mean for the fed. and moderna chairs jump on good news in the fight against rsv. it's wednesday, january 18th, and "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" here on cnbc we are live once again from the world economic forum in davos, switzerland. i'm becky quick along with joe kernen and andrew ross sorkin. we have another all-star lineup coming at you today. we have cisco's chairman and ceo chuck robbins. we'll talk about a lot of things in cyber space and goldman sachs chairman and ceo david solomon will join us

at 7:45 a.m. it was part of the reason the dow was lower yesterday in a big way. also later we have the carlyle group's co-founder and cochairman david rubenstein. so much in between right now let's get to today's market action. not too much movement at this point. dow futures are up by 8. this comes after a pretty devastated day yesterday s&p 500 is up by 4 the nasdaq was actually in positive territory it's indicated up noop another 17 points this morning you'll see after that news from the bank of japan, which was no news, again, a surprise, we'll talk about that in a moment, after that you can see the 10-year back to 3.479% pressure across the entire yield curve with the 2-year yielding 4.181% take a look at bitcoin

crypto up 2 7% this year. we're going to get the government's second read on inflation with the producer price increase also we'll be getting the latest reading on consumer with the december retail sales. we'll be chewing over that and trying to figure out -- it's all backwards looking but it givens a forward look on what's going to happen next. >> for the news business since it's, you know, very early in the year, i think we can say yesterday was the worst day of the year wasn't it the worst day of the year i think it was. >> technically it has been a good start to the year yesterday it was down $360 on the dow. now to a surprise move on the bank of demand despite pressure from markets.

the dollar strengthened against the yen. stooev liesman is here to break it down and make it clear. the initial move when japan did this six weeks or so again, that was a surprise then. now it's a surprise they didn't move further, i guess. is that the way to look at it? >> the reason is the 10-year treasury from japan had been trading up above the ban it had been as high as 60 basis points the doj was going to raise that limit. what does it have to do? it has to buy a lot of bonds to keep the upper ceiling of the yield curve in place instead, they kept it in place, and i guess the governor of the bank of japan last time said when they made this move, it was not the start of bag change. you have to take him at his

word another interesting story that's developing is the european central bank there was talk maybe they would not do so much in the way of big rate hikes maybe instead of 50, they were going to do 25 i'm reading now on the wire, they're reaffirming the 50-point ba basis. maybe central banks are going to be doing less because inflation has been coming down here in the u.s. some of the reports out of europe have been a little better if you look at what's happening with the u.s. 10-year, it's down quite a year, ten basis points on the year with japan with the thought ma maybe they're not going as far as we thought. >> that's rich so it's a global synchronized swivel it's not a pivot

that's good for the gss. what was it yesterday, becky they've seen it before they have to talk tough, act tough, and maybe go further than necessary to prove their credibility. and i've been hoping all along there's nothing close to what was happening back in the '70s or '80s, and it just seems like a crazy way to save the economy by trying to kill the economy. so maybe the markets are once again in charge, the global markets in this case. >> you know, joe, i've described the markets like -- of course, i'm dating myself -- like kareem abdul-jabbar in the center of the paint when a small guard is

driving. basically what happened, he threw the ball up and kareem rejected it. that's what i mean when you go back and look at what happened when the fed raised its forecast and what the market said is, no, we're not going with you on that we've been with you all the way and then the fed market says number we think the fed gets to 490 and then turns around and goes back. 440, if you look at the january '24 futures contract is 70 basis points below does the fed go to the market or the market to the fed? i don't know, joe. can you run down some ecb guys there in the hallways and ask them if it's 15 or 25 coming up on february 2nd? >> i thought about that because you said there's news coming out of davos it had to happen here, go all the way over to you, and then -- you know, that's a long way all

the way back to us but i do like your characterization that the markets are kareem and the fed is like muggsy who's like 5'3". >> muggsy is pretty good he was pretty good. >> he was. he was 5'3" and he could score. >> if you look at the charts, joe, and they said, no, we're not going there, and who goes to whom, it's going to be painful if the market has to go back to the fed. but all they have to do is eat a little kroechlt. >> that's a good analogy it's not the market said no. it's the market said no! >> what's a little crow? it's not that bad for the fed. >> from experience >> yeah. i even done that a few times. >> i'll see you later. >> thanks, steve. when we come back, the markets are looking for a reset in 2023.

nasdaq's adena friedman will give us an update and what's happening in the pipeline. also p check the rsv vaccine is 84% effective in preventing disease in older adults ask moderna's ceo stephane bancel will be joining us in the 8:30 a.m. hour to talk about this and much more you're watching "squawk box" live from davos, and we'll be right back >> announcer: this cnb program is sponsored by baird. visit bairdifference.com your dedicated fidelity advisor can help you open those doors. for you, mama. through personalized money management that can evolve with new chapters. and they can proactively view your entire portfolio. with an eye on taxes and the impact of risk.

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welcome back to "squawk box," everybody. 2022 brought turmoil to the financial markets as geopolitical tensions, supply chain snags, rampant inflation, rising rates pushed through the worst year since the financial crisis but our next guest says it brings tremendous opportunity and an opportunity for a reset here joiningus is adena friedman, the ceo and newly appointed chair for the nasdaq welcome. great to see you. >> great to be here. >> congratulations on the new position, chair of the nasdaq. >> thank you

i appreciate that. >> welcome to our house. >> we'll talk about titles i have a question about that later. >> okay. >> let's start off talking about the year because it was a difficult year for the market ts, not just equities markets if you were looking at what was happening with ipos, deals all the way through. things kind of froze up. what is it looking like now? >> right now it's kind in that zone at the moment as well there are still a lot of unknowns that people want to see, have a little more uncertainty around, most notably the environmental. what we should expect in the first three to four months, we'll have a known environment. >> i think it was yesterday, i forget who it was, man one of the bankers, it's almost worse waiting for a recession. he wishes it would get here because it's the uncertainty no one can plan for. >> first of all, i hope we don't have to actually plan for a recession. it's not an absolute certainty that it's going to happen. but what people want is a known

environment. we want to understand capital. as an investor, we need to model investments and understand what your hurdle rate is in terms of your investment return versus cost of capital. if we can get to that point where we have a known interest rate environmental and even inflation is a little elevated, i think we can operate in that environment for a long time. it will allow companies to make company allocation decisions and i think we're going toned up hopefully even skirting a recession, but even if we live in one for a little while, we'll know the environment and that creates a better investment for investors. >> even if it's 5.25%, you'd rather just live there >> we forget the last 4 years has been a little bit of an economic experiment. and prior to that, we had 3, 4, 5 percentage rates for a long time and a very vibrant growth in the economy. >> in you outlook you just put out this morning and the things

you're seeing, the things that are up, you made an interesting point that money is no longer free and as a result a lot of things are going to have to operate differently. >> that's right. i thinkfirst of all, this notion of growth at all costs is gone for the foreseeable future. the cost of capital is real. money costs money. so access to capital is going to have some sort of consequence. that will make it so companies are making more discerning investment choices in terms of how to grow and handle their business, they're going to be focused on cash flow a little more and investors are going to underwrite companies that can show clear growth or profitability. in our environment that's a nice way to manage our economy and a much more sustainable market as well. >> is that stifled innovation or only certain ones get funded >>. >> instead of every sprout, you're going to choose off of

that it's something that's going to happen it's happening it's an unstopping force i think companies will continue to focus on that, making use of their data, and, frankly, with the labor environment, they're trying to do more with less. they want that technological trance pore nation is real that's one of the trees. that's the one that's going to grow into a tree, and then they're going to havable we're continuing to be very, very bullish on those and we have to make sure we're efficient. >> the nasdaq is known for technology obviously that's where -- you know torsion take on the big board initially and everything else, it's always about this technology. we've had this crypto revolution and for a while you had me thinking how does this fit in for nasdaq does matt damon get jobs

gisele. >> that was a bad year for what happened did you total or recalibrate how much future crypto has for the nasdaq or whatever you want to call it, blockchain? >> let's focus on crypto the blockchain technology is something that could have volatility. >> for the nasdaq. >> financial situations in general. when you look at cryptocurrencies, that particular ecosystem went through a massive reckoning. i like to say in a way you saw what would happen to the financial markets if there was no regulation. you have to think of regulation as helping sustainable trusted markets. i also think the crypto world we had, it's lost truck, it's lost the confidence of investors. so what's going to happen next i don't think it's going to die. i think there are certain cryptocurrencies that have real utility. adults want to come into the

roomful it's a time for some trusted players to come into the space. however, the regulatory environment needs to come in you have to plan ahead you can plan ahead and make sure you're entering -- >> what's a currency i think. it's the building block for other coins and digital ssets. i think those are the types that will find a place. >> it's correlated it's up 27% this year >> i also think it's an interesting time so how we recalibrated, we have certainly recalibrated our thinking to make sure we're coming in at a time when we feel like we have a growth of opportunity to grow the business, be a trusted player, and we're working with regulators to make sure we're doing it the right way but it is an interesting time. >> who's the right regulator

>> that's a great question i think i'm going to let washington figure that out but i certainly think that having some clarity asto who the regulatoryauthorities are in addition to some clear rules will be important. >> can i ask you a davos question >> sure. >> we talk about dei, climate, all of these issues. you've been a pioneer talking about a lot of this stuff, but there's been a massive backlash. i'm curious what you think of that you were one of the people early on who told boards you can't go public on our exchange, right, unless you're going to have a certain number of people that are women or minorities and things like that i just wonder whether you think there's going to be such a backlash to all of this that's going to upend things? >> first of all our rule is a disclosure rule. either you disclose it, you're boar

bored, or you try to explain it. it's not an absolute gain. >> by the way, in the united states there's questions about disclosure around climate issues >> on the broader issue, i just want to make sure we're clear on the rule, i think any time you have a fundamental change in terms of what's expected you have to go through a period where you say what's needed and what's nice to have? right now the regulators are grappling with that. the next generation of employees, consumers, they're looking for companies to grow profitably and generate a return, but also manage it the right way, kind of manage the company in the right way to meet their values, whatever those values are those disclosures become a critical part of making investment decision. there's no clarrification on that it makes it difficult for corporates to navigate the

space. we're frustrated investors are also frustrated because they don't have a way to compare and contrast one company if there another there's no commonality in data let's not go overboard we've been very clear with the s.e.c. and regulators. you could very easily go overboard and choke off the capital markets or you can do a complier type of framework you make it easier for corporates and investors to navigate the space. >> have you had the public go public that has effectively explained away what they've done rather than actually have those people onboard >> the way our rule works is in the first rule of the rule being effective, you have to disclose it any new company that comes on, they disclose the caompocomposi. then we'll start to look to have a certain composition explained.

that part of the rule has not been there yet. >> adena, thank you for joining us. >> thank you very much. when we return, accenture heading into the mavseeter "squawk box" returns live from davos davos, switzerland, in just a moment they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

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welcome back to "squawk box. our next guest oversees 700,000. the metaverse, that's a new one for you, and much, much more, julie sweet is here with accenture. good morning. >> good morning. >> you guys are diving in in a pretty unique way. let's talk first about what you're hearing from ceos, what you actually think is going on is the hand wringing hand

wringing or is there more to it? >> the number one topic here is geo politics it's not the economy the relevance of the forum has shifted so much because you have ceos who really want to hear what are the ministers of the eu country, india, what's going on in the middle east is a big shift from prior years the second thing is allen change no one is talking to me about the economy, disruption, the economy, all the stuff you guys are talking about, i ice a given. we put out stuff, you need to reinvent, what does that mean. it's about how to succeed. >> what does that mean half of these people are having business meetings? >> yeah, so what they're talking about is most of us, lots of these companies did this transformation, moved to the cloud. now they say what's the next new business model the most significant one, how you do take products from three

different companies, put them together and make a new protect. sort of mixing autos with insurance and maybe you throw in some of kind of predict active maintenance problem. >> is that the idea of merging different companies together or the yid of growing companies inside of a company that might not have otherwise had these skill sets >> it's not about merging. it's about them saying we're going to look outside the four walls of the company and create what our clients want, customers want what a lot of customers have discovered is customer centric is they want something easy that they don't already have. think about the automobile and insurance. >> can we talk about the metaverse? you think the future is the metaverse of some sort what is it what's the bet >> first here, metaverse with a

public purpose, complete killer app. people are going crazy about it. >> what do you mean by that? >> metaverse is a public purpose. solving problems here we're taking people to the bottom of the ocean. like you went to the u.s., about washington, dc, to see the monument when your teacher said, if you read about it, you don't care if you see it, you care. social services, caseworkers quitting because when they go into a house to help and evaluate a child they're in dangerous situations they're not prepared we're working with state right now to train social workers in the metaverse so they can immerse themselves what is it going to feel like, what is it going to look like using the metaverse to address these things wildfires in california. huge problem training people in the metaverse to how you deal with wild fire

it's super excited. >> i get car sick. that worried me a little. >> i don't feel that way by the way, my husband's a gamer. you get used to it i would say the next generation of headsets, so proquest, for example, that proma just put out is game-changering in terms of that feeling. >> it's how they're actually -- it's what the streets look like -- it's the resolution of the screens and how they're actually lined up with your pupils. >> that will be the device piece of it and that will be a zero issue. it's exciting. by the way, you can do it in 2-d. for the public purpose you have to be inclusive. >> what is the cost to do this >> the cost? >> to put this metaverse project together at a time when owl i havely it's not to scale yet

i'm always curious about the first movers what's the cost look like? >> so for us it's a cost of business you know, our cloud business was a billion dollar a year a decade ago. it's $26 billion now we started doing that 15 years ago. so for us, working with emerging technologies, being ahead of the curve is what we do, and what is most interesting about this work is that because we're doing it with not-for-profits and companies, we're actually shaping the technology at scale. you can't put a price on that. >> here's a harder within one for you. everyone gives meta a hard time and are you a believer >> absolutely. >> and that five, ten years from now, we'll all be wearing these goggles not all the time, but enough >> yeah. i believe we will.

consumers want to do it. 55% want to do it in the next 12 months industrial metaverse, huge i've got so many people wanting to go through it use cases are enormous. >> you've got a lot of consults. that's amazing i guess the question is are you going to spend a lot of money. that's a big leap of faith to think the money you spend now -- it didn't work for meta, that's the truth. you'd have to ask how prudent that was to blow all the money. >> you know, joe, a company that wants to make sure that every dollar spent will absolutely work will never innovate if you don't take the risk -- >> so good, so good. mckinseyspeak, i love it. >> i guess you're spending a lot less than meta is. >> oh, yes, absolutely joe, when you say it's consulting speak, with a social weeker that's going through the

metaverse right now and learning how to spot that, that's right my enthusiasm is because that's the kind of work we're doing, and when you go talk to those individuals, it's game-changing. >> you can take that to anything you do and say learn in the me the metaverse. >> you just gave it to me. >> i get car sick too. >> he's a skeptic. i'm more a believer. julie, thank you it's great to see you. >> thank you. coming up, the tense relationship between the u.s. and china, the politics between the two largest economies having a direct impact on businesses. alng're going to take up the chlee and split off. we're going to have more consultants speak. it's going to be great we'll be right back. technologyu vacation in space,

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. we have our next guest, ey ceo we talk about all the things

that go on in da voechls i want to talk quickly about ey you were off in the sunset at some point the g 3 pulled you back in, did they not, for the split, but you've got to do the split because you can't really do what you can do as a consulting business if you're auditing those clients that you're trying to get at. so it's a natural. you've got to do it, but it's exp expensive, and it takes a while to orchestrate it. >> it definitely takes a while to orchestrate it, joe, but we're on our way it makes strategic sense for ey. it allows the company to grow. it alleviates a lot of conflicts. it alleviates more issues.

>> a branding company, spend a lot of oney? >> i haven't spent a lot of money. >> naming is available. >> naming companies, there's a whole industry around it. >> it's unbelievable. >> we are working on that. >> sure, you guys get the audit business we get this great fast-growing consulting business. why do they allow you to do that that's where the money comes in and you have to compensate -- >> that's not really -- our company is growing growth doesn't equal profit necessarily. our audit practice is growing, and today it's growing double digits, our insurance practice going forward. so we're very confident in terms of it doing well and, frankly, being very profitable. they'll have more opportunities to grow even faster because of what you mentioned you know, we audit, joe, nine out of ten tech companies in

silicon valley they're also the companies who can have alliances that's been an inhibitor in terms of our grourkt and consulting. >> just the problems in the technology world right now. >> well, yeah, and there's so much opportunity in the technology world and today we have alliances with the ones we can have alliances with you name the company, salesforce, google, amazon, we audit all of those. >> are you writing the headline for tomorrow on what's happening with davos and what you're hearing? what is it >> surprisingly less pessimistic than i thought when i got here there's actually -- i wouldn't say it's optimistic by any means, but there's actually less pessimism. i think people are starting to think maybe the major markets in the world are getting inflation under control. may maybe with china opening there will be more physical interaction with individuals

which will be helpful in terms of any kind of relationships, particularly on the business side as you all know, on the u.s. side, we as businesses are trying to help in terms of helping because we think that's important to the global economy. more optimism than i thought. >> maybe we should short the market. >> no, no. >> no, but we always wonder. >> i know. >> it's a thought. think of the last year and the way we perceive china and growing business with china. i'm glad they're back. i am we know what it's like with them shut down. we've got issues obviously with companies, with human rights and everything else. i'm glad they're back here, and the world needs china to be open and i think that's part of the reason for the pessimism thawing. we've got to welcome china back. >> i agree, joe. the other thing is u.s. companies and european companies in terms of taking advantage of

this time frame, we're working with them right now, many of them, over 30 of the largest companies on really maximizing value, value creation, whether that means splits, reorganizations. some of this is coming across as cost-cutting, but it's not it's positioning companies for the long term for value in the future, and we're doing a lot of work in the consulting side around that, both in the u.s. and europe so it's actually -- that part has actually helped our business, but i think it's helping companies position themselves. >> in the backdrop we just heard steve saying even globally maybe. you know, 25 basis points, you know, let's try that it does seem to be a little bit of softening and how far we're going to have to go to handle this i don't think it's the inflation we saw in previous decades that was so insidious and so hard to tackle >> the other piece that i would pay attention to is there's a lot of focus on, you know, these companies kuing jobs and so

forth and this company is firing 10,000 people and that company is firing 5,000. but look how many people they've hired the last 18 months it's a drop in the bucket in term os whatever they're doing the labor department is still pretty darn tight. >> odon't blow money. >> we will not >> allegus, that was one that lasted as long as new coke. thank you. >> thanks. coming up when we return, food, energy, and water hot topics here in davos we'll bring you more on that next

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welcome back to "squawk box. we're here at the world economic forum here in davos. i monitored a panel about the play of food, energy, and water. an actor won an award with his wife we asked him about taking a trip to sara leone and why he's making this an issue. >> i went to see this program. it's real proof if we have some investment, we will see change not only will it keep growing but people will teach people currently the scramn't is to find these systems that's why i'm here at davos i'm looking at the movement to try to push the agenda a little

bit further. >> but the gloves came off when the conversation moved in a different direction. india's minister was there and last month india increased its import of russian oil to a record high. i asked him about the moral trade-off given the conversation we were just having. >> gas, et cetera, that we import from russia, in a month, is something which, you know, all europe combined consumes in a day from russia. so the quantum is there. india is the only one that looks at the global temperature. we have achieved that nine years in advance. >> if the russian oil is such a small part of what's needed in india, why wouldn't you say, you know what? we don't need to import it then?

>> if you're going to import it, what would happen is your prices would go up three or four times. >> so it's significant then. >> just hold on. yeah, even the small market is significant. i tell you what's happened in india, the energy demand increased by 10.6% this year last year it increased by 8% despite that, we have not had any blackouts. it was level. >> the reason i'm raising the issue is because i think food, northwestern, and water energy, and water, it's a moral issue. many people look at the war between russia and ukraine as a moral one, and given your support by buying oil from russia, it appears as if you're supporting them. >> we've been buying oil from russia for a long time now, you say, you know, the water in ukraine is something which should result in people cutting off oil supplies

that's your perspective. that's your perspective. >> there's a lot of multi national countries that have done that. >> if we have a conflict with our northern neighbor, we don't do that. no i can stop the import of russia oil. let the other european countries do that. let them stop first and then i can stop it. >> you can find the rest of that online the debate continues one of the ministers from norway -- i mean it goes on i get out of the way and -- >> you were in the way there in the end, he waved you off and turned you away. >> it was an interesting debate and hopefully didn't color it. it was important. >> what did the norway representative say >> look, her argument is she's very involved in agriculture,

fertilizer, price of oil matters to that, but her view is this is a moral dilemma and a moral discussion and that india, by supporting russia, is making a big mistake, and so they went back and forth it went from there an mornlt coimportant conversatn he was deep on water, food, security, climate. >> that's interesting to see >> james bond, i hope. >> i don't know if he's getting that i don't know i think it might not be in the cards anymore. i didn't like it when he met his demise. >> the ultimate entrepreneur. >> yeah. all right, when we come back, will there be a thaw in the frozen ipo pipeline? that's the question we've been nnying to get to the bottom of ly martin, president of the new york stock exchange will join us next we'll be right back.

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- the past few years have been a challenge for our physical and mental health. - join kate and me as we get personal about our own journeys and how the conversation around mental health has changed. - watch our conversation on peacock. welcome back, everybody. the ipo market nearly froze over last year after posting its best year in the history of the new york stock exchange in 2021, but spac bankruptcies forced private companies to stop their plans to go public. lynn martin is the president of the new york stock exchange. she joins us right now with her outlook on the ipo pipeline and much more. lynn, great to see you here. >> thanks for having me. >> what are things looking like

at this point? >> the pipeline is strong. the pipeline has never been stronger the power of the public market currency has never resonated more than it's currently resonating however, as you know and as you report on every day, we're in a period of deep uncertainty and that's being reflected by the market the market doesn't like uncertainty. it's caused ceos of companies who are looking to go public are postponing their plans. >> can they do that for an extended period of time? are there some companies that just need cash >> some of the companies that came out last year had a strategic reason to come out last year. what you've seen is a lot of companies go back to the fundamentals really hone in on what the priorities for growth are going to be, how to do that in an economically responsible fashion. look at their costs in particular rather than looking to come to market without a business plan that they're able to execute onto get to the

profitability standards. >> sounds like those are the types of things they should have been doing all along instead of chasing after cheap money. >> we're excited about the pipeline we're excited about the amount of innovation that's coming to market we're looking forward to the time when the market volatility could abate just a bit so some of these amazing companies could come public. >> do you have to wait until the federal reserve is kind of done with its march to hire interest rates. >> yeah, i think the -- based on the data that you've seen over the last two inflation prints, that's an encouraging sign, right? and you've seen the market react in a positive fashion to those encouraging signs that we're starting to get inflation under control, particularly the print that happened last week. 6.5% is a great number compared to the eights that they were printing just two cycles ago. >> sure. >> can i ask joe's question? it's a question you asked your

competitor which was, what you're thinking about crypto now. given everything that's happened, does it change your view on crypto >> i've long said that crypto is a market in need of regulation we need to know what the regulatory guideposts are. we need to know what a framework is to bring this asset class under the more traditional structure that is have served volatile markets, volatile periods well and that's more the centrally traded, centrally cleared types of frameworks. and i think this has just been further evidence -- >> that's what she said too. would you want to be in this business if you could be is this an asset -- >> is it an asset class? were spacs an asset class? >> do you -- did we need to regulate beanny babies, pet rocks? there's still a huge contingent

of people that think this is absolutely great in theory and it's all going to zero and everybody is going to be bankrupt. >> i don't know what the status of crypto in the long term is. obviously the underlying technology is good and the underlying technology has applicability outside of a -- some of the cryptocurrencies such as a bitcoin or ethereum. but underlying technology is what we're more focused on and how to deploy that technology to add efficiencies to arcane processes that still exist in markets. >> devil's advocating. i still hear it and i'm on the other side of that we still could have that discussion, right? >> i don't know where i am anymore. [ laughter ] first i was -- i was pro, then i was con -- initially i was -- back in '13, i thought it was

great. >> but you didn't buy any. >> no. i didn't buy any. >> thank you another big hour -- actually, we have two more today and three more tomorrow, all big. brian kemp on his agenda to bring major investment and jobs to his state really good college football players. we're going to talk with chuck robins and david solomon "squawk box" live from davos returns jt mont inusa me

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good morning we are live from the world economic forum in davos, switzerland, where business leaders, politicians and global thinkers are gathering to talk about the issues that matter most to your money and the global economy in this hour, chuck robbins will be our guest, plus an exclusive interview with david solomon after the company's quarterly results yesterday. if you're in the market for a neon twitter sign, look no further than a big auction that's happening right now we've got the details straight ahead. second hour of "squawk box" begins right now ♪ good morning welcome back to "squawk box.

we are right here on cnbc live at the world economic forum in davos, switzerland, on day two i'm andrew ross sorkin along with becky quick and joe kernen. still 2 1/2 hours before the market is set to open. the dow up about 25 points after what was a tough day yesterday more than a tough day. we said it was the worst day of the year on the dow. we talk about why that may have been goldman sachs earnings contributing to that and we'll talk to the ceo of that company in just a little bit. the nasdaq looking to open higher the s&p 500 up about seven points treasury yields standing right now, if you look at the ten-year note, we're going to flip the board around, what you're looking at right there, a little pause, 3.476 and the two-year at 4.177. wti crude, when you think about the energy complex and oil, we were just talking about it, talking to the indian minister there about the morality of buying oil from russia it costs $81.85.

and then finally crypto which has been one of the big winners of 2023 so far bitcoin is at 21,214, making a massive comeback. >> it was a 1% drop. because we're so early in the year, it's one of the worst days of the year -- >> life is relative. >> exactly it's been a good start to the year brian kemp's agenda this year focuses on a clean energy economy. the republican governor pushing to make georgia the electric mobility capital of america. governor brian kemp joins us this morning it is great to have you here this morning what are you doing here, number one, and would you say georgia, davos, they're not -- atlanta and davos aren't like sister cities, i don't think? could you go any further around the spectrum to davos from what i think of as georgia.

>> well, to answer your question, look, i'm here selling our great state. we have so many good things going on we've had two record years in a row with job growth and investment our midyear numbers that i got while i was on the way out here are set to break last year's record, if you take out the rivian and hyundai deals, which you don't get those, maybe once in a decade if you're lucky, if that we're still doing incredible, even in this environment and we're selling that story we offer stability, great business environment, we've been the number one state in the country for business in some people's eyes for nine years running. and they're tied to electric mobility and it's something continue to grow for the next five, ten, 20 years. >> hopefully people know me well enough to know i wasn't disparaging georgia. it's one of my favorite places i go there quite a bit can you accomplish things for

georgia here or do you at least get an idea of the partisan divide that we're dealing with and it's front and center with every election we have in between elections, we're waiting for the next election and we're still in the -- >> as you could imagine, catching criticism for folks in my party for coming here others are criticizing for me for not being back in georgia during budget week i gave my budget address yesterday by zoom. but look, i'm here to sell our state. i've been pleasantly surprised, there's a lot of georgia-based companies here i know you have chuck robbins coming on next he has a big presence in atlanta. we're excited to have him back after 14 or 15 years but i met with sk yesterday who is building battery plants, a

lot of other things. they've been doing business in georgia for over 20 years. i was talking with jose munoz yesterday about the project and they're having issues with the federal legislation. we're working to get that fixed. it's unfortunate they didn't do that before they passed the bill we're getting a lot done we'll be visiting with some georgia-based companies that are looking to expand friday in germany. so this is a working trip for me to sell our state. >> what issues are they having with the federal legislation >> when the legislation passed, it treated our georgia-based companies unfairly because we're a -- i think a right to work state. i believe the legislation in the way it was drawn up and passed it was designed to help the union-based workforce in other states we made that aware to our u.s. senators before the legislation passed we've working with the white house and them since to get changes so every company that is

building electric vehicles in the united states is treated fairly that's all we're asking for. it's unfortunate that was not the case when the legislation was passed and we continue to urge them to fix it. >> you mentioned the white house. i'm just -- things can change a lot in a couple of years and i think about two of the governors that were maybe some of the biggest lightning rods for all kinds of criticism for things, voting rights, and that governor to the south of you that also was a lightning rod. i look at certain parts of the political divide, you and governor desantis, and now you're talking about being potential presidential candidates, in the top three or four names that we hear now. how did that happen? you stuck to your guns, you didn't blow in the wind. some principles are very unpopular. i'm surprised it turned out okay. >> we stayed focused on working for the people of our state. we can't decide who is going to

low lightning bolts at us, whether it's our opponents, other folks that are criticizing us i've obviously experienced that from both sides of the aisle it's amazing how many international people here like, oh, yeah, i know who you are. >> not for a good reason. >> at the end of the day, i stayed focus on doing what i promised people i would do in 2018 and that's keeping people safe, making sure people have economic opportunity no matter what part of the state they live in our mid-year numbers which may break last year's record minus hyundai and rivian, 218 projects, 85% of the 17,500 jobs is outside the metro atlanta area, 92% of the investment is outside the atlanta area, and i campaigned on strength in a rural georgia, making sure people had economic opportunity in all parts of our state. and it's happening in georgia and it's going to continue to happen. >> i don't think of either florida or georgia as blue

states, but they got bluer and i look at the issues that governor desantis was criticized for, the covid response, for one, the disney debacle for another he won by 20 points. you won in a landslide both of these are at best purple states they're not -- >> i would disagree with that. >> tell me why. >> in november, every statewide republican that ran, ran without a runoff except for one, and that was well documented in the u.s. senate race. >> yes. >> and we won handedly we have libertarians on the ballot where the democrats don't -- >> is georgia a red state, brian? >> i believe it is i believe it's a 52/48 state if you run good campaigns and do everything you need to do to win. i think we -- >> what went on down in florida? how do you explain that? >> florida is a different state than georgia. >> the result was the same. >> i think it's moved redder than we have

but you also i think -- you got to have a reason for people to vote for you you can't criticize the other side you got to tell people what you got to do. look at my budget presentation, we're going to send a billion dollars back to the taxpayer to help them fight inflation, we're going to do a billion dollar one-time property relief grant we're focused on helping people fight through inflation, we fought to get our kids back in the classroom when you had the other side that were pushing for them to stay out i got called a voter suppresser and the legislation was called jim crow 2.0 by the president. at the end of the day, nobody got suppressed in georgia. we had record turnout and nobody is talking about the process in georgia. and it just shows that what we did was what the people in our state wanted us to do and that's what i've stayed focused on and

that's where my focus remains -- >> do you have national aspirations, governor -- >> i'm not worried about -- i just got sworn in for my second term thursday. >> but you've hueard some of the scuttlebutt -- >> i believe governors are the i incubators of democracy. you could see the differences between blue state and red state governors and the governors have a great story to tell, whether they run for president or whether they're just involved in -- being involved in who the nominee is going to be, i think it's going to be very important. >> i know georgia, georgia, georgia. but you saw the speaker mccarthy, saw how that went. president trump, former president trump still looms large. how do you see it playing out for the next years >> i don't think i would be a good person to ask >> you're familiar with former president trump. >> i'm familiar with speaker mccarthy and certainly congratulate him, a hard-fought

victory, and with president trump. i've talked here about a lot of the good things that he did i think for our country. also i've been on the other end of that as well, but that's politics and i'm staying focused on the future and continuing to sell our great state and whatever happens in the future, you know, i'm not too worried about that. >> what should i ask pritzker, the governor from illinois do you have any zingers. >> nothing that i could say on live television. >> i love it all right. governor kemp, great to have you. good to have you this morning. >> thank you for having me >> thanks, governor. when we come back, chuck robbins now a new resident of the state of georgia, we're going to talk about the company's recent round of layoffs and the broader tech sector, and then later mike fries on the future of cable,

the internet take a look at futures right now, dow up 23 points. nasdaq up 26 points. the s&p 500 up about six points. we're micong right back from davos, switzerland >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!

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welcome back to "squawk box" right here in davis, switzerland. microsoft who is here plan to announce layoffs as early as this morning they're cutting less than 1% of its workforce back in july the software giant looking to cut 5% of its workforce. shares of microsoft right now up just marginally on that news and guggenheim cutting that stock to a sale from neutral. we'll see. maybe we'll run into them today and hear more about it >> perhaps. in the three years since we've convened here for a winter y davis, joining us now is chuck robbins. the ceo of cisco it's great to see you. >> it's good to be back together. >> it is it's good to see everybody in person speaking of being in person, there's a china contingency that's here again for the first

time since 2020. the vice premier was here yesterday and made some comments publicly about how they're looking to open up china again and be a little friendlier to business i know you had lunch with him yesterday. what happened? >> the message was very consistent with what he said publicly he did say they're open, they want -- they want to reengage with multiple national companies, he asked us questions, we asked him questions. it was very much in line with his public comments with what they want to do. i think it's encouraging i think the most encouraging part is it really seems that after xi and biden had their meeting at the g-20, there's a renewed commitment to at least begin dialogue again. >> is it enough to make you feel comfortable as a business leader with the potential for investing there and putting additional -- >> we're already invested there. we have a lot of supply chain stuff there. and so we sell into china,

obviously, although not a huge amount as we talked about in the past but i think it's more important from a global stability perspective more so than it is about whether i invest in china or not we need to find a way to compete and disagree but do it in a way that, you know, works for the global economy. >> it's been a little unnerving the last few years, the rhetoric -- >> the uncertainty is what really -- hampers investment >> right the feeling from the other leaders in the room, is it similar? people are open to this idea and looking to -- >> most of the people in the room had decent-sized businesses in china they're pretty open to it. >> is there a trust but verify situation. i think there's a lot of people who have been sort of spooked by the whole situation. what can you say -- how quickly do you think this can actually move >> i think it -- i think it falls under the category of the new world of different issues around resiliency.

we have -- we learned new areas that we need to focus on from a resiliency perspective during covid. i think the geopolitical climate over the last five to six years has also brought another element of thinking about resiliency, and we weigh all of those as business leaders when we make our investments. >> one of the questions is, are we headed into a global recession. and there was a lot of doom and gloom before we got here i know you're feeling a little more optimistic about things. >> somebody asked me last night, you know, what are you hearing from all your peers. i said, publicly, everybody is being asked, do you think we're going to have a recession. most people are saying, yeah, we're we'll probably have a mild one. other than that, people aren't talking about it hopefully, it turns out to be like davos, if everybody is going to talk about a recession, it won't be that bad because we're wrong.

>> are you cutting ba kck on yor spending initiatives in. >> we're not we'll spend more this year than last year. there was a survey that said greater than 50% of the executives they surveyed said the last thing they would cut would be their i.t. budgets. we haven't gotten a lot of that from our customers the pandemic taught the c-suite executives around the world really up close and personal the power of this technology and what it can do and i think they're now understanding whether it's connecting industrial systems to the internet or changing the way you interact with your customers, companies are investing. >> butyou didn't overdo it you weren't one of the pandemic play tech companies that just thought it was going to last forever and hired too many people, that's the excuse that they're giving for all of these layoffs -- >> we didn't have the surge during the pandemic that everybody else had we had a little bit of a hit at the beginning and we had supply

chain challenges that kept us from having that explosive growth >> now look back and maybe that was good that you didn't -- >> i didn't feel good then, but it feels okay now. >> if you're investing more this year than last, where are the areas that you're going to do some additional -- >> cybersecurity is number one. >> okay. >> cybersecurity. >> doing what? where? >> we're working on the portfolio continuing to invest in the portfolio, the teams are looking at lots of organic innovation as you think about what our customers have had to go through, they've got remote workers, mobile vices, they have the expansion of their iot platforms, you have this hybrid cloud world, customers that are no longer building private networks anymore they're running virtual enterprise networks on top of the internet the whole security posture and the requirements for what our customers need has changed completely we're investing into that -- >> you said the world organic. does that mean m&a is out? >> we're looking at inorganic

options as well. hopefully this year we'll see that activity pick back up i think a lot of those companies have hopefully come to grips with the fact that some of these valuations are real and we'll see how it goes. >> so that's it, it's the -- the prices have come down but not everybody is willing to believe that's the new normal. >> we're 12 to 14 months into it now. some are realizing, looking ahead and when we're talking about 2023 being a challenging year, perhaps, they may be looking ahead saying, i probably need a different plan. >> the other thing we talked about is interest rates, the cost of money goingup. is that a problem? does that create any issues? >> we were talking the other day, if you're under 40 years old, you think 0% interest rates are normal one of the guests earlier was talking about, we were very successful for decades at 5%, right? that's normal. but it does come into play with cost of capital and when you're

building your models around these acquisitions, you have to build it in. it's just math. >> when you go from 0 to 5, does that make it different than it was when it was -- had been five for a long time. there's floating rate stuff. it just seems like if it gets there too fast, on a relative basis, it's low, it's still pretty -- i don't know, disorienting and jarring what the fed has done. >> certainly, like when we're building models looking at m&a, it went so quickly that there wasn't a period where we could say, we need to move now before they go up further we're sort of at this point now. but i think that -- again, i think this is normal and i think the interest rates will also continue to contribute because the strategics and some of the sponsored buyers, you know, they're going to have to take that into account as well, the leverage of the acquisitions are

going to be tougher. >> thank you very much for being with us today. >> it's great to see you too >> by the way, we should point out that cisco takes the 36th play on cnbc just 100 list connecting the world through broadband. mike fries joins us to talk about the state of the business, the slowdown in the ad market. and then an exclusive interview with goldman sachs ceo david solomon following yesterday's quarterly results. be sure to stay tuned for that and much more from the world economic forum in davos. "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. which businessman started his retail career by opening several franchises of ben franklin

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franchises of ben franklin five-and-dime stores the answer, sam walton >> i knew it was going to be sam walton that was before the walton five and dimes. twitteris auctioning off computers and oversized neon displays as they've fallen behind on its office rent payments interested buyers can peruse an assortment of goods on the website which is conducting the auction. among the numerous kitchen supplies that they're selling, it includes multiple refrigerators and pizza ovens. they're selling a sign that displays the company's corporate bid logo as of this morning, someone has placed a bid for 22,500 dollars for that neon sign the auction ends today in less than six hours and this is one of those stories that maybe raises more questions than it answers. who is doing this? is twitter itself doing this

is the landlord doing this >> kegger-rators a keg on a refrigerator. you do a keg stand on them >> okay. still to come, we're going to talk to mike fries. and then a rough day for goldman sachs yesterday after reporting its biggest earnings miss in a decade lots of questions to ask david solomon is going to join us, talk about the quarter, what's ahead for wall street and the economy. "squawk box" coming right back live from davos, switzerland why are 93% of sleep number sleepers very satisfied with their bed?

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amid a collapsing ad market and a drop in subscribers, our next guest has an outlook on 2023 and the push for broadband, the streaming wars and more, let's welcome mike fries the ceo of liberty global. they're the largest broadband internet provider outside of the u.s. with over 86 million

customers across europe. thanks for joining us. >> happy to be here. >> how do you characterize the past 12 months -- >> our business isn't dependent upon advertising at all. in the broadband business, the pandemic wasn't that bad to us, right? nobody was disconnecting internet or mobile during the pandemic they were looking for faster speeds and more connectivity so we kind of did pretty well during the pandemic period and i think we're an essential service and that's been positive but advertising, we're not very dependent on. >> in the united states, cable subs have dropped sharply. you're looking at 49% penetration -- what's the situation in europe? >> better. you know, i think the paid tv business or the cable tv business has done better in europe because streamers came later and i think the broadcasters in europe are pretty strong. and so if you really want to watch broadcast television in european companies, local news,

you have to have those local channels same trajectory, maybe we're losing 1 to 3 -- >> why do you think so much stronger >> i think there's a greater dependence on broadcasters and we deliver those products to consumers over the internet. video today -- with 25 billion of aggregate revenue of our group in europe, 15% is video. video is really not what we're about. >> the stock performance was tough. >> we had a tough time i think for -- >> but not -- >> market was to hugh for everybody. >> but it was tougher in europe? >> look, we're down the same as comcast and better than charter. the market in europe -- we're not dependent on advertising yes, advertising is evolving everywhere in the world. so the u.s. with digital advertising, the same trends in europe you're seeing traditional advertisers struggle with, you know, the big tech companies who are into advertising that's -- again, the same

trajectory but it's a little slower everything is happening a little slower in europe. >> that gives you more time to react and try to figure out what you do, what's the solution? >> we're all about fixed mobile convergence. half our revenue today is mobile when i was sitting here, five years ago, seven years ago, 16 years ago, 100% video and broadband. so we exited several countries and we got smaller in order to get bigger today, we're a fixed mobile national player in every company. competing with incumbents. a lot more innovative and -- >> can you talk about the fixed mobile piece i think a lot of the u.s. players are thinking about what fixed mobile really looks like, how much does it compete with actual fiber in the ground broadband, what the cost to actually build it out is and how much of that market can ultimately become fixed wireless versusfixed, fixed or -- fixed wire -- >> good question u.s. capable guys have started

selling verizon's mobile product. they get 4, 5 million customers each in europe, 1 out of every 2 broadband subscribers takes a product for us we're highly converged we're approaching each home and business with a fixed proposition, with equal weight and dependence fixed wireless, which is trying to provide 5g access to the rural markets, not as big an issue here because europe is dense and urban. i can see why it makes sense in the u.s. even in this company, we support the conference -- it's a great -- >> you don't believe that 5g fixed line wireless or -- whatever the next one is, somehow surpasses what has been a great business of fiber and cable -- >> i don't think so. >> that's one of the sort of existential questions -- >> and we're in both businesses.

we have 30 million homes that we reach ineurope within five to six years, 70% will be fiber. ten gig speeds the metaverse is going to be good to us >> people have said there's much more competition in europe, in the space that you're in, right, a lot of the capable, you have to allow other people on the -- >> correct >> is it as profitable a business as the u.s. where that competition arguably doesn't exist? >> in some ways, it is, and other ways it's not. we have to provide access in some instances to our networks, to third parties who are reselling the product. and there's about 120 mobile operators in just in europe. there's three in the u.s two or three in china. it is fragmented i wouldn't say it's necessarily more competitive, but it's highly fragmented and it needs consolidation. our margins are pretty good. our gross margins are 65, 70%,

our ebitda margins are 40, 45% we're a little more efficient. but the trend -- look, the demand for our products is going up yo you're consuming more broadband every year. >> and you're plan is to do more purchases -- >> the market needs consolidation. there are some markets like the uk where -- there -- >> but do you think the european regulators will allow for that -- >> for the first time, we're seeing tailwinds here. mobile service revenues are growing, we have pricing power, regulators are letting it happen because they know it's going to take a lot of money to build fiber and 5g regulators are taking their foot off our throats for the first time in a decade and they're letting the infrastructure side of our business evolve and knowing that we have to generate revenue to make that happen. i think it's pretty good. >> if you were running an old media company, i thought streaming was going to be

everything people are cutting the streaming. what's it look like? where do you focus >> what we do is we're -- we just launched in the uk a box about the size of that phone called tv stream and it's 35 pounds and no monthly charge as long as you have our broad band service when you put that device on your television, it makes your television smart, you can subscribe to my app. think about our video businesses as an aggregation business we've only been an aggregation business we bought channels and told them to someone else. now we're integrating apps and we want to be the place you go for all the apps on all your devices. from that point of view, we think we're going to be a destination for consumers who need all the apps in one place there will be a shakeout not everybody can be successful in streaming >> 35 pounds is the price, not the weight, right? >> it's a one-time fee, no monthly charge and so we've -- we've completely evolved to a streaming world where we aggregate those for you. >> 35 pounds what do you get, exactly

>> what we get is your continued broadband loyalty. and ideally your mobile service as well and if you subscribe on that to our video products, you'll pay us for it, but you don't have to. we get stickiness in a competitive market. >> mike, thanks. your dad and your grandmother. >> i know. we're family i knew your grandmother like she was my nanny that is so crazy. >> i know. i wish my dad was there. i would tell him all about it. it's nice to see you guys. >> thank you when we come back this morning, we have an exclusive interview with goldman sachs ceo david solomon. we're going to talk about the state of wall street, inflation, layoffs and much more, that interview is just minutes away and in the next hour, uber ceo i lle r srowshavwi bou guest. stay tuned

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shares of moderna moving higher in after hours trading. they said its vaccine that targets rsv is 84% effective at

presenting the disease in adults 60 and older moderna says it plans to file an application for approval by the fda in the first half of the year currently, there is no fda-approved vaccine for rsv, and you had it in your household this winter, you know you don't want it. it's not good for kids and the rest -- >> mrna vaccine? >> yeah. >> and that's the promise of that platform. >> going after cancer. knocking out vaccine after vaccine. >> powerful. >> we are going to speak with the ceo of moderna we'll talk to him about this news and much more. coming up next, goldman sachs' ceo, david solomon is going to join us we'll talk about inflation, layoffs and so much more "squawk box"om b cesack with mr. solomon after the break. w. go, go, go. sorry. nope. okay. fresh donuts - hot coffee!

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we are live in davos switzerland with a big interview. shares of goldman sachs dropped 6% in yesterday's trading session. this after the firm reported its biggest earnings miss in a decade let's get right to david solomon, chairman and ceo of goldman sachs. so much to discuss with you about what's happening in davos and wall street and the larger economy. i want to start with the firm first, which is, what is happening? and i think there were a lot of questions that were raised around what took place in the earnings call yesterday.

where you think this is all headed and maybe so we can start with the lessons of marcus to some degree. a lot of people have focused obviously on that. not to say that that's the future of the company, because it isn't anymore there were lessons in that and people are focused and trying to understand what you understood now about it. >> okay, there's a lot there thank you for having me. i'm glad to be here. we obviously had a disappointing quarter and we tried to own that up front i think the thing that's interesting is there has been a lot of focus on the investments we've made in serving consumers in the platforms as you know, we narrowed those but i think in the context of the quarter, there was an interview article in "the wall street journal" this morning the thing that affected the quarter and the year is that we have a very balance sheet intensive company. particularly during the pandemic, one of the reasons we so outperformed in 2021 was because of that balance sheet.

if you look at 2021, our roe outperformed the average by 21 basis points for the first time in 50 years, fixed income markets and equity markets are down the s&p is down 20 the nasdaq is down 30. our business mix -- we have a third of our capital attributed to this was more effective we wound up with reasonable performance of the year, better than 10% roe what i'm focused on, three years ago we laid out a strategy to grow our businesses, we've grown them, taken market share those are leaders. you can look at the relative performance through 2022, look are the r.o.e. for those businesses, those are leading businesses, part of our core, our asset management business, executing on our strategy, reducing the balance sheet if you look under the numbers and you can see them now in our new disclosure, the performance

of the core business is actually quite good when you stand it up against peers. raising a lot of money, serving clients, growing that. there's a lot of opportunity for us in the asset management business in the consumer platforms, we did some things right, we didn't execute on some others i think -- and i said this on the earnings call yesterday. we probably took on more than we should have, too much too quickly. but i think we now have a very good deposits business, we're working on our cards platform and the partnership with apple is going to pay dividends over time we think it's a good business. we're going to give people a clearer view, there's more transparency around how they can contribute but everybody is focused on -- 3% of our revenues and we're very focused -- >> i would tell you, i spoke to a number of investors yesterday who think the stock is holding up quite well. i don't know if you agree with that it is a small part of the business >> and you have a goldman premium. i'm wondering, it's under 300 --

>> books over 300. i think three -- >> some people just shooting the breeze -- i think 300 is a great spot for it. maybe the goldman premium isn't what it used to be >> i would tell you that if we have no corporate center. >> ge had a multiple that was so out of line because itnever missed, never missed. >> joe, we trade at 9 times earnings i think we've done well for our shareholders over the last three years we've gone up book value per share by 40%. the next year's competitor is approximately 20%. the half that. the this past year, some bumps

we grew our book value by 7% next closest competitor, 3%. a bunch of large financial institutions, zero we're focused on executing our strategy we made a lot of progress over the last few years we've got a lot more to do we have a business mix that we're trying to evolve. >> speak to the job cuts that's made a lot of headlines recently. >> it has made a lot of headlines. i understand to some degree it's a difficult decision to do a job cut like that. i'll tell you honestly, we struggled with it. i feel enormously for the people affected by it but we've grown the firm substantively if you go look at the revenue of the firm compared to the revenues before. the balance sheet, the capital we've grown it materially and we've materially grown our head count. during the pandemic we stopped

the normal process of reviewing under performers for 2 1/2 years. the environment has changed and we've made the decision and it's a reset. i think it was the right decision and it's positioned us very well as we go forward i hate the fact we had to do it but given how we've grown the firm and the head count was the right decision to do. >> the financial times has reported basically everything at the firm is under review spending on just about everything is that accurate >> i think that's a little bit of an over statement we're always focused on expenses we're always managing the firm we're running our normal process. again, if you step back, okay, i don't think what we saw in the asset management business in the balance sheet in 2020, the second half of 2020 and 2021 was normal with everything inflated. by the way, i don't think it was normal in 2022 when both fixed income and equity markets were down s&p down 20. the nasdaq down 20 if we have another year where

the s&p is down 20 and nasdaq down 30 and fixed and equity models are down, that will be tough. that's not the way the year is starting off. >> what do we deserve in terms of when do we get synchronized fixed income in stock markets? could it be this year. >> the 60/40 question. >> do we not deserve it yet? >> the macro psyche is breaking. you guys would agree with that if you look at -- and i just got here this morning so i haven't had a chance to go through 15 or 20 meetings. i've got 30 over the next few days see a lot of clients i think the sentiment is softening a little bit and the view of the chance of a softer landing both in the u.s. and europe is actually increasing. our economics team has been pretty soft landing over the

last six months. i was more in a position because i was talking to ceos who have been more cautious but i see ceos softening a little bit. our economics team even last weekend went to see they are not calling for a recession in europe they actually see as a little bit more positive so i think the distribution where we have a softer situation, it's still out of consensus but i think you're going to hear more of that here over the next couple of days and if we continue as we are, i think the chance of that may grow as we go. >> do you trust the fed? are they in love with being tough and doing what needs to be done they don't know when to declare vic victory? >> i think the fed's going to look at the data and do what it meets to do. i think there's a stronger point of view it has peaked. we'll have to watch the data and the trajectory the last meeting or two would endorse that view. if that continues, you know, i

think as we get through the first half of the year, we'll see some different messages. we'll have to see. >> i wanted to go back investment bank has been strong. continues to be strong i wanted to know where, you mentioned apple and the credit cards. i want to understand where you think that fits in the whole matrix long term if it does and how the wealth management piece of goldman evolves or doesn't? >> well, we're growing our wealth management business very, very nicely. as you know, andrew, we've talked about it before if you go back five years, we've really only managed wealth for a very, very small number for a group of uber, uber wealthy individuals. but goldman sachs is a big and aspirational brand and a big global footprint there are lots of wealthy people that have assets to invest we have a big, big platform so we've done a number of things to grow that. i think that will continue to grow our partnership with apple, one of the things that i think is interesting about it, it's one of the big ecosystems that

people are on around the world it's an interesting potential deposit source the we announced something with apple that's not out yet but will be coming out it allows people to take their apple cash and put it inside goldman sachs. i think it's an interesting opportunity to exerrperiment and different things i'm not going to sit here and say it will change the trajectory has it been as we're investing it in a drag yes. it's in a different stage of development and it really isn't the thing that affected our performance in the fourth quarter. >> a couple years ago we were hearing, man, things are good. things were percolating, cooking and paul tudor jones sat right there and said, yeah, but there's this coronavirus that, you know, we don't know anything about it it's over in china could mean something maybe not.

it obviously meant something anything else right now that it's impossible to say what we don't know how about debt ceiling does that smack us in the head >> it's obviously hard to see things that -- >> that you can't see, right. >> but what i would say, joe, on the debt ceiling what i would say, i remember 2011 very well, as i know you do. >> yeah. >> you know, not good for us to go further and make this an issue. in 2011 we didn't tip over but we started a downgrade downgrades have an implication i don't know what would happen if we tipped over but i don't want to test it. i think it would be a bad thing. the message is clear >> it's not like electing a speaker. you only need a few. it would be very strange for -- those guys can't do the debt ceiling. that's impossible. >> i don't want to test it >> there are people who like to watch the world burn

>> i personally am not one of them. >> just on deal making, when there's lots of confidence people make deals. right now there's not as much confidence do you think that's coming back? do you think there's going to be a whole sort of restructuring component that hasn't happened yet? we keep hearing from ceos that keep saying they want to buy stuff. the cycle's not over yet, meaning the downturn on the cycle. >> deal making has slowed a little bit i point you to our m&a revenues. we're still seeing good activity on our m&a franchise but it's off the peek it's very correlated to the discussion about the path of the economy and how soft a landing do we have the more dovish the scenario, the better chance that that rejuvenates more quickly i do think we'll see more capital markets activity almost in any scenario in 2023.

you know, my kind of historical lens on that is it takes four to six quarters to see people kind of get their head around the fact that the price is different. we had a very, very aggressive move up in stock prices and asset prices and then an aggressive move down it's taking a little bit of time to reset. >> david solomon, thank you. >> absolutely. great to see you. >> thank you very much for having me. >> still to come from a world economic forum, david reuben stein. co-founder and co-chair man of the carlyle foundation uber ceo, could be said different ways, right? >> yeah. >> great ceo. >> dara khosrwshahi. and then stephane bancel on the news the rsv is 84% effective, their new vaccine. "squawk box" will be right back. i'm so glad we did this.

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impressive. okay, you've convinced me, i'm back. just gonna... get this... and we're not quite half a world away but for argument's sake we're half a world away from the federal reserve in

washington it's still dominating the conversation david reuben stein, the carlyle group's co-founder and co-chairman. >> thank you for having me. >> the weather is pretty good here right now. >> it is >> the world is getting excited there's a possibility they saw what japan did, in europe the interest rate hikes looked like they're moderating even in the united states, maybe 25 basis points, maybe 25 basis points >> right. >> are we at that point, an inflection point today >> i think the fed has telegraphed it's likely to do 25 basis points and they haven't telegraphed it but it's probable they will do 25 in march they have paused and see what the impact is. hopefully by the end of the year they will do the reverse and begin to lower rates

that's the hope. >> that's crazy, isn't it? why raise it if you're getting ready to lower >> it's a long period of time. in the end, you know, the fed is very data driven i think jay powell's done a good job. he tells you pretty much what he's going to do and explains it afterwards the fed used to not do that. >> liesman has made the point. they were vociferously saying they're not data driven. they're going to 5 1/4 come hell or high water. >> what they might do might be different than what other people think they should do we have an advantage with him. he talks in english. he doesn't talk in fed speak so when he speaks you can understand him which is a plus. >> what do you do in anticipation of that environment? >> the best time to invest is when there's some uncertainty or when the economy is nervous in terms of where it's going. that's the best time to invest, not when the markets are going this way. >> we're there

we were talking we're there but maybe not even fully there. >> david solomon just said the same thing >> i think it's a good time to invest now because i think the markets are not going to see another 20% drop in public prices i think that's probably past us. i think we're coming back to the point where people are going to feel comfortable investing i think prices between the sellers and buyers are still a big gap because the sellers are afraid -- >> holding on? >> right the buyers don't want to look stupid by buying now there's too big a gap. that is a bigger problem than anything. >> the private has some catching up to do with the public, too? >> private marks haven't gone down as much as the public marks. the private marks should have a different standard they are not accurately reflecting what the real value is i haven't seen that. i think the private marks are pretty accurate. based on what i've seen, private marks are not going to see a big drop, anything like thepublic marks. >> fiscally, do we have some

concern, would you say you've been around a while we're never at 120% of gdp we've only been at 120% of gdp as far as debt in 20 years. >> that's right. italy and japan are the only people comparable to us. it's not great we have one advantage over other countries. we have a printing press that for some reason people want to buy our dollars. we don't have a sovereign wealth fund but we have a printing press. it's not great to have $31.5 trillion of debt and we'll have more but i think it's sustainable. it's not great i'm not in favor of it i don't think the economy is going to collapse over it. >> how would you do more about it are you unhappy that gridlock is forecast for the next two years? >> of course, gridlock is never a great thing. >> would you like to do more after what we did for the last 18 months? >> i don't think gridlock is ever a good thing. >> some people do?

>> i don't think anybody thinks gridlock is a good thing. >> i do. >> do you like what you see going on in congress is that a good thing >> maybe not as far as a debt ceiling. i don't want another build back better i don't want another omnibus bill for 1.7 there's plenty of things i want. >> but gridlock is not a good thing. it's not a good thing -- >> people would disagree with you on that. >> maybe you and i disagree. >> i will. >> run more efficiently, more bipartisanship way. >> why bipartisanship with democrats, always republicans agreeing with what republicans want to do why is that always bipartisanship >> could be democrats agreeing with republicans if republicans were -- >> i always hear it. >> democrats came on and said they wanted gridlock -- >> always doing more spending. >> what you saw in the house when they were trying to get organized, was that a good thing? the way the government was --

>> i don't know. if it was based on omnibus and having the power to stop something like that from happening year after year after year, maybe it was a good thing. it all got worked out in the end. better than a rubber stamp >> i don't think we had a rubber stamp before >> rubber stamp on omnibus we had a rubber stamp on all the legislation in the last year and a half that wasn't stopped. not a single republican vote, david. >> build back better did not pass, right? >> well, the -- >> build back better it was cut in half pretty much. >> they called it the inflation reduction act. >> i didn't come up with the name i think congress would be better served and the country better served if we have more bipartisanship you might not like that phrase. >> i don't like your brand of bipartisanship. >> we can agree to disagree. i do think that in terms of fiscal policy congress is not likely to default in my view

the markets are not going to want to have a default we've never had a default. that's not a good thing. >> speaker mccarthy has asked for all the parties to sit down and start discussing this. the white house to this point has rebuffed him is that a good thing or a bad thing? >> it's a good thing there's an old saying -- >> parkinson's law in washington says the amount of time it takes for the government to do something is exactly the amount of time that's available so they have until early june so they probably really won't get serious until the end of may. >> can i just ask you real quick about china and the fact that janet yellen is not in davos but is in zurich is meeting with the vice premiere of china who was just here. seems to be a major shift happening here, you hear it that china is opening up, people are feeling better about it. do you think that'sreal? do you think that's a hedge fake what do you think that is? >> when you change your government policy you can't do

it overnight so it looks like you were making a mistake before so you evolve. the chinese government is evolving from a complete covid shutdown to a more different covid policy i think they would like a better relationship with the united states they are astounded we think they're going to invade taiwan i don't think they're against having a better relationship the real problem i think is the u.s. doesn't have a situation where we can get into a better relationship with china rather than causing the republicans to be upset. >> since you know politics so well, what do you think of the fact that janet yellen is only 2 1/2 hours away from here having the meeting there than -- >> she didn't want to come on your show, i guess, that was the big thing. i don't know why else would she not come here >> come here and not come on the show. >> sometimes it's hard to get here it's not as easy to get here as zurich. >> it is >> in closing, if democrats, the biden administration comes up

with another 3 trillion this year for really good stuff, you'd be okay with that? >> i don't think that would happen >> republicans voted for it? why not? they did 8 trillion in two years. >> i don't think the republicans in the house are going to agree to that. >> won't be bipartisan. >> otherwise you'd do 3 trillion >> i wouldn't be in favor of 3 trillion but passing a budget on time having a budget on time is a good thing to do. >> we'll do that you don't think that's going to happen. >> you never considered running for office >> i would never do that i wouldn't inflict that on the country. >> just on viewers >> exactly much easier. >> david, thank you. appreciate it. when we come back, got a lot more to talk about the ceo of uber will join us live he's just back from meeting with drivers and employees in ukraine. stay tedun, you're watching "squawk box" and this is cnbc. [music - cover of blondie's “dreaming”]

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welcome back to "squawk box," everybody. you've been watching the futures this morning, and right now it looks like green across the board. dow futures up by 44 points.

the nasdaq up by 43. the s&p up by 11 yesterday was a big down day s&p was down just slightly. >> the ceo of uber just back from a trip to ukraine where he met with the drivers and they've been meeting with the support services since february. joining us is dara khosrwshahi >> we've got an amazing team on the ground there they're risking their lives to help doctors get to hospitals and teachers get to school, helping refugees, transport refugees and getting winter supplies to families in need and they're on the ground working every day to save lives risking their own lives. i wanted to go there and i wanted to get there in person and show them my appreciation for what they're doing and then

see what's happening. >> what did you see? >> you know, it's a strange combination of normalcy in that the people of ukraine are living their lives and at the same time you're in the middle of a full scale war. and it's so difficult but the people, they're so brave so entrepreneurial in their approach to life and also approach to the war. and i came out incredibly energized and at the same time energized that all of us have to do more. we have a campaign with united 24 where we're showing driver stories, brave drivers who are helping save lives every day and that campaign has raised $3 million. it's enough to buy 50 ambulances that are saving lives and for me, i wanted the team to know we're ukraine but it also reminded me there's a lot more work. >> what kind of personal precautions do you take when you go to places like that >> i think you've got to be

smart, but there's risk involved but they're taking risk every day so why can't i take risk for a couple of days >> what's the cost of the operation there? >> the operation is not profitable but we're not in counting mode. right now the teams are making sure that we are there for the people of kyiv and transportation, which is something that you take for granted here, you know, when power outages, when power goes out, when there's a rocket attack, the demand for uber transportation absolutely increases. we don't have enough drivers, et cetera so we just want to be on the ground helping anybody we can. the honestly, we're not counting right now. >> a whole new humanity to the business. >> we're a technology company but we're a technology company that operates on the streets, in the cities that we operate in with real people affecting lives and that comes with a

responsibility but it's incredible the just absolutely incredible. >> there's a number of multi-nationals, you look at star link, uber, a couple of others where you talk to people who are there on the ground. there's a number of people from ukraine here who say, we couldn't live without it. >> there are so many mentions of starlink it's a life line information is everything now and the way, the creativity in which people of ukraine are using technology -- >> use starlink to call their uber. >> yeah, yeah, it's incredible. >> what are you seeing more broadly, in the business globally itself? >> i'd say the business is doing well we talked in q3 we guided for gross bookings for up 23 to 27%. we talked about ebitda hitting levels consumer spend remains strong. a lot of people are thinking about there's a reception

coming, et cetera. there's demand, weakness we obviously haven't announced our results but generally i'd say across the world the consumer stays strong. >> do you have trouble finding drivers? are they plentiful these days? >> be no we need more drivers we are now the single largest source of work in the world. 5 million drivers, not gig workers, 5 million drivers on our platform and we could add another 500,000 drivers tomorrow and they would have work so we absolutely need to add drivers. at the same time, 70 to 8le 0% of drivers who are joining the platform are saying that one of the reasons that they're joining the platform is because of inflation, it is because of cost of living and earning on uber is helping them buy their groceries or otherwise continue be to live their life. >> are you past the point of local government or state or --

take your pick, global governments killing the goose that laid the golden egg with good intentions for workers where they just don't understand the business model can you still get screwed? you can totally get screwed up not screwed. ruin the business model all over the world. >> things can go right, things can go wrong i think for us we have the independent contractor business model which is where we came from where we're trying to take the business model is you have the flexibility of working wherever you want whenever you want one of the drivers in amsterdam, whenever he greeted to a rider, he would say, welcome to my office you can have that flexibility, which is cool. more and more what we're doing is we're introducing benefits, minimum earnings for example, in france, a result of sectoral bargaining, resulted in minimum earnings of 7 euro 65 which made us increase prices, et cetera. that's okay.

it makes driving more attractive. >> what has it done for demand what does it ultimately do for the margin is. >> the demand is there the it does increase price for the consumer long term we think it's worthwhile driving on uber or -- >> it's only attractive in a place like france where they make you do it >> we've rolled it out in california we've got -- >> california is another place where regulators get involved and start to say we're going to do this. >> i think from our standpoint we actually are now leaning into that i actually do think in a world where we need more uber drivers and a world where society is more looking to protections, we want to have those conversations. >> were you there? that was not the approach -- that was not the approach of your former ceo and i would dare say when you first got this job i'm not sure that was the way you were thinking of it. >> it wasn't. >> was it the forcing mechanism of this is the world we live in

and the politics are the politics and if i don't lean into it, it's worse or -- >> i think there's a reality in which we are a regulated business and you have to think about where the world is going there's reality for me and more importantly just talking to drivers. >> right. >> on average earnings on uber are very, very attractive. we talked about, for example, last quarter $39 per utilized hour on average in the u.s. but the fact is that there's volatility in the earnings you have good days, you have bad days there are good situations, et cetera if we can remove some of that volatility, which means benefits, minimum earnings standards, et cetera, we could actually make driving more attractive the fact is when i joined, i hadn't talked to many drivers. i hadn't driven. i drive in san francisco i drive a tesla. why? if you're ever in town you might get me, so the experience of -- >> what kind of tips are you getting? >> i'm actually getting decent

tips. >> what kind of star rating are you getting as a driver? >> i'm a five star driver. >> do they know who you are? >> no, i wear a mask i wear a mask. >> has anyone ever said to you you are the ceo of uber? >> one person? >> i said yes. >> "undercover boss." >> what was the tip like from that person? >> i don't know. >> if they knew they would say, he doesn't need a tip. >> what was that, $90 ride they wanted for something -- >> he knows. i told him >> yes >> andrew bends my ear all the time >> how do you satisfy a client -- >> the prices have come down. >> the prices have come down. >> sometimes they have to stay high for you to get the car. that's the way it works. >> it's the dynamic. >> they're playing it out. dara, great to see you we appreciate you being here and the work you and all of your colleagues -- >> you are an uber ceo. >> you are. >> uber uber ceo. >> coming up, moderna ceo

stephane bancel. the we'll be right back.

coming up, we've got breaking economic data, the producer price index and retail sales both for december. the numbers and instant reaction are next plus, the ceo of moderna joins us on set for the latest answers on covid vaccine and now

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welcome back to "squawk box," everybody. we are just seconds away from a december ppi and retail sales numbers. we've been watching the futures ahead of that. you're going to see we're still looking at some green arrows

yesterday was a rough day for the dow. we lost 360 points plus. now you're looking at the dow indicated up by 38 points. the s&p futures up by 10 it was down by about that much yesterday. nasdaq up by another 40 points 10-year note has been interesting after the bank of japan didn't do anything today when it was expected to maybe raise the band for its 10-year you're now looking at the 10-year at 3.459 steve liesman, take it away. >> i have the final demand, ppi actually falling more than expected on wholesale prices down 0.5% on the headline number november actually was revised down, too. so a little less inflation up the chain there. let me see if i can give you some other intermediate demand final demand which you did that, okay i don't have retailsales yet give me a little bit more on the ppi here final demand for goods you have the goods deflation in

there, down 1.6% x food and energy up 0.2 the final demand, products, the main number i have retail sales taking a big hit down 1.1%. .1% worse and that's the only headline is the question whether or not the consumer-we talked jed about the consumer having the wherewithal to spend and whenever they do -- whether they do that. better news on inflation somewhat worse news on retail sales. i think the story here is we had that strong october for the beginning of the holiday season. started earlier. a lousy november and it looks like now a lousy december as well we'll see the national retail federation will put up their tally of holiday spending later on this morning. the other question is whether or

not people have moved from goods into services. that's going to be something to watch. this retail sales report puts up mostly goods services with the service side i'll throw it back to you guys in davos stay warm. >> steve, thank you very much. been watching what's taking place with the futures the market looked at that as good news. maybe some welcome relief that the fed will be paying attention. inflation not as strong as had been anticipated retail sales not as strong either dow futures up 84 points now you're up by about 86. there is a new vaccine race. moderna says that its rsv vaccine is 84% effective at preventing disease in older adults it uses the same messenger rna technology that's present in covid shots. this is being watched closely by investors as one of the next mrna opportunities

it has some competition. stephane bancel, the stock up by 7.6% stephane, welcome. >> thank you for having me great to see you. >> i want to talk about this rsv vaccine and the promise that it brings for what's happening. i'd like to go back because the last time we were here in davos in the winter it was january 2020. >> yeah. >> i saw you at that point and we were at a breakfast right over here. >> i remember. >> you came up to me in this small room you were talking about how you had actually -- you were working on a vaccine for covid and at that point covid-19 didn't even really exist. >> we were -- >> i think there was no name at the time >> right it's amazing how much you have accomplished in such a short amount of time. >> thank you we have a big team and the technology we talk about rsv, the technology is quite special. >> yeah, it is unbelievable. the idea that it's the first time we're seeing you back here and how much has been happening since then

what about the rsv why did you go after the rsv what is this showing you >> sure. pre-covid if you look at the respiratory viruses in the u.s. and around the world, rsv was number two it's not very well known it used to be not tested because there's no vaccine, nobody really talked about it the there's a flu vaccine as you know as we look at the impact on the world, we need to find a solution so we deployed the mrna technology actually, if you look at one of the amazing things with the technology, we started the phase 1 for the rsv vaccine in january of 2021 just after the covid-19 vaccine was approved here just 20 months after we are now seeing phase 3 positive data think about how you have taken functional technology, six, seven, eight years. >> what did you use, a -- not a spike -- is it a spike protein surface protein? >> profusion pro tan.

>> highly conservative >> right doesn't mutate we run the experiments in 37,000 participants, classic control, randomized, all of that good stuff. very happy last night when we were able to share the results in "the new york times." we are preparing the filing for the fda. during the christmas break we want to accelerate the finding the other great news about the mrna. >> you can use the exact same equipment and people and raw material. >> lipid -- >> same. >> get to the site similar side effect profile i would imagine? >> it's very interesting fever, the placebo groups, 2.8%. in the active group, the vaccine group, 4.0%. very close to the placebo group. we like the high efficacy.

>> can i ask you something very quickly and it's still in dispute. do you think, for example with covid, the messenger rna vaccine, i always assumed natural immunity would have been better there were others that argued that why would a spike protein that's such a specific part, great way to do it, but i would still think natural immunity would be better. no, we concentrate the spikes together but wouldn't the whole virus gge you better >> the data show that people are vaccinated have less risk of being specialized than people not being vaccinated show you how to run it. >> different method than infection itself. >> can i just ask you though a related question, a trust question it has to do with davos and this idea of all of the plutocrats here, the idea that there were mandates for vaccines and just

the trust of, frankly, the leaders, both policy leaders and business leaders who took the positions over the last year or two. and now if there were questions then, there are clearly questions now. how do you think about that in the grand scheme of things, especially when you are actually introducing potentially new vaccines and whether people will trust and be willing to take them >> it's a great question, andrew if we look around the world because we have a chance to talk and to provide vaccine to many, many countries, it's really amazing to see the differences country like portugal with extremely high vaccine rates, there's been no political debate there's been no debate and then with all of the data they were going to a population to take the vaccine for the country to protect the elderly, to get them back together. >> there's a question whether transparency, that is a good thing or bad thing in places like the united states and parts of europe, they would

say there wasn't enough transparency as the twitter files have now emerged, you've probably watched some of these things, there's all sorts of disputes about who was trying to influence what government officials, corporations, et cetera >> yeah. if you look at the data, i mean, the clinical data were retun by independent data case by case we run the entire analysis ourselves i think the sense was very strong the time lines were surprising to everybody the process that was used phase 1, phase 2, phase 3. >> what do you think has to happen now to the extent there are going to be scientific breakthroughs and there are going to be people who aren't going to trust the science >> it's a tough question that governments and industry have to work together to figure out how do we educate people how do we share the real organization just on the vaccine. 800 million people -- >> unfortunately people do

invoke science and science, there's one thing for sure, that these vaccines saved our collective asses there's no doubt about it. but did it prevent be transmission did people say it did? yes. did people say you need to protect everyone else, we need to send the military in to vaccinate? they invoked science that was not science the science is you get myocarditis much worse from coronavirus than the vaccine pick your poison. >> how many vaccines, with the rs vf vaccine, i hate rsv. i think of it with little kids it runs through the kids' populations quickly. how many vaccines is going to be too many >> that's a great question which is why we are trying to combine them we have a covid booster and flu booster and rsv in one dose. when we talk to consumers, people did i get a covid shot this winter or flu shot? think when you had the other one

people who are 50, 60 years old. >> is there medical literature on whether stimulating your immune system too many times can that become a problem? do we know >> how do you run a controlled experiment figure out and -- >> very -- >> it's so hard to be very precise about the science. so we just need to be careful and keep watching like we do vfd, the side effects. >> i get sick from the covid booster. every time i've gotten it it's got me. >> that makes sense. >> my body reacts. >> your immune system reacts to it that's a good sign i have no reaction. >> is there any way five years from now there could be an adverse long-term effect on the immune system? >> i don't know. i think it's highly unlikely talking to scientists. >> stephane, thank you so much. >> thank you so much.

when we come back, a lot more here in davos, switzerland. markets in the new year. ann walsh from guggenheim partners we're joining you from the alps. we'll be right back. ♪ 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. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.

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our next guest sees the recession starting in the middle of to2023 expects inflation to start. ann walsh, chief investment officer at guggenheim partners investment management. scott's done this so many times over the years that was a shocker for all of us >> minor. >> family, everyone else great to have you on

>> thank you >> i don't know whether the latest inflation number informs the same opinion with you but when we talked to you previously, that number was not out. it's a bigger than expected drop in ppi >> indeed. it actually adds to our narrative, i think we we, as you mentioned, are predicting the recession to start mid year it's because we think the fed is continuing to push on the qt accelerator and continuing to drive down inflation as well as labor costs and all the other elements that lead into that story. and we're a little ahead of a market pierce in terms of our viewpoint. our market peers are predicting a recession maybe at the end of 2023, maybe the end of 2024. we think the quantitative tightening which is a combination of rate hikes which we anticipate the fed will continue, the market is priced into 25 basis point rate hikes

this year still and of course the addition of the quantitative tightening coming from the reduction of the balance sheet will help to drive down balance sheet prices all of this is feeding into our narrative. >> the depth of the recession, how is it going to feel? is it going to feel soft is it going to be hard is it short lived? is the market already discounted a mild recession >> so the market's pricing in a mild recession some market participants are anticipating we avoid recession entirely the goldie locks experience. that's not the place where we end up the more quantitative tightening we see, the more we see the risk of a more prolonged and dieeper recession. historically recessions last about a year if you exclude the pandemic recession and the global financial crisis, and that's a normal business cycle so we could see that the in addition, we think that

the recession normally where we are right now, we would see the recession being fairly mild, but there's the risk that -- particularly with the reduction in the balance sheet and the lack of liquidity that the fed is introducing that that recession story is going to be getting worse. >> do you have to justify what the fed is doing or could they overshoot? >> they could overshoot and expecting them to. the that seems to be their history. >> part of the calculus that they over shoot. >> indeed, it is i'm looking at the quantitative tightening. >> just 1/4 point, half point? not talking about the effect of the qt >> in the background >> so what do you do as a result do you wait? this is not a time to buy even though the prices have come down because you think there's more pain to come >> i think this is a time to reposition there's one thing the fed has

done for us and they've put the income back in fixed income. right now there's a very good time to be investment fixed income relative to equities. equities haven't repriced. as we go through a recessionary time line, we will see that. certainly right now the fixed income story is a good one i would be avoiding the lowest credit quality, high yield and/or bank loans at this point in time because we haven't seen the default series start we haven't seen that cycle begin. as we go through a recession, even a shallow one, defaults will rise. the risks will get much worse in lower rated credits. >> where was i going to go next? in terms of the notion that this is some type of systemic wage price inflation, is it that's why the fed is -- we talked about it yesterday, that's why they're so city committed. it can be worse than a recession obviously. we saw that in the past. is it just a reopening

phenomenon is it really actually kind of transitory even though we can't use that word anymore or is it because of all the money that we printed and spent, fiscally and monetarily what do you think? >> there's multiple layers to that question and to the answer. there was the post covid reopening and that was the jump in prices of goods and supply chain disruption and that led the fed to believe that the inflation was transitory it has pervaded, however, all aspects of the economy including services and of course wages and now it has become a headwind that the fed has to fight. what they're really concerned about is that if they pivoted too soon or even paused too soon, then what would happen is is that that would allow the reemergence of inflation and they don't want that to happen. >> then maybe it becomes more deeply ingrained. >> exactly. >> nip it in the bud

theoretically that's what they would say. >> great to have you on, thank you. >> thank you very much appreciate it. when we come back, illinois governor j.b. pritzker joins us. he's looking to bring more jobs and employers to theand lof lincoln. stay tuned, "squawk box" will be right back they can help you create a retirement-income plan designed to balance growth and guaranteed income. and provide access to specialists who help with estate planning to look out for future generations so you're not just growing and protecting your wealth. you're sharing it. because doors were meant to be opened. great job, everybody!

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welcome back to sidewalk box. we are live in davos, switzerland, on day two here at

the world economic forum and fortune magazine's ranking of the largest companies, after the pandemic, businesses started to change our next guest is making his pitch to bring big employers back to the state of illinois. joining us now is illinois governor j.b. pritzker great to see you tell us what the message is, because we have been hearing from a lot of different business leaders quite publicly, as you know, who have been talking about the city of chicago, the state of illinois, and to be quite blunt about it, a lot of them say they want to get out. >> well, that's not what we're hearing. in fact, you saw the kellogg moved to chicago just recently, so just another example of corporate headquarters coming to illinois and we're doing a lot to attract business and retain businesses we had one business that left, citadel, because, frankly, he lost a political election trying to unseat me, and wanted to get out and made it as an excuse

that we have a high crime rate but the reality is, he went to miami where they have a worse crime rate >> you're talking about ken griffin of citadel tell us about that did you guys ever have a conversation yourselves about this >> not about my run for re-election. he just decided he didn't want me as governor, so he went after me and spent $50 million trying to take me out and then another guy, richard, who owns u-line, spent another $55 million trying to take me out in the same election and look, you know, i've talked to ken griffin i've known him for a number of years. we still have a major citadel headquarters in chicago and quite a number of people still working there. they haven't moved jobs, but -- and we're glad to have them in illinois, but i'm sorry he left. >> but it's not political so say, for example, the ceo of mcdonald's has raised concerns about the security issues in chicago. >> absolutely. and i have sat down with him to talk to him about that i think his comments are not

inappropriate to talk about the safety and security -- public safety of people in the city of chicago and what that means for business we're doing, actually, quite a lot to address that, both in crime prevention dollars applied so that we're intervening on the street literally, providing jobs for young people, and then of course, we just passed an assault weapons ban in the state of illinois, and that's going to help, but crime is coming down gradually in the city, and across the state it's going to take a little while. these things don't come down immediately. but it's getting better. >> is it -- governor, you know, the other side would say that it's no cash bail and lenient prosecutors. you got to approach it a whole different way, and i guess the mayor, obviously, of chicago, gets a lot of criticism on that as well. you sure that the cure is -- that you're prescribing is what needs to be done >> it's working, and the reality is that when you talk about no

cash bail, people misunderstand that >> shop -- >> that doesn't mean that you're just letting the jail doors open >> some places, that seems like that's what's happening. >> by the way, in the state of new york, we have a similar issue. in fact, an employee from goldman-sachs was killed in a -- in the subway. this was earlier this year after somebody who was let out on bail who probably should not have been -- clearly should not have been. >> banning assault rifles isn't going to do anything for us. >> violent criminals shouldn't be let out on bail, but when you've got somebody who committed a nonviolent offense and frankly would be kept in jail -- >> that's the broken windows argument >> they just don't have a few hundred dollars. that's not a justice system. that's injustice >> some people say when you let the broken windows, that whole idea, that if you let minor crimes go without any punishment, the whole environment seems to be more lenient and it just leads to more serious crimes. you don't adhere to that >> it's the serious criminals that are, you know, that are

committing the violent crimes. >> shoplifting >> it's not people who are committing shoplifting that are going out -- >> if a hundred people go in and steal from a store -- >> i understand. they should be held accountable. that's not the suggestion, that we're not holding them accountable. the issue is that it's violent criminals that need to be kept without bail because right now if you're wealthy enough, you can buy your way out if you're a wealthy drug dealer, you can buy your way out with bail >> typically blue states like california and san francisco, which are losing new york is having a tough time. i'm a new yorker i love new york. chicago. all of these are also high-tax states, and the question is, you layer on high taxes, plus some of these genuine safety issues and the like, and all of the additional costs, by the way, that you need to spend to get all of these issues fixed, and you say to yourself, how's it going to get there >> actually, we're running surpluses in the state of illinois

>> how much of that is a function of federal money? >> that's not the case we made significant changes in our tax code, but what we didn't do is raise the individual income tax rate or the corporate income tax rate in the state we're actually in decent position we paid off a whole bunch of debt over the last four years, since i took office. my predecessor ran up enormous amount -- $17 billion of a buildback log in the state we paid it all off and the reality is that we're in a much better fiscal situation in the state and at much better position to help businesses. it has not been a high-tax state. 4.95% individual income tax is not a high rate. we're not raising that rate. the rate has remained steady, and we're attracting jobs and business to the state. >> why did kellogg come? >> well, they -- as you know, they split the business into three, and i talked to the ceo the ceo wanted to bring that division to chicago. i mean, he actually has lived in chicago before, wants to stay in chicago. >> great place >> do you think it's a messaging

problem? and by the way, a political messaging problem, because one of the things that you hear, depending on what you're watching or who you're reading, there's a lot of focus on safety, security in chicago in particular >> look, let's start with, there are challenges that we still need to overcome, and crime is too high it's too high all across the nation so, that's a real thing. so, when we talk about messaging, there's no getting around the fact that that's one big challenge. people need to know that things are getting better we still have major things we got to overcome. we've got to fund education better in the state of illinois. and you talked about taxes look, the biggest challenge we've got in the state of illinois, honestly, from a tax perspective, is in many areas of the state, property taxes, because unfortunately, unlike most other states where they're about half and half dollars for education coming from the state versus dollars coming from local government, the reality is that in illinois, it's about a third from the state, and the rest of

it from local. >> we got to run you want to run for president? we asked the governor of georgia just before. >> if he wanted to run for president? what'd he say? >> do you want governor kemp to run for president? what are you learning in davos don't take much of this back to chicago. it's not going to help your problems there, i don't think. >> oh, now, now, spoken like someone who believes in this right-wing nonsense. >> exactly >> the reality is i'm talking to businesses from around the world about coming to the state of illinois and getting a great reception. we passed a climate equitable jobs act people want clean energy to power their businesses, and they want a state that's got stable government that's actually taking care of people. >> you have a sister who spent some time in government, washington, i'm talking about. i'm talking about washington what do you think? >> i'm focused i just won re-election, folks. four years in illinois >> that's right out of the playbook >> i have a job. >> they both had the same

answer >> i have a job. come on back >> good to see you >> great to be with you. >> we have another big show coming up tomorrow from davos. among our special guests, jpmorgan chairman and ceo, jamie dimon, and morgan stanley's chairman and ceo as well they will both be joining us this does it for us today. there's james gorman this does it for us today. now it's time for "squawk on the street." ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber live at post nine of the new york stock exchange. futures, modestly green here as the market absorbs a morning of soft ecodata ppi is a miss. retail sales down more than double the estimate. yields backing off the curve two-year near 4.12%. our road map begins with easing fears in davos, anyway, as hopes rise for a soft landing.