let's get a final check on the markets this morning lots of earnings out this morning for dow components, many other companies. added up to not great news at least that's how the market is interpreting it right now. dow futures down by 140 points the s&p 500 futures down by 20 the nasdaq off by 80 that does it for us today. make sure you join us tomorrow >> going to be a great show tomorrow >> it is we have a lot more earnings. look out squawk on the street begins right now. good tuesday morning welcome to "squawk on the street." we're live at post nine of the new york stock exchange. futures a little wabbly here we have done the first batch of industrial q-4 results coming up in the next few hours, we're all over the earnings movers we vicinity views with raytheon, ge and union pacific all respective results and that's where we will begin a bunch of names we could start with 3-m this

morning, jim >> i think a lot of companies are coming in hot. a lot of stocks. you take a 3 m and 3 m had been weaker it moved up. and now giving back that gain. and it's giving back the gain because when you talk to a ceo and he says, look, we're not satisfied with the progress or performance, its difficult for me to be satisfied they do have 2500 global manufacturing lay ofoff. i think 3m is atypical how bad it s organic growth, .4. you do a gap earnings thashgs d -- the cash flow is there this is something that mike wilson says don't, you know, you have to worry about the earnings and, boom, you have to worry >> rapid declines and consumer facing markets accelerated in december i think the guy that many investors are going to think is the key problems here, they had guided to $8.50 after $9

remember they're no longer manufacturing pfas that's going to take a number of years. but nonetheless, even if you give them credit for those earnings, its still about $8.72 to $9.22 versus consensus of $10.20 in terms of the guide down margins organic growth, negative 3%. maybe a top of flat if you're lucky. so you could maybe view it as a kitchen sink guide in front of the health care spin, jim. it's no the great. >> no, it's not great. there is a line also there they don't like and we advance strategy to resolve legal matters. you know what? one thing about legal matters is that there are two sides can you advance your strategy but the other side may have advanced their strategies. we all know this is something that juries just never find in favor of companies that i've seen but also combat arms, the

problems with hearing loss that they may or may not have caused. >> they didn't get out of that liability either remember, they were trying to separate that. >> yeah. >> how do you separate the specific challenges and liabilities versus what we used to call an economic bellwether >> i just think that 3m right now is challenged in areas that we just find to be hard to believe. i mean, health care has been steady i think that 3m materials -- look, it was run in a way that i think was probably overearned before micro so i'm reluctant to be as critical david, you know we didn't know about groundwater before the big issue. >> right listen, to their credit, they're dealing with all of these things >> they're trying. >> it's going to take some time. >> right >> it's going to take some time. >> yeah. >> and to your point, the

liability on the ear -- what do they call it >> combat arms. >> yeah. >> it's potentially significant. >> right >> pfas, obviously the manufacturing. it's going to take a while for them to exit that fully. but then you just deal with -- is this a reflection though of what we're talking about in terms of the broader economy >> it's extreme reflection >> it's an extreme reflection. >> yeah. this is like what happens if you really miss the ball on a bunch of different lines reminds me of a great quote from bill parcells where he takes a player out and the guy says, coach, i'm trying. and he says, no, we don't want you to try we want you to win and 3m is trying that's not enough. >> when it comes to the stock, there is someone sm that sayen ott businesses they own, it could be considered cheap. i that i liability question is one -- >> too high. >> that is very difficult for investors to say i'm willing to take that risk even if it does appear to be cheap >> i think that they misunderstood and still

misunderstand what happens when you have a veteran on the stand who is suing for, you know, millions of dollars and is the kind of plaintiff that juries tend to want to side with. 3m, you know, when you have water that may have caused cancer, again, these are really hard things to put behind you. they're not asbestos but these problems can't go away >> not the only company this morning where guidance is underwhelming. look at verizon, ge. >> look, verizon, again, verizon is a stock when he tells me, listen, we didn't do that. things look weak ahead of things kin i can't go against him. ge, you have them at $15.15. some think the forecast is not that good. i think you have to press them

on how the possibilities of hower would have upside. suddenly, europe turned in favor of natural gas i am not -- i mean, i read steve's note today he is the jp morgan ahab and this is the white whale. i did not detect the usual level of cynicism. i felt that culp may have something here >> interesting we'll be focused on that with him. i have to say that hans vesberg of verizon was a guest earlier he did something i rarely heard him do >> what? >> he said he was disappointed in how they executed in the second quarter you know, vesberg is not usually one who sort of is critical. it is usually like everything is great. take a listen to what he had to say in an unusual admission for him. >> we had a year and i was

disappointed over the second quarter. really disappointed. we didn't perform. took a lot of action start to see some improvement in the third quarter. in the fourth quarter, on the consumer business we saw improvements and momentum. that's what we're coming into in '23. >> vestberg didn't get into the details of what actions they took and started to see improvements but again, interesting to hear that from vestberg >> i think you're right. >> i've done a lot of interviews with him the last was a tougher interview. actually in the third quarter. >> and mike seener from t-mobile, they continue to win a lot of business. and i -- i think that hans vestberg is getting beaten by t-mobile >> do you? >> yes, i do i think that the t-mobile offers, look, i think thatther are a lot us who were brought up on verizon and then there is a lot of young people that just say, look, i don't need verizon. they give me' great phone at

t-mobile t-mobile has been -- >> we talked about it. i focus used on it for weeks when the market value passed verizon. that is long gone for this point. the two are not that far apart in terms of dollar wise. verizon relied for many, many years as the key marketing tool having the best network. they continue to say that is the case think i think that is more of a question mark now. >> very much so. i'm glad you brought that up that's -- it looks like t-mobile leap-frogged and john ledger said it would happen mike siebert is not a bragger. he added up a number of months ago for at&t >> verizon reports tomorrow. >> verizon is very visible miss. so you have 3m, visible miss you have ge talking about the future we have greg hayes on from raytheon technologies. and i think it's a very good quarter. the market says maybe it isn't

the market is -- the long knives are out for the market j&j was up $1.50 when they reported its with a very exciting quargter the market turned off. >> yep >> j&j, one of the few firms this morning to guide above adjusted gps for the year. a beat on the quarter and revenue. of all the names we talk about today, jim, the only stocks that are up premarket are going to be horton and lockheed. >> lockheed went down almost daily because of the republican pledge to cut the deficit and horton, the orders were weaker no doubt about it, the rates going up hurt them but the extraordinary amount of money that they're still making from the homes shows me that this is one why wr a lot of people are short it rolled over this is a giant home builder and there is a note out saying housing could be troughing

is that troughing? is that troughing? i think the trough was maybe when peaked in october >> jim, i would like to come back to the broader market we have seen a numberst companies reporting numbers, particularly the industrial related companies down in the premarket perhaps when we open 20 minutes from now. but we're up 4.7% in the s&p 500. 8.5% on the nasdaq i'm looking at the stocks. nvidia is up 31% disney up 21%. warner brothers is up 42%. tesla up 16.7% have we got ahead of ourselves a bit on the names or with the very strong rebounds from very poor 2022 or is it reflective of this general hope that, you know, things are only going to get better when it comes to the fed and that the focus on wage inflation is not as great as people think i don't know >> look, i think that you --

that there is a note today there say downgrade of amd the stock was up 10% yesterday well, that was fine. >> it's up 18% for the year. >> yeah. >> i mean the stock is down from $170 correct to say that there is no inventory correction >> for the year, when i say for the year, i mean year to date. >> right >> excuse me >> i'm just saying that downgrade has gravitas the stock was up 70. i think that there is a note that is really encouraging there was a note that said you have to buy warner brothers discovery. i don't know if you've seen that >> i haven't seen it. >> oh, my. basically just saying you want cheap, you want stock that can go up a lot, it is warner brothers >> yeah. it would have been helpful three weeks ago. here it is year to date. the stock is up 41%. >> b of a raised numbers on wbd the turn of the year >> look, you talk about 80%

upside you missed some of it. david, there is one right up your alley >> tell me >> disney, wells fargo says that they're going to come out swinging swinging against who exactly >> he's always swinging. >> yeah. he is swinging >> $2 billion cost cut, that will be big. >> yep there are a lot of costs potentially that he needs to deal w sorry, carl >> that's all right. yesterday on amd upgrade out of barclay's. today the downgrade out of bernstein and the pc environment has grown considerably worse >> i disagree with that. pc environment was down 19% end of the quarter i don't think you can see through a price reduction. three price cuts micron, take that stock to $61 remember, he guided down, guided down, guided down. but we should really focus on what that upgrade was about yesterday. it wasn't about 2023

in that upgrade, there is nothing about how pcs are turning. there was an end to the endless decline of pcs i agree with him you can't go down 19% every year >> the barclay's upgrade was basically saying we didn't realies how much investors wanted to own these names coming into this part of the cycle. >> maybe that will wipe things out. i do think that yesterday you saw the triumph of an etf. the notion of that upgrade that we saw was that the semiconductor capital equipment companies have not gotten the orders they got which is how that ends. so they were saying selling. sell lamb. and the stocks went up huge. that is the etf that i just despise. >> why >> because the only reason you might make their numbers amd is people stop ordering machines. to make -- to make the semis >> there it is

nvidia is different. >> year to date. >> that is $11 billion chat. >> i think it was gelsinger said feels like the industry is hitting the brakes and gas at the same time. they're trying to control a glutton one hand and also produce from what we think will be a deficit in the future >> i did that in my first time -- in the first test in getting the license, hit the brake and gas at the same time the second time, the state police gave me a break when i did. that i think he is using that analogy of what i regard as being an early driver. >> getting the learner's permit. we'll find out more. that capex number is going to be key. >> they're no longer the bellwether nvidia, you have to -- >> nvidia is the bellwether. >> yeah. if you're going to do something with chatgdp, that's the best

way to play it >> i understand. i'm just trying to help people follow your thinking >> i don't think people need help >> no, it's fine >> you want to go play >> cgp >> with you go buy microsoft i think that is ridiculous there are other businesses like -- >> azure >> you're just saying words now. >> what i said to a dashboard, please draw me a plan and i will do it. i didn't realize that is what it was. i thought it was a parlor game >> we're going to learn more about microsoft tonight, that's for sure coming up, we'll get cramer's mad dash to the opening bell futures closero lln nus. tbe i15 don't go away. orld, you could hire a professional pit crew. go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was. (air tool sound) to help you stay ahead of the curve...

or you could use workday. the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world. ♪♪ for skin as alive as you are... don't settle for silver. harness the power of 7 moisturizers & 3 vitamins to smooth, heal, and moisturize your dry skin. gold bond. champion your skin. 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply.

all right. so what you need to know about johnson & johnson. this is the arc of earnings season that i fear okay so joe walt, the cfo comes on. the stock immediately reacts and jumps to $169. okay and that's because the consumer product which is the spin did much better. a lot of that is with gm tylenol was up you start thinking, wow, okay,

so we have to spin this year the consumer product, maybe mid to high single digit the big loss of exclusivity problem i was worried about could be made up by myeloma drugs. so i thought after listening, as did other viewers, this stock is up $1.50 here we go now the stock is down $2.65. the stocks overall are up. this is a company that is -- what you're supposed to sell if we're coming out of a -- >> by the way, this move is mirrored by merk, pfizer, the entire group has done this starting the year. obviously in contrast to the many names that we mentioned earlier such as nvidia or tesla. you go through many of them of the bigger growth, former growth names. >> you're not supposed to buy this stock if you think that the economy is coming back you're not supposed to buy it, by the way, horton is doing well

my problem is this is a self help situation the company giving conservative guidance they didn't take that back it didn't make them feel very, very good. when i listen to joe, an excellent vcfo. okay fantastic. it should be down two because it's a pharma company. the market decided no doubt that pharma is no good. people also worried about the democratic party and they elect -- if they put up someone more anti-drug and we'll talk to raytheon but people think that the republicans are just decided it's time to have discipline so you have a lot of talk in washington that is not reflected in this. most important, david, this is a pattern that i am concerned about. >> which pattern >> great american companies going down because people feel the economy is going to war. >> got it. >> okay. >> we'll come back to that we're also going to have an exclusive interview, by the way, with raytheon's ceo greg hayes a lot more "squawk on the street" for you straight ahead

if your company actually practices the values that it posts about, then, yeah... you're on team earth. 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply.

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composite returns to growth. 50.2 looking for another month of contraction. opening bell coming up in about six minutes.

take a look at shares of tesla. going to be down a bit when we get started in trading, about 3 1/2 minutes from now it was up 8% yesterday that might encourage elon musk

to spend a lot more time in court. i doubt it but i mention it because that move yesterday came while mr. musk was in court for as long as four hours in that securities fraud trial. musk detailing that 2018 funding secure tweet was based off a hand shake deal that never materia materialized he said his spacex shares, remember, it is a private company, he said that alone would have secured the funding needed to take tesla private back then in '18 saying, i sold tesla stock to complete the twitter transaction. and i would have done thesame here meaning, he would have sold stock and then private -- still private spacex to fund a tesla go private by the way, he'll be back on the stand today. 11:30 a.m. eastern that will wrap up his testimony. talk about distraction stock performing strongly yesterday. up 17% coming into today's session. >> that's interesting.

there are actually facts going in favor of tesla. raw materials are better prices coming down they have got some good news out of berlin. carl, when i look at tesla, i know that there is -- there is a moth to flame situation. viewers really want to own the stock. and because it's been the greatest performers of all time. the distraction is hard to measure of twitter and it's in your face every day. you say okay, where is he working? so i would say that tesla's got maybe more bend than we realize. >> yep >> certainly market girl past the delivery news. in determines of global autos, ford in talks to sell plant in germany to byd a big step for that rival. >> look, there is a mantra that the ceo said to make money everywhere, he will not be in a business that doesn't make

money. but i think personally that ford which my travel trust owns, could be pressured by tesla. i think when you cut prices and you're musk, it is also -- it's kind of a statement look we're going to win the business board. maybe you think that they're so great. and they're producing all the tens of thousands. but we have intentions you're not going to make as much money on them. >> adam jonas yesterday said autos are going to start to take a lesson from the tech layoffs, jim. and maybe cut back on things they can do without for now in the wake of what is likely going to be a price war. >> i do think that we're seeing numbers pick up in subprime loans for autos. autos have been a reflection of employment i am concerned, though, that tesla trying to take share which they k can because they hv

such big margins in tesla. >> let's get the opening bell here let's get to the big board u-haul is opening the bell a lot of consumer down grades today. peloton, horton. >> horton had a bad quarter. there is no doubt about it peloton, look, there is going to be some pickup there but the lulu is beginning to make me wonder has it peaked i just wonder whether lulu got too expensive.

those of that shop there have coupons on a daily basis the downgrade was predicated on store traffic. that's not the lulu i know they're a full price stock brand. >> bernstein goes to underperform >> yeah. >> $290 is the target. zl >> that was vicious. apparel which was up in the cpi, .5, i mean, i don't know where they get that number sometimes i wonder who did they talk to we have levi strauss downgraded, you can outfit yourself with everything that is being cut yet, the cpi says that apparel is up. what is that about >> i don't know. you're the one that visits stores are you seeing actual discounts? are they starting to cut price on things to unload inventory? >> you go to t.j. max here >> yeah. >> you know what it's like shopping at a -- with every single name brand you want every one you want

with the exception nike is still not there. >> lulu will tell you they held in there as well >> they're not in the channel. but i just think that when you read the down grades, the down grades are basically about having too much merchandise. and i don't want to go against the down grades. frankly, the quarter was not a blowout. and i don't have -- they have a small china story. not a big china story. you know, one thing that bother m s me about the action at j&j we didn't do a lot of business in med tech in china med tech was shut down in china. med tech is very important in china. we forget that -- there we go. so someone decided to step up and buy. so why don't they look at danaher? i have gone over nine ways to sunday my travel trust owns i think they're going to call me and say, you know why our stock is down? this is not one of those where they say, you know what? we really don't know what we're doing. preannounce the darn quarter

they delivered the darn quarter. so you're selling on what they preannounce. what do you want out of a company? >> yeah. danaher with a beat. revenue ahead. they go to $290, buckleys. >> there is someone who desperately trying to color that stock down that -- or they just say wait a second all they did is do the number. but the number was just preannounced should the stock be down as much as it was in the preannouncement? i think that people are shooting first and shooting second and shooting third >> right that may be. verizon is up sharply. >> what? >> take a look >> a couple weird prints on verizon and union pacific. >> union pacific was a definite miss

>> okay. that is unexpected now -- i'm seeing something about the -- >> what is this? what is this up like this? what is this >> i'm not sure. what he smay have head on the call in terms of capex >> look at this one, carl. >> are you kidding me? >> those are unexpected moves. >> are trends right? >> verizon is halted they're halted >> so check out wells. frontier on wells. >> there is something wrong with the prints >> i'm going with -- >> oh, yeah. >> so -- are you kidding me? >> we've been in this territory before it made for meetings where i said i have to make phone calls. >> how many years was that >> june 2016 >> there is something weird

going on here. take a look at verizon and wells fargo and union pacific. those are not real prices. >> i'll sell you all the memes >> you set about practicalor back in the day. >> yeah. somebody -- i don't know >> something is going on here. >> now it's down 20. so you should go in and buy wells. let me tell you how to do it go in and buy 2000 wells at $43. use a limit of $43 if you pick them off, did you very well. there ain't nothing wrong with wells. they reported a good quarter anyway that is my advice. union pacific, as much as i like lance fritz that, is not a great operating ratio. if you can sell it, i would sell it at $220 $219 is limit. >> yeah. >> i don't think can you get that price >> it doesn't matter >> i have verizon on the phone

>> sign on it. >> cast way. he was great >> he was the best >> wells is -- let's just say that -- halted >> there is a ton of these lili this morning, crazy print there. >> how is lily doing >> yeah, lili is halted. yeah, there is something going on >> let's just say that we have completely bogus prints. >> these are not real. these are not real >> but if you can sell -- >> sell 1,000 lily with a $358 low. >> xom is down 7.6%. again, i have a p on my screen here >> why can't we just -- >> mcdonald's. what is going on someone want to answer this? >> there are a lot of companies whose stocks are incorrect >> but they're not trading >> they're halted. >> correct >> those are not right prices. >> charlie sharp is buying every share imaginable of wells fargo. >> he's not getting it

it's not trading there is some sort of a weird -- >> they're not facetious they're suboptimal >> let's move on to something we can trust. >> we want to find out what is going on we have the biggest market cap companies in the country that are not trading and are showing prints that are down 11% or up 7% or down 7%. you know, you have exxonmobil down 7%. verizon up 7%. wells down 11% lily up 7% i mean, come on. i don't know what is going on. >> i just gave you a plan. if tszit's real, i gave you a gd plan >> it's not real. >> okay. i'm sorry. so there is a machine -- >> yes >> what do you want, back money? >> no, make up anything you want >> i don't want to make up anything >> mcdonald's. >> i'm saying my travel trust owns lily and right now i'm selling every damn share of lily i own. >> no you're the no. >> that is unbelievable. it was 50% of fat. i mean, i'm sorry. body weight goes down.

>> some weird thing is going on. just bad market data i'm hearing -- >> tech issue. nothing happens. bad da bad market data. let's move on. >> there is a certain number of names. a lot of other names are trading. >> someone is going to own up. no one will own up it to because then they'll be fired. no one gets fired in corporate america unless they have a bad quarter. >> adding to the names visa up 6% that is halted so it's bad market data. >> visa? >> how is mastercard >> i don't know. mastercard is not halted no >> so let's seal with what we can deal with which is that we have some many people who want to upgrade things before they can be upgraded. we have a series of cybersecurity upgrades that i don't think are going to have a lot of staying power we have a lot of when it comes to -- when it comes to just like

any tech stock that is talked about today, j.p. morgan upgrades, it's microsoft tonight. so like just wait. microsoft is controlling everything that is said today. if microsoft is bad, you'll say why did i buy? >> the journal piece this morning doesn't create high hopes for tonight's print. >> i'm concerned about microsoft. i do think that when you lay off a lot of people it occurs to me that maybe your business is not as good as you say >> how about this report about justice taking aim at google >> for the second time okay >> digital -- >> justice is a smart fellow i think the american people in the end want prices lower and alphabet made prices lower, not higher this is the second go around first go around ended with the government kind of giving up and i think that the government as much as they may have, i think they have a good case. they don't have the horses

>> looks like things are getting back to normal exxonmobil, looks like we have corrected those technical problems >> you'll get to the bottom of that mcdonald's still is weird. number of them are starting to straighten out >> exxon looks is back to trading. verizon is trading now where we thought it would, down 1.8% wait >> can we just move on >> i'm told to go to you >> all right exchange related issues. that's what i'm told exchange related issues. >> great we'll look into that >> these things were halted from the beginning. >> if it did anything, it's in my plan, you'll make some money. >> you have a real opportunity >> i know. you mentioned salesforce. >> we have not mentioned

salesforce >> i just mentioned it >> what do you want to say about it >> i want to say that yesterday the stock was only up about 4% you have four activists that very much want a part of this. then you have the best product >> i don't know. this is what i would venture a guess at they want to get to 30% operating margins including stock based com over a two-year period and a real succession plan >> they deserve. that when you look at the board of sales force, if you ask me what the weakest part of salesforce is, they have board members that look like board members for life you can't do that. you can't have board members for life when it comes to a stock,

even if you think they're the greatest people on earth you can't have board members for 18, 19 years they need a refresher. there. >> okay. >> let's check in with bob pisani and find out more about some of the hiccups in pricing we have this morning bob, what do we know >> yeah. hi i am just walking around on the floor talking to people. and as david noted, there is a lot of strange prices. i don't have an answer i talked to michael blowgren he is going upstairs into a meeting. seems like there with a systemic issue with the prices. i don't know for sure. but walking around, just talking to the market makers and looking at prices, some companies -- some stocks appear to have opened up limit up and down. some this incorrect prices and we're just trying to still sort through exactly what is going on i don't quite know you know, this has been fairly rare for occurrence like this. some kind of technological

issue. that's what it looks like at the nyse it has not napd happened in a v very long time i think is primarily not related to anybody with pricing on the floor or anybody doing something. it was a technological issue we're sorting it out i'll talk again to the designated market maker. i'll see what i can get in the next couple of minutes >> jim >> yeah. sorey. bob, it looks like things are starting to get back to normal verizon is trading normally. exxon. many of the names that we cited seem to be back now to trading i have been hearing the same simply a technical issue of some kind involving bad market data but we'll see. >> nobody got hurt someone put a market order in. and bought eli lilly up 25 and now they're saying, yeah, sure you talk about a tech know lodge cam problem. i just ended up with one of the biggest losses i ever h be careful when you use market

orders. >> it was may of 2010 when we got -- much larger problem in that case, initially attributed to trader error when you taukt lked about proctor >> the asset class was challenged why is retail so smaller investor every year seems to be less interested. the answer is what just happened >> yeah. >> although again, i'm not sure anybody got hurt here. the stocks were halted immediately. so -- >> yeah. but how do you trust them? it's like bitcoin. >> i did miss something on the verizon call >> yeah. >> it was up 2 >> he must have been saying, i have to stop beating myself up he misses the quarter badly, union pacific is saying i'm way too critical of myself they're testifying with their psychiatrist >> almost everything we looked at is back to -- is actually trading and what we would have

expected >> verizon is a little better. >> a little bit. it opened down 1.3%. >> in the meantime, we're awaiting obviously microsoft tonight and some data throughout the course of the day, nothing too consequential. we'll get some composite pmis in a moment the two year note option is later. for the data, i think -- who has it, rick santelli? rick >> yes absolutely how you doing, carl? we have the release of our january preliminary s&p global pmis for manufacturing 46.8 we're expecting the number around 46. so a bit better an he is quenlly it follows 46.2 and the highest level only going back to november when it was 47.7. but we haven't been above 50 since october of last year if you look at the services pmi, probably the most important of the trio, 46.6 it definitely best expectations. and it's better than 44.7 in the

rearview mirror. 46.6 is the best level going back to october. haven't been over 50 june in the service sector finally, the composite pmi, that puts them all together, 46.6 very close to expectations 45.0 in the rearview mirror. and 46.6, how does that stack up that is the best level going back to october. hasn't been above 50 since june. and if you look at the markets with regard to interest rates, as that data was released yields have actually moved a little bit higher and we want to pay very close attention to the psychological level of 3.5% in ten year note yields we know that they came back from that sub-340 quickly carl, back to you. >> thank you so much, rick rick san tetelli. morgan brennan is here as we dig into raytheon. >> hey yeah so we have raytheon results. but coming up short on revenue

and i think we've got a special guest coming on. >> yeah. i've got to tell you thank you for being here it's great lack lockheed martin was up seven at one point. i want to go -- joining us exclusively, is raytheon's chairman and ceo greg hayes. like to call him a friend of the show do you like that >> i do. >> greg, i want to take issue with what the market is doing. i do that because of my faith in you as a ceo when you look at stocks that are down, suddenly you have automatic headlines saying things are worse and in this case, its headlines were that aerospace is weaker. now, greg, the aerospace is not the strongest it's ever been >> you think about the commercial aerospace markets they're about 80% of what they were pre-pandemic. that is worldwide traffic.

we see that recovery is going to continue throughout 2023 our commercial after market was up 25% last year, 15% in the fourth quarter i don't know what weakness anybody is seeing. it certainly looks like all -- everything is marching as exactly as we can expect it in terms of the recovery. >> yeah. right down the middle of the fairway i would say. now we do have a group of people in congress, they are doves. they want to cut back the military they seem to think that perhaps we're not in a threatened position and the republicans, how much should we worry about the idea that republicans want you to produce fewer, let's just say, weapons to protect us maybe, even patriot missiles. maybe we should make less of those. >> you know, jim, i think that is a very, very small subset of the republican party that thinks we're spending too much on defense. the budgets has gone up 10% to a little over $850 billion

but the fact is we're still not producing weapons and systems fast enough to support our allies both in nato and in the endough pacific region so while there may be some talk of few people that were spending too much on defense, i'm out talking to the different commands and whether we're out in the endo pacific area or the nato headquarters, everybody is saying we need more. we need more am ramps and patriots and nasaps and javelins so i think it's just a very vocal minority that is not going to get any traction. >> okay. one last question before i turn it over to morgan. i had understood that a patriot missile is not easy to man and does it require about 100 people to get it right very hard to learn do you think that ukrainians have time to be able to present the -- prevent the mass zrungs mass disruption of schools, hospitals and nursing homes or is our government afraid of some offensive quality that they

don't really have and just too difficult to learn how to use? >> so, look, jim, if anything. we have found that ukrainians have been very, very fast learners we have the systems in about six weeks from the time that it was announced. we had training under way up in norway we have the system in place. and as we look at the ability of nsams to detect and destroy incoming targets, they have 100% success rate since we introduced that system i think patriot is going to be the exact same one patriot system does not defend ukraine you need 14 or 15 patriot systems across the country with the russian missiles this is the first step, to get the first unit trained that's happening today. we think that will be less than six months and we'll see how many more we can get trained up and how many more systems we can work with dod to deploy in country.

>> greg, it's morgan just to stay with that thought for a moment, there are literally tens of billions of pentagon money that's been appropriated and does not seem to flow yet into contracts for weapons replenishment for ukraine-related orders, things like patriots. is the pace of contracting accelerating and as you do ramp production of things like stingers and nsams, for example, how quickly can you turn those over into places like ukraine? >> there's two issues there really, morgan first of all, in terms of the contracting or pace of contracting, we have significant a significant improvement at dod over the last year i think about the nsam system which would be 6 to 12-month procurement, we got that done in six weeks. as we think about the $32 billion appropriated for contract, under $6 billion is under contract we've seen $2 billion but we

haven't seen a patriot contract. we haven't seen some of the replenishment orders as far as stingers and javelin javelin we make in partnership with lockheed martin we're building 400 a month they need 800 a month. stingers, again, it's going to take us, i would say, the next two years to get stingers off the production line because they have been out of production for so long. we are way behind. it's just a matter of getting systems that were discounted years ago back into production it just takes time >> speaking of supply chain, are the bottlenecks starting to eedz >> there were three distinct areas we saw supply chain challenges obviously, semiconductors, chips. that's starting to stabilize we're starting to see lead times come in. i wouldn't say it's behind us but at least we understand where that is. i don't see any challenges as we

go through 2023. we had some problems with structural castings. jim and i talked about that before that is a continuing challenge, although it's getting better the other challenge has been labor, labor availability. we are starting to see some easing of labor shortages in the supply chain again, i think that will be with us for most of 2023. i would like to say we're out of the woods but there's still a little bit to go >> the last time you and i met back in december, you mentioned rocket motors being an issue as well i'm curious what your thoughts are on aero jet rocketdyne being acquired by l3harris and if you're going to back that deal >> first of all, i can't comment on the deal other than we think it's important that whatever happens, happens quickly again, aero jet rocket dyne has been on our watch list for at least two years. as we look out, we don't see them recovering to contract

levels until 2024. i know, i was just at the pentagon yesterday they have they little time for that kind of excuse, that we're not delivering missiles because they can't get rocket motors we need to fix it. as i told chris in an email back when this was announced, i said, congratulations. we need to improve the operations there and i hope that they can get it done >> greg, it's david. you didn't seem overly concerned in answer to jim's first question about a real reduction in defense spending. if we get a government shutdown or we get a real stalemate around the debt ceiling, are you going to get more concerned? does it become more of an issue for you? >> david, you remember back in 2011, the last time we got to this point and we ended up with sequestration. i just don't see sequestration, especially on the defense side, happening in 2023. only because the threat environment is so different. when you're talking about the russians invading ukraine,

you're talking about the threat in indo paycom none of those threats go away, and taking it away for other priorities or just to cut to cut, again, that's not going to get any traction could there be a government shutdown sure is that going to hamstring us? absolutely not we're going to keep building, keep producing as we saw in 2011, these things pass there's drama, there's drama, there's drama, and all of a sudden there's a deal and we're back to where we were. i'm not going to panic again, here in washington it's the talk of the town, but it's just one of those things that we have to work through >> greg, last time we talked to you, you needed 55,000 engineers. engineers are being laid off by the thousands in silicon valley, around the country, too. have you been able to hire engineers that used to work in silicon valley and it's become easier to get them and not as hard as it was last time we saw you

>> jim, we hired in total across all of raytheon last year 32,000 people about half of them were engineers. that's a big number. also there was attrition so our net hiring was about 7,000 we had been able to find engineering talent that was not available two years ago. so, as we see the googles and metas and all the others, microsoft, laying off people, it's actually an opportunity we still have over 6,000 job openings at raytheon today that need to be filled today. so, this is an opportunity for us to increase the talent pool we have been very, very successful in bringing folks in. i'm not -- i'm not concerned about finding those folks. they're out there. again, it's full steam ahead for raytheon in terms of demand. >> well, i got to tell you, craig, you set us straight and i think people who take quick action without listening to you are obviously misdirected.

thank you for coming on "squawk on the street. greg hayes runs raytheon technologies, united technologies and raytheon. thank you. >> thanks, jim, morgan, david. >> you'll have a lot to work with tonight, jim. >> i have a company called logitech and they make the different peripherals you use. if you want to make your office at home better they have a serious shortfall. this is part of the problem, you have the shortfall and then the rally up maybe you need to have the shortfall first and maybe it hasn't been enough that would be the bernstein view i am more bullish than that. >> we'll see you at 6:00 >> remember, we are in a period right now when you see verizon up 2.75%, you take advantage of it, even if it's fleeting. >> working with this open here, a little shaky at the open but a lot of halts have resumed and the nyse equity desk says status is normal. big earnings continue next hour. don't miss the ceos of general

electric and union pacific don't go anywhere.

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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, as we had a wobbly open, as some names were halted, some prices askew we're back to normal, circulating around the 4k level on the s&p. we're 30 minutes into the trading session. all dow components we're watching this morning. verizon down, adding around 41,000 subscribers after two consecutive quarters of loss shares are down %. j&j on the move after mixed results. missing on revenue but beating on profits after headwinds weakened in the quarter. finally, 3m falling after missing estimates for the quarter and announcing plans to cut 2,500 global jobs, citing macro economic challenges. ceo blaming slower than expected growth on, quote, rapid decline on growing markets

those shares are down about 5.5% on what is a busy day for earnings, especially industrial earnings which, david, we'll be talking a lot more this hour with key interviews. >> including larry culp from ge. we're also just 48 hours away from the first reading on fourth quarter gdp it could be the last good number we get for a while steve liesman has a rapid update for us make it rapid, steve >> as fast as i can. the fourth quarter looks like it's going to be surprisingly strong part of a better second half of 2022 than expected gdp growth is expected to slow to a crawl, even turned negative for one quarter this year amid slowly declining inflation the krnsz rapid update survey sees the government reporting fourth quarter growth around 2.6% on thursday that's above trend don't get used to it because the good news ends right there

the average forecast then sees growth barely above zero for the next four quarters, including this one it falls just barely below zero in the second quarter. and then this may be the soft landing that wall street's banking on but it puts the economy in danger where any shock could send it below or further below the zero line. looking at an annual, it's forecast to be three lackluster years in a row gdp growing 1.4% in 2022, just a half percent this year and modest bounceback in 2024 as the economy slows under the weight of fed rate hikes. doesn't gain much in 2024. on inflation, the fed is slowly seen achieving that goal of 2% with the core pce index dropping from around 5% in 2022 to just above 2% next year several fed officials say they don't see 2% until 2025. market proebl probably banking on a faster decline in inflation than the fed as for a recession, it's almost academic at this point the numbers are so close to zero, any breeze from a single

lousy data point could tip the economy into contraction a handful of forecasters see two consecutive quarters of negative growth others and their numbers look like they could be easily convinced that's going to happen in any event, looks like the economy is going to teeter precariously on the edge of recession all year carl >> steve, great start to the hour thank you. steve liesman. speaking of gdp, our next guest agrees thursday's numbers could see a downturn, arguing a rolling recession has been under way in this country for some time joining us charles schwab chief investment strategist liz ann sonders. expand on that a bit what parts are rolling in your view >> if you go back to the lockdown era of covid, particularly at the time where massive stimulus kicked in, of course, that ignited a huge demand surge that demand was forced to be funneled onto the goods side of the economic ledger. that also became the breeding ground for the inflation problem

we're still dealing with however, since then, you've not only seen pent down demand on the goods side, housing, housing, stay-at-home recessionary, year-end type conditions in those areas, but subsequent -- and, by the way, in disinflation or even deflation in some of those areas within inflation metrics but fast forward to the more recent period, you've had pent-up demand on the services side, you've seen the services components of metrics like cpi, those tend to be stickier. because services employs more in the united states than goods side, that's helped keep the labor market afloat. it's the weaknesses rolling through the economy versus the bottom falling out all at once, which was the case in 2020 and back in 2008 >> right so, this early action, this price action to start the year where people say the good times can't last, low quality start, running out of steam, does that make sense to you? are we in for more weakness in

q1 >> so, the low quality components of what has rallied don't make a lot of sense. some of what has rallied, i think, does make sense you've seen it throughout this bear market when you've had the moves up from lows, like was the case from the mid-june to mid-august rally you did see kind of a cohort of day traders, newly -- what we were calling newly minted day traders at the outset of covid step back in because of fomo or whatever it is and they move down the quality spectrum, they go into heavily shorted areas, into the meme stocks, into last year's losers. that might be fine for a trade, but we continue to say for stock-picking oriented investors, stay up in quality from a factor standpoint and look at factors that represent what's dear from a more macro perspective. positive earnings revisions, positive earnings surprises, shorter duration stocks with, you know, high free cash flow,

strength of balance sheet with lower debt, higher cash. so, that's the way we have focused for our equity-oriented, first stock pick oriented investors. >> i know you pointed out this morning some economic surprises we're getting out of europe. we got another one today with the pmi back above 50. europe is outperforming u.s. the last 90 days by the most in almost a quarter century almost. do you think it's safe to play some action overseas >> so, we've had the view really since the middle part of last year, and it got embedded in our outlooks, particularly you know my colleague and counterpart on the international side, jeff kleintov, we've been talking about dual cycle, a bear market, you eventually come out the other side, you have contractual, economy or otherwise, you come out the other side, you tend to see pretty meaningful shifts in leadership not just within things like the u.s. equity market but across asset classes, particularly

non-u.s. versus u.s. and it was our contention we were probably setting up for some better relative performance by non-u.s. markets. it wasn't a message to sell all your u.s. equity exposure and back up the truck and load up on em and europe and international. either because you've not rebalanced or just had -- u.s. is the only game in town view, there's not been that diversification that certainly so far this year has been very beneficial with non-u.s. outperforming. we do think it's got legs. be careful about chasing shorter term outperformance. i think there's probably opportunities to do it when you're mpbt in an extreme. >> finally on the fed, i know we're in a blackout window now, but some argue -- what is the argument for anything more than another quarter point? some argue, in effect, the pause is already here because they've

been able to guide the terminal rate higher than, say, 5, 5.25 do you think that makes sense? >> i think a pause does make sense. that said, the expectations, 100% chance braced on fed fund futures we'll get 25 basis points on february 1st but i think there is a case assuming the inflation data continues to surprise on the better side for a pause. i think where the disconnect still exists is the messaging from the fed of once they get to the terminal rate, maybe it's lower than what they're telegraphing, they're going to stay there a while versus the market pricing in one to two cuts that's possible that the fed starts cutting at the latter part of the year, but not if a goldilocks scenario is what we're facing i think the fed would only get the green light to cut rates if you have more deterioration in the market in particular, in the labor market absent that, i would take the fed at their word they're likely to stay at the terminal rate, at

least through this year. >> yeah. it's good to go into this quarter and certainly the full year with eyes wide open it's getting really interesting. liz ann, thanks so much. good to see you. liz ann sonders. as we head to break, here's our road map for the rest of the hour another round of quarterly earnings kicking off in earnest. we'll break down those results with ge, with chairman and ceo larry culp after the break. plus, union pacific is facing labor shortages, tough weather, inflation a whole lot more ceo lance fritz is going to join us. as the volatily coins,itntue big shift in the market. don't go away.

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several shocks to the noeshlg stock exchange getting halted due to a exchange-related issue. let's get to bob pisani and see if anything is cleared up. >> i don't have a formal statement from the nyse. i just got back from the ramp, the technology platform at the new york stock exchanges it's over here there's a lot of tech people and a lot of floor officials standing around discussing, number one, what exactly happened, and, number two, how to deal with any issues that occurred at the open again, i don't have a formal statement. i have asked them and waiting for that here's my impression of what happened remember, at the stock exchange, all quotes happen, all the prices happen at once at the open there is a single price at the

open what happens is, everyone puts in their orders to buy and sell. and based on those orders to buy and sell, a single price is determined at the open what appears to have happened to me is that many of the orders that would normally go into the book, as we call it, to buy and sell, to determine the opening price, did not get in. we don't know why. as a result of that, many stocks opened with very little volume and had crazy prices we immediately went to what's called a limit up/limit down situation on many stocks i wonder if you could put up mosaic this is one of the big material names. mosaic closed yesterday at $48.35 it opened this morning around $40. it was a rather remarkable open. $30.49 we're talking about, you know, that's an $8 difference in a $48 stock. that was immediately halted on a limit up/limit down. they halt them for about five minutes and then attempt to reopen on the reopen, as you can see,

the stock traded about $48 went back close to where it was. here's the problem what's the opening price here? it appears that the opening price is probably erroneous since many orders, it appears for it, did not appear and was not priced properly. it was the right price, $49.29, the opening price right now or is the right price the opening after many of the orders seem to have gotten in and it was around $48, roughly where it was yesterday. this is thekind of issues they're grappling with right now. that's the first issue what is the correct price for some of these stocks the second issue is what exactly happened here. this is a very rare occurrence there has been a massive technological upgrade for the new york stock exchange going on for a number of years now. they're consolidating many of their old trading systems into one system here on the floor it appears to have gone very successfully we don't know what is going on today. remember, occasionally in the past, there have been issues around software upgrades, for example.

i don't know if this has happened again, i am waiting for clarification from the nyse. a lot of people trying to figure out the more important issue, which is what is the correct opening price for some of these stocks guys, down here on the floor, that's what they have to tell their clients. did you fill at the open well, i filled but what's the open you see the dilemma. carl and morgan, as soon as i get more, i'll let you know. >> and i have a question for you, bob, because that clearly wasn't the right price we know it wasn't. it wasn't reflected in the fundamentals we expected verizon to be down 1.8% it wasn't going to be up 7% on no news. did anybody actually buy or sell verizon up 7%? >> yes, there was volume in that now they have to face -- you're right. official officially, that is the opening price. the correct observation is these prices are erroneous and they could bust the trades. this has happened in the past. this would not be unprecedented

for them to do that. i wouldn't be surprised if that is exactly what happened we don't have any official word that that's happened yet remember, guys on the floor fulfilling orders, they're the brokers down here. they tell their clients, did you have our order we have an order at opening price or for x amount. did you fill the order that's what they want to know. right now they can say, we filled the order but, or they didn't trade or, you know, there's a lot of people trying to figure this out i think what's going to happen is ultimately they're going to find some of these trades were, indeed, erroneous. >> when tech causes more trouble. this is one of those examples this morning bob pisani, thank you. meantime, shares of ge are slightly lower this morning despite an earnings beat the company forecasting profit for 2023 that's slightly softerer than analysts had anticipated. cash flow guidance is stronger as you can see, general electric down about 0.5%. joining us to discuss the quarter is chairman and ceo larry culp larry, great to have you back on the show

thanks for being here this morning. i do want to start with that guidance i realize there's some noise here given the fact that ge just spun out its health care business as well walk us through that guidance and what you are expecting for those remaining businesses, aerospace and power this year. >> morgan, good morning. thank you for having me on the guide for 2023 that we initiated this morning is really a continuation of the momentum we exited the fourth quarter with we were really pleased to see the fourth quarter end with revenues up 11%. earnings up over 50%, and cash up 16% we finished, in fact, just short of $5 billion of free cash clearly an aerospace-led story we didn't talk a lot about it today, health care and its launch back at the first of the year they traded very well. effectively, a $30 billion dividend to ge shareholders. as we look to '23, we think we're going to see high single

digitrevenue growth. again, largely given the aerospace recovery we think we'll be up mid-teens to high teens, in fact, top line that should convert to a very strong earnings performance. given that health care is out, we have to reset the base. think about '22 at 77 cents per share. our range is 1.60 to $2. more than double, even at the low end of that range, and we'll see good cash flow reset, looking at '22 at $3 billion. we're excited about the new year a lot to do at aerospace, a lot to do at ge as well. >> you just mentioned aerospace, 26% increed in orders, 26% increase in organic sales. i mean, it's really emerging as sort of the big -- one of the big stories, big trends for the industry more broadly, this very strong rebound we're seeing in commercial aerospace you can point to raytheon this

morning for example as well. can that strong pace continue this year? how much is the reopening of china going to contribute to it? >> morgan, i think we are not alone in anticipating that '23 will be another strong year in aerospace. particularly in commercial aviation i know you've had a number of the airline ceos on already this year with their earnings releases a very bullish outlook really around the world. we also know both of our air customers, boeing and airbus, would like to deliver more this year we'll see growth in the after-market and new unit deliveries and we believe we'll clear some of the backlog we have in our military business. all in, we think '23 is shaping up to be a very robust year, top line wise within our aerospace business >> can that robustness continue if we do actually see a global recession take place >> well, i think we're all

mindful of what's happening with the central banks. we can't take anything necessarily for granted. that said, everyone i talk to suggests there's tremendous pent-up demand you mentioned china earlier. china is really roaring back right now. we see departures at roughly 90% of 2019 levelsgoing into the lunar new year that recovery will only continue both within china and i think throughout the asia pac region we're set up in a very good way for the rest of this year. >> you know, china's interesting, larry, because obviously there's a huge pent-up demand for travel. we've been talking about revenge travel in and around china but it doesn't sound like you're counting on their reopening to drive supply chain relief as much why the difference >> carl, good morning. i think that you're right. as we look globally, we expect departures to get basically in line with where we were in '19 later this year. china will participate that's really a function of that

pent-up demand we don't have an overweight supply chain in china. i would say if you look globally, even if things continue to soften, we anticipate supply chain challenges we've talked about, both in aerospace, will continue to be that challenging through the rest of this year. i don't think it gets worse. not sure it gets materially better i just see so many things we're doing across the company with our lean initiatives to be better within our own facilities, better with our suppliers. literally, we're taking our engineers and going on site to help suppliers break bottlenecks. we're taking some of our workforce to go in and help our suppliers, in some instances, their suppliers, clear some of these backlogs, bottlenecks so we can serve the ultimate customer better in '23 >> you mentioned vernoba energy continues to be key on

the geopolitical stage what does that mean for the power generation business you have and also renewables, which have continued to be a source of softness, weakness >> no question, morgan, we saw a disappointing performance in our renewables business this '22 really a combination of the production tax credit lapsing, lessening demand here in the u.s., let alone the inflationary headwinds we've talked about before but that said, we really think that given what's happened around the world in the wake of events in ukraine and the acceleration of the energy transition of desire to electrify more broadly, coupled with the incentives here in the u.s. with inflation reduction act, that the stage is set so, it won't necessarily turn on overnight, but we do see signs, particularly, say, in our onshore wind business of demand picking up, pricing improving. if we can couple that with better execution day in and day out across our businesses, as we have with our grid business.

this is a business a couple years ago that lost $400 million. we had our first profitable quarter in the fourth quarter since 2018 and looking for a modestly profitable year in 2023 things are happening we just need more time to show everybody we will lead the energy transition. >> larry, it's david i do want to come back to power specifically on the call i believe it was your cfo, and this is a rough transcript, we do expect to have a tough mix equation in power with equipment deliveries as well as inflation, price cost for power having had a big impact in '22, up, obviously so, when you lap that, you're pressured by inflation can you explain what all that means to our viewers >> sure, david good morning i think what we see both in aerospace and vernova, given when we buy and when we produce, some of the inflationary pressures we all saw in 2022 will be with us in '23

that said, all in, we think price cost is a slight positive for us in 2023 given, again, both the price work we've done across ge, but also the way we're partnering with suppliers to drive productivity and, in turn, abate some of these inflationary headwinds >> where are we on times of renova and the split there >> i think what we learned with health care is that there's a lot of work that we need to do internally fortunately, we completed health care that work is under way with respect to renova, we talked about operating improvements and the structural dynamics that need to play out but we're feeling very good about the pending market debut if we can do anything akin to what we've seen thus far with health care, i think everybody will be delighted with the outcome. >> which of course leads me to longer term, the fact this is as you put it, a new era for ge what will that aerospace pure

play ge look like? what is your longer term vision for the company once the power unit is its own standing situation? >> morgan, i think both businesses have a bright future. we talk about aerospace shaping the future of flight with renova we talk about leading the energy transition. i think both businesses are well positioned to do that, in terms of our leadership position technically, but also what we're doing operationally, especially at a time, as we were talking a moment ago, supply chains can be challenging. i think the market today, just looking at the way the stock has performed thus far this year, likes ge as a more pure industrial technology and services play with services representing 60% of our revenue. as we go forward, i think that same appeal will hold. to your question about aerospace, i think we want to continue to lead the propulsion

segment, especially with sustainability in mind but there are a whole host of things we'll be able to do both commercially and i think on the military side of our business to, indeed, lead and shape the future of flight we're excited about that >> we look forward to hearing more about larry culp, ceo of ge. thanks for joining us today. meantime, lockheed and raytheon reporting results today. nuerl break down some mbs with morgan's help in a minute but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

welcome back to "squawk on the street." aerospace and defense earnings in focus today and this week. but today after results from lockheed martin and raytheon lockheed, a beat on top and bottom lines backlog jumping to $150 billion as top weapons maker logged the most orders ever at the company in a single year executives are reiterating 2023 guidance of flat revenue with a return to growth next year as supply chain issues continue to gradually improve. all that demand begins to translate into increased sales it's a similar dynamic at raytheon on the defense side raytheon reported mixed results, mixed guidance

a big rebound afoot in the commercial aerospace businesses. that's something ceo greg hayes discussed with us last hour. >> if you think about the commercial aerospace markets, right, there are about 80% of what they were pre-pandemic. that is worldwide traffic. we see that recovery is going to continue throughout 2023 you know, our commercial after-market was up 25% last year, 15% in the fourth quarter. so, i don't know what weakness anybody is seeing, but it certainly looks like all -- everything is marching exactly as we had expected in terms of the recovery. >> raytheon had some company specific news. reorganizing port foal into three segments, naming a c.o.o defense still stuck in neutral despite the increased demand we're seeing this is something ge's larry culp just discussed on the commercial aerospace side a few moments ago as well. you could call this read-through

to boeing ahead of its report tomorrow morning and some other a&d names we'll get this week. where investors will want to put money to work in the sector this year in general, though, it will depend very much on whether the economy is in for a soft or hard landing. in the meantime, tune in for more on the defense lance escape, specifically this afternoon at 2:00 p.m. eastern, that's when i'm sitting down exclusively with lockheed martin ceo jim taiclet on "power lunch. more to come. >> busy day for you and your beat today, morgan. so far an inside day with the s&p just above 4k. let's get a news update with bertha coombs. >> here's what's happening at this hour. california has suffered another mass shooting just south of the bay area in half moon bay. seven people were killed and one seriously injured at two locations. both are plant nurseries 67-year-old suspect has been arrested the suspect is believed to have worked at one or both of those

businesses from maine to massachusetts, up to a foot of snow has left more than 100,000 homes and businesses without power another winter storm is already dropping snow on texas and oklahoma and that's expected to continue he's ward through midwest. the indie sci-fi hits "everything everywhere" is leading the way for oscar nominations, including "avatar: way of the water" and top gun maverick "squawk on the street" we'll be back

92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply. just look around. rent a peloton bike or bike+. this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury.

everyone should have it and now a lot more people can. so let's go. the digital age is waiting. let's check on things an hour into trading. as we said before the break, staying within, for the moment, the ranges of yesterday. s&p, 4,004 the morning did start with a few

fireworks and we'll get clarity from bob pisani. >> this hasn't happened for a while. prices didn't open right at the new york stock exchange this morning. let me show you an example mosaic, a big material stock, closed yesterday at $48.35 opened at $40.29 there were some people who were not happy with that because there are a lot of, what they call, market orders, meaning opened by the stock at whatever market price is. that's down rather significantly. it was immediately halted for news pending -- excuse me, on a halted on limit up/limit down and everyone tried to figure out what happened. this happened at many stocks look at walmart. it happened in the other direction, too walmart closed at $159 last night and opened at $142 this morning. so, all of a sudden things started moving around in all sorts of different directions here you can see walmart opened up rather significantly -- closed at $142.

limit up/limit down halt we are waiting for an explanation from the new york stock exchange it appears the normal buy and sell orders that floor brokers and other traders put into to determining the opening price did not all make it in what we call the book. the book is what determines the opening price based on all the orders to buy and sell those orders, many of them did not get into the book. therefore, very low volume on some of these, crazy prices and limit up/limit down happened number one, are they going to bust these trades? what is the correct opening price? obviously, $40.29 for a stock that was $48 in mosaic, there's a lot of unhappy people. they can and have busted these trades in the past the bigger issue is what happened we don't know. we're waiting for that occasionally in the past there's been software upgrades that could be the source of the problem. again, we don't know i'm waiting for clarification. >> they're going to have to bust these trades none of them made sense. >> if you have a limited order

for mosaic at $48 close and it opens at $40, there's going to be a lot of unhappy people that have a market order. >> or mcdonald's or wells fargo or exxonmobil or verizon i mean, there were a lot of names. >> walmart, too. again, it went - >> these are big cap companies, too. >> yeah. again, it appears as if all of the orders to buy and sell at the open, that determines the opening price, did not make it into the book. that's the one that appears to me to have happened. >> what's your general advice to people who try to take advantage of the dislocation in the moment >> you're probably going to get busted that's another example of what will happen, as david said there's unhappy people and people try to take advantage perform obviously, that can't happen i strongly suspect this is all going to go away and the opening prices will be determined after the stocks reopen after the limit up/limit down. >> bob, thank you. elon musk, a very busy man who probably doesn't want to be spending a lot of time in court but he has been. in fact, he's expected to be

back on the stand in less than an hour to wrap up his testimony in that san francisco securities fraud trial. remember, most of these never go to court but during yesterday's questioning, musk defended his tesla take private tweet, saying the $420 price was not a joke but a coincidence due to a 20% premium he had put on tesla's stock in terms of where his offer ended up and then he kind of rounded up to $420. he also maintained the saudi sovereign wealth fund unequivocally backed his plan before backpedaling on their so-called funding commitment despite that, musk says he could have sold shares in spacex in order to fund the deal if, in fact, it had come to that. musk gave insight into his conversations with larry ellison, and massa son as he sought their thoughts around the idea of taking the company private. morgan, he apparently said he had a conversation with michael

dell, asked him if he had ever regretted taking dell private, one of the largest lbos. dell told him, no, something in hindsight he would have ever done dell is back to being a public company. that was a great deal for mr. dell this would have been a great deal for mr. musk if he had completed it based on the performance of tesla since that night -- since that nightmare year, as you said. >> you got the sense -- i don't have the quotes in front of me you sort of got the sense that maybe perhaps the conversation he had or the way he understood that conversation is very different than what the saudis have produced in terms of their version of that conversation after the fact. >> yes he said, carl, there was nobody there taking minutes that he saw. >> in a way the whole thing is entertaining, even though it's four years old, hard to believe. top laggards on the s&p, very much centered on industrials in the wake of some of these earnings.

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welcome back to "squawk on the street." i'm dominic chu. stocks are mostly lower this hour with the material sector among the worst performing sectors on the day down about two-thirds of 1%. within that group, albemarle down 1.5%. and sealed air corporation's firmly in negative territory after analysts at ubs downgraded that from a neutral to buy rating and cut their price target to 59 bucks a share from $65. materials in focus, morgan i'll send is it downtown to you at the new york stock exchange. >> thank you. labor shortages, extreme

weather, inflation all hitting union pacific last quarter a lot of uncertainty, quote, unquote, entering 2023 that's what ceo lance fritz just said on the conference call. he joins us next ♪

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welcome back union pacific losing steam in the fourth quarter, missing on top and bottom lines t shares are currently down about 2% joining us to break down those results and give us his outlook for this year, first on cnbc union pacific ceo and chair lance fritz. lance, it's great to have you on, as always, on the heels of results. one of the things you talked about on the call was this idea there's a lot of uncertainty as we enter 2023. walk me through what that looks like and what that means from the railroad standpoint, given the fact you do move so many different types of commodities and goods across the u.s. and really through the continent >> morgan, first, thank you very much for hosting me this morning. you're exactly right

freight railroads in the united states move about 40% of our tonnage, of the goods economy. and as union pacific looks into next year, you know, our concerns are around housing looking like it's getting a little wobbly, the consumer looks a little wobbly to us. not sure what's going to be happening in asia in terms of source of imports. it's not really clear what demand for those imports will be you roll that all together and there's enough storm clouds and industrial production that's expected to be down half a percentage point for us to think, well, we're going to add business we're doing a great job on business development we just brought on a large new customer in schneider and their intermodal business. it's just too early for us to be -- have a finer point on what we expect out of the year than to say, we think we're going to exceed industrial production >> okay. so, given that fact, the decline

in industrial production, the fact that all the manufacturing data is contracting right now, can you still grow volumes and if so, where are you seeing pockets of strength? >> yeah, there is a potential to and the pockets of strength are pretty broad for us. if you start in the bulk commodities, are pretty broad for us. we think coal has some growth updi upside for us. we didn't meet all the demand last year because of weather at the tail end of the year so there is still coal that can support growth we see some other areas of growth fertilizer perhaps when you switch over to the industrial products area, metals has been a good market for us. it is a growth market for us right now year over year and then you go into premium and because of the addition of schneider and our excellent stable of partners that are

intermodal marketing companies, we're in really good position to be able to grow inside of the domestic intermodal market and easy comps year over year, it is a little bit -- it is a little bit hard to discern the comps are a little easier, but consumers are apparently pulling in their horns in terms of buying things so overall, there are growth opportunities. >> and that's exactly where i was going to go with you because you see this remarkable decrease in freight coming into the u.s. many of those intermowal containers you have the east coast which has taken more and more of those volumes away from the west coast in recent months even here in the new york area, the ports here becoming the number one port in terms of some of those volumes. do you expect that some of that flow through of goods will return to the west coast

and how much are the labor negotiations impacting it? >> there is definitely an opportunity for goods to go back to the west coast. some part of it moving out was congestion that's gone off the ports. and some part was recently more concerned about labor negotiation. i understand those labor negotiations are proceeding. the temperature is relatively low. and the executive directors of both ports in l.a. and long beach are expecting to achieve an agreement i'm not sure exactly when. but we don't need to rely on volume going back to the port from the east coast or the gulf coast. there is a relatively easy comp in the beginning of the year where the owners of the boxes, the big ocean shipping companies were trying to make those boxes empty this time last year because pricing was so good over the pacific. and now they are much more prone to allow the box to go inland. that's where we get the opportunity to take it in.

>> hey, lance. are you framing the year as one in which industrial activity obviously softens, but prices do not? and how -- how treacherous is that scenario if, in fact, operating costs, for example, don't follow the decrease in activity >> yeah, karl. our specific guidance for 2023 was that we were going to beat industrial production on the topside and we're going to price ahead of inflation we're very confident in both we anticipate there is unique growth opportunity available to us, both from a business development perspective and the market on the pricing side, clearly, truck capacity is loose. and that makes for a more difficult pricing environment. but even in that context, we think there is enough opportunity reflecting inflation, reflecting the value that we're providing to our customers to be able to continue to price in 2023 >> lance, i mean, you have

mentioned a number of times a lot of uncertainty as we enter and begin this year. go through a few of those things can you distinguish them from years passed in terms of the level of uncertainty as well >> yeah. so unlike, let's say, the past three or four years, you have this dynamic of the fed raising interest rates very rapidly, which ultimately will destroy demand across markets. and you have got consumers that have been telling us for quite some time that they're concerned. but they have been flush with cash mostly about transfer payments from the government but also from a very hot jobs market. so you put those two together, and it does appear that consumers are starting to pull in their horns on goods consumption. they're still consuming at a high rate on experiences and travel and entertainment and it's just not clear yet exactly what the impact is going to be of the fed interest rate

increases. although, clearly you can see early innings, it is having an impact on things like housing. >> so, lance, i mean, you cited labor shortages in your results. you just talked about the hot labor market are you seeing any signs of that easing are you able to recruit or hopefully recruit enough new workers to your workforce this year and how are you balancing that against these uncertaint uncertainties? >> yeah, morgan. we are pleased with the hiring pipeline right now in the back half of the year it became fully charged even in the hard to hire areas it is unique to fill all of our classes in the hard to hire areas of the network but that's been happening since, call it, november and december. our pipeline is fully charged. to your point, it is a little bit front end loaded as we enter 2023 a, because we're not sure there might be risk as our existing employees receive their back pay

paychecks. some of them are retirement eligible and they might choose to retire, so we might see a spike of attrition early and then we expect some growth and we have attrition normally of 10% across our workforce every year through retirement and going to other industries. it is a relatively low attrition rate, but we have to be prepared to back fill it. right now we're very pleased with where we are on hiring. i want to explain one other thing. i am so happy with our employee referral program we have received last year over 12,000 employee referrals that turned into 1,200 hiring decisions, job opportunities that's a hell of a great mark of employees that think theywork for a great company. they know great people and they're helping to bring them onboard. we love that. >> all right ceo of union pacific, thanks for joining us. >> uh-huh, thank you

we have some major news and a story we brought you last year this is about a massive housing development underway just west of phoenix, arizona. diana oleg joins us now. >> we reported on the howard hughes corporation developing one of the largest master plan housing in the nation. at the time, they said there was enough water that is no longer the case the 37,000 acre community is supposed to eventually have more than 100,000 homes with big public builders already expressing interest in the project. there was adequate water. >> this area in the west area of phoenix is absolutely sustainable and viable forever, not just for the next few years. >> but arizona governor katie hobbs released a report showing over the next century there will not be adequate water and saying the arizona department of water

resources cannot approve the development of subdivisions reliant on ground water. o'reilly was unavailable for comment, but his team sent a response saying they are still committed to the project with the first phase now underway and will continue working on water conservation and reuse measures so that when the time comes to expand, we are ready to do so in a way that ensures the prosperous and sustainable future for the west valley i spoke with several analysts that cover howard hughes who agreed it has not hit the stock yet because it's already been under pressure with rising interest rates and it is a multidecade team project right now it is only a small part of the business but the company did pay $600 million for that land, and that, of course, presents a risk going forward. back to you guys. >> yeah. they're not alone. i have been reading stories about other communities outside of the phoenix area that relied on phoenix water that no longer -- they have been cutoff. i guess they have to actually

buy their water and have it shipped to them via trough this is an ongoing issue with the changes taking place there. >> yeah. when we look at what's happened to the colorado river, this is a prime example of how climate change will affect corporations' bottom line when they look to invest in land we will see whether howard hughes can pull this out or if they simply have to move on. >> yeah, fascinating, of course. that area expanded so quickly for so many years. diana oleg, thank you. well, before we go, we don't want to forget to tell you to tune in at 2:00 p.m. eastern for an interview with lockheed martin ceo jim taiclet with that stock trading higher it is a mixed picture. the dow is slightly higher right now. but the s&p is ever so slightly lower. it is hugging a flat line.

so staying above that 4,000 mark that traders have been watching so closely. >> a number of the names we have been watching, verizon, for example, had been down it is up 2.5%. that's a real print, by the way. that will do it for us on "squawk on the street. "tech check" starts now. >> good tuesday morning. this hour storm clouds on the horizon for microsoft. why investors are bracing for a slowdown in azure. we will find out soon, of course this dropped call for verizon, shares are making a mid-morning turn-around as the dow goes green. a holding pattern for thin check. the stocks you want in your portfolio. >> good morning. we'll take a look at the markets right now. stocks are off their lows but struggling to build on back-to-back gains you have the s&p 500 and the nasdaq