down, and it's a great point that you make, joe the ten-year is really trying to tell you that they think that the fed is fighting inflation, and that there's a recession >> right, long-term. okay >> so, i think it's going to be hard to get to a new high on the ten-year >> very good thank you. we are out of town -- out of time you add another person, it's nine, 10% more info. >> 10% less if you take one away >> make sure you join us tomorrow we're over oh my god. something's going to happen. am i going to die? "squawk on the street" is next ♪ good thursday morning, welcome to squawk"squawk on the street," i'm carl quintanilla with jim cramer. david faber has the morning off. futures resilient in the face of some hot eco-data. whether that's durables or

jobless claims ten-year climbs on a very busy day for earnings as well our road map is going to begin with tesla shares up more than 27% just this month chevron with a $75 billion share buy buyback posting dividend, and southwest chief bob jordan is going to join us after the company posted that loss following the holiday service meltdown over there. let's begin with the record results for tesla and elon musk is expressing some optimism about demand here's what he said last night on the call. >> thus far in january, we've seen the strongest orders year to date than ever in our history. we currently are seeing quarters at almost twice the rate of production, so i mean, that's hard to say whether that will continue, but the orders are high, and we actually raised the y price a little bit in response to that.

so, we think demand will be good, despite probably a contraction in the automotive market as a whole. >> shares going to hope above $150, which was originally, long ago, a bear case at morgan stanley. now they say it's where investors will get interested again. >> well, i think that the marginal price cuts brought in a lot of buyers. he doesn't sound as exuberant as i think he could be. it's rather remarkable, cut price just a little bit, and next thing you know, they got orders galore. this was a great quarter there's no denying it. and you found yourself thinking, how the heck did this stock fall so much? but it was too expensive versus the rest of the market, but look, they're just a tech car delivery system. they talk a lot about self-drive, talk a lot about battery storage, of course, and it was joyous. it was a joyous conference call, probably the most joyous >> at these levels, 10% gain,

would be the best day for the stock in about six months. does it fit with the notion that their price cuts are going to help them win cin a slowing market >> yes i think what's really going to be interesting is what happens to ford and gm they're coming in under ford and gm ford mach-e, i suspect they're going to have to cut price he's doing exactly what you would want a very strong competitor to do, which is cut price below where the other guys can make them so the other guys aren't capable of making the number that they thought they would, and therefore he takes more share >> he's playing with his queen, in other words >> yes that's a great way to look at it there's a moment in the call where he talks about how much further away he is from everybody else, and there's also a moment where he talks about how china is the only place that could possibly catch him very excited about the cyber truck. obviously, one of those situations where he can -- there's a battery bottleneck, but you can do two million cars.

it's a remarkable thing. he is doing these numbers that are extraordinary versus where he was three years ago, so it's a great job. >> right we got some news yesterday about the giga factory in nevada we've turned to musk a little bit more over time for peeks at the macro, and for a while, he was very nervous about rampant inflation. here's what he said last night about deflation and the fed. >> i think we are seeing deflation. and you add the deflation number to the risk free rate from the fed and that's 6%. now you're starting to exceed the large number return of the s&p 500 and starts to become questionable as to why not just put your money in t-bills or a savings account, essentially, in the s&p 500 if the s&p 500 is variable and the bank is not

so, basically, the fed is at risk of crushing the value of all equities quite a serious danger >> he's in the barry sternlicht camp here, jim >> i know. absolutely look, i think that he gives that -- he gives his view and then he gives his view of his own company, and frankly, i don't care as much about his macro view as i care about the numbers he's delivering. there's this moment on the call where he talks about tesla insurance, and it reminds me how powerful he is he's even talking about how he can hold the whole industry insurance hostage because he has kind of like a tva for insurance. tells you exactly what insurance can be works very well for anybody who buys one of his cars i think that the -- his view on the economy is as extraneous as this moment where he just talks about his -- whether he's popular. whether he's favorable

and he judges that by his 127 million followers, so he's clearly very popular and i think what's -- he does say it's very good to sell teslas, but he wants to be liked. i was surprised. i didn't think he cared. there's a lot of things in here that really cut to the psyche of musk, and it comes out very positive >> meantime, "journal" yesterday runs this story about him trying to raise money to pay off twitter debt, which he did push back on, but are we done thinking about additional stock sales of tesla to pay for, you know, whatever they do owe at twitter? >> yeah, and i think that was instrumental in bringing the stock down, because every day, you had someone -- you had supply, and this stock was very supply constrained i now feel that it actually has a pe it's not a bad stock to own. i mean, this is a guy who has got the moment of the economy is you want to cut price in order

to get buyers. he's cutting price, sells at 32 times earnings i mean, it is relatively cheap versus tech. we'll have tech companies on that will be 40 times earnings, don't have anywhere near the growth that he has >> right and oncoming competition, oncoming charging networks, oncoming marketing, right? the power of marketing, which is something tesla doesn't do >> well, that is the principal worry is that if you have to start marketing, which tesla has not had to do, what will that do are they trying to commoditize their own? when you look at henry ford and the model t, he wanted to dominate, and then he became a commodity, and you don't have as much price leverage when you have a commodity but i think if you're mary barr, if you're jim farley, i think you're saying, darn it, darn it. wow. >> we thought we had him on the ropes for a bit. >> that's a good way to put it, whenyou're doing 40,000 trucks and cars and they're electric, and he's cutting price and maybe

the cyber truck is more of a reality than you think, and people think the cyber truck might be very cool what does it do for the f-150? the electric f-150 sold through for the year, and that's fabulous because we're only in january. but he is a force -- he sees it coming, and other than in china, which is still doing well, he's really not concerned china, he does acknowledge that they're great. by the way, acknowledges that nvidia is very good. it's the only time -- the only company that rivals him is when he talks about the nvidia self-drive, and of course he trashes nvidia jensen wang, the guy's got the platform for chat for the a.i. chat i mean, how do you just slag him? >> i'm laughing today because credit suisse names it a top pick, 210 target, and they see gaming returning to double-digit revenue growth in the back half of the year. >> i mean, look, jensen, that's an inventory correction issue, and if they get the inventory corrected, then nvidia goes back to its premium status. my travel trust never -- we just

hold nvidia, because nvidia is the way that you have industrial chat, artificial information there's a moment, you know, you're on these calls, and people start talking about what it's really good for and it's good when you go to the wendy's line, and you ask for something and they can't understand it it's not as good for the parlor game of the haiku. >> jim, that's your favorite >> jim soars and carl goes higher i mean, we don't want the -- we don't want the games although there is talk, of course, that google can now challenge -- google will be challenged with questions that microsoft can do, but the main thing is it's industrial, and i don't think people get that. >> speaking of industrial information, new data today showed a slight slowdown in economic growth, initial read of q4 gdp 2.9, deceleration from 3.2, but that is above consensus and that slowdown occurring in

the wake of higher rates claims, we're still shaking our head, jim, at 186,000. not to -- and durables, by the way, the best print since 2020 >> no, i mean, it's just not working yet. i mean, you can see why they do these quarter points, because these are numbers that are pretty much red hot. i saw them, and i said, oh, 50's back on the table, because it's just not possible to have these numbers and expect, other than in enterprise software, that you're going to see layoffs. i mean, look, dow laid off people, a couple thousand, but they're really europe. europe is in recession china coming back in construction but we're just a strong country, and if you want to slow us down and get better price, you're going to have to come up with something else i mean, right now, right now, it's just too hot. >> right >> it's very hot everything's hot look at steel. it's doing amazingly >> i know you just had a conversation with andrew about severance, and that's made its

way into notes about our parent's earnings today out of wells, looking at -- look, the dow layoffs, ibm, 3m, lam research, s.a.p., do you think the data either is not reflecting the layoffs or that the severance is masking the impact >> i think the severance is. look, greg hayes did say that he was able to pick up, i don't know, 20,000 engineers from people who were laid off we'll talk to bill mcdermott he's -- i think he's even more bullish than his typical bullishness, but i know that if you get fired from meta, i mean, you're not going to work any time soon. it's the time of your life now, no one -- in the times that i have been fired, you know, i got a -- give me a couple bucks, here here's your hat, what's your hurry. >> some cushion. >> yeah, i mean, this is no cushion. this is basically just the -- if you're younger, and you get laid off by, of all people, mark

zuckerberg, you're going to vegas, and then you're probably going to europe, maybe go to bali go to poll ynesia >> look at the las vegas sands and some of the comments >> macao, gaming, if you didn't know any better, you would think, those fed cuts are really starting to have an impact sorry, jay i love jay, but i'm sorry i can't help you there's some really good quarters here. >> it's like when you score a touchdown, and then they do. >> yeah, they come right back. i do expect a low-score game >> yeah. still to come, as jim said, a ceo double header this hour. we'll talk to southwest on the quarterly loss there and some of the effects of those holiday operational disruptions. we'll talk profits and the cloud as jim also said with bill mcdermott of servicenow. we'll get to some of the other airlines we'll get to news on meta, our parent, this incredible buyback over at chevron when we come back >> oh geez new customers get our best deals on all smartphones.

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well, we're coming off that upside reversal from yesterday, futures adding to some gains this morning a lot in the way of macrodata and corporate earnings, of course, one of the busiest days of the season so far opening bell coming up in about 15 minutes as well as southwest chief bob jordan on their quarter. don't go anywhere.

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shares of servicenow, symbol now, is lower in the premarket this despite an earnings beat. joining us now is bill mcdermott, chairman and ceo of servicenow >> great to be with you, thank you. >> all right, so, bill, let's get down to it sometimes, the stock market -- your stock was down 18 at one point last night sometimes, the stock market just gets it wrong. i read through this very closely. i think it's in line, even better than we heard when you were in davos, and yet people are picking on a 0.5 crpi -- i don't want to be too in the weeds here, but basically saying you missed one little part of your guidance, but when you look at the actual order flow and when the orders were renewed,

you beat the number. so, let's just get right to it in terms of how well you're doing. >> yeah, jim, servicenow mains a beyond-expectations company. we had an unbelievable quarter we beat on the top line. our margins were two points better our eps was 26 cents better, and the one thing that you're pointing out is this idea of rpo, which is this remaining performance obligation or backlog, and basically, in the fourth quarter, we had such a surge in new business, 30% year over year growth in new business, we didn't need to go for early renewals, so it has absolutely no bearing on revenue or profit or the sustenance of the company. it's one little thing that somebody's picking on because they can so, i explained that in the earnings call. everybody now gets it, and the analyst notes are coming out

with buy everywhere today on servicenow by the way, jim, our guide was well above the highest estimate on the street, not even close, so our guide for '23 is continuing our amazing performance. >> yeah. look, i have to agree with you i was kind of laughing about what people were looking for they wanted something, and you know why i think they wanted something, bill? because the other guys in your cohort aren't doing as well, and i think they want to believe that analyst community, that there's no way that bill mcdermott and servicenow have such good product that they're head and shoulders above everybody else could you explain to our audience that if you bring servicenow, you're saving money, and that's why you're doing so well >> we're not even dependent on whether i.t. budgets or budgets are going up, because we have the platform, the platform for end-to-end digital transformation, so the c-level decision makers that are watching your show right now, if they want to take cost out of the equation, improve

productivity, and do everything with maximum automation, they're going to go for servicenow because this is the platform that can get it done but they also are super smart people, and they recognize, if they don't invest in the short-term, they'll fall back in the mid and the long-term, so growth still has to be on their minds, and digital transformation is still the most important thing for digitizing a kaepe company. and we also do that. so, you can say yes to servicenow if it's a cost out or a growth on scenario, and that's why it's become the de facto standard for digital transformation for forward-thinking companies around the world >> you know, bill, we talked a lot about your interview with jim over the last, say, quarter and a half where you initially warned people about longer lead times, some incremental weakness in europe, and it was jarring, and i'm wondering if you look back on that now, how the picture's evolved since.

>> it's a great question, carl i was a straight shooter then, and i'm a straight shooter now the reality is, at that time, if you remember, it was the second quarter of 2022, the ukraine war was kind of sinking in we had an interesting macro with inflation, supply chain dislocation, tightening monetary policy all this was just starting, and i saw the clouds, and i called it out and now, i see a situation where, with our company as an example, we completely pivoted around that new paradigm and changed the go to market to really go after business impact, selling solutions, and making sure the customer was front and center in the way we innovated, the way we delivered value, and ultimately the way we performed. and that's why we are in fantastic shape right now, because we have been working hard for our customers >> all right, so, bill, i got to go there the headline right after you released your numbers was no

layoffs from mcdermott i said, somehow, you are too fat that you are carrying a much too much of a table of employment. bill, isn't it because you need the people because you have a lot of business? >> yeah. jim, i mean, look at it this way. you guys know very well, and the people watching your show know very well that a company that performs at the rule of 40 is considered world class that's a combination of revenue and free cash flow growth at 40. we're operating at the rule of 58.5, so that means we're growing top line really fast, we're expanding geographically, we're growing across all industries, and we're driving solutions for every persona in an enterprise. so, we need people to build the best platform in the world, so we're hiring engineers, and we need the go to market machine to serve our customers, and we're

hiring go to market folks, especially those that carry quotas, and we're expanding our ecosystem and the network effect everywhere, so we're hiring, no layoffs. in fact, we're looking for nines and tens we want the best people in the world to work for servicenow >> well, bill, i know you're a giving guy, because i have been to your galas, and everybody's there, including your competitors, but i was trying to come up with a new one what do you think of this one? jealous per share. >> well, you know, jim, you know this very well the united states army expanded with servicenow to go way beyond i.t. to go into customer service management for more than a million active military contractor and civilians the schwartz group in europe, one of the largest retailers in the world, is reinventing retail on servicenow for 11,000 stores. at&t, banco do brasil, they all want to innovate and change the game so they win, and there is

so much to be done, and we are doing it all organically there's no tech debt with servicenow, because we built it ourselves. our engineers are the best in the world. i'm betting it all on them, and our great professionals and our great partners, and every quarter i come on this show, i want to give you an update and let you know that anybody that's not long on servicenow doesn't actually win >> well, i like that bill, we're going to have to leave it go at that. other than the fact that the nines and tens have been laid off from meta, time to get your resume in there. bill mcdermott, servicenow, thank you so much. >> thank you so much, jim and carl >> good to see you, bill when we come back, speaking of corporate rivalries, we'll talk about southwest, some of the shade being thrown their way by the likes of american they can take a look at futures as we count down to the opening bell in about four and a half minutes.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's get cramer's "mad

dash" as we dowcount down to th opening bell >> in honor of jay powell, who i know tunes in around 9:25 because he wants to get the "mad dash." sherwin williams, very disappointing. consumer brands, bad performance coding is bad. i mean, some of these are just really big, obviously, everyone knows sherwin-williams. housing is problematic by the way, dallas said houses, problematic, so it's not all bad for jay. this is a win for powell, sherwin-williams, so maybe we send him some cans of sherwin-williams next meeting. it's pretty good for him >> whether he not be immune from what we expect to be a challenging environment. visibility beyond the first half of the year is limited they specifically point to existing homes >> right and it's true. that's where the leverage is of course, interest rate -- mortgage rates aren't higher at the highest, but this was reassuring from the point of

view of sherwin-williams, but the idea that there is some cooling of a part of inflation that was very bad for the working person it's not eggs, but everybody has the right to be able to try to own a home, and we were losing that in this country maybe it's coming back >> let's get the opening bell. the cnbc realtime exchange, at the big board, it is latin finance in celebration of the latin america capital market summit at the nasdaq, freightos celebrating its public listing via spac does that mean, jim, that -- are you firmly back in the 50 camp here for next week >> no, i'm saying there will be chatter because when you get these numbers, you question how quickly we're slowing. and the answer is that we can't be on the pace of europe europe is getting into a really bad recession. china, coming out of it, because they're reopening. and then the united states just kind of humming, and if that's

what you're -- if they don't want to have overreach, if they just have humming and they're all right with that, then they're okay but otherwise, no, these -- the raises have not really meant much >> right so, directionally, then, what does this mean for stocks? we remain in a range does the 200-day, does that remain material? does the vicks remain material >> well, i'll tell you, i don't know what those mistaken trades at the beginning of our charts are going to matter. i'm not kidding about that it does affect the charts. but i think that what's happened is that we've got a -- we have some very severe layoffs in the country. but they're not where we expect them every single time your you're o a tech call, ibm, of course they're laying off all the tech calls, with the exception of bill mcdermott of servicenow we just heard, are calls of gloom now, the packages are terrific, and you might say, well, those people are -- they're not really unemployed, they're just surfing. but i would say that this is a -- if there is going to be a slowdown, it's concentrated in

an area that has been so strong and bit up so many engineers, that they actually may impact the economy, and people don't think that's right when i mention that, they don't realize that 27% of the s&p comes under the purview of this kind of software, and enterprise software is so bad it's so bad. that's why -- people are, like, is mcdermott not laying off people doesn't he know what's going on? mcdermott has a product that saves people -- saves cost for companies, but there is no doubt about it that there's a gigantic pause on spend in tech gigantic and then, i mean, let's give -- see, people who are making fortunes, 500 to $600,000, the layoff packages, and then you have chipotle, and chipotle's got to find the 15,000 people because it's burrito season, which i wasn't quite familiar with i thought it was still football season i didn't know it was burrito season but there are some lower-paying jobs that they're going to struggle to find and then you just have --

someone from alphabet who doesn't get hired or gets laid off is not going to work at chipotle but they don't have to they have such a good severance package. >> for now yeah >> for as long as it lasts >> your point about ibm is good. stock back to 136. that's going to take you back to november the software revenue was ahead, and the fx neutral revenue guide was in line, but there were comments from krishna about the back half of the year and what happens if things do get worse take a listen. >> what we are seeing is that most of our clients do believe that even if there are some minor or different headwinds in 2023, they are going to emerge stronger as they emerge stronger, that means they're all deploying technology to help offset wage inflation, issues, supply chain challenges, and all the demographic shifts, meaning there's just fewer skilled

people to hire consequence consequently, we're seeing them double down. >> so, he's talking about i.t. intensity, same thing that -- >> a lot of people have felt it was a back-half story. a lot of people felt that the layoffs that were mentioned are for real because they don't have enough business. they actually are part of a broad reshuffling of where people are working within ibm. this stock has been a great performer. so, it's coming in a little -- it was in a bad quarter. was it a great quarter no it's very typical, by the way, of a lot of software quarters. they had this red hat, which they bought, and i think it's looking okay and it's giving a hybrid cloud strategy, but it mentions the word, cloud, and if it's got anything to do with the cloud, then it seems very yesteryear. everybody who wanted to get on the cloud is on the cloud. actually, that's not true, but that's where the market's taking at this point. >> yeah. chips today, whether it's sd

micro, c gates leading the s&p at the moment. we mentioned the call at nvidia over at credit suisse, looking for gaming rebound >> i know this is insane, but the best call of last night, in terms of understanding the -- all of tech was from tim archer, who is the ceo and straight shooter at lam research, which was down 20 at one point they announced gigantic job cuts but really a lot of job cuts, but what they said is that, look, this inventory glut that we've seen in semiconductors, well, they're producing the fewest drams that they ever have, basically, as a percentage of -- they make the equipment that you need in order to make semiconductors 7% workforce, 1,300 jobs, layoff, but 2 billion out of sales in china ended, just ended. the u.s. government took it away and yet, the company is still humming, and yet if you want to know -- i bet you micron is up

nicely now let's see if the market's rational at all. >> sd micro is at almost a 52-week high, and i can't remember the last 52-week high we had in chips. >> no, it's hard to find but yeah, anybody who makes chips and had an inventory glut had to like what tim archer had to say which is, we don't have a lot of orders. we make a ton of money, and the orders cut back dramatically because everybody realizes, wow, we can't end this glut, but he did say the glut in drams end. those are the basic building block commodities, because when you do something on the cloud, you do have to store it. i happen to think he's very, very good, and it's a really well-run company the fact that they could make so much money when the government says, listen, you're done with sophisticated china product, including, by the way, the add-ons, it's a testament to how great america is i know that you can say, listen, cramer, you're just shilling for america. >> no, i mean, american corporate dynamism is what we're

all about. >> yeah, i mean, look, this company sells 14 times earnings, generates huge amounts of cash they basically have no orders in their key product line, and they're still doing well because they do great servicing. when people look at the intellectual property of where we're great in this country, it's lam, it's kla, that is the difference maker so, when they -- when our government said no to lam for sending $2 billion to china, that's because if you want to be keeping up with america, you get -- you take lam product. asml too so, people should read lam and realize how great we are in this company, that you can lay off all these people, have virtually no orders, and have the stock lunge. the semiconductors, another area where i think that, geez, jay was winning there, and now he's not winning. jay, i'm sorry jay, stay tuned, because we got a real loser kocoming up.

>> easy. >> i'm sorry, that was wrong i was more travel oriented >> we do want to turn to southwest today. the airline did post a $220 million loss for the quarter following those canceled flights and the scheduling troubles during the winter holidays joining us this -- phil lebeau joins us with a very special guest. hey, phil. >> carl, thank you very much bob jordan, ceo of southwest airlines >> thank you, phil >> on a day where you guys posted a much wider than expected loss for the fourth quarter, $800 million hit from the meltdown, got lingering impact in the first quarter of $300 million, do you realize -- give us some sense of how much you understand just how mad your customers are about what happened at the last week of the year >> well, phil, first, thanks for being here we're in the -- our dallas maintenance facility, which is just terrific. but i just got to start with a huge apology to our customers and to our employees we really messed up that week, and you have my sincere apologies. it's on me you've got my commitment to do

what it takes to fix our issues. our customers are sticking with us we really inconvenienced them, but if you look at march and beyond, our bookings are strong. our leisure booking are strong, our managed business bookings are strong, so our loyal customers are sticking with us >> bob, you say it's on you. i have to be honest with you a lot of people probably heard that and say, that sounds like the typical corporate apology. how do i know that the true changes are going to be made if this happened at my company, somebody is going to lose their job. something's going to happen. what's been changing to make sure this doesn't happen again >> well, we alreadyhad a very rigorous program in place. one of our top five strategies to modernize the operation, so there was a lot under way. my full focus is on taking care of our customers and employees and doing everything it takes to ensure that this does not happen again. we've got things in the short-term that we're doing. we have added a full-scale look at our deicing procedures. we have additional early alerts

to understand the state of the operation. we have extra crew scheduling, staffing as an example, and we have a full deep reporting and assessment with oliver to really get to the root cause of what happened and we're committed to fixing those things >> i know jim's got a question i have one quick follow-up for bob. you and gary kelly, years at this airline how is it that you were not making the investments -- and i know it's not just you two -- but the management team, the investments that were needed that should have been made that weren't being made how could that happen? >> well, there's been a lot of discussion about technology and technology investment. we invest a lot in technology, a billion dollars a year we'll actually invest closer to $1.3 billion in 2023 we have a long track record of doing well in technology we put in an industry-leading system for our maintenance and aircraft routing folks to serve them last year, we put in a brand-new human capital management people system, so the idea that we don't invest in technology just

isn't correct. we have a long track record of doing that there are always things to work on, and we have things to work on in the crew scheduling area, as an example, and we will do that >> jim, i know you got a question >> bob, hey, good to see you bob, i actually don't care that you spent a lot on technology. what i care about is, do you spend enough on technology and to me, when i read holiday meltdown exposes southwest airlines technology woes, and when i read another one, "southwest antiquated and atypical flight systems," what i say to myself is, what a chump i am i believed you guys that you were the best run. you're not spending enough, and i don't know who you're bringing in i'd like to know, who are you bringing in? you cannot do this yourselves. what big companies in technology are you bringing in to fix this? because $1 billion doesn't cut it >> jim, we partner with all kinds of partners as you would expect aws for cloud services, ibm, microsoft. but to get specific on crew scheduling, there's been a lot

of discussion there. that software performed as designed what really happened is we just had an absolute cascade of flight cancellations given the breadth and the depth of the storm and for so many days, that turned into a lot of aircraft routings that had to be solved and ultimately so many crew routings that had to be solved, it overwhelmed our technical and manual and process ability to handle those that was the issue, not the software we've actually got a fix with ge digital here that fixes that issue. a new enhancement. it is in test right now, so a very rapid response to that issue in particular. >> okay, so, you're sticking with the hub and spoke approach, even though all of the journalists who obviously don't know the business as well as you do, their reporting says that hub and spoke failed on this particular period. >> you know, we are a very large operator we have a very large network it has served our customers very well for 51 years. i would say that we're somewhere between hub-and-spoke and

point-to-point >> you're both you have a hybrid system >> yeah, yeah. >> i'm sorry >> absolutely. there are more that are more point-to-point than we are at the end of the day, it serves our customers really well. direct routings, far fewer connections, and it serves our operational reliability very well, because you have more flights and more depth in markets to be able to reaccommodate customers when you do have irregular operations all of our capacity, the vast majority at 2023, is going into existing markets to add breadth and depth, and that will add operationalreliability >> the d.o.t. has launched an investigation into what happened with the meltdown. two questions here have you pinpointed that specific -- it sounds like you have, because the work you're doing with ge digital. and also, how often have you had conversations with pete buttigieg, the transportation secretary, and what has he said to you >> first, woo ere're going to f collaborate with our oversight committees i have had several conversations with the secretary, and we're

aligned in our focus on taking care of our customers and ensuring that we handle them properly that's exactly what you would expect southwest to do that's the secretary's focus but we'll absolutely collaborate and cooperate with those investigations >> and did you pinpoint this -- is this ge digital fix, is that going to specifically fix the software issue that was at the heart of this scheduling problem? >> well, it's not one thing. this was a very complicated series of events, and i think -- i don't want to speculate before we get this oliver wyman report, but i think we'll find a number of things, things like being prepared even more for super cold weather, more deicing capabilities, as an example. it wasn't just -- just to clear it up, it wasn't a failure in the scheduling software. what happened was we got to the point there were so many transactions to solve that we got behind, and the software is not designed to solve past problems the good news is ge digital already has a fix in place that's in test today that will

be able to handle that condition if we get there again. >> your pilots are going to be potentially with a new contract at some point this year. >> not just potentially. they will have a new contract. i promise you. >> but in the meantime, they have authorized a strike vote for may 1st and in the process, their leadership has said, you know what? if you're a southwest customer, i wouldn't book these guys as the ceo of this company, what do you think when you hear your own pilots saying, don't book us right now? >> we are in negotiations and mediation, and this is a very complex event that doesn't lends itself to a headline or a sound byte the mediation process is very well defined it's an authorization to take a strike vote, not a strike vote >> correct >> and even that does not lead to a strike. this will not impact our operation. it will not impact the reliability for our customers. and i'm confident we will get to an agreement with our pilots and our other unions in the last few months, we've

gotten to five new agreements with our unions, and we're making progress with several others, and we are going to pay market rates >> but when you heard the head of the union tell your customers, publicly, don't book us, you're not -- you're not being served if you go with southwest this spring. don't book us. what do you think? i >> well, you have to watch the headlines. there's a well defined process of mediation run by the national mediation board, and there are many, many, many steps before you could get to a strike if that were to occur, which i do not believe it will. the mediation process is 99% effective. we're making great progress, and i'm confident we'll get to an agreement with our pilots. >> jim, i know you got another question for bob >> sure. bob, crishris said, we are not hub-and-spoke carrier. it made me think, you do point-to-point, hub-and-spoke. how can you possibly have enough pilots to do what you're doing given the great pilot shortage in the country >> well, the -- if you look at

the disruption in december, it had nothing to do with staffing. we were very well staffed coming into the disruption, and we remain well staffed. we hired 11,800 new employees in 2022, which is actually higher than the plan, and a lot of that was pre-preparing for 2023 this is a great place to work. i was visiting with a group of applicant pilots a few days ago. they were eager to come to southwest airlines i am not concerned that we will attract great pilots to southwest airlines >> bob, this week, there's a series of storms actually, one big one, rolling through the midwest right now. i think it just went through chicago, indianapolis, now it's heading east have you applied what you learned during the meltdown to handle this storm? it's not as big, and you're not having the meltdown, but have you already said, what did we learn then that we can apply now? >> we have we've put things into place like early warning detectors, more crew schedulers that can be drawn upon if you look at the january 11th

note of issue and ground stop, that was very difficult for all airlines, but we recovered very well we were number one in on-time performance the next day if you look at january of '23 so far, as of today, we are number one in on-time performance in the industry, so of course, we are applying what we learned and are actually performing very, very well. >> bob jordan, ceo of southwest airlines guys, we'll send it back to you. >> thank you >> that was pretty good, phil. i don't know carl, didn't you -- i felt he's got that point-to-point, he's got the hub-and-spoke. got the people he's putting the money in technology i thought this was -- look, i'm not saying that, you know, this is sandbag interview like i used to do when i was younger, but i don't know >> well, american also had a pretty good quarter. >> yes >> way above 2019, and they did make a comment about their reliability. >> the long knives are out but at the same time, first of all, this man comes on mr. jordan comes on. wasn't on last time.

but second, if they are spending and they are curing this and the fact that the traffic has held up and all those questions that phil asked that were so tough, i come away thinking, wow, they have a good reputation, so people are still flying. >> yep you'll see him later tonight on "nightly news. lester holt is going to talk to bob a little further >> wow >> look forward to that. >> yeah. >> we have settled off the highs here dow is up 70 points. s&p, still holding on to a 22-point gain. bonds have settled down as well. we got to 3.52 this morning on the ten-year after that data but settled back just shy of 3.5% and the two-year, back below 4.17%. we'll be right back. >> announcer: the bond report is brought to you by pimco, a global leader in active fixed

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let's get to jim and "stop trading". >> nucor doing incredibly well reported this morning. the stock's on fire. i've got them on tonight you do not expect the largest steel company to be hitting it out of the park if you're raising, raising, raising. this is everything that should come up in the meeting nucore is a fantastic company. there's so much business ask and a lot of it is generated by the u.s. government. next year will be the same when we get the infrastructure money. it's just -- it's a conundrum. you can have all the great cyclicals doing well and still expect the economy to slow they're good we have some great companies in this country. >> gas and the brakes at the same time. >> yeah, yeah. that's what i did when i failed the first driver's test.

at least i didn't have the emergency brake. >> there's a look at tonight, jim. >> here's an interesting thing what's the company that did poorest? well, it's the spice company you know, a spice company is not what the fed is trying to engineer it's a slowdown in pepper or salt that's not the game. but i guess, look, they have sherwin-williams, they got that. they don't even have southwest anymore. they lost southwest. >> we'll see you tonight, jim. it's a busy week today is one of the peaks in terms of activity. "mad money" 6:00 p.m when we come back, more reaction to the tesla rally after the company's record results and the upbeat demand outlook. still a fair amount of risk-on with staples lagging and consumer discretionary in the lead

welcome back to "squawk on the street." rick santelli live at cme hq with the last breaking news of the morning in the form of december new home sales. expecting a number in the vicinity of 612,000. very close 616,000, seasonally adjusted

annualized units the recent low water mark was july at 543,000. and that was the lowest month-over-month level change since march of 2016. we haven't bounced all that much we continue to monitor how interest rates, higher interest rates in the fed are affecting new home sales one of the most sentient parts of the economy that gives us a clue as to immediate response to tighter capital with regard to lending. "squawk on the street" will -- actually, carl, back to you, buddy. >> thanks, rick. a busy morning for rick. welcome back to another hour of "squawk on the street." i'm carl quintanilla with morgan brennan and mike santoli david faber has the morning off. we had a pretty good start in the wake of the data and slew of earnings, but settling back, s&p still hanging onto a gain, about a quarter of a point. we're 30 minutes into the

trading session. it is another busy earnings morning so we'll start here. big blue, revenue topping analyst estimates, with higher than expected growth in software and infrastructure segments. separately the company, ibm, saying it plans to cut around 3,900 jobs, about 1.5% of ibm's workforce. shares are down 4% las vegas sands is moving higher just by posting weaker than expected results analysts citing upbeat comments about the company's reopening in macau. those shares are up 3% they were up around 25% over the past 12 months finally, our parent company, comcast, beating wall street expectations despite persistent softness in broadband subscriber growth and mounting losses from the streaming service peacock. those shares are around the flat line, down ever so slightly. gdp in the last quarter of the year rising 3%, more than expected amid some of these recession fears. our senior economics reporter

steve liesman has more on the numbers and the internals. good morning, steve. >> good morning, carl. yeah i've been doing this a long time it's hard for me to remember when the economic data, at least on the surface, looked so good and the forecasts were so bad and confidently bad. they're pretty sure about it today's strong gdp and durable data the last prediction for downturn and recession real gdp up near 3% at 2.9%. consumer spending, strong, a little weaker than expected at 2.1% business spending hanging in there at 1.4% but there was a 3.7% decline in equipment spending government spending helping. trade and inventory adding 2 percentage points in the gdp big surprise on durable goods with a huge turn-around in boeing orders, up 5.6% take out the transportation and it was down 0.1% jobless claims continue to defy

predictions. they are better again at 186 continuing claims benign many economists strip out that trade and inventory and left with a 0.8% rise in final sales. they think that gives a truer picture of the strength of the economy. joe brusuelas writing, this strongly implies that the top line growth number overexaggerates leading indicator given the lagged impact of the inflation and interest rates the economy is still absorbing. it's true, the consumer weakened in november and we'll hear more tomorrow about december spending business pulled back in december and there are lagged effects of the rates to come. it's hard to say if the right story is the economy's surprise resilience shown in today's numbers or the coming downturn so confidently forecast on the street, carl. >> thank you for that.

steve liesman looking at one slice of the data we got this morning. mike, real disposable income, personal disposable income, up 3.3 in the quarter is a nice tailwind even though we talk about the winddown of excess savings. >> it's a bright spot for sure clearly as steve implies, the downturn is not happening on time for a lot of people were positioned for steel and machinery stocks working well the market is sending mixed message about how strong the economy is going to be you can have a little rethink on people's fed expectations about an immediate pause or near-term pause because the numbers are held up better than expected even if below the surface it still lends credence to the idea we have a decelerating economy, that we do have these lags i have to say, though, housing numbers came in more or less as expected but the home builder

stocks are way up off their lows it seems like people are wondering if there's a way out here without having to take much more pain. we've had folks like the ceo of compass on who suggests we've seen the worst of the pain for housing. at the end of last year, but we also don't know if we've seen the full impacts doesn't seem like we have based on the forecasts you're getting from economists. in the meantime, mixed messages through earnings just look no further than tech, microsoft, right, saying they're softening macro picture. ibm was up, service, et cetera.

>> the corporate response is a bit of a wild card in terms of if they really retrench or going back over hiring or bloated expenses over the course of the pandemic we haven't had one of these fed tightening cycles. everyone is waiting for the lag effects to kick in when you've had a relatively unleveraged consumer sector. you have very low debt obligations in households and that may give more staying power. tesla rallying after this record quarter, 33% increase year on year but warning of increases ahead. baird's ben kahlo joins us i would say the mood on some says it's a good call. i wouldn't say it's $160 good. what do you think? >> thanks for having me on we think it was the best pick this year. i think one of the things coming off what you were talking about tech and layoffs, one of the things tesla emphasizes, they are not slowing down on their

growth they announced a $3.8 billion deal to sell batteries in the semitruck in nevada i think we'll hear more about new factors, new models on their march 1st analyst day. i think the resiliency of their model, their industry lead margin and profitability, which we've come a long way over the last ten years to be able to say that, their balance sheet gets the best of oem, we've come a long way to say that i think that's starting to feed into sentiment and they realize they can outlast any of their competitors. >> i was going to say, normally as a practice, industries about to enter a price war, whether or not you have first strike advantage doesn't look all that appealing. do you think the differences here regarding their dealer network and balance sheet is a

good reason to follow them >> price cuts are never a good sign but i think the sentiment shifted around to where all of a sudden the light came over people's heads, they can do this, but can x, y, z, oem do this, because of their profitability, their dealer network, they can do this better than anyone else and faster. and they're also cutting prices after they raised prices half a dozen times in other markets, get them to levels where they have subsidies, whether it's here in the u.s., in china, germany. that's spurring demand that was one of the big emphasis on the call with all the price cuts, we've never seen this huge demand cliff, and i've been covering tesla for a long time they say demand is strong, two times over their production so far this year. >> we've had this debate over and over on our air. it's so crucial to where you're

going to value tesla anyway within the broader market. that's this idea of whether tesla is a car company or whether it's a tech company. the fact they did talk about software and that becoming a bigger piece, that recurring revenue becoming a bigger piece of the overall sales pie, when does that happen and how does that, i guess, go back into this de debate >> so, yes, it's both. one of the things i've been watching, too, if you just light it up with large cap tech companies, let's pull amazon, let's pull netflix, it's neck and neck with returns this year. at the fundamental level, they're both a manufacturing company and tech company so, i think the valuation often gets questioned. it's never been cheaper as a stock than it is right now you have a company growing 50% versus its peers and retracted

last year with products on analyst day, whether it's new vehicles i think that's a big thing because we just had the sx 3 and the y out there. now the semi, the cyber truck and they're worried about their pipeline additionally one thing we focus on, solar and renewable energy, energy soernlg business, the best quarter ever, the margins are, the profitability on it has increased in this quarter and the pipeline is very strong, this year and next year as well. all the other things, full self-driving to autonomous robots out there, pie in the sky. we don't use that in our valuation. >> you have still the embedded call options on the future ventures of tesla. in the here and now, ben, is anything in the results yesterday or in the guidance going to keep the estimates from coming down anymore? they've been on the downswing.

you're under $6 for 2024 in earnings per share, the street's around 6, i think, that's been down from 7.50 a few months ago. the point is, when you decide what to pay for it today, are we going to see the actual volumes turn into better profitability down the road? we did have a shortfall in free cash flow versus the estimate in the previous quarter >> my numbers, we cover numbers, and my competitors cut numbers heading into the end of the year when the stock fell, people reined in their price targets. i think there's upward bias for revisions right now. a couple different points. we model below this 1.8 billion, more like 1.7. elon talked about going up to 2 million, depending on the economy. i think on the inflation reduction act, none of that's been built into direct subsidies

for cells and batteries haven't been built into my model, other people's models. that's upside in the near term, definitely upside as well. and as we see austin and -- and so i think there is an upward bias to numbers after they were slashed at the end of last year. >> ben, thanks so much fascinating day for the stock. appreciate it. >> take care. as we go to break today, a road map for it the rest of the hour, including chevron announcing $75 billion stock buyback right before earnings, of course. we'll talk about drawing the ire of d.c. bob diamond, former barclays ceo, and why he's still bullish on digital currencies. the state of freight we have an earnings exclusive with new csx ceo when "squawk on

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the street." csx under pressure after reporting after the bell volume coming in lower year over year shares down 4% right now ceo joseph hinrichs warning on the call that international markets could continue to slow here to discuss in a cnbc exclusive csx ceo joe hinrichs

joe, it's great to have you on the show certainly you're coming up on your first full -- this is your first full quarter in the ceo position so, walk me through the results, specifically the fact that we've seen other freight railroads that have report basically be very cautious and suggest their volumes this year are going to hurt given the slowing economy you seem to be bucking that trend. >> morgan, good morning. our employees delivered an outstanding year last year, $6 billion profit as you look for 2023, we're optimistic because our service levels, our staffing levels give us the capacity and confidence in things we can control and influence are setting up nicely for the year we're off to a really good start in january when you look at the business overall, intermodal business

from an international perspective is down. but there is strength in our business like in automotive, like in the coal business. actually what we saw, morgan, in the second half of last year, boxcar orders started coming down and pretty rapidly between september and october and november and december. we saw those orders come up and we're able to meet that capacity. >> given as a railroad, your company is touching so many different goods that move across the country. does that suggest from your standpoint that we could be from a macro standpoint in for a soft landing this year? >> well, it's hard to say, as you've heard from a number of our colleagues as well it's hard to break what's going to happen in 2023. we're actually very optimistic about january. we've seen a strong start to the year that's a good sign as i said, we've seen boxcar

orders come back a little bit in december and january, which is also another good sign there's a lot of uncertainty out there. that's why you're not getting a lot of guidance for 2023 because of that uncertainty. we believe there's a road map out there that we can deliver volume growth this year, largely on the back of our increased performance and capacity and not just revenue growth but volume growth but we're positioned to do that. >> you talk about the recovery in service and what that means in terms of labor and the fact you've been able to hire do you feel right sized from a workforce standpoint >> yeah, we do, morgan we actually reached the 7,000 t&e, engineers and conductors that run the locomotives we reset to our target and will continue to grow 200 more throughout the next several months to get ready for the summer season when there's more absenteeism. it took a while to get here, but

we're in really good shape now we're delivering service numbers to our customers that we haven't seen back before pre-pandemic levels, in some cases better than we've ever seen we're feeling good about our performance, our capacity and our ability to serve our customers. >> you make a good point about the way companies are communicating right now, at least to the street, meaning there's no upside to promise much of anything at the moment i wonder, when you talk to your customers, if they were being perfectly candid in terms of, say, back half of the year, order trends, would they be more constructive than we're hearing them >> i think that possibility exists, carl i'm looking at what happens in december and january and seeing move up in boxcar orders, which is a good sign there are so many conflicting datapoints you reference in your show that we're trying to figure out what's happening our chemicals business, our plastic business is soft

international intermodal is soft but we're seeing strength in auto production, strength in coal and other parts of the business that come back. forest products is slow, which involves housing it's a mixed bag certain parts of the business we're optistic about the year. and as we watch intermodal with retail, we have to watch but i think on the bul sk side i think we'll have a pretty good year. >> are we getting a clean read on actual, free of the supply chain and double ordering kind of noise we were dealing with before you mentioned the service levels you're able to deliver for your customer are we now beyond those potential distortions? >> i think from a csx perspective we are we are filling a higher percentage of carloads than last year, for example. we can't meet all the demand but much higher percentage, for example. as i said, we're seeing mixed

parts of the economy obviously, in the real industry, we see it early, right we see the intermodal shipments slowing, we see other parts of the economy starting to slow that's why -- we started seeing that in the summer of last year through the fall and really accelerating into the early winter now we're seeing some of that recover. i think that's a possible good sign there's a lot of uncertainty out there. what goes on with retail is one of those uncertainties we're feeling good about our business from things we can control right now and we're set up for a good year if the economy supports that. >> yeah. in terms of the intermodal piece of the puzzle, we have seen a lot of the international container shipping traffic come to the east coast from the west coast. that seems to be persisting given the uncertainty of labor

increased market share, is that likely to last on the east coast? >> i think it can, yes obviously the new york/new jersey port has been the number one part for the last several months that can continue. there is rerouting benefits the east coast railroad, so we're appreciative of that. we have a strong international intermodal franchise that's why we've been more pronounced in drop-in intermodal there's a lot of certainty on the west coast ports i hear there's good talks going on we're not in the west coast. we feel good about where the east coast ports are up and down to the gulf. we see lots of capacity coming online to help support growth in the future. >> thank you for joining us. i have to say, probably the best live shot of the day, standing in front of a csx train. thank you for being with us. >> thank you appreciate it. have a good day. as we go to break, sherwin-williams with mixed results, though guidance came in

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welcome back northrup grumman topping revenue, 3% growth the maker of the b-22 bomber raising sales guidance to almost 5%, growing 5% among the defense primes makes it an industry leader. cfo telling me the guidance is the result of strong financial momentum from q4, easing labor shortages as northrop hired last year, a supply chain still challenging but not getting worse, and more demand as $79 billion backlog nears the

company's record high. double digit sales growth expected to continue this year the ground base strategic deterrent, the nuclear modernization program to replace the minuteman icbms, that's fueling the growth but also saying the strength is, quote, broadbased, missile tracking, reconnaissance, satellite constellation capability, some areas to name a few. regarding future defense spending, because investors have been focused on this, given congressional gridlock over the future of the u.s. budget, adding, quote, the global threat environment these days continues to be as active as ever and that is what will rise the rate of growth in defense and national security spending, both in the u.s. and internationally by the way, not just tied to ukraine but also across nato and in asia as well. after our conversation northrop detailing a doj criminal investigation believed to be tied to interest rate

assumptions used to cal late pension expenses northrop saying the underlying issue was first disclosed back in 2020. we'll continue to keep an eye on that overall, a real bright spot in an otherwise flat to down year for the broader defense sector at large you can see that with shares up almost 1%. carl >> fascinating week in defense, no question about that. coming up after the break, the blowback to some of these buybacks with d.c. going after chevron after the $75 billion stock buyback. we'll talk about that.

welcome back breaking news in washington regarding a notorious ransomware >> take a live look at the department of justice. we are awaiting a press conference here. we expect to see the attorney general, merrick garland, also the fbi director, christopher wray, step up to that podium in

the next couple of minutes and tell us about a takedown that happened overnight of the hive ransomware group that's a pernicious ransomware group the fbi said stole more than $100 million from a thousand companies and particularly in the health care sector, shutting down health care providers and shutting down software that seemed particularly cruel given there are patients with health care situations on the line we expect to see this announce many coming up in the next couple of minutes. a massive international coalition involved here. take a look here at this graphic, which shows you if you go to the hive ransomware site on the dark web, this is what you see. you are expecting to see ransomware details on the dark web from hive. instead you see this site which says, this hidden site has been seized and the seal of the department of justice, fbi,

secret service and a whole host of international law enforcement agencies that site has been owned by international law enforcement and we'll get the details in a couple of minutes from the department of justice and fbi on exactly how this takedown went down, whether there are any arrests and how much money has been recovered, if anything. back over to you. >> we know you'll bring us all of those details eamon, thank you. energy giant chevron getting a nice boost after announcing a $75 billion stock buyback program and also a dividend hike this ahead of earnings tomorrow. stock's up about 4% right now. bob pisani has more on the rise of corporate buybacks over the last few years bob? >> this is just the latest in a whole series of buyback announcements. chevron is the talk of wall street and washington because of its massive share repurchase program, $75 billion announced last night they increased the dividend 6.3% as well and announced the $75 billion buyback. that's about 20% of the shares

outstanding. that is a lot of shares to buy back if it's fully implemented buybacks have become an important part of returning shareholder profits. last year about $980 billion was spent on buybacks for companies in the s&p about $560 billion wall street loves buybacks it provides immediate gratification because the company is buying shares on the open market and everyone can see that and the buyback can be adjusted down if the cash flow declines dividends, by contrast, are much stickier there's a big problem with buybacks they are supposed to reduce the share count to improve earnings per share. in many instances, there is no share count reduction because the companies issue new shares as options to executives and also issue more shares for m&a activity

some companies do reduce their share cap. some oil companies like marathon oil, look at share cap reduction, this is the third quarter last year. they were big buyback monsters along with some of the big financials last year were very active reducing share count. aig, wells fargo, morgan stanley, for example, have also been actively reducing their share count. the one thing i would emphasize to everyone, last year wall street spent $1 trillion to buy back stock and the overall share count didn't go down like we talked about this many times, even counting amazon and tesla share splits, they keep increasing share count on the other side so it's a gigantic merry go round, a hamster wheel. i've been saying it for many, many years, that's the problem i have with it. >> filling and draining tub at the same time. let's turn to kayla in washington looking at the d.c. response to all of this. >> reporter: the white house

sees this chevron buyback as further proof these oil companies aren't using their capital to increase production or lower prices further for consumers. again, calling on them to do just that. a white house spokesman saying, for a company that claimed not too long ago that it was, quote, working hard to increase oil production, handing out $75 billion to executives and wealthy shareholders, sure is an odd way to show it chevron ceo mike wirth visited the white house twice last summer officials said dividends and buybacks were discussed in those meetings but no policy agreement was reached between the parties. chevron could not be reached this morning for comment chevron is a component of the dow and the s&p 500, making it an incredibly widely held stock, even among members of the administration and lawmakers, but the white house tells me, that doesn't change its viewpoint on this matter in the last year, portfolios touching two democrats and eight republicans traded chevron stock

directly a total of 30 times. 22 sells and 8 buys, according to capital trades. president biden is set to speak on what the white house sees as an improving overall economy this afternoon remains to be seen whether mr. biden will review his personal attack with oil prices down so significantly from thursday june peak certainly the messaging strategy from the white house is not letting up. >> kayla, you wouldn't expect it to it obviously seems like it would be a winner, $75 billion sounds like a big number. it is a lot of money people still have this raw nerve about gasoline prices. on the other hand, you know, chevron is so profitable it probably doesn't really impact them. what's interesting, too, is we now have a tax on buybacks we'll see if, in fact, that acts as a deterrent or was ever meant to. >> reporter: there's a 1% tax on buybacks and that's seen as a placeholder for democrats.

if they're trying to raids revenue in the future, that could be a vehicle to raise more slowly certainly buybacks were also part of the legislation during the pandemic for the rescue programs they did not want executives to be receiving this money to shore up their balance sheets only to be buying back stocks or increase dividends during those uncertain times. now is very different but there are specific industries that will remain under the microscope for these very clear reasons. >> bob, that 1% excise tax is exactly where i was going with this whether after a record year for buybacks in 2022 that's going to put any dent, perhaps not looking at chevron's announcement, any dent on buyback activity this year, especially if you are concerned about a recession and -- >> i'm not in the camp to think this is somehow going to deter buybacks it's about cash flow it's always about the cash flow. who's doing the big buybacks oil companies.

who's got big cash flows oil companies. did you see the financials announcing they won't be deterred by a 1% if they have the cash flow, they'll do that because that's the best way for them to return money to shareholders because they don't want to do dividend increases. again, i'm going to keep pounding the table on this old school people want dividends, cash in hand. not some vague promise, we're going to reduce the share count and then it doesn't end up happening in the long run. that's what i would like to see. more pressure for shareholders for dividends. >> although the historic critique of buybacks has been, if you buy back stock, you have no idea of what else to do with your cash. >> or there's so much to go around i think that's the case with chevron. it's not as if, do we buy back this much stock or invest an equivalent amount in new drilling or capital expenditures there's enough to go around. the cash flow at chevron last year is triple what it was six years ago. it's not as if it's an either/or. there's no magic for your stock

price. the heavy buyback did not consistently outperform. they just soaked up the share issuance and became compensation to employees. >> many are not reducing the share count, that's the bottom line if you can't get the eps up, what's the purpose you're in the hamster wheel giving options to executives and m&a. i'm saying let's find another way to distribute the profits from companies that have great cash flow. >> we're going to leave the conversation there thank you to bob pisani and kayla. after the break, do not miss our interview with former barclays' chief, bob diamond first, check out shares of dow the chemical company missing on earnings hurt by higher energy costs and weaker demand. also announcing it will cut around 2,000 jobs. that's about 5% of its overall workforce. stock's down about 1%. worth noting those layoffs

we've seen so many announced in tech here you havanheseor eryore seeing more cost cutting. late sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

markets trying to circle around 4035 after a lot of data came out, including gdp. six months of solid growth despite widespread recession fears. our next guest says we are in a recession but it will prove to be mild. joining us this morning, former executive bob diamond. it's great to see you again. thanks for the time this morning. >> good to be here, carl >> so, on the one hand, people are dissecting gdp obviously a huge impact in inventories. we're shaking our head at jobless claims at 186. what do you think this last print told us about the end of last year? >> well, listen, it was certainly a surprise to the upside, but, you know, if you and i sit here nine, ten months

to an environment with absolutely raging inflation, close to double digits, in less than a year we've had 450 basis points of rate increases we have mortgage rates two to three times the levels they were less than a year ago to be thinking we'd have this kind of a print in fourth quarter gnp and the kind of labor market we have today, i don't think we would have believed it. we do believe that, you know, recession is a correction in the economy. clearly was necessary. but we think it will be mild and, you know, potentially longer over a year, year and a half as opposed to 2009, which was short but very, very sharp and very, very deep. so, everything indicates that this is going to be a mild correction as opposed to deep and dark >> it sounds like you think mild in severity, but maybe not necessarily in duration?

>> yeah. we really have to sit back and consider just what i said, 450 basis points higher in rates from less than a year ago. i think the economy's going to take a little bit of time to adjust to that there's some positives to having a more normalized interest rates, more normalized curve, particularly for financial services but the economy's going to take a while. i think it will -- inflation has peaked it seems more mild in terms of the correction i agree. but i think 2023 will still have a lot of challenges for the economy. >> so, bob, the fact markets are pricing in the fed will cut rates the second half of this year, your thoughts on that? >> no, zero chance i think before the fourth quarter print, morgan, i would have said -- it's a very, very high hurdle for the fed to reverse course i do think two or more

25-point-increase is likely and a long period of pause and watch. i think the numbers that just came out in the fortquarter, there's zero chance we'll see rate decreases this year i don't think we'll see them even before that print i think the odds are even lower now. >> bob, if we don't see the fed easing later this year, which suggests the overall economy probably would have grown accustomed to a higher level of the cost of capital, wouldn't it you have record bond issuance in the first few weeks of january clearly both sides of the trade are okay playing 5-plus percent if you're investment grade and getting that if you're an investor in it i wonder what that means for capital markets, for valuations and, you know, if the economy can withstand this over longer term. >> absolutely. i think if you look at the reverse of that, the other extreme, we had a period of negative interest rates in many areas of the world, in the uk

and europe, for example. i think that was abnormal and not healthy in the longer term for the economy. i think having interest rates in 4% or 5%, more normalized yield curves is going to make better decision-making and investing and better decision-making in the economy. frankly, just to your point, i think it will take a little while for the economy to adjust. it was 10, 12, 13 years of zero interest rates, virtually. of course, there's going to be an adjustment. frankly, i think this is very healthy for the economy. we'll certainly see it in the area we specialize in, which is financial services it's undeniably good for financial services we have rates above zero in a more normalized curve and a little more volatility >> if all this is true, bob, how does -- why is real consumer spend staying above the precovid trend? and what did you make about some of the guidance we got last week

regarding charge-offs at consumer-facing financial companies looking at delinquencies, especially in the lower cohort >> listen, two really good questions. i think who would have ever expected, carl, when covid hit, the response was quick, it was very, very strong. you know, $5 billion in fiscal sti stimulus, just unprecedented the fed balance sheet, unprecedented change and i think what that's led to is, although there's a correction and 450 basis points increase in rates, we're still seeing the labor market's very strong, but more importantly, we haven't seen a real crack in housing or autos also importantly, the balance sheets of corporates and households were -- you know, were able to build up strongly during the covid period. i think right now that's the impact we're having in terms of a much milder recession.

it's around the balance sheets, it's around labor supply and also who would have thought that today energy both in europe and the u.s., basically energy is cheaper than it was in the invasion of ukraine. you know, we wouldn't have expected that either there's a lot of positive things that are lot of positive thingst are allowing the rate increases to happen without a deep and dark corruption. >> just to shift gears here because you do focus on financial services we have eefseen the risk on raly extend to crypto as well there's a bifurcation around the space one around the crypto within cr cryptocurrencies themselves and the other around the block change your thoughts with everything we've seen in that

>> i think crypto is a very broad term, i like to say technology there are things like the tokens with with -- tokens as you talk about, that i don't fully understand but i look at everything we're investing in early on we had insurance investments which were very much based on assets and managing those assets today with investments in marsh bury, the leading m&a firm. so we're seeing the application of technology to create competitive advantages in terms of the distribution or marketing of insurance products. and that's happening in banking as well. i think block chain which has been thought of pretty much in

the crypto space exclusively for many years -- the truth is j.p. morgan and many banks are investing in block chain technology so i think it'll be important for the underpinning of financial services more broadly the next few years. >> we're on the hunt for use cases. that's the way of framing it for sure bob as always, great to see you again. >> thanks. >> we'll take a quick break, don't go anywhere. ♪ this feels so right... ♪ adt systems now feature google products like the nest cam with floodlight, with intelligent alerts when a person or familiar face is detected. so you can listen in... sam. and even speak up. sophie's not here tonight. i can show her the video tomorrow, and you can keep playing. thank you. that would be great. ♪ this feels so right... ♪ when the most trusted name in home security adds

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coming up on "techcheck," a lot more on tesla, up 25% year-to-date, following the call last nhtth binatig, ategs the top of the hour. like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

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first ever mission from u.s. soil earlier this week, delivering three commercial satellites to orbit from nasa's site in virginia it makes rocket lab a standout, especially given failures and delays by other small rocket makers in the last few months. i asked the founder and kree about the financial chshakeout that is affecting the industry

overall. >> you know, we -- i'm quite happy there's a capital constrained environment. rocket lab is generating a couple hundred million dollars of revenue a year, we have lots of cash reserves and a real company so we -- i think this is a good time for us >> even so beck saying he doesn't see a recession impacting the growth trajectory of space overall as demand does continue to soar. >> historically, the space industry has been immune to recession, and in some cases it actually grows for various reasons. so it's tremendous growth in the sector and i don't see that slowing at any time. >> and of course that growth means a company like rocket lab is well positioned if you are launching regularly and

successfully, there is business to be had. you had catch more on this conversation on manifest space, my bpodcast. that's out catch it wherever you catch your pod cast. >> not yet subject to cyclical forces the spay ince industry. >> that's going to do it for us on "squawk on the street," "techcheck" starts now good thursday morning welcome to "techcheck," i'm carl quintanilla with jon fortt and deirdre bosa coming up this hour the growth debate earnings versus econ some bearish commentary, bullish data what side of the market should you be on. tesla turn around, the in 2023 later, an exclue wisive with the of jetblue we'll get his take on the consumer in a moment >> let's loo