tv Squawk Box CNBC February 1, 2023 6:00am-9:00am EST
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good morning and welcome to bks right here on cnbc i'm andrew ross sorkin along with kelly evans and mike santoli. joe and becky are off. it's nice to see everybody i haven't seen you in a very, long time. >> it is early. >> it's early. 6:01 in the morning. we've got a lot to do. about 3 1/2 hours before the market opens let's see where the futures stand as we await. what is the fed going to do? that is really the question. the dow looks like we opened about 147 points nasdaq off about 41 points s&p 500 off by 17 points the s&p 500 rose by 6 opinion 2% and the nasdaq rose by 10.7% but meantime take a look at treasury yields.
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today's the day, we're going to hear from fed chair powell will he talk it up will he talk it down we'll see? also cathie wood, arc etf had a very strong january. take a look. it rose by 27% we're goingto be speaking with cathie this morning at 7:30 eastern time. >> you wonder. it's less about any specific stock and more about what's going on liquidity do you know what i'm saying? does stock selection even matter i wonder. >> it matters. that whole category of stocks was very specific and a concentrated bet on other people feeling as if we're going to pay up for the potential disruption. it peaked almost two years ago.
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>> wow. >> it was fess 2021 that the arc etf peaked what's interesting to me, it's trading at a level that it was five years ago so in other words, the s&p 500 is up 50%. >> i guess my point is if you overlaid it with the fed balance sheet or m 2, you know, is it forces a little bit bigger than arkk. >> no question you look at because of the weighting of that, whether it repelled in ways it might not. >> for better and for worse. >> thought they have changed tactic i don't think so
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we all talk about it you look at all the different things did any of that matter or was it just, you know, hey, everybody's about to run sp it >> the thing that really created the stories with tesla. >> yes. >> so whether you give them credit for ice a littling early and trying to pay for everything else that was one of the lucky bets and this is a venture-type approach we got one winner and it carried us for years. >> i know they have. to. >> here's the good news, we can put all these questions to k cathie wood herself.
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average revenue per user fell short they didn't give a forecast for the coming year although it included a forecast that was short of estimates and it twice mentioned rapid deceleration in digital advertising growth here's evin speelg on the call. >> it seems like it hasn't improved, but it hasn't gotten sig ninificantly higher. they can react quickly to any changes in the environment >> snap is down 15.5%. meta down 1.5% after the bell, pinterest down 2.5%. we're watching shares of amd. it beat estimates by 2%.
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the company extent as 10% decline. in a phone call, lisa su said there's reason for optimism. >> we believe in the quarter for our pc business and we'll see some growth in the second quarter and seasonably higher -- we undershipped in q3, q4 an photo the others the sharess are about 4% lisa su will be on "squawk on the street" at 9:00 a.m. eastern. >>le if we looked back at when it peaked, i'd be curious.
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texas instrument is saying the same thing i don't know. >> it peaks slightly after the nasdaq so at the very end of 2021 on a fiechb-year basis, it's still up a lot. >> it is >> it's one of those things where it's been this reset we have this cyclical issue, but i don't think it's unwound the -- >> does it have to >> i'm not saying it does. i don't necessarily think it does it's part of the industrial cycle. >> by the way, just going back to the snap story for just a second, what does it tell you that digital ads spen for them was so challenging what does it suggest in the big markets? >> they cut, slashed, slashed and burned. >> it's always the brand
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campaign that goes first you want to keep the direct stuff because you can measure it the brand stuff, you can't that's, by the way, to some degree -- we're going to hear from meta. but you think about what's happening with twitter putting aside whatever you think of politics or this or that or brand safety or whatever twitter's product up until now was bitz in a brand advertising sort of play and he's trying to chanlt that. >> it's really not to scale. it's tough for an investor i think the ipo six years ago was in the 20s. >> what's going to be the end story for snap, i wonder. >> >> i don't know we've got founder control. we see what happens.
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>> no, no. mine are. >> there's a generation that's on it. 100% locked and loaded. 's talk more tech google testing a new ai powerle. it's described as code red response to chatgpt. now, ghoul leaders have been asking for employees for feedback on potential products in recent weeks. you can read a lot more on products being tested on cnbc.com it seems like. interestingly, google's been working on products like chat gg
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pt it's unclear. >> it's weird. it's hiding in plain sight and you use it and you're never the same, i would argue. >> i could ask it to write a haiku about the fed and it would have no problem. realtors are obsessed with chat gpp. write a listing about a five-bed, three-bath it gets done in a nano second. >> what would the monthly payment be for 5$578 huh thors dlu hours and it will again them an ansel. >> here's a question of the morning to go off been i have a son -- i have two sons i had to give a speech
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my son wrote something and he turn it in to chatgpt and it turned into six, seven paragraphs it was great which would you have him read? >> what would be the point of him reading the chat gdp version? >> a, how do you approach it we're way off topic, but you know what grammarly is, like a hyped up -- >> people swear by it. >> more sophisticated version of speck check. >> people say they boenlt write without grammarly. now maybe they won't write without gpt. >> i haven't tried it that you haven't tried it net
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>> nope. i'm not bringing up my own obsolescence it's a tool. there are going to be a lot more in-class examines. that's my theory. coming up, how big of a rate cut to expect and how much for your money. on friday, joe and becky vd a huge line it looking forward to that very much we'll be back in a moment. here ee you're watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com why are 93% of sleep number sleepers very satisfied with their bed?
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later we'll have our own discussion operates. let's bring in our guests. great to see you both this morning. welcome, seth, i'll start with you, and not to kind of meander from the point here, but as i'm reading through your notes, 50 basis points for europe and a quarter point here is europe's economy doing that well to justify a half a point rate hike? >> it's not obvious to me at all that it is doing it that well. these one of the difficult chamgs for the ecb they're so much more concentrated on head line high the ecb started late they're behind the curve, and so they're trying to play a little bit of catch-up. >> what's going on with the energy story there obviously the crisis has been averted. i don't know what the deal was with the spanish inflation
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yesterday. why has it been fed more persistent, and is it going to fall the energy price bleed through in the next six months' time >> we're worried about the people in europe an it should be overtime we think the ecb isa little bi over its skis. that said, they dodged a bullet. the warmer winter than expected really made it easier for them to avoid a particularly bad recession. there's damage that was done to very intess irv energies, so they're in for a very rough patch. >> peter, i ask, because people are trying to figure on net are we adding or subtracting liquidity global maybe china thinks we're adding it somewhat. what do you think about if fed hike this afternoon and the prospect for the sharp rally and stocks we've seen going into
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snit. >> well, that's the balance that the sfed fweeng to try to manage here because they brought forward their financial positions. monetary policy has married itself with asset prices so just as the fed embarked on forward guide answer when rates were at zero and telling the markets they even going to stay there to in their eyes stimulate the economy, they'll have more guidance and say i'm almost done raising interest rates, but that you're going to stay high for a while. it's ilts own form of monetary tightening because every loan that comes due is going to be refinances at a rate that's coming up and any new loan is going to be at a much higher rate than we've seen in the past 10 to 15 years at the same time, quantitative
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tightening is going to continue on it's continuing on in the uk and canada to your question, central banks want to shrink their blass sheets and that will continue a the year prokbregs. >> your call is it will be the last of the cycle? they're going to pause after that. >> that's right. that's our baseline view one point is worth reemphasizing, and i think i agree with a lot of what he was saying there there's no chance at today's meeting powell would signal it would be the last rate hike. i don't the believe they think it will be their lat height. it shows material further softening. so they get to come to the conclusion it. it's she
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the economy down it's going to take tyke. they have every emphasis to continue to keep policy rates high for as long as it takes to get inflation back to target. >> and, peter, assuming, let's say they're about done even though they're not going to say soing do you think the economy can absorb the market right now if rates state here, or do you think it's baked that the downturn is ahead of us? >> i still think it's going to take type for the economy to action wlitd meant the initial impact hass impactig housing. you're going to get a quick response in housing. you're beginning to see in autos, affordability is the bigger issue but for the broader economy, i think it workses its way through and how it affects behavior, so
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i stim think we eat going to see it that is very impactful on an economy that's before very dependent on borrowing and less on savings. >> peter, real quick on that point, the market is already pricing in rate cuts. why shouldn't we expect rate cuts in the next four to five months >> there could be, but there's going d/b/a big difference with cutting rates from 5 back to four as opposed to fix fed rate cuts where the fed quick takes it back down to zero any rate cuts are going to be tweaks rather than a drawet make
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rate cutting cycle as we've seen in the past. >> do you agree with that, seth >> i do. when powell talks about achieving a softish landing, what he means is slowing the economy down a lot, having it grow well bolo the potential for at least a year, maybe two years to get rid of the inflation impetus that's here in the economy. the reason we won't see cutting is because that ice exactly what they've been trying to achieve. >> we'll leave it there. thank you boechlkt be sure to watch the show between 22:00 and 2:30 p.m. eastern. coming up, a new piece in
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the sem a for. we've talked about fit ar long time, the era of superstar banks and weather it's over. next, a programming note, don't miss an interview with br bridgewater founder ray dalio. we're going to talk about that and so much more we're coming right back. an approaching car, a puddle, and knew there was going to be a situation. ♪ ♪ ms. hogan's class? yeah, it's atlantis. nice. i don't think they had camels in atlantis. really? today she's a teammate at truist, the bank that starts with care when you start with care, you get a different kind of bank. how will your business adapt to change? you could hire an office w full of peyton mannings. what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse.
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and now, save 50% on the sleep number 360 limited edition smart bed. ends monday. okay, folks. if you're a banker, you're going to want to close your eyes or close your ears because apparently -- we'll debate it. we're not going to say it outright our next guest is going to say it outright. the era of the superstar banker may be over. howen that the assembly line nature of modern finance has now taken over liz hoffman broke the story
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arngstory. >> it makesme think that i'm right. >> i don't think you're wrorngs how about that >> lit. >> what had it been? >> i think a couple of things happened number one, m & a got boring the actual tactical advantages, the cat-and-mouse game didn't play any more. the other thing is the m & a boom of the 2010s was entirely financial driven you saw rates push up. fund mentally capital market
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machines means not a lot of value add from the next big idea and the private equity part of the biggest deal. >> i think it's all economics. if you were a bank were this inathleticual capital thing we're talking about, if you were worth your salt and you actually followed money, you're like, this is not going to do this i'm going to go to a large venture capital company or i look at it another way the big companies decided that they actually -- the fees -- because i remember we used to write about these outrageous
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fees why are they not getti ggetting. >> 100%. you know, it's possible the ego -- the new gold rush is something slightly different greg came out of goldman sachs and went to michael dell's firm and now trotz's fiplan. >> this seems to me this is the direction financial services go. the start mutual fund manager is don analysts used to get paid a lot of money for the calls now they even keeping you abreast of what's going on
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it seems like the way they want to take things in a ridge rebard thigh. lot a lot of a 57 tights -- >> what do you mack of the rise of the center vaus of the world. we had berkoff on last we've many created this. everyone is doing the plus, plus they're not going to add. >> except one. >> first of all, they can't for
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regulatory reasons it still exists, but they're in the process of shifting. so it doesn't rhett woong. firms like it. they don't care. the dollar signs are pointing elsewhere. it's probably been going on for a while. i don't think any of the major bangs are whip p i think -- >> that's part of their culture. >> slijpmorgan and others like paulsen, you'd have to go back. >> ig's a lofty b-- it's a loft
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business it's a lumpy business. they like a sack businesses. especially if we're fwoep have high intere >> i could see it going either way chlg when things get tougher, you'll see people migrate toward better advice, toward more generally concentrated capital market she'ses. le those actually require someone on the other side. f i don't know the drengz of travel doesn't seem to be minting out to your point, the last boutique of -- to make a real tent in the markets tables was re around
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i think pbgt it not the oval thing. you see the other makes you pick from the past. >> >> thank you frp stag prevolleyballtive this morning it turned out to be pretty voc a tiff coming up, ex--on-'s profits. and as we head to a break, the look at yesterday's s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure oh, i can tell business is going through the “woof”.
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good morning and welcome back to "squawk box" right here on cnbc. that is where we are, but we're also live in the nasdaq market square take look at the futures we're set to open down right now. dow down about 118 points. nasdaq down about 128 points. >> we've got tocks s >> we've got toctocks to watch revenue beat estimates but the company swung to a loss of $46
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million versus a profit of $564 million the same quarter a year ago. the revenue guidance came in below estimates. it's much worse than analysts exp expected the shares look like they're down almost 5% shares of match group are down, saw revenue decline slightly the quarter guidance came in below. as bwell as a tough economy. the hinge business was hit by product delays tinder is prepared to launch global branding. the match shares had come back after a tough year. >> what product launch unhinged, i wonder. >> you're asking the wrong person. >> is that a new thing >> i think that's an old thing.
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>> my sense from covering the company is that there is a bit of an arm's race you have to look for a few pool and a new something and get people to pay and subscribe to separate features. it's tougher to stay ahead of it. >> what happens when they write the bios here? >> maybe it already is. >> they already have the ai-enhanced photos >> avatars moving along, the white house expressed outrage yesterday after exxonmobil reported its net profit of $56 billion in 2022. the latest earnings reports make clear the oil companies have everything they need including record profits to increase production they're choosing instead to plow those profits into padding the pockets of executives and shareholders it's a topic that becky asked darryn woods about yesterday and his anticipation of the back
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hashbacklash from the white house. >> they said they were jacking um its share buybacks and raising its dividend as well that, you know, look, they want to make sure that oil companies are investing, and they have been very harsh. is it a harder line to walk these days when you have a president and a white house that feels that way about things? >> well, i think, you know, my first accounting would be the white house needs to get its farkts straight. as i said earlier, when times were toughest, we were out there investing at a level that exceeded anybody else in our industry and so we've done the hard work. we've made the investments we had a keen focus on making sure we had the production there in products available for society when it was needed when the call came, we answered it we had spent that money. taking criticism at the time and grew our production and basically providing more products today because of those
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investments. so i think we're doing what the white house in essence is asking us to do. >> amid the backlash over oil company profits, cnbc asked them to calculate the most profitable s&p companies to see where it falls. this accounts for some differences. here you can see the top eight over the past four quarters. so number one, apple $96 billion in profit. microsoft, $67 billion alphabet right behind them exxon with that profit jpmorgan, by the way, in fifth place. then you've got chevron, pfizer, and meta as bob pisani sort of remarked sarcastically, should we be shaking down apple to produce more iphone? why do you think the oil issue hit so much more closer to the nerve and triggered a all these kinds of responses about how it's using capital, as if it has any control over the oil price.
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>> i personally think this argument works for all sides the white house gets to make the point. we want gasoline prices lower. we know that feeds into consumer confidence and poll ratings. at the same time, you don't think something's going to change we have enough to go around. meanwhile crude is at the same price it was 15 months ago what are we talking about? you want it go to zero. >> right, right. we've seen windfall taxes come down year-round. so itcould happen here. >> without a doubt i guess my point is like the company can say we're smart disciplined stewards of capital, we're doing what we're supposed to be doing on all fronts. >> the question is whether you think the politicians -- if the politicians ever get their act toke and actually do what they're saying, that's what's happening in europe. >> right >> the question is whether it's
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either here or there and new this morning let's see what "the wall street journal" is reporting. they say bp's ceo is planning to dial back renewables on energy he's made comments with people close to the company he said he's disappointed in the returns for some of the oil giants' renewable investments. he said that he plans to place less emphasis on so-called esg goals to help clarify that those aren't distracting the company from its ability to deliver products. >> this is a perfect follow-up. >> but bp is a company that's spent the last call it, what 20 years trying to rebrand itself as something beyond petroleum. that's been what they've done ever since the oil spill i mean it's just been -- they want to be a friendly company. they want all of this, an here we are. >> are they going to change the
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public perception here because this is -- there's a big audience who is the audience here, to the blackrocks and the rest of it, it's not just the general public and the political battle they're fighting what is the message going to be? >> are your bps in a slightly different place? maybe they all are there are esg oriented -- not oriented there are esg laws in europe in terms of disclosure and the like we all talk about it as if it's an optional, should we not do it situation. the truth is a lot of companies including multi nationals who are u.s.-based are having to do it anyway. so there's the view, i'm already -- >> shell had to leave and go back to be sheltered from some of the stuff coming douchblt there are huge -- you're absolutely right there are financial implications for pushing ahead in that direction. i do wonder about the fallout wrchlt are they based? >> london. >> they have lags for various
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reasons. it's various reasons it's sort of a complicated thing, if you're telling people, moat of them who work there, most of what you're doing and create most of the value for the company is you want to get rid of that. >> absolutely, absolutely. >> it reminds me of pepsico with frito-lay. we have the better brands over here and the fun brands over here they're making all the money. >> actually i think the better-for-you brands the margins are so high. >> the prices are up there. >> again, at least bp, if they can, they can choose tact. >> we will see coming up we're going to talk about the ceo who had to apology for her layoff email that's coming up next. you don't want to miss this. and later, don't miss transportation secretary pete buttigieg. he's going to join us live at
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welcome back paypal announcing plans to lay off 2,000 of its workers the shares right now about -- down about -- i thought the news came out yesterday on the session. i don't remember what shares were then. they were up about 2%. they're down a third of a percent this morning. meantime the ceo of pagerduty told staff she was cutting employees. she prefaced the quote from dr. king she said it's not where leaders stand in times of convenience but in challenge and
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controversy. when quoting dr. king she was criticized for using an upbeat tone in announcing the layoff announcement she apologized and said there are a number of things she would do if she could. never great to get a layoff -- layoffs by email -- we should have a separate debate or discussion about how people are doing. google's doing everybody. i don't know they're all following the twitter lead. >> but these are companies, this whole cycle going to be a raft of companies who have never had to do layoffs before i don't know if pagerduty have had to do this people are going to go through this, fix out the tone they want to strike, what is the right -- i think facebook and meta when they had the big layoffs, they had to bring in consultants to tell them how to do it. >> hero's the other question a lot of people are saying how can you lay people off by email,
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this is so impersonal and so terrible the whole situation is terrible. but we are now in this sort of strange universe where it's not like everybody's in the office every day. and so if you -- do you send out an email saying please call me you need to call me in the next 24 hours and if you do that, what's happening in the next 24 hours? so how do you do it? i'm not saying this is the way to do it >> it's hard these are companies also to your point never had to do layoffs, never conceded that they were subject to ma droe economic forces and also speaking in an upbeat tone, they're winning all the time. >> they've been spending time in the last go oar three years talking about company as family, mental health, all these things, and here you are at a time when they were talking stakeholders and everything being equal, remember that
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employees, shareholders, everybody's equal until they're not. >> it's well said. coming up, we'll talk more about those snap shares plunging 15% as digital ad struggles continue we've got more about the numbers and implications if there are any. reminder, get the best of "squawk box" in our daily podcasts llfoow on your favorite podcast and listen any time. we're back right after this. technologists in india, and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world.
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markets last check out u.s. listed shares of baidu in a new scc filing, black rock saying it increased its stake to 150 million shares, that represents 6.6% of the company. so here you see the stock reacting with a 7.74% pop on that news. >> wow meanwhile, snap going the other way, reporting weak revenue in the fourth quarter and its informal weak guidance for first
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quarter sent the stock plunging last night brand advertising was down 11%, the shares this morning are down 15.5%. joining us to discuss what these results mean for rest of the tech sector is ron john roy. great to have you here welcome. >> thank you >> so what is going on with brand -- why are these brands not advertising right now? >> i think if investors are looking at the q4 earnings and trying to get some direction around where snap is going, they're going to be disappointed evan spiegel said, he said advertising demand hasn't really returned, but it hasn't gotten much worse either. they have obviously guided down for the quarter, but i think it is symbolic of overall economic caution and head winds and i have been bullish for snap since the disastrous july earnings report last year because i do think this is a company positioned for the long-term, and i think they are being correctly cautious about trying to forecast where the overall
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advertising market is going to go and i do think this is going to be a big week and i think meta's earnings is going to be the next big show of is everyone being this cautious about where the ad market going or are some companies actually able to become bullish. >> so, before we jump to the conclusion that this is a macro story, what about the fact that as this benchmark analyst is saying, at its core snap's return on ad spend has never been competitive >> i think for every social media advertising-driven company, we are now at the point, it has been a year and a half since ios 14.5 where they were all knee capped around their ability to track i think for snap you had commented that brand spend was down 11% but we also should dig into the revenue and see that direct response was up 4% and i think that's the key direct response, that's where marketers go for performance, for efficiency, for roi, especially in a cautionary environment. and i do think, like, there has been a lot of reporting that
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meta has -- using machine learning prediction, they're able to build models that are helping their ad targeting, bringing back attribution, conversion, to help advertisers and i think it will be very interesting to see how snap performs around this kind of thing. but direct response is up. so it is a somewhat bullish indicator for them >> i guess the couple of questions are is snap just not have the scale to really monetize the way that investors might want it. and the other piece of it how much is really trying to fashion some kind of response to tiktok, at least in terms of time spent on the app >> in terms of engagement, snap is directly competing with tiktok this is a company that is 75% of people 13 to 34 in over 20 countries and those countries being valuable ones that comprise over 50% of the global digital ad market use snapchat almost on a daily basis. they have the engagement and
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another thing i think is really important investors need to think about is facebook/meta is essentially ceding the social graph. they're moving more toward this ai-driven content discovery. it is no longer going to be the place where you go to see photos of your friends' kids and dogs, it is going to be a place you find memes and get content recommended to you snap is becoming the dominant social network and i think that's the part of the market to segment that no one seems to be competing on, tiktok has never really been there, facebook and meta are moving away from there. i do think that snap is positioned well as the social network for the younger generation which has always been the story and they haven't really shown amazing ability to monetize that yet, but they still have the product and the engagement. >> i see some -- maybe some skepticism, ranjan, i'll wait until my kids are of that age. thank you for joining us this morning.
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we appreciate it. >> thank you. coming up, we'll talk to kentucky congressman james comer about the backlash over waste, fraud and abuse in federal pandemic spending. his committee is holding a hearing on that topic today. then, arkk's cathie wood joins us to talk about her rtlio picks after a solid performance in january "squawk box" will be right back. maybe it's because you can adjust your comfort and firmness on either side... your sleep number setting. to help relieve pressure points and keep you both comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday. girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!
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♪♪ i was having challenges with my old bank. lots of red flags. fees, penalties. so i broke up with bad banking and moved on with sofi checking and savings. now, i earn higher interest on all my money, and pay no account fees. sofi. get your money right. good morning gearing up for the fed's latest rate decision as we kick off a new trading month.
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central bank expected to raise rates, futures pointing to a lower open this morning ahead of that announcement. and breaking news, widely followed cathie wood fund arkk invest releasing her best ideas for 2023 she's going to join us live to share her thoughts on the market and tell us where she plans to put money to work, a lot of folks focused on her fund. for quite some time now and we'll debate and discuss it. and billions of dollars in federal pandemic funding may have been abused by firms. now congress wants answeranswer. the head of the house oversight committee will join us today as the second hour of "squawk box" joins us right now good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market
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site in times square andrew ross sorkin can with kelly evans. we have you u.s. equity futures at this hour to show you things are down. we're going to be hearing from jay powell at 2:30 this afternoon. we'll see where that shakes out for us dow now 133 points off nasdaq off 20 points the s&p 500 off 12 points. treasury yields, we're going to fl flip the board around, two-year at 4.2 and oil, a lot of questions about price of oil, profits in oil, buybacks, dividends and windfall taxes that doesn't necessarily impact this wti crude at 79.38 if you want to buy it by the barrel. and crypto, let's show you bitcoin. let's show you where we are. we are at 23,000, over 23,000. so we have been living just
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under it for a little bit there. but here we are. eth at 1500. not a bad trade on a short-term basis. on a short-term basis, not a bad trade. >> diamond hands now. >> diamond hands, paper hands, what are the other hands >> let's talk to dom chu with the premarket movers. >> that's what we got over here, we have a couple of big tech earnings reports that are moving things around premarket in a pretty significant way big drop in shares in snap, the parent company of social media platform snapchat. lower by 15.5% just around almost a million shares of trading volume, around 900 plus thousand, it reported better than expected profits it did not give financial guidance for the company but said its own internal forecast is assuming a possible revenue decline of between 2% and 10% from the same time last year
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this does represent the third big disappointing earnings report in a row for snap investors. some outsized moves over the last couple of quarters. those shares down 15% and down 71% over the last year also on the move this morning, advanced microdevices, shares higher by just around 3.5% to 4% premarket, around 500 shares of volume this is one of america's biggest semiconductormakers after it surged past intel over the course of the last couple of months better than expected profits and revenues here thanks in part to better results from its data centers business, which helped offset weakness in certain markets like pc and gaming and amd did guide that current quarter revenues would be down over 10% year over year, better than some forecasts. that's why the shares are up 3.5% now and we're going to end with an analyst call a check on foot locker, up 2.5% now out of a call from credit suisse, upgraded that stock to an outperform rating from a neutral. it also put a $62 price target,
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that's up from $38 they like amongst other things a more profitable path ahead for the company and better supplier relationships, namely with nike. so foot locker shares up 2% on that call. some big moves out here. and another big day of earnings coming up. i have a feeling, kelly, that we'll be talking much more about the headlines and the coming hours when those reports start pouring in. >> exactly between that and -- but doing everything, it feels like it is waiting still for the fed. >> yeah, you know it does. and it is always that hour that we kind of anticipate, we'll be in the 1:00 hour, kind of previewing what is going on. normally i would put banks up here on a fed day, interest rates, that sort of thirng but it feels like this is all about whether or not -- ithink it is a foregone conclusion it is going to be a quarter of 1% but who knows. they might surprise us this is maybe not greenspan's fed, but certainly up for debate still. >> still capable of a surprise or two. >> the question is whether it is volcker's fed. >> yeah. >> that's the whole call and so that's why there is a
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little bit of suspense in this market that went up 6% in a month on the s&p 500 we'll see how it plays thank you very much. and with the fed just hours from the release of its statement and the fed chair's press conference, senior economics reporter steve liesman joins us now with a look at what the fed might and might not say. a communication challenge always, but maybe more so this time. >> yeah, big one today the first clue you want to look for after the fed has expected raises, the funds rate by 25 basis point, the policy statement that repeats the phrase that the committee anticipates ongoing increases in the funds rate it will be a very dovish sign. the fed is getting ready to pause. but it is not widely expected. thomas simons over at jeffries writes fed officials do not want the market to think the downshift to a 25 basis point meeting pays -- signifies the end of the tightening cycle. that's a theme in the statement in the press conference, a market that wants to hear the fed is done and the fed
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unwilling to tell the mark wheat market wants to hear we're calling this a 66 basis point gap between the markets year end forecast and the fed's own forecast of 5.13% for the funds rate if powell finds a need to tighten conditions, he might talk about the need for additional rate hikes or holding for longer the data seems to be undermining the fed's own case for tighter conditions the fed forecast 3.1% headline inflation this year. it is now at 2.1%, on a six-month annualized basis for core, 3.5% and now at 3%. so the fed has been achieving its goal of reducing inflation with a lower funds rate than itself forecast. he needs to defend the 5% target mike >> and, steve, it is also seemingly on the way to achieving those inflation goals and what it anticipated inflation would do with a lower unemployment rate, right
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that's another way that in theory the chair could go out there and try to, you know, get the market's attention about the need for maintaining tighter conditions is to imply that maybe we do see -- need to see more softening in the labor market before we can be convinced that, you know, we have really put the inflation threat to bed. >> i thinkit isa really good way to look at it. think about the variables. the goal is the inflation rate unemployment, higher unemployment is a means to an end of a lower inflation rate. gdp coming down is a means to an end of a lower inflation rate. and the funds rate is a means to an end of a lower inflation rate if you're getting that lower inflation rate over here, more than you forecasted, by the way, i'm not the only one to bring up this idea of a six-month annualized way of looking at it. fed chair lowell brainard talked about it as well her number was higher than the real number that came in, but it came in at 2.1%. it seemed to be achieving that
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goal at a lower funds rate than they themselves forecast so in a sense there is victory to be declared i think the thing that will stay powell's hand on being dovish at all is this concern that inflation came back a couple of times once it seemed like it was going down and this idea that they're going to need substantial evidence and to reach a funds rate that is what they call quote/unquote sufficiently restrictive. >> and it is interesting because we're now in a position where it would seem the burden of proof is starting to shift toward folks who say inflation is going to remain high and sticky. and you are starting to hear people say, look, there is a cost of living adjustment in social security coming through, that's going to create spending power. we still have a lot of, you know, housing market is actually even showing like it has refreshed demand here. and corporate borrowing costs are back to where they were, i don't know, five, six months ago. >> right so, the question is whether or not we can get back to a sort of normal level of activity
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and what the cause of inflation has been that's where the big debate that i'm watching is, mike. and there are those who say, and we had a couple of people along the last couple of days, we had a very angry professor the other day from duke who said, look, it is really a supply problem, we have brought back, we solved the supply problems, even again getting back to brainard, she kind of challenged powell's outlook on inflation saying you had to bring down the -- bring up the unemployment rate to bring down inflation brainard said, you know what, all these other things are maybe what pushed up the inflation rate once they come down you may not have a problem, you may not have to really go strong in terms of raising the unemployment rate. the idea we can get out of this, mike, without causing this kind of downturn, i think it is worth exploration. >> absolutely is sometimes you get lucky and we had lots of changes on how we think about what is required in terms of unemployment and inflation and growth in the past cycle, steve
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thank you very much. >> pleasure. coming up, lawmakers taking up a hearing today focused on waste, fraud and abuse of federal pandemic spending. we'll hear from the chair of the oversight committee on that they plan to do about it. and arkk invest ceo cathie wood tells us where she's planning to put money to work in 2023 her flagship fund up, but still down 48% over the past 52 weeks. and down almost 70% from the peak two years ago
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the market flash check out u.s. listed shares of baidu. in a new s.e.c. filing, black rock disclosing it increased its stake in the company to 150 million shares, representing 6.6% of baidu. and shares responding with a 7.5% gain this morning. speaking of pops, look at what's going on in peloton, which is up after reporting its quarterly results just now they had a loss of 98 cents, worse than estimates a loss of 64 cents revenue beat, though, and cash burned throw ed slow to $94 mil the most recent quarter. the company now expects to reach free cash flow break even by the end of this year peloton also generated more revenue from subscriptions in the quarter than it did from hardware sales could be one of the reasons for that nearly 7% gain we're seeing this morning >> up 60% the first month of the year so a lot of discarded, beaten up
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shorted stocks >> wow the house oversight committee planning to hold its first public hearing to investigate potential covid aid fraud. a new report by the government watchdog now identifying more than $5 billion that it says may have gone to firms using suspicious social security numbers, roughly $5 trillion in federal stimulus aid has been approved since the spring of 2020 with us is congressman james comer of kentucky, chair of the oversight and accountability committee. maybe this was to be expected. but obviously not good news. what have you seen and what do you think it really suggests here >> well, i think that $5 billion number is going to be very, very short. i think that what we're going to find out is we had massive fraud in the hundreds of billions of dollars throughout the pandemic spending remember, the name of covid congress spent record amounts of money. but what we're going to learn is unfortunately there were very few safeguards on this money to
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prevent fraud. we're going to see how susceptible we are to cyberfraud, from government agencies, especially the unemployment insurance agencies in all 50 states there were many cyberattacks there were lots of people that got ppp loans who weren't eligible and so much of this pandemic spending didn't go where it was intended for example, the department of education money was supposed to go to help make schools safer to prevent the spread of covid-19 many school districts didn't use it for that. hospitals got lots and lots of money that they didn't use where they were intended and this is unfortunately going to be the first hearing in congress to identify the waste and try to hold people accountable for wrongdoing. >> one thing i remember talking to treasury secretary mnuchin during this period was there was a real effort as you will remember to get the money out, and to get it out quickly. there was almost a view that there would be fraud, there would be waste and abuse in other things, and that was
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almost, i hate to say it, the cost of doing business, that if you wanted to actually get the money out, to as many americans as quickly as we did, and i think there is a lot of people at least from some of the early tranches that went out who thought that speed over everything else was the point, that that was the right way to do it. of course, now we're looking back and saying, it could be done better. everything could be done better, always, but how do you think about that >> well, i think you're right, unfortunately. i think that, you know what mnuchin talked about was the first round, the cares act then when biden became president we had, you know, two more stimulus bills and the inflation reduction act which only increased inflation, so the massive amount of spending over the last three years which spans two administrations is breathtaking. and what we're going to learn is a significant percentage of this money did nothing to help people who were suffering from covid,
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either from illnesses or from businesses being shut down and what you're going to learn is agencies like the small business administration, there were tools in their toolbox to prevent massive amounts of fraud but for whatever reason, they were never activated so we got to put guardrails in place in these government agencies, and we got to learn from the mistakes and history is not going to be kind when we go back and read about all the actions congress took to try to stimulate the economy as a result of covid. >> chairman, what penalties, what consequences are there going to be for the people who committed fraud and for the institutions you mentioned dollars misspent at schools and at hospitals, how are they going to be held accountable >> well, what we got one of the witnesses today will be the leader of the -- the secret service fraud division they had a little amount of
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success in clawing the money back that's our first priority, to see if there is any way to get some of this fraudulent money back in to the treasury. but secondly, we want to hold people accountable for wrongdoing and that's why we got both the inspector general going to be testifying today, and as well as the head of the secret service fraud division we're going to find out anything that congress can do now that we have a republican majority who is serious about making spending cuts, who is serious about trying to get government under control, government spending under control, to where the government can live within its means and i think we're going to learn today where we can begin, so this is going to be a long drawnout process unfortunately if this had been done two years ago, if we had had congressional oversight over the spending two years ago, i don't think we would have wasted as much money as we're going to learn has been wasted today. >> chairman what is your expectation in terms of being able to claw back money? in truth how much of this is
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investigation to actually go after the fraudsters, versus going after the system that allowed the fraudsters to do what they did? >> yeah. well, you know, you're talking about pennies on the dollar. what will be possible to claw back but one thing i don't think a lot of people realize is there is a significant amount of this money that was allocated and appropriated, but has never been spent. it is still sitting in different accounts that's a primary to claw money back, especially when we're talking about the debt ceiling coming up and republicans in congress are serious about trying to make spending cuts, when you can find there is hundreds of billions of dollarsa primary to start with to make the cuts easier. so, we're also going to try to identify fraudsters, there was a lot of cyberfraud with the various programs, unemployment insurance as well as ppp loan
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programs >> just before we let you go, did you meet with elon musk last week and anything you can tell us about that? >> yeah, we had a great meeting, met with elon musk for a little over an hour, along with speaker mccarthy and jim jordan. he's a great american. he's done a great service to every american who cares about free speech, whether you're a democrat or a republican, you should be concerned when the government steps in and tries to censor free speech i'll have a committee hering next week. we're going to bring in the first three employees with respect to twitter we're going to talk about what all -- what role the government played in suppressing the biden laptop story because a big part of our biden family influence peddling investigation involves the evidence on that laptop computer that computer is 100% legitimate but at the time you had government agencies and social media platforms that banned the story from the new york post saying it was russian
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disinformation when the fbi knew it was not russian disinformation this is very concerning to me it should be very concerning to every american that cares about free speech. and god bless elon musk for being transparent. >> chairman comblm comer, we apt it we hope you'll come on back after the hearing or before the hearing so we can discuss even more of it thank you. >> all right thank you. >> appreciate it coming up, arkk invest ceo cathie wood on some of her big ideas for 2023 and whether -- and where she's putting money to work now check out the futures this morning. pulling back a little bit, but there was a late rally yesterday at half a percent to the s&p s&p down really just 5 points. dow indicated lower by 100 we'll be right back. time for today's aflac trivia question. in 2006, google purchased youtube. how much was the deal?
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youtube. how much was the deal? the answer, $1.65 billion. >> welcome back to "squawk. we begin the celebration of black heritage month by looking at alternative investing, dozens of students from black colleges and universities are learning about private equity and private credit and more from the biggest firms on wall street frank holland has more good morning, frank. >> good morning to all of you guys the three of these large investment firms, they're joining forces to literally change the face of private equity, private credit, commercial real estate, much more all finance fellowship is introducing 100 students to these areas with only 2% black representation these fellows get paid experience, mentorship, and networking opportunities
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the firms say alt finance is building a pipeline to untap talent that can increase their profits. >> the more perspectives you have, both in your employee base and in the companies you look at, the more perspectives you have, the better the investor you are. so, the idea of being a more diverse company for us is a positive it is good for business. it is good for our investment decisions. >> we are a culture of finding that which is now well understood and increasingly that comes from having diverse points of view at the table. and diverse backgrounds and diverse i was ways of looking at things and delivering a diverse message to a diverse set of clients. >> so the market largely outpaced the s&p 500 since 2009. the compensation is also very lucrative, but these fellows say it is about both impact and income >> learning the tools necessary to be able to create
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generational wealth and an impact, a positive impact that will be felt on my family and community. >> the impact is what really drives me to want to be in this environment, and also create these relationships because overall, my main motto, what i live by is you live as you find. >> alt finance is providing $678,000 scholarship dollars to the fellows they're expected to do as much in 2023 as well. >> it is fascinating these firms, i know people who recruited for all these financial services firms and they would have a list of these are our target schools target schools are usually the top business schools and a handful of undergrads. the fact they're broadening it out is a big shift. >> they're broadening out and they were very transparent about the fact that they have a lot of self-interest. they believe this is untapped talent they think they can come in with different ideas, perhaps a different set of people, get invited to sit at different tables and in different rooms and i was surprised by this as
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well all three said they're hoping other firms will join them it is a $3 million a year commitment so they can broaden this out but the students aren't committed to go to just to one of these firms they can go somewhere else, but the idea is bring them into the world, and, of course, they want to get the cream of the crop they're saying they want the cream, but they're willing to train people, give people a lot of insight into the industry and let them take their own direction. >> how did this whole thing start? >> it started a conversation between tony ressler, and mark rowan, and also howard marks, just talking about what can we do after the killing of george floyd. they wanted to do something that had some impact. they could give money. but they were, like what can we do with our time and resources and networks this is what they came up with it is a substantial final commitment and a lot of their time i'm sure some of their clients would ask, what is our portfolio manager doing, i'm meeting with some fellows, there would be some questions, but they believe
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it is important for the country and for the industry >> important story. still to come, arkk invest ceo cathie wood, find out what names she's investing in now after the break. quick look at futures. we saw the nasdaq turn positive, up by 12 dow implied lower by 119 it's time for the ultimate sleep number event on the sleep number 360 smart bed. science proves quality sleep is vital to your mental, emotional, and physical health. the sleep number 360 smart bed. it's temperature balancing, so you stay cool. it senses your movements and automatically adjusts to help keep you both comfortable all night. our smart sleepers get 28 minutes more restful sleep per night. and now, save 50% on the sleep number 360 limited edition smart bed. plus 0% interest on select smart beds for 36 months. ends monday.
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welcome back to "squawk box. arkk posting its best month ever life is relative because we're going to talk about what's happened here. it finished up 27% in january. it has been a very rough two years for the etf, down 72%. joining us now first on cnbc is arkk invest ceo and cio cathie wood cathie good to see you it has been a heck of a month. it has been a heck of a two years, heck of a five years when talking about all of it. but also i know you have some new ideas about what is going to happen this year and maybe some of your best ones. but before we get to that, i'm curious, your broader context in terms of how you're thinking about the market, and how you're
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thinking about your own performance, both in the january period, we got the fed, the backdrop of the fed is part of that, also just the larger backdrop over the past couple of years. >> sure. i think what we have been through is a very big inflation and interest rate scare that hit long duration assets incredibly hard and including long-term bonds. last year the worst performance in the bond market since the 1700s, that's how bad this was, and, of course, that was going to really hurt our strategies. but we do believe and we have been saying for some time that the inflation is unwinding, we think the market is leading the fed, the bond market, i think we're down to 3.5% today on the ten-year treasury bond yield, the bond market is basically saying the fed is close to the end of this tightening move. and is also saying that
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inflation will surprise on the low side of expectations, which means when we look back that the past two years inflation issue, and interest rate issue has been a function of massive supply shocks to the system and i notice that even janet yellen, this week, said that she believes that inflation is probably going to surprise on the low side and stay there. and might even become a problem. larry summers, say thing, saying wait a minute, the economy is much weaker than i thought. >> so in terms of the language jay powell might use later today, you think it will be softer rather than a hawkish tone >> i have no idea. i don't know i've been surprised at how unanimously this fed has voted given how weak its own federal reserve bank districts are i don't know i do know that the market is
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leading the fed and i also know that innovation solves problems and we have a lot of problems now, including the fed being so tight and activity becoming so weak in so many areas. so, you know, we put out big ideas last night these are our big ideas 2023, very excited and the first one you see there is artificial intelligence, which, of course, chatgpt has finally caught the public's imagination. we have been working on artificial intelligence for a long time now. and i think some of the things we're seeing are just the beginning of the impact that artificial intelligence is going to have on every sector, every industry, every company. >> who do you think, though, is the biggest beneficiary or winner of that obviously tesla has been a big investment for you and ai is a huge part of what they're trying to do
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again, we had a big debate on this program and in the markets for a long time about whether they're a car company or a tech company. i know you're in the tech camp, but what do you say to those who say at least from the economics today it is a car company? >> well, i would say that it is just even its own gross margins structure would tell you there is something else going on here. it is gross margins are going up and it is a technology company from the point of view of battery technology it is at the leading edge there. artificial intelligence as you said, andrew, and i think the -- one of the most important things you ask who the winners are going to be, they're going to be those companies with proprietary data and large pools of high quality proprietary data and you'll see many of our stocks are in that category. >> let's talk about other big
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ideas. where are you in the world of crypto we've been talking about crypto for a long time. we had a conversation two years ago, talked about bitcoin going to $500,000. you still in the same place? >> yes, we are in fact we're a little higher than that in our base case for the year 2030. and in our bull case, much higher if you look at what has happened in the last year, actually sam bankman-fried didn't like bitcoin at all and he didn't like it because of its decentralization and transparency and what companies and went under, they were the highly centralized, nontransparent, opaque companies so ftx, celsius, 3ac, three arrows capital if you look at what happened to bitcoin, the network, and ethereum, the network, they really didn't skip a beat. all transactions were completed.
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all smart contracts opened and closed so, i think that starting with '08, '09, when bitcoin debuted, and even more so after the crypto fallout this past year, the collapse in many companies, this idea of transparency and decentralization is taking hold. and bitcoin and ethereum are the two best manifestations of that in the crypto world. >> ask you a different one, amazon robotics, that's on your list >> yeah. amazon is adding about a thousand robots a day. and we do believe that at robots, if i remember correctly, if you compare the number of robots amazon has to the number of employees, about a third. and we believe that by the year
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2030 amazon could have more robots than employees. so, we are just at the dawn of the robotics age, and i would say artificial intelligence and battery technology are all a part of that movement as well. and amazon, i believe, has 3200 robots per 10,000. i guess that's 10,000 employees, i guess that's closer to a third. if you look at manufacturing, in total, there are only a think 140 robots per 10,000 people that is going to change, thanks to breakthroughs in artificial intelligence, battery technology, the sensors we can now cover robots with, so that we can work with them safely so pretty excited about the robotics movement. and one of the reasons is going to happen, i think, more quickly than most believe now is if you look at the cost declines, which drive all of our models, the
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cost declines in industrial robots for every cumulative doubling in the number of robots produced, the cost declines are in the 50 to 60% range that's one of the highest learning curves or steepest learning curves that we are watching right now so, pretty exciting. >> cathie, if you could, would you invest in open ai or what are the best ai ideas out there right now? is it too early? do you think google would ever catch your attention more on that front or microsoft? what should the typical investor do are there any companies you have exposure to because you like what they're doing in ai >> well, most of the companies in our portfolio are there because of some data advantage i think that's where the secret sauce is going to be we have a lot of debates about the commoditization associated with artificial intelligence
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if you think of chatgpt, for example, what is it doing? it is scraping the history of the internet, the entire history, and answering questions based on that history. well, you know, we're seeing a lot of companies move in that direction. and i think that the key here is who has the proprietary data what we -- we just started a private public crossover fund. one of the companies in there is mosaic ml. and we find that one very interesting because it is actually speeding up an already very rapid transition into the artificial intelligence age. so we look for some picks and shovels like that. and it is a software company but i really think looking at companies' data and what kind of proprietary advantage exact sciences we just -- we just published our model and our
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report and you'll see what an advantage it has in terms of data on cancer, thanks to its molecular diagnostic testing franchise. and thanks to its distribution around the world so, again, have to look very carefully. i think there is going to be a lot of commoditization in this industry, in the whole artificial intelligence movement, and so you have to look -- you have to look at the data people say data is the new gold as they talk about the cloud and other movements in technology. i think that's ever more true now with artificial intelligence >> data is the new oil, i guess, is the other one we sometimes hear, cathie just to broaden out again, you mentioned the inflation and interest rate shocks that all the markets have gone through in the last year plus clearly hitting, you know, emerging growth, preprofit companies that you had owned and concentrated fashion much harder
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but your fund was up 250% a year into the peak. clearly there was a huge rush into those names is there anything since then in terms of how the market has shown its preferences in terms of how your portfolio performed that made you kind of revise your approach or think about companies in a different way and how you allocate capital >> well, i think what happened during that period is time horizons shrank to one quart er if not looking backwards we will never do that. we are focused on the future, on the next five years, and in our business, style drift is the kiss of death. we are going to -- our focus is solely on disruptive innovation, i think we're the only company in the investment world with this sole focus. all of our research and investing is centered on it. and if you look at our big ideas
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on ark invest what you'll see is that we expect that the market value of truly disruptive innovation is going to increase from $13 trillion globally to date so, less than roughly 10% of the global equity market, to $200 trillion by the year 2030. that's a 40% compound annual rate of return and the reason it is going to happen is the exponential growth opportunities that we describe and delineate in our big ideas report that 40% seems astonishingly high to most of us actually because we have spent the last 50 years in a linear growth world. but thanks to artificial intelligence, and the 14 different technologies around which we have centered our research, we believe that we are ready for primetime, for not
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only exponential growth, but as our chief future describes, accelerating growth rates. so we're as the world's time horizon shrank to one quarter, we stayed with our five-year investment time horizon and we're positioned for these super exponential growth trajectories. >> cathie, quick, before you go, you're a big investor in gbtc, the great scale of bitcoin fund, about 5% -- a little over actually your portfolio. i'm curious how you're thinking about that because as a big court date coming up, lawsuit, against the s.e.c. over this etf obviously it is trading far below its real -- arguably real value. what do you think is going to happen and how do you imagine that plays out >> yes we have that position is in arkw that's our next generation internet portfolio
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yes, huge discount there that will close at some point i have no idea how the lawsuit is going to play out i do think it is good that this discussion is taking place i think the s.e.c. has dragged its feet in terms of a bitcoin etf while approving a bitcoin futures etf. it just doesn't make any sense to us. so i think this discussion is going to be a very good one and the news around the trial is going to be very good for bitcoin generally as more and more people begin to understand bitcoin itself and gptc in particular. >> cathie, good to see you we appreciate you joining us this morning hope to see you again soon in person, no less. thanks. >> thank you coming up, a preview of tonight's earnings report from meta and a couple of programming notes for you. tomorrow on "squawk box," founder and cio, mentor, ray dalio joins the program at 7:30 a.m. eastern time.
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conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent. shares of snap plunging more than 15% this morning. earnings beat estimates but revenue fell short the company ed 375 million daily active users they didn't give a forecast for the coming year. the investor letter included a user forecast that was less than expected see the theme here, it is not just snap, other social media stocks dipping as well
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meta's off the lows down less than 1% now. the report after the closing bell today and we will preview that right after the break he onsqwkox "ua b."er the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free
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here with a look at what investors should expect when meta reports after the bell is michael nathanson, senior rrj analyst for svp moffett. it really depends on when you start the clock in terms of saying whether meta is up a lot or down a ton and what the psychology around it is. what are you expecting them to deliver numbers-wise today ask what are your clients really looking for? >> yeah, so great reference point. we've been positive throughout this whole downturn. we stuck with it at the bottom people are expecting a similar time of negative revenue quarter from meta in the fourth quarter and probably a weak guide, right? people are comfortable knowing that the fourth quarter ended slowly for advertising the first quarter is not an essential quarter either, but as you get through 2023, meta has a lot of opportunities to accelerate growth and we're seeing clients start to come back to meta a big change for them is taking
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the costs out they did in the fourth quarter the company felt like they were tone deaf to the market in the third quarter and came back with cost action. people are optimistic. they know the near-term is going to be choppy you get through the second quarter things should be better. that's why the stock is up >> is it mostly that it's going to get better because they're getting traction on engagement where is the improvement coming from or for that matter just about, you know, being more disciplined on costs and having more of the earnings flow through? >> on the revenue line there were two things that happened last year or a year and a half ago. one was the apple change with idfa that was a $10 billion headwind. the second one is the move to reels. they basically as you know changed format they moved to reels from video that was not very well monetized in the beginning it actually was a headwind, and
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you're about to see a turn i think you're going to hear a lot about how reels is going all the data looks like it's picking up steam it's still not well monetized. our belief is as they've done with story, they start integrating it better in their ad selling process you will see an acceleration it's reels and iffa headwind currency becomes more favorable, and then your point of cost action, rieght? so you know, it's very clear, and i think when the third quarter ended they're optimistic about their top line the market wasn't, but the company sounded like they believed that they were on the verge of a turn, which you can't say at snap, right this is six to nine months ahead of where snap could be, but we don't have a lot of faith in snap's management to turn this around. >> i was going to just get to that actually. you clearly see the market also potentially losing some patience that the model is just not delivering what many had hoped at this point. i mean, what levers are there to
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pull at snap >> there really are very few levers like their whole pitch now is that we're going to build a better targeting machine, right? we're going to compete on performance marketing and better targeting. you know, we've heard that from twitter all these years and twitter is never able to do it i think it's very hard to compete with google and meta own targeting. they don't have the scale. they're a very narrow platform, a and their big innovation was stories which was copied and now they want to copy tiktok, which is hard to do. they're really boxed in here i don't think they have the scale to compete on engineering talent or impressions or advertising monetization so we are pretty cautious in that one you know, in relation to meta. >> right, and of course they still continue to be on that treadmill with stock-based comp and it's hard to see the financials coming through. and of course $400 billion market cap for meta, it's in the teens for snap, so we'll see if
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they can rescue it michael, it's good to check in with you we'll maybe catch you after the meta numbers. >> kate stockton is going to join us. we need to talk to her about the markets. and ahead of friday's government da,at you don't want to miss that number. "squawk box" coming right back big hour ahead >> announcer: squawk picks is sponsored by wisdom tree, the modern alpha pioneer
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good morning, it is fed day, the u.s. central bank and wanted to slow its pace of rate increases. investors standing by for that decision ahead of it, we're going to get new jobs data. adp's january report coming up in 15 minutes. and president biden talking up infrastructure funding from his signature bill passed a year ago. we're going to speak live with transportation secretary pete buttigieg on the impact of more than a billion dollars in new funding. the final hour of "squawk box" begins right now ♪ good morning, and welcome back to "squawk box" right here on cnbc, we're live from the nasdaq market in times square, kelly evans in this morning, joe and becky are off today. we've got a lot to get through this next hour u.s. equity futures right now in the red. let's show you where we are.
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about 111 points off on the dow. we'll show you treasury yields as well. you're looking at the ten-year note sitting just at about -- i can't even see it because you guys have this over here, 3.486 and the two-year just sitting at 4.197, there's some cameras and other things in the way, a little hard to see nonetheless. >> we'll start this hour on the markets. mike's got more. he's made his way over to the plasma, what are you watching? >> yes, i'm the problem here i was the cause of all the moving of the furniture. what are we looking at is the s&p 500 for 13 months. that's just about when the market peaked for all time 13 months ago just about. and yesterday we got this very strong finish to a very upbeat month, 6%, 6.2% gain in the s&p 500 just in the month. what is interesting is it brings it up to another one of these fulcrum points right at the december highs we've broken for now this long-term down trend that dates back to the january 3rd, 2022 peak but the question is with the fed
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coming and all the other cross currents have we used up some of the good news? clearly soft landing hopes are getting into the market, and one way to take a look at how much maybe the economy has moderated in the direction the fed is looking for, take a look at the big payroll processor stocks over the last three years. paychecks, adp, right? we definitely have them flattened out, kind of basically go sideways for about a year they're a good deal off their highs, but clearly not falling apart. it's still somewhat a tight labor market it's not something where you would say the market is bracing for an immediate decline in the labor market, at least not by this measure take a look at the homebuilder stocks, really conspicuous how they've come back. we've had mortgage rates go down about a percentage point it seems like it reinvigorated some demand here this is a three-year chart this is well above pre-pandemic levels really the only level we got to above this were at the very overheated part of the housing
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market in 2021 so this is sort of saying perhaps the economy can absorb what rates have now gotten to. we'll see if the fed really explicitly wants to kind of check the market's optimism on that point or if we do have enough underlying strength and we get that immaculate disinflation. >> i don't know if we can show even a five-year chart that's shocking to me that we'd be -- it's one thing to say we've had a big rebound off the fall lows. to say we're now actually higher than we were before the pandemic, that's wild. >> it really is. you know, again, there could be some industry specific stuff going on right here. yesterday pulte made a 12-month high, i believe, so clearly they're not seeing the long-term n demand story go away whether it's just demographics or something else, this is telling -- maybe telling the fed that the economy can withstand what's been thrown at it so far.
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>> bill snead is smiling this morning. i know that much thank you, we appreciate it. widely followed stock picker cathie wood acknowledging last year was a tough one for her innovation focus strategy. she joined us in the last hour she called 2022 a big inflation and interest rate scare that she says hurt long duration assets particularly hard, and she stressed what the data has been saying that she says inflation is unwinding >> we think the market is leading the fed. the bond market, i think we're down to 3.5% today on the ten-year treasury bond yield the bond market is basically saying the fed is close to the end of this tightening move, and is also saying that inflation will surprise on the low side of the expectations >> and then on bitcoin, we talked to her about her base case for bitcoin by the year which she says 2030, she says is now above $500,000, and her bull
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case, she says, is quote, much higher so if you're invested in bitcoin, you should be -- >> and she said it was higher now when you asked her if she still held to 500 k, didn't she say it was now higher i thought? >> she said her base case was 500,000. >> got it. >> i want to go back because when i did interview her i want to say about two years ago on a stage at one of the salt conferences she was also at 500,000, but i think that she might have been at 500,000 in 2025 rather than o2030 i don't know i don't want to misspeak. >> check the video tape. check out shares of snap plunging after last night's fourth quarter numbers this is following a closely followed report on what it might indicate about meta's ad business snap beating profit estimates and barely missed on revenue internal guidance in the company pointed to worse than expected revenue and daily active users in the first quarter
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the sorkin family, at least the sorkin kids helping boost some of those numbers. >> do you think the analyst is right? you know, again, some of them have come out this morning and said they don't have as good of a return on ad spend for the clients. and that's the problem here. we heard from the news letter guy we spoke to and said no, they're going to bethe predominant social network for kids -- or not kids. >> the next gen. >> the question is whether the next gen becomes the next, next gen. do you start at snap and graduate to instagram or to something else or do you start at snap and stay with snap >> or more to the point. do the next, next, next gen think of snap the way snap kids think about facebook in other words, there's always a new one that's going to be more associated with your generation. and average user on snap is 20% of what facebook is. let's get back to the broader markets. as february begins, the s&p 500 is up 6% for the year. bitcoin up close to 40%.
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meanwhile, the yield on the ten-year is down 10%, if you want to calculate it that way. clearly a refreshing of animal spirit here's. joining us now with a look at the market technicals, katie stockton, founder and managing partner at fair lead strategies as well as a cnbc contributor. katie, good morning. >> good morning. so here we are on a fed day where the market again kind of gets up to a point where it's got some decisions to make in other words, whether this rebound rally really started back in october has further momentum behind it, can really break out of that down trend or if this is as far as it goes what's your technical work telling you at this point? >> it's definitely a pivotal week for the market in technical terms. we have the rally from january now lifting the s&p 500 into resistance you speak about the down trend line what i use is called the cloud model, and the cloud model shows resistance for this week of
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roughly 40, 50 s&p 500 is currently above that level, so if we see a weekly close so this friday a close above 4050 that would mark a short-term breakout per this cloud model and that would be an incremental positive it wouldn't necessarily mean that the down trend has fully reversed in fact, we'd need a bigger move for that we expect that bullish reversal to be proceeded by more improvement in our long-term indicators we just don't have it yet in terms of the monthly gauges that we track, things like the monthly mac d. those haven't turned to such a degree to suggest that that october low was the final low of this bear market cycle >> yeah, certainly still more to be proved if it's going to go that way katie, i wonder how the nasdaq or at least the mega cap growth part of the market looks right now. clearly leader on the way up leader on the way down it's been really a weight on the
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indexes. you've gotten some relief, and we're getting some of the fundamental flow with earnings this week as well. >> yeah, that relief has led to upside leadership from these mega caps during january and it is a welcomed balance, overbought conditions have returned for really all of the mega caps. there are resistance levels in line there are also down trends still very much intact there so while we don't have any decisive sell signals coming into these earnings reports, i think when you see the overbought reading ahead of them, it does make it harder essentially for them to see upside follow through. they're somewhat challenged here coming into resistance the leadership has been quit good that's affected market sentiment. it's affected sentiment in a way that is actually not kr constructive from a contrarian perspective. we watch the vix as an
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indication of transactional sentiment, and it's very gr depressed showing some compl complacency. we worry about that, breath has been widely noted as being very strong this is true eastb, and yet tho measures are overbought and haven't reversed course in our opinion. we're a little bit nervous art the reactions here we'll watch is and wait, not willing to snep tep in front of them as of yesterday's close with the january monthly data, we did see something interesting that's brand new, and it said demark signals so one of these countertrends that we track in ten-year treasury yields that would suggest this year is indeed an inflection year. we obviously don't think necessarily that we have that inflection already, and yet, i think that would be one indication that yields should
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actually be more range bound for several months, and that's a shift in our work, long-term momentum should start to neutralize based on that signal. >> interesting so if we do for whatever reason, whether it's the fed or just because we are somewhat overbought in the equity indexes, if we get a pullback, what would you be looking for to frame whether that's just kind of a normal routine, helpful pullback or something that compromises where this rally might end up >> you know, the worst-case scenario i think for the market would be a grind lower from here as opposed to something sharp. when you see sharp moves, they're usually counter trend, and that's why we're a little bit worried about the sharp nature of some of the up moves in the likes of bitcoin and other higher growth areas of the market those fast and furious rallies are usually counter trend, what we want to see is that slow grind higher if we saw the major indices roll over and start to grind lower, that would be worst case in our
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opinion. initial support for the s&p 500 is roughly 3880 now based on that same cloud model on the daily chart. that's sort after good breaking point and our opinion suggest ifs it breaks, then we'll go back to those october lows. >> all right, that's a little less than 5% pullback from here would be that support level. katie, thanks so much. talk to you soon coming up, a can't miss interview with transportation secr secretary pete buttigieg r we'll get adp's january jobs report when "squawk box" returns. don't go anywhere. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. >> announcer: this cnbc program is sponsored by baird. visit bairdbusiness.com. ected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.
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complete connectivity. one solution, for wherever business takes you. comcast business. powering possibilities. welcome back to "squawk box," futures pointing lower ahead of the opening bell. right now it is time for january's adp employment report, and steve liesman has the number and some of those future numbers are already moving steve. >> 106,000 adp payrolls saying the private sector job growth in the month of january went up by 106,000. that's a miss compared to the estimate the december number was revised up to 253 from 235 thous,000 the street was off this is a new number being calculated with new methodology as of august service sector up 109,000, but good sector down 3,000 we'll see what happened there in
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just a second. and there's the non-farm payroll estimate for friday, 187,000 that's private and government jobs looking by business, small business taking it on the chin, they're down 75,000. medium up 64 and large business resuming hiring up 128 thousand leisure, hospitality leads the way, up 95,000 financial activities despite layoffs announced on wall street up 30. manufacturing despite several indicators being negative, up 23,000 there's construction down 24,000, train transportation and utilities also down 41,000 as for median payroll, unchanged for job stayers, and higher for job changers, up 15.4% two caveats, the first is adp saying in its report that a lot of weather was around the country so you saw some declines in the pacific northwest, for example, and elsewhere in the country from potentially wea
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weather-related. this is a new series that we've only gotten since august and it's been up and down in terms of its core relation with the bls, and with the bls data these days who knows who's got it right, kelly. >> yeah, and houw much do we dra from this into the friday report ask the rest of it stick there for a closer look at the data let's bring in nella richardson, a chief economist at adp what jumps out to you from this headline >> first of all, steve's done a great job breaking down the numbers. i'll start with what we think. we blame it on the weather, kelly. this was a reference week, and one of the similar factors between the ner and the bls as we look at the same reference week that includes the 12th day of the month on that particular week we saw flooding in california, ice storms in the east coast and in the midwest, and so basically a lot of the jobs that are done outside, those sectors saw weakness so we saw it in construction
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natural resources, we saw it in trade and transportation, and there's where the weather effect is showing up. when we look at the broader month, hiring sows strength. in fact, we're seeing a pattern that mirrors last december and november so i wouldn't get caught up in this weather story of the reference week the broader month shows a sound trend, and if you need evidence of that, look at that leisure and hospitality number that has been the stalwart of the jobs report for the better part of a year, and it continues to be strong, even when there was extreme weather. >> although, steve leisure and hospitality is often a lower earning part of the labor market as well. you have to wonder if that will keep bringing down median wage gains. >> i think it's been going the other way, and she also did a great job breaking down her numbers. right back at you. so you have had, kelly, uncharacteristically some strong
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wage gains i'm going to toss this to nella because she has data down there. in general we have had strong wage gains at the bottom of the pay scale throughout this jobs recovery as businesses have had to pay up to get people to go to work, and i didn't look at the breakdown of the wage data, maybe nella has that. >> i do. i do it's a great thing to point out. look, most of the jobs that were lost in that terrible pandemic six-week period when the u.s. economy lost 20 million jobs, most of those jobs were low paying service jobs, and it was very difficult to get people back into those jobs so what we've seen is double-digit wage gains for several months now that are starting to slow in leisure and hospitality but are still high and so that 7.3%, that represents sectors that moved very little except -- and this is interesting to note -- information technology it was the only sector that we saw a sizable dip in january, so it ties into what we're hearing
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from tech about a slowdown in hiring but overall wages have gone up a lot, especially at the low paid part of the distribution, but they're starting to steady and sideline at this higher rate, in this case 7.3% for workers who have kept the same job for the better part of a year. >> kelly, we had our cfo council meeting yesterday and we're starting to hear from these folks who are running companies that the edge is off the hiring panic i guess if you want to say that they have to offer a little bit less it seems like we don't know this for sure, and it may be early days to call it, kelly if you could imagine you have demand and supply on one side and you need a new equilibrium rate of pay in order to have these two things meet, it feels like we're getting a little bit closer and maybe the neutral or the unchanged month to month change in wage growth in the adp
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report, which is still high by the way, but perhaps we're getting closer to that point which is the one that paulo keeps emphasizing for getting demand of labor and supply of labor back into sync, and that's requ going to come at a price and maybe what nela's saying you have this edging off of some of the wage cases at the end of the lower sector. >> of our guests who have said if we could stop the movie here it might end okay, right the labor market is still strong, everything steve is talking about but you have to wonder where we'll be in six months' time if the labor market continues to slow. >> it depends on wages early on people ask me what's more important inflation or labor, and you can see that wages is the connecting line through both unless wages moderate to something that is more in line with i'll say under 3%, hopefully 2% target inflation, we're not going to get that pretty picture and that happy
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ending that hollywood ending of that movie so i think the path, the through line is still wages and they're still too high because of labor shortages in a still tight labor market the fed has to be thinking about that going into today's decision. >> all right, nela and steve, thank you both we appreciate it dow's still lower about 118 points >> okay. coming up, we are going to hear from gsk's ceo straight off fourth quarter results and our interview with transportation secretary pete buttigieg on the w frtrti dlongraonepyi neinasucture funds stay tuned you're watching "squawk" and this is cnbc science proves quality sleep is vital to your mental, emotional, and physical health. and we know 80% of couples sleep too hot or too cold. introducing the new sleep number climate360 smart bed.
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welcome back to "squawk box. futures have been mostly under water, the mnasdaq briefly turne higher. >> nobody cares, don't bury the lead. >> market selling off on tom brady's retirement >> here we go, here we go, that's what people want to talk about this morning. >> it makes you feel very different about america. >> right >> do you think the futures are related? >> probably not, although maybe they could be reacted to that as much as the adp numbers. it's modest moves. yes, he did say he's, again, going to retire. >> he's retiring. >> it was in play, there were a couple of teams people thought he might go. people also say there's a broadcasting career dangling in front of him he did tweet a video saying he's
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retiring for good. he's also probably watched these much younger quarterbacks get completely taken out over the last couple of weeks in the playoffs too >> what a terrible year then, you know, the marriage, the career, the whole thing. >> i mean, i think there's some offsets that he can lean back on. >> financially or? >> he's got, you know, the family, health, and financially. he's 45 years old, you know. >> it's an amazing career. i just wonder whether he should have done this, you know, last summer >> well, it's not unique to have one of the greats go out with a whimper, let's put it that way joe montana finished his career in kansas city. >> people really struggle. they really struggle do you think this will really, really, really be it this time >> we'll see free agency is ahead of us, you know, after the super bowl. >> he could take up baseball. >> there you go. >> he used to play baseball. he was a catcher as a matter of fact drug giant gsk out with fourth quarter results this morning,
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the stock, let's see how it's reacting so far. up about a half a percent. meg ter rel joins us with a special guest. >> emma walmsley joins us, it looked like a beat in the fourth quarter, slightly ahead of expectations for the year ahead. tell us about the drivers this year for gsk. >> well, thanks, megan, it's great to deliver this landmark year for gsk, a successful demerger and delivery to a commitment on operating performance. operating profit or indeed eps, we now have ten products with more than a billion pounds sales, and shingles alone reached a record breaking year with 3 billion pounds with plenty of room for growth. we're facing into 2023 with a lot of optimism, not least because of the progress in our pipeline two-thirds of the business now in vaccines and specialty meds, a very important shift in the
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profile of a newly focused gsk, lots of excitement ahead for our new rsv vaccine, continuing pioneering, innovation, and long-acting hiv, and still building on that infectious diseases excitement for new first in class medicines to treat he been te -- hepatitis b or next generation antibiotics looking into our 26 commitments with a lot of confidence and looking forward to updating on our progress for growth through the decade and beyond. >> i want to ask you about shing riks, your shingles vaccine, in the year behind us, how do you think demand looks going forward for that vaccine and other vaccines as we come out of the covid pandemic, people might have been catching up and getting their shots. do you expect the high interest in that vaccine and others to continue >> well, absolutely. i mean, we've still only penetrated 30% of shingrix in
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the u.s. market. one in three of us get shingles. we also know you're more likely to contract shingles if you've actually had covid, and of course we're helped by the new ira, which removes the copay in adult vaccination. that's really important because we know it's been a barrier for people to get vaccinated to date and it's important not just for shingrix but for our emerging portfolio of adult vaccination whether that's a new first rsv vaccines that are coming through or our portfolio in pneumococcal vaccines or next generation mrna that we'll be looking forward to later in the decade. and remember, half of our growth in the last year on shingrix was outside the u.s., lots of room for growth still within the u.s., but plenty of room internationally too. >> well, let's talk about rsv. you just mentioned it. this of course another horrible
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respiratory virus that was affecting us over the winter here along with flu and covid. you guys are one of the front runners in the rsv vaccine race. we just saw good data from moderna, pfizer has good data. this is shaping up to be a tight race how do you see it playing out? >> first of all, more competition is definitely good for patients and this is a market that, you know, manufacturers have been working for decades to bring innovation in we were first out with data, but there are a billion over 60s in the world, and in the u.s. alone, you've got 180,000 hospitalizations every single year and tragically 15,000 deaths there's a lot more awareness in general, not only around adult vaccination but rsv in particular, and you know, more players is definitely going to help us to drive this majorket we're very comfortable in our
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candidate. we have 94% efficacy for the people that matter, that's particularly the more vulnerable, those who represent over 90% of the hospitalizations those with comorbidities or the older cohorts. we also importantly have co-administration data that means you can both safely but protecting efficacy have your flu and your rsv shot at the same time, and then very importantly before the meetings in the summer with the reg regulators we're also going to have two-year data coming through. this is something we think a lot of people are more thoughtful about as they've lived through covid. of course we have a unique add voe vent technology in our candidate. we're looking forward to being able to ship this important vaccine to americans for the next winter season and this being a key contributor to our growth for the years ahead >> absolutely. americans and everybody paying a lot more attention to vaccines now after what we've all been through with covid emma, thanks so much for being with us. >> great to see you, thank you. >> mike, sending it back to you. >> thanks so much. transportation secretary pete buttigieg coming up on
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infrastructure, nationwide air travel issues this winter and more. and a programming note, friday on "squawk box," joe and becky have a big lineup from the at&t pro am in pebble beach including the ceos of at&t, waste management, and piper sandler's jimmy dunne. stay tuned, we'll be right back. t the next generation in global secure networking from comcast business, with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want... your team, ours or a mix of both... with the nation's largest ip converged network, from the most innovative company. bring on today with comcast business. powering possibilities™.
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welcome back to "squawk box," president biden spotlighting more than a billion dollars in public works funding for projects across the country. these coming from the big infrastructure law signed a little more than a year ago yesterday. biden was in new york to talk up close to $300 million in funding for a new tunnel under the hudson river joinings r us right now to talk about this and much more, transportation secretary pete buttigieg. mr. secretary, it's great to see you. you guys have been on a bit of -- i don't know, can you kcal this like a tour of winning, right? that's sort of what the -- i think is being said. >> we'll go with that. we're celebrating good news in a lot of places. >> comma, but, and this is where i was going with this. a lot of people are looking at the infrastructure package and saying a lot of good things, but one of the things that came out this morning that i wanted to ask you directly about is that the cost of all this is actually going to be much higher,
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possibly four times as high as originally anticipated >> i'm not sure what you mean by all this, but yeah, one of the things we're dealing with in any individual infrastructure project is the upward pressure on prices, right just as we've been seeing that throughout the economy and even as inflation is beginning to cool generally at a macro level, you got to look at all of the different things that could bottleneck a construction project, that could add to its expense, and it's one of the reasons why in addition to the kind of regular machinery of pushing grant money out to state departments of transportation, out to cities to do their work one thing we're really rei reinforcing here at the u.s. d.o.t. is the capacity to help them deliver the projects on time, on task, and on budget i mean, the truth is going back to antiquantiquity, there has a been a tendency, especially on the big projects, the mega projects what i call the
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cathedrals of our infrastructure for them to take years longer and cost much, much more than they were supposed to, something we're very conscious right now of as we begin to get into the implementation and execution phase of this bill. >> let me ask you about this, and this is in "axios" this morning, this is about the inflation reduction act and specifically about evs and all the tax incentives and tax credits that have been built in. there is now an estimate that says it's literally -- and this is not inflation it's four times the cost because of the number of folks that are going to benefit from it, and they're taking advantage of it the good news is they're taking advantage of it. the bad news is the math is going to be a lot more expensive, which raises the question of actually whether the incentives needed to be as high as they are. >> well, we know that there's a shift toward electric vehicles that would probably have happened with or without us, but there are three things that would not have happened on their own. we have to shape with policy one is that electric revolution going to be made in america, and
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that's why these incentives were shaped in a way that encourages u.s.-based manufacturing production of these cars it's in line with the president's extraordinary record of creating a 750,000 plus manufacturing jobs in the u.s. and as a child of the industrial midwest, growing up in what used to be a company town for the studebaker auto manufacturing company in south bend, indiana, it's certainly something that means a lot to me. one, making sure it's made in america. two, making sure it happens quickly enough to help us meet our climate goals. you know, you want to talk about things that are expensive, the destruction of lives and property by allowing the any outcome to happen, even just a minute later than it should have in terms of a climate win is enormous and third, making sure it's accessible and available to everyone like any early technology, you know, the early adopters of electric vehicles were people with a lot of means, a lot of resources. this is something that needs to get quickly main streamed, especially when you consider
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that the americans who stand the most to benefit from having an ev is lower income americans paying a higher share of their family budget on gas prices. >> given the trends that you see at the top and how quickly people are taking this up, are we going to look back two, three, four years from now and say you know what, we didn't need to provide those incentives they were going to happen anyway or maybe the incentives were too rj. >> you look at tesla -- a billion bucks in a year. >> yeah, so like if we didn't care whether the ev revolution was going to be led by china, if we didn't care whether or not, you know, u.s. manufacturers with high labor standards were going to be at the cutting edge, we could have not bothered with the incentives if we didn't care about the pace of it and if we said, look, these will happen sooner or later, if these climate wins come a few years later and that
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warming happens just a little quicker and a few more people die because of that, that's why we have policy interventions. >> we had a segment on the last hour where we were talking about the fraud and abuse and waste that came from some of the ppp loans and the like, and i remember a period of time where people said, you know what, we just got to get the money out as quickly as humanly possible to as many american citizens as humanly possible, and you know what, there might be some lost along the way, and that's just fg going to be the cost of doing business and today of course there's finger pointing several years later. what i'm suggesting or at least raising the question with you is here we are at a moment -- and i don't disagree with you. you know, i think we all want to move the ev revolution along as fast as we humanly can it's also possible people will finger point and say were these incentives necessary or were the incentives designed as perfectly as they could be >> yeah, look, remember, i cut my teeth as a mayor, and one
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thing that mayors think a lot about, governors think a lot about is these economic development packages where you offer to do the utility work or something to prepare a site, maybe a tax break because you really want to land that big factory or get that big plo ir to -- employer to come over. one question you ask yourself, by definition, the first penny of incentive more than what was required to make something happen, by definition it is wasted, or at least it's captured from the taxpayer by the beneficiary of that incentive in a way that doesn't meet your policy goal. and you know, even the best due diligence in the world can't pinpoint where that first penny begins i think one thing you did see of course especially in those early days of covid response was the country very much on an emergency footing, and policymakers understanding that this might not be the kind of, you know, policy design that if you had ten years to think it up would be perfect, but we had to save the economy i think in this case, it is
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different. we still have a sense of urgency. we still have, obviously, a clock ticking in terms of climate, in terms of the economic race with our global competitors, but i also think we have had the space to design these kinds of incentives. one other thing i think is really important to point out, especially on the charging piece, we have a ton of flexibility in terms of the states leading the way on their individual charging plans, precisely because nobody can say at the outset before you even go in what the optimal subsidy is to make sure a charging network works. some of them are going to focus more on the capital. some of them are going to focus more on o&m. the policy is designed to see what works and adjust fire as we go. >> related to this, i'm curious, i don't know if you saw this news this morning, it's unrelated to you personally. it's something i imagine you might have a view on, which is bp, the oil company, which has tried to be more about clean energy in recent years the ceo recently saying, you know what? we're going to actually change
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str strategy we might have gone too far on the esg side of things we need to kind of pull it back. i'm curious what you think of that, and i think we're starting to see that across the board given that so much of what the administration is trying to do is at odds with it. >> look, i think a lot of these companies are deciding what are they fundamentally, are they f fundamentally energy companies or petroleum companies the way you answer that question drives their business strategies what i know in terms of our national strategy is that we've got an economy that needs to be powered in a way that is effective and efficient and affordable for americans and we also have a very clear and present climate threat that requires us to prepare for the next few years in a very different way than how we did the last 100 i've had this on my mind because of the infrastructure work we're doing. you know, announcing tunnels and bridges we're working on that are literally 100 plus years
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old, and the mentality has to shift. you know, it's obviously not my place as transportation secretary to organize how those companies make those choices, but as a policy matter, we're going to keep making sure that we have the right kind of diligent -- >> related to those choices for oil companies specifically because the other thing, the administration, the white house has been very vocal about is their frustration with oil companies pursuing buybacks and dividends at a time when there have been record profits in europe there have been windfall taxes the question here is is this all theater here in the united states is there meaningful -- is there something more meaningful happening between sort of finger pointing on both sides >> as you know, the president, for example, has called for use it or lose it policies because you have seen a lot of these energy companies basically sitting on capacity. the ability to use more of these leases and permits that they have they're not doing it because of course when prices are high,
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including when prices are high because production could be higher, they're doing perfectly fine that's exactly why the president has taken steps to, first of all, be clear with the american people about how we got here, and also to use the policy tools we do have, whether it's ethanol flexibility, the petroleum reserve, whatever it takes to get some relief for americans at the pump and obviously we've seen a lot of relief compared to the peak of where gas prices were but still a lot of pain at the pump long-term, we're looking at profound changes to how we energize this country. one pattern that we're definitely seeing, whether you're talking about the energy sector or the transportation sector, is you've got choice ths that have been made in board rooms that are leading to not just reasonable profit or impressive profits but spectacular profits being made at the very same time that americans are struggling or suffering because of some of the consequences of under investment
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and then you've got some people here in washington trying to blame the government, and you know, that's a pattern that's at least as old as i've been alive, but we're going to keep working to actually make sure people are better off. >> let's pivot the conversation from the ground to the skies talk about criticism, there's been criticism both of the faa, which obviously is in your world as well as airlines like southwest and i'm just sort of -- i'm baffled as to where we are because i know we've had these conversations now for many months, probably the past year about problems in the skies, and yet we have not resolved them, and there is a lot of frustration. i know you've talked about holding the airlines accountable and the faa accountable, what are you actually doing at this point? >> well, our focus is getting results for consumers, so, for example, with the frustrations we've seen over last year with cancellations and delays, we took a lot of steps over the summer that won more benefits for passengers in terms of enforceable requirements on getting, you know, fetie gettinr expenses covered, getting a
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voucher for a meal or hotel when you get stuck, things that came in handy, by the way, during the southwest debacle. until we got those customer service agreements that are enforceable by our department, we won that progress over the summer inch by inch. until we had that, there was really no ability to enforce on those things we're looking at other steps that we can take including rules that are going to basically toughen and strengthen that, since we've already made a lot of updates basically finding new ways to use our existing authorities to take care of passengers but of course we're going to continue doing everything we can includinging following up on al the complaints about southwest. >> right, what else can you do within your own purview, and what kind of potential legislation -- can you imagine legislation, we were talking to one of the ceos of one of the airlines this week about the bill of rights that exists, for example, in europe and whether that is a path to pursue or not pursue as you might imagine that the airlines don't like that. >> they don't, but we've got to
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look a ways to continue making for a better passenger experience and so i think everything has to be on the table. some things we can do with the authorities that we have we're pursuing those aggressively with a small but mighty team. we have about 15 lawyers and 15 analysts in our consumer protection shop doing everything from rule making and enforcement for passengers with disabilities to following up on thousands of complaints about southwest airlines to preparing regulations on ancillary fees. but i think this sis also a good time for that conversation to happen in congress we've got faa reauthorization coming up. aviation is going to be on everybody's mind on capitol hill, and look, we've had a business model that has seen more and more consolidation, more and more, you know, for lack of a better of term, nickel and dimeing. if this is the direction that airlines are going to continue moving in, we've got to make sure the backstop getting tougher and tougher. last year we set an all time
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record for civil penalties assessed against airlines for violations, what we'd rather see of course is a high standard of service in the first place so people don't need to come to us and complain and we don't need to issue those fines we're going to do it if that's what it takes. i think both on our end and on the legislative side, you're going to see more proposals and more steps that i think, by the way, are perfectly consistent with airlines doing well as businesses, but not on the backs of the miserable passenger experience. >> secretary pete buttigieg, we appreciate you joining us this morning. look forward to talking to you again very, very soon, thanks. >> same here good to see you. coming up, jim cramer's first take on the trading day ead. ay tuned, you're watching "squawk box" on cnbc why are 93% of sleep number sleepers very satisfied with their bed? maybe it's because you can gently raise your partner's head to help relieve snoring.
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what if you were a major transit system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm to build a security architecture to keep your data, network, and applications protected. now you can tackle threats so they don't bring you to a grinding halt. and everyone's going places, including you. let's create cybersecurity that keeps your business on track. ibm. let's create new york stock exchange, jim cramer joins us now. what do you think of those adp numbers, jim >> well, i think that's once again what we really need to see is employment cool so that wage
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inflation goes down, which is what they're principally looking at still gives them room because they're trying to stamp it out quarter point and then maybe another quarter point. these people who think that by the end of the year, they'll be cutting, i think that they're just hoping, but i do like things that i see. those who think that there's no inflation, i think, are otherworldly, and fictional in quality. >> what do you think we should take away from the snap earnings how much is that, do you think, s.n.a.p. itself? obviously, there's the macro trends against just marketing spend, the big brand campaigns and the like, but what's your takeaway there and how it's going to affect everybody else >> last time, i felt there wouldn't be a good readthrough and wouldn't be a good predictor for facebook and google, and i was wrong. it turned out to be a very good
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predictor. snap has lost scale, but you know what? what was amazing was the bad readthrough to meta and google didn't even matter it's just that the advertising's weak, and i'm not going to make the same mistake and be really bullish on those meta's had a giant move. i owned these for the trust forever. alphabet's doing nothing i don't like alphabet on the justice department case either i'm very concerned about alphabet and what they have to say, given the fact that they're completely opaque and they say whatever they want, and i'm tired of it. i'm tired of them just being arrogant and saying, listen, we're great, you're not. when it comes to meta, i can't believe i have to try to find out where mark zuckerberg is working, that there could be such a one-man team. is there kryptonite in the metaverse? how is reels really doing? both these two companies, they got away with this for years because we love them
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but now they're in the real world, and they act like they're berkshire hathaway, but they ain't no berkshire hathaway. i'm tired of them. tremendous ennui they're undervalued, they don't seem to care take it or leave it. fortunately, the businesses are worth a lot. unfortunately, advertising is really horrendous for everybody, but they're not going to say that, you know why because they're better than you and me we don't have to -- you know they're like private companies we're fans, and we want to ask the coach something, and they say, well, you're fans take a hike. that's where we are as shareholders and it's unfortunate. >> the gloves have already come off and it's only 8:54 we're going to see you at 9:00 a.m >> people think there's no inflation. they're fictional. >> on "squawk on the street. >> i'm tired of fiction. >> this is just a warm-up act for jim. we'll see him in just a couple minutes. see you in a bit "squawk" coming right back
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welcome back joining us now on the market as we get ready to wrap up the hour is the ceo of ig north america it's been a while, jj. good to see you. >> great to see you. >> there's a huge debate we're all having right now is this rally a head fake or not? how much is the fed's decision today going to feed into that? >> well, you know, it's interesting. when i look at our clients' activity, two things give me a
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real real note of caution, the first one being tesla, which we talked about before, and the fact it's a real barometer of retail confidence two days before their earnings and a couple days after, we saw a lot of bullish positions both in the equity and call buys. 70% of those peoplewho opened positions have closed them i combined that with what i have seen -- what i saw yesterday in the fact that people buying puts in qqq, so, for those not as familiar with options, again, you buy puts, hoping that the market will go down and you can sell them for a higher price, but in the qqqs, reflecting the nasdaq 100, obviously, we saw almost three times as many people buying puts as we see on a normal day i think that's reflecting exactly the conundrum you guys have been discussing all morning. is chairman powell going to continue with his 5% talk after, you know, we're at a 99.7%
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probability of a 25-basis-point hike, so after that raise, is he going to continue with the 5% talk, or is the market, if you look at the probabilities, is pricing in one more raise and then sort of slows down? so, there's going to be a, i think, perhaps, an upset in the market because of that and it's very interesting to me that retail traders are already going towards that, because they see, perhaps, an upset in there after he speaks. >> so, you think the fed will win this round >> you know, the old wall street expression, never bet against the fed. they tend to have a lot of tools and money at their disposal, and even if you think, you know, if you think they're irrational, they can stay irrational longer than you can stay liquid, so it's really difficult to bet against them >> jj, you have to leave it there. thank you so much for popping in today. we appreciate it >> of course let's take a final check on the markets this morning, show you where things stand we are still in the red, and we'll see what happens at 2:30 when we hear from jay powell
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later today. dow off about 183 points, the nasdaq down about 18, 19 points, the s&p 500 off about 15 points. show you the ten-year real quick if we could. you're going to look right there at 3.464%, a big thank you to both of you for hanging out all morning. i know it's early. it's an early thing to do. >> i don't know how you do it. >> i'll see you tomorrow >> we'll see you all tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber, live at the post nine new york stock exchange got a ceo hat trick this hour, amd, peloton, all on their quarterly results. adp comes in light at 106,000, less than half the prior month, and euro zone inflation did fall our road
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