it is 5:00 a.m. at cnbc global headquarters. here is your top "five@5." a sentiment shift after wall street's worst day since december futures, bythe way, lower agai today. could the recent selloff be short lived? new record on the dry powder on the investment sideline a new debt ceiling showdown as the u.s. hits $31.5 trillion borrowing cap. a live report from d.c. coming

up. and another domino set to fall in the ongoing crypto crisis later on, elon musk being painted as a visionary and a liar as lawyers layout opening statements in the tweet trial. it is thursday, january 19th, 2023 you are watching "worldwide exchange" here on cnbc welcome to the show. i'm dominic chu in for brian sullivan let's check on u.s. equity futures after the worst day since mid-december with the dow falling more than 600 points as you follow with our time lapse here throughout course of the day. it was not looking good and things were market edly lower yesterday. futures as i said before, pointing to loses. dow implied lower by 159

s&p by 17 and nasdaq out performing down by 50 at the opening bell in the last two hours, we have seen things take a turn for the worse. if you checked the bond market overall. futures are sliding to the lows of the session in the bond market, a sharp move in the 10-year treasury hitting the lowest level since september and right now yields are lower again. be benchmark 10-year treasury at 3.36%. we were above 4% not that long ago. people buying up safety of u.s. government bonds 2-year treasury is 4.07% 30-year treasury is 3.53%. keep an eye on that treasury complex. yields falling across the board. in energy, oil prices were higher catching a bid of the chinese economy and more fuel demand coming from the iea

today, we saw reversal we are lower again $78.50 we were above $80 yesterday. 1% decline there ice brent crude down 83 cents. $84.15 down 1% as well. in crypto, bitcoin and ethereum had been showing upside surprise over the last couple weeks it is a little bit more mixed in trading today. bitcoin prices now below the $21,000 mark up .10%. flat on the session for ethereum $1,527 raaround the world, we saw a mixed session. japan fell 1.5% on the day shanghai and kospi in south korea gaining 1% and europe's day starting. it is red as you see there

dax off 1% .50% for the ftse 100 in the uk and the cac 40 in france off 1% as well. not a lot of green on the screen in europe. back on wall street, data showing investors may be chomping at the bit to put money to work. whatever money there is on the sidelines. the investment company institute or ici says a report amount of funds flow into money market accounts at the end of last year $4.4 trillion. topping the peak in the early months of the virus pandemic in 2020 that record level of cash could potentially fuel a major rally in stocks. some strategists say investors may hold off since market sentiment is very negative and money markets are generating better returns than in years because of higher rates. let's talk more about all of these currents with timothy chubb at gerard. tim, this is interesting we talked about the death of the

60/40 portfolio ofand stocks and bonds last year. now bond investors are doing well there seems to be a normality. flight to safety stock prices go down is that something we can expect to see in the coming weeks and months >> i think it will be a theme for the year ultimately the market needs to move away as long as the data continues to provide us evidence that we can from the inflation story and talking about the selling growth environment it ultimately is the look at the fixed income markets it means more treasury exposure and fixed income portfolio you don't have to look far to find opportunity you can get income that is 350 basis points over amazon bond

warehouse leased by amazon to the credit side of things. investment grade and below investment grade we don't expect it to be where they were during prior recessions there is plenty out there. the companies are in great shape. >> in the past, when we have seen sharp moves lower like the treasury complex, we know there are a lot of factors at play the bank of japan was a big influence. recessionary fears right now yields north of 4% of the 10-year treasury now 3% to 4% mark implies people are cramming for the safety of u.s. government debt guaranteed by the treasury. is this a sign that recession is inevitable >> i think the dichotomy is

priced in. i think there is some flows especially with the strength of the dollar investors coming into the united states to get the yeields. you know, ultimately, we are a little overbought at this point. if you look at the inflation data and what the fed is projecting with the fed funds and you need to go in the first six months, we expect to pause some time in may that would imply a 10-year is closer to 4.25% relative to like you said with the 10-year treasury inching lower at 3.6% it might be a little overdone. it feeds into the recession narrative which we expect. >> the one thing the recession

can do is will inflation that is the idea here. is there inflation story in your mind done? is it in the rear-view mirror or still threats in the coming months for higher prices for consumers out there? >> you know, i don't think there is a necessarily set of higher prices we will see the lag effect with the housing flowing in the data. we have it on the soft side of data it doesn't flow through to the hard data. i think the inflation picture will soon change and how the wage growth environment will impact corporate earnings. corporate earnings have been resilient. last quarter is the first since the first in 2020 where profit margins fell for the s&p 500 most come from higher costs of doing business opposed to actually coming from wage inflation. although we have seen wage inflation slow a little bit, but more softness in the labor

market the challenger gray shows it is off the year prior t ultimately the softening should be an encouraging sign for wage growth and how it impacts corporate earnings now is the reverse of what we have seen in last year where you focus on companies and your portfolio which have been exposed and ben pefitting from h rising rate environment. you have to flip the script. >> before we let you go, what with exactly is your outlook for the stock market in 2023 >> sure. we're cautious we think 17 times earnings is a fair multiple with yields. with the yields become lower and dollar sell off this year. that has been helpful for risk

assets i think we are weary coming into the fourth quarter earnings season we have banks reporting so far i wouldn't be surprised if this is the kitchen sink quarter where companies lower the bar for guidance and throw all of the expenses into the quarter and get the bar lower to jump over it later in the year. by the time the fed is done tightening, investors will look at 2024 and what the trough should look like for the economy and growth at top and bottom line >> choppy trade. timothy chubb at girard. thank you. to washington, d.c. and another debt ceiling showdown today as the country hits the $31.5 trillion credit limit, if you will borrowing limit. the treasury expected to take extraordinary measures to keep paying the nation's bills without raising the debt

ceiling. washington could be on the verge of default brie jackson joins us now. brie, are negotiations progressing? >> reporter: good morning, dom republicans are demanding spending cuts in return for raising the debt limit the white house says it won't negotiate and neither side wants to pay the political price of the government default the u.s. is expected to max out the borrowing limit today. meaning the clock is ticking for congress to raise the debt ceiling. >> if you are going to have the party, you have to pay the band. >> if we default on the debt, the inflation rate would be greater than it has ever been. >> reporter: experts warn this comes with consequences like a recession and stock market crash and issues on social security. the debt limit should be raised

with no limits attached. >> if we think about the default or playing these political games using the debt ceiling as hostage for the kinds of so-ca so-callednegotiations -- >> reporter: house republicans want to negotiate spending cuts. >> set a budget. set a path to get to a balanced budget let's pay the debt off and make sure the future generations have opportunities. >> reporter: janet yellen sent a letter to speaker mccarthy saying she would take s extraordinary measures that would last until june >> this is a simple thing that congress needs to do they have done it over and over. >> reporter: congress raised the debt limit 78 times since 1960

congressional leaders recognize raising the limit is necessary it has been done 49 times under republican presidents and 29 times under democratic presidents dom. >> brie, you mentioned the deal making that is going on. what type of spending cuts are republicans proposing to try to get a deal done here >> reporter: dom, house speaker mccarthy hasn't given specifics. they have been divided over military spending and possible cuts to military spending. they have thrown out alternative fuels and cutting social programs either way, lawmakers will hash out some type of deal so they do raise the debt limit >> debt limit debate brie jackson, thank you. coming up on the show, can the netflix rally actually hold on those shares as you see are up

60% in the past six months as the company prepares to report latest results after the closing bell another casualty in the ongoing crypto csiris. that is coming up. we have a lot coming up after this commercial break. helping them achieve financial freedom. we're proud to serve people everywhere, in investing for the retirement they envision. from the plains to the coasts, we help americans invest for their future. and help communities thrive.

all right. you know that music. earnings central netflix shares are on a tear

after hammered in the first half of 2022. there are up more than 60% since april. this comes as the company reports earnings after closer bell today its first report since the s subscription tier in april let's talk more about all of these are alex kantrowitz. he is a cnbc contributor alex, we have talked about the netflix story over the course of last year because of the bottom it saw and the off to the races rally we have seen is all of the good news already priced in? >> this is a crucial quarter for netflix. i have seen expectations from 5.5 million ads to 7 million

ads. if it beats on the high end, you could see thestock have room t continue going up. if it misses, the pressure is high this is a company that actually contracted subscribers last year it is a tenuous moment for the company. this is a very, very important quarter. >> the subs are the key. alex, you and i know over the last several years, it is not necessarily the earnings per share beat or miss or revenue beat or miss it is the subscribers and what wall street expects. what does wall street have to do >> i think the ad supported tier is important you can't forget that. obviously it launched in the replie middle of the quarter. the key is content we see competition from disney and amazon and it just isn't

netflix own ballpark there are more teams in the league right now it doesn't come as easy as it used to be i think that key is produce good con content. no "squid games" like q4 >> it wasn't that long ago, alex, when the oscars buzz and movie buzz and award ceremony was netflixed produced program "orange is the new black." now amazon, disney plus and others have put out a huge slate of their own award winning original content does this mean that netflix has to up the game at a time theycot >> no doubt. what concerns me is netflix isn't going to tell us what it forecasts for subscriber growth for the next quarter that is going away to see that combined with the fact you have increasing competition and the fact you

contracted subscribers in a quarter last year, that is not a good sign. i understand they want to focus on revenue fine end of password sharing. okay the focus should be limiting churn and focus on growing subscribers. when you see the signal we will not tell you how many s subscribers we expect to grow, that sends alarm bells. >> alex, you follow these companies and communications services and tech and media and t telecom. with netflix, can you compare t others in streaming or spotify or others in terms of what you think the subscriber growth could be with advertising supported products is this a game changer in the way it could be for tech companies? >> the advertising has gotten

off to a tough start i think this quarter in particular will be great because we are finally getting to hear netflix leadership and how they are doing there. i think the key is for advertising is try to limit churn. every different platform has their own little thing they do on the side of streaming netflix will try to do this and see if it can limit churn. for amazon, talk about comparison they don't need necessarily to be making money on subscribers if they can drive people to retail disney, more brand and business to theme parks for netflix, where is the added element? if your business is counting on doing ad supported tier to limit churn, you will have problems. it is a tough fight for netflix as we have seen over the last few years although they are up 60% in the past few months >> alex kantrowitz

thank you very much. see you soon. >> thank you, dom. still on deck for the show, commodity price crunch hitting shares of alcoa in a big way your big money movers when "worldwide exchange" returns after this break ming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change.

welcome back to "worldwide exchange." time for the big money movers.

financial discover the company reporting $3.73 billion in revenue compared to the $6.6 billion analysts were expecting. potentially signaling a weaker economy ahead. shares down 6.5% in the pre-market trade next um is hb fuller shares slipping after missing on earnings as revenue due to a fall in demand for products. warning it expects revenue to be plat for the fiscal year shares off in the pre-market trade. and finally alcoa. dipping in negative territory after the net loss of $374 million in the fourth quarter. shares off 6% in the pre-market trade. let's get a check of the

other top headlines with nbc's frances rivera in new york >> dom, good morning the new mexico district attorney will announce if any charges will be filed in the fatal shooting of the "rust" film set. alec baldwin was holding a gun that killed helena hutchins. prosecutors have concentrated on the individuals who handled the gun that day the crew members denied any wrongdoing. and dangerous winter storm is marching east after blankets the plains 27 million are under winter alerts from wyoming to maine parts of nebraska saw 2 feet of snow of o snow in colorado, they saw dangerous driving conditions and pileups on the highway. and jacinda arden says she no longer has enough in the tank

to do the job. finally, a ground breaker at columbia nemat shafik is the first woman to head the ivy league university when she assumes the role in july dom, back to you >> thank you, frances rivera as we head to break, let's check on shares of hertz it is teaming up with the city of denver to build out the electric vehicle infrastructure. including adding more than 5,000 evs to its fleet in that city and installing public ev charging stations. hertz hopes to strike deals around the country the shares are down roughly 1% in pre-market trade. we are back after this lomita feed is 101 years old. when covid hit, we had some challenges.

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from the parent company as it scrambles to stay afloat it is thursday, january 19th, 2023 you are watching "wiorldwide exchange" here on cnbc i'm dominic chu in for brian sullivan it is just around 5:31 a.m. eastern time here is how u.s. stock futures are shaping up as i mentioned, we are off implied lower by 185 s&p down 22. the nasdaq down 66 again, a possible down day to follow-up on yesterday in markets for bonds, yields are lower across the board we are now below 3.4% for the benchmark 10-year treasury yield. currently 3.36%. 2-year treasury is 4.076%. 30-year treasury is 3.53%. every part of the yield curve,

maturities lower compared to yesterday. let's hit oil prices as well like the stock market, wti crude below $80. world benchmark ice brent down to $84.30. let's get a check of the top stories with silvana henao >> dom, good morning the trial over the tweets on taking tesla private is getting under way. lawyers representing the plaintiff state the tesla ceo as a liar he had funding secured for a $7 billion butyout at time

the trial is slated to last three weeks. coin desk is exploring a sale as it looks to separate itself from the digital currency group. the crypto trade publication hiring at lazard souring sentiment across the industry hitting stocks tight to crypto in a big way. names like marathon digital and riot platforms down big yesterday. adding to steep losses in the past year. allstate is warning it expects higher losses in the latest quarter as a result of the deadly winter storm that hit a majority of the u.s. last month. the losses for the fourth quarter are estimated to have hit $779 million with 80% comin

from the storm analysts expected the figure to be $568 million, dom >> we heard similar from travelers as well. silvana, thank you very much to washington, d.c. and the situation with the debt ceiling. treasury secretary janet yellen warning the u.s. would hit that fl threshold today. inaction could cause harm to the u.s. economy and global financial stability as a result. lawmakers appearing at a political impasse on the matter. ylan mui is here with latest on where the situation stands ylan, how close are we >> reporter: dom, republicans and democrats are on the collision course over the debt ceiling. some lawmakers are looking for an escape hatch. the treasury department is expected to hit the borrowing

limit today and start deploying extraordinary measures in order to keep paying the bills that includes suspending reinvestment in the thrift savings plan and pausing retirement and government employees. those measures are expected to run out some time this summer. both parties are looking to see what to do if the country ends up in default. the house is looking at a bill to prioritize payments if the debt ceiling is not raised that was part tof the agreement struck with kevin mccarthy it is spis expected to come up a vote in the first quarter. and then a discharge petition is looking to vote on the clean energy increase. it would still ultimately need at least some republicans on board. there have by a few bipartisan attempts to fix the debt ceiling

over the years one is to give the president the ability to raise the debt selling. we -- debt ceiling dom, the only thing guaranteed is this is a messy process back to you. >> we should expect that with the midterms and the house speaker vote there is a lot, ylan, of talk, of cutting social security or medicare two of the most important entitlement programs in the country. how real are those possibilities? >> reporter: that is the third rail of american politics. dom, at this point, some of the most conservative members like chip roy of texas are saying medicare and social security will remain untouched. however, to make the targets for

spending reduction, you have to see big cuts in other programs they are not saying what programs those are because that could be a political tliability. it will not pass the senate where democrats are in control the question is is the conversation about spending reduction enough to apiece and get them to vote on the debt limit or do they really want to see red lines all over the budget i think that is where you see the risk for investors and whether or not some of the members are just spewing rhetoric >> ylan, you mentioned the idea we are not going to get the idea of the clean process or bill for a debt ceiling raise without other attached to it is there any discussion or how likely would it be for america and congress to couple with something clean to address the

debt limit itself? >> reporter: at this point, republicans are saying that is a no-go. kevin mccarthy said it is off the table. sometimes in washington, you need to see things fail before you see things pass. one potential outcome is house passes a plan to cut spending to cap the budget at the levels we saw in the past fiscal year. then it is dead on arrival in the senate we will have to find out whether or not that is really enough in order to apiece republicans or if they want to see more. >> continuing messy debate ylan, thank you for that report. coming up on the show, potential tax problem for elon musk how his takeover the twitter may cost him more than expected. and as we head to break, on soccer fan paying $2.6 million to see the greatest faceoff.

a saudi arabia businessman to watch cristiano ronaldo's new club take on a team featuring lionel messi. flo rida awarded more than $82 million in damages for the celsius lawsuit. the jury finding the company guilty of the breach of the endorsement deal with the rapper and hiding information from him. and cat named mittens causing chaos in chess a cute kitten averaged 27.5 million games played per day that is 40% more than any month in the company's history cat avatar who ewkn it could drive such

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(vo) this is more than just a building. it's billion-dollar views. perfectly located. an inspiration. and enough space to start an empire. loopnet. the most popular place to find a space. wielcome back to "worldwide exchange." morgan stanley is downgrading roblox morgan stanley says first half bookings are priced in and expects slower growth for the the second half of the year.

wolfe and meta platforms for the fourth quarter expects holiday ad spending was solid and should surpass expectations m much piper sandler is cutting the target price on tesla to $300 a share from the prior $340. piper citing price cuts and delays with the self driving those down 2.5% right now. to the takeover of twitter by elon musk it is proving to be a bumpy ride the purchase of the social media platform and time spent at the headquarters in california could result in the bigger hit on musk's wealth. robert frank will tell us why the time spent in california is such a big deal.

robert >> dom, elon musk left california and high taxes two years ago. now california could come calling again because of his time at twitter. as the effective owner and ceo of twitter, he is spending time in san francisco and we don't know how many days he's been there. california tax law says that any time spent in california providing services to a company is subject to state taxes. if he was performing duties as the ceo of tesla and spacex and twitter while he was in san francisco, he could be taxed by california for any compensation during that time at all three companies. california franchise tax board could argue that because he is running a california-based company, he is also not really a texas tax resident

california requires any advisits to california to be transitory he was awarded a $55 billion pay package back in 2018 that earns out over time he, of course, sold about $40 billion of tesla stock over the past two years the tax attorney who works with a lot of wealthy californians says california could argue mumusk planned to buy twitter before moving the franchise tax board is aggressive with high profile taxpayers. he said, quote, they will definitely be looking at this. dom, it sounds like a stretch to say his time in san francisco should be taxed by california, but the franchise tax board is very aggressive in that state. >> it happens all the time robert, we've spoken about this

on camera and off. the higher tax states, new york, new jersey, connecticut, california, are not likely to give up on the tax revenues generated by the wealthy taxpayers. is this a precedent setter how much do the tax states enforce the location and allocation type issues with regard to where people spend their time >> you are right, dom. they go after the high profile cases because they can make an example of them and everyone will see this person did not get away with simply leaving the state apparend coming back a lot with musk, it takes added importance for california. he accounts for a large percentage of the tax revenue for the past two years just that one tax bill in 2021 was over $3 billion to the state

of california. he's high profile and it is a meaningful amount of revenue if they can get not just revenue from the stock sales, but the $55 billion compensation progra that he almost finished out earnings this year >> you wonder if there is talk about moving twitter headquarters to texas. >> i would not be surprised. they auctioned off most of the stuff. it is an easier move. >> less stuff to haul. robert frank, thank you for the update. on deck for the show, stock losses poised to continue at the opening bell cfra research lays out why better days may be ahead and sam stovall lays out the s&p 500 there is a bullish outlook out there. we'll be right back.

[music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪

♪ dreaming is free. ♪ accenture, let there be change.

welcome back to "worldwide exchange." time for your "wex wrap-up." here we go shares of discover sliding on fourth quarter after boosting the provision of the economy the company did beat on earnings and revenue. hong kong scrapping the quarantine for cases beginning january 30th this after the contact tracing and vaccine pass system this month. xi jinping warns of the covid outbreak during lunar new year coming up. this is the direct acknowledgment of the crisis on the health side of things by xi. and h.b. fuller warned of the drop in demand for the

fiscal year. investors are holding record number of cash total net assets and more than market funds rose to $4.8 trillion beating the peak of $4.7 trillion back in may of 2020 alcoa reporting decline of 20% due to challenging market conditions and higher production costs and slowing demand stock is falling on the weaker forecast for the year. shares down 6.5% gearing up for the trading day ahead, we have data on deck. jobless claims and december housing starts and december building permits and january philadelphia fed manufacturing figuring figures out at 8:30 a.m. we have p&g reporting and netflix and key corp as well a number of fed speakers today

susan collins and lael brainard and john williams making speeches investors get the look at the latest from the european central bank at 7:30 a.m sticking with the trading day ahead. renewed recession worries and curbing stocks to start the year despite mounting concerns. our next guest is sticking with the bullish call for stocks through year end sam stovall is the cio at cfra his price target is 4575 that is the most bullish on wall street tracking the s&p 500. sam, thank you for being here. we have spent a lot of time talking about what seems as though is a consensus opinion among ceos and your peer strategists about recession or soft or hard landing

for that reason, many have bearish forecasts. why are you bullish? >> good morning, dom first, the price target is a year from now or close to a year from now and a lot can happen. traditionally, after a market decline in one calendar year, the market is up more than 80% of the time in the subsequent year gaining 14% i think that because of the uncertainty that we are likely to be seeing noin the first quarter, it is a tale of two halves where the fed will tighten one more time on february 1st then hit the pause button. we are reminded the fed does tend to cut interest rates nine months after the last rate hike. >> in your models, sam, as you put your projections together and data for inputs and forecasts in there and that

generates 4575 number and what stood out to you and what is driving that bullish forecast? is it the rate side of things in valuations is it earnings growth? what is driving it the most? >> i think it is the magnitude of the pending recession i think it will be mild. i think we will fall into one if we look at the weakness we anticipate for the first quarter of 2023 and second quarter when all is said and done, the mber, might died the be-- date the ben of the recession in 2023 not

pricing probaperly. the fed is data dependent. we see the gdp change index come down month over month. our expectation is the fed will realize once it starts the pause, it will not have to restart. >> sam, some of your peers at other firms, like mike wilson at morgan stanley is stating this could be weakness in the coming quarters that is driving the down side forecast they have can you take us through the earnings picture as opposed to bar barclays his target is 3,900. why do you think the earnings

picture could hold up? >> i think we are on the precipice of an earnings recession. expectations are 2.9% decline in fourth quarter with of 2022. a 1% decline in first quarter of 2023 a 2.5% decline in the second quarter of 2023. i'm also reminded that company management does an excellent job of managing expectations 52 of the last 53 quarters have seen results exceed estimates. i feel we could end up as the prior guest said in the first half hour, we could end up with a kitchen sink quarter where companies say investors are expecting bad news let's write off as much as we can for the end of 2022. that would set us up nicely for 2023 >> sam, ten seconds. a favorite sector for 2023 >> yes you go from first to worst

meaning get out of the groups that were the best like consumer staples and utilities. go to those beaten up the most areas like consumer disc discretionary and tech >> sam stovall, thank you very much the bullish call that does it for us on "worldwide exchange. "squawk x"bo picking up the latest coverage from davos economic forum helping them achieve financial freedom. we're investing for our clients in the projects that power our economy. from the plains to the coasts, we help americans invest for their future. and help communities thrive. millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile.

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good morning pick your poison cool inflation numbers that means recession fears are rising futures are indicating a lower opening following yesterday's selloff which definitely was the worst day this year.

more fed speak and economic data on the way as well. debt ceiling drama the nation expected to take it to the limit treasury department expected to take action which pushes the date to june we have time netflix on deck. expected to report as the stock mounted a strong comeback for investors. it is thursday, january 19th "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the world economic forum in davos, switzerland. i'm rebecca quick along with joe kernen and andrew ross sorkin. we have another huge round of