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. we'll get details.

plus, layoffs in the technology sector continue to pick up steam. spodify is the latest company to cut staff. citadel posted aid $16 billion profit for investors last year that is the biggest dollar gain by a hedge fund in history >> speaking of the markets today, the dow is trying to bounce back from the worst week since september of 2022. jim, a lot of discussion about weaker dollar maybe helping. s&p 500 tends to trade better after options expire >> yeah. i think that's true. but there is also very poignant piece by mike wilson about how the end of these bull market phases with bear markets you get a lot of junk that goes up i don't regard the, let's say, second tier semiconductors as junk or software companies, some of which were pushed today but i do say is that, yes, there is speculation i'm not going to dismiss what happened with crypto

which is back. >> that is back since august. >> yes i know the metals which are late stage of rally are back. and david, you could argue that underperforming companies right now are under attack and that's also the end. the ones that didn't participate in this rally. >> and you're thinking of when you say that -- >> i'm thinking of salesforce sfw >> yeah. we have a lot to talk about that and you've got a lot of insight. i have reporting to share as well but you have been saying however, stay away from your -- what were your high multiple, once high growth technology names. this is not the market for that yet. you still believe that >> yes unless you take radical action and that does not include 12,500 people from alphabet yesterday it does not include just 10% cut at salesforce.

they added 49,000 people a few years ago. took it up more than 50% i would say is no. i still favor the industrials. the industrials have infrastructure ahead they have weaker dollar ahead. and they have china head whereas these companies, software companies and big tech have not much in china they lose what i regard as the tail wind that big guns have in the industrials. the industrials are relatively easy they sell 20 times earnings. you have the software companies that are still selling at sales. i'm not as interested. >> your point in china is really g mike wilson says the median company in our university derives 0% of revenue from china. so it's going to help nike, las vegas sands, apple, visa, but not enough to up the overall market >> no. there is also a sense that china has enough pull to be able to have oil go higher

which the oil stocks, look, people are still liking the larger ones. you saw faang that got curious downgrade today. >> yes >> i just think that you look at something like that, you have to say, well, do we really just want to go internationally yes. i think people feel these companies are much more in tune to china than diamond back >> you want to talk salesforce now? probably worth doing it's funny, jim. you and i have talked about it for weeks if not months. really it was last fall when jeff smith on our show unveiled that position in salesforce and starboard talking about at the time wanting to see the company generate more meaningful operating leverage relative to peers. you've been mentioning on air three activists being there. we know one of them is elliott >> no. that's four. >> four. actually, you're right

it's four. one of them i would argue is not fully an activist at this point. >> i agree with that >> but what is going on here, i guess is the bigger question you know, you had some -- the nominating window opens about a month from now >> right not a stagger. >> not a staggered board there is pressure on not just in terms of operating margins and jim getting, what was it, you know, getting to the 30% operating margin by 2025 and that includes stock base comp but also making sure he has a succession plan. and the question becomes where does all that stand? who is he listening to my reporting indicates he hasn't really talked very much to elliott at this point. >> no. >> they have a largest single position >> he hasn't >> of these numerous activists >> you could argue from their point of view, why hasn't he he is a dominant force in davos. in some ways, that's a problem, i believe, with place like

elliott. they're not looking for dominant force in davos but they're looking for someone who can use better earnings. a board that is far more focused on earnings than a board focused on larger issues of how to improve treaties i'm not insulting marc by that you know i think marc has done an unbelievable job. >> you have a long and deep relationship >> it's not about friends, it's about money. it's hard to say about that i've done a number of charity projects with marc i can't just say -- >> you can't just divorce that >> but i will say this, i think to some degree the last acquisition, slack, tough one. the integration not perfect. the buyback, i felt was very good i did feel that marc is very responsive to starboard instantly and jeff smith very good rapport i think when i look at who elliott, is i'm not saying i know what he is up, to but i wonder what they think that marc

is the right person to run the company at this point. >> yeah. i don't know how they view that. i think their -- my guess is their hope is to have more of a conversation, fick it out. you know there is a massive operational improvement plan that needs to go into infect more so than the last that has taken place and the margin improvement they have already identified or at least did in their investor day and a few other places not being seen as enough. you know, perhaps a lack of trust in the company and then, yeah, so it's both operate better, improve profitability, maybe move away from an m & a strategy that takes precedence over all else and then really have a meaningful success plan in place against someone else familiar with one of the other activists telling me that is sort of they're looking at a two year time period under which, you know, marc needs to find a successor. >> i think that it is safe to say that elliott doesn't have that level of patience

i also think that that last acquisition, slack, may be viewed -- that's, of course, competitive with teams, as a bridge too far but can i just say this? salesforce is an amazing company. and they have triumphed over many different people in terms of winning big acts accounts do they have too many people on an account yes. it is very difficult for marc to fire but bret taylor, the co-ceo who is leaving was supposed to do that >> was it because he was trying to do it that marc and he ran into some issues together or because marc felt he wasn't doing it enough? >> i asked directly during salesforce i said to bret, bret, if you're going to defeat elie musk as the chairman of twitter, how do you have time to spend on salesforce and he said, it's not even a problem. well, i'm not sure about that. i'll tell you one thing marc

wasn't ready for him to quit >> right right. do you think that -- i guess -- >> it was a succession plan. >> it was and it failed. keith block was the previous ceo for not a particularly long period of time and also seen -- >> more of a sales guy >> do you believe marc is focused on and dedicated to impro improving profitability in a way that the activists will be happy with or feel as though i don't need to challenge the board? >> it's a good question. in football, it's win or go home this can be win and go home. because it's not quite sure that he doesn't want to go at the absolute top he would rather go out like elway, you know, absolute top. i'm going to disney world which is an account he brought in. i hope they listen to him. carl, look, it's really difficult. he is the founder. it's his company he's amazing and it's very difficult to see him under siege. but it's really the model that is under siege which is not to

use -- it's an ohana model let's not laugh at ohana >> part of the culture. >> that faired them well >> certainly one of the names that have been rewarded for reducing head count. that takes us to spodify today the latest company to lay off employees, reducing head count by 6%. stocks higher as you can see in the note, he says, like many other leaders, i'd hope to sustain the strong tail winds from the pandemic and believe that our broad global business and lower risk of the impact of a slowdown in ads would insulate us in hindsight, i was too ambitious in investing ahead of our revenue growth also don ostroff, most powerful person in streaming as far as podcasts go, going to leave and become a senior adviser. >> extraordinary i remember when she was brought n i heard she was about hollywood. and now, david, i think they may think she's about old hollywood. there is a belief that other than joe rogan, there is not an

effective, let's say, talk radio, so to speak and this is a tough move because eck is now involved with more of a strategist and it's nuts and bolts to people. >> i mean, it was here at this desk that daniel ek introduced the podcast strategy >> yes >> and told his shareholder base we're spending a lot of money on this because we believe this is going to be a growth business. that is a number of years. it's no the clear that worked. >> i think they paid too much for people i think that is the problem. by the way, carl, i have to till, i'm minimizing this. she was brought in for pizzazz and joe rogan is not necessarily -- kind of anthehical view. the people they spent, perhaps even the obamas, i think too much for too little. i think that spodify is

correctly up they're going back to the initial knitting which was dominant i think this is a correct increase in price. >> so after crm and microsoft and wayfair double upgrade today and now spodify, green light for companies that want to cut head count. >> i twha hink what is interestg is wayfair, double cutback first they try and was enough. second, they got it right. so you go sell to high i think about the an log here, salesforce they did one cut obviously, every activist wants another cut. that's not easy for someone who announced a gigantic buyback and fired a lot of people when they're not of the firing kind but if you want your stock to go up permanently, you take the wood -- i mean the wayfair cuts were the kind that i think a lot of people wanted amazon to do. they wanted alphabet to -- >> percentage wise the numbers are not that great

head count wise. but percentage of the workforce is more significant. >> one thing that i think is hard for people to believe is alphabet, i'm not saying pick the names out of a hat it does seem to be that they didn't necessarily do them as targeted as i thought. >> across the globe. >> exactly >> i know. >> whereas mark zuckerberg who is still the benchmark of the grim reaper said, you know what you? didn't produce a lot of revenue. so i don't -- i want to shift over a little more to reels. i don't want to be with you. >> and then there is the guy we're going to talk about after the break, elon musk the guy in the mid sl doing okay the two people on either side, see you later. >> the more people you fire is the better it is very difficult. >> i think it's four people. i'll take that guy that is kind of in the middle >> and now force is price cutting throughout the industry. >> i don't want to go -- >> red tail is the only winner >> that's true

started with 8,000 employees at twitter and end up with 500. >> that's incredible >> and when president and former president trump comes back -- can i say it >> welcome home? >> june, right he is staying with truth social? >> he's probably not happy with the document in garage question. i'm going to text that one >> we'll get to some of the tesla news we'll get to that upgrade of wayfair and a few others today including shopify. down grades of things like levi. there is a look at the drawings from friday's appearance by musk on the stand a lot of data coming our way next few sessions as well. take a look at furutes more "squawk on the street" in a moment s “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪

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elon musk was on the stand friday in that fraud trial over his potential attempt to take tesla private back in 2018 he testified that his tweets about that are not directly linked to tesla's stock price. he told the court, quote, just because i tweet something doesn't mean that people believe it or will act accordingly musk is going to take the stand yet again today at 11:30 a.m. eastern. lawyers are going to continue their questioning, guys. in fact, he was only on the stand for about 20 minutes on friday today is going to be a longer

time period for mr. musk >> does he have more, let's say, respect for this part of the judicial system? >> i don't know, jim i don't know >> his flip nature doesn't fly in the court of law. flip naturebeing exactly what just heard from you which is, are you kidding me go get a real lawyer >> he's got a decent legal team. but the question will be back to that point it's like is what you tweet kind of material? it's what it comes down to is that a material statement from a guy running the company and be taken by such as the investing public and if it was, well, then it's deemed to have not been true. >> how could it not -- >> the junl adge already said t. >> let's say you called "the new york times" and walt j"wall strt journal. people say that at which timer

is not material. that is proved over and over not to be the case when you post something, carl, when you post something on twitter, as much as you think that twitter is the place where people battle over who is better the niners or eagles, it is also a news breaking center and i think that a flip man may just say, you know what? i can say what i want because that's not what i care about i'm above what i guess is regarded as the -- >> we're having this discussion since really twitter exploded. >> yes >> wouldn't you argue regulators have not demonstrated a view that it's material information that crosses line? >> i think the sec, previous sec i think just said enough we don't want to take them on. and that is, david, as you know, a way where the sec would say, you know, we don't have that kind of power. >> right >> and the justice department chose to look the other way. >> they did.

there is a lack of context on at which timer that might have been very important for mr. mus to being h-- musk to have been abl to afford himself in choosing to communicate in that fashion around that go private five years ago. >> i'm not going to disagree maybe it was a little more a timely and freewheeling. >> they were >> look, there was a sense that -- >> we didn't take it seriously at the time. it is still an enormous company. he needs an enormous amount of money which does go back to the tweet, funding secure. >> funding secure was definitely raises the -- david, you have to admit. do you remember on our network people came on and said he's getting in too cheap as if that funding secured is announced any minute but he's not pain paying enough for his own company. that was a discussion. it wasn't hey, you know, that's not material it's worth 1,000 he is stealing it. i don't exactly what ron said. >> by the way, they were right the stock is still up 450 --

500 -- enormous amount even with last year's plummet. >> there is a story about the percentage of buy ratings now for tesla on the sell side, highest in eight years >> i mean i think tesla is trying to take everybody down by lowering prices. they have good gross margins there is no doubt about it the guy is eye superior manufacturer and total visionary but he is stuck in the four walls of a judiciary committee that can bring anybody down. it is all consuming. you don't go to work in the morning and say i'm going to focus on tesla you have to go to work and say what are they going to cross-examine me on? to hell with this he bought, you know, you seat people on commercials i like it so much i bought the company. the company doesn't cost $240 million. >> well -- >> recom >>. >> i had to bite entire company. that's what it comes down to

>> that stake turned out to be more than tiny little thing. >> yes >> coming up this morning, cramer's mad dash. we count down to the opening bell interesting headlines from microsoft this morning doubling down on their investment in open ai. futures pretty steady here we'll get the opening bell in aboueit nus.t ghmite ♪ ♪

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we haven't talks about the semiconductor industry at all. that is a topic on the mad dash. >> estimates and price targets have come down barclay's call saying they like the components you see the numbers. think go from 70 to 85 sky works is up. nvidia, 170 to 250 in part because of nvidia really close to being the center of ai. but these are big calls. david, they're not following off with the apple you think that, wait a second, everything goes into apple is going up why do they raise numbers for that everyone is reluctant to do so it's hard to raise the dif components i'm not getting that sense at all. >> what is the main reason behind the call then is it evaluation call?

>> no, end of the inventory glut for data center and hand set and, yes, the unimaginable pc which had a gigantic inventory glut these are all 24, not on 23. but it's a way to get ahead of the inventory correction completion >> all right you mentioned hardware they noted the dollar arguing that earnings if -- assuming this fx scenario that we now have would be higher for the year by 2% to 4% by q-4 guidance. >> salesforce would come in 20 to 21. >> his point is that dollar weakness favors hardware over software >> i know. i like tony. salesforce was the one that was most exposed when you look at the international, these company -- i mean, look, qualcomm is not china. but amd has china. nvidia is china.

i think nvidia is -- david, nvidia is in the wheel house you know china is a big business player. >> no doubt. one quarter that they had gotten a slowdown in china. that was some time ago >> it's very problematic situation for everyone on the dollar and, yes, what i would tell you, you want to be dollar focused. >> let's get to the opening bell to start the week. the big board, uranium producer encore celebrating the listing on the nyc a real time video communications provider >> china back. >> yeah, jim, you mentioned, you were talking india last week and today an indian ministry official says apple wants to create a simple a quarter of the iphone's there they're 5% to 7% >> i think it's very smart apple has a made in by

philosophy in china. i also think that we saw the weakness in the china supply chain. and also, david, we're not going to stop. the united states has really cut off their high end chips and i think that despite that excellent discussion that andrew ross sorkin had about where india sits politically with oil and russia, that market is the best more than half the country is under $1.4 billion. >> it's not an easy thing though to move significant amounts of production of the iphone to another place. i mean, there is a lot of specificity and technological prowess that goes into being able to not just bring all your supply chains together but put these things together. >> number and it's not -- no matter what it seems, april sl not being rewarded i think, carl there is a belief that this quarter is a weak quarter. obviously, if you look at the currency, you do get a better number

but what i think is dogging apple over and over again is that it was a bad period for china because of covid and if that's the case, upgrade right now. this covid -- when 900 million people have covid, they're almost over it. >> as we said, morgan stanley highlights las vegas sands i see caesars today beats estimates. the leisure economy is doing okay >> yes it's the lunar new year and incredible time. to go back to nvidia and what is going on with microsoft, too, i don't mean to be too glib here but chat gdpt, if you go in and ask for someone to describe the eagles-niners that some have, david, 49ers march forward, eagles soar in the sky above tough battle ahead that's demonstrated. >> did you request that? >> a friend of mine that is a niner fan, i think he actually

put it in a way that could you tell me one for the niners beating the eagles you know what? he may be a trojan horse >> tough battle ahead. >> let's slant more about what it's like to plate eagles at home gdp >> by the way, the headlines on microsoft this morning, doubling down on their investment in open ai, jim. looking for multiyear partnership as they try to make this a key part of the accessing the internet. >> i think you have to i mean when you look at what can happen, take a bing, which i always have affiliated with not as good as bing crosby who was a de tremendous crooner. >> he was. >> maybe you can ask bing a serious question other than a second rate question, maybe bing is now part of the mix, the he is very competitive. i wait for what alphabet is going to do. they've been very good at ai and

good at inter ai >> you've been quiet you have to imagine that it could eventually be a threat to the business were you to get a very sophisticated ai search to your point available how it could be that alphabet would not be able to match that seems hard to imagine. but we just don't know that much about their reference. we know they spent a lot of money on it. had a lot of engineers after it. >> well -- >> some point, they have to tell us, don't they >> they have a lot of different divisions. they had two different duely health care divisions. that's not what they do. carl, i think that what is interesting is you look at what mark bennie did to battle directly with a one time friend now not even friend to me, microsoft. this deal for slack was directly against him. i do not believe the activists think that slack is correctly integrated slack is difficult to write off

as fox would be to disney. once again, to put a finger into disney's eye i would say that salesforce should be up more than that. there should be people who recognize that no matter what the margins are going to get better at salesforce whether you believe it from other party, david, or from starboard or when you go from l.a. partners. they're all about the margins getting better and not having oracle and sap had better price to sales. that really is rather remarkable the idea is only up two and change presumes that everybody is partly ohana. and that's not true. >> i'm looking back at the original deck from jeff smith at starboard. the first activist at salesforce broke that news us with on cnbc during an interview last october, i think talking about, you know -- and very positive ways what he hoped would be a real embrace by the company of margin improvement

and making the point they have a leading market share across the many businesses. but they don't make as much money as the peers do in the same businesses. and talking about margins. jim, you had mentioned recently that there were a number of potential activists there. in fact, we had a conversation i think on thursday or friday you said at least three. >> yes >> now we noel know elliott and there was one that indicated, jeff ubben, his firm owned a significant for them stake in the company has been talking to bennioff as well he's been on so many different boards he is focused on succession. unclear what his presence will mean but yet another kind of activist i wouldn't term jeff a, you know, sort of a -- thoughtful. yeah, someone i dealt with many times. most recently with his presence ott exxonmobil board

someone brought any n. by an agreed upon director but we still have a fourth activist there as well remember e ubben is more focused on his new firm, inexclusive capital. there is the environment, esg. companies doing well by doing better >> i think that some of these activists may feel that is a little too much time to spend on that not enough time to spend on nuts and bolts. say their a different board. much larger representation of the board to bring more focus. i would say that mark is a by their. but that bret taylor is going to be a successor i think all these people like to see a successor. i'm not sure that starboard doesn't want marc to step up as executive chairman i'm not sure that elliott has any plan yet >> i don't think they do they're not sharing much at all at this point. other than the simple statement acknowledging that they do have a significant position my sense is they have not had a

lot of conversations with him, jim, but can you not rule out the possibility here which, of course, is an interesting story of a proxy fight that has to be something you have to consider here with the presence of all these activityists no the to mention elliott which is not shyed away from the potential proxy fights in the past. >> wouldn't be so bad if marc presented his own people that he would like them to be more in sync all they say and i want to stress this i know some people say that i am too close to marc. he's built an amazing company. the product, obviously, the product twice in my career and the number, the lift you get is extraordinary. i don't think that what he's accomplished should be lost. because it's not lost on elliott. it's not lost on starboard what they are all saying is, okay, given how superior the product is, the company should be making more money i don't even know if marc would disagree with that i think he's actually kind of fascinating that very smart people are intrigued by the company and want to -- david,

you made this characterization how can they make more snn. >> i think that's the way they would approach it with him i don't know what his posture is going to be about whether they're serious in that. he is -- he is salesforce. and by the way, i talked to another very large activity who chose not to focus on salesforce and said, you know what? i'm not sure benioff is ever going to stop doing what he is doing. keep spending and keep disappointing. those are harsh words. but he said by the way, we're not going to push him out. he's bennioff. he is bigger than life this is his company. and there is no way that you're going to sort of be able to get a lottery -- >> analog to a founder who has been able to sustain his or her position after attack of multifailings of activists >> i can't remember anything quite like this. >> avon? >> by the way, this is $150 billion market cap

>> absolutely. look, carl, there is an element to bennioff that is a magnet for clients. but does he make enough money per client does he have too many people on each account the c team is going now. >> the pressure he is under is well told in this downgrade of zoom today, for example. mkm says companies that adopted a bunch of different applications are going to streamline they go to neutral 75 target. that's not looking at the seat count dynamic as well. companies cut back workforces overall. >> he is good friends with marc. i question whether zoom would be good acquisition i know that you have to pay too much >> do another deal >> no. no all right. >> i think it's -- no. i am more -- i'm just saying

that marc needs to find a way to have video, to be more 360 which is zoom. but, no. zoom is probably out of the question >> video is 80% of zoom. >> but the apps. all right. i have to tread facarefully here my stepson was directly involved with the apps. once he left, he shared with me the apps i think they're excellent. but then again, periodically my wife watches the show. now they are excellent i think that -- but i have to tell you, that company, david, didn't have a merger that was very -- i'm not saying that -- >> but it didn't happen. >> no. but it was -- >> it got voted down and was distracting. by the way, as is a proxy fight. speaking of, come back to more pure m & a it's what i'm following here much. >> oh, my god.

>> they made -- they put out a release where they basically say, listen, you know, we're obviously pursuing aggressively our desire to buy national instrument for $53 and they've been talking to us and, you know, they've been sort of being -- they commenced the real process we've been policed to see engagement between the management teams and advisors for our company and their company. we're not going to try to run anybody for the board of directors. >> yes but, david -- >> considered to be a sham process. >> no, it's not a sham process i'll tell you as well, i'm fairly confident that honeywell hired advisors doesn't mean they're going to make a bid but they certainly will do the work honeywell typically disciplined. dis disciplined buyer. the other names, siemens, probably not key site, maybe anti-trust issues fordive, we'll see there are a number of names can you put out there as might be

interested and national instrument this is a real process you can see the stock is trading $1.65 above the $53 price. as i reported early esier, at l, emerson said we're not going to pay something that starts with a six in front of it. >> my travel trust owns. this i communicated very loudly on this show which got back to the company that i never seen a deal that is destroyed so much value almost instantaneously. >> you're talking about -- >> emerson. >> when they did -- >> when this -- >> oh, when they announced this? yeah absolutely >> talking to them they went hostile. i mean when you use -- >> i want board seats. >> two years >> they checked every box. >> they checked every box except what do you do if you're a shareholder and you get crushed?

like my trust was. and you know what? i don't like it. >> it's really bad to lose money. i learned that very early in the game it wasn't from buffet. i learned it myself. >> yep >> you lose money, bad >> self taught >> yeah. >> kind of one and done when you're down ten. and you go home. you're dallas. if you're dallas, go home. >> we have a minute left here, jim. they mention the upgrade to j.p. morgan they go from 35 to 63. more confident in break even this year that is the first time since 2020 this is the first peak above the 200 day, jim, since november of '21. >> when i looked awhat wayfair has dovenlt ne, i have to tell think wayfair is really the template of what these act activists which is come on you're fat and happy you're not that g ood.

wayfair makes furniture. wayfair shows what you happens if you get real serious. >> yeah. also shows you wethat even witha 26% rise in the stock it is not breaking through >> wayfair is one of the companies that is coming through to the other side. >> right >> i think a lot of people -- do i look at wayfair? you bet. i think that wayfair is some stuff is better than you thought sfwlc we won't talk much fed this week but jp morgan over the weekend that seven of nine of the model indicators now show less than 50% chance of recession. the journal piece, of course, on the fed graduating do you remember to -- down to 25 basis points >> i went over the charts thekd woochlt the strongest are the industrials. and the weakest are the food and drug and that is a sure sign that it's a quarter point weight. people have been, i think that

group that i mentioned, the winners, bottomed in october when interest rates peaked i think, carl, we have a traditional rally in the industrials and very wayward action in food, drug, and software to make it today. >> as we're trying to get back once again close to 4 k on the s&p 500. dow is roughly flat. let's get to bob pisani. >> happy monday. flattish open. but there some very clear leaders. growth is back for 2023. right now take a look at the sectors. semiconductors having a nice move up. barclay's upgrade of a number of big names there. energy oil is at $82 creeping up there. that's been strong banks doing okay real estate, you know, if you look at the laggers, utilities, health care, consumer staples for the year and again today, it's all the defensive sectors. they're sitting out there as laggers here the leader board is mostly tech. semiconductors we mentioned that barclay's upgrade there. amd, qualcomm getting an

upgreat, seagate skyworks is on fire. of my heavens. that is the highest level since august or september, $106 there for skywork. other big cap tech doing really well today we mentioned salesforce with the elliott stake there. that is doing well nice move up on some of the other names. there is what we're doing so far in 2023. this is a growth, big growth move in first three weeks of the year here. semiconductors up 12%. communication services, consumer discretionary, technology. i mean look at the big moves up here remember the s&p 500 is only up about 4% on the year the laggers are all the stuff that held up comparatively better last year health care, utilities, consumer st staples all trading to the down side a growth mindset for 2023. meantime, this is the 30th anniversary of the etf revolution 30 years ago this week the

launch this sin is the index to the s& 500. it launched 30 years ago this week it launched the etf revolution and indexing revolution brought about in the 1970s there was an s&p 500 index fund. but etfs are a different structure. this is the world's biggest etf. most actively traded on a daily basis. it trades north of $30 billion here so the etf revolution really created two things 30 years ago. there is the s&p 500 there number one, created passive indexing, popularized passive indexing over active management. this had been going on for a number of years before but it put it in a very easy wrapper. etfs had a number of advantages over mutual funds, carl. the important thing, of course, easy to trade intraday lower cost than mutual funds and, of course, a better tax

structure than mutual funds. we'll have the man on that runs the state street etf business for us on halftime report, rory tobin. he'll talk about the index revolution and the etf business and growth of etfs carl, back to you. >> thank you, bob pisani as we go to break, check out the bond report and see how treasuries are faring. not a lot of fed speak this week as we await the next meeting on the first. a look at q-4 gdp, income spending numbers, housing data headed our way along with a third of the s&p 500 reporting earnings ten year north of 3.5% back in a minute

1. s&p gainers going to be concentrated in semis. jim mentioned upgrade of barclay's of a lot and leading the s&p overall a long with

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let's get to jim and "stop trading". >> i do like matt boss' piece,

really talks up the greatness of nike and how january is strong in other words, once again, as covid burned through, there was tremendous shopping. now we're going through the lunar period that's going to be really good. downgrades levi strauss. that's important the universe of apparel has proven very, very difficult. remember, we've had companies, many companies just swimming in apparel. >> second downgrade for levi in a week b have b of a last week on fears of denim not coming back. >> i know. stay very close to this. nike is the one. some people feel there's good things to say, but, you know look, lulu missed. lulu is sacrosanct. >> are you going to celebrate your victory over the weekend tonight? >> we are technically underdogs.

we, being the eagles, so i think that there's no celebration yet until we completely trash a team that everybody thinks is so darn great. and i would say that let it be that way all week. we need to play our best game. >> you look awfully strong awfully strong. >> thank you both sides >> yeah. >> great job on that, jim. really it was great >> we'll see you tonight >> "mad money" 6:00 p.m. eastern time. elon musk set to take the stand for day two of that tesla trial, as we get a live shot outside the cothseurou

good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber at the new york stock exchange. the nasdaq adding another 1% now to start the new week where we'll get a lot of earnings. maybe a third of the s&p along with serious eco data as well. >> that's right. we're 30 minutes into the tr

trading session. spotify shares soaring after cutting roughly 600 jobs along with the content and advertising chief, don ostref. wayfair shares rallying after two double upgrades. both jpmorgan and bank of america getting bullish on the company and its cost control measures they, too, recently announced -- wayfair, that is, recently announced layoffs. we'll talk to an analyst of that call later this hour shares up 25%. salesforce, activists piling on elliott management joining starboard in taking a stake in the dow component. salesforce has seen its market cap halved since 2021 as growth has slowed and shares are up 1.5% david, the latest? >> and there's another activist as well. we believe there are four in total. and, you know, this is a company

that does have nominating window for board of directors next month. certainly the possibility, let's start with elliott, they might come to challenge for that board. elliott not saying much other than confirming a significant position of billions of dollars worth in the company's stock and based on my reporting, at least, sort of not a lot of back and forth between them and mr. benioff at this point. they will have those conversations, probably somewhat similar conversations to those with jeff smith who started this off last fall. you spent so much on acquisitions you have a great sales growth profile, but you have not done as well on getting margins to what, at least many of these activists may believe would be an appropriate place couple that with sort of a focus in part for things on like succession, and you may have a battle or you may have at least an interesting continued

conversation between mr. benioff and these investors. >> i think what's so incredible to me is that -- yes, there was the large acquisition for slack for $28 billion in 2021. we saw that pull forward in demand during the pandemic, which has affected everybody in tech now the idea of right sizing that demand. i didn't realize that expansion had almost tripled salesforce's workforce over the past four years. i know they announced some layoffs but it seems like more potential cuts, more potential changes will come. four activist investors, carl. >> we're left with questions about activists, looking at companies where you could argue the tough work of reversing that has begun already with the crm layoffs. >> without a doubt i think these activists will feel as though it's not quite enough at this point you know, i think a focus may be can marc benioff get to 30% operating margins by 2025? that is certainly something many investors believe is possible. the question is, will he actually be able to execute on

that vision? and if you were to get there and then also put in succession plan, perhaps it ends as jim indicated earlier, well for mr. benioff. he can go out on top, so to speak. there has been building frustration with the company for quite some time in terms of just not delivering on the profitability side of its business >> and just to be clear, we have not gotten a response or statement from either benioff or salesforce at large? >> no, not at this point again, if you want to keep track, jeff smith and starboard last fall, elliott, jeff has been in there for a period of time smaller but a well-known activist in the past of course, he had run and funded value add and another activist of some size that has been engaging with the company. we'll be watching it closely something else we're watching closely this morning is a courthouse in san francisco, where elon musk is expected to take the stand later this morning. that, of course, is that fraud trial, securities fraud trial. it will begin about an hour and

a half from now. for more on the trial and the implications for musk, let's bring in greg baker, former s.e.c. senior counsel and patterson belknap partner. >> thank you for having me. >> thank you we've talk about what's at stake for mr. musk what could actually happen here for him? >> i want to start by noting it is incredibly rare for federal securities class action cases to make it this far, to make it to trial. i think dating back to 1996, only about two dozen cases out of the thousands and thousands of federal securities class action cases have made it to trial. and i think that speaks to the risk that defendants face when they make it this far. usually these cases are either dismissed by thecourt or the parties settle, and for good reason so, the stakes are high for mr. musk here. >> in what way in other words, if he is found guilty, so to speak, what happens?

>> so, just to reset, this case concerns well-publicized incident in august 2018. he issued a series of tweets indicating his intent to take tesla private at $420 a share. he said that funding had been secured and investors support had been confirmed it was later revealed, largely by a "new york times" article published august 17, 2018, that this wasn't true mr. musk argues he had some conversations with a saudi arabian sovereign wealth fund. but it was pretty clear, based on the evidence that subsequently came out, nothing had progressed to the point where he actually secured the funding to take tesla private. this got him into hot water with the s.e.c. there was a well-publicized settlement with the s.e.c. >> stepped down as the company's chairman. >> and he paid a $20 million

penalty, tesla as well the s.e.c. took away his right to tweet -- he had to preclear his tweets with the company. so, simultaneously around the same time a group of investors filed this federal securities class action in san francisco, which is just now making its way to trial. >> so, the fact this is one of those exceedingly rare cases to actually make it into a courtroom and in front of a jury right now, what does that say about what we know about the case so far and the strength of the case, whether you are elon musk and team tesla or whether you are the investors looking to be made whole based off these tweets >> an important point to know is judge chen, presiding over this case, ruled last summer the tweets he made were false, and critically mr. musk was reckless am making them he should have known they were false when he actually issued them right off the bat he's operating from a whole he's operating from a deficit.

those are two big wins for the plaintiff. there's three other points the plaintiffs have to prove in this litigation first, something called reliance the investors who purchased or sold tesla stock during this period were relying on the tweets when they made those investments. another thing is called loss causation. they have to show the tweets actually caused the stock price to increase. subsequently, when the truth came out, that these tweets were false, that the stock price declined finally, and perhaps most critically, the plaintiffs will have to prove the amount of damages here you can expect them to shoot for the stars. we can expect to see a number in the billions so,ers there's a lot of risk he. >> do you think it solidifies the role tweets play in disclosure >> yeah, tweets are limited. musk testified to this last week he tries to argue that, you know, the tweets weren't untrue, but he didn't have enough -- because of the character

limitations, he didn't have enough room to fully explain what he meant. that right there is a reason not to use twitter to disclose important company statements it's not really going to be a good defense for him in the long run. >> so, what does a win look like i mean that for both sides are there different outcomes that could come from this? >> yeah. i mean, for the plaintiffs, obviously, a win is going to be prevailing on those elements that i just described for you. and getting a large judgment from the jury at the end of the day. for mr. musk, his job is hard, but what he has to try to show is the tweets weren't really what was responsible for moving the stock price here there were some other factors in the market that caused the stock price to move. in my opinion, that's going to be an uphill battle. the other objective is to mitigate the damages, try to keep that damages number as low as possible. >> tweets are material, is that a final statement at this point,

or are we stilldebating that a well >> it's part of the question of reliance and loss causation. were vinvestors relying on these statements objectively looking at this, it's hard to say if you're an investor in tesla, if you're considering investing in tesla, these statements weren't substantial? >> the twitter habits he established prior to that tweet, are they material in this case or not the fact that he was a vocal user of the platform. >> yeah, i mean, he's already testified to the fact that he didn't bother preclearing his tweets he didn't run it by his lawyers, his marketing personnel, other executives, most steps you see public companies take before they issue profound statements that's an important factor the jury is going to consider. >> say this were to go in the plaintiffs' favor, say tesla now has to pay out millions or even billions of dollars to those

investors, are there any other read-throughs to tesla, any other longer-term impact this could have in the ruling that this could have? >> i don't really see this having a huge impact on tesla. this case is -- we're almost 4 1/2 years into -- from when the tweets were made it's been well publicized at this point i don't think it's going to really affect the market price of tesla or the long-term impact the only exception would be if there were some bombshell evidence that came out during trial the public weren't already aware of, largely concerning current affairs. that seems unlikely to me. >> we'll be paying close attention to what may be hours ofat least testimony today fro mr. musk thank you for being with us and explaining it. >> of course. >> appreciate it. as we head to break,here's our road map for the rest of the hour we're keeping an eye on slowing inflation data when it comes to a market comeback. well, maybe you should be watching bonds we'll discuss that also, wayfair shares are

up -- they were up as much as 24% this morning, this after double upgrades. find out why jpmorgan is getting bullish. we'll talk to the analyst behind that call this hour. finally, if you're trying to buy a car, well, if prices are anything to go by, you'll be waiting a whole lot longer more on that story this hour stbig show still ahead as we're ju south of 4k don't go anywhere. realtor.com (in a whisper) can we even afford this house? maybe jacob can finally get a job. the house whisperer! this house says use realtor.com

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for business economics is out with their fourth quarter survey results. the economy is slowing, even on the hiring front senior economics reporter steve liesman joins us with the details. hi, steve. >> good morning, morgan. the outlook for hiring and capex turning decidedly negative in the survey at a time when decisions like this by businesses is critical in figuring out whether the u.s. economy barely escapes or does it fall into recession here are the results here are expectations and the net percent of those respondents who say it's rising higher you can see net percent is negative the first negatives we've had since the pandemic capex is still positive but the lowest level since the pandemic. profit margins a little less negative than last quarter but the third negative in a row. good news came in the inflation front. prices charged at 25, lowest before the onset of inflation. there were more good signs on the inflation front. you had declines in both actual

and expected input costs and an easing of labor and material shortages. half of all the companies reporting said there wereno shortages. that's the smallest percentage, since the question was asked in may beginning the cycle. the bigger story, likely the declining net percentage of actual and expected rising sales. that's what it's all about anyway after several good quarters after the pandemic, sales and expectations have both fallen below the pre-pandemic levels and approaching recessionary levels fed chair chris waller spoke on friday, saying the u.s. economy can avoid recession, but he acknowledged some data has turned down recently he said future rate hibkes will depend on data like others on the fed, guys, he said he did not foresee rate cuts this year carl >> steve, we'lltake all that into advisement and talk more about the impact on the market

let's bring in megan schu. megan, let's just talk about the data that we have seen as steve mentioned some of the naib stuff, ceo confidence, backlogs, inventories. the market is beginning to sniff out why that would be happening, and that's negative for stocks. >> exactly, carl thank you for having me. i think i would add to that list the conference board leading economic indicator that we got just a few minutes ago, which was negative 1% on the month negative 7.5% on a year-over-year basis that's one of the indicators we are watching that would be the biggest head fake if we don't have a recession we haven't seen that decline at this pace without a recession. i would say odds have improved over recent months as we've gotten more inflationary data.

a lot does, as you point out, come down to what the fed does at the end of this year and if they're going to hold the line i think it bodes more negatively for the economy. we still think there is a chance of a soft landing but i think a mild recession is more likely. in that case, i don't see the market as appropriately pricing that in at this moment >> that is definitely the argument among some. i wonder if you think q1, q2, despite any impending pause the fed may bring, is treacherous? >> yeah, carl, thanks for having me i do think there's reasons to, one, be cautionary here. if you look -- obviously, we've seen the job cuts, if that's going to make a move in the actual employment data which is backward-looking i think on the positive side there are some things we looked at we mentioned the inflationary trends something that's been positive now. we see the momentum and recovery in the growth stocks for investors, speaking personally, i just put a little -- able to dip a little

back into the market and buy at the top this morning that's been something that has been cautionary for a lot of us. i think there is a small chance for a soft landing here. i think when you look at how the unemployment data hasn't been much affected but the cuts are still coming, i think we'll see in different sectors, not just tech that's something for investors to play out and look very closely at here, carl. >> what are you buying >> so, right now, i think there's a couple areas investors want to stay into. one, the broader market. i think if you believe in that soft landing, you want to stay in the broader market. the other area is in health care where we're see still dividends paid out to a lot of companies the last year that is a good area to look at is growth tech companies. while we have a lot of earnings coming out, i think they made the appropriate cuts, especially if you're looking at some of the things they did to resure their tosses i think a lot of those people land on their feet with a tight labor market i do think with growth slowing, this had to happen, especially in tech.

now these companies are a little bit -- valued a little better and opportunities for people to be buying that price-to-earnings valuation we haven't seen in a bit. i think they'll tighten here in a bit. >> starting to see some notes and commentary from various analysts and strategists that this feels like early 2000s right now. what happened in the early 2000s, when you saw all that stimulus get pulled back and liquidity sucked out of the market is you did have a mild recession. it was only mild, economically speaking, but it was a real bear of a bear market do you see it the same way >> i think there are, from an economic perspective, definitely similarities to 2000 and i think this, as we look at the strength of the labor market, that's the greatest spot i mean, initial jobless claims under 200,000 is really hard to imagine and hard to synch with the possibility of being near a recession. i think as we look beyond the economy towards the market, i

don't see the same degree of potential selling that would happen in the stock market we were in a definite bubble in 2000 i just don't see the need for that amount of repricing we've seen a lot of that already in the tech sector the market is trading at 17 times now so we've adjusted downward i think absent the fed continuing to go much more aggressively above 6 and hold it there, i don't think we need to see the market reprice from a multiple perspective much more than that. i do think this earnings season and the next two quarters will be very telling. hopefully we finally get some of that flush from an earnings expectations perspective and we can start to think about how the rest of the year is going to pan out. >> although, we were talking earlier this morning the way in which companies that had reduced head count have been rewarded. at least in the short term, whether it's microsoft or salesforce last week or wayfair today.

i mean, i wonder how we get that flush if you, at least this particular earnings season, if companies can say, look, we're taking the medicine now and the fears you had about our margins going forward might not be well founded. >> with the companies taking the medicine, people wonder if that was enough of the medicine if you look at the amount of the cuts that happened, it doesn't account for, i think some of the areas where you have attrition or not filling open jobs i think we're seeing a bounce from a lot of these companies because they're taking the medicine and investors believe margins and earnings will get better in comparison to what we saw in 2022, or at least 2021 for comparison purposes. i think the medicine has been taken and a lot of companies are showing strong sides now, if they'll be able to meet these much lower expectations on the top and bottom line, that's a big thing because demand has softened for a lot of companies where enterprise to consumer

that's the thing sil be looking for and the outlook for a lot of companies if they see 2023 getting better, especially in the second half. >> the picture is going to start filling in starting tomorrow as that new wave of earnings begins we'll talk to you soon thanks so much >> thank you the s&p might be higher right now. it's just above 4,000. but the top laggards on the index, zillum down 11% domino's, american tower, slb and freeport under pressure as well we have a $7 billion acquisition sending zilm lower

microsoft announcing a new multibillion investment in chatgpt and openai microsoft was in talks to invest $10 billion. the deal marks the third phase of this partnership between the two following microsoft's previous investments in 2019 and

2021 david, it's not just human-like conversational texts but also the ability to generate images based on a hoandful of words. that's where we're going. >> it is suddenly we're all paying close attention to the advances in ai. we also have questions, of course, about alphabet because there would seem to be a frontal with search if microsoft is able to incorporate this in a meaningful way we don't know what alphabet has been up to in ai, about the we know they've been up to a lot. >> even though they are cutting jobs, they are saying they are going to refocus and double down on areas like ai moving forward. it does seem to be an area where the competition is only going to increase here. in the meantime, i don't know, it's a little scary to me. call me old school we'll see. anyway, there's another deal we're watching this morning because it is merger monday. and this one's all about water

shares evoqua nearing a nine-month high after agreeing to be acquired by xylem. deal is expected to close midyear. xylem is down 10.5% on this news evoqua is up 11% these are two industrial names we don't often discuss xylem manufactures equipment used in water and wastewater applications and evoqua would boost those with an opportunity to expand into some industrial markets. 2022 alone they generated over $7 billion in combined revenue and just in terms of aqua, evoqua, aqua is its ticker, xylem has apparently had its eye on this name for a number of years now. it speaks to infrastructure spending by the federal government and also on the local

levels, water infrastructure in the u.s. and that's played on why you've seen both of these stocks outperforming the broader market over the last 12 months also in terms of evoqua, pfas, those chemicals that need to be cleaned up and in so many different products evoqua is essentially a play on the cleaning of water to strip out those chemicals. >> yep jim has made a thesis out of the inflation reduction act and infrastructure, industrial policy driving demand. dow up 200, session highs. bitcoin, highest level since august over the weekend as it gets above almost back to -- it was above 23k. can that rally continue? we'll talk about that after a break. this is ge aerospace,

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welcome back to "squawk on the street." i'm bertha coombs and here's your cnbc news update at this hour some preliminary clues to the possible motive for this weekend's dance hall shooting near los angeles where ten people were killed the suspect's home was searched overnight. this morning the mayor of monterey park says the suspect appears to have visited the dance hall several times before the attack and that, quote, personal relationships may have played a role. democratic congressman ruben gallego will challenge ker yrstn sinema for senate. poland is pushing germany for more tanks for kyiv. poland's prime minister says he will ask germany for permission to send some of its german-made tanks to ukraine he is also urging other nato

allies to do the same. while german officials have yet to announce whether they will allow any of the tanks to be sent to ukraine. carl, back over to you. >> thank you. watching the markets on this monday, the bulls making another push the dow is up 200. s&p back 4k, vix below 120 as investors work through some hopeful commentary from the treasury secretary, jpmorgan showing recession odds are falling back below 50% mike santoli joins us with a different signal that he's watching. >> watching the bond market, carl, because all of that kind of relatively good news and this idea the fed might actually be stopping raising rates into a firmer economy as it was hiking into a slowdown last week, it at least puts a little challenge into the new-found bullishness people have towards bonds. massive three-month rally in

bonds. 4.2 on the ten-year down to 3.4 or thereabouts and that is actually had a lot of money coming behind it. you had $40 billion going to bond funds in the first three months of this year. fed's almost done. you can grab 4% to 6%, some novelty factor in that i think the least you can say is bonds are now poised to do their traditional job in a portfolio, which is hedge against a potential for inflation -- i mean, recession to hit down the road and create a cushion for equities what i do find interesting, though, is people come on our air all the time and say bonds are well positioned, default rates will remain low for corporates and you can safely own them feeling as if there's no opportunity that the stock market is not going to run away without you. to me it's a sentiment signal towards stocks we'll see if -- how that goes from here. you still have positive real yields that's good on paper that means you're getting paid

to own bonds right now but still kind of an interesting moment i think you're seeing yields back up here a little bit just as people decided they love bonds. >> does it feed the notion that it would be rare for 60/40 to have to back-to-back horrible years? >> 100%. three months ago we were looking at all this, trying to stress you had some capitulation in the bond market and 0-40 had the worst in memory. since then a total return on a three-month basis of close to 17%. i mean, you've actually done pretty well in terms of resetting yourself on that historical path. not that you're going to have great returns, necessarily, if stocks don't really fire away. but you're not going to necessarily be penalized on both legs of that trade >> all right mike santoli, thank you. bitcoin hitting 23k this weekend, now holding the line at 22k. the chaos in crypto-type companies has carried on

let's bring in worldwide asset exchange ceo william quigley great to have you back on the show before i get into the goings on in the industry more broadly, first, the fact we have seen the risk-on rally extend to bitcoin, ether, some other coins as well. just want to get your thoughts on that and whether it actually has legs here. >> well, i think any time you go a couple weeks in crypto these days and there's no bankruptcy filings, people get excited. that's probably part of it a lot of the bad news as come out and been priced in at this point. 2022 we had one bankruptcy after another. generally around centralized businesses and we've gone a month or so without that absent genesis, of course. that was expected for months so i think it's more just the bad news has stopped and so people are getting a little more excited. and, of course, because crypto is pretty well linked now to the

behaviors on wall street when wall street's doing well, you get more people excited about crypto. >> you mentioned genesis you have this fight that's been crescendoing between genesis and gemini as well in recent weeks is it safe to say the worst of the contagion within crypto -- the crypto industry is over? or are there still pockets of trouble where another shoe could drop >> if you asked me that nine months ago, i would say, of course, everything's been done and cycled through but i'm probably like a lot of people in this space, i have been in it a long time i was not aware of how much leverage was in the crypto industry in various centralized businesses and so i'm even reluctant to say, have we seen the last of it i don't know of any other places where there's a lot of concentrated leverage. but, you never know.

>> so, in light of that, we ask this question all the time, every time we have a segment dedicated to cryptocurrency, but what does it mean in terms of regulation is it actually going to come is it actually going to come quickly? is it actually going to be productive and effective >> whenever someone asks me about regulation, it's hard to answer it in the abstract. what i would say is, if there were rules for centralized businesses around more transparency, particularly transparency of their balance sheets, i think that would be a good idea. if you're getting a lot of people putting money on an exchange like gemini and depositing that money into things like yield programs, which is what they were doing with gemini earn, which is where a lot of the money on gemini went, into the genesis lending platform, there's probably more disclosures that would be helpful for your average

investor to see before they put their money or their crypto at risk >> are we going to see any kind of regulation, i guess, any time soon i ask that because at least stateside, we know there's all this gridlock that everyone is asking for in d.c. i do wonder what it's going to mean for this market and investor sentiment yes, we've seen bitcoin rally here in recent weeks alongside the broader market, but in terms of the sustainability of that, can that happen without some sort of -- >> this is complicated, right? crypto's been around for more than ten years it's a -- it's a -- it's a complicated global property and so i think, you know, congress first needs to make sure all of its agencies, the s.e.c., you know, treasury, cftc, that they

all understand how this stuff works before they start to take what will probably be legislation from the banking sector and applying it into crypto, because there are distinct differences and i don't foresee major legislation coming down, you know, in the next six months, but i think what congress should try to do is to get the agencies to do a lot more with respect to the obvious grievances that you've seen where there's clear violations and they've been doing that. the s.e.c. has been doing a lot of enforcement actions but an overarching policy framework for crypto, i think, is going to take more than a few months maybe we'll start to see something at the end of this year >> okay. william quigley, co-founder of tether, thank you for joining us. >> thank you bye-bye. wayfair shares popping after

not one but two double upgrades today. stock's up 75% since the beginning of the year. we'll talk about why jpmorgan is getting bullish with the analyst behind that call in just a moment dow's up 210 tay at a vrbo you always get the whole home not part of it but the whole upstairs the whole downstairs the whole fridge and the whole secret nap room because is it really a vacation home if you have to share a house with a host? ♪ only with vrbo

the street." i'm dominic chu. it's a solidly positive day so far in action. it's tech, communication services and consumer discretionary, arguably the most important sectors in the market leading the way higher, as you can see behind me. a notable laggard is in the material sector. among the worst performers is metals like freeport on the copper and gold side speaking of gold, you have newmon mining. both stocks have been on solid near-term uptrends as of late. industrial gases company linde and corteva acting as a drag in

the overall sector keep in mind, the material sector has been a market outperformer over the last 12 months we'll keep an eye on what's happening with the material sector one to watch today now i'll send it back downtown to you folks at the new york stock exchange, carl. >> thanks. spotify is joining the list of tech companies cutting costs and workers this morning as ceo daniel says, quote, i was too ambitious. more on that news and what to do with the stock coming up in the next hour, along with saleorsfce as elliott takes that stake there. all in about 15 minutes.

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welcome back to "squawk on the street." shares of wayfair soaring, up about 24% right now, after a long-time bear turns bullish the stock getting a double upgrade from underweight to overweight at jpmorgan, nearly doubling the price target from $35 to $63 a share let's bring in the analyst behind that call from jpmorgan chris, thanks for joining us walk me through -- >> good morning. >> walk me through why you are double upgrading and why now >> the why now is because with

where the stock is valued and with where numbers are going to go, there's a tremendous amount of upside that's still ahead of us we've had a sell on the stock for most of the past three years, two-plus years. our view was that the share gains that they gained during covid early on were afemoral, they are going to fade estimates got too high frankly, the consumer was going to go back to the store. that is exactly what's happened. however, in the past few months, what you've seen is that wayfair share gains have normalized to pre-covid levels they're starting to gain share in the marketplace over the long term we expect wayfair to grow roughly double the pace of the overall market and at the same time, numbers come down and they're flowing through about $1 billion of cost cuts as they and other tech companies narrow down their focus and focus on core growth concepts and growth areas, not a bunch of tangential strategies.

>> that's right. they're one of the growing -- the list of growing companies that just in recent days have announced more job layoffs okay, so if they're taking market share, who are they taking it from >> well, on the good news -- also, by the way, on the stock side, the stock is still not even back to pre-covid levels. the stock was at levels it was at 82 when you first heard news about covid in china, the stocks are in the mid 50s today and the valuation at the trough of our price target so that could potentially go higher in terms of market share you know bed, bath and beyond, they're in sufficietough shape. there's financing they're trying to work out there, that's a big share opportunity. so that's one. number two, versus traditional retail overall, this category should grow roughly 10% online first it's historically the core market might only grow 4, 5% so

they may grow 2x that as you as a consumer continue to grow more and more online. so those are two sources of market share. >> we know demand was pulled forward during the pandemic, people doing work on their houses, buying stuff for their houses if we go into an economic recession, or at least a slow down, does that bake into your thesis >> yes we have an underweight on an williams sonoma, for example the difference is wayfair was early in, saw the numbers go away and the numbers come way down if you look about 18 months ago, the street consensus ebitda was $1.7 million to the positive the con sense now is a million loss. and now you see the inflection

go back to the upside. with our stocks when you beat numbers, the valuations only expands. they're the first ones coming out and the share gains will continue over the mead dium ter. >> on the macro, you guys have done good work on excess saving during covid, how much is left are you looking for a dramatic inflection point in the summer, q2 or q3 when, in fact, the bulk of that is gone? >> you've already actually seen this if you look at the census retail sales data that came out last week, you had on a three-year growth perspective, categories growing 9% from a general merchandise side in october and november those retail sales only grew about 2%. so we've seen a shift lower. you heard from other companies, macy's, a promotional environment, they came late. as we get into the earnings

season in february when you hear from walmart, target, home depot, lowes, i think you'll hear a change in tone around the consumer frankly seeing trade down into walmart from the mid to high end consumer consumers that make more than $100,000 are trading down to walmart. there's already a general merchandise recession going on i think you see that spread and you saw the inflection down during the holiday season. >> we'll be watching chris, thanks for joining us >> thank you let's give you a check on the markets right now. we're in rally mode. nasdaq up 1.5% and you're above 8% for the nasdaq so far this year. we're back in a second a custome? oh! no problem! hey, cam? wow! same deal! yeah! it's kind of our thing. what if i'm new to at&t? cam, can you?

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welcome back we've been talking a lot about layoffs, particularly in the technology sector. today we discussed layoffs at spotify. but i want to comeback to alphabet the company did announce 12,000 job reduction -- or losing 12,000 jobs recently those people have been notified.

you may recall in the middle of november, tci fund management, active in the past, sent a letter to them, saying at that time, you need to really keep an eye on costs and significant cuts should take place they reiterate that and say 12,000 is great but not enough chris hawn saying i believe management should aim to reduce head count to 150000 that would be 20% reduction overall. they were 780,000 employees, as of the end of the third quarter. remember they did add more emp employees in the fourth quarter. in the past five years alphabet doubled the head count, 30,000 added in the first nine months of 2021. so the 12,000 jobs a step in the right direction but nowhere near what they say needs to be done at the company

obviously it's a controlled company yet they are an influential activist and they get some notoriety for their communication. >> which is where i was going to go with this alphabet has a dual class sales structure. salesforce does not. and it raises the question to your point of just how much impact a letter like this is going to haveon a company like alphabet where they are doing layoffs. not at the levels that tci would like to see. see you have cnbc reporting over the weekend about how painful some soft layoffs have been. people were showing up at google offices to find out their badge didn't work. that's how they were delivered their digital pink slip. >> not well executed i should add that tci says you pay people too much. this was part of their original

letter they reiterate that as well saying the median salary was 300,000. average much higher. and allowing alphabet to reduce compensation per employee. there is going to be reductions. we talked about salesforce facing four activists and their focus is margin. here similar. >> upwards of 200,000 layoffs announced across the tech sector and counting the question question getting into earnings season is whether you see the spillover in terms of layoffs and cost cutting in a more meaningful way across other industries two you can argue they're doing it -- unintentionally doing the bidding of the fed in terms of loosening the labor market. >> and it is having an impact overall, to the extent the companies are being more disciplined or showing discipline on their stock

prices salesforce is up there a story they'll deal with "techcheck." with that, let's send it over to "techcheck," which starts now. good monday morning i'm carl quintanilla. with deirdre bosa and jon fortt. six percent of spotify employee's cut and wayfair two upgrades from sell to buy. >> let's check the markets as we kick off the trading week, we are in rally mode. stocks are near session highs. you can see the nasdaq leading the way, outperformer despite a rise in yield. materials, your laggards >> we begin with some activist