need those employees in order to be -- in order to be able to fulfill the orders i think on the other side of the fact is there's not as many people returning to the labor market as we saw precovid. in that case, we need the blue collar employees so they can continue to drive our industry. >> jason, what does this mean, this broader trend of working from home? if that's where the layoffs are focused, just this week you had bob iger of disney saying he wants his employees in the office at least four days a week and some employees said, well, you know, that's pretty strict if this is a situation of that's where the job cuts are going to be, is this a situation where five day as week is going to be the norm >> absolutely. listen, here's what i tell people whether you're remote or hybrid,

the fact of the matter is the market is moving back to how it was precovid we have bob iger who comes on and says we want to move four days a week. part of the reason he's doing that, there's a psychological play he understands four days sounds a heck of a lot better than five days four days is let's put our foot in the water, feel how the water goes, let's get people used to coming back, working through traffic, getting their starbucks, and a year from now, six months from now, they'll go back to five. >> and right up to six. >> exactly. >> doggonnit. >> jason, thank you. >> thank you so much it's a pleasure. >> and if you don't show up on saturday, don't even think about coming in here on sunday because you're not welcome. when we come back, after a positive reaction, the coverage of the speaker election c-span wants expanded access to the house of representatives i bet they do.

we've got the details next. later, don't miss our interview with mario gabelli the futures right now, the dow's up by 81 points. "squawk box" will be right back. why are 93% of sleep number sleepers satisfied with their bed? maybe it's because you can gently raise your partner's head to help relieve snoring.

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. c-span has asked to have complete coverage of the house c-span had access to the ch chamber. it was limited to the speaker vote they've asked to allow it to continue its use to film proceedings rather than rely on tightly restricted shots that were done by employees speaker mccarthy was noncommittal on this he said, we are exploring a number of options to open up the people's house to ensure a more

transparent and accessible congress for the american people it doesn't show action beyond that because this is all required by the rules. the reason it happened this time around is they can't change control of it until they pass a rules package. it didn't happen for a week. that's why we got to sigh all the fallout on the floor the expanded coverage included close-up shots of key members shouting their votes and chatting during long sessions and some heated exchanges too. it had lots of us watching c and c-span likes that. that is good though. transparency of the house for the people. >> i love it. >> i love it as a tv watcher, and i love it from a transparency perspective as a journalist i wonder whether it's just, though -- whether it's going to take this -- maybe it's an edifice of what we think is

going on in congress or we think of these people that we -- i don't want to say put on pedestals, but whether this turns all of this just into another version of what you see in parliament or twitter, right? it does sort of take the veneer off a lot of it. >> put them on a pedestal? that's why they have that 8% approval >> i don't know if it's good people always say about babe ruth that, you know, if there were cameras around babe ruth back then or mickey mantle, we wouldn't think of them the same. >> there's a saying. there's no stopping it, number one. wouldn't you rather watch it without someone on this network versus -- i was watching this, and it was like, oh, my god, this is a pleasure i started do thank with some sporting events because i can't take the non-stop vibe shut up. >> who's controlling the

cameras? >> the house government. >> where are they going to get these cameramen and women? >> they're taking that away. >> who are those do they hire freelance camera people, and, by the way, where does that budget come from >> that would be a great experiment cnn has one camera you watch their feed and fox news i bet they'd be 180 degrees. >> they'd be acting for the cameras. >> i didn't mean that. i meant cnn. i definitely didn't mean -- >> far be it, we're going to go straight to break. we're going to talk to the reporter who conducted an interview with sam bankman-fried ntom his house arrest inside his pares' home. it's a fascinating article and a fascinating discussion coming up right after this >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure

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welcome back to "squawk box. sam bankman-fried speaking out this time while on house arrest. the ousted ceo awaiting trial, of course, speaking with a reporter in a 2 1/2-hour interview from his parents' house in california. joining us is the author of the piece. it's a fascinating story of your journey inside his home and just spending time with him tell us what it was like what was your big impression >> it was surreal, andrew. it's not every day that you get to be up close with, you know, the alleged fraudster of one of the greatest criminal conspiracies ever. ultimately, this is a human being. i'm trying to capture a person at obviously the most high-stakes moment of their

life we often deal with people during the most intense experiences of human kind and, you know, that's a treat. it's like we're talking about when you watch c-span. you're seeing people at their most raw emotional unguarded moments. ultimately it was just a guy talking to a guy in a house to some extent. obviously, obviously, you know, you don't see this every day you didn't see elizabeth holmes or bernie madoff or frankly people who have much lower-grade controversies talk for hours about their experience it was unusual. >> what do you think explains that obviously sam has been more willing to speak i don't know if you think it's strategic. i don't know if you think it's something. what do you crack it up to be? >> i think everybody wants to talk fundamentally, right, and we as reporters get to be a fly on the wall and sometimes the incentive is where they want to talk and there's a therapy element to it. but, look, ultimately he

believes the crisis playbook that we've seen over the last century is too conservative. people are too focused on winning a legal fight, a year or a decade down the line and are willing to sacrifice losing the public relations war in the intervening months and years so that's -- that is the strategy, if there is one, andrew, is this belief that, hey, you know, maybe the lawyers are wrong. >> what was your biggest lesson in this? was there something that -- i read the piece -- i literally probably read three or four times and there were lots of wonderful little nuggets in there. is there one that you would point to >> you know, i was humored by the arrival of a 75-pound german shepherd, a guard dog that was shown up basically sam seemed totally unaware of how the dog had gotten there his parents dropped it off for security sam said someone tried to break

into their house and make a citizen's arrest of sam bankman-fried, not observing the fact that sam has been arrested plenty over the last couple of weeks. ultimately there's a paranoia. i don't necessarily think is unfounded, but, you know, sam and his family are very concerned about security at this point, just given his profile. >> i want to get back to the german shepherd. long hair? short hair a lot of black and brown coloring did you -- you didn't see it -- what's the name? >> oh, oh. i saw it didn't bring out the ruler to measure the hair length. the dog's name is sandore. it's derived from defender of men. >> that's a great -- i like that. >> one of the biggest questions people have is, does he have any money? do you believe he has any money left do you believe his parents have

money left, both to support his own legal defense and potentially to pay back creditors and others if, in fact -- whether he's found guilty or not, frankly >> right, look, obviously sam is not going to have as much money to defend himself as he would have had no one six months ago sam has said that he does not have some secret stash of cash available. obviously, the doj is trying to repossess his stake in robinhood and suggests there's not some secret war chest buried in the backyard i don't believe he has any money leftover his parents own a $4 million house. all he has left is the house and the family that's it. >> teddy, it's a great piece i read your newsletter regularly. we appreciate you waking up early on the west coast and

telling us about this story this morning. >> thank you. >> love that name. love it, love it coming up, you're looking live at the airport in atlanta we're going to bring you an tadate on the faa computer ouge phil lebeau has the latest right after the break. you know, it seems like hope and trust are in short supply. [clap] now, as businesses we can blame and shame. or... [whistles] we can make a change. [clap] we can make work, work for our communities. create more equal opportunities. [clap] it's time for business to show its true worth. because it's not goodbye, world. it's hello, team earth. [clap] why are 93% of sleep number sleepers satisfied with their bed? maybe it's because you can adjust your comfort and firmness on either side. it's hello, team earth. your sleep number setting. to help relieve pressure points and keep you both comfortable all night.

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futures rise after the nasdaq's third straight winning day investors turning their attention to tomorrow's inflation data we will preview that number and get some stock ideas from a legendary investor president biden back from his trip to mexico where trade and immigration issues take center stage we'll hear from carlos gutierrez about that trip and what it means for business. ftx back in court today. how and when will ftx be allowed to sell asset and is businesses? we will discuss. the second hour of "squawk box" begins right now ♪ good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and joe kernen.

2 1/2 hours before we open up. things would open higher dow up about 59 points let's call it nasdaq up about 15, 16 points and the s&p 500 up 18 points. phil lebeau joins us with the latest on the faa outage. >> we have most flights, almost all flights nationwide that have been halted by the airlines while the faa updates its computer system, what's known as the notice to air message which has all the critical information that a flight needs when it's taking off if that system is not working, rarely will you see the airline take off without that system working. we have an updated statement from the faa saying it's still working to fully restore notice to air mission system following an outage. while some systems are beginning to come back online, national

air space system operations remain limited so that's encouraging, compared to what we heard from the faa just about 45 minutes ago. we are hearing from some of the airlines as well united airlines putting out a statement saying the faa system that sends out important real-time flight hazards and restrictions to all commercial airline pilots, notice to air missions, notam is suffering a nationwide outage. united has delayed all domestic flights and will issue an update when we learn more from the faa. the question you guys raised 45 minutes ago is what happens with those flights that are en route, that are in the air right now? those flights continue it's not like the pilots in those flights don't have information real-time, so they understand where their plane is, where it's headed, et cetera communications still exist between aircraft and air traffic control centers, aircraft and

the individual airlines, air traffic control. so those will continue, guys the question becomes now, how long does it take for this to be rebooted and how long does -- do we see the ripple effects of this when this happened, i want to say three or four years ago, we got some indication that, you know, it was half a day, there was some type of a delay built into the system. so that's what we're waiting to find out, guys, how long it takes for them to reboot this computer system. >> phil, i was just reading the faa on their website is talking about how they've been modernizing the system to try and improve the delivery -- >> ha! >> maybe they've been modernizing since the last time it went out three or four years ago. >> they have been modernizing, that is true but you talk to anybody within commercial aviation, anybody within the airline industry, anybody who has or did work for the faa.

it's long been a joke that the systems that the faa uses have not been as robust as they would like does it mean that the system is terrible no it is one of the -- it is the safest in the world. could it be better yes, they would like to and that's part of the modernization process. this is one of those things that gets caught up often in the funding that happens in washington, d.c. it quits kicked around a lot, and the faa has been -- they've been pounding the table for years that they need to continue to upgrade their system. they're doing that that's not to say that the system is not functioning, that it's not a system that is safe and reliable what the faa and what people in the airline industry will tell you is, it can be even more robust and that's part of the process of modernizing the system, if you will >> phil, thank you next time, you can tell us what this means if you have all

takeoffs across the county down -- >> it's a ripple effect, becky at least several hours you're going to see delays for several hours. >> oh, boy. >> seems like your connecting flight would be delayed too. probably not, though nothing works like that. let's get to dom chu with a look at this morning's premarket movers. >> all the airlines are on the move right now we'll check shares of tesla which are up fractionally on just about a half a million shares of trading volume the tesla bulls will take that as a near-term victory but today's positive catalyst comes from news that they're looking to put a massive expansion in place for its texas giga factory they could spend $700 million to build out additional space that will help establish five

facilities at that austin, texas, site. analysts at goldman sachs have named tesla one of their top picks in autos for 2023. they cited among other thing's the company's leadership position in ev and its technology, cost management. those shares up 2% in the premarket trade. of course, again, it's been a rough year for tesla, losing two-thirds of its value. shares of salesforce down over 2% right now, just around 30,000 shares of premarket volume the enterprise software is getting downgraded by analysts at bernstein to an underperform rating the target price goes down to 119. it was 134 they cited amongst other thing, it's lofty valuation against a backdrop of a multiyear deceleration of growth that was masked during acquisitions and we're going to end with a move higher in warner brothers

discovery which is up 1.5%, just around 100,000 shares of volume. helped along this morning by analysts who have upgraded that stock to a buy rating and they put a $16.50 price target on it. by the way, wbd stock is riding an eight-day winning streak. from the lows, becky, this move higher, it doesn't seem like a lot, but it's up 43% a big move higher in wbd i'll send things back over to you. >> thank you. investors are hoping to see a rapid retreat when it comes to inflation. steve liesman joins us now with the likelihood of a negative print. >> it's out there, becky new data suggesting tomorrow's inflation report from the government could be soft, even

negative and it joins other private sector data in suggesting inflation has certainly eased. the price stats inflation index fell 0.3% for one of its largest monthly drops since the pandemic other sectors like food bounced back during the month. that's the year over year rate it runs below the cpi because of how it's calculated. generally it tracks a direction. there's no guarantee here the cpi is going to follow it tomorrow as you can see there, there's hope that it might even be negative the only inflation indicator trending down. ism services is down 17 points from its peak, the price index in there, the ism manufacturing price index, down 52% and we

talked about it yesterday, the nfib price index down 30 points. it may explain why the market isn't following the fed in pushing rates higher because the data has suggested falling inflation. fed chair jay powell's idea in his speech a few weeks ago where he pointed to in inflation in the core service sector as a reason to keep rates high, he said it's falling apart. he sent me this data yesterday, it's fallen every month since peaking in june at 12% and now stands at just 3.17% the market looks to be pushing rates lower because it has to be that the fed has done enough and it's easing. fed officials acknowledge the process but they're sticking with their higher for longer outlook for rates. >> i think joe has a question. >> i asked someone earlier, steve, it occurred to me from reading some notes that if china

completely reopens and europe -- there's some stories today about how well stocks have done there because maybe the recession there that everybody just assumed maybe it doesn't even happen, energy prices not as bad in europe, what if commodity inflation come back from china reopening at the same time that maybe labor inflation cools a little is commodity inflation still something that the fed would say -- wouldn't that be okay if we did have growth, but maybe the labor aspects started cooling a little it seemed like they could back off from that. it would be the best of both worlds >> yeah, it is, joe. let me just tell you, that you're preempting a story that we're working on right now i got a call later this morning with -- remember carl weinburg, we're going -- i'm going to try to puzzle through with him whether this china reopening is

inflationary or disinflationary. their whole supply to the global supply chain could come back on line in full force and i don't know what the net is on that >> i think it's a positive there's no doubt it's a positive -- >> it could be >> even if we see a little firmness in some -- commodity prices you don't think of commodity prices being firm. it's for a good reason there's growth it's not like a -- something that just feeds on itself and spirals -- >> i like the way you're thinking, joe. i'm thinking along the same lines. i want to report that story and try to get a feel for what the net on the inflation story is on china. i think it's a good question >> china >> okay. when we come back, president biden back in washington after attending the north american leaders summit in mexico city. we're going to hear from carlos whtierrez next about the trip and at investors should take away from the meeting. "squawk box" returns after this.

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welcome back to "squawk box. president biden back in washington after attending the north american leaders summit in mexico city. at that meeting, president biden's focus was on migration, trade and illegal drugs. kayla? >> good morning, andrew. the three north american leaders

meeting together for the first time within 14 months with an ambitious agenda as the continent tries to combat the swell in migration and shift supply chains away from the east a sharp turn from just one year a ago when the focus was on ending the pandemic. but for president biden, the big question even on foreign soil is the problem plaguing him back home the discovery by his lawyers of classified documents and his former private office. the president said he takes such information seriously. >> i was briefed about this discovery and was surprised to learn that there were any government records that were taken to that office i don't know what's in the documents. my lawyers suggested that i do not ask what documents they were i turned over the boxes, they turned over the boxes to the archives >> he says there are fully cooperating with that investigation. he's defending his immigration policy and pointing to

cooperation from mexico in enforcing the rejection of certain asylum seekers as they establish new legal pathways to the u.s. they've agreed to pubestablish website and a processing center. the country's pledged in the coming weeks a private sector forum on chips would take place as well as a visit by president biden to canada. joining us right now to talk more about the summit and the issues that matter most to investors is carlos gutierrez. the former ceo of kelloggs and executive chairman of impath what are the important issues that might get resolved out of this a lot of times things get bogged down afterwards. >> in the short term, the

achievement is relationships president biden, they have a better relationship now than they did before. but in terms of concrete outcomes, i don't expect any i would hope with that migration discussion that that will start a process that may become very effective in five, seven or ten years. but in the meimmediate term, there's not much to say that we encourage migrants to take legal pathways, what are those legal pathways? it is very premature and i think we have to recognize that we're dealing with a very different kind of mexican president. he's taking us back to sort of left-wing populism and the one thing that he cannot do is show or give the impression that he's kowtowing to the u.s that he's somehow being pushed around by the u.s.

so -- it's very delicate and i think it also goes back to central america, it goes back to the caribbean. so this is bigger than the mexican border and we have to get more countries involved >> more countries, what -- you mean -- >> central america, cuba, this is where the migrants are coming from but there was very little agreed to this idea of recruiting centers in mexico and other countries where a private sector can go, a recruiting agency and say, i need these skills, please provide me these people. that's an idea that's been around for quite awhile and i think it has potential but, you know, they talked about a website, that's great. that's a great start but what else? there needs to be a infrastructure, an architecture to be able to pull this off and that's not going to happen overnight. but i think that is a potential solution which requires

cooperation, collaboration, things that haven't been envogue in the last several years. >> i think if you look back to the original kind of goals of nafta, when you start thinking through auto production, for example, i mean, there's some big questions about auto rules of origin. so it feels like in a lot of ways we're dealing with issues that are more than 20 years old. >> we knew from the time the usmca was signed, everyone knew that autos were going to be a problem. the way the rules of origin are written, to be to manage and monitor that is close to impossible and that's what we're seeing now controlling this 40% of local content is just different to monitor, to supervise and canada has a problem with that, mexico has a problem with that.

each country has a problem with something that other country is doing. that's why a lot of times these things become a circular argument very little came out of drug smuggling in the release and this is also a circular argument you want me to stop the cartels, why don't you stop consumption and stop sending us weapons. and it goes around and around. >> the other issue when it comes to lumber is a huge issue. these issues that have kind of quieted for awhile during covid, but these are issues that years and years going back and forth. >> soft wood lumber has been an issue for 25 years and it comes up in every meeting and we're going to take a look at it. we'll put together a group i think the big picture in north america, especially mexico, is that it is a great place to invest and i know you don't hear that often. but it is a country that has

been growing, the middle class that be growing. look at the economy. mexico was a place where every -- at the end of every six-year presidential term, there would be an economic implosion. major devaluation, major inflation. huge losses when you take into account hyperinflation ty accounting that hasn't happened in 25 years. there's been a change. and companies who have been there for awhile do not want to go because it's a very profitable growing market. that's the big picture it's not going to happen the way we would like. but there's a -- there's life after. and it's a matter of managing the current situation. but all of the issues that we see are grounded in a basic mexican political principle. we cannot see sovereignty to the

u.s. any mexican politician who looks to be doing that will commit suicide instantly. he believes it he's a nationalist, he's a populist and he's not been friendly to business in general terms. >> secretary, thank you as always >> thank you coming up, new hampshire governor chris sununu talks washington, money, taxes, inflation and much more. as we head to break, we're continuing to follow the faa computer outage that has disrupted air traffic nationwide the faa has ordered all airlines to pause domestic departures until 9:00 a.m. eastern. we'll get you more updates as we get them "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. the first module of the

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>> announcer: now the answer to today's aflac trivia question. the first module of the international space station was launched in which year the answer, 1998 it's that time of year and we are starting the selection process for our annual cnbc

disrupter 50 list. we have a look at what to expect now that we are in the -- i can't believe this it's the 11th year of this list. what's the plan? >> well, for our viewers to remind them, the cnbc disrupt 5 tracks the 50 companies that are challenging the status quo andrew, with an economic downturn, start-ups face growing challenges, particularly around fund-raising venture funding for the third quarter of 2022 declined by 50%. the quarter continuing a decline throughout the year. that puts pressure on start-ups that haven't recently raised funding and aren't yet profitable but investors should pay special attention to the companies that emerged from this downturn some companies that are born in the leanest of times have become

game-changing tech behemoths tech unicorns are worth $150 billion today that includes 24 disrupter 50 companies from over the past decade including airbnb, block, pinterest, slack and whatsapp. not all companies started in the dow downturn succeeded, but it can force all kinds of scrappy innovations. we have our annual disrupter 50 list to learn more, scan the qr code that you see right now on your screen or go to cnbc.com/disrupters. andrew >> you think it's going to be a different type of group this year do you think now that we're in this sort of new world that it's shifting >> you know, it's interesting

because we do anticipate a shift into certain types of industries, certain parts of the tech sector that tend to be more resilient and especially in this economic downturn could be particularly resilient i want to point out three particular areas that we expect to see more companies in, and that is because there has been sustained venture capital funding into these parts of the tech sector despite that overall decline. and that cybersecurity health tech and energy tech those are three areas where investment is still robust and where we're still seeing so much demand in terms of those enterprise consumers and also individual consumers so i think those are three areas to watch we have seen money shift into these areas over the past several years. but that might -- my guess is we'll see more companies in those areas. >> okay. appreciate it. thank you. still to come, new hampshire governor chris sununu -- >> in the house.

right behind you. >> he might throw his hat in the ring right here to talk about everything from taxes to tiktok and why he thinks the state could be a blueprint for economic success probably not we'll ask him. don't miss our interview also with mario gabelli on where he's looking for opportunity both at home and overseas. stay tuned you're watching "squawk box. this is cnbc

an update right now on the computer outage at the faa folks, this is disrupting flights nationwide if you are flying today, you need to check in with your airline. just moments ago, the faa said that it has ordered all airlines to pause domestic departures until 9:00 a.m. eastern time that's to allow the agency to evaluate the integrity of flight and safety information this is hours after a notice to air mission system went down this is an important system to the airlines they've described it as a computer being rebooted and they have to see how quickly they can reset all of that.

there are 21,464 flights scheduled to depart airports in the united states today. that accounts for about 2.9 million seats. these are major disruptions that are going to be affecting lots of people. this is the faa ordering no domestic departures at this point. they said it was up to the airlines to see if they felt safe flying without this system. most airlines have said they do not even before this order came down united said they wouldn't be flying with it southwest is dealing with this we've been hearing also others saying those things too. if you take a look at the shares, this is a headache, but this is not their own making there are not big moves to the downside for any of these stocks. we're going to talk a little new hampshire and maybe the rest of the country as well now for a look at the state of the economy, the battle against inflation at the state level and much more, i want to welcome governor chris sununu. he's recently inaugurated for a

fourth term as governor. you teased -- are you going to ask him the big question -- >> there were some moves that seemed to indicate you had an interest in running for office >> people are talking about it we're having conversations -- >> we? who is we? we >> me and my people. america wants somebody who can get something done, a good bipartisan ticket, sununu/sorkin 2024 are you a biology guy? molecular biology -- >> if i told you you was going to do it, what did i tell you? >> you want money. >> no, no, no, that goes without saying my son isn't old enough to get into those lucrative businesses. i want to be vice president. tell me to do the border

you don't have to do anything if you're vice president. >> vice president pence did a lot of work. >> he did. >> he pulled a lot of successes over the line. >> let's talk economy. state of new hampshire if you could, broaden it out i'm curious what you think you would do in the laerjer country about what's going on in our economy right now? >> i'm a fiscal hawk whether you talk about inflation, good government, the responsibility of spending other people's money, folks in washington don't seem to have a good grasp of that you have to start controlling spending what we saw with the latest $1.7 billion bill, it's political graft to get a base bill passed and you got to stop all that, the inflation causation act, whatever label you want to hit, there's so much

money out there. you see the tightening happen, but get stuff done and leadership can do that even out of the white house they can drive success in congress. >> get them. so you want to cut spending, but no republicans want to raise any -- i'm devil's advocate here >> thank you. >> you're going to close some of the loopholes, hire agents -- the irs has been underfunded for years, all these millionaires are not paying their taxes, why not -- why are the republicans dead set against having -- >> you don't need more irs agents -- >> trust but verify. >> simplify the tax code. >> that's not going to happen. >> you have lots of people who have gotten caught up with trouble who are average americans who can't get someone at the irs to call them back certain things the government needs to do. >> let's look at the infrastructure act that came up, the -- that went out

if you're going to put money in, put it in systems, invest in long-term systems in a modern technology and business economy that doesn't require all the workers. >> would you prepared to invest in the irs, the systems behind the irs? >> first, you start by massively simplifying the tax code everybody wants that every american wants and businesses want that a if you simplify that tax code, you don't need -- you do the -- >> i can imagine your taxes, joe -- >> it seems great. we've never been able to get to that point the reason we can't, there are so many special interests, you have real estate, charitable donations, do you say no to all those things and if we wait to invest in the systems -- >> you sound like all the senators when they were trying to convince to run for the u.s. senate it was excuse after excuse are there special interests? yes. does that mean you can't get

something done no >> if you could cut out every special interest, i would be in -- >> it's called negotiation. >> what are you giving >> what do they want you can give a little to get a lot. it's just like i deal with at the state level as governor. i have special interest rate who wants this, but i still got school choice done, we're still the most -- >> do you like the chips act >> i don't mind the chips spending i think it had a lot of other stuff in it. it would have voted for the chips act. >> 1031 exchanges, you get rid of that? state tax? >> i don't need a state tax. i'm living proof of it. >> you can't even get democrats -- >> i have no sales tax, no income tax i have no estate tax, no death tax. we are -- we have the most efficient government in th

country. i'm going to tell you, we have a great model for how to do it you bring a lot of the decision-making local. we're too used to the federal government making all the decisions here let states and localities decide. >> you don't think new hampshire is a unique state in insofar as its size, per capita, just the -- if i told you to do what you're doing in new hampshire to this city, it would be much harder you don't think? >> of course it would be harder, but it's possible. i'm asking folks to take a bigger -- to create more efficient systems and get out of their traditional thinking if we keep thinking the same way, we're going to keep having the same discussion of national special interest rates. >> minimum wage? >> i got the lowest minimum wage in the country yet i'm ranked as some of the highest percentage per capita my poverty rate is 20% lower than the next closest state because we get government out of the way.

we let a free market ensue and wages, et cetera. >> i appreciate that but your minimum wage remains, if i see it right, tied to the federal rate, which is still at $7.25. you're saying that's good? >> yes look, what's -- what's the issue of minimum wage? you're dealing with poverty. but i have the lowest poverty rate in the country by far if you raise minimum wage, you're going to help -- bring people out of poverty is a fallacy and i'm living proof. >> you think, for example, more broadly around the rest of the country, you would not raise the minimum wage >> no, you would let states decide states can figure that out if you let a free market reign, nobody in new hampshire makes minimum wage because businesses want to be there, everyone is fighting for the workers, wages naturally go up and sustainable. we're the only state in new england that is actually growing in population. we have the strongest economy, the model is there. >> wage price controls are the worst idea, that's a wage

control. >> i don't disagree with you >> we can't seem to understand it because it makes you feel virtuous -- >> it's very political it really is i'm not saying it's an overnight fix for a lot of the other states and localities, but there is a model for the rest of the countries to start looking at and the key is, you get a lot of the decision-making out of the federal government return it back to states or cities or towns or school boards my job as governor is to know the limits of my power and that means allowing localities and schools and parents to make most of the decisions at their level. >> how old are you >> 48. thank you for reminding me >> no. what was that about? we got to pass the baton no more boomer presidents. we got to pass the baton. >> i'm not going to say no to that, but i think as a republican, my party is missing a huge opportunity to speak to the next generation. and i spent a lot of time doing that across the country. we tend to talk in this echo

chamber politically, but we need to reach beyond that to influence others to join the team we got a great team on the republican side. i want to get out there and say, look at all the opportunities we're creating not because government says so it ain't about me, it ain't about us it's about you as an individual and young people want to be empowered by that. >> how do you like governor desantis >> ron is good he handled the hurricane incredibly well -- >> how about covid >> we were very similar in covid. look, we were -- we're ranked the most free state in covid, the most personal freedoms and also one of the safest states, he's number two. we were number one it's not about ignoring the pandemic, we didn't do that -- >> it relates to all of this and business which is that one of the things we've seen over the last year -- let me go backwards. for many years, a lot of blue states used their treasuries

politically to influence business, right? and red states said, that's terrible we can't do that we would never do that because we're supporters of the free market in the last year, yo you've seen is a bit of a shift on that, a reversal arguing against an anti-woke approach to what some people have seen as going too far -- do you agree -- >> no, you've hit it right on the head i do not believe in big government authoritarianism. i'm the government i'm not going to tell a private business how to run themselves or what they want out of their employees. i might agree with what a school does, but in new hampshire, at least, the parents already have all the say in -- we talk about parents matter it's animportant thing that governor youngkin brought forth. parents, localities, they always have had thefirst decision in terms of the quality of education, what's happening in schools. it's not about what i want it's about the freedoms i'm

giving and that's what i think where we miss it sometimes as republicans. what do you say? '24? are you in >> we might have to do this. >> it will be fun, i tell you that whatever happens, i always make sure it's fun. >> what do you think about this ticket you're worried >> you're going to have to battle it out for the vp. >> it's meaningless, really, you or me, right it does it matter >> it's been a lot of fun. >> appreciate it much better in studio. >> much better because i can respond to the witty banter the delay. >> we got to get up there and get some maple syrup -- >> tell me about the taxes. >> we have no sales tax, income tax, we have no inheritance tax, we have none of that we are ranked as the most efficient government in the country. you don't need a campaign manager. i handle it all. the latest on the faa

outage we're going to hear from mario gabelli. futures right now, up about 53 points nasd uaqp 12, 11, s&p indicated up seven we'll be right back. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones

story that we are covering this morning, if you are just waking up, you need to hear this the faa halting all domestic departures in the united states until 9:00 a.m this is happening because of an

outage of a computer system at the faa. the agency says some systems are functionings are beginning to come back online this has been going on since 5:00 a.m you're talking about close to three hours and continued shutdown expected at least for the next hour and 15 minutes now the white house press secretary says that president biden has been briefed on this situation. says there's no evidence of a cyberattack at this point, but the president has directed that the d.o.t. investigate we will have an update straight ahead. mario gabelli will be joining us to talk stocks and where 's ptiheutng his money to work this year we'll be right back.

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futures at this hour in the green. the this would be four straight days for the nasdaq and, you know, we don't want to jinx it, but better start to the year than we've seen certainly last year let's talk markets with billionaire investor mario gabelli. say what you will, mario, but a year like last year, it may not be a great -- the perfect entry point but the valueis certainl a lot more apparent in this january than it was last ja january. >> thanks. great to be with you, becky, everyone else on the show,

andrew, and talk about, you know, a year from now, joe, it's going to be 2024 and the opportunities a year later are going to be terrific short term, what i'm learning meeting with companies, reading the dynamics, one, goods are becoming more available. more importantly, the management has to learn how to deal with passthroughs, how do deal with inflation, how to deal with currency, how to deal with the balance sheet and interest rates. they're learning to ask questions about the demand for their products now from my point of view, revenue is going to be quite okay this year in nominal terms. the gross margins are going to be challenged short-term for the manufacturing sector sg&a kind of held in check, and then the question is taxes we talked about with sununu there's a 15% tax on book profits. that's kind of going to be worked out bottom line, i think things are

okay but there's going to be a lot of tension in the first half of the year in the markets then we look at some of the pluses the pluses are the following the consumer's wealth is pretty significant still and they have spending power at certain categories of the consumer the second part, joe, is the following. the way i read it is that china is going to, you know, overcome some of their challenges right now they have obviously covid, they have concern over common prosperity, children. we all worry about china one, been on the other side of the coin if i'm xi and i want to do peace, i'm going to give a big order to boeing and show the world that we want to become part of that ecosystem on the other side, the companies that i talk to are all taking and reassuring that that is over i think corporate cash flows are okay they'll be terrific in 2024 and the outlook is pretty bright the market short term has a lot

of, you know, geopolitical dynamics that i have to be concerned be about and, you know, something is going to go wrong in private credit, something is going to go wrong in shadow banking. those are minor speed bumps. >> i want to ask you about as a value investor if there's any more value than a year ago, yes, but don't do anything yet >> no, come on for our taxable clients we want to not only earn a return in nominal terms, we want to maximize the tax efficiency. you have to look at what will work -- where can i get a double and triple over the next couple years and have a tax benefit tax free accounts hitchhike on that thought processes good businesses run by good management at reasonable prices and the multiples have come down to where they're starting to look extraordinarily interesting. the companies are also doing more corporate love making, financial engineering. i've talked about this forever who's buying what? joe, commanders are up for sale.

the nationals. the denver broncos just went for a big price. the l.a. angels are now up so the braves have gone from a tracking stock to a c stock. the stock's 34 with 62 million shares 62 times 34 is $2 billion. real estate offsets and add some value aund and i think you're going to see somebody step up and buy it team it up step up to the plate on the atlanta braves then there are other things. like you've talked before about the infrastructure and bill. that's very important. it's like a giant shrimp that is going to provide a significant tailwind to companies. china coming in to buy specific commodities. they need water, certain things like food. copper evs are going to be part --

electric vehicles are going to be pasht ort of that i have companies like wheeler industries, they have $10 a share in cash. half a billion in cash >> what's that >> mli out of -- not memphis but close to memphis decent management. good business. minimum earnings power of $5 a share. they were going to report over $10 for the current year they basically -- you take the infrastructure bill. we have to take led, we have to take led out of what they call the service line, the main waterline. there's 5 to 10 million of those. which companies benefit? they make the components that go into that service line that's a significant opportunity down the road. they also understand how to deal with copper. copper prices dropped from 475 down to 350, back to 405 they understand how to hedge and pass through that. so those are kind of examples, joe, that i tie in with what --

you know, bridges. we have 500,000 bridges. we're putting money finally into the bridges, we're putting it into the roads that ecosystem then you can't ignore the fact there's a food challenge the farmer ecosystem, the farmer's got to generate, joe, this year about 535, 545 billion. so how do we do precision farming? how do we do remote access to the farmer to plan without being on the piece of equipment during that time sensitive periods? the one stock that i have always liked is deere 1.3 billion shares in stock, 16, they're going to earn close to $212 where do you make money on those stocks one area i've always liked is entertainment business and, you know, when i look at warner

brothers, that's dropped from 27 before they closed often a deal with at&t and zas llof has a lo of potholes. it will flatten out to $150 billion for the companies. might have to overcome some strikes in hollywood i'm balanced when the stock is down, i'm paying 30 billion, 50 billion in debt. $80 billion. so it's a leveraged company similar to a private equity in public form and i have a decent management running it, and i've got a lot of potholes. a lot of potholes that they'll overcome you know, i can do that. for example, we talked about mexico where's the reshoring going? it's going to mexico the wages are competitive. ricardo's discussion about comparative advantage unfolds. who do i buy in mexico from the

growth of the hispanic market? from the fact that in 2024 you're going to have an election in the united states and the hispanic market is going to be very important and an enormous amount of money is going to go into the political system. that's going to benefit certain other companies. i find a stock down from 15 to 5, with 565 million shares, good business good management and a very compelling valuation so -- but you're not going to make money short term. it's like owning wwe before mcmahon comes back you have to pin it down. >> that was interesting. if we totally try to get out of the time zone of the far east with all of the supply chain stuff, if you bring it all back here, the comparative advantage is gone but not if you go to mexico we could go to mexico and get the same advantage that you're talking about with ricardo and in the same time zone and the whole supply chain could move to the americas instead of what we've been used to

that's going to happen it's happening now. >> i agree, joe. you did mention you'd like to get the management of the government to be a little more business friendly. i think they'll do that maybe, but that's a risk, but you always have risks. the companies down there -- unfortunately -- this is back to mexico, an important part of their gdp right now, but over the next year or two that visibility of reshoring to mexico we've done it in the auto industry and we'll do it in other businesses makes sense. you have to worry about china one and you have to worry about the logistics. >> mario, we're going to have to run in a second. since you bring love to the table and oftentimes some mergers, when we talk about the media companies, all of which -- everybody wants or thinks there should be consolidation but people think at least with this administration it's not on the table and won't bei, what is yor

expectation for when consolidation would happen >> that's a great question as always, you're right on target right now they're going to appoint a fifth commissioner ideal world for me is to allow companies to not be limited to 39% tv coverage. second part, i believe that financial engineering will take place. if i were running these companies i would sell off my -- spin off myelin i can't remember television stations, whether it's comcast -- sorry about that one, but paramount -- columbia pictures, cbs, keep the networks but monetize the tv stations but there's got to be an opportunity for someone to buy it net neutrality is obviously a question mark. in addition to that, what is the fcc going to do in regards to people like netflix that absorb a lot of capacity and on the telephone -- are the providers of that like on a major highway, they're not getting paid for that extra usage, much like a class a truck going over the george washington bridge

they charge more because of the damages and it needs more repair work on the bridges. there's a lot going on on that part of the regulation there's the question of taxes. 15% tax that's in the work, andrew, on book profits. is the irs going to say you mark your market portfolio holdings come on. then you have lena conan on your show talking about various things that, you know, the robinson act is coming back. people are going to dust that off. a lot of things going on, which is great that's what we like. that is, you know, this uncertainty creates great opportunity and you've got to be very positive about those opportunities in a country like the united states. >> mario, thank you very much. great to see you today >> a privilege hope to see you in person. certainly no later than omaha anyway. >> certainly it's on our calendar. folks, it is just after 8 a.m. on the east coast you are watching "squawk box" on cnbc i'm becky quick with joe kernen

and andrew ross sorkin we want to get to breaking news. faa computer outage that has caused a pause of all flight departures it will last until 9 or 9:30 a.m. it is eastern time we have already seen this because of computer outage flight aware says the number of delays in the united states is 2500 that number jumped by 1,000 in the last 25 minutes. believe me, folks, that is under counting things and how big an impact that's going to have when you have a shutdown for 4 hours, potentially longer phil, do you want to get people up to speed who have not been hearing this >> reporter: becky, this started at 5 a.m. this morning there was a computer outage with the notice to air missions basically that is the system for all of the faa communicates with the aircraft and all airlines

for flights. you need that to take off. technically could it take off without it yes. but all airlines want the most up to date information in terms of how a flight might be impacted as a result, once that computer system went down the faa to hol off. the faa says it is still working to fully restore the notice to air missions system following an out table. the faa has ordered all airlines to pause all domestic departures until 9 a.m. eastern time to allow the agency to validate the integrity of flight and safety information. there is some information it may be held off until 9:30 the that doesn't mean at 9 a.m. all cases will take off. you have to repopulate the computer system. secretary pete buttigieg i s shalling -- issuing a tweet saying i have been in touch with

faa this morning about an outage affecting a large system for safety information to pilots we've heard back from a number of the airlines. about an hour and a half ago we heard from united that it is waiting to hear from the faa also american airlines out with a statement this morning saying we are closely monitoring the situation, which impacts all airlines, and working with the faa to minimize disruption to our operation and couples. we encourage customers to check with aa.com for the latest flight information if you take a look at the airline stocks, not a huge impact here. we have seen this before where there have been computer outages for one part of the faa which has caused essentially a nationwide ground stop for an hour, couple of hours. the ripple effect of this, guys, will be thatif you have a flight today, if you have a flight this morning, it's not going any time soon. the airlines will have to make

decisions on canceling flights this will be a ripple effect throughout the day i was flying the last time one of these happened three or four years ago. was supposed to leave at noon, didn't leave until 4:30. that's the way it works. it's not going to be a case where the system once it is back and operating is ready to immediately put all flights back up in the air. >> phil, "the wall street journal" was talking about how there were 21,460 flights that would have 2. million seats on them you're talking about millions of americans affected by this when it's a winter storm that affects one or two parts of the country, that can cause severe ripple impacts when it's hours of shutdown, you're going to be talking at least four hours of shutdowns for the entire country's domestic flights how do they catch up with that what are the ripple impacts that kind of really do build? >> well, they don't catch up right away, becky.

they don't catch up right away they don't operate the complete schedule that's just the nature because if you have an aircraft or a crew that are expected to be in a particular location, let's say, by 10 a.m. eastern time, well, they're not going to be there and obviously that plane is not going to be at its destination so this is what the airlines are doing right now, they are going with their network operators and they're saying, okay, how do we modify this schedule? you can't make any final decisions until the faa says, yes, we have rebooted the system, it is good to go now we think that may happen by 9 a.m. the faa has indicated some of the work has already taken place, but that doesn't mean the system is up and working at this point the faa is saying to airlines, we think 9 a.m. we'd like you to hold off on your flights and that's what we're going to be waiting on, becky. >> phil, can i ask one final question about who pays? who pays for all of the delays

historically, there are rules about paying folks if this goes all day, which i think it could, there are some people who may have to stay at a hotel tonight. do the airlines pay for that the faa doesn't pay for it how does this work >> i don't think the airlines will be responsible. you're responsible as an airline when you cause the problems. southwest after christmas, that's a case where they're paying for the delays and cancellations people have gone through, but in this case i do not believe that the airlines are held liable for the fact that they can't operate their flights. >> does american express pay anybody pay? i don't know this is what i'm saying. >> great question. do you have travel insurance >> does the insurance dmik does it not dmik >> does the insurance cover it >> it depends on the program. >> i would think a lot of insurance programs would not cover a force majeure situation. hand of god.

weather. we need to check in with you repeatedly throughout the road. >> yes. >> the flight aware delay number has now topped 3500. it went from 1500 to 2500 to 3500 that will not be the end of delays the next will be the cancellations. coming up after this, former sec chair jay clayton and kyle bass warning about investing in china. and we'll talk to house majority leader svete scalise in what's on the gop agenda and preview of bills to come. "squawk box" coming right back

welcome back, everybody, a house select committee is goings to investigate china it's on the u.s. and the chinese communist party. they're worried about risks of investing in chinese companies we want to welcome jay clayton who is a former chair of the sec. he's a board member of american express. also, kyle bass who is hayman

capital's senior investment officer. welcome to both of you. >> glad to be here >> let's talk about the risks to investors. jay, let's start with you with your former sec position when you are telling investors what they should be worried about with investing in china, what should they be worried about. >> bipartisan much investment, reporting, financial investments in china is different from the united states. this is something that is recognized at every level of government, that when you're dealing with a chinese company, you're dealing with a different governance and reporting structure. and, you know, we look at quotes, we look at indices, we look at all of these things and they look just like you would see from the nasdaq or from the s&p 500 but the underlying governance and reporting is different. the risks are much different and investors need to understand that. >> that's not new. that's something we've known for a long time and quite frankly

people have been willing to turn a blind eye because they were looking at great growth opportunities. >> okay. let's then go with what's happening in washington now. i think in washington we're looking beyond investing, and that committee, mike gallagher -- mike gallagher's not the kind of guy who's just going to have hearings and not try to do something. he's the kind of guy who's going to try to get things done. this goes to what is -- what is investing in terms of policy we -- and if you look at esg, let's just go there, we have decided that somehow through investing you can do what i would say is public policy there are limits so with investing can we change china? i don't think so the and, you know, that's -- that's another thing that i think americans need to understand, american investors you know, can we change energy policy around the globe with esg-type investing

no can we change china with investing? no we need to understand that china hasa different approach to the global economy than we do here in the u.s let me just go one step deeper you've had a lot of great guests on today talking about where we are today versus two years ago the theme, whether you're right or left, is the nimble nature of the u.s. private sector has pulled us through what is one of the roughest times, you know, in our lifetimes from an economic perspective. we shut everything down and why are we pretty okay like we're talking about a mild recession or no recession -- >> object to the idea over the last 30 years that all of the american businesses, whether they be starbucks or apple or goldman sacks or others who have gone to china hoping to actually create better relationships, that that was a complete -- not just failure but something that we should not continue, that we should just cut it off what are you saying? >> not at all a failure. did it make sense to raise the

middle class in china, the world's largest population and think that by raising economic opportunity you would bring democratization and a lot of things we hold dear? that was not a mistake, that was a good bet the question is, where are we today? i think, again, the formation of this select committee. washington is fractured right now. everybody agrees this is a good idea and we need to reassess our relationship with china going forward. >> you have been sounding this alarm for a long time, kyle. do you feel like people are starting to listen to you now, that the winds have changed? >> jay's points are great points one other thing i would say about -- on the investing side, when you own a chinese entity, you just own a fantasy football share. you don't have a claim to any of their assets you have no way to enforce a claim on their assets so as a pfiduciary with you better thin about investing in china

the what discount rate do you put on xi jinping, if things go south, you have o no claim to anything i think about the how know your customer rule, how our raus work in the united states, how we should be -- the sec is supposed to protect investors, and i believe they need to go a few steps further. so i think people are starting to listen. i was in washington yesterday, and when you're in d.c., this bipartisan support is actually there. when you look at some of the -- some of the forced labor bills that have gone through, had unanimous consent, i think you're starting to see the world wake up to this fact that we may be a bet on china. andrew was saying should we just decouple now at some point in time we're going to realize what their real intent is. they don't adhere or abide by our laws, they abide by their own. they are committing genocide in shin jiang and every business is

worried about all of the forced labor acts that are coming through. they're trying to work around them you mentioned goldman sachs, the businesses that have companies in china if you mention them, have them on tv and ask them how many assets they have in the program. it's russia today, if it's china tomorrow they just turn it off they have four people there and they say -- >> i think some do and some don't. it's much more complicated for -- starbucks can't decouple so quickly, apple can't -- >> apple is trying. >> for years. >> dell announced they're moving completely away from china. >> it's doable it's not turn it off tomorrow, it's turn it off in 36 months. >> what is something we've learned in the last 24 months? not just china but russia and europe, how deeply integrated the world economy has become and that is something -- that is something that we all have to recognize, this committee has to recognize. you're not going to have a

binary approach to an economic relationship with china. you know, each day you've got to make it better. >> i think it's -- so the chinese people are on their own. yeah, it was a good idea to try to bring them up, but now where are we now because of this oppressive regime, $1.5 billion people need to wait. they need to wait until something good happens in terms of who's running the country i mean, it would be good if we could continue -- starbucks continue, all of these things because it helps the people in chien nampt all of this is about 150 guys who happen to be in charge right now >> kyle and i may differ a little bit here. we are deeply integrated pulling back would be terrible for the chinese people it would be a blow to america, but looking forward i think we have to recognize that the idea that economic development is going to lead to democratization. >> keep hoping it hasn't happened yet, kyle. >> we made a bet in 2001 and since really 2014, 2015 and the

investment committee realizes and flying in and the incentives on wall street they make were it past our economy. how fast it could actually grow. they made a bad bet. and i believe they will invade taiwan

what happens to investors the day that china invades taiwan? what happens you know what happened in russia you wrote it down to zero. that was a rounding error. if it happens in china and they get militaristically belligerent with taiwan which most people believe will happen in the next few years, what do you do? what happens to your investment? corporations have to write them down and deal with it but we as investors will have to write down huge amounts of our capital and endowments and pensions will be a problem. >> should you take 10% off of apple stocks do you take 10% off starbucks stocks is there a negative premium, if you will, on these companies >> maybe it's even factored in already. >> is it >> some of those -- >> in apple it probably is. >> is it factored into the nba growth where they had so many more -- >> nba gets same, 11, 12% of their revenue from china. >> kyle makes a good point which

is russia invades ukraine and with financial sanctions pulling back, that piece of the playbook is much more painful here at home on the taiwan invasion. just look at the size of your average portfolio. it allocates it. >> is this something you want as part of your portfolio

>> having this conversation is pretty important i don't think people who are allocating capital to their 401ks think about this and say, okay, what if we had similar to what happened to russia and china, what would that mean for my portfolio >> think about the indexification of 401ks. the mscim has $2 trillion that benchmark against that index 43% is chinese companies we have $900 billion of american's money, i wouldn't say forcibly but maybe unknowingly investing in chinese enterprise. many of those are military fusion companies we're actually funding the build of china's military through the indexification of chinese companies. it's kind of crazy at some point in time it has to stop there has to be some sort of liability or culpability of the index providers like there be should have been --

>> globally shouldn't perceive because in the back of everybody's mind there is chinese -- >> we've got one country. >> their consumers are great for us our products are great for their consumers. just because some day they're going to take over the world we can't a take these, that's sad. >> it's sad tharp government has taken the past they have taken over the past ten years. >> look, joe, i think it's important to recognize where we are. if we had this conversation five years, people would say, no way, that's not how integrated we are and the cost of decoupling if we were forced to do so, you know, wouldn't being as great as now, we all recognize it. this is where we are >> we'll probably be fine. domestically we're great

>> someone who thinks globally would like to bring everyone's standard of living up around the world. we're ready to just grow the 1.whatever what's it up to? >> 1.3 billion. >> throw them under the bus. >> that's not what i'm saying. >> we are saying that. >> inflationary -- >> starbucks coffee. >> short-term inflationary cost, by the way short-term might be considered five years, not transitory but longer, to do what you're talking about for the rest of the world. >> let's talk about what we're talking about. we're talking about recognizing where we are if you are going to have a geopolitical confrontation, recognizing the economic consequences and how that's going to play out, that's an important thing to do. and i think that this committee should not only look at, you know, where are the tensions -- >> once you recognize you have to do something with the recognition otherwise it's just like, okay, it's nice for your edification you know but then what >> okay. recognize it and then we -- were

we to have a russia-like situation with china, how are we going to deal with that economically >> you're not doing it preemptively >> no, not preemptively. understand it. the more you understand be it and forecast it and know how to deal with it, the less tension there is that's the way it is in any type of ffrp situation. if your counterpart knows you know how to deal with something that looks extremely stressful, they're less likely to make an aggressive move. >> if we did decouple and they're starting to pull back and apple and others, it takes the risk -- it lessens the risk to the u.s. and so the leverage point that they have, actually, goes down, not up. >> that's exactly -- >> arguably -- arguably i could turn it around and say, you know what, the chinese government, if in fact the u.s. were to actually get, you know, chip making in the u.s. and actually figure it out, that they would have an easier opportunity to take taiwan, for example, without the risk that actually you would do something because maybe we would say to ourselves,

okay, we're actually, you know, safe over here you know, we don't want to put anybody out. go for it. >> i like the first argument >> i'm saying, i can play both sides of it. the. >> jay, kyle, i want to thank you both for coming in today. >> nice to be here. we've got a market flash for you. bloomberg now saying tesla is near a preliminary deal to build a facility in indonesia. that would have a capacity of 1 million cars a year. the stock right now up 2.5%. a little over 2% on that news. joe? >> coming up, the new house majority leader joins us louisiana congressman steve scalise. and we're continuing to watch airports around the country after the faa -- like a local news story the faa told airlines to pause all domestic departures. we do have a weather front coming in here in the local area as well. the faa now says they're

resunlresunl i -- resuming from atlanta and they expect others to resume at 9 a.m. we'll be right back. realtor.com (in a whisper) if we use kevin's college fund, we can afford this house. the house whisperer! this house says use realtor.com to find options within your budget. good luck young man. realtor.com to each their home.

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in settling on kevin mccarthy as speaker, they've voted to slash irs funding, at least voted on it. look into what they claim is abuse of power in the federal government and investigating u.s./china competition joining us now house majority leader steve scalise great to have you. you know that judd gregg, he said on the fourth vote, that was going to be steve scalise. kevin mccarthy preprevailed. were you waiting in the wings or -- >> no, i supported kevin obviously we had a few extra rounds 15 rounds but, hey, it worked out. and really the debate in those rounds was over how we change the way washington works because i think everybody knows washington's been broken for a long time. it really hasn't been responding to the problems that the country's facing so we had a lot of internal discussions about

changing the rules dramatically so that we don't end up with these omnibus bills, thousands of pages dropped before the -- by dark of night right before the vote, nobody's read it deals with how many subjects you find out later if you look at the problems families are facing whether it's inflation, energy costs, border cr crisis you talked about another crisis over at the department of transportation they don't see washington fighting for them, and we've got to change that we've started that process now, and i think you're going to like what you see coming out of this new house. >> i think that thepublic, congressman, might look at what goes on in washington on both sides of the aisle so we're going to vote on, you know, not funding the irs for the 87,000 new agents. i guess you want the country to know where the republican party stands versus the biden administration and democrats, but it's just an exercise in

sort of just waiving your hands, we don't like this it's not going anywhere. is that governing? is that what people expect >> well, first of all, i've not found one person in my district of about 750,000 people who have said that they want to add people to the irs let alone more than doubling the size of the agency so, you know, when you look at what the cbo report said it's to go after not just the millionaires and billionaires, but people making $200,000 a year single moms making just a little at a restaurant and they don't think she's paying her taxes and they've said that. people are fed up with the government going after them. look, we've got to get our committees set up. republicans and democrats haven't made the final selections for all committees. congress just got started last week when you see the committees up and running, you're going to see bills to get an energy policy that makes sense for this

country. there's absolutely no reason that we should be getting our energy from foreign countries, whether it's opec, russia, iran. we don't need to be reducing ourselves a lot cheaper, a lot more energy efficient. let's have a bill on the floor that makes our country energy dependent and let's address bills for inflation so when people go to the grocery store they're not paying so much and let's get bills out that actually secure america's border so we don't have more than 100,000 young people last year dying from fentanyl overdoses. that's what you're going to be seeing we have to get the committee started. that's what we have to get started. >> in the endless debate, the irs needs more money they've been under funded in recent years nobody gets audited anymore. maybe there's a lot of -- you know, you don't need to raise taxes. >> i haven't heard those complaints either, by the way. >> i'm getting somewhere how about the faa? does the faa have enough money

are you up to speed on what's happening around the country right now at all of our airports what can you tell us >> can we just go a week in america without a major debacle out of the secretary of transportation's purview you know, at some point, look, you're going to see a lot of oversight in this administration you saw supply chain breakdowns. you had the southwest debacle where supposedly secretary buttigieg had been briefed in advance of that and yet no warning to the american public now you see this problem at the faa. these agencies are flush with cash again, everybody wants to talk about, hey, just throw money at the problem. money has been thrown at the problem and the problem seems to get worse so i think it's important we start looking at the money, looking for waste, fraud and abuse. what are they doing with our taxpayer money clearly they're not spending that money to take care of families across america. so these agencies need to be held to a different level of scrutiny because we haven't seen any. all we see is problems and

problems and then they ask for more money when they are not doing their job. families say, what's failed? let's throw more money at it they say, maybe we ought to do things very differently. >> leader, how many do you count that -- what do we call them, the hardliners it started at 20, then it went to -- i don't know, then it went to 8, then it went to 2. i don't know how to count it i was watching i know you were there. >> 20 to 6. >> i know you were there living it how are you ever going to get -- can the republican party -- you're not going to get democrats, but can you even get your own caucus to agree on anything other than we need to -- idon't know, maybe we need to close down the government so we don't raise the debt ceiling that's a possibility, isn't it they don't necessarily want the government doing anything but they don't want there to be zero government >> no. look, you know, again, we had a

lot of conversations, one just last week. we've been having these for months, about how to change the way washington works once we came to an agreement, you saw an overwhelming vote to pass the rules package on monday night. that was the beginning of getting this started then we brought a fau other bills already. we're going to be bringing a bill again this week to p bring the strategic reserve. i think most americans would agree with that. i think we're going to get a strong vote there. we had an overwhelming vote by two to one margin, democrats voted with republicans to have a check. we're going to have a bipartisan committee that actually addresses the threat that's posed by china again, that was an overwhelming bipartisan vote yesterday. i know those kind don't get covered by the press because it's not the food fights you see, but frankly a lot of these fights need to happen because our country is on the wrong

track. to get it on the right track we've got to go do things differently. there are some people in washington that don't want to change and yet it has to happen. that's going to continue to be a friction, but frankly i think people are encouraged to see an actual debate on how to fix the problems of this country and then let's go start fighting for families so wages can start going up again, so we can see energy costs coming down there's no reason we can't get there. we have to do the work to fix these problems >> a lot happened last year in spite of republican efforts. it's like setting up a showdown in 2004. all of this is a preamble. the given what happened in the last -- in the mid-terms and -- that was not a red wave. was it a red trickle what did we decide to call that?

>> is there a look back on what went wrong and how to change things from 2024 where does former president trump fit in in your view, leader >> in every election you go back and you look and say, where did we do well where did we do wrong? where did we do better first and foremost our goal was to win majority and we did that. if anybody wants to call it a failure to say, you know, nancy pelosi was the speaker running the house, passing multi-trillion dollar bills for everything under the sun racking up debt and she got fired and kevin mccarthy is the peaker, that's a victory there were places we did better than expected. we flipped two seats in florida. there were places we didn't do as well. i thought in pennsylvania we could have done a lot better there were some seats looking like we could flip them, we didn't clearly we're looking to see how we can do better in places like that but, again, you know, you look towards what's going to happen

this year. number one, you're not going to see any multi-trillion dollar bills paying people not to vote. how many americans are working remotely businesses are saying come back to work. we're going to be ending the pandemic so we can get our country fully opened again and get people living their lives normally again that's i think a healthy debate to have and those are the kind of things that we're going to be tackling >> is santos going to serve out his term >> obviously he's addressed some of the concerns that we've had in new york they're having a lot of internal conversations, too, but at the end of the day he was seated nobody objected to him being seated and we've got to make sure we're all focused on fights for the families who elected us. you've got 434 currently members

of congress -- >> are you guys engaging with him? even if he stays -- >> seems like sitting -- >> seems like he's sort of off to the side. is that how this is going to proceed? >> obviously there's going to be some internal conversations, but at the end of the day he's there. he was sent there by his constituents the 434 members are set with very different viewpoints, different walks of life. at the end of the day we have to come together to tackle problems democrats don't want to join us to lower energy costs. we're going to bring those bills anyway and that means we need to get every republican on board. obviously we don't all think exactly alike, but i think we've all addressed these problems from a similar viewpoint and when we bring these bills to the floor, we're going to pass them. i hope a lot of democrats vote to secure america's border why wouldn't we do that? we're going to give them that opportunity. if they don't want to join us,

we'll still do it. we'll go to the senate and it's not going to go anywhere why not? the number of senators finally went to the border president biden finally went to the border it was a sanitized version last year alone more people came into our country illegally than reside in the entire state of new mexico if people don't think that's a problem, look at the 100,000 deaths from fentanyl everybody knows somebody who died from a fentanyl overdose last year. why doesn't the president care about that he can do something about it by securing the border but he won't. skong needs to let's step up and join together. republicans and democrats should say, well, it's a democrat president, we don't want to upset the apple cart if they're okay with those 100,000 young people dying last year, shame on them. we have to fix this. it's a major national crisis. >> leader scalise, appreciate having you on this morning we rb avidly watching on cspan

where we don't have to have anyone interpret anything for us. >> can their viewer ship was up last week. >> are you going to let them control the cameras still in. >> they had a lot of access last week and, you know, i'm glad people are tuning in so many people were tuning in to how government works they were listening to the debate that needed to happen. >> will the party that controls the house gets to control the cameras. >> are you going to let them continue >> they've been working the same way for decades. i think it's good the public can see what's happening. >> this was way more interesting. >> you're going to see more members of congress -- you're going to see more members of congress in the chamber not back at home voting remotely. >> okay. thank you so very, very much we'll see you soon >> okay. >> on the other side of this brake, an update on the faa computer outage that are halted

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the faa now says departures are resuming from the atlanta and newark airports and that it expects departures to resume at 9 a.m. eastern time. flight aware says more than 4,000 flights are delayed and nearly 700 have been canceled today. joining us is michael boyd, chairman of the boyd group michael, the biggest question is

why this would happen, to be able to shut down flights across the nation for the computer system why isn't there a backup what's happening i know the faa is updating the systems. where are we in the process? >> the faa is in the same situation that southwest is. they've fallen off the trolly in terms of keeping up their systems. there's no execute for this. we've got to get people in charge of the faa. not political appointees there is no excuse for the faa to go down it shows a systemic problem for the faa. now we're shifting from southwest to the people controlling all of our airplanes. >> that's a very good question we just heard from steve scalise, he said there's been money for the problems over the years. the problems never go away is that true or not? >> there absolutely is we've put political appointees in the faa

there's another one lined up he has no aviation background at all to be the faa administrator. that's got to stop we've got to find people who are qualified aviation-related people, not people who know people in washington this is what we're going to get continually. the faa has had an atc problem for years. they sat on it they got a break with the pandemic where it took a lot of airplanes in the sky now we're coming back. it's going to get worse than this. >> mike, thank you for your update and the thoughts on this. we appreciate it >> thank you right now we want to get down to the new york stock exchange and check in with jim cramer jim, we've been watching the futures. the dow is up by 110 points. feeling pretty good for the first couple of weeks of the year so far. >> yeah. i think we're seeing some sort of balance involving some of the megacap stocks, tech stops were really overly punished i'm seeing a lot of things like boeing upgrades. people are saying enough is

enough that's fine. seeing still an incredible number of anything crypto going down but in general the research is driving things, and the research is pretty positive, becky. there's just a sense that things got overdone with the down side. the whole year was overdone on the down side and now is your time to get your tim to get in. i think the positive tone makes sense given how this was one of the seven worst years we've ever had in the market. >> yeah. look, the research will be front and center until we actually have real data that kind of takes its place. >> exactly >> until we get cpi on thursday, earnings starting in earnest on friday is that going to be in lockstep with this or do you think that will give us a different picture? >> i'm concerned if the market runs into cpi because people think it's going to be weak. it better be very, very weak the banks seem very mixed. i know that there's notes today about wells fargo getting out of some of housing. i think that's related to wells fargo trying to get, let's say, on the good side of the

regulators jpmorgan's been going up consistently since the bottom of october. bank of america has really not kept up, and i think bank of america's going to have a very good quarter, and citi remains a wild card. >> jim, thank you so much for running through all of that so quickly. nus.ill see you in a few mite we'll be right back. we've got mar ccie frost. that's next. 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. only at vanguard, you're more than just an investor—you're an owner. we got this, babe. that means that your dreams are ours too. and our financial planning tools can help you reach them. that's the value of ownership.

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welcome back to "squawk,"

the faa just out with another update, now lifting the ground stop on domestic departures. that move was expecting at 9:00 a.m., so coming a bit early as lots of air traffic around the country in a bit of a mess this morning, but now looks to be resuming and hopefully getting back to some sense of normalcy meantime, our final guest this hour is marcie frost. she runs the nation's largest public pension fund. marcie, we want to start with this this is where i want to start the conversation, because cnbc obtained a letter that was sent last month to two officials at calpers and the sustainability nonprofit. the letter is from a member of the house judiciary committee and the reason i want to start with this is because of this it raises the possibility of antitrust violations stemming from the officials helping to coordinate corporate esg policies, and i wanted to go there because we've been talking about esg for a long time together, but this is a bit of a shot across the bow, and i'm curious what your response to that letter was. >> well, we certainly have

responded to the lawmakers who sent the letter to both calpers and series we also have started to produce some of the records that they have requested but fundamentally, we obviously agree with the premise that it's an antitrust violation i think calpers has been very consistent in its esg approach it's about providing data. it's being transparent about how companies are managing their risks, and as a long-term investor, we need to make sure the we're being rewarded for the risks that we're taking. so, it's a transparency and engagement initiative, and we've been very consistent about it. >> what do you make, though, of what has turned into a bit of a political food fight over the battle over investing, the battle over esg? it was for a very long time, and i don't know if you agree with this, blue states like california used funds like yours to influence policy to some degree for a very long time. red states didn't do this, because they said, we're free

marketers. now you see red states doing this to some degree as well. >> i think the way you're describing it, blue states, red states, certainly would define that issue more as politics at play, and again, i think calpers has been consistent that this is an investment issue. it's not a political issue and keeping politics out of this portfolio is extremely important to the two million members that we serve now, you have to remember this trust fund is paying benefits to police officers, to firefighters, to school bus drivers, school employees, and so there's no place for politics in public employee pensions. >> so, as you know, i've wrestled with a lot of these esg issues for a long time, and we've discussed and debated them ourselves. >> we have >> but when you think about investing, for example, in fossil fuels, this is something that i think you've moved to some degree away from, to the extent you can there would be an argument to be made that from simply a fiduciary perspective, that would have been a better place to put money >> that's, again, i think, one

of the constant pieces of my job is to really correct misinformation, and we're not divested from fossil fuels we're still in we believe that engagement with the public companies that we're putting capital into is the right strategy for calpers again, being long-term investors, we want these companies to be successful, but we've not divested from fossil fuels, regardless of the pressure -- the incoming pressure to our board and to others to do so. but we're still in and that engagement strategy -- >> marcie, just to put a fine point on that, and i do know that you continue to own some fossil fuel companies, and i don't want to suggest you divested, but in terms of the emphasis or in terms of how the portfolio has moved over the last five years, clearly it's moved into other clean tech areas and other places is that not a fair way to describe it? >> those are really investment decisions. those are predominantly in our real assets program where we believe that the energy transition and purchasing cleaner energy, whether those are wind or solar farms, and

that portfolio has paid us quite nicely but on the global equity side, which i think is where we get most of the commentary, we're still in to all of those companies. we continue to engage with the ceos of those public companies privately about how they're managing the risk related to whether it's a changing climate, whether it's human capital issues, whether it's board governance issues, but calpers is a good partner, and we've been a good partner to these ceos and we plan to continue to do so. >> what do you make, though, of both what the -- what some in the federal government are trying to do around esg, what some of the red states are trying to do, and what that may do in terms of the impact on some companies that you're invested in? >> well, again, we believe that this is an investment issue, and the transparency of that data creating standardized measures for esg, i think there's a lot of confusion out there about what esg is, and i think there's a lot of confusion about how calpers is approaching it. but our approach has been very,

very consistent. it's about getting the data, being transparent -- >> no, marcie, what i'm suggesting is -- i'll give you an example banks. we've talked about gun laws in america. now have to write letters to states saying that they will engage in certain things that they said they don't, for whatever reason, don't want to engage in. otherwise, they actually lose business how does that even factor into this now >> well, i think there are certain consumer demands that are going to cause companies to change their behaviors, whether those are gun laws, whether those are climate, whatever they might be, but for us, it's about adding value to this portfolio, and we believe our strategy has actually worked. now, we are divested from guns that are illegal in the state of california that was a divestment decision that was made some time ago, but there have been no divestment decisions made in the last six years or so because the engagement and staying in those companies is where we think we can add long-term value for the portfolio. >> marcie, it is a much longer

conversation, and i hope we have an opportunity to have it. so, you got to come on back. maybe we'll do it all in-person at some point. thank you so much for waking up early on the west coast. 15 seconds to check the markets, triple digits on the dow. pretty nice gain this morning, 44 points. the year starting out a little bit better could be short-lived nobody knows make sure you join us tomorrow to find out, at least what happens tomorrow "squawk on the street" is next ♪ you are looking at live pictures from major airports around the country after the faa ordered all domestic flights to pause departures reports now say that ground stop's been lifted we'll get to that story in a moment i'm carl quintanilla with jim cramer and david faber futures relatively steady as we brace for december cpi in just under 24 hours but we will begin with the airlines