3rd. when is groundhog day? >> it was yet. >> what happened >> six more weeks of winter. get used to it >> shocker "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the at&t pro-am at pebble beach. i'm rebecca quick along with joe kernen andrew ross sorkin is in times square >> good morning, good morning. it is very early for you. >> it is we're still on east coast time >> 3:00 a.m. exactly. >> speak for yourself. >> i'm still on east coast time.

>> i'm on davos time >> we had travel lately. we have a big lineup including the ceos of at&t and waste management and chevron and delta airlines we will get the state of the economy and where things stand and as we get through earnings season and what they see happening in the year ahead. what they see what is going on with their businesses. a lot to talk about with our guests today we will pull them off before they get back on the greens today. it is early here for them as well we want to look at the markets today. there is activity and things you want to check out. yesterday, the nasdaq was doing very well. you had big gains that came in this morning, not so much. you see a decline of 200 points in the nasdaq futures right now. dow futures are down 100 s&p is down 33 a lot of the pressure coming from, as joe mentioned, tech earnings after hours that were

not near what was anticipated from the big cap names we will talk about this in a moment look at what is happening with the treasury market post-fed decision and jay powell press conference the 10-year treasury below 3.5%. not just 3.5%. 3.4% the 2-year treasury is above 4%. 4.092% >> it was a good month for stocks >> yes >> 4,200 on the s&p. nasdaq with a bull market. europe they are below us and inching up don't we think, andrew, aren't they almost done powell don't you think? i can't believe you don't have a jacket on and i do have a jacket on the world is topsy-turvy this has never happened before >> the jacket thing?

no on the fed, we had roger ferguson on yesterday and ray dalio on yesterday they both said listen to jay powell listen to what he is saying. he is not going to let up. they were in the not let up camp they said the market was doing a hear no evil and see no evil situation. take it for what you will. i think the markets decided they didn't believe the fed that's a separate issue. >> i talked to somebody here, a close fed watcher, who was just talking about the body language from jay powell. >> i know who it was >> don't say who thought it was just the body language wasn't strong enough to the market to convince otherwise. thinks the fed needs to keep raising, but the body language wasn't enough. the market maybe reading too much into the soft performance from the jay powell. >> you all right

>> yeah. >> why the long face i have something still winter, davos, 3:00 a.m. all these things meta yesterday >> let's talk about meta and lets talk about the tech companies. a whiplash and backlash. i don't know what you want to say about it, guys you know, you had the meta news. everybody thought great and what does that say about the advertising business things are better than we thought. here comes amazon and alphabet and apple thedown in the pre-market joining us now to talk about all this is stephanie link strategist at hightower and cnbc contributor. what do you think? whiplash is the right word >> i think that meta's expectations were so low and valuations 14 times into the

print, andrew , and they talked about the cost cutting that was the game changer. the quarter was okay the cost cutting that they got religion on. that is why meta took off. >> you saw its peers go in line with them until they didn't. we heard this news yesterday on apple, amazon and alphabet >> right that's because all three of them didn't produce good results. at the same time, they had rallied substantially. apple up 16% google up 21%. amazon up 31%. all of these stocks traded higher mull tiples expectations weren't high after meta none of these was a game changer. >> let's walk through each if we could. apple, the number here first

reporting the first miss since 2016 revenue falling 5% it missed estimates. company saying manufacturing in china hurting the ability to deliver premium iphones. tim cook told cnbc in terms of production today, it is back to where it needs to be that problem is behind us. steph, i want to get your thoughts on apple and throw into the mix the other thing. you saw ipad sales expecting to be down double digits. services will be up. iphones are still off. i think the expectation is that will continue. >> yeah. it will continue a lot of that is supply driven issues they have to iron that out iphone sales were down 8%. disappointing. wearables were down. imacs are down that is why they missed earnings

on the flip side, install base is $2 billion. gross margins is 43% that is due to cost cuts services came in 6%. that's the bright spot this is not like a terrible situation. it is just that the stock ran. it is trading 24 times earnings. you have unknowns of the next quarter or two i think the stock is dead money for the next couple quarters >> what is a fair multiple for apple right now? >> well, what are you getting? you have total revenue down 5% earnings, at best, if supply chain gets better, mid single or upper single digits. are you paying 24 times for that that is not something i feel comfortable doing. >> 18 times? is that something that is okay and you like that?

>> possibly, yes again, the $2 billion install base in my opinion, that along with the margins and cost discipline we are seeing at the company >> right joe? >> thanks, andrew. steph, i think the prediction was higher interest rates would hit tech stocks. isn't it fascinating that it is from different -- it is all different stories for these stocks apple is the not necessarily demand it is supply chain related they couldn't make enough. you have google. first time -- second time since google went public that ad revenues were actually down. that's digital advertising amazon what's the problem there inflation and i don't know maybe consumer all different things they are all down with higher interest rates isn't that weird the way it works? is that the way it manifests

itself >> well, you are right when rates go higher and if they stay higher for longer, if the fed takes a pause, it will hurt long-duration assets that's right every one has an issue of the three, joe, i thought amazon was pretty good the quarter beat on revenue. retail was pretty strong margins were better than expected if you exclude the charge on the retail piece they are cleaning the retail piece up margins have a possibility this year to actually expand. to me, amazon was fine guidance was a little light. cloud, of course, light. that is what everybody is obsessed about cloud in general that is not company specific that is industry wide. that is because you see a slowdown from enterprises from small and medium businesses. >> finally, steph, by the way, we are about to talk about

alphabet google's parent. good news for amazon they were taking share 19% up on the advertising piece of business. i don't know what it says about the advertising market or doesn't say much maybe amazon figured out a way to build a new mouse trap that's working for them >> i think amazon was impressive on the ad side for sure. of the three, patalphabet was te worst of reports youtube down 8%. that accelerated to the down side from last quarter which was down 2%. search missed. to your point, it is because of ad spend it might be because there's market share that's not only amazon taking, but maybe meta or maybe tiktok i think there are more questions on alphabet than any of the others >> what is fair value for alphabet right now

this goes back to the multiple question you would like apple at 18 times you are okay >> yeah. >> this is too rich? >> apple at 18 times >> where would you be on alphabet >> i mean, to me, you have a decelerating cloud business. it is still growing at 32% down from 38%. you just put up 1% consolidated total revenue growth youtube and search disappointing. eventually it will come back ai will eventually help their cloud businesslike it will everybody else it will take a lot of time to me, this one is not compelling at all. it is not expensiexpensive. 21 times is not expensive. i say what am i getting for paying 21 times. if i go out and spend high

multiple on amazon, i feel better about the retear story and marketplace story. >> stephanie link, i appreciate it thank you. becky? andrew, thank you. when we come back, the countdown is on to the january jobs report we talk expectations after the break. plus, nordstrom shares soaring on reports of a new activist stake we have details after this break. you are watching "squawk box" 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. the only smart bed in the world that actively cools, warms, and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

it is jobs friday. the forecasters are expecting the economy to add 187,000 jobs in january down from a gain of 223,000 in december average hourly wages expected to come in at 4.4% year over year that is a very important number because it is the gauge of where you anticipate nflation. higher wages working in the numbers. we wellill see what happens latr this hour. ryan cohen building a stake in nordstrom he is pushing for board changes according to the wall street journal report cohen is one of the top five

non-family shareholders. cohen is looking to replace a board member who you might recall, mark tritton, served as ceo of bed, bath & beyond. i said his name wrong. i called it tritton. he is conflicted and unqualified among other things cohen wants changes during tritton's tenure at bbby. shares of ford under pressure after the disappointing earnings report. phil lebeau has details next throughout the morning, we have a big lineup at at&t pebble beach with the ceo of at&t and

chevron and delta airlines and waste management and piper sandler. we wiltal lk all things in the world of golf. "squawk box" will be right back. prizefighter... ...meets trailblazer. ♪ ♪ classic meets modern. ♪ at morgan stanley, we may seem like a contradiction...and we are. ♪ ♪ at 87 years old, we still see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities ♪ and relentlessly working with you to make them real. ♪

partnering to unlock new ideas, ♪ to create new legacies, ♪ to research, innovate, collaborate, ♪ and build the way to transform a company, industry, economy, generation. ♪ because grit and vision working in lockstep puts you on the path to your full potential. ♪

welcome back ford shares are trading lower this morning this comes after the automaker miss when it comes to earnings the company says execution issues plagued operations. the ceo jim farley spoke to phil lebeau last night. phil, what did he have to say? >> becky, there is a level of frustration we heard from jim during the interview it is clear. he realizes that the problems at ford are substantial we will not go over the numbers from the fourth quarter. the main thing to tomfocus on i the miss comes to this $1 billion of lost volume. vehicles, 100,000 of which, the

did not make another $1 billion was due to higher than expected costs in the fourth quarter here is farley talking about the cost issues facing ford. >> we lost about 100,000 units of production. that is very material. came in late in the quarter. most of it is chips. some new supply issues you could say that is bad luck for ford that is not how we see it. we can manage our supply chain in different ways. we were dependent on broker chips and things like that >> okay. that is what happened in the fourth quarter the question now is what does farley and his team do to fix the situation at ford? it sounds trite, but improve quality. they have real issues there. gre greater efficiency in the manufacturing. they have to lower costs you will hear this costs have to come down at ford.

farley says they are on the path to see where they can do a better job when it comes to costs. >> we have to change our cost profile. i have to say i think our approach is different now and the way we think about costs than in the past in the past, we would cut the people that is like, you know, the output what we have to do is really improve the efficiency of the input. >> so read between the lines i asked if there would be layoffs. he said we are not talking about what we are going to do to cut costs. it is not whole salesale layoffs ford is looking at it overall. i ended the interview of what would you say to the ford investor right now here is what he said. >> be patient. we are growing in the right plan we are separating the businesses

out so you see where we are. this team is going to deliver for you. you are going to get a great return on your investment. >> that's what he is promising a great return on investment in ford investors are not seeing that right now. stock down 8%. you can watch the full interview with jim farley on cnbc.com. i have known jim for a number of years. he is a straight shooter that candor earns him a lot of praise on wall street. one said candor is not enough. we need specifics and details in what ford will do to fix the situation. >> phil, i still don't understand 100 million units lost in the fourth quarter >> 100,000 100,000. >> oh, 100,000 >> 100,000 vehicles they planned to build, but did not build. supply chain issues continue to have issues with semiconductors.

poor execution >> what does this mean in terms of whether the street things this is ford specific or whether this is something, you know, all of the automakers? how are the shares reacting to this >> they think it is ford specific deutsche bank out with a note within the last half hour. they moved ford down to a sell rating saying there is significant downside risk to the earnings trajectory they have to get their act together in terms of quality and execution. it is the blocking and tackling. you don't hear that with other automakers you don't hear it with gm earlier this week. if it was chip shortage, everybody has chip shortage, you would see the sector brought lower. this is ford specific. >> phil, thank you good to see you. >> you bet coming up, we have a lot more on tap. we get ready for the jobs report

this morning steve liesman is here to tell us what to expect and maybe how the market could move about it all we'll talk about that after the break. the cfo of starbucks will join us in a first on cnbc interview this morning to talk about the earnings miss. as we head to break, a look at the s&p 500 winners and losers from yesterday. we all work differently now. so cdw helped us deploy mac, supercharged by apple silicon. ♪♪ built-in security protects me from malware and forgotten passwords. i've got enough battery life to get me halfway around the globe. and lower overall costs leave more money in our budget. for more practical furniture? this was supposed to be hip. no. can you help me up? with mac, configured by cdw, a solution that works for everyone isn't just possible, it's powerful.

good morning welcome back to "squawk box" here from the nasdaq market site in times square. on one side of the country -- this is transcontinental show. becky and joe are in pebble beach this morning we will get back to them in a moment look at futures. dow off 102. nasdaq off 190 s&p off 33 points. here is why the futures are down apple and amazon and alphabet trading lower and disappointing earnings we have more at the top of the hour some other news from wall street carlyle group courting harvey schwartz of goldman sachs to take over at ceo semafor announcing they are in

talks. the announcement could come next week if the negotiations are completed. joe. we are about two hours, andrew, away from the january jobs report. i think that is three hours difference oh, yeah steve liesman is here. steve, it is summer down in aust australia. i haven't seen it myself what are we expecting today, steve? >> joe, it is two minus three plus five is how you figure it out. that's how you do it on the west coast. i have a spreadsheet i'll send it to you. joe, there is a lot of hope riding on the jobs report. the hope it confirms the market view that the fed can ease up on rate hikes some time soon and the idea they can execute a soft landing. jay powell singled out jobs to be the remaining source of inflation for the economy that they have to deal with

before giving the numbers, i want to give you the best-case scenario for markets and inflation and the fed. you have moderating payroll growth rising unemployment rate easing wage gains and rising participation. what if we went 4 for 4? 187 is a step down still higher than the run rate of the economy and the addition of the population. it was 223 in december unemployment ticking up to 3.6 hourly wafges of 0.3 the year over year rate because older and bigger numbers are dropping out of the calculation and dropping down 4.3 from 4.6 the expectation is if the job cuts announcements from the marquee companies will show up in the numbers or is the job market so tight that workers get fired and find jobs quickly.

low jobless claims so far suggesting that is the case. one measure i'll watch this morning is duration of unemp unemployment it is measured in weeks. it is declining from 32 weeks at the peak of june of 2021 to now. that is the top of the range not to make excuses for forecasters, but january is a tough month. holiday hirings and firings and weather issues and returning strikers all this leading goldman to 300,000. morgan stanley at 1175. it does see the monthly rate falling to 71,000 in the second half of the year joe. >> all right steve, obviously we keep talk about the fed and they need

credibility. the market just doesn't really seem to be willing to cede that to them without a fight. now we are not siekynchronized globally i don't know what it means for ecb and everything else. we still have heavy lifting to do. >> they had more heavy lifting to do overseas than over here. we got a head start on them. that is probably good news for us, joe. remember, the ecb hiked 50 the other day. we are down to 25. we did a bunch of 75s and now we're down at 25 we are off six months. >> aren't they way behind? i didn't mean heavy lifting just

to get almost synchronized to all be on the same page. where are they after the 50? they are still way below us? >> they are below us they may not go as high as we go, joe. it is unclear if they go as high as we go the inflation problems are different. they have a hiring problem over there right now. the forecasts are coming down over there the story, joe, i think, is what do you call it it is a hard thing to talk about. there is a sing ro sing row -- h raising rates with lagarde and powell you see the 3.40 on the 10-year treasury you lost almost in connection to the rate hikes look at it

the interesting thing i'm watching is are you back to the place -- remember in jackson hole where powell came forward and said we are hiking rates and tightening markets i think the tightening from the jaw boning in jackson hole is gone from the market >> almost below 4% on the 2-year treasury steve, i think the markets are right. i think the fed's wrong. i don't know >> the question is don't fight the fed or don't fight the market who is the bigger gorilla? >> i have a chart i want to show you which raises questions about whether powell has this right. i want to thank neil irwin who brought this to my attention the unemployment rate ticked down and so have employment costs. that is the opposite of the inflation dynamic that powell is basically basing policy on it's not supposed to happen. you had a tighter job market

during the course of the year. 3.8 to 3.6 on unemployment look at employment costs down from 1.4 to 1%. it is not entirely clear that the tight job market is that source of inflation that powell suggests >> all right all right. right. it's a big market. the bond market is tough it's tough to argue with that, isn't it, steve? >> right i think the market is not seeing the connection, joe. i think you may be on it right there. the market is on to the idea that the real source of inflation has been the supply chain problem and those are clearing up. >> that would be stupid to kill an economy because of the supply chain problems i would rather address the supply that's what people have been saying for a while thanks, steve. >> thanks, joe >> what am i >> you're joe kernen

>> i can't hit a chip shot i'm glad to be back here sitting in a chair i don't feel that yippy on tv. >> you shouldn't. when we come back, more workers are returning to offices. robert frank joins us next on what is driving the in-office push i have a guess bosses. and a big lineup from ceos from the at&t pebble beach executives from delta airlines and chevron and waste management and at&t "squawbo wk x"ill be right back. jimmy dunne will be here, too. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades

and stay on top of the market. (♪ ♪) how do we demonstrate our helunmovable strength?ades (eagle call) nope. how do we show that we'll stand tall through the storms? nah. (thunder) how do we make our clients feel secure and- ugh... not lions. (lion rumbles) we do it with our people. people who've been looking after people for over 170 years.

♪ ♪ a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward. because if it's connected, it's protected. cisco.

well come back to "squawk bx on jobs friday a look at meta, not meta that was two days ago. apple and alphabet dow off 79 nasdaq off 176 points. s&p off 30 becky, there is red on the screen and on my tie and your dress. >> i got the word too late, andrew i got nothing red. i'm sorry. i could put makeup on. it looks nice with us on a two-shot it's red, white and blue

>> it's true president of the it goes across the screenful all three of us matching >> i always do and mary says jump and i say how high. i go to the pro shop to buy something. >> i should have brought something for you. in the meantime, workers are returning to the office more than since the pandemic first hit. it may be the threat of layoffs and more to come that is driving the increase robert frank has the latest numbers. robert, what are you hearing >> becky, more than half of office workers are back in the office on the average weekday. the ten biggest cities average hit 50.4% last week. the first time it passed the 50% mark since the pandemic. there are differences in cities. austin, texas, 68% of workers are back in san jose, it is only 41%.

new york is now at 48% the actual number could be even higher survey of the new york biggest employers by the partnership for new york city found that 52% of manhattan office workers are now back only 10% are fully remote. that is down from 16% this fall. most new york office workers are in at least three days a week. employers say the new normal for new york will be around 56%. the industries with the highest office rates are real estate, finance and law. tech now among the lowest. labor experts say layoff fears are driving many back to the office and more ceos are cracking down. starbucks ceo telling employees to be in the office three days a week and disney at four days a week starting in march guys. >> robert, any time you talk to

the ceos, this is the subject that comes up. how do you get workers back? what tricks do they put in place or rules do they put in place? this is a struggle more than three years out or three years out at this point from all of the situations what happens next? i guess part of the question is the numbers you were quoting at 51% of workers back in the office and three days a week, those numbers are back three days a week or that's how many workers are in any given day in new york city? >> any given day if you look at wednesday, it is near 70% or on monday and friday, it is 20% or 30% it is surprising that basically three years later we are still celebrating the fact that half of the workers are back in the office what was stunning to me about this partnership for new york city survey is that the employers in new york city say the new normal even when we

reach the peak is 56% on the average weekday. this is a tuesday, wednesday, thursday few people in the office on monday and friday. the question is not just for employers, but cities, is what does a three-day workweek look like for cities whose economies and taxes and commuting base is based on the five-day workweek that is an adjustment that i don't think a lot of cities have really made. i still think they are hoping for 80% or 90% >> you think about the services surrounding that can you run a lunch business if it is only three days a week it will be interesting robert, thank you. >> thanks. coming up, an update on the indian billionaire who lost nearly half of his fortune since the beginning of the year. the numbers are right that i just looked at

you don't need to cry that much for this gentleman he is still doing well "squawk box" will be right back. the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. 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. that always puts you first.

so, you can both stay comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday.

adani shares continue to drop this week in india. the founder's net worth dropped $50 billion in the last week $63 billion as of yesterday's close. well over $100 billion yesterday, s&p and dow jones industrial average said adani enterprises would be removed from the sustainability indices falling the analysis triggered by allegations of stock manipulation and accounting fraud. the stock was just added to the emerging market index in december >> never mind.

coming up, guys, when we come back, a wrinkle in u.s.-china relations the pentagon reporting tracking a chinese spy balloon. take a look at this. it is on the screen right now over the continental united states over the state of montana right now. details after the brk. ea this tiny payment thing- is a giant pain! hi ladies! alex from u.s. bank! can she help? how about a comprehensive point of sale system... that can track inventory, manage schedules- and customize orders? that's what u.s. bank business essentials is for. (oven explosion) what about a new oven, can u.s. bank help us there? we can serve loans in as fast as 12 minutes. that would be a big help! huge! jumbo! ginormous! woo! -woo! finding ways to make your business boom. that's what u.s. bank is for. we'll get there together. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai.

now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

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. (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. welcome back to "squawk.

officials are tracking a chinese reconnaissance balloon over the continental united states. the balloon citing is days before secretary of state blinken is planning a trip to beijing. the balloon spotted wednesday by civilians in the commercial airliner it was spotted by two fighter pilots over montana before officials decided not to shoot it down. footage captured by the witness in billings, montana, after officials said they were tracking the balloon there the conversation with secretary blinken and the chinese is likely to get more complicated with the spying effort. meantime, sticking with china, ray dalio spoke to us yesterday and he is warning about the relationship he sees between u.s. and china >> we are at the brink of the economic war with a form of

sanctions, if it happened, would be shocking to the economy the world economy much worse than the russian war and that economy. if you have a war with china, that is a problem and the issue of taiwan. >> joining us is dewardric macneil. do we have balloons? >> this is bizarre this is not going to gain more intelligence than the low orbit satellite. it seems provocative and it happens at the wrong time. we have a new republican controlled house standing up to china. we have the blinken trip this is bizarre to me.

you don't get much value other than a poke in the heye. i don't understand >> are you putting this in poke in the higeye intentional? one hand is not talking to the other hand and they are happening to be doing this the timing is not great. i'm not making excuses for how this happened. >> i think you are right, andrew, to point out both of those things i was in the obama administration and secretary gates was on the trip to china when china launched a j-22 test fighter. it was bizarre to us it would happen at a time when secretary gates was there and the excuse we got was one hand wasn't talking to the other all of those things are possible we are at a stage where ray said we have to be careful not to tip the balance one way or the other and have a misunderstanding lead to something greater

>> i have a complicated one for you. i was talking to a u.s. ceo last week who does business in china. he said my worry today is not so much that the chinese try to kick me out of the country or don't let me exit, whatever, with my business my worry today is the u.s. is so hawkish about china that i get put on some kind of list in the united states where i'm shamed out of doing business in china i thought that was a fascinating twist where we are and i'm curious where you are as a result >> let's go back to what ray said yesterday which i think is an important thing for us to focus on he is right that it is possible that an economic war, a tit-for-tat, like the trump administration could happen. businesses will be in the

cross-hairs, whether it is on the u.s. side or chinese side. how are businesses planning for the new environment? so far, andrew, many have carried along as we hoped at some point this would return to a pre-trump or pre-obama era relationship that is not the trajectory the tone is changed, but the issue is direct to competition there will be collateral damage. >> dewardric, thank you. we hope to have you back. >> thank you, andrew becky. >> andrew, thanks. when we come back, more on the decline of the big tech stocks including apple, amazon and alphabet still to come, a big lineup from the ceos from the at&t pro-am in pebble beach including ltaiindea rles and

chevron and waste management and at&t "squawk box" will be right back. 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 with a partner that always puts you first. godaddy. tools and support for every small business first.

good morning futures sliding after several high profile earnings cast doubt on the recent market rally we breakdown the results of appar apple, alphabet and amazon. the january jobs report with

a gain of 187,000 for january. we find out if this changes market sentiment line up from pebble beach. ceos from delta airlines and waste management and at&t join us to talk about business conditions and inflation pressure and more. the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along with rebecca quick and joe kernen both of them in pebble beach at the at&t pro-am. i'm at the nasdaq market site in n new york we have a lot going on with jobs friday and your fabulous guests. >> looking forward to it

becky and i wearing red today. not to celebrate where the market is, but bring awareness to heart disease in america and around the world we can talk about that in a bit. take a look. dow off 77 nasdaq off 165 treasuries right now. this is the big one that we will talk about steve liesman in a bit. the 10-year treasury at 3.3990%. the 2-year treasury at $ 4.089%. wti is at $75. and the cryptocurrency board is close to $24,000 for bitcoin, joe.

>> it was over 24 at one point it issingis moving around a bit it is a bounce back year so far for bitcoin and ethereum and others. a big night of earnings yesterday. apple and amazon and alphabet reporting quarterly results. let's talk about apple the company reported the largest quarterly revenue decline since 2016 citing production slowdowns in china and the overall macro environment. joining us is dan flax senior research analyst from neuburger. dan, i was looking at all three of these they start blah, blah, blah, we continue to see the company executing. you like all three you are giving a pass because they all start with "a" or you have been recommending the stocks you don't see any problems with it let's start with apple there are issues, but they are continuing to execute.

same story with the other two. let's start with apple >> good morning, joe great to be with you as always apple is navigating a difficult environment. quite well, overall. as you know, we have been long time holders of the name they are executing on iphone iphone was impacted by supply challenges in china over the quarter. if you look across the businesses, they had record growth in the install base record size on the services which remains healthy. i think what will happen is as we move through the quarters, we see return to growth the market will begin to discount that. we continue to like the name in the face of the macro challenges >> what would they have said for you to say, okay, there's a problem. what did they not say that allows you to stay feeling good about apple? what would you have to see to get negative on the stock? >> it comes down to the

innovation so, if we were to see chal challchallenges with the execution on the product cycles or challenges on the services or gross margins. gross margins were the guidance for the march quarter which was better and i think that was notable in the face of things. we are tracking the innovation carefully. >> same thing with alphabet. despite the cyclical headwinds, the company is continuing to execute. they missed expectations on the top and bottom lines first time you see advertising -- second time since the ipo long ago where you saw advertising sales drop that's not enough to get you to feel -- it hasn't been a great hold for you in the last year. >> the last 12 months have been more difficult, but if you look over the last several years, it has been a good stock. i think if we look out over the next couple years, it will be a

good stock if you adjust for currency, the business performed well considering the environment. i think what we see with the case going forward is it continues to he evolve and chans it continues to deliver. you have newer businesses like the cloud business which grew over 30% it is not they are immune from the macro challenges we are seeing the company take a more aggressive approach to managing costs which is positive we continue to like that name here >> i guess there is nothing that would cause you to get negative? maybe it would be good to get negligative 12 months ago? nothing now? now is the time to buy or hang on >> we would be a buyer here. it is going to come down to the ability to develop new services and grow if they can do that the way they

have done historically, it will be good investment youtube has seen good traction with shorts. >> finally, amazon beat expectations. continued growth which is counter to google with the digital advertising business any concerns or is this another one that, i guess, is little to do anything in terms of lighting up >> we have been long-time holders of amazon. the cloud service is slowing it is approaching $100 billion it is impacted by cyclical headwinds. feedback is strong from customers. we like the cloud platform e commerce if they deliver in areas like prime, which they continue do expand the ability to deliver value to customers will serve them well. more of a focus on costs that is more important i expect growth to improve later this year and into 2024 which the market will discount in the

coming months and quarters >> do you watch the fed meetings, dan? obviously, it impacts the multiples on the tech stocks in general. do you think we need to see the fed finally pivot before you get back to the growthy days of technology will this sector lead us out of what we have seen last year which was a tough year will it lead the market back to bull market territory? >> i think the fed and the significant move in rates was notable and it certainly is impacting consumers. i think if we step back and look historically, rates are low levels certainly as the pace of interest rate increases likely moderates, that could help a little bit what matters more is whether amazon and some technology companies like the ones we discuss, if they drive growth,

they will help lead parts of the market higher. it comes down to innovation and growth and free cash flow generation if multiples remain at similar levels. you need to see that growth. >> do you think, dan, we are going to see a retest of the lows in any of the averages? i guess you have to consider that nasdaq has come back a bit do you think we're out of the woods in terms of the lows? >> i think we are mostly out of the woods. we will see how the data comes in more broadly and specifically for the companies. we try to take a longer term view on the investments and think how the next one to two years plays out. the market discounts what could be improving news. the markets are tracattractive . for longer-term investors, these names remain attractive.

>> dan, thank you. >> thanks, joe. still to come this morning, a list of morning movers in the pre-market and in the next half hour, big lineup from pebble beach ceos from delta and chevron and waste management. check out the futures this morning as we countdown to the january jobs report. less than an hour and a half to go dow futures down 75. that is improvement. nasdaq off 150 that's also improvement. s&p right now down 26. "squawk box" will be back live from pebble beach. ga-a-a-ap! oh... hi. what's this, a hospital bill? mm-hmm. for 1,100 bucks? ga-a-a-ap! looks like your wallet may need a sling too. tell me about it. did that goat say "gap"? he's talking about expenses

that health insurance doesn't cover. eh-ehh-eh! well i'm talking about the money aflac pays to help close that gap. aflac, huh? aflac! ga-a-a-ap! aflac! gap... uh-oh! that duck can motor! get help with expenses health insurance doesn't cover at... aflac! ...dot com. hi, i'm debra. i'm from colorado. i've been married to my high school sweetheart for 35 years. i'm a mother of four-- always busy. i was starting to feel a little foggy. just didn't feel like things were as sharp as i knew they once were. i heard about prevagen and then i started taking it about two years now. started noticing things a little sharper, a little clearer. i feel like it's kept me on my game. i'm able to remember things. i'd say give it a try. prevagen. at stores everywhere without a prescription.

why are 93% of sleep number sleepers very satisfied with their bed? 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.

i want to get back to check on what is moving in the pre-market ahead of the jobs number we have a bunch of earnings reports, frank what are you looking at? starbucks is on my list. >> we have to begin with starbucks. we are talking about earnings. down more than 2% after the miss on the top and bottom line same store sales is a mixed bag.

in the u.s., rose 10%. international, fell by 13% they were dragged lower by the covid shutdowns in china ceo howard schultz teased an announcement by his trip to italy. and coming up on "squawk box," the cfo will be on as you will talk about the ceo situation. and kqualcomm shares are don 3% after they missed on earnings they expect an 18% revenue decline for the quarter and weaker demand and lockdowns in china. third up is boeing the planemaker citing supply chain issues those issues will continue especially with production of the 787 and 737 max.

andrew. >> frank, we will talk to the cfo in a bit the stock is down 1% on the news out of china for starbucks does it become a reopen play for china or was it and that was disappointing? you talked about the domestic sales. that was remarkable. for every customer going in, it is not actually necessarily hugely more traffic into the stores the stores almost have too many people it is the fact they are able to take more money out of your wallet on every trip i think something about 7% more. the question is how long can that kind of growth continue obviously, we get more sophisticated drinks >> you are right about the 7% increase in sales per customer one issue is gift cards for the

holiday season that revenue is not realized until the cards are swiped and robert talked about people coming back to the office. that is a tailwind people coming back to the city like new york city and l.a. and going to the office and taking a coffee break the china reopening. we are waiting for it. there is a possibility of a spike in demand in china when the country reopens fully. we have heard and seen fits and starts with that the main is the people coming back to the office as it is mandated and we want to take a coffee break and get back into the flow of the office >> frank holland, thank you. when we come back, we will head to pebble beach and talk to ed bastian and then mike wirth after the white house launched the big attack on big oil.

we will talk about it when "squawk box" comes back. >> announcer: time for the aflac trivia question. what year did at&t become the official sponsor of the pebble beach pro-am the answer when "squawk box" on cnbc continues

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. so, you can both stay comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday.

>> announcer: now the answer to the day's aflac trivia question. what year did at&t become the official sponsor of the pebble beach pro-am the answer 1986 it was originally known as the bing crosby national pro-am. welcome back ryan cohen building a stake in nordstrom and now intends to push for board changes cohen is one of the top five non-family shareholders. cohen will look to replace mark tritton who worked for nordstrom and worked for bed bath &

beyond mr. kernen, we have not talked about how you are playing. >> there was a lot of wind yesterday. it is good and bad it was the best of times, it was the worst of times like a dickens novel we may show something later. i had one good swing there is always today. getting up at 1:30 in the morning. ford shares fourth quarter earnings missed estimates and fell short of its full year guidance by $1.1 billion the company cited execution issues that plagued operations fell short of expected sales by 100,000 units. speaking to cnbc after the call, ford ceo jim farley says he knows the company needs to change >> we have to change our cost

profile. i have to say i think our approach is different now in the way we are thinking about costs than in the past in the past, we would cut, you know, the people that's kind of like, you know, the output what we have to do is improve the efficiency of the input. >> and again, check out the shares of ford down 6.5% at 13 and change this morning. a big lineup still to come from pebble beach this morning wm ceo jim fish will be here company known as west maste mana management ed bastian will join us next we have mike wirth with us as well the first time he will talk

since the buyback stock bringing on heat from the white house over it. we have the jobs report coming out at 8:30 a.m. eastern time look at the futures ahead of that dow futures off 70 points. "squawk box" ruretns to pebble beach after a quick break. you e full of peyton mannings. what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

welcome back shares of waste management under performed the market this year last year, they massively out performed the market the company reported fourth quarter earnings that missed est estimates. for the look ahead for the economy because this is a good gauge for the economy, we bring in jim fish. the ceo of wm. >> good to be here. >> let's talk about the earnings the first time you are talking with the media about the earnings it did show a little bit of a miss from wall street expecting in free cash flow and other metrics. stronger numbers from a year ago. >> still up 9.5% for the year.

8.8% for the quarter we feel good about the numbers the story was the investment making in sustainability projects and renewable natural gas and recycling. it was a two-part conversation one was the earnings and one was the future. >> that was a surprise to analysts increased investment with the natural gas plants and more plants you will bring on talk about the business and what it does and where you see it headed for the future. >> we felt buying a business that you buy three times earnings is better than turning around buying from a third party for ten times earnings we felt this is a byproduct of the landfills. half was monetized now with designation as renewable natural gas and monetize the whole piece. i was up in canada outside of montreal

one plant will cost $115 million to build it and generate $144 million. >> you laid that to rest >> yeah. >> why do people think you should spin off? >> it was an interesting question they asked. it is in its infancy build it out and decide down the road if you want to keep it. we own the gas it makes sense to keep the business. >> let's say we got a relatrip, roaring economy when the fed h eases. how much does it go up can you gauge the strength of the economy from how much trash we're making >> i think, joe, for our business, it goes with the economy for the most part. volumes of trash move with the economy. the recycling business has more volatility to it because of commodity prices

we took that out with the restructuring of contracts >> would you be in that business if your customers weren't asking for it 5% of profits would you say? >> i think we absolutely would be in the business if customers were asking for it >> recycling it is not a profit driver. it is the volatile with commodity prices. >> it is a profit driver after changing the contracts four years ago when commodity prices dipped, you had a break-even business. now we have a good margin on the business when prices dipped. it is a good business for us you know, as we rebranded as a susz sustainability company >> it gives you a growth end it is sexier than dumpsters. >> i think over the next four years, you will see the growth

of 30% to 40% in part of the renewable natural gas business >> how much of that is reliant on what the government sets and pricing and what you get back? >> two components are to it. one is the credits part of the ability to sell those is a fleet of 75% natural gas. you burn the fuel and propduce the gas, now you sell the credits. that is a difference because our competition may be 15% or 20% renewable natural gas fleet. on the other side, you have the gas itself that you put in the pipeline and essentially we refuel the trucks. we created the full circle where gas goes into the pipeline, we fuel the 75% of the trucks that pick up trash that comes back to the landfill >> is it a partner with the government >> always a partner. >> you are satisfied with the

regulatory environment >> we don't do a lot with the fo federal government this is a federal government program. most of the interaction is at the state level. for this set rule that the epa came out with recently and they will finalize this summer is done by the federal government i think it is a good program it is good for the environment and good for us. >> what do you see if terms of the economy with trash and what you pick up there? >> if we looked at inflation the last couple years, that impacted us it felt like a fist fight with that trying to cover it with pricing. that looks like it is coming back down considerably it dropped in half of the we were double digits with the drivers and technicians.

s s . >> employment costs were part of it it better in january than q 4. we built in flat volume. >> paying people more money to keep them or to get workers? >> that is a big question because some of the jobs -- it is interesting with the trade jobs, joe. my daughter said one time, dad, nobody in high school talks about driving a truck. we're paying our average driver now in the neighborhood of $90,000 a year >> tough to stay home in the hybrid work model. >> right. >> we were talking before and during the pandemic with waste shifts nobody was away from the office and you had more pick up from home if you are trying to figure out workers back to work >> i think a lot of workers are coming back and here at pebble

beach, ed said his team has been back in the office for the last year and a half. we are seeing our people come back to the office during the pandemic, everything shifted to home. residential waste went up and commercial waste went down that is flipping back. i think that is a good thing i'd rather work from the office than home. >> are the levels back to the levels they were >> small business is not fully recovered. big business has i think small businesses went out that still haven't come back >> jim, i remember when wayne, he was smart and started this. he realized if you can rent a dumpster every month, it will be a good business forever once you own the dumpster all of the things you can do how do you raise prices? why couldn't -- would someone else come in and undercut you if you just consistently kept raising prices

>> they do you are right. there is a lot of small competitors out there. >> that keeps you unable to really -- >> we raise prices a lot we took prices up in the neighborhood of 10% last year. it was a fist fight with inflation. we really didn't have a lot of margin points. this year, we may not take them up as much this year, but we hope to add a few margin points to the bottom line this year. >> prices don't come back down once you raise them. >> they are always going up. the percentage will be lower this year. >> it is an essential service, jim. you know that. you have the doctor and garbage man. that's it. absolutely have to have. all you need is a couple of weeks of a strike to see what happens. >> that's exactly right. >> keep doing it >> we will >> great to see you in person. >> great to see you, too >> jim fish. keeping up with travel

we mentioned ed. are you playing with ed? >> i am. we played yesterday. >> in the fox hole together. friends for life now you see each other in front of the gallery. keeping up with travel demand. next is delta's ceo. ed bastian will join us after this quick break "squawk box" returns to pebble beach next 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. as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile.

flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

♪ air travel demand is strong a month into 2023. airline stocks have risen to match. delta closed january up 19%. that is management at delta. really effective how are you doing, ed? >> i'm doing well, joe >> shares on the upswing so far in february here at pebble beach. ed bastian, ceo of delta airlines something more cyclical after the pandemic and 9/11, i don't know what it is. at this point, is the pent-up demand we saw that built up during the pandemic, is that starting to wear off or is it

not? >> not at all. we'll be lapping the annualization of it this february there were no signs people were able to take care of almost three years of travel in a year. this will continue this will be a multi-year incremental demand. >> how far out can you see are you looking at bookings six months from now? the consumer cash may run out in june or july can you see past that? >> we have pretty good inchsigh into the spring or early summer. the numbers continue to be strong our consumer does have a significant amount of cash still. we're not -- we're more of a premium brand. international is still open. we don't have china opened yet there is a significant year

ahead for our industry it is up to the industry to do a good job of running a good business. >> that's leisure. with this new idea about how work has changed, is business travel getting back and above that now business and leisure is combined with conventions. then company visits and things like that. overall, business travel is not back to where it was. >> traditional business travel is not back. people are traveling for lots of reasons. many business travelers may not come into the office five days a week or any days they are taking work with them on the road. they travel and work wherever they are and as a result, you see a significant incremental piece of business we never saw before >> you are a strict task master.

when did you get people back in in >> our people were back april of 2021 almost two years now our office is in the public eye. our people don't have an office to come to they bring the world together. our merit staff, headquarters staff, can't lead from home. if your people are out delivering results we made limited exceptions by the way, it has been great. people are collaborating and working. it is a great environment to be back on the campus >> do you know what kind of planes are going to be the future do you know the order? is it the pods is first class >> more and more first class just for you >> for me. yeah you still do things with partnerships with -- not necessarily private, but sort of a fractional with wheels up. >> we are the largest shareholder in wheels up we have a 20% stake with kenny

that is the top end of the premium spac if you want do go above pods, call kenny >> the overall economy in your view is going to do what this year can you tell does it matter for you >> we had our recession the last several years. you couldn't have had a worse recession in the airline industry than what we had. the incremental spend that consumers have is prioritized with experiences look out here. how busy it is here. the buzz people are excited to be back out and seeing each other. that continues what you find is the most you do it, you realize why you did it in the first place and how good it is to be back together. the ages of doing this on zoom o recreate virtual moments there is no liking that. >> it is interesting to see the troubles at southwest in

particular it looks like they haven't kept up with spending on the back end with computers and operations are ready to go. you haven't seen the similar problems what with do y-- what do you do to make sure to deal with anything thrown your way >> our people are our brand. the technology is enables people to do their jobs we have been staying ahead and investing in multi-years this is a tough industry and fragile industry we are not at the level of durability as an industry, but we are getting there >> what are the weak points? what needs to be corrected >> there is still training there is still hiring being done infrastructure and atc as we saw, also, earlier in january. the people at delta are doing a great job. we led the industry in the month of january across the board in

reliability and time and completion rate. that feeds itself. the southwest issues are their issue. they have a different business model. you have technology which is the lifeline >> the business model is different or the technology? >> i'm not going to pass judgment i don't know bob has said as much as they have to continue to invest in technology >> you have labor issues on the horizon? do you feel good about that? could a railroad-type situation happen >> we reached tentative agreement with the pilots for a four-year deal the pilots rank-and-file are voting on. i will not comment i don't want to be seen to influence that vote. the vote will be done by the end of the month hope nfully if that passes, that is the only major contract we have at delta. >> are you pulling for boeing at this point

>> of course >> hub and spoke is here to stay it is not 500 passenger aircraft that doesn't work? >> no. hub and spoke is here to stay. you will build bigger planes over time. they delivered the last 747 this last week. that era is gone for us, delta and the majors, it is international that's where we're going the domestic structure is in tact >> you mentioned the problems of air traffic control earlier this month. what needs to be done? we had different people on from congress and other places commenting on it is it a problem of more money p needed to fix that or a problem of leadership in trying to figure out where the funds are spent and maybe continuity >> i think it is a resource issue and multi-year resource issue. you can't fund a major agency like the faa on an annual basis

trying to decide how much capital you will invest. there are a lot of voices, as you say, becky, of what should be done. the people of the faa are hard working and good people. i feel bad they somehow have been seen as being part of the problem. they are trying to get their job done and they need the technology and resources over time hopefully this will enable the d.o.t. and other political bodies to say we need to take politics out of funding and do the right thing for the american public >> there are great golf courses all over the world you need to fly to get there this is perfect sense for you to be here. if anyone asks -- >> we wouldn't be here if it wasn't for airplanes, right? >> any of the courses. the great courses we have here ed, thanks thanks it's early now you get to go play. >> i'm ready

i get extra practice time this morning. >> spyglass out of the way i get that to look forward to after my 1:30 a.m. wake up thank you. still to come from pebble beach, i'm not complaining ceo mike wirth joins us as well as at&t's john stankey "squawk box" will be right back. we see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities and relentlessly working with you to make them real. ♪ because grit and vision working in lockstep ♪ puts you on the path to your full potential. ♪

good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. both at the at&t pebble beach. look at u.s. equities at this hour we have been talking about the red on the screen. that is in large part of the function of the earnings reports from apple and alphabet and amazon last night. dow off 57

the nasdaq off 133 s s&p off 23 let's get a better understanding of the treasuries as the market believes or disbelieves what jay powell saidten-year note at 3.3, the two-year at 4.108. and then oil, wti crude right now at $75.98. and then finally crypto, bitcoin specifically, sitting just at about $23,500. and i'm going to send it back right now to somebody who i think likes crypto a little bit more these days. joe kernen joe? >> i do. i liked it i told you when i suggested bitcoin was at a decent level and they started laughing at me. i asked, why are you laughing. that was at 16,000 i said, look, i think it's time to buy some.

let's get to our first guest of the hour, john stankey at&t has sponsored the pebble beach pro-am since 1986. th thank you for doing that how much to charity in the monterey area? >> this tournament has a record for the pga tour it's over $200 million throughout the longevity of the tournament and they do a photo photographic job. >> i wanted to make that birdie on 17 so badly. >> i heard you choked. >> i didn't choke. >> did you make it >> it was about a 12-foot putt it was the -- >> how many times have you played that green, joe you would think you would know the breaks now. >> on the green, at least. i wanted to. if i did, it would have been $2,500 -- >> there's some poor child that doesn't have a laptop because of your -- >> because of my crappy -- because of my yips you have a much more focused company as we know

but then when i look at what you're going to try to do in the future, it's really not an easier in terms of how smart you need to be, how expensive it's going to be. and decisions you're going to have to make, disconnecting everyone so that we can do everything we have -- the data to do what we need to do but it's up to you to make it happen you can't relax. >> you're making the case why it's so encouraging what the future holds the skilled infrastructure and high performance networking is going to be really critical and there aren't just a lot of companies around who can do this kind of thing. and i think we're one of the unique companies who have the scale, and the wherewithal and experience in doing the hard work to actually get the right amount of structure in the country. when you talk about the applications and what's to come, it's going to be required.

i think it's a really rosy future trends are going to be good for networking companies like ours. >> but it's going to take -- what do you think it will average in terms of capital expenditures >> we'll probably settle in somewhere around the 15% of revenues range maybe a little bit more one year, a little bit less the next but it will be probably right around that range. but we also have a dynamic coming on where there's nearly $50 billion of government subsidy that's about ready to be released into the system later this year. i think we can be a really competitive force in deploying that so there will be government subsidy that comes in and matches with private capital that may take the industry up a bit over the next three, call it three, four years. >> john, on the call, you're cfo just pointed out that for this year, you're anticipating about 24 billion in capex. thinks it will come down after 2023 is that because you don't need to spend as much when it comes

to 5g or other issues, or because you're bringing in partners like blackstone. >> it's a combination of all those things we're at a unique time where we're deploying a new interface in the wireless business that comes once about every ten years. when it comes, it drives a bit of an uptick in capital deployment we're going to be through that cycle largely this year, and we're largely at that point left with more fiber capillaries. that allows us to take it down because we're through that cycle and, you know, just a normal trend we typically see and, look, when you see what we're trying to do right now with alternate partnerships to bring other investors into the business, our blackrock discussion is a really important one. because we can go try some different things that we haven't done before. we're moving outside of our traditional operating footprint. the capital that they're going to bring in, allows us to try different deployment constructs, different business models. we think it's going to be really, really helpful and it's

going to give us a little more scale. >> where the payout is now and the dividend coverage, it's not -- you're not concerned with it you're not up at night. >> we made a lot of hard decisions probably starting a year and a half, two years ago prior to the devest temperature of warner media, and one of it was resizing our capital structure. and we set the dividend a level that we thought was sustainable for the business we have now and i think you look at last year's performance and you look at the cash flow dynamics, and what we've got to do this year, we got to do a $16 billion cash flow number -- or dividend obligation in a year is about 8 billion. it gives us a lot of looatituden top of that. and we expect we have a great opportunity to manage our business more efficiently. we've taken costs out over the last three years we're going to do even more as we move forward and that gives us the flexibility we need

especially with the growth we have. >> can i keep my landline? for how long longer? >> you know, i don't think copper-based landlines are long for this world -- >> that's a no >> but you've got a lot of other great remains that work better and do a lot more than that. i think you'll be able to talk to somebody on the telephone forever, joe, so you can still call. >> the way you described what you need to do -- i think maybe you are onto something you don't need dealing with producers and directors -- you don't need to create that content that's going to be on all these connected networks that you're being. if you had to do both, there's no way there's no way -- >> somebody made that choice, i guess, that's correct. look, they're -- i do believe we have a lot to do as you started out with we are very focused on doing that and doing it well >> focused and i think in the future -- >> stock is starting to work to john. >> i like it better where we were now than where we were this time last year. >> right here at a place called

pebble beach thank you. good to have you on. >> absolutely. >> okay. >> andrew? >> great conversation and interview. we've got a lot more coming up on "squawk box" this morning still to come from pebble beach, chevron's ceo is going will be the becky and joe, mike wirth. plus starbucks cfo plus the january jobs report it's all coming up jobs friday, the futures ahead and those numbers in the red the nasdaq off 130 points. p 0 wn3 points big hour ahead >> announcer: this is cnbc program is sponsored by baird. visit bairddifference.com. why are 93% of sleep number sleepers very satisfied with their bed? 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. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

♪ good morning it is jobs friday in america 30 minutes and counting to that big number and futures pointing lower as we make your way there. but the nasdaq is on pace for its longest weekly winning streak in more than a year and misgivings over the mega

caps investors see concerns in each of the latest corporate giants to report, alphabet, ambasazon d apple. the final hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" here on cnbc live from the at&t pro-am at pebble beach i'm joe kernen along with becky quick. andrew is back at the nasdaq holding down the fort in times square aside from getting the january jobs report this hour, we're going to speak with mike wirth, jimmy dunne and starbucks cfo, rachel ruggeri but u.s. ektquity futures deali

with mixed reports late yesterday in the tech sector the nasdaq was down about twice that when i first checked it this morning about 255. it's pared its losses to some extent the dow and the s&p both giving back some ground after what was a pretty solid month pretty good performance in january. treasury yields, we got below 3.4 on the ten-year, 338 right now. the two-year, moved up a little in yield i thought that was possible going to have a -- not quite yet. still early. we're watching three tech giants that reported earnings last night. apple, alphabet, and amazon. i guess, beginning of the alphabet, is that it -- >> aaa. >> aaa that's it. >> may very well be. let's -- we have a headline to tell you about i'm curious what both of you think about it the s.e.c. considering a

softening of planned rules that require companies to disclose the effects of extreme weather and other costs related to global warming the report coming as the final rules will still likely manage of disclosures but those requirements would be less onerous than proposed you have a guest coming up, becky, that may have some views on all of it >> that's right. we're going to be talking to mike wirth right now after oil companies continue to report record profits this season it's not the only thing they've been focused on. but politicians have been keeping political pressure on them to prioritize energy production rather than stock buybacks joining us right now is mike wirth. last week chevron announced a $75 billion buyback and raised its dividend it's the first time that you're talking to the media since the media first hit. it's good to see you here. that announcement sparked some big blowback from the white house very quickly

in fact, if i can read some of this, the white house said at the time, for a company to claim not too long ago that it was working hard to increase oil production, handing out $75 billion to executives and wealthy shareholders is an odd way to show it we call on oil companies to increase supply and reduce costs for the american people. what do you make of what you heard from the white house >> we're doing exactly what the white house is calling for we're staying consistent with our financial priorities and financial framework that we've long had for decades which is first to prioritize the dividend we increased it 6% the 36th year in a row we increased organic capital spending this year 30% above what it was last year. keep a very strong balance sheet and only have cash we return it to the owners of the company. we had a prior repurchase program that was authorized five years ago when we were repurchasing at about $5 billion

a year we're a stronger company this year we're repurchasing at $15 billion a year a five-year execution on that plan would be $75 billion. it's no more than that we had record production in the u.s. last year up 4%. the highest production we've had. we expect to grow the permabasin 5% we're investing in more -- >> you did not call that shameful demagoguery, i don't think. it wasn't you who said that. maybe it was a voice inside my head saying it how much of the company do these horrible executives own, mike? what percentage of it are you enriching there. it's a small percentage. >> it's a fraction of a fraction. >> now the wealthy shareholders, let's talk about them, do you have any pension plans, do you have any teacher plans that own any of this stock? do you have any retirement plans

that own -- is it just these wealthy fat cat shareholders that you're enriching? >> our shareholders they are constitutional funds -- >> would you agree that's shameful demagoguery or do you have a better word for it. >> i'm not going to comment on what the white house said. we understand the world needs more production. we're investing in that. it's completely false and it doesn't -- it's not helpful after you've said you're going to end fossil fuel production to then turn around a year later and say that that's what you should be doing. do you know -- do you like getting whipsawed? what should you be doing now as an executive >> the mixed signals don't make it easier to allocate capital. they try to make it challenging. we look through some of the political rhetoric to some of the fundamental needs of the economy. we're trying to stabilize markets and we invest through long cycles which last longer

than political administrations and election cycles. we have to allocate capital on a scale of many decades. >> how long for the 75 billion. >> we didn't have a -- >> five years? >> at the rate we're repurchasing shares right now, it would be five years. >> let me ask, what is the math that goes into how you figure out where you're putting things? the world has changed a lot. governments are changing the way they value things. how do you figure out what you actually spend on production, what you actually spend to give back to shareholders >> it's a function of a very consistent and stable financial framework where we really do prioritize the dividend as the number one priority. our shareholders are as joe described and they look to our company for income first we're not a growth sector. and so we've got a 6% compound annual growth rate in our dividend over the last 15 years. we need to reinvest to generate the cash flow to support that and so that's where the organic spending comes in.

we're a better company than we were five years ago. we're 20% more capital efficient. we're able to deliver nmore output the ability to execute them, the supply chain reality that is we deal with. the third priority is to keep your balance sheet strong. two years ago, three years ago, prices were negative and we were lo losing billions of dollars and then when you have cash surplus, we try to return it to shareholders over time we don't try to time buybacks. we've repurchased shares 15 of the last 19 years. so it's a very -- what we're doing now is consistent with what we've always done the numbers are bigger because we're a better company but the approach is actually very, very similar to what we've been doing before covid, during covid and through covid. >> could you find $15 billion a year worth of additional

projects to produce more oil have you ever looked at the future and said, i'm worried for shareholders about what it's going to be like five or ten years from now with esg pressure and the climate lobby and everything else? have you cut back on what you're doing and it's better to return it to shareholders than it is to chase something that might not be a great investment? >> let me give you a couple numbers to illustrate that we're not going out of business. we produce about 1 billion barrels a year our reserves are 11 billion barrels. our reserve is over 75 billion barrels. so we have plenty of resource that we can invest in. it requires technology, it requires permits, engineering, it requires exploration wells and there's a lot that -- >> labor

supply chain issues. >> we try to run a system that is ratable and predictable so we can deliver returns on the capitol. you're spend it efficiently, you have cost overruns we need to execute our projects well which what we're doing. and we're growing at 3 to 4% production growth over the next several years. the demand for oil and gas is growing about 1% we're growing at a rate much faster than market demand. >> a huge part of your profitability is going to come down to the price of wti and natural gas, things you have no control over you must have some guesses about where they're headed do you think prices go up from here as china reopens? have you seen anything to suggest there's no demand yet? >> we're starting to see that there's more activity that will drive demand an increase in airline flights being scheduled, we're seeing road traffic and road congestion there's a number of different ways you measure there

people are moving around supply chains are restarting, businesses are restarting. i spoke to people who run businesses in china who are ramping up production. we see indicators that the chinese economy is beginning to grow and i think what's offset that has been this concern about a slowdown in the u.s., how hard will the fed really go after inflation, what does that mean for growth and so the market has been a little bit mixed over the last several weeks. fundamentally, supply and demand are relatively tight and we have a lot of restrictions on what can move where and be sold to who and sold at what price which makes the system for vulnerable to unexpected events i would say the view we have is that there's probably more risk to an upside move in prices and a downside move would come with a hard economic slowdown it seems like the risk of that has gone down a little bit and certainly an unexpected event of some sort of in a

volatile world is something that can push markets the other way. >> we all hear about the handoff to renewables. but i don't know what the numbers are. what's been spent over the past 10, 15 years that's trillions and it's a decimal point difference in how much of the world's energy is still fossil fuel-based. it's almost the same it was 15 years ago. when does it become not -- do you see the number instead of 80%, when is it "x" minus 10%? >> this is a long cycle phenomenon it's decades the reality is, there's 8 billion people on the planet today -- >> living in a 21st century world, not in an 18th century world. >> many of them living in a middle class lifestyle some not there and on the way. we'll have 10 billion people by 2050 one of the challenges is the absolute demand continues to grow and so even as we see strong

investment in renewables, it doesn't change the mix as fast as some people would like. and there are risks and we've seen this in europe in particular the world runs on system "a" right now. which is the one you described there is a great desire to move to a different system which has a different mix. but it's 1 or 2% built today if we try to shutdown the system that runs the world prematurely before the other ones are ready to take it, we can create real unintended consequences. >> they're not all wealthy americans living the way we do it's going to affect a lot of people that aren't in a position to be affected yet at this point. >> that's what we work on every day. >> you have to own that -- certain people are going to have to own that. >> i talk to people about the three things that matter when you come to energy, economic prosperity, energy security and environmental protect. you have to balance those. we can't overindex on any one or we see unintended coincidences.

>> thank you. >> you got nervous when i said you said that. that was me. thanks, mike. coming up, january jobs are just a few minutes away from the big report next, though, we're going to ask starbucks cfo when she sees demand in the key china market recovery stay tuned you're watching "squawk box" on cnbc

at adp, we understand business today looks nothing like it did yesterday.

while it's more unpredictable, its possibilities are endless. from paying your people from anywhere to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪

starbucks missing analyst estimates on the top and bottom lines for its quarter. nearly 30% drop in china comparable sales with covid closures weighing on demand, but in u.s. comps were up 10% joining us right now is rachel ruggeri. good morning to you. a bit of a mixed picture the stock is off this morning. i think really off the expectations of -- the reopen trade, if you will, for china and it not happening i'm curious sort of how you see the china peace of this relative to the rest of the business. >> so when we look at china, as you saw, we had headwinds in q-1 and we expect that will continue into q-2 and that's largely driven by the fact that even though we're starting to see signs of recovery, which is encouraging, there's still -- there's still a lot of headwinds

in the market related to covid and so as a result, we expect the back half of the year to be stronger than the first couple quarters and that's what we've guided but we have a lot of confidence in what we're seeing because when you look at our international business, excluding china, we grew 25% of the quarter. and that's largely driven by a recovery we have double digit comps in markets like japan and uk, and that just speaks to the strength of recovery. so we have every confidence that the headwinds we're seeing in china today will lead to tailwinds and that's what gave us the ability to be able to reaffirm our guidance on a full-year basis, but gives us a lot of confidence in the growth that we've -- the growth that we've outlined for the years to come >> can you speak to just the strength of the consumer i mean, you look at some of the numbers in the u.s. of 10%, a lot of it -- it's not necessarily more people are coming to the stores, that is part of it it's actually the people who are spending more and weather you think that's going to persist.

>> it's a combination of both. we do actually have more customers coming into our stores we're up 10% versus prior year we have a record number of customers coming into the store. they're not coming as frequently but more customers are coming in and spending more when they come in and that was evidenced in our ticket this quarter. that's a combination of pricing, but it's also reflection of the highest -- food attach was another high strong food attach continue to attach with beverage but it reflects the personalization that we have, increases -- like we saw an increase in customization as an example, up 28%. it's our customers choosing beverages that are best for them and that work for them the combination of all of that is leading to a higher ticket. what we're encouraged by, that led to the highest sales that we've ever seen in the u.s. business on a weekly basis 8 of our 10 highest sales days ever came in the quarter with our red cup giveaway being the

highest ever we're counsencouraged by what we seeing as long as we create value for our customers in that experience, we think it supports growth over the long term. >> the reason i ask about the strength of the consumer, we're hearing that walmart is seeing and amazon is seeing and others are seeing, someone who might have been prepared to buy an 85-inch tv is buying a 75-inch tv but the opposite seems to be happening in your stores >> definitely, we understand and we're cognizant of the fact that our consumers, our customers are facing many challenges in terms of the economy, inflationary pressures, employment pressures, things of that nature. so we recognize that that's a reality. but we have not seen an actual issue with our demand. our customers are trading down we're seeing them continuing to spend more and we believe part

of that is the fact that it's an affordable luxury. as long as we can create that experience, whether it be through unique offerings, as well as different channels to be able to connect with us, we think that that's what is part of what's driving it and we see it not only in the u.s., but we see it globally, which is encouraging. >> part of what drove it was the gift card business which was a remarkable thing to behold how persistent or consistent can that business be obviously last quarter was a holiday quarter? >> we see our highest activations in the q-1 period, our holiday period, because it's a gifting opportunity. and that's a big driver of what we saw but we have a lot of different opportunities throughout the year to use starbucks as a gifting occasion whether it be a mother's day, whether it be a teacher's day,

things of that nature. i think what's great about the starbucks gift card, it doesn't take a lot to be able to gift $5, $6 so that somebody can get a drink or a sandwich. and so i think it provides a lot of opportunity from the gifting occasion. >> 5, $6 doesn't buy you much at starbucks anymore. >> it buys you a drink it's under $10 but i saw -- my husband was a teacher for a long time, and he got a lot of gift cards. it's a great way to go out, get yourself a drink and you can do that with $5, you can do that with $6. it's hard to do that with a lot of other gift cards. >> you mentioned that some of the drinks are getting as we know more and more complicated that's where the margin is the more complicated the drink, the higher the margin. for the past year, i know with a return of howard schultz, you have spent a lot of time and

money to retool these stores to make it easier for your workers and employees to do their job. where are you in that process? >> well, that's part of our reinvention plan we had a really good quarter we saw great progress. we continue to invest ahead of the curve and continuing to make investments in our equipment and partners and all of that led to a very successful quarter in terms of -- we have the best productivity we've seen in the month of december. in addition to that, we saw our turnover come down by 8% which is against our high last year in december in addition to that, we're seeing retention improve that creates a more stable environment. it creates a better experience for our partners -- >> here's a hard one for you how much do you think that's a function of what you're doing in the store versus the macro trends which is to say -- we're going to have the jobs number in just

a couple minutes here. it's been a supertight jobs market is it loosening up and is that part of what's happening here? >> it's definitely a combination. i mean, there's no doubt that our ability to hire is much easier than it was a year ago at this time. but i think because we've invested ahead of the curve, and we've continued to -- and continue to have investments in our stores, in our partners, that continues to keep us an employer of choice our ambition is to be the best job in retail. that's what our plan is focused upon. >> tease us and tell us if it's material for those investors who are trying to figure it out. there's something you guys have up your sleeve that we're going to be learning about that i know is being sort of advertised as transformative is that in the stock, whatever we're talking about here >> well, i think it's the -- the concept of innovation. so, obviously, i can't divulge much about that. but i can say it's innovation.

and what starbucks has always done well is innovate. it gives customers a reason to come into our stores and a reason to come back. that's what creates the stickiness with customers. you'll find it's another innovation play and as howard said, game-changing. we'll look forward to see how that comes to fruition. >> that's what they call a tease in the tv business we appreciate you being with us. thank you. >> thank you becky? >> thanks, andrew. when we come back, the january jobs report. our panel is standing by for the data and the market reaction we'll have it all when "squawk box" comes right back. . i am here because they saw how cancer adapts to different oxygen levels and starved it. i am here because they switched off egfr gene mutation and stopped the growth of tumor cells. there's a place that's making one advanced cancer discovery after another for 75 years. i am here... i am here.... because of dana-farber.

what we do here changes lives everywhere. i am here.

♪ welcome back to "squawk box" right here on cnbc we're a few minutes away from the january jobs report. let's bring in tyler goodspeed, our own steve liesman is here this morning, along with rick santelli and we're going to get to those numbers in about two minutes. liesman, set it up for us.

what are you expecting, thinking, watching for >> there's a lot of high marks out there in the 300,000 range because of some quirks, returning striking workers, offset by some -- by some weather issues that were out there. i'm going to be in the 250 range because i'm not buying all of goldman's upside which is based on some of the positive high frequency data out there but i'm buying some of it. >> betsy, where are you? >> this is when i get to remind you that the error on this is plus or minus 100. so i'll tell you that my ranges are going to come in somewhere between say 100 and 300, putting us around 200. steve is right there's a bunch of fluctuations going on in this month's report. so i think there's more uncertainty than normal. >> and what does mr. hoover say?

>> i agree with betsy. i think there's a lot of uncertainty around this number in particular. but i've been taking the over for the past six months. i think i'm going to go with consensus here of 190, 200 when i look at the jobs -- >> let's get to rick right now he's got the number for us >> we're at 180. i don't have the number. 180 is my guess. numbers will be coming out shortly. we're expecting 188 to 200,000 whoever took the over, congratulations. 571,000. 517,000. that's the highest number since february of '22 when it was 714,000. if you look at manufacturing payrolls, they were 19,000 three times expectations unemployment rate, 3.4 we crashed the half century

barrier. a new post cycle low that is unreal when you think about it and average hourly earnings month over month, up 0.3 which matches last month, which matches october, which matches august, which matches april. we've had a lot of 310s. that's pretty much the low-watermark until you get to mark where it was only up 0.1 and january -- that's '21, when it was unchanged if you look at year over year, a bit of a different story 4.4% not too bad. at least for the moment following 4.6. when you look at 4.4% on average hourly earnings, that actually is the lightest going all the way back to august of '21. august of '21 with it was 4.3. if you look at the workweek, workweek came in at 34.7, 34.3 is the low watermark 34.7, actually, ramps this up to

the highest since february of last year. that is a big jump something to pay attention to. and finally labor force participation rate, also pretty good news. 62.4 62.4 actually equals the high watermark which was march at 62.4 that's really good news. to find a higher one, you have to go to march right after covid hit. that's march of 2020 where it was 62.6 we're looking pretty good there. the under employment rate ticked up to 6.5. excuse me. 6.6. in the rearview mirror, 6.5. and 6.5 had been the low it's not too bad we only moved up a bit so to summarize, much better than expected, yields jumped from basically 338 up to 347 348 is the high watermark there.

we see futures drop, not significantly but they're very volatile there's benchmark revisions for the 12 months ending in march of '22. and one final thought. the most important issue here that everybody wants to try to hook in together, especially if you're looking for the fed to ease back and this report kicked up in many ways. a pause -- well, i don't know if a pause really reignites inflation. that's the first thing that always needs to be questioned. but the biggest issue of all, and i'll leave it here, is that the alignment between wages, jobs, jobs, jobs, jobs and ela inflation may not be matching. i'll leave it there and throw it back to the panel. >> we're going to bring you back into this. you made some very provocative

statements without -- without saying it is explicitly as you may later. we'll see. i want to get back to steve liesman to get his initial reaction to this and the read through of how the fed might react to this. there's so much good news in this report. but as we know, we've been living in this strange place where good news can turn into bad news that's what the initial reaction of the market is now maybe it's -- it's hard to read the futures. >> well, first of all, it was the over i think and i was only half of the number i don't know if there's some statistical quirk in all of this job growth was in leisure and hospitality. up 128,000 government jobs also up strongly 74,000 i'm not sure about the source of

that take a second on the table here. everybody's favorite table it looks like -- you know, state government, education, that was back big big part of that not on the federal side. more on the local and state side you had construction jobs up 25,000 manufacturing up 19. retail up 30 if you're hearing a trend here, i can tell you what the trend is the trend is that the job growth was broad based. it was not in a single industry or single sector there were revisions revisions to the upside in november, up 34,000. new benchmarks for the year ending in march of 568,000 the job market was much stronger you also lost one of the linchpins of those who thought the job market was slowing because the workweek ticked up to 34.7. everybody said the workweek is coming down. that's a sign of the weakening job market that is gone as well i don't think the fed is going

to like this because i had a 4-point check point of what the fed was looking for. moderating unemployment didn't happen, wage growth was okay in terms of being stable. and then the participation rate did tick up. only two out of four for the fed. here we have this incredibly tight and strong job market and wage year over year is coming down again, we have to talk about the essential underlying thesis of the fed and fed chair powell that a tight job market is leading to inflation or the biggest concern about inflation, it doesn't seem to be the case andrew >> okay. steve, thank you for that. betsy, i'll go to you. maybe it's unfair to say, what seems like great news in so many ways for those -- for those at least in the stock market and playing in the bond market, it may not be i think there was a bet that

something else was happening. >> i understand that they're playing with moving money around they placed a bet and maybe a bet for lower numbers and now they're going to have to move things around. there's no way to see this other than good news and i think the real connection there is the fact that we aren't seeing wage growth take off. the problem is -- in this report, we're seeing a lot of people hired, but it's not that it's employers competing over a pool of workers. if you look at the household survey, what we saw was a surge in the number of people employed so the household survey tells us employment growth was stronger than that establishment surveyed we don't want to put too much weight in the household survey with all of the adjustments, but it does tell us that what's happening is people are coming and taking these jobs. and as long as there's more people coming to take the jobs, there's not the wage pressure. so the fed's model is assuming something about the stability of

labor force entry that just seems to be incorrect when we look at the data >> tyler, what do you think? >> well, i wasn't quite as optimistic looking at the household survey because i think it was about 271,000 jobs measured there and a positive increase in labor force participation but not a substantial one. so this is -- this is a really head-scratcher and it implies probably a massive collapse of productivity in january because if -- looking at the components of gdp toward the end of 2022, that's pointing toward a pretty weak output number -- early months of 2023 and with these sorts of job gains, that is -- that is implying a -- either we're mismeasuring gdp or jobs or th there's been a big collapse in

productivity at the start of the year we'll see as the data comes in. >> rick, can you go back and sort of elaborate on the point you were trying to make right before we kicked it to steve which is this idea that, you know, is it possible you could have have type of job growth, this type of unemployment and actually see inflation come down at the same time, i think, is where you were going with that >> i think all we have to do is look at yesterday's newspaper or yesterday's ipad however you get your news. that is exactly what is going on inflation is coming down job growth is strong unemployment rate is low workweek is expanding. wages, though they have moderated, they're still doing pretty good. wages, when you consider some of the high water marks, we've had significantly higher both month over month and year over year. but there's still at good levels i think the models of the fed

aren't correlating with reality. i think that's a huge issue. i'm not casting negative regard toward the fed they have their models i understand that. it's not easy to model anybody who has ever dabbled in it, i used to try to model markets and how data affected yields consider this, if what is going on in the labor market is so intense, then why are two-year notes still down on the week they closed at 420 last week they're at 419 and we've seen a quarter point tightening, the uk and the ecb raise a half a percentage point on each, we've seen strong report here. we saw yesterday 180 -- what was it, 183,000 on initial claims. that was lowest since april of '22. we saw 570,000 jump month over month in job openings and labor turnover this is exactly what's going on.

another thing i'll question, everybody says from the fed on the guidance, a pause. if we pause before we really think we've slayed inflation, that it's going to resurface, it's going to reignite, reappear i don't think you have to finish your whole prescription before you're fully cured ic i think these are all assumptions that may not be accurate. >> think if you're right, rick think of the correlation that a strong labor market always brings a wage price spiral the participation rate -- >> the participation tells you a lot. >> it doesn't mean they're demanding a 30% wage increase. think how great it would be if you just kept adding job, but i didn't just correlate to higher inflation. >> and the cfo of starbucks said

they're having an easier time hiring people. look throughsome of the statistics and you start trying to take that out and listen to what you're hearing from people -- >> if the inflation was supply chain from the start and not deeply ingrained and not -- the fed could be chasing a phantom you know, really doing some damage to a great economy that doesn't fix -- >> which gets back to your point, steve, that you were making, is the fed wrong in its assumptions here and would they be able to recognize that if that's the case? >> that was the question i asked chair powell guys, if you would pull up that full screen i used at 6:30 this whole kept of the relationship between inflation and jobs is really under -- of course, this is from the prior data it doesn't have the current data in it. if you look at it from the first quarter, the average unemployment rate went down from 3.8 and 3.6. and it went down from 1.4 to 1

and i asked chair powell maybe your assumptions are wrong and i based it on assumptions made by lael brainard who said maybe these other inputs costs caused the service prices to go up as el ma i agree there are challenges in the job market and to the total supply of labor that has to do with early retirement. but immigration, by the way, guys, something we've talked a lot about on the show, it has come back to normal and that may be something that the participation rate and making it easier for some of the ceos and cfos you're talking to out in california to find the workers they need. >> okay. we are going to thank our jobs panel. steve and rick, what a number this morning as we all try to make sense of what it means and where the market may be headed as a function of it. when we come back, jim cramer's

take and we're going to speak with jimmy dunne on the universe of m&a. "squawk box" coming right back what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq 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. yeah... oh. don't worry i got it! so, you can both stay comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday.

let's get to miami, florida. jim cramer is there and joins us now. i mean, i guess it's all old news, the three "a"s, alphabet, amazon and apple and then ford and now 500,000 -- what do you want to -- where do you want to start, jim take it away. >> i called the other day, i said those who thought that powell would cut interest rates

later in the year, i called them clowns and that wasn't fair what i really should have said is that they're chowder heads. it's incredible to me that there were morons so stupid to believe this man would say we need a couple of rate increases and they doubted him what do they know? the economy is red hot still when it kwcomes to wage and job. he's prepared. and all this is going to do is say, all right, powell knows more than the prognosticators. so i'm fine. >> but the -- you can't call a ten-year or a two-year -- you're calling the participants showed chowder heads or clowns -- >> there's so many people who look at the yield curve and say, the yield curve says they're going to cut so they should cut i read cindy homer's book about inside the yield curve it was a page turner but it taught me, don't look at

what they are doing with the bonds. think to yourself about what could happen i think the bond market, those guys were wrong. that's okay. they've been wrong >> so you think that -- we were just having the discussion about whether the model that a -- could you have people return to the workforce and the participation rate, that they're not coming back causing wage increases? they're just -- there's plenty of people employed but it doesn't correlate with inflation. so the fed is -- >> no. >> -- barking up the wrong neck of the woods. >> no. the fed is going to keep tightening until we get wage decreases. that's why it was important to listen to what he said they're wrong. powell has a handle on this. powell new wage inflation was still a problem, otherwise he would have stopped raising rates. i think what's happening, this is a reset where the people who

were so stupid as to think that he was going to cut rates get their heads handed to them and we get a new group of people in. >> so, yeah -- >> you and i, joe, we know when people are wrong let's call them wrong. that's what they are they scored no points. they didn't make the playoffs -- >> i want them to stop raising. >> playoffs? we can't win in a regular game. >> they need to keep raising until wages go down. i don't like that. >> he wants disinflation don't worry, he'll get his way it's the people who talk about it who don't understand. . >> all right, jim, thanks. we'll see you in just a couple of minutes we'll be right back with jimmy dunne live from pebble beach at these payroll forms... my business' payroll taxes will calculate themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed.

nothing, it really is something. as an expedia member, you can save up to 30% when you add a hotel to your flight. so you can have a bit more money, to do even less. why are 93% of sleep number sleepers very satisfied with their bed? 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. power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market

with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity

our final guest of the morning is here to join us to give us his outlook on m&a, on golf, and what's happening next year we're going to welcome jimmy dunne, piper sandler's vice chair and the independent director to the pga policy board so he's the perfect guest to have on all the topics we're concerned about this morning jimmy, it's great to see you >> delighted it's been a while, beck. delighted to be here sorry i'm a little underdressed. >> you're perfect for golf >> i'm going to the tees soon, i'm not going to deny it >> let's talk about m&a activity

because i think overall m&a activity was down something like 37%. you guys still had a big portion of them, but there are fewer deals to go down what's the mood feeling like this year? what will it take to get people back >> the m&a market has been slower and you're exactly correct, our firm, piper sandler, has averaged about 55 deals a year last year, we did 40, or the whole team did 40. i'm less of a contributor than i used to be, but the team did a great job. there are a lot of reasons there's uncertainty. you can go up and down the list. inflation, credit, regulatory environment is very, very difficult. but you know, stuff will still get done, and you know, with banks, particularly, you don't wait until the recession is almost over before you buy, because they tend to perform better than people realize in recessions, and you got to buy them earlier than that so, i'm --

>> you think we're in a recession? >> i think we're headed to a recession, but the reality is, there's nobody in the world that doesn't think that it's not like, oh, wait, we have this devastating situation and nobody was ready for it. the banks are in way better shape from capital, from their loan underwritings, where they are. i'm actually more optimistic than most in about six months or so i think it's -- if you wait too long to buy the financials, you miss it. now, their range -- they trade from book to 2.25 so there's a limit. you got to make sure you know what you're doing, but i'm a little more upbeat sort of, maybe the second half of this year >> why a recession, jimmy? i've heard of a jobless recovery, but have you heard of a jobful recession we're 3% unemployment, 500,000 job openings why should there be a -- so, the fed is just going to keep going?

they're going to cause a recession, come hell or high water? >> if you look at something like air traffic, it's a really good -- and that is loaded >> yes, but that's because people can work from anywhere, working from home. if you talk to the airline executives, they will tell you their busier days are sundays and thursdays because people are taking four and five-day weekends it's the consumer who still has money to spend >> yeah, but i think it's been historically a pretty good indicator. i understand it's slightly different, but usually, when that's that strong, you won't see it >> where's the recession coming from, then >> i think the fed -- you know, i think that with government intervention, even when they're right, you can take covid, you can take, you know, the response starting with 9/11, they just throw money with impunity on problems, and they always overdo it you, the directional trend has been correct on both topics, and so i think that they're going to

keep -- i think they're going to force it i think they'll keep raising rates to try to get everything under control. i'm not -- i was an economic major at notre dame but i wouldn't call myself an economist. all i'm saying is it seems to me that there will be a recession, but i don't think it's going to be as bad as people would think, and i think the financials will be in much, much better shape this time around than they were in the past. and they have made money through recessions historically. so, i'm a little more positive than most people, but that's my nature >> can we talk golf while we're here we have to, we're at pebble beach. >> on the 1st hole, becky, i hit a little to the left no >> no, i know you're an excellent golfer i know you are >> you are >> he is, for real >> i'll show you a bad golfer. >> let's just talk about what's happening with the pga right now and with liv golf you are an independent director on the policy board at the pga

you got to looking at what's happening with liv and think, okay, what you've been pretty outspoken >> i am a brand-spanking-new member i've been to one meeting -- not even a full member i just sat through it. but yeah, interesting. i went to the hero in the bahamas, played in that event. i played in the american express a couple weeks ago, and obviously, i'm delighted and appreciative to be here at pebble beach the mood out there -- and i know, living in florida, playing a lot of golf, i see many of the tour members it's real positive i mean, the tone is real good. the events are good. there's excitement i think that it's been a difficult period, but the tour has done a really good job reacting and will continue to, and i think the product is really good and getting better i believe that >> it's weird. normally, i would say, let the market decide what someone's worth. if these guys can make all that

money, it's great, but it's weird, because it's not really the market it's like sovereign money or something. the seminal decision, they're not coming to seminole, right? they're not welcome there? >> they can apply, but they'll be on a waiting list >> permanently permanent waiting list >> no, and look, first of all -- >> i'm still on the waiting list to get into medical school i might be too late. >> it could be a while, but you got some promise, joe. well, the reality on that is, we did what we've always done at the seminole pro member. we have always had tour players, first priority >> pga tour players. >> there's only one tour >> that sums it up >> and that -- those tour players have -- >> is it good that some of these guys are making so much money and that guys that maybe weren't making as much, couldn't really, you know, make a living because they didn't -- >> i'm delighted for everybody

to make as much money as they can, legally, you know, that's all fine and i don't -- i like most all of the -- i like probably every one of those guys. >> not a big fan of greg norman, no >> not huge. he's not on the tour he's just flying in on a parachute and doing other things i wouldn't want to work for him, no no i wouldn't do that but that's just one man's opinion. but i like a lot of the guys they're free to do what they do, but the appointment is, if you remember the tour, you have certain things you have to abide by you have to play a certain number of events it isn't like you can say, well, i'm going to play two of these you have to -- there's a responsibility to the tour, who represents all the players, who are all the players, perform for the sponsors they have their best players there. they do what they can do so, yeah and also, i think, in the end, and there's been a lot said and most of it is worthless, but the reality of it is, you look at the product. and as a golfer, is there -- i

challenge any real golfer to feel that the tour product isn't better than the other product. there's no comparison. >> jimmy, we love you. we're so glad to see you, and hope to have you back soon, because it's been far too long since we've seen you in-person >> great to see you guys >> good luck today >> thank you folks, that does it for us today. make sure you join us next week when we'll all be back together. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at the new york stock exchange jim cramer is in miami january jobs are a blockbuster, 517,000, more than double the estimate unemployment down to 3.4%, the lowest in 50 years wage growth, though, is in line, and participation improves you got yields up, but the two-year, still below 4.25%. our road map is going to begin with that stunning jobs number,