good morning futures are flat dow is higher after that big surprise rally on friday did recession fears start waninging? we had them for 24 hours nasdaq with the focus on the next wave of quarterly results. a survey of economists say the rate hikes may be working which means we may need smaller ones and not as many. and salesforce is getting activists attention. it is monday, january 23rd "squawk box" begins right now from new york.

good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. it is good to be home, guys. >> it is it is. >> i'm warm. >> we have headwinds >> the week that was what did we take away from the week >> that it's good to be back home. >> did we ever get on that time zone six hours. we got up at 11:30 >> i got up at 10:30 p.m. new york time to come home. >> up for 24 hours >> you know what we did have a great slew of guests maybe learned a lot. saw what they were thinking. i don't know what the take away is >> if it is 15 degrees, we can still do it. >> 13. who is counting?

>> and survive the people that are there, i got a little stockholm i can be davos boy at the most >> we'll give you that it's good to be back we have a lot of news. it is a big week for earnings. 12 dow and dozens ofs&p set to release numbers this week. the companies include verizon, 3m, johnson & johnson, microsoft, tesla, southwest and many more. let's look at what is happening with the equities futures at this hour. joe mentioned we are coming off a big friday day of trading. nasdaq with the best day since november 30th. you had the s&p and dow and russell 2000 breaking three-day losing streaks today, the dow is down 3.5 points

nasdaq down 17 watching the treasury yields we saw incredible moves last week this morning, things have flattened out. 10-year treasury at 3.5% above that after it fell earlier in the week. the 2-year treasury is back at 4.18%. if you are looking for moves, bitcoin crossing over $23,000 over the weekend below that right now at $22,891. that is the move of 40 plus percent from the lows of $16,000. >> it's something, becky. in the meantime, the business economic survey is out and could signal the fed rate hike strategy is working to slow the economy. economists expect to cut jobs and spend less on expansion for the first time since the pandemic business owners are still concerned that the fed decision making could push too hard on

the economy and put the u.s. in the recession this year. the next two-day meeting starts january 31st we have steve liesman coming up in the next hour, guys >> i think we're back to maybe inflation moderating maybe we don't get a horrible recession. that would be -- that would be amazing. >> that is what jpmorgan chase is now saying. >> inflation does -- we will see what happens with china, obviously. for people that say, you know, you can't rush the pivot, it just seems like the body language looks like they are swiveling a little fed sets milder course on rate increases. lael brainard, she doesn't speak for everybody, they are interested in the incoming data.

i thought they were dead set -- >> lael. >> bullard doesn't get a vote this year. >> that's a good point my point is a lot of people with varying degrees of views on all this >> larry summers has been interesting. in davos, he was speaking a bit more benignly in terms of things maybe we have a better shot of coming out of this without some severe recession he also made comments at the cnbc event where he was talking about how the one thing you don't want to do is fight inflation again. you need to snuff it out >> pandemic reopening. that is not what it -- we did print a lot of money you do see who has a vote? austin goolsby

a squawk remembegular gets a vo? did you see what he said we had that eight-box. he said it took five people to replace me >> not wrong >> i had no answer for that. i want to come back with something and say -- >> he's a smart guy. >> i just said i have no answer. it took five people to get to your level of analysis and insight. check out the shares of salesforce elliott management taking a multibillion dollar stake of the company. history shows that elliott seeks board representation and pushes for companies to make operational improvements this is after salesforce earlier this month said it was laying off 10% of its global work force. it looks like a double diamond

slope over in davos, andrew. you didn't ski >> sadly i never hit the skis. a lot of meetings. never hit the skis. >> i hit a lot of parties. >> doesn't count, joe. >> did you go to the big salesforce party, andrew i'm not invited. i wonder if you went >> my understanding of the way davos works is that it is a off the record chatham house rules arrangement. what stays in davos is -- maybe, but maybe not. >> i didn't agree to that. i d i didn't go? what do you think of chrissy

hinde? i love the pretenders. maybe reining it in with layoffs. >> people make their choices around what looks good or bad. you know, microsoft is looking worse with sting so there >> that's why people don't like davos? >> what does elliott want? he wants to phone home what does elliott want >> the truth is this is a company pre-pandemic we talked about this two weeks ago. 71,000 employees today they had about $808 88 -- 80,00 before it had 50,000 employees

pre-pandemic that is a big cut if you think that is what they are talking about. >> you think elliott wants more than the 10% >> oh, yeah. no question. part of the argument is that this is a company -- and i'm not sure i agree -- but this has become a bloated company i don't know if you agree or disagree or debate that is the view that elliott has right now. >> the whole week all they want is publicity here is what we are talking about and here is how we're fixing this. blah, blah, blah now you are telling me it is off the record are you sure send me the actual guidelines. i didn't realize that. i apologize. no other comments? you can't say?

>> you know, let me say this in the best way i can i attended a couple of things for a very short amount of time. i don't have any great wisdom to share. >> i know what you mean. let's talk about abbott labs confirming the justice department is investigating the baby formula plant shutdown last year for contamination issues. the plant shutdown for several months which led to a shortage abbott says it is cooperating with the justice officials several violations at the plant were discovered after four bacteria infections were discovered in infants. two of the infants died from the formula. that stock off 2.6%. and big sunday for the nfl playoffs bengals advancing to the afc

championship game after beating the bills. they face the chiefs who are just a one-point favorite. nobody knows about patrick ankn go back in and tape it up. you know how the ankle feels the next day the bengals have an expression called who dey!. hudepohl beer is big you get moody with the hudey who dey think going to beat the bengals. last night was who was that? the defensive and offensive lines dominating the bills it seemed like they shouldn't -- i have seen the bills not look good recently. i have seen them look great. any given night, you never know. >> the blowout and stop watching

just like the eagles games that was another blowout situation. >> i don't think there is any question joe burrow is for real maybe watching him get better and better and becoming the pre premier. and a special moment in the game when they announced damar hamlin was at the game to the crowd we had seen him earlier. showing a heart with his hands it was almost three weeks ago that he went into cardiac arrest on the field playing the bengals. >> amazing he is there and looking. >> didn't turn out the way he would have hoped and if you stayed up late, the 49ers took care of the cowboys they face the eagles next week in the nfc

9-6. field goals. that was low they blocked it, but it was a crappy kick. sideways and low. >> i feel for that guy >> yeah. >> that's in his head now. >> i guess it didn't matter. coming up, another big wave of earnings. economic data and the fed. fed meeting approaching fast we get a read of what investors should be watching what you are watching is "squawk box" on cnbc that's the picture of the pil.cato it looks nice with that lighting we'll be back. >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most. completely on its head. bringing legendary design... and state-of-the-art technology... to a fully-electric suv. the all-new, all-electric eqb from mercedes-benz.

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we have several economic reports coming out this week the two standouts are gdp and the fed's preferred personal consumption gauge on inflation markets will have another round of quarterly results including johnson & johnson and general electric will report, too. microsoft and tesla and boeing and intel. for insight how it plays out in the bond and equity market is priya and michael zen at ubs priya, we noted the movement in the 10-year treasury and 2-year

treasury it was interesting it seemed to signal, i don't think the fed would ease up, but the economy was slowing more than people had really imagined with the retail sales. should that have been something we liked the market sold off on it. we went interest inflation to recession fears. then once we got back to 3.5% on the 10-year treasury, now i wonder what are we supposed to make of it >> sure. we had quite a move lower in rates this year. i think most of it was inflation fears that were coming down. i do think that the recession is very likely this year. i think we saw that first sign in retail sales number i would say that goods consumption is declining this is the intended consequence. i do think the economy will slow i think the market may be a little too optimistic that the fed is done and the economy will slow we think gdp will come out

strong things areclearly, but not slowing into recession territory. you get close to 4% on the 10-year treasury, you are supposed to buy. the economy will slowdown later this year. we look to the fed and the fed says we told you there will be pain we need to make sure inflation is closer to 2%. i think that move from 8% to 9% to 4% is so much easier on inflation. when you get from 4% to 2%, that last bit is hard that is service inflation and wage inflation the fed will hold tight and not cut rates this year. that is when rather than being in the front end, buying the long-end treasury and fixed income makes sense you have to be patient there is uncertainty i would not be chasing the move. if you get 3.75% or 4%, that is

something to own in the economy likely heading into recession later this year. >> michael, i'll get to you in a second priya, do you see a softening with the fed's rhetoric or not being data dependent quarter point. not a half maybe is there a little bit of a pivot coming or do you see the body language origi beginning o the pivot? >> i think the word pivot is planned by the fed i do think the body language is changing they are getting nervous about two-sided risk to growth and inflation. inflation is coming weaker than what a lot of people thought growth is starting to weaken what they want to do is go slower when it is a little murky, you

drive slower that is the plan where they will downshift again with 25. keeping going. that is the message the market has heard. the message in february is one more and done. our view is 25 and go until the second quarter and then stay there. they really want to make sure inflation is down. that is the message. you still have to communicate. it is hard we don't get a dot plot. i think they are swiveling or pivoting there they are trying to tell us we can keep going, but at a slower pace. >> michael, with all that in mind, what should investors do you still have pretty attractive yields on the short end. a dividend yield of 1.6% on the s&p. stocks really aren't that cheap. >> that's right. i think that comparison between what you can get from treasury

or bond or dividend yelled with the s&p isn't favorable for the s&p. you know, despite that so far this year, we see reversal of fortune from last year there has been a surge of growth stocks and absolutely trounced the value sector it is not clear yet if this is a dead cat bounce or follow on to the tax loss selling in december or something more durable going on here. i do think the prints this week will be super crucial with the direction of the market. particularly in big cap tech so much gloom about margins and the secular story. we are near the 200-moving day average on the s&p low for the vix. low for the volatility index of the 10-year treasury as well those typically have not been great entry points for the market they often have been selloff triggers i agree with priya

don't chase on fixed income side or the market side here. i would let this play out a little bit and kind of being more likely to buy on dips after the prints that come through this week. >> we started out the year with hopes it wouldn't be like last year sometimes that means something if you have a good january let me ask you, mike, it is not all the fed. you are looking at a lot of things how is the consumer? what do you see there? what do you expect for the remainder of earnings season >> this is a great question. i think the action in the credit card company prints last week was super fascinating. you get more credit card prints this week. you saw high charge-off levels on the credit card side. we know the used car market has come down a lot. we know consumers are much more likely to be upside down on their auto loans now this is priced in.

we have disappointing prints the stocks kind of fought off the short sellers who i think by the end of the day slunk away in the corner we have to watch the super credit super carefully we know the credit levels are very high. we know that the job market so far has been super durable we are hearing now about the layoffs. to what you and andrew were the chatting about earlier, it may not be the end of this layoff bit. this may be the beginning. you may see activist investors looking for more obviously a heavy layoff rate is not going to be great for the consumer i think that bears watching, joe. that is good to point out. as far as the rest of the earnings season, there is a debate about margins the optimism i have seen is we

have seen the producer price index now grow more slowly than the consumer price index the cost for companies are slowing relative to the prices they could get that could be helpful to margins. >> michael zinn and priya, thank you. ubs. big presence for some reason in davos. >> yeah. looking for an advantage >> signs everywhere. we have a real focus there weird. >> yeah. welcome home, guys >> you notice that >> i wonder why. ubs. all right. thanks see ya', priya. when we come back, we are all-in on earnings season. johnson & johnson cfo joe wolk will be on cnbc when the dow reports come morning. and next, former president

trump getting ready to change up his social media plans wait until you hear that story that story is just ahead >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. now i have this. this is inspire. it's simple... it's just a button. sometimes i press his button. inspire is a sleep apnea treatment that works inside my body with the click of this remote. no mask, no hose, just sleep. we go night-night now. inspire. sleep apnea innovation. learn more and view important safety information at inspiresleep.com. another busy day? learn more and view important of course, you're a cio in 2023.

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and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number. welcome back to "squawk box. sipping here on my squawk mug given to me by the great rebecca quick. >> show the other side >> here we go. there you go >> zoom in more. >> joe is cut out of the picture. >> more, more, more.

okay >> these are mugs all three of us have. >> there we go let's go back to the news this morning. "rolling stone" reporting that former president trump may not renew the contract with truth social the contract expires in june and the former president has told people close to him he doesn't be want to re-up the contract requires him to make any social media post on truth six hours before he posts on any other social network. this raises the question if mr. trump will end up back on, you bet, musk's twitter. will he pay for twitter blue or improved twitter blue with no ads? >> i see a lot of ads. i think knowing the former president, he's not getting what

he needs >> the return -- >> from truth social not getting what he needs. definitely >> that would be my guess. >> i can't imagine if we see it on twitter again for entertainment sake, wouldn't you like to see that sorkin, don't you miss him bonkers. i think deep down, it would give you something to talk about every day. >> who says i'm not on truth social following his ups and downs? >> oh, you could be. is parler gone >> i think it's gone >> i've been following you, joe. >> i don't like following people i like blocking people >> you're good at it >> on truth social >> i'm not on. shut up. when we come back, big tech layoffs. alphabet and microsoft are

slashing jobs among the glowing number of companies. will that make them more attractive to investors? and the debt ceiling hanging over capitol hill. will both sides rise above to negotiate a deal to keep the nation from defaulting we set up the debate right after this >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. ♪♪

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the fighting continues on capitol hill as the white house and leader kevin mccarthy play hard ball over the debt limit deal joining us with advice on how congress can come together is former senator heidi heitkamp. she is the director of ofthe institute of politics and former senator judd gregg welcome to both of you senator gregg, let's start with you on this. the things are getting heated up and looking complicated. is there a way for us to get things resolved to not put the

nation in some sort of stress over whether or not we pay our bills? >> of course it is a simple way two sides sit down and reach agreement which what should happen unfortunately, this is a turn from substance to politics i think the white house and i think dick durbin believes pushing it to the brink works in their favor. they are thinking of the gingrich period. he was self emulated with the government shutdown. you have house republicans who are hard core that they don't mind looking at default which is extraordinarily damaging to our economy and nation's reputation internationally and value of the currency it is politics now, not substance. hopefully they will switch to substance closer to the end game this is different from the past

because of the nature of the house of representatives being so close and the house members that control the house of representatives being minority being so hard over you have the president who appears to be hard over which doesn't make sense traditionally he was able to reach agreements and certainly obama did. i like to think we would reach agreement. we should reach agreement. no reason not to reach agreement. we spent the money we should pay for it probably should institute caps that would be a good idea. that is the only thing which is disciplined spending in the last few years. is it part of the package? >> caps on what we are allowed to spend >> the only thing that is disciplined in the last 20 years of the appropriations process has been having caps which set the upper limits on which you can spend money. it has been very effective very, very effective they don't exist today

that's what speaker kevin mccarthy has asked for is caps it is a reasonable request in my opinion. i'm not sure the politics of it will allow it to happen. >> senator heitkamp, do you think these caps are reasonable and what we have seen in the past >> let's start out with -- and i know the governor -- when i go back to the previous president, we had three debt limits passed unencumbered straight up. that was because they didn't want to confront this challenge of debt and deficit. now we're in a situation where we have to address this problem. speaker mccarthy has a caucus that is very interested in doing this what i would suggest is that he wants to initiate a debate how about he passes a bill that raises the debt limit and sets the caps and be sends it across. the other reason why the caps,

which is something that sequestration which did impose some budget discipline and those caps were eliminated because they kept getting breached the republicans -- a deal that you couldn't raise defense spending without raising discretionary domestic spending. so, yes, the caps held kcur curt curtailing we saw excessive deficit spending in the sequestration period >> heidi, the caps that mccarthy is talking about right now effect domestic spending, not defense spending >> i'm not sure. his caucus who elected him have asked for across the board 20% reduction to achieve a ten-year goal of balancing the budget and reducing the department. if you look at this, then fine,

put it on the floor and pass it and send it to the senate. that will initiate the dialogue. it is like this game of chicken. no one wants to go first because we all know spending is popular. you saw it in the infrastructure bill >> heidi, just strategically and politically and i hate to be crass about it, isn't there say sense the democrats will try to push the republicans to almost force the issue in a which to make one side look better than the other? we are talking about this on a practical level. the practicality of the politics of this will be very different >> andrew, if the democrats are thinking that, they are thinking wrong. it whill be a pop on both their houses as we solve the deficit problem. that is a game of chicken no one

should be playing. let's do the right thing let's actually pass it >> senator, i don't disagree with you realistically, don't you think -- i hate to say it. it upsets me as a citizen to watch it all in action senator gregg can speak to it. both sides are always trying to play the game. it is who can play the game better in a terrible way >> andrew, if i can just say when president trump asked for a clean, you know, cap or budget deficit -- when he asked to raise the budget limit or debt limit, he got those clean ones in a bipartisan way. so to suggest democrats wouldn't cooperate or work with republicans is a little unfair, i think. >> well, i think you have to remember when trump did that, he also had a rider that spent $350

billion more andrew, i think you are right. this is politics one side sees a significant political victory and forcing the other side to the ground i think the democrats, as i mentioned earlier, are thinking of the gingrich model. the whole republican house secon basically self emulated. if you are thinking soft landing for the economy and push this to the extreme, you will not get a soft landing you withll get a thud because we are risking the currency which is a risk to the economy. >> talk what happens if this gets pushed further than the past >> if it goes to default, you have more than a weekend of it certainly i hope it would not be longer than that you get a downgrade.

moody's. they don't have a lot of credibility. as a practical matter, there will be actions. it creates an international attitude of do we want to risk reserves in the american dollars when they do stupid things like. fiscally few -- stupid if there is another krcurrency,t gives the left against the dollar the advantage we have is everything is done in dollars. we don't want to risk that >> senator gregg and senator heitkamp >> treasuries are carried 100% of value because of the faith of credit what happens if you actually go to default we don't know. >> that is an excellent point.

senators, thank you both we appreciate it. coming up here on "squawk box," more to come will it be a smaller rate hike this time? we talk to muhamed el-erian. we will discuss that and more as "squawk box" rolls on. e from anywhere to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪

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well come back to "squawk

box. alphabet is laying off 12,000 workers. some tech stocks up 11%. here to discuss what the recent cuts could mean for tech stocks is gene munster. good morning to you, gene. we heard from them we also heard from microsoft while they were in davos having that party with sting, which turned out to be not such a great look and then you have activist investor elliot management now this morning in salesforce's stock and you can only imagine that that 10% head count reduction could turn into more what do you think? >> it's going to turn into more, andrew just to put some parameters around that. i looked at where we were at the end of 2019 in terms of head count and looked at big tech and most of them have grown at the same pace as their revenue typically 50 to 80%. the one standout company that

hasn't that had ha growth is apple, in terms of their head count. their head count was only 19%. and i bring that up as a case study and i think what will be a guide look for other tech companies. ultimately when you put this together, it implies there's still another 15 to 20% of head count reductions for these big tech companies in the next three to six months. and i -- >> and you think that's -- you think that's across the board. we were talking about salesforce earlier. the question is, do you try to look at what the employment picture was like prepandemic salesforce was at the 80,000 just a month ago they're down to 71-something and they were at 50,000 prepandemic. and i don't know if you think that's a good barometer for all of this. you got to turn the clock completely backwards >> not entirely backwards. once again, use apple as an example, the 20% benchmark is a good -- is a good indicator.

ultimately the issue here is that the head count growth being at the same pace of revenue growth is one piece. the second is, it's impossible to make the proper changes in the speed that these companies need to do it. the one company that has done it, obviously, twitter, and that has its own -- >> let's talk about that, though because -- and i will say, in davos, one of the things that i heard from so many different tech executives was almost a level of awe irrespective of what you think about what's happened at twitter, a level of awe from a management perspective of the willingness to cut as deeply as he has and a sense that at least thus far, it's working meaning that the service hasn't broken down completely >> in part of my belief, i agree, it is impressive. i think it is freeing for some executives to look at what's happened and he's set that as a

plausible approach that you can significant head cuts. and ultimately it keep coming back to these companies added too many people too fast in twitter's case, the business is still going on. in apple's case, they're still growing revenue. so at the end of the day i think that, you know, again, it's -- these other companies aren't going to do it they have a sense of kind of politically how to go about this that elon musk doesn't >> gene, let me just ask, if you have elliot management now in at salesforce, does that give them cover to do things that they would like to do does this put pressure on them how would you read that? >> i think it gives them cover ultimately, probably cover to take a step in the right direction. but even if somebody comes in new, it's something where you can't go and take that full measure that you need to do. twitter took more than a full

measure. but these other tech companies haven't taken enough. >> here's what i can't figure out on the salesforce front, you see the big job cut number and you see the stock pop marginally the question really i think longer term is a multiple story, more than just about anything else and so how much gain are you going -- from an investor perspective, are you going to get simply from the cut alone? is this a revenue story long term >> so for tech stocks, you need to do both, you need to have substantial profitability, preferably growing profit margins and you need to be growing. if tech companies aren't growing, they're dying and for tech investors, they need them both they need both profitability and revenue growth in the case of -- >> if you were going to run a screen on tech broadly, would you run a screen looking at the employment figure based on how much -- you know, how -- how

they grew employment over the last two years, two-plus years, pandemic-wise and expecting a cut and say, okay, i'll buy that stock? how would you do this from an investment perspective >> i do want to quickly go back and answer a question that you asked. the impact here, just to put google's recent cuts into perspective, is that they're operating margin goes up by 1% with those recent cuts, that assumes a $300,000 average salary per employee. i think these -- even though they catch a lot of headlines, it really doesn't move the needle when we think about that screen, what's the screen that we're ultimately looking for we're looking for companies with persistent growth at a right valuation. that's our investment framework. but that screen in this case is, we want to look at companies that have an ability to continue to grow revenue and have head count or head count is moving in a direction that is up 30% from where it was prepandemic >> gene, before we go, i see you

renamed your company what's the thought >> so that's correct it's deep water asset management and we introduced some new funds and introduced a new brand and it better reflects who we are, which is, we invest both in private and public growth companies driven by tech and so it's the same team that i've been with for the past 20 years. we've had some huge additions in the past year. from my perspective, nothing changes. i'm still -- >> i don't know. i don't know i liked loop and i think you could drown in deep water that's the thing -- deep water -- >> it's better than -- >> there's sharks in deep water -- >> you would cross that off the list immediately under water investment -- >> it's deep thinking. deep thinking, andrew. deep thinking at deep water. >> thank you >> underwater is still available.

>> all right when we come back, more economists are expecting more job cuts this year, not just in technology, but this is a sign that the fed's rate hike strategy is slowing the economy. steve liesman will break it all down right after this. >> for the first time in 2023, mohamed el erian will join us as e markets get ready to kick off the trading week "squawk" returns after a quick break.

good morning

futures muted ahead of the open as investors weigh the fed's next policy move and a biz week for earnings. elliot management taking a stake in salesforce. a closer look at that stock and others that are moving in the premarket on this monday morning. and tesla is in rally mode over the last week we'll talk about thebuzz aroun their upcoming quarterly results and the drama surrounding elon musk the second hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures at this hour 2 1/2 hours before the market is set to open. let's show you where things are set to stand the dow is down, off 3 1/2 points there

s&p 500, off about 4, 4 1/2, 5 points show you treasury yields take a look at the ten-year note it's sitting at 3.501. the two year down. the energy complex, when you look at oil right now, you're looking at wti crude and that is sitting at $82.28. and finally crypto and bitcoin, specifically, if that's a signal of anything, maybe it is, maybe it isn't bitcoin is sitting at almost $23,000, guys. 22, 22 22 22,916 it's been holding above that level. we'll see whether the crypto bulls are right or jamie dimon. >> i want to get -- it matters for more than just bitcoin they were all headed to support, all assets really bonds. across the boards, equities.

bitcoin maybe 14,000 was still indicated, unless, there was some positive things happening now, is this positive? does it mean it's headed back down or does it mean that it's broken out of some of the -- and if it has, what does that say for all the support levels for equities in the nasdaq since it is sort of a risk on trade. >> is it the tail -- who is the dog, where is the tail right? this is the ultimate question. but meantime, let's talk about the economy. we've got steve liesman here the national association for business economics out with their fourth quarter survey. our senior economics reporter, mr. leaseman, the professor, joins us now with the details. professor, we haven't called you that in a very long time. >> yeah, well, it's all good,

andy welcome back to the great american economy where the outlook for hiring and capex spending turning decidedly negative at a time when these kind of decisions are going to be critical in determining whether the u.s. economy barely escapes. here are the numbers, it's the net rising percentage of respondenting over the next three months hiring plans, minus seven. this is the first negative number we've seen since the pandemic capex plans, 21. profit margins, minus 7. a bit of an improvement. it is the third negative in a row for the outlook for profit margins. one good news here, prices charged, 25, the lowest since before the onset of the inflation bout we've been going through. there were a few more good signs on the inflation front, declines in both actual and expected input costs and material shortages reported by respondents. 50% of companies reported no

shortages and that's the smallest since the question has been asked since may what were terrific quarters here following the pandemic, sales and expectations for sales have fallen below pandemic levels and now you can see on that chart there, really approaching recessionary levels right now. on fed news, chris wallsuggested the u.s. economy can avoid recession but acknowledged that some of the data has turned down recently he said future rate hikes are going to depend on the day, but he did point the way to further increases and like others on the fed, he said he did not foresee rate cuts this year. andrew, he needs to get to a restrictive level and he said we're almost but not quite there. >> okay, but, i don't know if you were listening in the 6:00 hour, we had this debate about lael brainard saying things are going to soften up what's your latest thinking at

this point the personal -- >> i think they're going to do 25 this week -- next week, and probably another 25 after that and they're going to hold there for at least some time i think what we call the gab between the fed and the market remains large at 71. some of the fed talk last week did a little bit of work in terms of their efforts to tighten financial conditions but not a whole lot. there remains this gap and the question becomes who is right. wallard said to me on friday, i would be a happy man to be wrong on this and head back down towards where the market is. but he's not doing it yet. and i think the fed does not feel like they're in the clear i don't know if you heard the interview, andrew. i compared this a little bit to the wisdom of oz now that they have three years of inflation data, it's not enough with dorothy, they kept asking her for more and more and more to get back to kansas. and i said, the market wants to

get back to kansas here. he said, what's it going to take and he said more convincing evidence that inflation is coming down. >> i don't know if you heard, la larry summers was in davos, and he's been hawkish about all of this for a long time by the way, happened to have been right thus far. i don't want to claim he was being dovish about the universe, but seemed to be a lot more sanguid. >> inflation numbers are coming down gdp numbers have held up so far. i have been a little bit spooked by the last round of data, both being in the negative territory. some of the data in this survey is not very optimistic in terms of -- look, it's the guys yo talked to last week, that's why i was listening to every word, that's going to figure out where this goes. do they fire a lot of people, do these people who are fired not get work, do they draw back a

lot on capital spending? it's now up to them. it's in the c-suite. the fed, what they do right now is at the margin and now the question is, how does business respond. and that's why we're going to listen to the interviews you did in davos the upcoming earnings are going to be critical and the stories we're not going to hear, andrew, which you just were talking about this the tech workers who lose their jobs how quickly do they get back to work or do they end up spending a lot of time unemployed those are going to be the critical issues for the outcome of the u.s. economy from this point going forward. >> that is the critical question and we won't know the answer on that, i imagine, for the next two months we will see. steve liesman, thank you very much -- >> just real quick one of the things i've been looking at is what happens to the duration of unemployment it went down in december so the number of weeks on unemployment, that's going to be a critical issue are people spending a lot of time unemployed. that's why we're making a big

deal of the jobless claims the weekly number of jobless claims and continued claims are critical as to whether or not people are spending a long time unemployed. >> supersmart data point thank you, steve joe? >> andrew, thanks. let's get to dom chu with a look at this morning' premarket movers hey, dom did you see us over in davos what were you thinking cold glad you're home what were you thinking >> for the better part of my time at cnbc going back to 2013, i've often been tasked with being the backup anchor here in englewood cliffs just in case your shots go down so i always watch intently it was very scenic there were a couple spots where i thought the snow was intense but it is unseasonably warm as you know in new york this time of year. anyway, with the davos aside, let's kick things off with a check of this morning of shares of salesforce.com which are up 4.5% right now

the business services, software, cloud computing company, dow component, by the way, is now the target of elliot management which has take a million billion dollar stake in the company. that makes it the second high profile firm to get involved they called on salesforce to work on improving profit margins. you have two activists in there. salesforce shares up 4.5% right now. by the way, salesforce was $150 billion company right now at its peak back in '21. it was a $300 billion company. you have shares of goldman sachs which are up fractionally right now. the investment banking giant will look to reduce its exposure to alternative investments citing a senior executive at the firm those plans are to divest of that portion of the positions in the next few years goldman shares, after earnings,

after the consumer lending operations reports that we've seen, now down premarket we'll end with a check on abbott labs thin premarket volumes the move lower is being driven by a "wall street journal" report saying that the health care company is facing a possible criminal probe from the justice department related to its similac baby formula last year now that helped lead to a run on baby formula that we all remember, that led to widespread shortages across the country abbott labs said it's aware of the doj investigation and is cooperating fully. but those shares down 2.5% right now. >> okay. all right, dom thanks and thank you for being there, for being there for us >> i always am i always am. >> you are you're very consistent that way. shiny star almost. like the north star i dare say thanks when we come back, could an economic recovery in china lift oil prices

looks like it already is if you've been watching the markets. we're going to here from helima croft next on where energy prices may be headed. and then the debt ceiling drama deepinens. we will speak to libby ctranal about that "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit baird difference.com school counselor. m a rd [lea] i'm a retired art teacher. [steve] we met online about 10 years ago. as i got older, my hearing was not so good so i got hearing aids. my vision was not as good as it used to be, got a change in prescription. but the this missing was my memory. i saw a prevagen commercial and i thought, "that makes sense." i just didn't have to work so hard to remember things. prevagen. healthier brain. better life.

oil coming off of its second straight weekly gain in part because of prospects for an increase in demand from china. the international agent forecasted that global demand could reach a record this year i want to bring in helima croft. she's also a cnbc contributor. watching oil up around $82 a barrel, has that factored in china reopening at this point. >> a china reopening story has been the catalyst to move higher i would say there's caution about whether china will stay the course on this reopening we have rising covid cases, potentially around the new year, but if this proceeds and all indications are, if you look at

mobility data, people are getting back on the road, back in airports, back on the subway, chinese imports are rising, if this trend continues, that is the real bull story for oil this year >> i think you pointed out that we've seen 11 million barrels a day reported for the second consecutive month, is that what it was >> november, december, chinese imports back up above 11 that's the first time since the first time quarter of 2021 again, all indications are this china reopening is proceeding as planned. now, again, there is some caution. i was just in the middle east, some officials there were saying, that they're going to be watching rising covid cases. they pointed out the weakness in the chinese health care system in terms of doctors, lack of vaccine, can the government stay the course if the government stays the course, again, this is the story that would propel oil prices higher chinese -- indian demand has

been very robust if you add on strong chinese demand, that's the big story for oil this year. >> the reason oil prices haven't gone higher has been outside of china, you also have talk of a global recession if there's a global recession and demand comes down, then what happens? how does opec respond? >> i mean, again, i think the china story -- i mean, a significant surge in chinese demand, that will push prices higher again, i would watch potentially if there's a rollback in the relaxation of mobility restrictions again, opec right now, they're staying the course on this 2 million barrel a day cut i'm sure they will try to get them to increase production. right now they're saying, they're going to maintain their cautious policy. no need to change, you know, direction on those 2 million barrel a day cuts. i think for the biden administration, the question is, if we start to see, you know, oil prices back up in the 90s, what levers do they have to

pull >> meaning that they can't release anymore oil from the spr, meaning that opec is not really listening to their pleas at this point? >> i mean, the spr, they say they can do some additional releases, but no one is expecting another release like we saw last year there's been some speculation we've seen in rising iranian exports -- >> i think we just lost her mic i'm not hearing it i think what she was pointing out though is what we were talking about before, that if a iran is exporting the more, the biden administration may be turning a blind eye to it. is that what you were saying i think you're back. >> i'm back. that's speculation iranian oil experts have been up by almost 35%. highest in four years. the last quarter of 2022 the question is, is there an

official policy, sort of turn a blind eye to exports those are the kind of things that they'll be watching they've relaxed restrictions on venezuela. how much more oil can you get out of venezuela not a great option set for the biden administration if this chinese reopening precedes as planned. >> okay, so on that point in terms of saying one thing but really thinking another, andrea had an interesting exchange at one of the panels in davos where he was going back and forth with the minister from indian who was saying, yeah, we're importing russian oil and doing it because of what i have to do to feed my people how does the u.s. feel about that if you were to take the oil off the market, that would really cut into the supply issues >> absolutely, becky this has been the policy of the biden administration from the start. sanction every aspect of the russian economy except for oil and the price caps have really

actually kept russian oil on the market countries like indian and china are abiding by the cap they're using it by some circumstances to push the russian prices lower but the oil is staying on the market and that is actually what the biden administration intended. they did not want a disruption of oil on the market they wanted russia to receive lots of revenue for it, but they wanted those barrels on the market the next thing to watch, though, is what happens on february 5th. when the eu bans product imports and do we see more dislocation with the products ban. we're reading, it might be harder to move products around the world than it is to move oil around the world do we see potentially -- it's just with diesel when this ban kicks in >> becky, thank you for mentioning that exchange in davos. my question is, if indian or some other major country were to

decide not to buy from russian, this minister said that it was such a small -- he was trying to make the point that it was such a small piece of the pie in terms of -- in india but he was also trying to suggest that the ramifications not just on his own people, but i think he was trying to suggest -- have a moral argument about this later that the price across the world would go up materially so what is it? >> i mean, indian is now -- russia is now their top supplier into indian. indian has been able to demand discounts from russia. but they basically say, look, we have a major development imperative we have millions of people we need to lift from poverty and we need affordable, reliable, cheap energy if we can get these barrels from russia at a discount, we'll take them, especially if the biden administration and the eu policy has actually been to allow those

ba ba barrels to remain on the market. there's no one telling them at this point they can't take those barrels. >> thank you this gives us a lot to think about and we will have you back on soon. we appreciate it. >> thank you so much. coming up, pimco's head of public policy on what a debt ceiling default would mean for the economy and what's being done in washington to avoid it. >> elon musk and tesla in focus for investors. the company will report results later this week. musk defending past tweets about a deal that never materialized we're going to talk about the issues facing the ev maker and its ceo. "squawk box" will be right back. and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping

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spotify coming off a nearly 5% gain on friday. we're watching shares again this morning on reports that the company is adding its name to the list of tech companies laying off people. in 2023, up another 4% it follows an earlier round of layoffs where it slashed 38 positions. the company has about 9800 employees worldwide.

still to come this morning, the debt ceiling looms as congress gets back to work we'll have the latest out of washington and talk about what is at stake next and later, we'll speak with mohamed el erian for his take on the markets in the trading week ahead. stay tuned you're watching quk x,"sawbo" and this is cnbc

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welcome back to "squawk box. we turn now to another developing story this morning. fbi agents finding more classified documents at president biden's home in delaware that new batch of documents discovered after a nearly 13-hour search conducted that took place on friday six additional items appear to be related to his time as vice president. sources familiar with the matter saying the search is prompted by the white house, not the justice department it's drawing lots of criticism from top democrats >> when that information is found, it diminishes the stature of any person who is in possession of it because it's not supposed to happen >> this is all happening as white house chief of staff ron klain announcing he will be

leaving in the coming weeks. biden will tap a former covid czar he worked with steve case for many years before taking that post, joe. lawmakers are working on a plan to avert a debt ceiling crisis joining us now with what's at stake, libby cantrill. any reason to think there's going debate the outcome is probably the same, but will there be some different things happening that we haven't seen in the past, in your view, this time around? >> yeah, good morning. good morning, joe. what we're telling our clients is that it is really -- it is really early, arguably too early, to be even talking about the chances of default here. we are -- it's important to remember that the markets don't really react to previous debt

ceiling standoffs until days, maybe weeks before the so-called ex-date, the drop deadline and so the fact that we're six months out and talking about, you know, sort of chances of default just seems a bit overblown from our perspective, sure, our house republicans using this as one of their very few sources of leverage because, of course, they're in the minority, yes, of course i think that should have been expected but kind of when push comes to shove, joe, as you said, we've seen this movie before we don't think the dynamics are very different from sort of the 2021 debt ceiling standoff or the 2015 debt ceiling standoff, and i think really importantly here, joe, there are lots of similarities, people are calling out between 2011 and 2023 and we don't think that there are a lot of similarities. house republicans have a much smaller majority than they did back in 2011, only a four-seat

majority versus a 24-seat majority that decreases their leverage going into the debt ceiling negotiations and i think politics has changed back in 2010 after the 2010 election, 63 new republicans were sent to the house really to rein in spending that is not the case now there are only ten new republicans coming to washington and their mandate wasn't to cut spending in fact, entitlements still are very popular among voters, particularly as they get older so -- >> libby, during the leadership debacle, whatever you want to call it, probably the republicans that were the 20 holdouts didn't really do the overall party any favors, probably, and you saw the glee and the schadenfreude and the

epicaricacy of the democrats during that whole thing. there was at least popcorn and a lot of enjoyment watching that happen you're setting up the republicans as the bad guys here everybody is but andrew made a point earlier, this is the daily news we know that's the opposite of the daily post it has they lma and louise headg off a cliff. it's got a donkey and uncle sam. are the republicans dumb enough to get played again? are they dumb enough to get played by the democrats again by holding out? >> just to be clear, joe, i'm not -- i'm not saying that republicans are necessarily at fault here what i'm saying is that this

should be expected, that usually a party out of power in the white house uses any sort of tool they can to extract concessions or to exert leverage over the party that's in power and so it shouldn't be surprising that house republicans are using this as one of their few sources of leverage that is sort of the point i'm making here. but, yes, i mean, in terms of kind of the politics here, 2024 is going to be right around the corner from this, you know, so-called ex-date of june or august or whatever this politically is not going to benefit republicans. i think you're right that -- you know, my view and i think lots of other folks who have been observers of these debt ceiling standoffs for years is that cooler heads will prevail. leader mcconnell has made it clear that he will not let the u.s. default and he is a really important player here.

and republicans, i think the majority of republicans know they will have to raise the debt ceiling somehow. they want to get concessions along the way. i think that's unlikely to happen, maybe they get some sort of kind of fig leaf in terms of the establishment of a commission to look at spending, but that seems like the most that they will likely get. this is -- this seems like it's political posturing to be expected, is not a market event. from our perspective, that's what we're telling clients this is not a market event as of now. we take this seriously but folks should be -- focus on other things like what the fed is doing. >> the only thing i would say is having watched the election for speaker that just took place, i mean that was pretty unwieldy, different than what we had seen in the past. i just wonder how much power those things will have over speaker mccarthy just in terms of what he had to say okay too and allow in order to get elected speaker. is he in a weaker position or

are we not looking at that correctly? >> these are all excellent points that you're making. i think, again, when push comes to shove, this is all about the votes. and are there 218 votes to raise the debt ceiling when push comes to shove, are there 60 votes in the senate, and will president biden sign a clean debt ceiling bill into -- into law, those are the things that folks at the end of the day are the most important, and, yes, there are 218 votes, if not more, to raise the debt ceiling speaker mccarthy is probably in a more weakened position, but the numbers really just punctuate how weak of a position he would be in regardless of what would happen in terms of the speaker election he only has a four-seat majority in 2011, they had a 24-seat majority the math here is not on his side and as a result, if democrats can do something called the

discharge position, which has been in the news, it's really onerous, but i think the potential of doing that will be an escape valve in many respects kind of bottom line here, this is not a market event as of now, even though the media is very focused on it. >> that's what i was going to say, what is it thatwould tip it over? the expectation is that it will -- it will go to midnight, and midnight -- it will -- that will keep happening. but inevitably, the market is betting that it gets fixed is there a moment -- does it have to tip over for the market to actually feel it, or no >> again, maybe the market does get a little bit wobbly and that, again, sort of emphasizes how important to members it is to raise the debt ceiling. but i think we've seen this movie before unlike 2011 when the last time that the debt ceiling had been

taken hostage was in the 1990s it wasn't front of mind for folks -- >> libby, isn't that the problem? because we've seen the movie so many times and we know how the movie ends, the pressure isn't there, right washington can't look at the market and go, oh, we got to do something now because the market is not telling them that do you see what i mean >> i know -- i see your point. but i also -- it's the reality here, is that a lot of these members on the republican side are going to be hearing from donors who are in the financial markets and should we be getting closer to the ex-date without a resolution, even if the market is fine and sanguine about this. members will be hearing from very important stakeholders, the importance of this if it really does look like default is a potential, not only will the markets react, but the donors will be reaching out to members. we're not trying to be sanguid

about this we're fiduciaries, obviously but the fact that we're treating this default as -- in some ways -- in january just feels very premature >> okay. libby, i can't take it, if it's -- talking about july, right? the only thing good is, we can obsess over this and by the time we're finished, it will be warm again outside and we -- we'll be -- right? >> be on the beach, yes, hopefully. my questions is, that's okay we'll pass the time wringing our hands about the debt ceiling and then we'll be at the beach. >> and then -- and, joe, we might then be talking about a government shutdown which i don't think is a market event either that actually -- if republicans really want to get concessions from the administration and from democrats, that's the fight to focus on that's talking about future spending, not just authorizing

previous spending. the trillion dollar coin, if someone loses it and we happen to find it, that will be cool. if they misplace it -- >> find it, pick it up >> trillion dollar coin. if we started printing trillion dollar coin, we would go like that through nothing student loans. boom. >> there would be lawsuits that could come from it these are the problems with any of the work-arounds that they've talked about you could tell additional treasuries, but then what would that do to the treasury market if you're selling things that don't have the support of both sides of the government. there's a lot of work-arounds that are not going to seem like great work-arounds. >> libby, thanks we'll say "hi" to mohamed el erian for you. when we come back, the auto industry being forced to cut prices as inventories grow, the latest numbers show that is not happening. phil lebeau has the details right after the break. and tomorrow on "squawk

box," don't miss our special interview with johnson & johnson's cfo joseph wolk. "squawk box" comes right back.

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welcome back to "squawk box," everybody. the futures this morning are a little bit higher. we are coming off of big gains on friday, but you're looking right now at the dow futures indicated up by 29 points. s&p futures up by 1 point. >> this one is interesting news this morning that citadel making history they surpassed the 15.6 billion that it made john paulson made that money in 2007 through that big bet against subprime citadel managers about $54 billion in total assets under management made a 38% return in its main hedge fund according to a record $16 billion of profit for investors after fees and, guys, i was reading a story, becky, the total amount of money that all the other hedge funds combined made was $22 billion.

it's a remarkable feat, if you will, and citadel has been in the spotlight from moving from chicago down to miami. lots of political machinations around ken griffin and the like. but this is great for his investors, but i imagine it will put a bigger spotlight on the firm as well >> i mean, that's impressive when you consider the market's performance last year, too that's a hedge for you >> miami that's what i'm gleaning from all this no state income tax and -- >> and it's warm. >> and miami and south beach close to the keys. you know, a lot to think about there, andrew. for those hoping that car prices will come down soon, you might have to wait a bit longer. phil lebeau joins us now with more hey, phil. >> joe, you've heard this discussion and i know it's been swirling around for the last several weeks, new car prices

are coming down, just wait and see. we're already seeing the impact. really the latest data from jd power which tracks average transaction prices shows that in january, there was a very slight decline from the record high in december, but that's mainly seasonality because you have more luxury vehicles sold in december bottom line is, we're basically at record transaction prices for new vehicles the inventory, by the way, has not changed. there is another story that you hear swirling around on wall street there's greater inventory. no, there's not. it's still a 36-day supply it has not increased will that change maybe. maybe not. north american production currently running below the expected demand level. that production right now, 13 1/2 million vehicles demand most believe is 13 million vehicles to be sold this year you still have more demand than production this will be front and center

over the next couple of weeks. next week we hear from general motors and ford. they will report their results and a big focus on the conference call will be their perspective on both inventory and transaction prices, as well as profit margins and how they're may be squeezed, if there's a price war. tesla is slashing prices we will hear from tesla wednesday after the bell and the focus is going to be on automotive gross margins they cut prices at the end of the fourth quarter both in china and here in the u.s. and you're seeing further price cuts which they instituted over the last week and a half here in north america as well as in europe and other markets as well. so that's the bottom line. i know this story is out there, people are saying, prices are coming down. they ain't coming down any time soon they remain elevated and likely will here for some time. >> i like the price-cutting story and i -- you know, i think it's a smart move.

i did -- i was in an amazing car over in switzerland. a lot of beamers over there. and it was really nice it was really nice >> joe, i do think we will see some -- i think we will see some compression in prices for electric vehicles. simply because tesla dominates that market. and tesla cutting prices as much as it has, it's going to force others, even if they're not a direct competitor with a particular model with tesla, they're going to have to lower their prices >> right and i guess it's pretty -- i didn't notice -- we started out and i said, something is different. no flies on me something is different here. i guess you can tell, it felt like a golf cart almost the way it -- no sound but nice acceleration and everything >> that's what every carmaker wants to hear. it felt like a golf cart. >> it did. it was electric.

four-wheel drive. >> in the snow. >> in the snow all right. thanks, phil >> you bet right here on "squawk box," more on what investors can expect when tesla reports later this week and the buzz surrounding elon musk. the stock up 9% this week, this morning adding to gains. we're going to talk about the stock's performance and the elon musk drama of it all as we head to a break a look at big box retailers. bank of america naming walmart, costco, kroger and bj's wholesale top picks for 2023 "squawk box" coming right back.

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tesla chief elon musk will take the witness stand again today as he defends himself against fraud claims that he lied when he tweeted in 2018 that he had funding secured funding to take the electric carmaker private millions of dollars were at stake as well as the reputation of mr. musk whose personal stature is a central asset of the brand. the trial will test whether his passion for taking to twitter to air his sometimes irreverent views misled investors and damaged the value of the company. shareholders claim they lost millions after musk tweeted that he had funding secured to take tesla private. >> meanwhile, joe, let's talk about it tesla shares have seen a bit of a rally. the stock coming off a 9% gain

last week. joining us to talk about the big week is tick higgins, "wall street journal" reporter and cnbc contributor what do you think we should be expecting and as you're talking to the investor community and those around tesla, what are you hearing? >> well, it's probably a record. i mean record profit for the quarter but really what analysts and investors will be looking for is that excitement for the rest of the year can the company do 50% sales growth as it's been talking about in the past? it missed that target last year and, you know, that was a big hit to the stock, a big hit to kind of the reputation of the company, so going into this week it's really all about the future can tesla get back to the growth stock story that it fueled that excitement for so many years >> how much of the falloff in terms of where the stock is do you think isa function of the macro, which is to say obviously the multiple on tech stocks

across the board has come down, how much actually is the growth story at tesla and how much of it is, do you think, the anxiety or nervousness i don't know if you think it's just headlines about elon musk's attention on twitter if you believe that that's taking away from his attention on tesla. >> it seems to be a mixture of all three. clearly the company didn't perform as promised and that's an issue, you got the macro issues we talked about but also comes down to elon seems to be distracted and perception is reality and that kind of reality for him is a lot of investors have this perception he's maybe his hands aren't on the wheel and distracted with twitter the last three months. one thing investors are looking for this week and the weeks to come he is re-engaged at tesla and back to the company can be prepared for the possibility of a recession this year. >> and i think the question, though, is given your own

reporting is that the case meaning is he focused more on twitter these days, and even if he is focused on twitter, he's had a management team, same management team at tesla, there's been turnover over the years but the current team is the same team and spacex, the same manager managing that business how much is the investor community supposed to take away from his personal attention on one specific company at a time >> well, you -- it's very hard to understand how he prioritizes things in his mind the average person couldn't handle running three companies and he's not the average person, right? so kind of the idea of what, you know, his engagement level is is tough. he would say and he has said that he's still engaged in tesla and that, you know, the signals are that twitter is going to be almost kind of a hobby for him but still investors out there are concerned and they had been

airing those concerns in a rather remarkable way asking him to get back into the seat at tesla to put twitter in the hands of another ceo >> what do you make of the used car sales market for tesla specifically i don't know if you noticed. in the past week or two there were a couple of headlines and other things that moving in terms of just the price of used teslas coming down and what that means to the market for new teslas and also the distinction between the model y and as you go -- as you -- and model x as you go down, you know, just in terms of whether one is taking away sales from the other. >> yeah, you know, it's interesting, when you drop the price of a new car, that will immediately affect the used car market we saw that in rather remarkable fashion in the last few weeks when tesla surprised i think a lot of people in the states by that rather dramatic up to 20% price cut. so, yes, it affects the used car market, indeed but clearly it's

helping move the sheet metal for new teslas and that's an important thing here it's interesting as we look at tesla, it's a car company, right? in the short term it has to have challenges of moving the sheet metal, right potentially consumers are concerned about a recession and maybe not spending you have to get the cars out as markets and investors look at the stock they look at it, will tesla change the market if it's becoming an electric vehicle market tesla looks like it's going to have that dominant position with a generation of technological advancement. it's rather remarkable interesting period tesla, the tech company, going forward or the tesla, the car company going forward. it can be messy moving sheet metal at a time when you might be in a recession or might be heading toward a recession >> where do you land there, tim? tech company or car company? >> well, at the end of the day -- >> that is the question.

>> that is the question. at the end of the day they're selling cars elon has been selling investors with the idea of solar panel technology and battery technology and that's, i think, in the next few weeks when investors will want to hear elon talking about again and moving away from the focus of it being a car company. >> tim, it's always good to see you. appreciate your analysis thank you. >> thank you andrew, thanks when we come back mohamed el erian will join us barely budget, dow higher by 11%s, s&p down by a point and a "sawbo wl lf quk x"ilbe right back.

good morning get ready for earnings dozens of americans' biggest companies set to report results this week. we'll get you ready ahead of the monday open. more tech job cuts high-profile music streamer announcing layoffs hours ago and salesforce now being targeted. well-known activist investor taking at least a ten-digit stake in the dow component

details ahead as the final hour of "squawk box" begins right now. good morning, and welcome to "squawk box" here on cnbc live from the nasdaq marketsite in times square i'm joe kernen along with becky quick and andrew ross sorkin it's quiet too quiet. we are in the green, though, up a little bit big day on friday which came out of nowhere was that supposed to happen? thursday was bad and got nervous about the economy and ten-year yields fell to 3.3 and the two-year almost fell to 4 but that all turned around and now it's back to 3.5 so that means maybe inflation is

cooling and maybe we're not headed off a complete cliff like thelma and louise which we can thank the daily news for we've got earnings, lots of earnings coming this week. more fed talk as well. so we're going to get this year going in earnest, i think now. davos is behind us, sorkin and becky. >> no, it's in front of us, 51 weeks. >> it's coming again, isn't it it's coming again. >> it'll be back. >> do you have a calendar you cross off the days, davos man? >> i'm waiting for it. i wish they'd do it again in may. >> it's funny the way the waters part as you walk through the congress center. am i allowed to say that or it's all off the record >> why state the obvious but, sure, you can tell people. >> people pointing and hitting their -- it's pretty cool. >> the selfie, all the selfies, it's so much >> it gets old. >> that's why it's tiring.

>> i will say one thing, just one thing. >> more things >> our hours are much more palatable for a lot of people in europe did you know that they run us -- i didn't know that we're on -- i thought it was cnbc europe. >> no, "squawk box" runs there and all over the globe. >> i mean, people -- >> that was kind of cool being an international media star that people want to be around that was kind of cool. people from the netherlands. >> people that don't know you want to be around. >> people that don't know me that well. >> it was fun. we're glad to be back. >> on at noon over there >> yeah. it's pretty civilized hours we should say we should get you caught up on some stories that investors are likely to be talking about today. elliott making an investment in salesforce it's unclear what their aims are in terms of what it wants but

the company's shares have fallen 30% not including this morning's move up by 4.5%. spotify the latest technology company to announce that it is cutting jobs. in a note sent to employees today, the ceo said that the company would reduce its head count by about 6%. he said like many other leaders, i hope to sustain the strong tailwinds from the pandemic and believe that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. in hindsight, i was too ambitious in investing ahead of our revenue growth same story from a lot of technology companies these days. and then there's wells fargo, bank of america, jpmorgan and other banks working on a new debit and credit card linked digital wallet for online shopping according to "the wall street journal." the service will be managed by the same company that operations zelle and they're planning to launch the wallet in the second half of the year so another

competitor, paypal, add to amazon what it's been doing and kind of get the picture. >> is it safe? >> yep >> back to the broad sell -- you remember that. >> zelle is great. >> marathon man -- that seemed tolling -- that was one of the last great performances by sir laurence olivier if you remember what's going on, mike, ahead of the opening bell >> you know, joe, we're holding steady actually all three fridays so far this year, very small sample size but have been big up days and did levitate and had a three-day pullback after the strong start to the year but it's really sideways and steady for months right now i think it's relevant, talking about trading range. what happened in october that's basically when inflation peaked at least in the market's perception when fed hawkishness peaked and it's about being held in check about how the economy is going to deal with what we've done on

rates. that to me explains most off to a relatively soft start but enough back and forth within it to not have the overall indexes feel too much pain bonds off toa strong start thi year but yields did go higher. look at this aor etf approximates the 60/40 portfolio but global and equities, s&p 500 is still below that down trend but dating back to the beginning of last year but you see there, you know, depending on how you draw it the down trend line has been broken to the upside 4.64 worst nine months, it treated a decent low there because people had been flocking to bonds and want to lock in 4% to 6% flows heavy and also have been an aggregate underinvested in debt so that's a corrective right there although takety hook

at the ten-year note around the 3/4 area and goes back to last spring as you suggested and i agree the buying panic in bonds last week, early last week is not necessarily in the immediate sense bullish for stocks because it does suggest to people that we're pricing at a worse economic outcome and go sideways in the ten-year, joe >> you know, 2022, it doesn't have to be that way, mike. there might not be a recession there might -- the debt ceiling probably won't get violated. inflation may not be around forever. i mean, it is possible for some normal things to happen, is it not? >> that's right. it absolutely is possible. eventually they will happen, those normal things eventually we're going to get through this. i do think it's a good two-sided debate i think on a given day you're

going to have days when it seems like it's soft landing day friday was one of those, ally financial said guidance looks reassuring and all stocks rallied because cheerp klemped up for something bad i think that's the mode we're in for a little while until we debt some resolution. >> unless the tanks going to ukraine makes putin mad and he loses his mind then all bets are off. we have to keep that in mind, right? >> you got to keep it in mind but to me it's never been that useful. >> because it happens, we got bigger problems than, you know, than the s&p all right. thanks, mike all right, joining us right now for more is mohamed el erian, he, of course, is allianz's adviser and president of queens college cambridge. is this the first time we've had you on in 2023

>> it is i took some weeks off and it's really good. like a kwloeblist, take him to davos and -- >> i'm feeling global after being there. no kidding you're feeling like a bengals fan. >> i am. i am impressive performance, joe, congratulations. >> thank you it was don't congratulate me. i, you know, it's going to take me a while to start believing again after all the wounds 30 years of -- 40 >> that's how many years in a row, joe you got to start believing >> burrow is making me a believer i hope he doesn't wear one of those crazy outfits before next week's game. >> well, you've become a globalist. you are a globalist. i just -- >> i did i even said i started -- it'll be a better world if china re-opens, mohamed. i can't believe i'm saying that and we need -- they're not going to be us we're not going to be them we scant expect -- that they'll

be perfect or any other country is going to be perfect and we just need, right, that's how i became a globalist. >> what did they give you to drink there, joe >> kool-aid. obviously. hey, mohamed, let's talk about what's happening this year so far the year's young, 23 days in, but you are talking about some pretty phenomenal rallies that you've seen in stocks and bonds to this point. do you think that trend continues? >> three reasons, you heard it, one is economic prospects have improved two is the market feels inflation is mostly behind us. the problem. and, three, the fed has signaled that it's going to downshift to 25 basis points and not only have we done well domestically we've done better internationally with two big trades from the u.s. to the rest of the word and into bonds i look forward and i see many potential outcomes for this year the one that joe cited a few

minutes ago is certainly a possibility, not a probability, but there's also others so i think the year we got to romance different outcomes with growth and inflation. >> larry summers was a little more sanguine go the environment, what the fed has to do but did make the point last week that the one thing we have to make certain is that inflation is really dead and that doesn't come back to haunt us so we don't have to fight this fight twice i would assume you're kind of in the same camp on that. >> i am and the inflation dynamics themselves are not very encouraging because what has happened is inflation has moved from the good sector to the services sector and that's much harder to contain. so i'm in the very, very small camp who thinks that they should not downshift to 25 basis points they should do 50. they should take advantage of

this growth window we're in. they should take advantage of where the market is and they should try to tighten financial conditions, because i do think that we still have an inflation issue. >> hey, mohamed, i know that's your view. the question is whether you think that's jay powell's view, meaning -- the question is whether you think -- >> no, it's not. they have been very clear and if you look at today's "journal" article which tended to be fed by guidance if you like from the fed, they're very clear. they're going to downshift 25 basis points i think that's a mistake, so, no, it is not the view of the fed. >> but is your sense that it's a 25, 25 pause, it's a 25, 25, 25 -- the question is where is the pause? you can get there different ways >> yeah, and this is, andrew, an issue we have is that they have made the level that they'll stop

and the pace dependent on each other. they say the pace we got to go on, okay, is open because the destination is a variable itself that's an overhang for the market the marketplace is very clear. it says not only is the fed not going to be able to post for long it will have to cut so you have three tensions that we need to sort out. first, between the fed and the market we don't agree on what it looks like, two, within the markets there are those who believe we have to come down because inflation will really -- and those believe we'll come down because we'll be in a recession and thirdly within the fed there is some disagreement about the pace so we're going to have to reconcile this all year. that's why i say, we have to be open to the fact that this is still an uncertain year. >> mohamed, i think we're feeling pretty good because inflation has come down so much and a big part of that has been

energy prices have come down so much but there is some real concern that energy prices could rebound as china re-opens. do you fall into that camp >> i'm not there yet, but there is a few people that i think it's interesting that say not only will inflation plateau at 4%, that's where i am, but what you're going to have is the good sector is not only going to stop disinflating but it will stop inflating for the reasons you said, china, while the service sector still is inflating. you have a small segment of economists who see this view inflation. if we get that, that would be bad news i'm not there yet. we'll plateau around 4% and the fed will have a hard decision. do they crush the economy to get to 2%, or revise up the inflation target i don't think they'll do that or do they keep on promising us 2% down the road and hope we can live with a steady 3% to 4%?

that's probably the best outcome. >> all right mohamed, great to see you. can't believe it's the 23rd and first time we're seeing you but i'm sure we'll see lots more of you in the days ahead. >> thank you >> okay, coming up, a lot more on "squawk." one of washington's brand-new senators, his take on the debt ceiling. stay tuned you're wchg atin"squawk box" and this is cnbc senator peter welch will join us so you can rise from pain like a pro. icy hot pro.

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saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. welcome back to "squawk box," everybody. we're watching the futures this morning. a little bit of a pickup nasdaq soundly higher up by 33 points and the s&p futures right now up by 8 1/2. andrew >> meantime, thanks, becky, congress returning to work in washington today with the fight over raising the debt limit, a major question mark among the possible ideas trying to tie allowable debt to a percentage of national economic output rather than try to go for a fixed dollar amount and it's an idea from house problem solvers caucus and chance to talk about the issue from the senate side and whether a deal can get done before the last second, senator

peter welch is here from vermont. everybody is trying to handicap what's going to happen and whether we've seen this movie before and how it ends do you think it's more than just dramatic this time >> no, i think it's more serious this time because of what you're seeing in the house. i mean there's two issues here, one is very important and legitimate how do we balance revenues and spending that's a debate we have to have. it should be resolved in the budget then there's the question of the tactic. do you literally use shut down or default on your obligations and debt on bills you have incurred as a tactic to try to get your way so that has catastrophic consequences for the economy if we don't pay our bills, it's like if you don't pay your mortgage because you're sick of paying the high monthly bill that ends badly. and it would end really badly here at the end of the day we will not default, i hope, but what you've seen in the house is that

in those 15 votes that speaker mccarthy had to negotiate, there has been significant power transferred to an extreme wing of the republican party where a shutdown is the goal so i am more concerned than i was when we went through this before. >> but, senator, let me ask you this, you talk about tactic, politically, the question is whether you think democrats in the house try to create a situation where this small group of republicans block things, frankly, for the political optics of it all or there's some other deal that can be made? >> the reality is that the republicans in the house are in charge of this it's always been a burden of the majority to raise the debt ceiling and avoid default. and there's always been gamesmanship on both sides about it but at the end of the day the majority party has moved ahead oftentimes with getting some help from the minority not at all clear that will happen because there's so much

division within the republican side so you've got some true believers on the house side who actually think if we defaulted on our debt, that would make things better, well, it would be catastrophic and it would be ultimately unsustainable and it would actually cost us more money. if we default on our debt and interest rates go up because we don't have the credit rating that we need and have always enjoyed, that is going to have catastrophic economic consequences so the dangers here are real the concern about the debt is legitimate and i'm all for us having a way where we work together to try to balance the revenues and balance the spending and find ways to lower the debt but defaulting is to the an option >> let me ask you separately, there's a gop bill out to defund the irs this after there was the funding of the irs where does that stand and what do you think happens >> well, it passed the house but i don't think it will go

anywhere in the senate we have to have an irs that is properly staffed so when one of my constituents has a phone call, the call gets answered and it's been characterized in the republican side as though it's auditing everyday folks and that's not the case. there's two goal, one is good customer service and the second is, auditing those folks who are shorting the tax -- not paying their share of taxes everybody should be paying their fair share >> separately it's in the headlines this morning and it's been in the headlines for the past week and a half or two weeks, surprisingly, these classified documents that keep getting found at president biden's homes or other places. this, of course, in the wake of what was an ongoing debate about what was happening with former president trump. how do you see that? and how damaging is it >> well, it's damaging all around, but what i see is that

there's a special counsel appointed in each case the special counsel will do the complete report and be able to evaluate who did what. i also think there's a problem of overclassification. i've served on the intelligence committee and the house and a lot of things that are, quote, top secret really shouldn't be they should be more public but the special counsel means that in each case with trump and with biden we'll get the full report, hopefully, a straight direct reporting about what happened and how. >> but how damaging is this just to the president's ability to manage through so many of these other issues that we just have been talking about, for example, in terms of his own credibility with the american people, with congress, et cetera? >> well, it gets us back into another he said/she said debate. trump had all those documents at mar-a-lago then there was criticism of that. now the republicans, of course, are saying it's tit for tat. in the bottom line here is that

classified documents were found where they shouldn't be so that hurts and then it gets put into the political debate with the back and forth that really ultimately gets us nowhere bottom line we have a special prosecutor in each case and can report and i'll have much more confidence in each of those reports than i do about the volleys back and forth between the republicans and democrats. >> senator welch, it's good to see you. we appreciate you for joining us this morning thanks. >> thank you >> coming up, thanks, andrew, rich greenfield tells us where he thinks netflix's stock goes in the year ahead. i knew it. remember under 200 that was such a buy. you could just close your eyes after last week's earnings driven pop and a programming note, don't miss a first on "squawk box" interview some with johnson & johnson cfo joe wolk after the company's ur

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welcome back to "squawk box. futures now solidly in the green after -- was it a surprise rally on friday? it was a pretty good rally on friday when it was all said and done with the dow up more than 300 points as crazy enough as yields rose, which maybe

dispelled some of the worst case fears about how deep or long the slowdown -- i hesitate to call it a recession, how long the slowdown will be in this country and globally i think we are thinking europe won't be as bad. >> energy prices haven't gone as high and managed to get through the worst part of winter already. >> and the dollar hasn't -- the dollar has weakened a little bit. >> all right, when we come back we'll speak with a top analyst on elliott management's newly revealed stake in salesforce and media maven rich greenfield will join us with his biggest predictions of 2023 including one about disney's bob iger potentially sticking around the magic kingdom for awhile longer. we'll be right back. -surprise! -for you, mama. ...can help you open those doors. by proactively reviewing your entire portfolio. with an eye on taxes and risk. doors were meant to be opened.

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welcome back to "squawk box" right here on cnbc we're under an hour to the opening bell dom chiu has some of the top premarket movers at the domino what's going on. >> andrew, it's a ponseca which means merger news.

two heavyweights will join forces xylem and evoqua, roughly $7.5 billion evoqua get 0.4 shares of it for each share they own and it's up 15% on the news and xylem, the acquirer, down about 8% and that's what we're watching more bad news on the jobs front. tech, media and telecom, spotify will cut roughly 588 people. their founder said he was too ambitious in investing ahead of revenue growth shares up roughly 5% to 6% on just around 90,000 shares of premarket volume then we add with a check on salesforce up 5% premarket, over 225,000 shares

of volume. the upside being driven by multiple reports that elliott management has taken a multibillion dollar stake in the business services, software and cloud computing and this follows up on fellow starboard value which disclosed its own stake back in october of last year pushing for profit margin improvements at the company. now after record highs, you remember back in 2021, this was a roughly $300 billion company today it rests closer to $151 billion so, again, halving of its value and by the way, andrew, just for context, about roughly half the dow's implied at the opening bell is just the gain in spotify or rather salesforce shares, i'll send things back over to you. >> dom, thank you for that we'll dive deeper into elliott management's stake in salesforce and bring in scott burr. curious what you make of this headline and what you think ultimately they'll be pushing

for. now it appears this i've said they want it to be a friendly and constructive dialogue. what do you think that means >> hi. good morning, thanks for having me my guess is this outcome is all about margin expansion we've been on the sidelines for five years for the primary thesis this is not a profitable company given its size and given what we think is one of the largest and most expensive acquisitions in all the software space today and think they'll be friendly but friendly is going to be all about driving new margins. >> so are we talking more layoffs? a company went through a 10% layoff they had 80,000 employees and down to 71,000 employees noting that at least it looks from that various filings over the years that prepandemic their number was closer to 50,000 then you take what's happened over at twitter and elon musk and what

he has done in terms of those cuts and the quote, unquote success they've had insofar as the company hasn't fallen apart. how deep do they have to be and talking about cuts on that side or other cuts in the company >> you know, if you look at the company's growth rate over the last two to three years relative to its growth in employee head count, employee head count is still above the revenue growth of the company even after the recent reduction in force that was announced roughly 10%. we would not be surprised if it's another 5% to 10% but part of it is just the philosophy on how the company spends money, how they talk to customers and actually acquire that customer at the end of the day. yes, i do expect another maybe 5% to 8% to 10% in layoffs and think of it as a structural shift in how it operates is what needs to be exercised. >> speak to what you mean. so this is a company that puts on lots of events.

the seasforce dream force events they do around the country and in other places. we were talking about the presence they have at a place like davos, all are remarkably expensive way to bring in customers. the question is if they didn't would customers go elsewhere >> you know, salesforce created one of the best ecosystems we've ever seen in software probably since microsoft, and we're a big believer of once you hit the scale the markings events and some of those other items just don't have to be as costly so it could be as simple as, you know, taking customers out to an expensive dinner that might run $500, $600 a head on a recurring basis or internal corporate events where salespeople get together on an annual basis to talk about the business but there are a variety of items that just that worked for many in this environment, you can accomplish many so of these thing this is a slightly lower cost environment without

really sacrificing what your bookings look like because their ecosystem brings customers in and want those customers come back more. >> scott, good to see you. we appreciate your perspective this will be a drama of sorts, i imagine, so far, and we'll be watching it. thanks, becky. >> andrew, thank you friday was the last day for fedspeak until the upcoming meeting next week. senior economics reporter steve liesman looks at the gap between the fed and market when it comes to the outlook for policy. steve, good morning, again >> yeah, good morning, becky the gap between the market and the fed's outlook remains large as we enter that blackout period where fed officials don't speak ahead of this january 31/february 1 meeting. chris waller addressed it when i spoke to him saying it wasn't as much about the market not believing the fed will hike or not but a difference over opinion of the outlook for inflation. >> the market has a very

optimistic view that inflation is just going to melt away we have a different view inflation is not going to just miraculously melt away a slower, harder slog to get inflation down and, therefore, we have to keep rates higher for longer and not start cutting them by the end of the year. >> he used the phrase, immaculate disinflation but will be happy if he is wrong and would take them downward because inflation was less than expected 71 basis points separate the market on the year end fed funds outrate look believing they will hike to 490 and cut almost immediately, fed officials insisting they'll hike and hold for at a high rate for all of 2023 above 5%. a lot depends on how businesses react. news from the national association of business economics suggest they're preparing for a downturn take a look at the next three

months outlook net percent hiring plans, minus 7, first negative since the pandemic, capebut good news on e prices charged 25, lowest since the inflation bout in actual and expected, input costs, you saw easinglabor and material shortages reported. 50% of companies reported no shortages, the smallest since the question has been asked but waller said he wants five months of better inflation data before deciding the fed is done becky. >> all right, very quickly, mohamed was on earlier and thinks the fed's tough decision is going to be whether it wants to get inflation all the way down to 2% and drive us into a deeper hole in terns of the economy or whether they'd be willing to let it run hotter, 3%, 4% even. >> yeah, i heard what muhammad

syed i don't hear anything from the fed about moving off of their 2% target i think they feel like that would really undermine their credibility. but mohamed is right that they're going to have a very difficult choice to make because it may be that the first bit of getting down from, what was it, 11 down to 5 or 4, it may be the easier part because you had all those commodities come off and hopefully if those prices stay off you can maintain that lower rate then getting from 4% to 2% and especially because they said it's inside the service sector, that could be more differ and require more painful and difficult choices by the fed. >> on your chart you show that companies are planning on having hiring down 7% but capex up 21%. what are they spending the capex on >> actually, you know what, i have that right here because the capex numbers for tech are pretty good, becky, so that's interesting.

and i think that maybe in response to the inflation problem, well, it creates something of a premium for buying tech goods. >> perfect steve, thank you following blow-out subscriber numbers for netflix this earnings season investors is looking to see what they say about their growth prospects joining us to talk about that and his predictions for 2023, rich greenfield. i told you, i told everybody -- under 200. you don't need to know anything about the stock market if something goes from 700 that's that ubiquitous and goes to $160, you knew that was a buy. rich, for netflix, didn't you? >> look, there was a real crisis of confidence, not just for netflix, but really for the entire concept of streaming. i think most investors last year looking at netflix and then looking at each of the media companies, legacy companies

losing billions there was sort of a belief that it was over, like that, hey, you're investing in streaming but if the goal is netflix, that goal doesn't look so exciting. well, all of a sudden within 12 months, they're generating $3 billion of free cash flow, revenues reaccelerating so the question now is, all of these legacy companies, joe, that you were just sort of talking about in the intro all started to pull back and focus on profitability, the question is, now what do they do? they're not in a position to get to the scale like netflix. they're losing a lot of money. do they keep going with streaming or do they start to raise the white flag and give up i think that's going to be the big question of 2023 for all of these companies. >> it's like anything, though, rich, we would talk in absolute terps and it's somewhere in the middle probably and disney is up 20% or more in the last couple of weeks comcast is up probably 30%. it started -- it bottomed a

little bit earlier, i guess, than disney. so all these -- i don't know the demise of these companies is always greatly exaggerated question now is, is netflix a buy here is disney a buy here is comcast a buy here? >> i think one of the big questions for disney is, iger has been back, i think week nine, nobody literally there's nobody other than bob iger that knows what the plan is are they selling hulu? buying hulu from comcast do they want it? is espn and sports streaming core, is it a family service, meaning just disney family sort of pixar, marvel, lucasfilm? do they want to be everything like they had this big show "the dropout" and talked about "the bear" before they have great shows on hulu but how important is that non-disney franchise content we're all waiting for, you know, in a couple of weeks to hear

what is iger's plan? he has to make big decisions, first and foremost is sports core and is it a family company or are they going to try to be everything like netflix? those two key decisions are critical to what happens for disney over the next couple of years and he's got to get animation back on track. i mean, universal, if you think about what universal studios has done over the last couple of years relative to disney, disney's been crushed animationwise and that's just a big problem. >> we have such great content, though, across the board i just -- every time i get back from davos i appreciate it i had two english channels, i had bloomberg and al jazeera so that's what i was watching, al jazeera and i actually kind of liked it but when i got back, you can put anything in front of me now and i'm happy as long as it's in english so the content that all these companies across the board has is getting more and more valuable, rich. i don't know

how we get it, does that matter that much if there's advertising associated with it does that matter that much >> it matters a lot, joe, because the monetization mechanism that the industry has been accustomed to which is cable networks is not working the way it used to subscribers are falling off faster than before advertising for linear tv is slowing. so making money off it -- >> but stream something not the answer either. what is it some weird highbid like our workweek we're looking at? >> this is what nelson peltz and the interview david faber did weeks ago, this is what he misses, it will never be as profitable as it used to be. nothing will be as good as cable networks have been over the last 30 years >> that's weird. why, rich? the content is just as valuable. there's too much competition so margins are getting squeezed people are still going to sit like a bunch of couch potatoes,

if they're not going out to theaters and not watching anything at home what are they going to be doing, rich? a.i., maybe visiting rome with going thes on or something. >> i don't think they're going to have goggles on but i do think that what the key answer to your question, joe, is the friction to cancel it's so easy now there's no friction to stop watching apple tv plus or me cook or paramount plus easy on, easy off, that never existed. think about trying to cancel comcast or charter service over the last 10, 15 years and how difficult that was there was this lock into the bundle where you were paying $100 a month for a lot of content youdidn't want i would assume, joe, you don't pay for a lot of services that you don't want it's so easy -- >> i want them all i do i still need them all and, you know, we're lucky because we're not watching every penny a lot of times andrew, you got a question

>> we've raised the issue of hulu practically every time we talk i was curious where you land on this did you see tom rogers who has been on a couple times with this sort of, you know, he proposed this solution, i don't know if you think it is one where they live in harmony in some kind of long-term joint venture where they actually contribute even more content to one and effectively merge everything peacock and everything else into hulu i don't know if you think that's realistic or not curious on your take of what should happen not just the problem that is. >> bottom line, iger came in -- remember iger's first term replacing michael eisner, he made a very big bold move quickly and bought pixar, andrew, within six months of becoming ceo, the first time i think as you look at this turn for iger call it iger, part 2, he's got to make a very quick decision on hulu and my guess is he likes the content when you look at the deck he

presented to nelson and responded with, it had a lot of the executives sort of tied to hulu and i think that's going to be the move is he's going to work aggressively even if he overpays brian roberts, i think he moves very quickly and swiftly to take stroll of hulu waiting and getting through this process at some point in 204 i don't think will make bob happy or any investor in disney happy. >> just sounds like -- i've heard that so long, rich, that, you know, digital nickels for analog dollars i don't know so you wouldn't buy any of these stocks then basically because the future is so uncertain in terms of monetizing things >> i would buy netflix, i think you saw last week, $3 billion of free cash flow, they've got a very clear path to scaling profitability. everybody else, let's see what their plan is. they're all rethinking what their strategy is as you start at the beginning, joe, they've all got to figure out how they react to this news this was pretty big industry

news last week, everyone is going to be thrown for a loop in terms of what's the plan now can they get to scale is the question every one of your viewers should be asking these companies. >> i will watch "the beverly hillbillies. i'll watch anything. andrew, you were never in your hotel room looking for something on tv. >> can i tell you i've been going there, i don't know how many years i don't think i've ever turned the television on. >> when you're in there alone, you don't -- really? >> nope. >> you study you're advancing -- >> studying, working, emailing. >> calling people. you never need a break to cool off? >> nota lot of calling everybody is there but, you know >> that's the problem. "squawk box" will be right back. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary.

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stock exchange check in with jim cramer jim, you're the person i want to hear from this morning on this when it comes to salesforce. you know the company well. what do you think of elliott coming in? what is it going to mean >> well, i think that there's going to be, i guess -- elliott likes to have a little more control of people in the board room that are more focused on the bottom line, less focused on kind of world view i also think that that's not that different from what starboard wants. so it's pretty serious and the stock is -- i think it's correctly reflecting change that some people feel mark has not been able to do. and that 10% cut is not enough that said, i think a little respect for what mark has done, the environment has become tough. he is still delivering above average growth they want better margins i wouldn't be surprised with the margins. and, therefore, i think the company needs to start outperforming on a revenue to

share basis at oracle which is doing better even an sap i think it's a good thing to have people who love salesforce in there but it will be tough there is a family nature to salesforce that i think that these activists want to -- let's just say change it >> the shake-up. all right. we'll be watching. we'll see you in a few minutes >> you did a great job in davos. i love what you did in davos >> thanks, jim it's really good to be back. we'll see new a few minute minutes.

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. good morning welcome back we're a little more than a half hour from the opening bell at wall street. i want to talk markets with chris bitterly from city global wealth we have the dow looking like it will move high they are morning on the back of this activist news around salesforce, chris. and after all of us getting back from davos, there is a real question as to what happens next there was sort of -- i don't want to say a sense of optimism. i don't know what it was grounded in. but maybe it's being reflected in what we think the fed may or may not do where do you stand >> i'd love to be an optimist. i am in many ways. the market action that we've seen here to date, if anything, i think that this recent rally is only going to compel the fed to step up the hawkish rhetoric. this whole discussion we have around now with the 205 basis point hike in february, this is

on the back of basis hikes last year and $450 billion coming out. liquidity taken out of the bond market a lot of it is cumulus medicine that the market is injecting into the economy is not seen in earnings yet this is why we're still playing defense and cautious here. >> so you think there is a head fake i mean, look, if you have been waiting, are you going to sell some stuff in this market right now? you think it's going lower >> the way we've been positioneded is overweight fixed income relative to equities even within our fixed income portfolio, we're overweight on the quality side that includes investment grade and government and municipals as well as preferred which is offering attractive yields so for us to then take on significant positions on the equity side, this is going to require either a big change in the employment backdrop or a big change in inflation. neither one which we anticipate would happen over the next

couple of months so we have equities in our portfolios but still, we're talking about dividend growers we're talking about the resilient factors that have been able to outperform in investigations like health care and global pharma. >> clearly you're playing the role of contrarian of sorts. they want to the fed to get under 50 basis points. but he wanted them to go 50 points doesn't think it will. sounds like you think they will. >> we think it is 25 basis points the fed tends to do what's in line with markets. and in ermz terms of the big question, the fed's target of 2%, we're still really far away from that. so this idea that we're going to see a material progress down to that 2% this year is going to be really challenging that is probably, we won't see that until next year so what has to give before the fed actually changes their trajectory what has to give is the employment backdrop. we're starting to see signs of that but layoffs that we're seeing within technology. but the real significant part is

going to come out in areas like residential construction which we could see upwards of anywhere from 300,000 to 500,000 job losses once the fed sees that, that's when they would change course. >> kristen, thank you for your perspective this morning we'll see how things shake out but lots of questions about whether to be opt mimistic or pessimistic. sounds like 25, 25, 25, and it's just going to keep going on. we'll see. >> play a little defense thank you. >> joe >> all right >> she is playing defense. but the folks playing bitcoin are playing offense. >> for now for now. but again, after genesis, too. so genesis last week got firmer when the new ceo said maybe it's an on going business for real ftx. i don't know maybe it is. there is crypto, the dow is between 90 and 100 points. a lot of that is salesforce

which is up for not necessarily fundamental reasons other nonsn someone taking a look at it. let's look at the ten year that got as low as 330 while we were on the continent earlier. lots of high mountains and snow. we'll be back again tomorrow in this place which is -- that's good in and of itself. make sure you join us. "squawk on the street" is next good monday morning. welcome to "squawk on the street." we're at post nine at the new york stock exchange. futures are solid after that 2% gain on friday setting up for a very busy week. a third of the s&p 500 reports this week. and including some big industrials, mega cap tech and we'll get our first look at q-4 gdp. taking a multibillion dollar activist stake in the company.