the tone in the early going, and we need an expert here we've got one. we're going to break down that report. and rue put murdock decides not to put the band back together the media mogul pulls the plug on a proposed fox news corp. deal i think he was deposed last week in a dominion case elon musk going from the courtroom to the earnings call and may be opening another factory in between wednesday, january 25th already. "squawk box" begins right now. ♪ good morning, every, and welcome to "squawk box" here on cnbc we are live from the nasdaq market -- it's contagious around

here -- site in times square i'm becky quick along with joe kernen andrew is off today. let's take a look at the equity futures. if you're long on the market, you're not going to like what you see. dow futures down by 165. s&p down by 28 and nasdaq by 132. it's all about the guidance, and that's what took the stock down after it initially surged. steve kovach ishere. he's here. he's going to be joining us to break down microsoft's report. treasury markets, i think you're back below 3.5%. looking to the lights. big mistake. the 2-year's at 4.125% what do you think it's signaling, joe >> i thinkwe're going back and forth again between inflation

and recession. there's a piece in the journal about temporary workers. they're getting rid of them faster than you can take a lot of what's been in the past may be a precursor in the jobs market because they're easy. it's easy to do. >> there were workers that were brought in to deal with the surge. >> the different things. >> that's gone, and that's the first thing that goes. >> it's like a winter phlegm it's permanent. >> it's from davos. >> for me -- i wondered about -- i don't have long covid, but i do feel a little -- i don't know like it he's sort of here to stay, no >> i feel like it's more of a waking up at 3:45 thing that 'eers here to stay. >> you sleep in 15 minutes more than i. >> you get up at 3:30? >> i've got a lot to do. >> never mind. i know what you do moving on. >> you'll see. another big day for earnings reports. we're going to have at&t coming

up this hour meanwhile, maybe i ought to give the guidance first before everyone piles into the stock based on the last quarter. >> smash the buy button. >> whoa, that's a pretty good number and, oh, by the way we'll look at that next hour bowing is going to release results, and then after the bell, ibm and tesla are set to report. tesla also says it's going to invest more than $3.6 million to expand its nevada giga factory complex with two new facilities. one will be devoted to mass production of its long delayed semi-electric truck, one of those big ones and the other for its new 4680 battery cell, producing enough batteries for 2 million light-duty vehicles per year tesla says the new factories will employ about 3,000 people, and the stock has been on quite

a run since the start of the year it's up more than 30% in the last month. >> you know, he has been busy. he's been deposed in several different lawsuits, but i think the one he's going back an forth with right now that's in court is about that funding security. >> yep it's in the headlines. i think he knew the funding was not secured at the time. >> no, he admitted in court. the opposing counsel got him to admit in court, no, he did not have 420 worked out with them, however, his side was able to push the point that, yeah, look, just because you say a deal might be coming doesn't mean that it's necessarily coming they each -- >> also funding scured with elon musk with what he's worth, he could secure a lot of funding. >> that was his point. >> yeah. i'd take a check from him. >> i feel like he's been quieter on twitter lately. like he's not been quite as out there because some of the stuff he's been saying has gotten him in so much trouble, he's been

busy being depose and being dragged into court i would stop saying things too it's a distraction one thing he values is his time, and they have a hold on his time it's got to be a miserable sort of situation. in the meantime rupert murdoch says let's call the whole thing off, pulling the plug on buying fox corps and news corps murdoch and his son lachlan has determined that the determination is not beneficial for either shareholders. murdoch effectively has control over both companies, but it would have required the majority of non-murdoch shareholders. you can see fox up by about 1.1%, news corp up by 1.8.

>> he's 93 did you see him cavorting on the beach last week with his new -- >> he has a new girlfriend. >> he does she's 25 years younger than him. i have a couple of idols you probably don't know. shatner. >> william shatner blocked me on twitter. >> what did you do >> i don't -- i said something snarky to him probably. >> why >> i don't know. the shat has blocked me. >> he's a snarky guy. >> as a huge nerd, that was a hit because he's captain kirk. i don't remember -- this was like eight years ago i don't o rememremember what i him. >> if he's not doing a commercial and doing it well -- he's like 92, and he was in

"amazing race. zip lining might be the quickest way. a person with direct knowledge tells the "financial times" that the company's new investors and former value x has made it clear tableau should be explored for overpaying. also ceo marc benioff should expect elliott to seek a board seat should he disregard its demands. >> do what i say or we're coming after you with the universal proxy in. >> that's implied, i think there. i need to find out more about this fox thing can you look into it >> the corp amemerger

>> i thought he really wanted to do that. >> he can't just do it himself. >> i know. i just wondered what it means. it says for now. >> maybe after the dominion lawsuit? i don't know. >> i don't know. >> i added for now. >> he was deposed supposedly. >> they all were. >> you added that. >> i ad-libbed it. that's what it feels like to me. >> nothing is permanent. take them apart, put it back together the investment bankers are like, let's see. it's a slow month. let's get to the stock of the morning. that is microsoft, which is setting the tone for today's action our cnbc technology reporter steve kovach -- >> i'm here. >> you're part of the show you don't have to -- >> for the next three hours. >> you don't have to talk about microsoft. >> we should talk about microsoft because the stock did turn around after hours. it was up over 4% and now it's down about 2%. they've beaten most expectations and this was just days after

announcing they would lay off their 10,000 workers we heard that last week. the company reporting a beat of 2.32 cents a share revenue was a slight miss, $52.75 billion that's just 2% sales growth, guys year over year, the slowest rate since 2017 azure cloud growth did slightly beat expectations at 31% that's what initially set the stock up that's dramatically lower than the 46% growth from the year ago quarter and it used to be 50%. microsoft says azure will slow even slower. down three to four points on the constant currency basis and the strong dollar is still going to be a problem, microsoft saying it will hurt remember knew growth by three percentage point this quarter and giving a fresh read into consumer demand which imploded across its portfolio.

it wes it includes xbox, down 12% and windows down 39% still usage is strong in those categories with windows' usage gaining. really just showing off the usage versus the revenue being made from it. >> this is a situation where this was a pandemic stock. companies were having people work from home, and now you have to get to more normalization. >> he said on the call, we're back to prepandemic levels the pc market was slacking before the pandemic. we saw the huge run-up, and now down 40% that's very significant and affects a lot of other hardware companies. apple is reporting next week,

the dells and hps as well and chip companies. >> is this it? are we done? >> we kind of like having you here. >> i love being here it's great. >> you've got stuff -- things you've got to do >> we can keep talking tech. >> you know what i told him this morning? >> not to wear glasses. >> look how nice his eyes are. >> i've got the baby blues like you, joe. >> i'm going to get in trouble. >> you are i could appreciate it the same way. >> see, i'm scared of contacts. >> i didn't realize that oh, my gosh. >> we're locking eyes now. i like this. >> god almighty. >> seriously, take off the glasses. >> but then i can't see. now we all have baby blues going. this is great. >> i get it. i used to be afraid of contacts too. >> i'm afraid of eye drops, becky. they have to numb my eyes at the optometrist's office like

6-year-olds. >> look up don't look at it. >> oh, stop. that's nasty. much more. let's move along here. >> he didn't like eye talk he does not like eye talk. how about me talk? much more still ahead. we're awaiting for results from at&t we'll bring you those results when they're released. and futures pointing to a lower open this morning. once again, a surprise gain after a weak early market session. we're going to get into the markets. you're watching "squawk box" starring steve kovach on cnbc. >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse.

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confirm some recent good news on the inflation front, but the pmi reminds us that it's not -- it's still stuff to worry about it's not going to be a smooth ride and there will be bumps along the way, and earnings have not been that good, and probably the market has done well this year considering the economic backdrop. >> indeed. i think when we kind of think through all of the data that we've been getting so far this week, one of the most notable headlines that caught my attention yesterday was the fact that america's largest private employer is increasing that starting wage to the tune of 17%. we're not out of the woods when it comes to inflation, so the fed is going to continue to talk tough. we should expect rates to remain at elevated current levels we're looking for them to fall in the near end.

but in the meantime that leaves us a little bit skeptical about the recent rally given that you're not able to see a scenario when the multiple can move that much higher, and you've got the earnings which are starting to come down toward our outlook levels. >> yeah. you're talking about walmart walmart, you know, doug mcmillon -- he's a stakeholder guy. he loves his pemployees. he went to $14 from $12. that's tough he's not doing it just for workers. it's tough you need to offer that to bring them on board. >> exactly and that's why when we're thinking about inflation and talking about inflation, just like the fed, i think the narrative has shifted. it this is about the tightness in the labor market at this point. as we continue to see these headlines or more and more employers starting to lay workers off and if we see that broiden out not from just the

tech and financial companies that went on a hiring spree throughout the pandemic era, that's the point where we would say, okay, this is all coming home to roost, the recession is coming to fruition, and when we can get excited about starting to pound the table on adding risk in the meantime what we're doing is anchoring on those buffers and portfolios and barbelling them and adding exposures to areas we think are already reflecting recessionary-type pain at least here in the united states. >> you made it i don't know you're managing $33 billion? that just seems like a really important job. thank you for joining us, and i'm glad we're able to get you in here. what are you doing at this point to manage that type of money is fixed income attractive all of a sudden again for a balanced portfolio? >> 2022 was quite damaging on

both sides of the portfolio, unprecedented for that we're speaking about maintaining their focus. we've been saying that for a long time. as your previous guest said, we're enjoying that. the pounding the table has been on maintaining the global exposure that's been difficult to stay the course as the dollar has been strong and as strong u.s. markets have lagged for now coming on 15 years now we see that that's beginning to revert to the mean. again, it's a validation of maintaining that global portfolio. the other area where it's been added to the portfolio over time has been alternative exposure, infrastructure, real assets. they were there as inflation hedges we're glad they were there it provides essential ballasts

it gishs a type of exposure which has given ballasts again we're having conversation around these fronts and the really active attractiveness of fixed yields and bond interest at this time. >> what was most attractive to you that maybe our viewers could take advantage of it for noncorrelated because everything seemed correlated in 2022. >> it's true and even something like reits or listed infrastructure was going to have more equity type things. like the inflation type assets in the portfolio we like to blend them with private exposure to that increasingly we work with a high network and client base. there are more available to clients. things have improved a great deal since i was a pension fund cio. we like to have a blend to

public and private exposure like real estate and infrastructure like forestry. these are not things that will necessarily shoot the lights out in a portfolio, but it will provide that ballast and inflation protection. >> elyse, the microsoft outlook has not been as good as some market participants had hoped. is the earnings season going to be disappointing when it's all said and done? >> we this so. we were perhaps going into it with lower expectations than what consensus was expecting as we've seen the downgrades, the numbers are starting to come to our year-end outlooks for both 2023 and 2024 we're at 210 for s&p 500 eps

so as the numbers kind of come down and realize that outlook, i think that's when we would start to get more excited about adding broad market exposure, but for the time being, we're looking for those alpha opportunities, the names that are oversold, and thinking through what we can be taking advantage of in terms of setting ourselves up to, you know, position for the restart of the cycle once we have this recession air washout. >> very good, elyse. i want to thank you both i know, aoifinn, you were at federated in ireland is it a real island? >> it is they're not a huge population. i nomt sure if they're all speaking irish, but one of the picturesque destinations on the

way. >> 900 nominations colin farrell for "banshee." we digress thank you both, elyse and aoifinn. we have earnings reports this morning we're awaiting at&t, also awaiting boeing. that's expected around 7:30 a.m. eastern time. up next, though, more fallout from the ftx collapse. block fi's secret financial records showing the bankrupt crypto lender had more exposur to sam bankman-fried's empire than first thought we've got more details on that story next >> announcer: this cnbc program is sponsored by truist wealth where we focus on person-to-person connections so you can focus on what matters most harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible.

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all right, folks the number you've been waiting for. at&t out with the results. on the fourth quarter they had earnings per share of 61 cents. that compares to 57 cents the street was anticipating. they came in with free cash flow they reduced their net debt by $24 billion in 2022 and also say that using cash after dividends to pay down debt remain as top priority if you're aproort organization you list it. i think at this point they have about 95% of the debt that they do have that's fixed at the

average rate of about 4% they say they achieved more than $5 billion of a $6 billion run rate cost savings target at the end of the year. one thing i should point out, adjustments for the fourth quarter include a noncash good will impairment charge that's driven primarily by driving interest rates and taken in conjunction with annual good will assessments they do in 2023 the outlook is what matters. revenue growth of 4% than higher that's better on the street was expanded broadband growth also a little higher adjusted ebitda a little higher. adjusted earnings per share for the full year, 235 to 245. that's below what the street was looking for of 256, but it looks like they're saying because of a change in pension accounting higher interest rates forced them to take that higher -- to take the value asset base they

have to discount the discount rate goes up as a result of the higher interest cost and so on a numbers basis, they have to accrue that cost the present value of where the pension would be doesn't require additional cash at this point. other things they're looking for, free cash flow of about $16 billion or better. that would be up $2 billion from 2022 and capital investment of about $24 billion, which would be consistent with 2022 levels remember we talked to verizon and they were lowering their capex after years of investing in 5g, but it looks like at&t is going to continue investing at those levels probably something that matters is post paid net earnings. if you're look at churn for the fourth quarter, 0.84%. that's a wlitle better than they had before post paid 1.4% 2022 was the most profitable year ever for at&t's mobility

business down 4%. we'll see where it trades. >> at 19, you know, it's been well documented it was well above that, but back in the late 2022, the fall, it was 14.5. >> yeah. >> so there's some progress at least for shareholders from the, i think, october or so back in 2022 that's a pretty big move that's 33% or so just since. 19 looks better than 14.5. 5.7%, 5.8% yield was higher than that, but after the deal with wbd, it came down, but these still a pretty rich payout for shareholders. >> i think it's like an $8 billion annual dividend. >> it's pretty good progress on a dividend debt. now reporting shows that

blockfi had over $1.2 billion in assets tied up with sam bankman-fried's empire mackenzie sigalos joins us now. >> they had over $14 million linked to ftx, another $13 million to alameda it's unclear if that's just fluctuations in crypto prices or revised estimates, but they were really bororowing back and fort. when blockfi took a hit, ftx arranged a plan. we're talking about yet another

example of crypto companies borrowing hundreds of millions of dollars and basically not paying it back and swapping around all this debt >> so this stuff is confusing. it's kind of difficult to follow some of it, mackenzie. what do we know? what's difference about this what do we think about sam bankman-fried? >> it's the kind of insight that folks have wanted from crypto bankruptcies but have rarely gotten because companies will usually move to redact all that they possibly can in these cases especially in a chapter 11 bankruptcy where you're ostensibly trying to reorganize in the hopes of founding a buyer. wait does is lays out the entire business model the customer breakdown, revenue figures, this the is highly privileged information if you're trying to buy this business, these numbers are

everything it gives a lot more insight into how these bids did make money or if blockfi didn't make money it was a lousy business model. you look at the revenue with 162,000 new users with money on the platform, they were only clearing on average $21 per customer, which is terrible. but to go to your larger question about what does this potentially tell us about ftx, it goes to fact there were such endemic problems with the lending corner of the crypto center it's just another example of that >> mackenzie, thank you. >> thanks, becky. >> appreciate it. when we come back, elon musk on the stand he was back in federal court defending his 2018 tesla buyout tweet saying he thought he was doing the right thing. we'll talk about the case as the ev maker gets ready to report quarterly results after the bell today. "squawk box" will be back in

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elon musk expected to be on tesla's earnings call tonight after testifying for a third day about his controversial 2008 buyout tweet he told the jury he thought he was doing the right thing and talked in detail about his souring relationship with jpmorgan joining us is dan. you find out about all kinds of details peek have speculated up to this point. what do you think about this >> soap opera, yes, but it should be god-awful canceled i'm somebody who cares about this i find myself kind of spacing out and dozing off i can't imagine what the jury is thinking

the judge ruled it was untrue and reckless the ultimate verdict, who knows. has to believe it was untrue, not just that it was untrue. he had to be thinking he was essentially committing fraud. >> that's an impossibly high bar. they'll net get over that. >> the lawyeriers think they can. it almost feels like the plaintiff's attorney's strategy is to keep asking questions over and over in this email, in this email in the hopes that elon will get tired and let it slip pt at one point he thought his tweet would help the stock go up at one point he said that. my guess is the plaintiff's attorneys are going to hammer that in close. >> whoops. dan, if you're bored by this, how do you think elon musk feels going through all this

>> he seems bored by it on the stand, however, it's unclear if his kind of strategy is to be very monotone. i will say before his first day of testimony -- and you never know exactly when you're going to get called for one of these things this were witnesses before him ten or 15 minutes before he took the stand, he was tweeting about things that have nothing to do about this, maybe about twitter and tesla, but nothing about the trial. he seemed kind of annoyed by it which goes to the question of state of mind, what his real goal was i will say his explanation for why he tweeted funding secured strikes me as odd. he kind of said there had been a leak to the "financial times" how the saudis had taken a stake in tesla and he was concerned there could be a new like that he was thinking about taking it private. if you're a tesla shareholder and some of you read the ft and some of you don't, that would be undemocratic, but tesla has an ir department. he could have asked them to put

out a statement to the s.e.c. and public statement, et cetera. he did none of that >> i would guess not all tesla shareholders are on twitter either dan, how much of a distraction has this become on top of the diss d distraction that's twitter, which he owns as well? if he's the key man and owns part of the company and you're only getting a part of his brain, and it's ever-shrinking because he's got so many things going including being dragged in for testimony and depositions. >> he doesn't sleep that much. >> he said he tries to sleep seven hours. he tried less, but it's not productive. >> i'm amazed. i guess the argument would be right now. if you're a tesla shareholder, how much is elon musk as

compared to those who are there day to day if you're betting on elon, i'm surprised you're still a tesla shareholder. he clearly has very split time at best he could be spending a third of his time, maybe at best, the half of his time it could be a major hit to tesla in terms of money we have no idea what the damages could be, but they could be substantial. >> i bring that up, that point of him being a king man because that's something ron barren has told us. he has said the biggest weakness, he said, he thinks elon is the key man and it would not run the same without him. >> i mean he's not not there he's off the stand at this point i don't get the sense -- this is just spc lags from listening to elon's testimony and candidly kind of how he was prepare order not prepared for some of the questions. i don't get the sense this trial has taken up an anor muss amount

of his mind share. i think his connection with twitter, i would think that was a much larger issue. >> dan, is there a good soap opera? you said this is like a really bad soap opera. >> "days of our lives. >> there are ones that people tune into day to day. >> prime-time soaps. the daytime with the lighting, i don't know. >> "dynasty," "dallas,". >> "succession." >> that would counseled. i remember my mother watching "dallas" on friday nights. >> jr. nobody gives you power, you've got to take it. >> i don't remember the dialogue as well as you. >> no, you don't i don't know that anyone dells blake carrington nobody givens you power, bobby you've got to take it. >> dan, once you take the power,

you know what comes with the power. >> great responsibility. that's spider-man. >> no -- >> is that "dallas" or -- >> he's talking to me again. what is your problem all right. we've got to go. thank you. thanks uncle ben, i think, wasn't it? >> yeah. >> i know. coming up, the u.s. is ready to provide m-1 abrams tanks to ukraine. an announcement could come as early as tore. the plan would be for a couple dozen tanks. a final decision has yet to be made it has to do with coercing germany, and there's all kinds of ramifications the conflict of russia and ukraine will be one of the big topics we'll cover with former secretary of state mike pompeo who's about halfhat si tze, so we'll need a new picture "squawk box" is on for another half hour.

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welcome back u.s. equity futures down about 169. you can see on the dow good day friday and monday and tuesday. we're doing pretty well at least for the dow. i think the nasdaq did close down you can see the nasdaq down 140 points treasury yields started pulling back a little bit. again, growth worries. coming up, microsoft's wild ride the stocks soared after it posted results for the last three months but then worries about the rest of the year guidance giving investors a reality check. we're going to get into the company's prospects next. and a remind your u can get the best of "squawk box" in our daily podcast. follow squawkpod you can listen any time. we'll be right back.

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microsoft's quarterly results managed to beat the street, but the guidance from

the software giant is putting pressure on the stock and the futures this morning joining us now, portfolio manager for independent solutions wealth management and a finance professor at the citadel. i don't know is it the ultimate buy on weakness stock for the last 20 years, paul? do you think it should be bought today? >> i don't think so because -- no here's the issue this company has a june fiscal year so we're halfway through fiscal 2023 and the street expects the company to earn $9.50 this year. i don't quibble with that. what i quibble with is in the next year which is going to include two quarters, the street is expecting over 11 bucks and i still think that's way too high. >> the demise has been greatly exaggerated over the years

and i think -- it was like old tech it came roaring back and it probably held up as any tech stock. since 1.7, 1.8 trillion in market cap but you think at this point there's a better entry point when, paul sometime in the next six months? >> yeah. once we get through, do we have a recession? if we have a recession, how long does it last is it deep or shallow. still to be determined a big part of their business were pc/oem-related. and, of course, before covid, that was a mature low-margin visit. they got a covid bump when everybody worked remotely, and unfortunately, now we're seeing the aftermath of that. and even though azure and cloud is exciting, you have a business that is growing no longer and

probably at least through the next year or so will decrease revenue each and every quarter double-digit percentage. >> if you were satya nadella, how would you prepare for the future where would you be investing what would -- how would you be positioning microsoft -- >> i think they're doing all the right things the company has done extraordinarily well under satya nadella. i do think one of the highlights, joe, is this big investment, actually their third round in open ai i don't know what's going to app at facebook with the metaverse but open ai is going to be a big deal the other thing that will be helpful to microsoft going forward is they were hurt badly by the strength in the u.s. dollar and now that's going another way. there are a couple of reasons to be a little bit more optimistic,

but your question about when to buy it, i would buy this thing at 220 a share it looks like it's going to open 235 or so. and last night during the conference call, at one point it was up to 245. like you says in the lead-in, people were relieved that the quarter weren't so bad but they were disappointed in the guidance. >> gaming is a metaverse play, isn't it >> yeah, i think that will be interesting and they continue to do pretty well there but the problem is, they're dependent on this activision deal and i think the government has said that ain't happening. and so they will do the best they can, but i don't think the activision deal will ever be approved by the feds. >> do you think their appetite has dmiminished at all >> their appetite, i don't quite follow. >> just microsoft, i mean this is a deal they want done, they

said they're willing to go to bat and take to court -- >> yeah, they've campaigned hardly for it. we'll see what happens but the ftc in this case seems to be a very strong and serious obstacle they'll continue to play out it doesn't look to me like it's going to happen and they'll have to reboot and attack that market some other way >> do you ever see ai monetizable? i guess it just depends on when. what are they doing with chat gpt. are you just reciting from something that that program wrote for you, paul, or are these your thoughts? >> that's right, joe i'm here virtually and i have somebody talking -- no, but i actually think that there is a good chance it will be monetizable and i think it will be pretty big. sometimes other tech themes come and, go but i like this one. they made a really big triple follow-on investment here and i

actually think it's pretty savvy. >> what does the -- is there anything after social media, paul, two, three, four years from now ar and ai, is that it? >> those are going to be the big ones but those are kind of like big umbrella statements and there's a lot of stuff, you know, underneath, but you think about the -- when you talk about monetization, at the end of the day you have to make some money. it's all about how do you parlay those things like we thought for a long time we were going to be able to parlay social media into e-commerce that is the connection that's what we need to get to and i think we have probably a better chance with open ai than we do with some other things i'm cautiously optimistic, but, you know, always cautiously i got to follow all the numbers. >> paul, thanks. is it still the citadel. i thought ohio state university trademarked that

it's still the citadel, isn't it >> it is the citadel think even capitalize it we only have 2 or 3,000. we're a military school. so they're all cadets. >> awesome place thank you, paul. your hair is a little long for teaching there i would get that high and tight. >> okay. >> okay. see you later. thanks >> you bet >> all right, when we come back, another heavy hitter about to report results boeing is now on the clock the numbers and reaction are coming up in the next half-hour. plus, congress wants to put limits on tapping the strategic petroleum reserve. the biden administration is pushing back amos hochstein wl ins xtiljo u

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♪ good morning the futures falling as investors await more high-profile earnings amid fears of recession. in this boeing will report we've got the numbers and the market reaction coming up. will restricting releases from the spr cause an increase in gas prices? that's one of the questions that we'll get the answer to from the white house energy adviser amos hochstein. the gop is readying a vote on a bill to restrict drawdowns from the spr. we'll talk to him about that. former secretary of state mike pompeo will join us for an

extended interview to talk about his memoir and the issues facing the nation right now lots to get into, as the second hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick. andrew is off today. we have a lrotating list of people whohave been in their chair so far u.s. equity futures at this hour, they're in the red down about 180 points dow. 156 on the nasdaq. yields dropping a little bit again. remember when we were freezing our noses off, freezing our

fingers off -- >> we had a heater it was even -- >> that was fine. >> it was on fire. those heaters. they don't know where to put them but were we at 330 >> we were >> on the 10-year. kind of in the midpoint. we're talking about oil in a second let's look at it 80 almost exactly 80. what's the floor been? about 75, would you say? >> yeah. >> even slightly lower >> amos hochstein is here. he's in studio, as i said. got all dressed up for us. >> the full frontal assault. >> exactly. >> i'm giving him time to read the article that you're going to -- >> there's no way you can counter what the journal says. just say, you're right, we should pass this up. >> or you can read and we'll talk about it in just a moment >> let's take a look at crypto quickly. it's weak today. bitcoin is back. it was above 23,000 for awhile over the weekend and yesterday,

but today, down about 2% let's get to dom chu with a look another this morning's premarket movers. >> let's start off with reports. and microsoft, of course, the shares are down 2.5% they've been that way all premarket. a quarter million shares of volume right now the tech giant reporting quarterly results after close yesterday that was mixed profits were better than expected a slight miss how you want to look at it but it's growth in its azure cloud unit that was still up 31%. that growth is expected to slow further in the current quarter which is leading to a revenue forecast that's below estimates. that's what investors are keying on, the reason why those shares are down 2.5%. then you have earnings this morning from at&t. shares are up over 2% right now.

over 200,000 shares of volume. also a mixed quarter earnings beat consensus but revenues were a slight miss or in line with expectations. at&t was helped along by better than expected growth and the number of wireless customers it was able to add that pay a bill as opposed to prepaying for that service, and then we're going to end on merger news it's a calloff a planned combination of fox corp. and news corp. has been mixed. rupert murdoch has withdrawn that proposal to combine the two entities they said a combo is not optimal for shareholders at this time. fox corp. is the owner of fox sports and others, but news corp. is the parent company of dow jones, "the wall street journal," harper collins those shares both up, fox and news corp. premarket i'll send things back over to you. >> thank you. the biden administration is

pushing back against new congressional legislation that would seek to limit future strategic protocol reserves. for more on this and the u.s. energy outlook, we want to welcome amos hochstein special presidential coordinator for global infrastructure and community. thank you for being here in studio it's great to see you. >> great to be here. >> sort of, right? >> even with all this, it's better than being -- >> people didn't hear us -- people didn't hear us off camera we already settled that it's a good idea. i hope you've alerted your overseers that you're going to go and suddenly support this proposal >> let's talk about the legislation that congress is considering right now that would limit the ability to draw down anything else from the spr >> unless -- it's not limiting it unless you -- open up some federal lands, for 5% draw down you open up 5% federal lands for

drilling and leases. >> let's level-set about what we're really talking about the spr, is there so that if we have an emergency, meaning a natural disaster, hurricane, or if we have a foreign policy emergency, a war, anything that really restricts our ability to affect the market, that -- >> wait, wait, wait. that's where you stretch it. >> we didn't have that and you did it. >> the spr is there because in the 1970s we had an emergency where farm producers cut their production and their exports so we needed to have a reserve that if a foreign policy emergency that will affect our ability to have enough oil in the market is restricted, we have something to do with that look, we had a war that started this year -- last year almost a year ago exactly. and as a result -- and that war, when russia invaded ukraine, russia is the third largest oil

producer in the world. so that was immediately going to have an impact oil prices jumped to over $120 a barrel >> the supply wasn't threatened, was it there was a midterm coming up and gas prices was -- there's always a midterm coming up it was $4.50 a gallon. price can be an emergency? >> no. what's an emergency is when we have a war in the middle of europe where supplies were being restricted as the fear of the supply being restricted alone is what jumped the price. nothing else happened in the market outside of that war that necessitated a price to go from 80 degrees to over $120 a barrel that's because there was a scarcity fear and an emergency which is the war the president decided to tap is spr right away at a historic level. the price went down as a result of 180 million barrels being released in the united states over a period of six months. we didn't do it alone. our allies contributed as well

and released oil as well from their reserves in order to be able to make sure that the alliance was united and that russia knew that playing the energy card that they had was not going to break up nato, it was not going to break up the international alliance guess what, i know it's hard, but it worked. >> let me just say, let's forget politics for a moment. i've talked to engineers about this who say that we have drown down the spr to levels that it wouldn't be safe to draw down much more from here, you're talking about -- these are caves where the oil is stored. if you draw it down much more, you're going to be looking at an issue where some of those caves could collapse that's a concern -- >> that's an alarmist view. >> i've talked to people who are engineers who i trust on this. not from a political standpoint. >> we don't play politics with safety and the spr folks are managing quite well. there's going to be a bunch of maintenance that's going to happen this next year, in the next several months. we have reduced the level of --

in the spr to about 370. we've also worked with congress and congress canceled the congressionally mandated sales of about 140 million barrels from 2024 to 2027. it's been canceled the market when they make assumptions of how much oil is going to be available for emergency, now know there's going to be 140 more in there. we have mandated sales this year that congress is going to force us to sell, about 25 million barrels give or take so we're going to do those as congress mandated. we do have enough to be able to respond to additional emergencies if they should come. but we wanted to see -- give time for the private sector to increase production. they've had high prices. so it's their job now to increase production, increase their -- >> you could help that more. it could still -- there's more that you could do. i think the -- but the whole question is whether we had really high inflation, nobody likes it, biden administration didn't like high inflation

so to conflate an emergency like from a hurricane or from -- where supplies were disrupted, where we were going to have trouble supplying oil and gas to our people, that's one thing but $4.50 per gallon because inflation is running high, that's not an emergency. it's a relief for the american people, but that's not what the spr was necessarily intended for. >> the underlying emergency that caused price at the pump to go to over $5 a gallon -- >> it wasn't a supply disruption to people here. >> remember that you had some -- every ceo of every bank of the united states came to your show and told you we're going to have an nenergy emergency in the united states and europe, and there's an oil ban going on in europe there's a products ban that's coming we had a -- we were in a vulnerable situation with russia trying to use energy as a weapon

this legislation that congress wants to do now is going to take a tool away from this president and from future presidents, to react to an emergency during an emergency. >> but to -- again, to depleted levels is china coming back on line that could be the thing that drives prices from here? >> we have to see. i think already china has reopened and we've seen demand for energy rise in china how much more it's going to rise, but i think a lot of the price is baked in now for a significant open in china. >> the idea that china is going to get back to its normal use of energy, that doesn't seem like an emergency that seems like the normalization of what's going on around the globe. >> we're not here to talk about a chinese emergency of opening up look, we have done a major release. the president has said clearly that if prices go to a lower level, we will buy those back. we have every intention to repurchase oil into the spr -- >> 75?

>> somewhere around that range i'm not going to give a specific. >> granholm said it raises the risk if there was an actual emergency. the journal points out, the bill wouldn't prevent you from tapping the spr, you have to open up some federal lands it's not going to pass, obviously, it could be tester and some of these guys on the other side, it could put them on the spot to vote no against it it says the house gop bill sends the message that the spr shouldn't be tapped merely to mitigate to harm the consumers caused by inflation because of mr. biden's emernergy policies. >> he's not restricted additional production -- >> on federal lands? >> what matters more is where real oil is being produced which is not the on federal lands and production is up a million barrels a day -- a million

barrels, sorry, from where we were when president biden took office >> below prepandemic levels? >> well, we went through a pandemic and we're growing back. what has the president said on that, joe? he's called on the oil companies to spend those record profits and to increase their capex in investment into production and so he's calling on increased production -- >> at the same time that he's saying he's going to end the fossil fuel industry. >> some are doing that look, we've had a conversation with the oil companies and, you know, i'm not going to break news here and said the biden administration -- we're going to have a lot of disagreements. but i believe they should be spending more. they should produce more i think some of them have, beck b y as you just said. >> the president has said, read my lips, i'm going to end the fossil fuel industry on the other side, two days later, he says you're not making

enough why would you do it. if he said he's going to end it -- >> the arc of the energy transition is that we're on, we're going to need oil for more years to come as we accelerate the energy transition. what the president wants to do is two things at the same time, accelerate that -- >> it's not going to end it. >> accelerate the energy transition while making sure we have enough energy in the system now, oil and gas, to be able to sustain this energy transition. >> for how long? >> i don't know that -- >> 20 years? >> i don't know. >> 50? he's not going to end it he probably won't be around -- >> most oil produced in the united states is a short cycle where they can make their profits back in three too five years. there's nothing stopping them from increasing production so that we have enough production at home. same goes for producers overseas they can increase production as well. >> we're $1.57 in below where we were of the june highs if you're looking at what's

happening over the last week, it's gone up 12 cents in the last week, 35 cents in the last month. does it concern you, do you think, we're going to get back to levels that pinch the american consumer? >> i sure hope not i less confidence means higher prices usually but i think that we're looking at the market of what happens h happening in china we had a winter storm that look out refining capacity. that's going to come back. in the winter, in some of these seasonal issues that we have between storms and other things, we end up with higher prices sometimes. price ran up on rooil, gave baca little bit yesterday we have to stay focused on the long-term goals and that is to have enough oil and gas in the system to support the united states and our allies. natural gas is at a low -- >> thank that for the weather.

>> the weather in europe and the united states but also the fact we've been able to manage the supply together with suppliers around the world on natural gas. make sure that putin can use it. and i think that's been one of his biggest surprises, that europe could actually get off of russian gas and stillnot fall apart. i'll tell you, that has been a very tough job, a lot of coordination between -- >> if china comes back and remember jamie dimon talked about importing 11 million barrels a day, so china reopens, there's a lot of people that we have on that think oil may resume an upward climb are you going to have the motivation to keep tapping the spr if -- would you do it again if oil goes $100 a barrel? >> i think the president should continue to have the flexibility of addressing an emergency and we have to -- right now, we're not in that emergency, we're not

tapping -- >> is 100 a barrel an emergency? >> it's not about the price. we've been at high prices before and not used the spr we also went -- i was in the government years ago when the libya war started and we did use the spr because prices went up because a million and a half barrels went off because of the libyan war we have to look at what is the underlying reason that the price is going up. sometimes it's about an emergency. the price went from 80 to 120 in a very short period of time because a war was going on in europe and nobody knew what was going to happen. we were encouraging the industry to increase production they told us, it's going to take us six months to increase production. >> so europe and the united states are not using russian oil. indian is. they're importing lots of it are you happy they are >> well, i think that the price cap that i think everybody now admits has worked out so far so good, it's only been a couple

months, but indian is buying it but at a steep discount. we want pursuant to get as low a price as possible. look at what euros are trading at they're trading at around $40. so i wouldn't say mission accomplished, but who knows. so far so good i think it's working. stay tuned we have a ban on gasoline and diesel and other things coming out -- >> and possible tanks head today ukraine. we're going to have secretary pompeo on. two ships passing in the night but things could get dicey again if the war escalates and china comes back that's why we may have this -- >> that's why "the wall street journal" is wrong. that's why the republicans in congress are wrong. >> open up federal lands open up the -- >> the president has to have flexibility to support the american people. why would you want to raise prices in america. >> we're going to leave politics out of that.

i like when he say that is. >> thank you for being here in the studio. >> thanks, amos. when we come back, quarterly results just out for nasdaq ceo idina freeman. she will be joining us to go through those numbers. and former secretary of state under president trump mike pompeo out with a memoir he will share his thoughts on his time in office, the war in ukraine and much more. that's cinupomg in just a few minutes. "squawk box" will be right back. ♪ this feels so right... ♪ adt systems now feature google products like the nest cam >> announcer: this is cnbc program is sponsored by baird. visit bairddifference.com. sam. sophie's not here tonight. so you have a home with no worries. brought to you by adt.

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one of the advantages to being here at the nasdaq company just reported fourth quarter earnings and according to this, missing estimates on the top and bottom lines werks need to talk about this immediately and here you are, adena friedman joins us now chairwoman and ceo of the nasdaq and our -- you're not really one of our parents but you do -- >> we're good friends. >> we're good friends. we like having you in the home. >> you host us and we like being here let's go over quickly. what kind of quarter -- how would you characterize the quarter overall? >> actually, we feel very good about the growth that we were able to generate for our shareholders in the quarter. we had 5% overall organic across the business we had one business, our index

business, that had a tough quarter. index was up 6% for the year but in the quarter the revenues declined 11% because of a challenging market backdrop. everyone experienced that. we had a 19% decline in our business but even with that one part of the business having more of a challenge, the overall business did quite well if we look at decisions, we talked about our antifinancial crimes solutions, our corporate solutions and those solution that is we serve our investors with, that really generates our analyzed reoccurring revenues and that was up 8% and saas was up 13% so generally speaking, we feel very good about continued growth across the franchise, but index did have a challenging quarter. >> the businesses that you're in, some -- it seems like you can control and some you really can't control. you can't control the listing business front page of the journal today, you're not even -- it's almost impossible to list if you're a crypto concern at this point

it's almost trickled to zero in the last couple. a tough year. >> yeah, we saw a sharp decline in the number of listings across -- in the united states frankly, around the world last year i think we're continuing to see that as we get into 2023, that's a part of the beta that we have to manage through. i think that if we think about what is going to bring listings back into the fray, i think there are two things it's a supply-and-demand issue supply, we have about 200 companies on file to go public on nasdaq. we have supply and they're really interesting companies that are looking to get out, but then it's a demand issue and the investors continue to struggle to try to figure it how to predict the future. the interest rate environment continues to be influx if we could see where that lands, i think that will be helpful. the inflationary environment continues to be influx we're starting to see steady declines there if those two things start to become more known, i think

investors will have a better ability to underwrite deals and then it's just a matter of market performance is the economic backdrop going to be inviting to companies. >> the nasdaq stock market led u.s. exchanges for operating company ipos with 90% total win rate during 2022 and 100% win rate in the fourth quarter of 2022 >> that is correct, yes. we're proud of the fact that companies that chose to go public in the year, we had a 92% win rate for the year and we did have 100% in the quarter so it's really -- we're really proud of everything we do to support companies. as provide companies, we provide -- the ability to start to understand the investor -- the investor base and we also then as they go public provide a huge level of support to them both marketing and ir and esg capabilities that allow them to succeed as public companies and i think that's helping bolster our win rate. >> if your business was down in

the fourth quarter, has it improved in the first quarter? >> as we look at aum -- the way that we get paid on average aum in the quarter as well as futures volumes on our nasdaq 100 index futures. the futures environment continues to be quite strong i think that as we look at our aum, the aum, we look at average over the quarter, the average aum versus the first three weeks of january, so it's early, you are around equivalent. so i think we have to look at that and say, well, if we continue to see strength in the markets in the first quarter, our coverage will creep back up. i think we have to recognize -- it was a challenging year. actually, i was really pleased that we were able to generate 6% growth in our index business last year just because of the fact that the markets were so tumultuous. >> it has started off better this year. in your heart of hearts, the vix is at 20, interest rates still might be problematic, at least they say, do you feel 2023 can

end on a better note in your gut, what does it tell you? is it a year to manage through or are there going to be opportunities. >> i think this year is going to be another very dynamic year when i think about -- i mean, we're in a -- we're in a period of a lot of change and if any thing, i think the economy is trying to find the new normal. right? we're not going to have access to free money anymore and i think we have to get used to that if we can recognize that and adjust ourselves, we have to focus on the biggest opportunities that -- everyone company has in front of them as opposed to every opportunity that they have in front of them. >> dynamic means volatile. when people say normalizing, business is down when people say dynamic -- >> the pandemic period had a lot of stimulus, right we had access to free money and a lot of fiscal stimulus we're getting back to the point where, you know, money costs money and fiscal stimulus is going to be much more modest so i think that on the back of that, you've got consumers

returning to a more normalized environment, you have businesses having to make harder decisions in terms of how to allocate company. it in 2022, nasdaq realigned our entire company around three key business opportunities because we wanted to make sure that we were making cap allocation decisions very concentrated decisions around long-term mega trends which is market modernization. we brought our first market in the cloud in the fourth quarter. we're proud of that. in terms of making sure that investors and corporates can navigate the public markets for successfully and our third is financial crime. we had -- >> that's always good growth >> that's going to be a growth area for a long, long time >> thank you the stock has had a -- after the pandemic and everything else thank you for playing along with me -- is that your new year's resolution. >> no more bacon. >> got it. >> thank you

>> thank you very much when we come back, boeing is set to report results. we'll bring you the numbers and the instant market reaction. futures ahead of that -- boeing shares are up by half a percent ahead of that. the futures this morning are still in the red significantly the nasdaq down by 145 the s&p down by 32 we'll be right back. >> time now for today's aflac trivia question. mount everest, which has an elevation of 29,032 feet is part of what mount range? of what mount range? the answer when cnbc continues for $1,200? ga-a-a-ap! did you say "gap"? yeah, he did. he's talking about expenses that health insurance doesn't cover. ga-a-a-ap! uh-uh. aflac! that's why there's aflac. it pays you money to help close that gap. aflac, huh? don't tell me he high stepping. af-lac, af-lac! he stole my move! get help with expenses

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>> announcer: now the answer to today's aflac trivia question. mount everest which has an elevation of 29,032 feet is part of what mountain range the answer, the himalayas. welcome back to "squawk box. i'm fill phil lebeau. the company misses on the top and the bottom line. on the bottom line, it's a miss by more than $2 a share. the company reporting a loss of $1.75 a share. the street was expecting a positive gain of 26 cents a share. revenue coming in lighter than expected at 19.98 billion. the q-4 operating margins, negative 1.8%.

now there was some positives within the q-4 results free cash flow, better than the street was expecting due to the surge of deliveries, especially with the 737 max and the dream liners in the fourth quarter free cash flow for the year. by the way, last year was the first year since 2018 boeing had positive annual free cash flow the question is, why is miss in the fourth quarter the company says they had abnormal production costs and higher production costs due to the fact that as they were clearing out the inventory of 737 maxes and 77 dream liners, there was rework that was involved that's why they had higher production cost. they're reaffirming their guidance for deliveries of the 737 max and dream liner for all of 2023. free cash flow for the year, they expect it to be between 3 and $5 million and for 2025 and 2026, they're reaffirming their guidance of free cash flow of

$10 billion and they see for this year, stabilization of commercial airplane rates. lots to discuss with dave calhoun. you do not want to miss when we talk with him. that's coming up, that's an exclusive on "squawk on the street," 9:00 a.m. lots to discuss here, becky. but this is a miss on the top and the bottom line for boeing i'll end it back to you. >> thank you very much we will see you in just a little bit. still to come this morning, former secretary of state mike pompeo will join us in an interview you don't want to miss we'll talk about everything from the ukraine war to tiktok and his time in the white house. a quick check on the futures. the picture is worsening can attribute some of this to the boeing miss. down by 236 points that's down another 50 points or so nasdaq is still down 145 points. the s&p still down by 33 "squawk box" will be right back.

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there are reports this morning that the u.s. could soon announce it will send battle tanks to ukraine the it's part of a strategy to

get germany to agree to send tanks of its own could be a pivotal moment in the war. mike pompeo is familiar with global strategic negotiations. he writes about his experience in the trump white house, his work with china, the middle east and russia never give an inch, fighting for the america i love mr. secretary, it's good to see you. >> good to be with you. >> i read that some books like this are boring. the word that this person used was savage for what's in your book did you read that? >> i saw the headline -- i don't know that it's savage. but it's truthful. i tried to share with the american people our stories from four years, how we thought about the world. it's a mean, nasty place and america's place in it. >> we're going to talk about -- you know about tanks too. >> when you're 22, that's as good as it gets. >> in the tank yeah, a lot of fun >> you don't feel -- i guess,

invincible, but as close as you can be -- >> i talk about this in never give an inch the smell after you fire a round, nothing -- and the turret, there's nothing quite like it. >> that sounds like i love the smell of napalm in the morning. >> not my intention, but there you go. >> secretary, it's obviously -- doomsday clock, 90 seconds from midnight i'm just using this to illustrate that we are in dangerous times. we always-- the world is a dangerous place. but it seems even more so now with putin and this war. >> it's unimaginable we have a major land war in europe i'm glad the biden administration has provided the tools the ukrainians need. what just breaks my heart, they weren't able to deter vladimir putin from doing what he's doing. i'm glad they're providing the tanks. i think that's the right thing the only way to end this is by providing them with things they

need to convince putin he's got to stop this. >> there are a lot of people who will say that the trump administration did much more to encourage putin, trump himself. >> i'll say this, he took a fifth of ukraine under president obama. he didn't take an inch of ukraine during my tenure and within months of my departure, we went back into europe i didn't happen. putin respected us he understood, right, we took out qassem soleimani, we pushed back on chairman kim the taliban didn't take over kabul on our watch in the end, look at -- and what i write about is look at the outcomes we got for the american people they created more economic opportunity for the american people. >> did it drive you nuts >> it's tough. there's noise after my book.

but the truth is, put your element on, get back out there. >> this s.aaga with the tanks points out how important germany has been do you understand the renascence on the tank issue? why are the leopard tanks thought to be a better fit -- >> i think it's a better fit for a couple of reasons. training issues, capacity issues, hop it off the rail head to being prepared to deliver their lethality in the field i think that's it. we battled with the europeans too. we were accused of wanting to pull out of nato in never give an inch. if you depend on russian gas for your energy, mad things -- >> is that why they're still -- >> there's a long history with germany. the former german chancellor that was in charge of the largest german gas companies this is often about economics

and money and i think the germans for a long time thought, no, we can have it all way, we have economic relationships with v vladimir putin and that was a fundamental misunderstanding of their own security. >> with germany, it's going to get tougher for us to lead, perhaps, with some of the rhetoric from the new republican-controlled house. we've already heard about it and so europe can't count on this. but they don't seem to be willing to step up to the excellent -- germany, at least, that they should is that all related back to the -- what putin -- with energy. >> it's deeply connect today that, joe. there are voices inside of my party that think we shouldn't be doing anything, that there aren't american interests there. i disagree with that i think there are deep american interest rates this is for us we put america first in our four years. this is one of the critiques of my book, you were always thinking about america

i think it is deeply in america's interest, our diplomatic interests, and our security interests to help the ukrainians they haven't asked for the 82nd airborne >> we have a ticker at the bottom but we talk about moral relativism in the world again and again and again. and one thing that you talked about in your book, you called khashoggi an activist and almost seemed to not minimize his murder, but give the saudis some cover because it's what they do. and i'm wondering, do we give the same cover to china with uyghurs? where do we -- how do we navigate through what we think is morally correct and we sort of dispense it differently depending on our own self-interests >> that's what we should do, my goodness >> my job, when i raised my right hand as secretary of state, it was defend america, our constitution our way of life.

no one makes light of the fact that jamal khashoggi was murdered i signed the documents to sanction them. but you can't make them a pariah nation president biden comes in and says this is a price and he ends up going on their knees to beg them for energy. we had a deep security relationship in the kingdom of saudi arabia that matters to the american people and we were unabashed and not apologizing for our country. it doesn't mean you have to forgive, it doesn't mean you have to condone, but make no mistake about "the washington post" who went after me viciously for me after this. "the washington post" didn't say the same thing when they captured americans they didn't run full page ads when 13 americans were killed in afghanistan. this is a complicated world, one needs to be thought about about how they do it if there's trouble today in the middle east, the saudis will be with us, the iranians will be against us and the chinese and russians will be on the side of the iranians you should never forget that you

have to do the right thing for our country. >> what does that mean in terms of how we deal with china? >> we've messed up their relationship with china for 40 years. we thought more engagement would lead to a better relationship. it led to them stealing hundreds of thousands of our jobs, building the product there and then dumping it back into our country. it lead to the largest spying operation in united states in history. i talk about the fact that we knew this and did nothing about it until i became secretary of state. i said that's nuts they were stealing to our -- they were stealing secrets from the american energy industry that american technology and medical industry and the health care corridor there in texas from their diplomatic facility in houston, texas. how dumb can america be? >> the largest spy operation in history. >> the espionage operation being conducted by chinese diplomats from that consulate was of a

scale that america has not seen before. >> in the old days, we would say it was a frenemy relationship. in terms of trade. do we now try to disengage or decouple because of their designs on leading -- i guess, being the number one empire in the world in five years, or is it -- it's not the uyghurs we don't do things because we don't like what's happening human rights right we do it because of our own self-interest and -- >> you mentioned, joe, human rights a couple of times i was the one who declared it was sgenocide inside that country. america's relationship with china should depend on the behavior of the chinese communist party. today they're trying to destroy our way of life. they want our kids and grandkids to live in a country that's

marxist. we can't let that happen we have lots of things that we have to do that are fundamentally different. full throttle, engage, build more commerce, it doesn't work for the american people and we've got to create an idea of reciprocity in the relationship with them. when we do, we'll push back. they've got lots of economic problems, lots of demographic challenges i'm confident we'll prevail. they've been in economic war with the united states for 40 years and we turn the other cheek. >> if you're a multinational company that we cover all the time here, what is your approach to china at this point >> less. >> less? >> less. >> less relationship with? less business with >> less relationship, political risk the big companies that had to take write-offs in russia. t the political risk is greater. >> so you would tell u.s. companies they better start pulling out of china and -- >> i would they're doing it already

>> they are. >> they're diversifying. >> and that's the answer i don't fault some of them we're here in new york city. america's biggest financial opportunities have massive operations inside of that country. i don't fault them for putting -- we encourage that the u.s. government engage that had for decades, but the reassessment has to take place the reshaping of the economy of the world on a model that protects the u.s. dollar and our economy is central. >> would you punish u.s. companies that do business there? how would you handle that message being sent >> on the things that really matter, places you can't give an inch, i talk about this in the book, think about semis, ai, our technology, the fact they're in our universities inside our gate, those are the things you'll begin to fix. and when you do that, they'll see it's in their best economic self-interest not to have so many eggs in the chinese communist party's basket. >> are you going to get caught up in docugate. >> i'm surprised that they're in

indiana in the vice president's home. >> they're different situations, we hear that depending on where you stand, you either -- one is important, one is not but what it does seem to have done is taken some of the -- maybe some of the focus off of former president trump to the joint where he's up 20 in some of these policy now on -- is he going -- you might run are you considering it >> we're trying to figure out what's next for us in life, joe. >> does this latest incident, there are multiple incidents does it resurrect the former president to some extent, if that is what people were looking at to decide he can't be president -- >> i don't think folks are focused on that. >> i think new hampshire is in a year. >> i don't think they're looking at these documents as they -- >> what are they -- >> whether he's going to be the nominee. i would say this, from my perspective, the reason documents are classified is

because this information ought not to be in public. each of us who handles classified information should do everything we can to make sure it's in the right place. if you find it in the wrong place, put it back where it goes apologize, make sure you know, be transparent with the american people by the way, also for leaders, take accountability. if there's documents that you find, screwed it up, i messed it up. >> we won't read this about mike pompeo ever. >> don't say i have regrets. get it right and if we did damage to american security, i am terribly sorry. we should all be -- it is not political. it is about american security. >> so savage i may have to read more. >> there is some good stories. a forward by my son, it is a good book. >> very good mr. secretary, thank you. >> thank you very much >> great to be with you. >> there it is whether we come back, we'll break down this morning's earnings and talk microsoft as

well the company out with its earnings last night. you see the stock is off by 2.5% at&t out with earnings, it is up by 2.3%. nasdaq off by .7%. futures are pointing to a lower open microsoft and boeing, both dow components, and the dow, futures down by 212 points we'll be right bk.ac ♪ at morgan stanley, we see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities and relentlessly working with you to make them real. ♪ because grit and vision working in lockstep ♪ puts you on the path to your full potential. ♪

i screwed up. mhm. puts you on the path to your full potential. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

we heard from boeing, at&t and microsoft in the last 12 hours or so. maybe a little longer than that for microsoft. tesla's results are expected tonight. we're in the height of earnings season and joining us right now for his take on some of the results is serat sefi for dcla. let's start with some of the biggies from today boeing, first of all, what did you think? and do you own boeing? i don't know >> we don't own boeing we're looking at it. we think it is an interesting story at this point. they were free cash flow positive for the first time in a long time. it is a story here of can they meet their demand and do it in a way they can make real money and operating margins can go up. they have been supply constrained for a while. it is an interesting story and the stock is getting punished a little bit i think their demand going forward for travel as we know is pretty big >> i guess you like it more the further it trades down >> exactly the cheaper it gets for us, the

better we like the story >> okay. let's talk about at&t also out its numbers are a little better this morning that stock is up by over 2% the last i checked, 2.5% at this point. at&t is a different story. go ahead >> it is it is like the verizon at&t story. that's what the market is telling us now, they're looking for companies that are going to grow cash flow, grow income, and actually that is -- if you take it across where are multiples, at&t is a cheap stock, so is verizon. other companies like american express that traded 14 times earnings, market is looking to see who has the proper valuation at this point, given where we are with the discount rate that's going to be really important for earnings going forward. >> that's a big deal the discount rate, the -- it changes a lot about how some of the assets are valued. but i guess whether these companies can continue to put free cash flow forward, whether they can continue to lure in customers, at&t has been

disciplined recently about making sure that it is raising prices even as it tries to win more customers. >> absolutely. and if we take that across the board, one of the things that we need to watch for now is companies cannot grow by acquisition. we have a government here that does not -- is really not allowing it. the ftc is saying you cannot grow by acquiring other companies. l you're looking at organic growth that's tough for a lot of companies. you have to focus on your customer base, on organic growth and focus on what you have, given the valuation metrics that people have. so when we have companies trading at high premiums, today microsoft announced earnings, and they're talking about slowing cloud growth microsoft takes 24 times earnings we own it, we have a small piece of it. it is a big part of the s&p. over 5%. we're getting to an area where i think investors will be looking to see what do i want to own for the next three to five years, especially if rates are going to stay where they are, if not a

little bit higher. >> if you own microsoft, and if they're talking about the slowing cloud growth, does that mean you sell it at this point >> i think you would be very careful. we're looking at it very carefully. i think there will be other opportunities there. i don't know i would own it in the size that it is in the market i like the company i like a lot of attributes, cash flow positive, a lot of recurring revenue. but i think you can look for other opportunities, especially if it is a sizable position. >> thanks. i didn't ask you, did you own at&t or verizon? >> we do not own either of those. we own microsoft >> okay. thanks always great to see you. >> thank you coming up, the department of justice suing google over its dominance in the ad market we'll break down that suit with former white house technology head aneesh chopra and tesla up big so far this year can it keep the momentum going we'll hear the bull and bear cases as the companyea grs up for earnings "squawk box" will be right back.

good morning futures pointing to losses for the major averages at the opening bell maybe some new results from boeing and at&t. one of those stocks is up. the other is down. and the street gearing up for tesla results after the close. we have a bull/bear debate teed up that you don't want to miss as the final hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" on cnbc we are live from the nasdaq market site in times square. i'm becky quick with joe kernen. andrew is off today. can you believe it is already 8:00 time flies when you're having fun. >> it does. >> let's look at the u.s. equity futures. if you're along the market, you're not having so much fun. dow futures off by 200 points. the nasdaq down by 147 a lot of the guidance we have seen from those companies, we'll talk more about the individual stories in a moment. in the meantime, take a quick look at what is happening in the treasury market. we have seen yields come back down under some pressure the ten-year is back below 3.5%,

at 3.423 >> and key earnings out this morning, boeing shares falling on fourth quarter results. the company missed on the top line and posted an adjusted loss for the quarter. wasn't supposed to and as a result it has improved a little bit, down about 1.5% now. the company blaming abnormal and higher production costs. higher boeing is affirming, they did it for me, phil said reaffirming, i don't know if they affirmed it already, but boeing is affirming its 2023 delivery guidance for the 737 max and 787 dreamliner i bet you it is reaffirming. they probably already affirmed it. >> nobody can ever do it right >> we need to know we need to know. if you affirm it, that's the first time if you affirm the affirmation, it is reaffirming. don't miss boeing ceo dave calhoun next hour on "squawk on the street."

i guess he doesn't get up before 9:00 a.m he promises he'll be on this show, but never does. >> we'll look forward to it, coming up an hour from now. >> okay. >> other earnings that are out -- >> is this you or me >> this is seething about that at&t ajustdjusted earnings guid. and you can catch an interview with at&t ceo john stankey on cnbc at 10:00 eastern. and microsoft out with a disappointing current quarter, part of the fiscal second quarter earnings amy hood expects azure cloud growth to slow again in the fiscal third quarter separately microsoft says some customers hit by cloud outages this morning are recovering. microsoft teams and outlook two of the products affected somehow i got through it >> let's get over now to cnbc's

senior markets commentator mark santoli who joins us with what he's been watching ahead of the opening bell on wall street. mike, this has been an interesting market the last couple of weeks. up, down, where are we >> for sure. more up than down, becky getting a little bit of a test here of the january rally at microsoft, 5% of the s&p, backing off a little bit a lot of two-way action as you've been describing in the earnings in general, a softer tone. market is holding up here. where are we up 5% for january and so a strong january after a down year some things start to line up that suggest maybe if nothing else the october low could be consequential, tough to crack, even if we have another downturn a lot of folks continue to point to that rough downturn line from the january peak of last year. we're right there. we're just above the 200 day average, about two-thirds of s&p stocks have gone over their own 200 day average. you're starting to see some broad participation. we also did see some good signals at that august peak too.

it is no guarantee, but some things are starting to come together for the bulls or those who think that we're not necessarily going to make new lows take a look at the equal weighted s&p it shows you more kind of a widespread view of the largest 500 companies, been outperforming for a while, above its december high, where as the s&p is not quite above the december high. so it shows you it is still the very largest stock that have weighed more on the s&p 500. microsoft, here is the two-year look at microsoft relative to both the nasdaq 100 and the broader software sector. it is 12% of the nasdaq 100, it is about 8% of this particular software etf it shows you very wide outperformance, getting that kind of premium for perceived safety you still pay something like i guess 22-ish times earnings for microsoft. they had some softness in their guidance question is, what people are going to be willing to value those earnings down the road

we're not seeing much of a growth story for this fiscal year the idea they're going to figure it out and just have such breadth and stability, it is worth paying up for, that's what we're going to be debating today in the market. >> yeah, mike, we were just talking with serat pointing out that microsoft is a really big part of the s&p 500, if you're indexing for any of these things it is a big part of the dow as the dow component. if you add up microsoft and then think about tesla, what it could say tonight, these companies for a long time have been an oversized part of the indexes. where do we stand on -- sorry to throw you a curveball on this. >> that's okay tesla has shrunk given the stock is down. i think it might be a top 50 in the s&p 500. not really that influential. in terms of size, in terms of public sentiment toward the market, i think it has a much greater role you had retail investors consistently buying the dip in tesla all the way down, 60 or so

percent. microsoft is more about how are we going to value in this interest rate regime in this particular economic moment, the big stalwart winners, even if they're slower growing tesla is much more about are we going get risk appetite flowing again? is the fundamental story, it is really bren anoken and that's a different tone. >> you're better than corps tanya or alexa or anything else i throw at i don't think i've ever thrown a question your way that you didn't know the answer to. >> i can pull something up i'm probably not better than open ai, chatgpt, but i'll work on it. >> i think you might be. >> make item up if you have to i'm worried about the vix. i'm worried about it it is too low. >> is it too low or too high >> way too low. >> it is always there. it is fine the index has been pretty quiet. the vix is just hovering here in this area. we got some big stuff coming up, pce and the fed. i don't think the vix is out of whack. >> we never had that, you know,

just looks like more trading -- >> never had the pop up to 40. >> yeah. well -- >> i don't know. >> i said at the time, there is no single way it has to go >> okay. all right. >> better than watson, trying to think of all the other ai supposed geniuses. >> okay, thanks. >> watsonwas pretty, you know, pretty good at chess too. >> evil. yeah >> mike, thank you mike santoli we'll see you soon >> thank you. the department of justice targeting google over its online advertising dominance, filing an antitrust suit against the silicon valley giant for the second time in two years google's ad business generated more than $54 billion in the quarter that ended september 30th in a statement, the google spokesperson said the doj lawsuit is attempting to pick winners and losers in the ad tech sector. to talk more about this, we want to bring in aneesh chopra, former white house chief technology officer under

president obama. he currently heads care journey. and aneesh, i'm eager to get your take on this. this is a situation where google is dominant when it comes too this ad revenue spending online. is that the problem or is there something else they're doing that is anticompetitive? >> this is a case that appears to be about big tech but is really about whether they have been in the traditional sense abusing their position in the market so this is going to come down to emails and other evidence that they have been actively manipulating, the technology infrastructure that powers how you and i access the free and open ad-supported internet my guess is we at this point don't have the receipts from the justice department in terms of what they have got but if they have a strong and compelling case, it will be part of the policy mix to open up more of that infrastructure for advertising so there could be more competition >> what does that mean in english for somebody who doesn't follow this that closely >> well, so, there san on ramp

for people that want to buy ads, an on ramp for people who want to sell ads and a mechanism to basically create a stock exchange for the ads that i get, you and i get served when we visit the internet today those are tightly integrated dominant purveyor of those technologies they're using these tetchnologis for the greater good they're going to do that to improve consumer benefit the allegations here are that they're manipulating the market, making statements like they actively gave billions of dollars to publishers to curry favor when the market would not have naturally supported those prices and so that abuse of that critical infrastructure is at the heart of the case. my sense is that the technologies themselves need to work well together, and the debate will be if they abused it, there is going to have to be a remedy that may be a long ways off in the probability of action like divestiture of google's ad

elements will be low, but it may result in some kind of more transparency, so a competitor can participate in the exchange or participate in the on ramps more seamlessly like the integrated google package does today. >> is this -- am i right to think of this in the same way that you would have thought with the microsoft antitrust suit, whether they were letting other people, other browsers on to the operating software >> that's right. it is not wrong for microsoft to have had a browser and an operating system, what was wrong was how they were abusing the market by telling suppliers they had to ship it with it natively deployed and thatbullying behavior is what led to that action to kind of strip out the particular software. that may be kind of where the justice and state ags have gone to kind of get to that same spirit of free and open internet if you remember, becky, a decade ago, we had the same issue with the cable platforms having essentially a monopoly pipe into

our homes. and so there was a policy debate about net neutrality the cable company should not say netflix is better than peacock or whatever. when it comes to the experience you and i have accessing that information at home. that spirit of net neutrality may start to creep up into the sort of app ecosystems, the advertising tech apps or the app stores at apple, you're seeing take that up the technical stack. >> i can see both sides of the argument in situations like this these are businesses, you're taught to be incredibly competitive, you're taught to protect what you have built and what you have invested in. where is the line drawn? it is the same thing you think about your kids being in a basketball court, you want them to be competitors, you don't want them shoving other people down you want them to be competitive and make sure they stand their ground. >> that's the heart of ur current policy domain. it is consumer welfare

are you and i harmed what is our harm if these businesses compete and maybe push an elbow and lean in? to some degree, the big argument is we get access to a wide range of content, and so to what extent are we suffering harm that's been the challenge in these big tech legal battles because ultimately how do you say i'm harmed by free one could argue, i got a data issue, you're taking my data inappropriately, i'm abusing it, and in this particular case it is about, well, the publishers are getting less ad revenue, they have to do more, so i have to pay more for articles so there is some indirect argument, but really if you read president biden's op-ed in "the wall street journal," this is a larger policy debate are the rules on the books prepared for the tech driven innovation economy that will be the next decade two or three for global competition

and the broad perspective is we haven't done enough in understanding a new standard, if not consumer harm, there may be nonfinancial harms that need to be incorporated to make that question you asked me an easier one to answer. >> okay, that's a little complicated. that's where you lose me a little bit we're going to change our definition of consumer harm because we can't find it here. >> well, the ftc has all but said we need to look at other factors. that's where you see in the privacy debate what is the harm if our -- let's take the tiktok example we have spoken about in the past, if the data held by tiktok on our kids finds its way into the chinese communist party's kind of government profiling. what is that harm to us today and in the future? it was a free service, i'm enjoying the videos, but i paid a price because my privacy and maybe my security online might be compromised that's a little bit of the extreme example, but maybe characterizing what you would think of as nonfinancial harm by

what is otherwise a free service that you and i consume on the internet >> aneesh, thank you good breakdown of where things stand right now. we appreciate it >> thank you for having me. coming up, the republican energy agenda in the 118th congress we're going to revisit the subject we talked about, a long interview about the new bill and we talk to the house and energy commerce chair cathy mcmorris rodgers after a quick break. you're watching "squawk box" on cnbc

welcome back to "squawk box. 200 and change now on the dow. down premarket at the nasdaq which closed down lower, 150 house republicans pushing along a new energy agenda. for more let's bring in washington representative cathy mcmorris rodgers chair of the house, energy and commerce committee she introduced two bills, one that would place limits on drawdowns on the strategic petroleum reserve and another that prohibits oil sales from the spr to china

and thanks for joining us. used to call sheila bear, chair bear, like care bear, but chair rodgers you prefer welcome to the show. thank you for joining us this morning. >> good to be with you. >> the complaint we're hearing from hoch steen and others, i'm sure you disagree with them. >> i do disagree the secretary of the administration have been misrepresenting the bill the bill only addresses nonemergency use but this goes back fundamentally to the importance of american energy security. it is our economic security, our national security, and this -- the legislation that we passed in the house already and the

second bill is related to the strategic petroleum reserve. this is a critical asset, national security asset, it is an economic asset, for emergency uses, and unfortunately the administration, especially leading up to the election, depleted our reserve for political purposes and i believe it is important that they are transparent and we are holding them accountable for that so we pass the first bill, that would prohibit any sales from the strategic petroleum reserve from going to china. and we gained over 100 democrats, it was the largest bipartisan vote on an energy bill in years. and i urge the senate to take action on that the second bill requires the administration, when they deplete it, when they sell these reserves, that they would have to develop a plan for domestic production to offset what they are selling from the strategic reserve and it only applies for

the nonemergency situation >> we actually posed those questions to the administration's energy representative, it was his contention that the invasion of ukraine constituted an emergency. and that we had oil go to $120 a barrel and that's in his view what the spr was created for, to bring relief and he points out that it worked oil and gas prices came down for american consumers to much lower levels and the -- even the energy crisis in europe at least at this point hasn't been nearly as damaging as predictions. >> well, i would point out that the administration used it for political purposes unfortunately, depleting the oil reserve, the strategic petroleum reserve, a critical asset, brought it down, it is at the lowest levels in 40 years.

we're down to 1983 levels and now what we're seeing since we're past the election is that prices are going back up this was used for political purposes this -- the emergency uses are more related to natural disasters than for their own political gain, and in the meantime, what we're seeing is china has built up the largest petroleum reserve now in the world. they have been buying a lot of this oil on the open market, so what we would like to see, what the republicans and as chair of the committee, we are requiring the administration to come up with a plan. we saw this administration go ask opec, go ask venezuela, to produce more oil in order to help their situation the energy crisis that they had -- their policies had

brought us to. what we're asking is for them to come up with a plan to increase domestic oil production in places like the balkan we have tremendous resources in the united states of america and so what we're asking or requiring in this legislation is for them to come up with a plan so they reduce it by 10%, they have to increase domestic production by 10%. >> the administration, i guess, says president biden urged the energy, the majors, to maybe not do quite as much in terms of buying back their own stock, but to use some of the profits that have been generated from these high energy prices to increase production, and the administration says it has been begging the oil companies to do this and they have got leases, they have got permits, and they just haven't done it on the other side, we always hear that there aren't leases,

or permits available and we need to open up federal lands and we just keep going back and forth at each other. and i've been watching it go on for almost a year now. and we never get anywhere with it do you need -- does the industry need more potential sites to drill or are they not drilling on the ones they have? >> well, the number one barrier to energy production in the united states is permitting in a regulatory climate and even at the end of last congress, we heard senator manchin talking about the importance of permitting reform in the united states we need permitting reform and we're anxious to go to work on that i'm encouraged, actually that we had over 100 democrats join us in a very strong bipartisan bill related to the strategic petroleum reserve to ensure that our supply is not being sold to china. i believe that we can find -- that we agree that america needs

to be energy secure, that affordability, reliability is important to every hard working american, to our economy, to our industries here in the united states, and i am encouraged that we saw the bipartisan support and i'm hopeful that we'll continue to build upon the first bill >> the other one is not going to -- that's what a lot of people wonder about, chair rodgers, you don't have the senate, slim majority in the house. a lot of statements are made with bills that have no chance of ever becoming law it is not going to get through the senate, though you might -- is the idea to force some of the democratic senators from oil producing states, is that the idea to get them to come out on the record as opposing this? or what is the -- what is the -- to go through all this work when you know that it would be vetoed or not get through the senate,

what is the point? >> well, the point is that this is important for american energy security, for economic security, our national security. >> it is not going anywhere though. >> wait, well, we're going to put -- we had a big vote in the house. we had over 100 democrats -- >> that's the other one. that's the china one. >> we'll see what the vote is on this one too they said they weren't -- they were saying, oh, they were kind of making similar arguments on the first bill there is a recognition as to the importance of american security. we're going continue to highlight the solutions that we believe will ensure that america is energy secure and we're going to continue to build support in the house and with the american people so that the senate will have to take action and the administration will stop shutting down american energy and promoting policies that are raising costs, that are jeopardizing reliability

we are now -- we're asking the administration -- we're requiring the administration to be transparent as to what the impact of their policies are this administration has enacted policies that have created this crisis energy crisis in the united states policy matters and we're going to continue to highlight solutions that will help hard working american families and protect our economy and national security >> interesting to see the votes and where it goes from there chair rodgers, thanks for coming on this morning andexplaining i all to us, we appreciate it. >> good to be with you. when we return, we will get you ready for a hotly anticipated earnings report from tesla after the bell two analysts will join us. one with a more than $200 price target on tesla, and one with a price target that is below $100. yeah bull and bear. we'll see how they duke this out. don't go anywhere. "squawk box" will be right back.

coming up, the latest earnings report from microsoft is more than just a stock story. plus, a tesla bull versus bear debate don't miss it. all straight ahead when "squawk box" returns but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them.

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welcome back to "squawk box" on cnbc. the futures on some of the worst levels we have seen this morning, down 240, 245 now on the dow. we can see the nasdaq down closing in on over 150, 162

points earnings movers this morning, boeing among those, and boeing had recovered a little bit, but boeing down $5 now, that's adding the pressure on the dow that's about 2.5%. and you can see at&t, though, up almost 2%. we're keeping an eye on microsoft after its second quarter results that were out late yesterday the results beat on top and bottom line, but the outlook was gloomy and you can see that that caused a quick turn around in that stock and the share is now down 2.75%. >> microsoft guidance affecting more than the stock market this morning. steve liesman sees it echoing in bond markets here in the united states and around the world and, steve, this is an angle we haven't covered with the microsoft story. >> yeah, this is a global story, becky. you can see when you look at the

charts, global bond yields started falling with the company's guidance affirming and deepening concern of an economic slowdown we'll talk about that more in depth. look at the two-year and ten-year, they fell near the lowest levels of the year with the two-year down six or seven basis points to 415. the ten-year was down in the day, it had fallen ten basis points before the microsoft report came out. and just off a couple basis points this morning. the yield curve a little steeper. yields also falling in europe, and in the uk. microsoft reported its slowest sales growth in six years, a potential broader sign of cautious business spending that will have growth implications in the u.s. and around the world. the rally in bonds might have been stronger, but we got that higher than expected inflation report out of australia this morning reminding investors that the global threat on inflation is still out there the china reopening impact on global inflation, the recent perking up of energy prices and gas prices and stickier rents and housing are common themes

across global cpis that could be why the futures market really didn't change much its outlook this morning on the peak funds rate of 491 in june still prices in those rate cuts by year end, that say big difference with them and the fed. for a lot of this pandemic and post pandemic period, it seemed like companies were practically immune from what was going on in the broader economy. they printed money when the pandemic hit, they printed money when we had high inflation microsoft's earnings yesterday might suggest that's no longer the case >> look, microsoft, i think is a case where a lot of sales were pulled forward we have seen that time and time again with some pandemic companies. we didn't think it was some of the bigger tech companies, but, hey, look, everybody was dealing with the realities you got companies that can't spend the same, got consumers that won't be able to spend the same and danya friedman was here earlier this morning, the ceo of the nasdaq, talking about how there is no longer free money and that's going to impact and change a lot of different things got to watch that all over the

place. >> i think that's a big deal and i think -- i put myself in the camp among those who thought, hey, high inflation, that's going to hurt companies, guess what, high inflation allowed companies to expand margins. i think this notion of being in a declining inflation fed tightening mode, that's the challenge for companies and you saw microsoft lay off workers trying to right size and the echo of that is, well, for companies that are not microsoft, maybe i'm not going to upgrade my software this year, maybe there is some other stuff i ought to be doing with my money, and it is really interesting race now when it comes to earnings, becky, because you do have input costs coming down. do they come down as fast as revenue comes down or as fast as margins come down? that's really what the key story is going to be when it comes to margins for companies. and, look, microsoft, we got to put a caveat there, it is one company, we have to listen to the rest of them, and see whether or not there is this guidance out there about

declining sales or lackluster revenue forecasts from other companies as well. >> yeah, and, look, i think the other thing you have to do is keep one eye on the energy markets. inflation has come down relatively speaking, a much better picture if you start to see prices pick up like we have recently, if that continues, that flows through to a lot of areas, whether you're somebody who directly uses energy or not, it the just a fact of life that that is a very widespread inflationary pressure that lots of companies will feel if that's the case. >> i think -- i think it is worth reminding us that bullard, i think last week, said this disinflation process is not a straight line. and both he and waller think the market is too optimistic about this, that it is just oh, well, we had inflation and now we have -- and it is a straight line down. there is bumps along the way and the australian report this morning i think reminded markets of that. >> steve, thank you. we'll see you later.

>> pleasure. tesla shares rallying into earnings with a gain of more than 15% this year the company reports tonight, investors will listen for comments on the margin impact of recent price cuts and monitor for delivery guidance and elon musk's level of management during the conference call, if he attends at all. here to debate whether now is a good time to buy and own tesla shares, garrett nelson, $210 price target on the stock, rates it a strong buy, and craig irwin of roth capital, he has an $85 price target and rates tesla a hold craig, how long have you been that bearish on tesla? a long way from your price target. >> yeah, you remember. it has been about close to two years that i've been saying as tesla became egregiously overvalued it was not long-term sustainable. they do not operate in a vacuum.

they're going to be 500 evs on the road by 2025 and, yeah they deserve a lot of credit for creating the market, basically. but we need to bring some rationality, some logic to valuation and, you know, toyota's smaller market cap and they don't have -- tesla doesn't have anything that toyota doesn't. that's kind of irrational valuation in my view >> garrett, do you think that tesla has something that toyota doesn't have, that has been the bull case for a long time, tesla has something that nobody else has. >> absolutely. we do. and it is battery technology, it is their innovation, and it is the fact that they produce the two best-selling evs in the u.s. by a wide margin, model 3 and model y. and we view this stock's valuation as highly compelling at these levels. remember, tesla fell by 65% last

year it was a broad-based ev sell-off so its decline wasn't as bad as some of its peers, such as lucid and rivian, both of which fell by 82% but we feel that so much of the head winds are priced in at these levels, it is really a compelling buy and investors will be glad that they bought this stock at these levels looking down the road, you know, one, three, five years from now. >> there are some headwinds, though, you acknowledge, garrett? what are the -- can you summarize the top three headwinds? is it good for market share that you see prices discounted? are supply constraints, are those still affecting deliveries so that they're not going to be what had been promised and what about mr. musk's other interests, if you will >> i think you just reeld ed off

the major concerns there it is really demand has been a major worry of investors production -- tesla's quarterly production has exceeded its sales for the last three quarters they built some inventory. but what they have done to respond is cut prices which they just announced a week or two ago, and also the company's lower price model 3 and model y vehicles are now eligible for $7500 ev tax credit. we think that helps stimulate the sales. we're seeing that anecdotally in some of the sales data we have seen recently. as far as elon's interest in twitter, you know, that's still the number one headwind for the stock. just the uncertainty regarding whether he might possibly sell additional stock, sell additional tesla shares at some point down the road in order to continue to fund twitter's operations

>> gus, those headwinds are front and center for you, craig? >> the most important thing right now is competition, right? you can't control the demand environment. and we know competition is becoming more intense. tesla had to put in price cuts to defend market share they were overly aggressive in building out capacity. so price cuts are -- price can cuts are something they will use going forward. and, you know, once they used it, it is coming again but the bigger thing is there is nothing they have that others don't. battery technology was mentioned. the 4680 sales are starting to cut into production now. those are based on the matchwell technologies, the key piece there is the coders. some investors, some viewers would have noticed $100 million order recently that was, i assume, from tesla but if you do a little bit of

work, you see matthews corp. sells to many different battery oems worldwide the key technology is open source, other people in japan and germany are using the same technology tesla does not have anything that others don't have if their batteries were so superior, why are they buying from chinese oems? just doesn't make sense. so the posturing, you know, just doesn't fit with the reality of intensifying competition, weak environment, price cuts necessary to drive growth consistent with capacity growth. it doesn't speak for a company that is going into a golden era. it speaks for a company that has done a phenomenal job creating the market, but there is probably better value elsewhere, and that's how we really encourage our clients to approach the situation. >> does that change your viewpoint, garrett >> it doesn't. what tesla does have is they have a lot of traction with

consumers. and they have the cybertruck coming to market at some point in the next year that vehicle has a reservation count north of 1.5 million units. that's far and away the highest reservation count of any forth coming ev model. they have the lowest costs in the industry, they have an investment grade balance sheet, they have a cfo who recently exercised stock options in late december to buy 13,500 shares. and then they also have a potential stock pbuyback announcement on the magnitude of $5 billion to $10 billion. those are the positive catalysts we see ahead for the stock that's what we like about it here >>endless debate on tesla. thank you, garrett garrett nelson, sounds like an astronaut. garrett and tony nelson,

remember you weren't an astronaut, were you? no i'm certain you weren't. craig, thank you appreciate it. coming up, jim cramer joins with us his first take on the trading day ahead and a programming note, don't miss an exclusive interview with boeing's ceo dave calhoun on "squawk on the street" 9:00 a.m. eastern. stay tuned we'll be right back. so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

down to the new york stock exchange time to check in with jim cramer good morning, my friend. >> good morning. how are you, becky >> doing pretty good we have two big earnings reports out today. boeing and at&t. and you have two big guests on these names coming up in the next hour. we're looking forward to it. what are you going to ask? >> at&t, they took a gigantic goodwill charge, setting things up for a pretty good year. i kind of -- i don't hate at&t as much as i used to kind of maybe -- i think boeing is remarkable and people who are selling boeing are just taking profits what i think is the beginning of a new era of boeing because the free cash flow is what we look for and it was excellent. obviously everybody is thinking about microsoft and those people who bought it ahead are some of the dumbest people i've ever seen everybody knows that amy hood is the person who determines things but, you know what, people, the first amendment does not prohibit stupidity it keeps happening i find it rather amazing people

could be so dumb continually >> what does microsoft need just in terms of price before it looks more interesting the story they laid out is some pain for some time to come, jim. >> i think they need to see stabilization. they fired very few people versus how many people they hired. and i'm including the acquisitions they i'm including acquisitions they made there was unrealistic notion that maybe, you know, october would be a continuation, and it was december that things really fell off maybe that's when they announced the layoffs. it was a rather shocking call, because you're seeing azure continue to deteriorate in the month of january, yet it's still better than a lot of companies so, we need to have a reset of expectations and a recognition that enterprise software is probably the worst place to be in this market the worst. and it's been the best for about a decade >> you know, jim, i keep coming back to this question, trying to figure out if microsoft is still 100% prepared to go ahead with

this legal battle to make sure that they can do the acquisition, the activision acquisition. this is something they've said they're going to take to court it's just a little messy and they didn't have all these other issues back at their base business when they first started down this path do you think they hold on to this >> i think the judiciary's united in hating f.a.n.g., both the democrats and republicans hate f.a.n.g., and people who get appointed judges are people who are from those constituencies this group is really a uniter between the two parties. and i will tell you, this administration, the ftc and justice department are trying to undo a legacy of rubber stamping every single deal. i don't know what deal will pass muster, but it sure isn't this they'll say writers of video games will have one fewer place to go, not unlike random house

and simon & schuster there's no need to merge anymore, because it really hurts the consumer the google thing is beyond me. i can't believe that they already had this case but it doesn't matter. >> they already had the case from texas, you mean >> it's really canada that's driving things,and i'm rather surprised that cantor, who was a paul weiss partner, is coming out and saying, let's redo what was already approved by justice and i thought that one was ill advised. because you can't break up google it's been too long >> yeah. i mean, these are a lot of stories that are going to drive stocks for a while jim, thank you >> i mean, i kind of like five below today. this is a very wilsonian day you're like the wilsonian era, because he's right on everything today. disappointing. >> well, we are looking forward, again, to the ceos of both boeing and at&t coming up, and we will see you in just a few minutes, jim >> thank you "squawk box" will be right back with what you need to watch

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all right, welcome back, everybody. this is the futures picture this

morning. it's gotten uglier as the morning has progressed the dow futures are now down by more than 280 points nasdaq futures are approaching down 200, right now down 193 s&p futures are down by about 44, so again, this picture has worsened with every half hour we've been watching. want to talk a little bit more about what investors should know today, and joining us for that is sandy, partner at esprit. how are you feeling about things we had seen markets tick up pretty significantly in the beginning parts of this month. this morning, not so much. >> becky, we have been pleased with the rally that we have had over the last three months or so, equities in our portfolios are up 15%, so this week, we've been very busy rebalancing portfolios, selling off stocks that are above targets, buying other things in the portfolio like bonds and liquid alternatives to keep everything afloat we are concerned that the market has been too focused on inflation. we think recession is a definite

risk, and in this market, we're not making any high-conviction bets on what the fed's doing, what's going to happen with inflation, nor any big bets around recession instead, we think that a better, more prudent way to move forward is to maintain diversified portfolios, and that's what we're doing for our clients who are corporate executives, family business owners and entrepreneurs. >> did i hear that right markets went up. equities markets went up, so you sold lots of stock and diversified into things like bonds in other places. are there any stocks that you have bought? >> yeah. in our portfolios, within the u.s. portion of the portfolios, we're highly tilted toward value stocks and toward quality stocks, and quality stocks for us are companies are really strong balance sheets. they do well in good economic times and poor economic times. they have little or no debt on their books, and they tend to

have less volatility so, tjx companies is an example of one of those stocks, and it meets the value criteria too as being underpriced. that's a stock we like a lot they own the t.j. maxx, marshals, and home goods stores throughout the united states, canada, europe, and australia, and in times when it does look like the country is facing recession, their brands of more affordable-priced goods and apparel are definitely in more demand >> so, what have you been selling the last week or two >> we've been selling some of the growth stocks in the portfolio that have been falling off, and again, stocks generally with the tilt toward value and quality. those stocks have done really well in the last three months, so we've been probably selling those off. >> like what kind of names >> microsoft, apple. >> you sold microsoft before the earnings >> in some of our portfolios, we did. and in other portfolios, becky, we have been actually shaving off some of the equity

allocations and moving into bonds as a more permanent proposition because bonds are starting to retain their more normal role in the portfolio, delivering strong returns, dampening portfolio volatility, and hedging against equity risk, which we see mounting and which the markets are pointing toward today. >> what kind of allocation have you had, maybe, the last five or eight years in terms of stocks versus bonds and what are you kind of moving towards now >> you know, i think the more interesting spot is the last few years, so in 2020, as we were expecting the fed to begin interest rate increases, we backed off from bonds at about 40% of the portfolio down to about 20%. and moved that differential into stocks, and now we're starting to march backwards toward bonds with a 5% move in some of our portfolios this week >> all right that sounds pretty prescient sandi, thank you for your time today. >> thank you it's been a pleasure and a final check, well,

sounds so final, before we hand it over to "squawk on the street." this is the final time we're going to look at it. down 285 points now on the dow boeing, hurting things microsoft, late yesterday, with some weak guidance nasdaq was down yesterday, diverging from the dow down significantly today make sure that you join us tomorrow, which will be thursday by my reckoning. "squawk on the street" is next ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, and david faber. futures still absorbing that guidance from microsoft last night. nasdaq futures are weak, yeeds lower too as some of these macro slowdown worries come in microsoft forecasting the recent slowdown will continue and

suggesting the cloud gwi