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 map begins with

decision day for the fed will we see the smallest rate hike since last year amd is getting a lift after beating analyst expectations ceo lisa su is going to join us just a few moments from now. a different story for snap, amidst the digital ad slowdown the shares, they're going to be down sharply after the company warned it expects significant headwinds to persist throughout the current quarter. let's begin with the fed as investors look ahead to that decision this afternoon. jim, wegot adp under our belt, eci yesterday. what do you think this means to them >> i think that they like the direction. i think they know, first you have to have hiring cool, then you have to have not wage slowing but actual wage reduction, and then you have pressure on everyone who's raised prices like we saw yesterday with whole foods, story that was in the dow jones in the "wall street journal," and then once you begin to get that, you get momentum against inflation, so we're at the point

of inflection, not the wopoint f win, where the fed can say, okay, listen, now we have to be a little bit slower. the runway is coming we don't want to screw it up we don't want to have to foam the runway quarter point, quarter point, wait and see >> all of which the market seems to have expected and was reflected in that 10% jump in the nasdaq comp over the last month? >> i also think there are people, including the people who are buying the highest beta, i know some people think high beta is right, highest beta stocks, who genuinely believe the fed is going to start cutting by year-end, and that's the gun that sees around the corner, and i have never seen that >> those who have a less constructive view on the equity markets believe differently, and they see us going to perhaps as high as 5% or more on the terminal rate and staying there for some period of time, which they say will not bring earnings

nirvana nor significant growth >> well, i think that the main thing that they're missing is the long-term rates haven't even gone up, so, i mean, you have quality homes reporting its best quarter. carl, i think what the bears are missing is that the dollar peaked in the fall, and interest rates peaked in the fall, and that's -- that makes it so there's a huge number of stocks that go up, but now, a lot of the flotsam and jetsam went up in the month of january, and that's worrisome to me those have to -- the companies that don't have any earnings and that are laying off people furiously, a lot of the tech companies, i don't want to own them, and then a lot of the junk i mean, we had cathie wood on today and she's a respected analyst, respected stock picker, but i don't respect anything that she's picked in the last year, because her perspective is just that we're -- we are in a deflationary environment now, that's just like looking at a painting upside down could be a rothko and you can't tell the difference. it's probably worth more upside

down you know >> who knows >> but if you put the rembrandt upside down, it's pretty realistic. >> people know it's upside down. >> cathie, interesting on "squawk" this morning doubling down on the long-term target for some cryptocurrencies. >> that was funny. i laughed. in the same way i laugh at project bernanke and project perot that google dreamed up in order to confuse the customers they're literally confusing. i'll see you 500,000 and raise you 500,000 but like it's real money. it's not paper money and you have people listening. and they do actions that are reckless because they don't understand that you don't -- when i was in the sea of galilee and walked on water, it was a pretty good time i'm trying to find something

outlandish that somebody has accomplished >> jim continues to refer to poirot and bernanke, and i want to explain what they are they are two of the efforts that the doj said alphabet made to basically control both the ad exchange and the ad market, the publisher side and both sides. it's part of the complaint that the doj has filed against alphabet, a story that we'll continue to follow that you're deep in on that i finally started to read the complaint, but that's what jim -- >> did you say page 785? >> that's what jim is referring to every time he says project bernanke >> project bernanke, we've heard about before project poirot i forgot was hercule poirot, agatha christie character. >> do you think -- these things don't seem to have a real impact on a stock over a short-term period >> this will be different. and it will be different because

jonathan kanter, who's a real lawyer, who worked at paul weiss, which is my firm for 35 years, has a solution, basically, which is that you have to choose -- this is my extrapolation -- you have to choose google can be on the buy side or the sell side, but they can't be both google can't be goldman-sachs and own the new york stock exchange it's got to dwivest one. the difference between now and then -- i know we're off track on this -- they already looked at this once and it was fine that's not the case at all what they're saying is, since they approved these acquisitions, google has consolidated and taken just a gigantic part of the market. it's not like what it was ten years ago, and david, you studied exxon and you studied rockefeller. when they started -- when rockefeller decided he wanted 100% of the oil market, he started at 30% >> all true. >> by the time he got to 100%, well, that's like google

>> and i will say, in reading it, there's a fair level of complexity in the ad market, one would not have thought that should be that, but with the header stuff and all -- i mean, just trying to understand it takes a while. i didn't want to divert too much, but now at least our viewers know when you keep referring to bernanke and poirot, what you're talking about. speaking of the ad market, it may be worth talking about snap >> cpm is down nine. they do guide below on q1 daus ubs cuts to neutral, jim >> that was a terrible conference call, terrible execution, terrible business model, terrible numbers. they're like, i'm going to pull it here. here's what people want, the readthrough. when they did their miserable, horrible, really bad quarter last time, meta didn't do much in sympathy, but it was down 1%, but then it fell 24% when it reported the next week obviously, they're reporting now. alphabet was up october 21st,

1%, but then fell 9.1% the next week so, you should have listened to snap in those last few times now, snap is so ill-fated and ill-advised in the way that they're choosing to say, it's just direct response, everything will come back fine, that you do feel, david, some degree of -- that they're going to stay in business there's just -- i'm taking that off the table. >> you are >> i'm taking viability off the table. they may lose money. i'm taking peloton, by the way >> peloton, we're going to talk to barry mccarthy later. says he's done with madehead cot reductions >> well, 9,000 to 4,000. people who know barry mccarthy from when he was at netflix and when he was at spotify, he never says something unless he means it he never says, look, we're done, it's going to be good, the subscription revenue is better, the gross margin is better if you take out one one-time thing versus suppliers, the free cash flow is there barry mccarthy is doing it again. he is doing it again

it's incredible that he's pulling this off this is -- those who are betting against peloton, you're betting against this man that's a mistake >> when you look at that -- obviously, last couple days, net app, paypal, splunk, impossible foods, a lot of layoffs, but do you think companies have been surgical and are nearing the end of that? >> morgan stanley's got a layoff watch, and i think that most of them are just not deep enough. they're just not and you can add upstart today, 20%. splunk, 4% david, these companies,if business doesn't pick up, a lot of these companies are going to have to do a second layoff >> another round >> what do you think of that >> i think it's certainly possible that that will happen in fact, i think a lot of people expect it will listen, snap is not going to grow this year at all. >> that's what i -- >> zero. i'm looking at a jeffries note here we assume zero percent growth. >> it's not a growth stock >> no, it would not.

>> reminutesds me of teldar. >> speaking of which, we're we'll talk about international paper, for example, yesterday. >> and no one cares. >> six-month high. some of these industrial names, jim, they're belying the idea we're not going to grow. >> these companies, they fired so many people you know, little bit of up and they inflect >> after the break, as we said earlier, do not miss amd lisa su will be with us, stock rising after beating on earnings and revenue. and we'll get to mondoleze and match and otis some tesla news as well. don't go anywhere.

amd shares are higher after reporting a quarter that was much better than expected. joining us now to discuss how amd did is lisa su lisa, first, i want to congratulate you, and also, point out, right from the top, two women at the top woman ceo and a woman cfo, and i hope you represent the future, and i think that that's just a great thing that you're doing. >> well, good morning, jim it's great to be here with you guys as always >> so, let's go to what really happened here, which, to me, looks like that the xylinx acquisition, which i had questioned at the time, because i wasn't sure you spent a lot of money, really came through and drove a lot more upside than

people realized. >> yeah, it was a strong year for us as we finished up 2022, jim. you know, if you think about it, there were a lot of moving pieces in the year, but we had a very strong fourth quarter with our datacenter and our embedded business growing, and what we saw is, as you said, the xylinx acquisition has helped us transform amd. part of this was ensuring that with our broad product portfolio and our markets that we serve, that we do have a lot of diversity in our business, so we saw records in health care, industrial, automotive, communications, aerospace and defense, as well as -- you know, very, very strong datacenter cloud quarter for us so, that was how we finished up the year, up more than 40% for the quarter. >> okay, so, let's talk the future datacenter, 30%. i was very excited about it until you dropped the bomb, which said that thecloud companies are maybe a little bit too thick with inventory at the same time, you tried to call bottom of the first quarter

for pcs, but my problem is the pc margins, as you know, are not great, and the datacenter margins are terrific, so should i be worried about the next two quarters, lisa >> well, you know, jim, i'd like to take a step back and just look at sort of all of 2023. when we look at all of 2023, what we see is, first, compute is a secular growth driver over the medium term, and what we've seen is that our product portfolio is just very strong. we have had consistent execution with our datacenter road maps, so we've talked on this show before about our third generation epic milan. we just launched our fourth generation epic with genoa, extremely strong performance, total cost of ownership per datacenter providers, and so yes, on the overall, we believe that datacenter and embedded will grow for us in 2023 now, there are some, you know, near-term adjustments in inventory for some of the largest cloud manufacturers, which, by the way, you should

expect, given just how strong 2022 was in terms of a demand environment. so, we do expect some near-term inventory adjustments over the first half of the year, but we've made progress in pcs, so i know there's been a lot of questions about pcs. we do believe that the first quarter is the bottom for pcs, and we believe very much in our product portfolio and the strategy that we put together. so, that's what we're seeing as we go forward. >> all right, let's go back to datacenter, which, again, you did say that a couple of cloud customers might have too much inventory, but i saw your datacenter revenues up 42% year over year to $1.7 billion. i know you don't like to talk about competitors, and you have always told me not to talk about competitors. lisa, intel declined 33% year over year, but that's a competitor, and you can just say, other competitors haven't done as well this is a monumental delta for you, and i think, lisa, i'm not asking you to take a bow, but

just tell me how you're able to take share like this in an atmosphere where a lot of companies aren't able to leapfrog over other companies. >> i think, jim, this is all about product execution. what we see with the largest datacenter providers, first of all, it's a fantastic long-term market this is our big bet that we've made over the last five years, and we have been just very clear that we're going to consistently execute, and every generation is going to get better in terms of performance, capability. one of the big things right now, jim, as you can imagine, is overall sustainability and the fact that we want to make sure that as we build these large datacenters, that we do it in a way that's very sustainable and very energy efficient, and that's what we've been focused on, so i'm proud of our execution, and now there's a lot more to do, and as we look forward to 2023, we have lots of products that are coming out we announced a number of products earlier this year, and you know, i view this as we just need to control the things that we do control, which is our own execution and really deep

partnerships with some of the largest cloud customers in the world. >> but of course, of the things you can't control, lisa, you talked about a better second half of the year when it comes to cloud inventory are there things in the macro that need to go right to make that happen? >> carl, certainly, we're always watching the macro environment, and there are lots of puts and takes, as you look through what may happen as we go through the year i think from what we see, though, what we see is there are more workloads, there are more capabilities that amd will be able to address as we go forward in the datacenter and in the cloud, and so we view that as positive for us, and sure, we'll be affected a bit by the macro, like everyone else will, but we think that even in this environment, we see a strong path to continue to grow share and grow our partnerships with the -- with our customers. >> lisa, then, but to those who would say, given what you have

just told us, in terms of the macro environment, and say, listen, following multiple years of very strong double-digit topline growth, you're going to be hard pressed to grow top line in 2023, what do you say >> well, david, what i would say is, we have a lot of positives in terms of the product portfolio. we believe that that's been the key for our business and our growth has been the strength of our product portfolio and our ability to gain share. we are a very diversified company now, so we very much like our data center exposure as well as our broad embedded exposure that came from the xylinx acquisition, and we're watching the macro, especially as it relates to pcs and gaming, which perhaps are a bit more dependent on how the macro plays out over the year, but i think overall, we like the position that we're in, and we're very focused on execution as we go through the year >> let's talk about embedded more, because i think it's such a highlight, and the growth is

rather extraordinary from when xylinx was running the company you're now into defense, into aerospace, industrials, auto how are these markets doing versus, say, how we think the cyclical environment is in our country? >> i would tell you, jim, that the overall embedded markets for us, as you mentioned, aerospace and defense, industrial, health care, automotive, communications, you know, we have over 6,000-plus customers that we have brought in with the xylinx acquisition it's a very diversified portfolio. what we see is for each of these markets, they actually need more content, so they're using more capability, more computing capability, and we're leading the industry with our adaptive computing capability so, i really like what we have there. i would also say that we have good visibility in terms of backlogs for these markets they tend to be muchless cyclical, i would say, than some of the other, like, the pc markets and so on.

so, we feel very good about the growth that we have seen there we expect to grow as we go into the first quarter, and we believe that here is another place where our market capability is expanding, and we'll continue to invest in this market going forward one of the things, jim, i'll tell you is in the fourth quarter, our datacenter embedded businesses were over 50% of our revenue, so it is a very nice mix of revenue for us. >> one last question elevated levels, inventory cloud, i want to go back to that but better in the second half. what gives you the visibility that would be better in the second half? because when i see elevated now, after i saw it in gaming and pc, i have to be a little bit more skeptical than i was at one point. >> well, the nice thing about this is, you know, we really partnered very deeply with our customers, and as you know, these cloud customers are planning for their full year, and so we've been very much working with them on what their various patterns are, and the way to think about it is, each one is different, but at the end

of the day, we need more compute in the industry, and we see them moving more and more of their computing capabilities in their datacenters to amd so, i think we feel good about our positioning, and again, there are many things that have to play out in terms of the macro, but in terms of our product positioning and where we are in terms of the design environment, we feel havevery g about our overall positioning. >> well, lisa, i want to thank you for coming on the show this is a large position in my travel trust, and i think the turn seems to be here, but i know that you're very -- you never overpromise, because you don't want to underdeliver thank you so much for coming on the show >> it's been great to be here. thank you so much for having me. >> thank you thank you, lisa. still to come this morning, cramer's "mad dash." we'll count down to the opening bell still some data on deck later this morning, including pmis, ism. j.o.l.t.s.s t w ionheay and the fed. don't go anywhere.

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as you know, s&p in january up 6%, best month since october, best january since 2019 thanks in part to a lot of those components right there the top gainers, wbd, tesla, western digital and carnival with some amazing year-to-date gains. we're going to get the opening bell in less than five minutes we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're

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the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. welcome back let's squeeze in a "mad dash" before we get to the opening bell here's a name that we have not, i believe, ever featured on the "mad dash. >> no, no. the company's name is novo, symbol nvo that chart's about the greatest chart you've ever seen, and it's about one drug for the most part with that 172% increase over

last year, $300 million, but what does the drug do? it gives you almost instant weight loss, 15% of your weight will be lost in a very short period of time by taking this. 30% if you keep takingit >> how does it compare to the lilly drug >> i'm glad you asked about the readthrough. because right now, monjarno is not approved for weight loss, only for diabetes, and novo nordisk is constrained they can't make enough of this shot you give yourself, but eli lilly is spending a fortune building manufacturing capacity and they will have it. so, the readthrough here is that lilly has, as i've said before t greatest-selling drug of all time >> potentially >> david -- >> by the way, novo nordisk is an enormous company.

>> they can't make enough. can you imagine what will happen remember, it's not a mountain in africa >> understood. >> it's the best -- potential best-selling drug of all time. especially now that humera is off patent >> that's the opening bell in the cnbc realtime exchange at the big board, a professional servicing firm, and at the nasdaq, the american heart association. jim, lot of movers we've not gotten to so far this morning. we kind of did snap and amd, but i imagine you're also watching western dig, the guidance there absolutely crazy, looking for a loss that's four or five times the estimate >> there's one where you would expect the stock to be down big, and it was down three points last night it's actually up why is it up other than the fact that maybe it shouldn't be. why is it up because maybe we have a bottom in flash flash is immediately applicable

to micron, and micron is up. last night, when i saw western digital and they said flash is bad, how much will micron be down but we're in an era of good feeling right now. most is dram and some is flash when you heard lisa su, the takeaway is trough is there real trough when you have trough, it's so fabulous, you have to gun jump it, and that's what's happened people are looking at western digital, aghast at how horrible it can be, and drawing the conclusion, it can't get any worse. i've been there before in these cycles it arguably might not be able to get any worse. what happens when you do that number that bad is you stop making them and the inventory gets corrected and then you live to play again. >> is that what's happening after samsung? >> that's exactly what's happening. >> micron, intel >> if you worked at micron, you'd be saying, will samsung please stop it they keep trying to ruin the market when you see these kinds of

things, what happens is, you say, you know what like lisa su said about pcs, we're working through the inventory, and when we're done, it will be there, and that's the inflection, and you buy. now, obviously, we were asked a question about economic sensitivity. these are giant cycles, and when the cycles turn, really doesn't matter what's happening in the s&p, doesn't even matter what's happening to the fed so, people are saying, listen, it can't get worse, and i say that that could be true. it's really hard to be worse i don't know how you can be worse. >> we've been saying it for so long >> david, when you're making nothing, can it be worse when you're, i don't know, making nothing? >> when you got nothing, you got nothing the lose >> thank you, bob dylan. thank you for that >> you're welcome. >> can i just talk to something that a lot of people felt there was nothing, nothing to lose do you remember when people told us that peloton was just something you hung a jog bra on? well, it looks like it's more than that, david >> really? >> yeah, because it's no longer

a hardware company it's a software company. it's a software as service company. >> this is the big build-up to your interview with barry mccarthy next hour there he is. barry mccarthy, ceo. former cfo of spotify. >> i've been scared of barry for maybe a dozen years. >> and netflix yeah, well, look -- >> you know why? because barry does what's necessary. some guys won't. belichick has. barry has. parcells did >> musk does >> yes, that's good. >> he's cut way more jobs at twitter than barry has at peloton. >> you know who doesn't fear musk, besides bret taylor? mary barr. she's not worried, because the demand for the electric silverado, so off the charts, she's not sweating the musk --

there's nothing existential. >> following through today with a bit of an increase >> even as jonas raises. >> this was a great note out of jonas. the capex numbers at gm, far higher than we anticipated difficult to say how much of this is related to a more positive macro, but $11 billion to $13 billion is a major step up, and you spoke to mary last night. take a listen. >> i'm excited for '23 i know there's challenges, and we don't exactly know what the macro is going to be, but i think we're well positioned, and you know, just to make sure we're going to be able to deliver on everything, we put in a $2 billion cost program to take the structural cost out, and that's net, by the way, between this year and next so, this is a year that i think we can really demonstrate what gm can deliver from a profitable growth perspective >> well, we can't inject jonas into the debate, because he's injectable, not unlike wagovi.

but he's saying they're going to earn 490 gm is saying they're going to earn 6 to 7. there's quite a disparity there. what i think is really interesting was they are the leader in autonomous they hired this guy, kyle. i questioned whether i could go to -- right now, in phoenix, they're being used i questioned -- >> you really think they're the leader in autonomous >> absolutely. >> elon musk would take issue with that and say, we have way more road miles than anybody by far. >> so would google >> waymo also. but the data that tesla has is so far and above anything anybody has in terms of miles driven, what are you talking about? >> i'm talking about leadership. when i get to phoenix, i suggested that i can hail a waymo. mary barra said -- i challenged her to come with me. she said kyle may be there, the genius behind their autonomous vehicle. i think you're prejudiced. i think you're looking at the old gm, not the one that built

the tanks that won world war ii, but you're looking at gm and saying the business of america is tesla, and tesla is america's business i'm saying that they have hired the right people they have -- they are in the mix. yes, waymo is doing something great and they're all over san francisco. waymo will be as opaque as everything else with alphabet. you'll have to trust them. you know how alphabet does it. we're great, you're not. that's my theme. >> clearly after reading that complaint from the doj, you do not trust alphabet anymore i don't want to put words in your mouth, but that's what i'm hearing. >> i read it remember, alphabet, i've got to get more of their side when i went to them the first two times, they told me, be basically, another, we're great, you're not they did this twice. they did it once before, now they're doing itagain. no recognition that the whole market has changed since they did this i'll speak to them again and

again. >> you'll keep giving them a chance to make their case. >> i'm going to remain open-minded. >> guys, wanted to mention another mover this morning, which is electronic arts we haven't hit it at all couple of different things here. >> you are such a downer >> thank you delays of a key game that may be one of the main reasons here we're talking "jedi survivor," company attributing the delay to giving the title a few additional weeks for final polish but that is concerning some. and then overall, just bookings, just the business itself did not come in where they'd expected. fiscal year '23 bookings guidance set growth expectations notably below expectations you know, they did see some strength in certain franchises fifa looked okay but more than offset by weakness in apex and mobile titles, and

you see what's happening there having a bit of an impact as well on activision if the deal were to break with microsoft, what is activision worth? hence, maybe you increase your expectation a bit. no updates for anybody there we may get a leaked copy of the statement of objections from the eu that could be informative in some way that should be soon. as i've said many times, the key here is still waiting for the uk antitrust regulator, cma, to make its case known. that's the key no real transparency there could be, let's call it, within the next couple of weeks that's kind of our window. we'll see. but ea numbers, not good >> i'm so glad you brought this up we didn't get to ask lisa su from amd a question about gaming, which is 26% of her business still it was down 7%, but she remains

optimistic david, i'm growing more pessimistic by the day with gaming i'm looking at take two, which is a very well-run company and they're not doing well, the stock. they went more advertising oriented but they have great franchises i'm questioning whether, when i look at american express's numbers, and the go out, particularly of this cohort that was gaming, and how much they're spending on restaurants, we've got great data from steve squerry. they ain't playing games they're going out and having cocktails. >> take a look at brinker today. almost to $41. the maggiano's comps, 21.5 >> we got to talk to them. >> 21.5. >> why don't i have them on tonight? i couldn't believe it. i went to moog moaggiano's and s empty, but that was another lifetime ago >> it was. >> chili's up.

>> they have good fries. >> pretty amazing. meantime, macao revenue, up 82 in january las vegas sands, a year and a half high. >> people are going -- it's still -- david, i try to say this to you, but your level of cynicism always shocks me. people are glad to be alive, and they want to see the world before they perish they want to do things >> that's a -- that's good advice >> life's too short. >> good advice from a man who wears a tie more or less every waking moment. >> i didn't say i'm part of this world. >> basically works 18 hours a day. that's great advice. thanks >> i'm going to miami as part of my college tour, and i have a saturday off, so i'm wearing zane >> are you recruiting? just a reunion >> university of miami where are you going? >> university of miami yeah and i'm just trying to figure out whether i should wear brione a lot of people wearing swimsuits. me, they got the speedo. me, i got the 180-count thread

>> nice. i think that's way preferable to seeing you in a speedo >> remember what i said about this versus your entire wardrobe >> yes, it's worth more money than my entire wardrobe. >> no, this one's worth your wardrobe >> we mentioned the industrials yesterday. the international papers, the dovers, caterpillar. today, otis back up 11, which these days, you'll take it >> i can't wait to talk to judy marx, who is amazing and has done a fabulous job, is so nonpromotional at otis, but when you look at organic sales, up 2.5%, services up 6% i have to go back to david, because he's always quizzical. david, service is up 6%. once you get in an elevator, you know what you have to do >> service it. >> yes because safety never takes a vacation >> but china's such an important part of their market >> you got service there too they didn't give people --

>> do they service them in the half-built buildings >> cynical >> all those poor people put down payments -- not even down payments, paid for all of them they're just sitting there waiting for their apartments to get built. >> we got pmis on the other side of this break. meantime, as we await the fed this afternoon, yields down across the curve you got the two-year back below 4.19%. don't go anywhere.

welcome back to "squawk on the street," rick santelli here, live at cme hq with the first of a litany of breaking news today. s&p global, manufacturing pmi, january final, which means 6.8 mid month read gets tossed, gets replaced with 0.1 better 46.9 that is actually the best read

going back to, well, november, when it was 47.7, and in between there, december at 46.2 is the weakest since may of 2020. so, we aren't exactly bouncing very much. we haven't been above 50 since october, so there's the news, and of course, we have more isms to come. we had adp at 106,000. that was the weakest in two years. "squawk on the street" will tu aer srtre rernft aho bak new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. (woman 1) i just switched to verizon business unlimited. it's just right for my little business. whose resumes on indeed match your job criteria. unlimited premium data. unlimited hotspot data.

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it seems like advertising demand hasn't really improved, but it hasn't gotten significantly worse either i mean, obviously, the brand spend is significantly reduced, like we saw in the quarter, but our direct response business continued to grow in q4, and in general, it seems like our partners are managing their spend very cautiously, so they can react quickly to any changes in the environment >> evan spiegel on the call last night talking about snap and the ad market. jim, we know that digital ads are something you can do on the flip of a switch >> yeah, i think that, look, i can't be sanguine. advertising's the first thing that companies cut back when things get tough, and i don't think they cut back and therefore shift -- this is what i thought that i was wrong i felt that last time snap

reported and it was bad, remember, it's had very little impact from meta's stock and on google what i thought was the problem was snap turned out to be the problem was industrywide and i don't think things have gotten better along those lines. i think advertising's being cut everywhere, including on the web. >> you rarely like to go into earnings prints with the stocks hot. >> right. >> but meta has gone from 88 to 150. >> i think meta is an example of the one person who really runs a company, who is, i think, chosen behind the scenes to spend a little less time on the metaverse and more on the near term, the firings there were the second most after barry mccarthy from peloton and very -- >> you mean percentage wise. >> percentage wise, serious cutback. what was wrong with meta the last quarter they were spending a fortune and didn't get the payoff if you spend less -- >> their cap x numbers are still

incredible for this year. >> true, true. but it's up a lot because i think it shouldn't have been town as much there's still reverence about what mark zuckerberg can do. and if he spends all his time in metaverse and there's no payoff, the story is bad they have a real cfo they have some discipline. and i think that the discipline is going to be on display. they also, you know, instagram can't be as bad because people go out and are doing things. but i hope instagram is better and they can figure out a way to have more people post in the day. right now check seven times a day now check twice a day. that's what he has to be worried about. i respect him. >> yeah. it's going to be a big news event tonight. >> yes. not quite to yesterday's highs but not far away getting to bop. >> the low print was two or three minutes after the open, about to go positive on the s&p, generally tech is helping out

today, semiconductors, amd is a help arc is up, we saw kathy wood this morning on air. banks are on the flat side big tech, amd a help not only taking market share from intel but not great revenue guidance, but wasn't terrible. you see nvidia helping a lot apple down a little bit been in a slight down trend this week. february was -- excuse me, january was great, up 6% as goes january so goes the year, a psychological boost to the market but the important thing is we are seeing moves up in subsectors high beta. that's nvidia, amd, netflix, the high beta stocks small caps up 12%. value and growth up the same amount that is a broad market advance. that's the definition here

everything is in an uptrend in these sub sectors that's why more advancing stocks than declining stocks january was great, up 6% february tends to be a flattish to slightly down month it is the weak link in the next four months. february flat to down a little bit, march and april up about 1% each so this is slightly seasonal weak period here in the month of february jay powell and today, what can we say that he hasn't said before the fed says we're going to keep raising rates and keep them higher for longer. the market says they have two more rate hikes of 25 basis points and lower rates by th end of 2023 instead of 5%, i'll be about 4.5%. who's right? who knows. but everyone is debating what he can say that he hasn't said before maybe it is that he is right, he is going to win and has been winning and they'll stop and stand their ground in the middle of the year. that seems to be the likely

scenario one more important thing big big company getting into the etf business today morgan stanley, the last big company in the etf business not anymore. today they're opening the calvert, including the select equity etf and esg type of funds as well. i'll talk to the head of morgan stanley's etf business in miami beach starting on monday we'll have the big stars of the etf business. >> bob, thanks so much. let's get to jim >> we didn't talk about the -- just a fantastic quarter continues to put up great numbers. i like this page in his deck where he talks about the significant progress for transformation he's getting rid of gum which is a passe category, moves to cliff bars, great. tates, annual revenue 3.8 billion. this man is doing so many things right and shows how broad the

bull market is, you have otis up, west rock down, sorry. >> we mentioned the comps but north america up 19.5 that gets your attention. >> amazing numbers people are going out, having fun, eating stuff that tastes good david, this is the gilded age. >> can't stop. >> seasonal item you have to get it while you can >> one, two, four, seven, i'd say six, seven even though they get smaller and smaller. >> you complete my thinking. >> and also the tates get smaller and smaller. that helps margins >> shrinkflation that's really. >> shrinking the cookie to bite size. >> you go to a dollar store, the stuff is not as big. go to a dollar store, things are four, five, six, seven dollars they're not a dollar

other than upfront get the smarties. >> that's nothing a dollar anymore. >> nothing a dollar. listen to him. >> miami, you're going to miami. >> yeah. >> are you going to do the show with us tomorrow morning still >> would i ever be without you >> no, you wouldn't: >> i day is not complete without you. i'm the only one calling for saturday and sunday shows. i wear my suit may as well glide in. >> what about tonight? >> otis, thermo fisher. >> you have tmo, the greatest performing stocks of the last ten years. >> yes >> and eat >> how can you not have eat. >> you have a great lineup >> he does tv because i lick chile's. i was an olive garden guy, it's good for vegetarian. >> when you're there, you're family >> you bet you are

>> jim we'll see you tonight "mad money" 6:00 p.m. eastern time two interviews still ahead, t mobiles mike sievert and peloton's barry mccarthy as we are off the opening lows stay with us ♪♪ my finances were all over the place. and my banking relationship was getting... well, complicated. hahaha! so, i broke up with messy accounts and moved my money to sofi. now i earn higher interest on my checking and savings, and bank, borrow, and invest-all in one app. feels nice being in control. break up with bad banking. get up to 3.75% interest, and bank, borrow, and invest—all in one app. plus, download the sofi app and earn up to $250 when you set up direct deposit. sofi. get your money right.

good wednesday morning, welcome to another hour of "squawk on the street. live at the new york stock exchange high profile earnings, data, adp, pmi, and let's get to rick santelli >> construction spending for the month of december, expected to be unchanged remember, construction spending like much of the cottage industry of housing has not fared well with higher interest rates and this number is no exception. down .4%, down .4%, that's the weakens since august when we were at minus 1.1. this has one silver lining, the

last month's read up .2 now becomes up.5 so we did borrow a bit but still net net not what we expected manufacturing for january, 47.4, and that isn't a good number the weakest since may of 2020 and that ends up being the third in a row in contraction territory. look at prices paid, prices paid comes in at 44.5 44.5 so it moved from 39.4, which was the smallest month over month change in prices paid going back to april, and indeed it continues that is the one, two, three, fourth month below 50 and one of those months as i said was under 40 prices paid, of course, being on the down side under 50 is a good thing. if we look at employment, considering it is the week of employment, 50.6 unemployment. that's a pretty good number.

followed by 50.8 that was revised from 51.4 several sessions again it's still in expansion territory and new orders 42.5 that is not a good number when you consider following 45.1 and 42.5 is the lightest level also since may of 2020. these are not good numbers represents one, two, three, four -- fifth month in a row on new orders being in contraction mode finally, job openings and labor turnover, two months in arrears, december number, 11,012,000 better than we were expecting. look for interest rates to pop a bit on this. because the fed, counter intuitive as it might be does not want to see job openings this aggressive, especially with quits being aggressive, last month downgraded just a tad from

10, 458. and being back over 11 million the best now since july of last year a lot of numbers to take in. suffice it to say we're back close to 3.5% after being down to the 345, 346 level. morgan back to you. >> a lot to take in. coming hours before we get the fed decision rick santelli, thank you we are 30 minutes into the trading session. big movers again today we'll get to all of them but three to start the hour. snap those shares are plunging after posting flat q4 revenue and loss ad revenue could fall 2 to 10% in the current quarter shares are down 12%. brinker international blowing past estimates with comps up 9.7%, a strong holiday season driven by stronger pricing with

margins improving thanks to quote moderating commodity accomm accommodations shares up 1.5% electronic arts slumping after sales and guidance came in below expectations with plans also announced to cancel two major mobile games saying it will delay the launch of "star wars" after what they call challenging market dynamics for video gaming those shares down 12%. just a few hours away from another possible rate hike from the fed. fed chair powell will take the podium for his press conference at 2:30 eastern time steve liesman joins us on what we can expect. >> the first clue to look for after the fed does the expected 25 basis points hike iswhether the policy statement repeats the committee anticipated, quote, ongoing increases. a sign that the fed is getting

ready to pause, but that's not what's expected. it's supposed to be there again. a series of new voters comes in, kansas city, st. louis, cleveland, boston are out, that means a loss of midwestern hawks. chicago, philly, dallas and minneapolis in with new presidents there another thing to watch, how much concern the fed chair expresses with the loosening of financial conditions and the 65 basis points gap in the market and the fed's forecast at 5.13%. that's likely to be a theme in the statement and the press conference the market wants to hear the fed is done. the fed pressing to go on to the 5% funds rate. the data seems to be undermining the fed's own case for hike, the 3.1% headline pce inflation is 2.1% on a six month basis. it's now at 3% compared to the

forecast for core. the fed is achieving the lower without the funds rate so jay powell continues to defend the 5% target, guys. >> quickly, steve. the jolt number what to make of that right now, given the fact we know the fed is so focused on employment and the labor dynamics. >> exactly that. this job market won't quit it's a question about it is two months old, maybe things got softer in the month of december. this shows the job opening number is not going down, the quit rate remains low. and this is the one thing that powell has going for him, the idea that the job market remains tight and he needs a looser job market to get rid of the core service inflation number and claims have been low despite these announced layoffs, morgan, it's a question whether the layoffs are just these companies that e're reporting on or is i

a bigger, wider thing showing up in the data perhaps on friday. >> steve, thank you. we'll check in with you, of course, and see you this afternoon. >> yeah. >> steve liesman >> turning to shares of t mobile shares are up about half a percent right now after the company posted fourth quarter financial results. 20 billion in revenue, maybe a slight miss from what analysts were looking for but overall strong numbers, stock has been a great performer over the year as well. the ceo saying there is still room to run on if call despite a potentially challenging macro environment for 2023 joining us is the man himself. mike, listen we've talked often about the success your company has had in the marketplace and in the stock market, different than two of your main competitors but i want to come to churn, which is extremely low for you, helped your subscriber

growth numbers but i wonder about gross editions and the rest of the year because it appears your gross editions sort of look like they were down a bit at the hands of cable. how do you see the market playing out during the rest of this year in particular in terms of your ability to actually increase share of gross ads at some point >> we're outlooking a great year on overall growth. churn is a part that drives that we were the only player with year over year reductions in churn. 18 basis points year over year improvement in g q4 and several quarters we beat verizon, including sprint that allows us to moderate the investments we make in gross ads. the last few ads you go after the least economic ones and if you don't have to spend shareholders' money doing that it's smarter not to. for us it's balance. we want to outpace the market on growth but it's balanced growth so we can return profitability to shareholders.

ebitda up 12%, cash flow up 36%. i just provided a guy cash flow will be up 73% by midpoint 2023. >> that was the lower end of the prior rage of 13 to 14 billion. >> 13.1 to 13.6. yeah and we gave 13 to 14 guide but there are one-time items this year having to do with, for example, the sale of our wire line business which will be a positive development for free cash flow and ebitda in the future when we adjusted for that it's at or better than what we talked about in the beginning of 2021 and we are the only one still talking about guides consistent with 2021 at or above the levels we communicated. >> understood and i get the message there. at&t dramatically pulling in, at least what it was saying in terms of free cash flow guidance a couple of years back. >> something we saw with verizon

and at&t and your company is this upgrade rate. it may be consumer demand. you sold fewer phones this holiday quarter than the third quarter. have you seen that happen before and are you seeing people reluctant to upgrade at this point and is that a reflection of consumers being pinched >> it's the offsetting good guy of all the phone purchases people have been making. we've been looked at as an industry with expensive subsidies of the devices the offshoot is people are keeping those devices longer, which makes the subsidies economic so we have fantastic promotions on devices and people are sticking with the devices longer that's good. if you look at our revenues, service revenue is where we make the money. we lose money on the phones. so the difference between service to total revenue that's not an area that investors look at in our sector they're interested in service revenue where we again beat the guide

and came in above estimates. >> that may be for t mobile but with apple reporting after the bell i'm sure investors are paying attention to what someone like yourself is saying. i want to go back to something you said before, the last ads are the least economic why is that and how does that speak to saturation of the market overall >> this is a competitive market and wireless is a considered purchase people want to have the best value, network, customer service and from a brand they like and trust. so find the people that re-nate with your positioning and story. we love our hand of cards but it's expensive and a direct food fight. in the second half of the year, we surged forward 17% in net additions on postpaid while the rest of the industry fell off 19%. so it shows even in a return to pre-pandemic growth in our sector, t mobile continues to distinguish itself with, you know, a growth strategy that's

clearly differentiated and proving to be durable. >> what does that mean in terms of pricing power >> for us, and it's fascinating to see, both of our competitors, our principal competitors this year slammed their customers with $2 billion worth of price increases using inflation as an excuse and we had a choice point, we had a choice point to match that or go the other way. of course we went uncarrier. we rerolled out one of our most iconic uncarrier moves called price lock, a promise only you can change your price. that's why we're ahead of the pack >> you talk about the food fight. is your marketing spend over time going up or staying even or going down >> we've been able to find efficiencies when we first rolled out the merger we said 4 to $5 billion in annual run rate synergies an

then uped it to $7.5 billion in 2021 this morning i said $8 billion in run raid synergies and marketing is part of that. we have a powerful brand and people are coming to us not just because we have a great value but because we have the best network. that wasn't true a while back. people never gave us credit for being the best network before you the no they're understanding that and it allows us to attract customers more efficiently. >> talking about 5g here the fixed wireless broadband product that you brought to market that i think you said, in fact, what is -- you had nor net broadband ads than at&t, charter, comcast combined. >> right. >> how much further can you go with that? do you get capacity strain at all? people have to give you the specific address so you know if you can service their needs. >> there about 140 million

addresses in the u.s right now 50 million we would approve you if if you applied. we're on the way to a business plan that early 2021 we could achieve with this model about 7 to 8 million homes it's a single digit penetration we forecasted. could it be higher who knows but the capacity is still pouring in right now we have 130 megahurts of spectrum dedicated to 5g, that's on its way this year to 200 megahurts. so we're getting started pouring capacity into the network. this is an excess capacity model. none of the customers are b burdened with capital cost because it's paid for by the mobile business. >> so it can go for some time. >> yes. >> cable is a significant competitor in wireless, our parent company comcast using the verizon network. do you see them as a threat? >> absolutely. we have for years. cable had a great quarter in q4

we saw that coming it look like cable is adding to the sector, postpaid, the pie has been expanding, transference from prepaid, new numbers, new lines. look at this, fourth quarter when cable surged ahead, all three major incumbent wireless chairs are better churn than expected it's not like it was coming from our side, particularly for us, in the second half of the year, our net editions were up 17%, the rest of the industry combined down 19%, including cable. >> you have that wholesale deal with dish. would you consider doing a deal with comcast or charter in terms of a wholesale deal? >> of course. >> you would >> we're here to serve wholesale, retail, business, enterprise, government, everyone we have the highest capacity network in the history of this country and the best 5g of course we 'open to it but they seem happy with their

arrangement. >> great to have you. >> thank you as we head to break, here's a road map for the rest of the hour we'll look in on expectations with roger altman. >> breaking down amd's quarterly result and what it means for the rest of the semi sector. and barry mccarthy is with us in a femontw mes as the dow is down 200 in the wake of that jolts number don't go away. he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world.

welcome back to "squawk on the street." it is the first day of trading for february and markets are working through a slew of earnings and another busy morning for data ahead of the fed's latest policy update and a meeting between house speaker kevin mccarthy and president biden later today as well concerning the debt ceiling. here with his take on all of it is senior chairman roger altman. great to have you on the show. >> thanks for having me. >> i want to start with the data we have. we saw ever weakening, like ism manufacturing this morning but then on the flip saw you saw jolt, the jobs opening number spring higher to 11 million. the markets ralglied to start the year the idea of a soft landing maybe taking hold here the last time you wereon with us, about a month and a half ago you said you thought the recession risks were rising. do you still feel that way >> i think they're pushed out and we likely will have a

recession, but not as soon as at least i thought a month and a half ago because the latest data is indicating more resilience than it is recession. so at ever core, on the equities and research side we do a series of proprietary surveys, trucking, airlines, temporary employment agencies a lot of them and they're good in terms of the latest pulse of the economy. those surveys are not on the edge of recession. and the global surveys china are showing recovery you saw the imf raise the forecast for global growth and fourth quarter was good, 2.9% real growth gdp signaling a positive first quarter. our forecast at ever core is minus .5%. so tiny recession. yes, there are some strong signals, the inverted yield

curve is very large, m2 is falling and historically that's a strong sign, albeit with a long delay so yes, i think we have a recession, but i suspect it's shallow and delayed. >> in light of that, the divergence between the market -- what the market thinks, specifically the bond market versus what the fed is saying and this idea you have priced into the market actual cuts, interest rate cuts at the end of the year, who's right or is there a third narrative here that we should be talking about? >> i've been doing this a long time i never totally understood the markets and i don't right now either i don't understand the market point of view on this as follows. i just said that most of the data on the economy signifies resilience not recession when it comes to inflation itself yes, inflation is slowing, no doubt about it strong evidence too, whether

it's m2 or natural gas prices or egg prices or on so forth but this moment the data does not, to me, provide convincing evidence that we're on track to hit the fed's long term inflation goal or 3% so, for example, yes, we saw the employment cost index you had a guest on earlier this morning that talked very intelligently about that, showed 4.3% annual rate the fed's index, bce indicator, running at 4.4%, i notice larry summers tweeted that inflation is essentially at 4% we are not yet at the fed's goal and finally, if you're the fed, you had a tough year, right. your whole transitory mistake, a period there when they gave markets incouragement on a pause or pivot and pulled both of those back the one thing you cannot do is pull your foot off the break too soon and don't accomplish the

job. that would be catastrophic for the fed whose credibility is already under some pressure. so they have to err on the conservative side. and the idea this is going to be the last hike announced today, i don't see it and the idea that just three or four months from now we'll be doing rate cuts in light of the latest economic data i don't get that either maybe i'm wrong but i don't get it. >> in light of that, are you expecting that powell is going to come out and be hawkish today and there's a risk of the rhetoric being stronger in that sense than what the market is anticipating because the financial conditions have loosened it's a tight rope to walk here. >> it is but i think it's going to be a message of no surprises. quarter point hike, no language to the effect that's the final one. and i just don't think he's going to surprise the market on the dovish side or the hawkish side. >> you know i like to come at

you on a more m&a kind of stuff. i'll come at you on activism your firm gets hired to defend publically and also before a company when they think maybe t they're going to get hit what are you seeing out there, it feels as though things are fairly busy? >> you're right. activism is running at high levels one of the things that's pushing that recently is the advent of the universal proxy cart and there's no two ways about it, that makes it easier for an activist to succeed in nominating one or two or three people to a given board. because the voting mechanics make it easier instead of two cards, the blue and red whatever they are, you have one and so forth. so activism is running at high levels some of that issue say it's public, whether it's disney or others -- >> salesforce, for example. >> yes but activism is everywhere and, of course, there's two

categories effectively, david, as you know, of activists. the high profile well established real tough activists elliott starboard, et cetera and the whole category of newer activists who are out, among other things to make a name for themselves firms most people have never heard of until they surface. there's a lot of them, too so it's a very busy season and busy environment for activists. >> and a distraction for the ceos on occasion. >> and they're managing more money than ever. >> right >> they're all asset managers at the end of the day and focus primarily on aum the total assets under management for activist purposes is up. >> roger altman, thank you for joining us >> pleasure, thanks for having me. a tough morning for match and snap with both of those names mourning of more weakness ahead in the digital advertising space. what does it mean for a name

like meta which we get results from after the bell. keep an eye on that because ad-tied internet companies seem to be taking it on the chin. meta is actually up a frtiacon, though we've have more on the action after the break. don't go anywhere.

we begin cnbc celebration of black heritage this month but looking at a unique effort to diversity alternative investing. dozens of students from historically black colleges and university students are learning about private equity, credit, and more from the biggest firms on the street. frank holland joins us with more on why the multibillion dollar firms are investing in hbcu students. >> good morning. three of the largest investment firms are joining forces to literally change the face of the industry the all financial fellowship is introducing students to these areas, they get paid experience, mentoring, and networking opportunities and graduating seniors have six figure salary

offers but said the focus is on income and impact. >> being able to come in a space where i'm able to leverage private credit, real estate, cryptocurrency, private equity to create more opportunity not only for myself but my community, it's truly a privilege. >> the impact is what drives me to want to be in the environment and create these relationships because overall my main motto what i live by, you lift as you climb. >> alt finance is a $10 trillion market largely outpaced the s&p since 2009, the firm is creating a pipeline for talent that they believe can increase their profits. >> this is not a charitable activity i think it has socially beneficial aspects to it but that's not the only reason we're doing it we're also doing it because we believe it can enrich our

organizations. >> the more perspectives you have in your employee base and the companies you look at, the more you have, the better the investor you are so the idea of being a more diverse company for us is a positive it's good for business, good for our investment decision. >> alt fitness provided $678,000 in scholarships for these fellows in 2022. back to you. >> thank you, frank. still to come, we're, of course, keeping a close eye as we always do on the markets. we have a big decision coming this afternoon from the fed, most likely 25 basis points, we have the press conference. so who knows we also have one more semi name atbeating estimates. there it is, amd up. we're back in two. s of data points like hrv and rem sleep, so you know all you need for recovery.

and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. (woman 1) i just switched to verizon business unlimited. it's just right for my little business. unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. ♪ every search you make ♪ ♪ every click you take ♪ ♪ i'll be watching you ♪ - [narrator] the internet doesn't have to be so creepy,

the duckduckgo app, lets you search and browse pria blocking most trackers all forf your search history is never tracked, so it can't be shared. and when you leave search, duckduckgo helps keep companies from watching you as you brows. join tens of millions of people making the easy switch by downloading the app today. duckduckgo, privacy simplified. (upbeat music) welcome back to "squawk on the street" i'm bertha coombs

here's your cnbc news update texas and parts of the south are suffering a third day of heavy mixed sleet and snow over a quarter of a million homes and businesses are without power six deaths have been blamed on the dangerous conditions and air travelers are dealing with another day of disruptions with nearly 2,000 flights already canceled nationwide. the fbi is searching president biden's home in delaware after classified documents were found in his other delaware home. and an old office in washington. the biden lawyer said the search is being done with the president's full support and cooperation. and tom brady, the owner of seven super bowl rings and numerous nfl records is calling it quits again he went on twitter to break the news himself >> i'll get to the point right away i'm retiring for good

>> for good. he announced the end of his football career following an unprecedented 23rd season. brady thanked fans, teammates and competitors and said he wouldn't change a thing about his time in the nfl. of course morgan you have to figure that the odds makers are taking bets on whether he'll un-retire again. >> only time will tell bertha coombs, thank you taking a look at stocks right now, the major averages are down right now slightly as we await the press conference from powell and the decision later today. dow down 205 points. the markets are pricing in a near 100% certainly that they'll raise rates this afternoon. thi. that seems to be a given the key is the commentary we get from powell and how far we are from a pause or pivot. >> the market is comfortable not

just with a quarter percent today but the idea that we're at, at most, a quarter point pace of rate hikes and not far from the targets we have six or seven weeks between hikes, think how different it is than three straight hikes last year explains why the market on firmer footing, the s&p 500 not only 6% this year but levels it was at in early may of last year so it absorbed this. and there's the market pricing in we might escape this thing at a 5% nominal gdp rate. that would be a net win. obviously there's a lot of ifs built into that. so we're enjoying this moment when we could get a fed pause and the economy has still held together not knowing if that's just a brief reprieve. >> we came off of such a strong rally to start the year and there seemed to be two different

talking points that are fighting with each other in light of that the first, obviously, being that when you see the s&p finishing january in positive territory, the period of february to december tends to gain 78%, i think average gain of 9% on some data the flip side, with the nasdaq the gains there, the last time we saw those gains was january of 2001 in the middle of the dot com crash when we know what happened following that. >> exactly in terms of the january indicator thing. i think you respect it but acknowledge the february through december period is up in any year like two-thirds of the time so you're getting an extra boost when you have a strong start to the year i think we're at the point where the market is going to break higher and something is different here we have a potential here for the up trend to be higher or another 18% rally like we had in the summer

and the fed came out and fought against it i don't think the fed needs to fight against what the market is saying just now simply because of gas prices down where they are. the dollar has totally round tripped in the last eight months and all those things that would imply that the economy is responding to what the fed has done >> you're right about the dxy. thanks, mike mike santoli peloton shares headed higher today after strong results let's get to jim who has a special guest. morning, jim. >> i have to tell you this is one of the most exciting interviews to do because everyone knows this product, peloton so many people feel like it's over i have to tell you, carl it's not over because of the man i'm with right now, barry mccarthy, who was unbelievable when he was at netflix, spotify. there are people who felt this company was going under. i think with this quarter, it's safe to say, viability, put to bed. no longer a question, no longer brink of destruction

back and making free cash flow >> what a difference a year makes. so we said we had to focus on cash flow. we said we had to focus on leadership we said if we did those things well we'd have the opportunity to focus again on growth and so, here we are now talking about growth >> now, a couple things. one is that the barry i know is going to tell me it's not just barry because that's not the way you work i want to hear credit where credit is due. >> it's been a heavy lift for the entire team. and we stand on the shoulders of the founders and the founding team who left us with two uniquely exceptional assets. the content and the product. right. so the brand has always been golden, and the user community and the experience has always been platinum as my friend gayle

likes to say so it was the business model that got sideways, which is why our focus has been on resizing the expense structure and focus on cash flow so we could control our own destiny and in the last year we took out 830 million run rate of expenses and burned down the inventory by 530 odd million and to your point, the free cash flow, expayments to suppliers to offload inventory they didn't need and we didn't need was slightly positive. >> let's talk about the classic transformation, gross margin improvement, it's a software business not a hardware business talk about how you're able to see that's what you needed to be >> there's good news and bad news in the improvement in the margin for three consecutive quarters now we had more revenue from subscribers than we have had from hardware sales.

so the hardware margin on an adjusted basis was negative a couple of points and the margin on the subscription business is in the high 60s, 68%, i think. and so we have this structural shift and there are lots of economies to scale that come as a result of the growth in the subscription business. which we also saw at netflix and spo spotify. which we'll also have the benefit of here. >> okay. so this is, indeed, a celebration of the connected fitness model, but at the same time i have to tell you, since i've seen you last, the physical gyms are open, booming mirror, a lot of respect to google, they bought that how are you going to deal with the competition that is so strong right now since covid went its course?

>> i think about the competition and the market opportunity this way. so john folly invented the connected fitness category with tom cortez, we have 60 plus share. the category has been shrinking in a post-covid world pretty drama dramatically, maybe 30% year on year and it constrains our growth we can't grow faster than the category, although we gained share in this past quarter but it's not long term sustainable so when you think about growth you have to ask yourself where is it going to come from could be more marketing spending, geographic growth, new products for us in addition to all of those things we articulated a strategy that makes our content, which is our chief asset, available on other people's platforms. that's how we grow but selling into that installed base so today about half the people who pay for our digital app use it on other people's hardware

platforms and consume our tread contend, our running,/walking content, our bike content but we've always been afraid to lean into that, in this case we're leaning into that use case and not just in your home. but outside, in a gym. we'd be delighted for you to consume that content for you everywhere, doing yoga, strength, on a bike, on a tread, a row. domestically, internationally. >> there's also an, ethos change i viewed you as a manufacturer let's man manufacture. but that turned out to be not nearly as good as the best software which you always had the best content. the second thing you embraced not just the outside systems that were competitors but you went to amazon and dick's. the previous model would have

said that haieresy. >> and remains to be seen if it's a net positive for the business or not. the last quarter outperformed our expectations but still small in the low single digits of volume also coupled it with the sale of previously owned bikes that we refurbished and finance as a service that's a rental model, that's growing fast and the changes in the business model accounted for 19% of the unit model in the quarter and finance as a quarter has been as high as -- along with previously owned as high as 40% of the units 62% of the people taking a rental bike would never have engaged with peloton but for the fact that they didn't have to purchase up front. make sense >> yes >> and looks like, based on the churn behavior we're seeing, we're going to earn a pay back

on that somewhere in the one year to 18-month time frame. which is as good as we could have hoped for so it's profitable for the business the third party distribution, the question is how incremental is it? we don't have enough data yet to know but it did perform well during the holiday. now in fairness we had been in the business before so we didn't know how to forecast it. we just need more data and we'll see. >> that makes me feel like i should have with stock up too, a bit of a risk. i'm not hearing from you it's straight up free cash flow i'm hearing there are some -- some people thought it was a promotional quarter, you yourself are never an overpromiser but you feel it's not just about the brink, it's about growth and the growth path and to that you subscribe to the idea it's pretty clear >> yes

and the tension i think we'll feel is between the rate of growth constrained by free cash flow because like all subscription businesses you pay to bring the subscriber in the door and then 12 months you're break even and after that it's incremental profit you increase value because lifetime value on a net present value basis of operating profit is more than you paid to bring them in the door, and we're currently operating 1.4 to 1 so the unit economic model works well but the threshold question is, how much growth can i afford without going cash flow negative the faster i grow, the more money i spend to do it. >> one last question i remember when you told me when netflix was going to inflect i remember you told me that spotify was going to inflect now you're going to tell me that peloton is inflecting in. >> two quarters ago i said

peloton had turned and this is the first quarter i think we produced the metrics that would give investors a reason to believe. >> i have to congratulate you a a all three situations people did not want to believe. let's talk about growth. i want to thank barry. barry mccarthy is a winner thank you for coming on. >> thank you for having me >> back to you. after the break, more on amd today but first look at the laggards on the s&p as we're down about 15 points on the index. led by names that did have earnings in the past 24 hour, ea and match among them stay with us products like thm with floodlight, with intelligent alerts when a person or familiar face is detected. sam. sophie's not here tonight. so you have a home with no worries. brought to you by adt.

amd's headed higher despite this drop in fourth quarter profit as sales linked to pc clients were cut in half that said, the results were still better than analysts had

expected thanks to strength in embedded chips and data center ceo lisa sue joined us in the last hour to discuss >> our product portfolio is just very strong. we've had consistent execution with our datacenter road map, so, you know, we've talked on this show before about our third generation epic milan. we just launched our fourth generation epic with genoa you know, extremely strong performance, total cost of ownership per data center providers. and so, yes, on the overall, we believe that, you know, data center and embedded will grow for us in 2023 >> talked a bit about cloud inventories getting better in the back half of the year. they did guide q1 research a tad light, but coming off of intel's quarter, where they guided gross margins with a three-handle, it's hard to imagine anything worse than that. >> it really is a tale of two seminames here she did say that even in this environment, she sees a strong path to grow market share. i also thought it was

interesting, what she had to say about the less-than-cyclical nature of some of the end markets that they have folded in with their acquisition, as well. the aerospace and defense, industrial, auto, which we know has been strong. it's been a strong end market across industries and across, you know -- and as we saw, actually, with gm yesterday as well >> many of these ceos cautioning about the macro environment prior to making more positiv statements about how they're going to be able to execute in it certainly worth notie ingnoting, especially ahead of the fade fed. >> down taking a leg lower, down 350. back close to 450 on the s&p on tech check today, amid the slumping demand for digital ads, can snap snap back we've got more on their quarter as the stock is down better than 13%. and what that means for other big names like meta posting tonight. don't go away.

well, the dow might be down 1%, but the dow transports are positive this morning. why? trucking company old dominion surging almost 7% right now after an earnings beat, annual revenue and profitability hitting new records, as well pricing resilient as volumes

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seeing hefty gains to kick off 2023 20% gain in january, best month ever for that etf. of course, that amid a broader rally and beaten down gross gains. here she was on "squawk box" earlier today. >> 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 size of expectation. >> it certainly speaks to, david, this rally, we have seen in, i guess i could say beaten down growth names. but also according to one report i read this morning, the dash for trash, because it wasn't just arc innovation etf that had a huge month, but carvana, peloton. just had the ceo on even before this morning's numbers tesla, 40% bitcoin, 40% rally the question is, is it

sustainable here or is it just seasonal coming off of a rough year >> that's the key question, of course we may get a little bit better more information when we hear from fed chair powell later today. of course, one of these key questions, it's not just that we get to a terminal rate, but how long do you stay there all right, speaking of staying, we're done, we're leaving. i'm going to send it over to "tech check. >> happy wednesday welcome to "tech check." i'm john fourth with carl quint nina and deedra bosa the readthrough for earnings tonight with meta and alphabet set to report. those results against the backdrop of the fed this afternoon, with the nasdaq already up double digits so far in 2023. how today's decision will impact the tech stocks in your powerful that's next. >> and we've still got the megacaps left to report this week so markets, they are muted today ahead of that an