good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. let's take a look at what is happening with the u.s. equities last week was not a great one for the markets. s&p was down by 1.6% the nasdaq off 3.3%. you are still talking about great gains we have seen for the first month of the year. if you look this morning, there are red arrows dow futures down 244 points. the nasdaq indicated off 135 the s&p indicated down by 37 points this comes as you are looking at higher treasury yields as well all of this happening after that much stronger than anticipated jobs picture friday. good news on the jobs front, but

the fed may hang in longer and raise rates higher than anticipated. the 10-year treasury is yielding 3.6% we had been under 3.5% the last week the 2-year treasury is 4.39%. and dell is slashing nearly 5% of the work force amid the decline in pc sales. the sales fell 37% in the fourth quarter last year compared to a year ago so much was pulled forward for the pandemic >> more earnings this week it is a light week for data. we get the international trade numbers tomorrow you know, not a drum roll for those. >> no. you got jobless claims. >> we do have jobless claims on

thursday latest read on the consumer and consumer sentiment on friday we will hear from activision-blizzard and taketwo. tomorrow, softbank and bp and dupont and chipotle. and then yyum brands and uber. then disney after the closing bell on thursday, hilton and pepsi and lyft and paypal we will have full coverage of the president's message throughout the day we will speak to house speaker kevin mccarthy on the state of the economy and after the jobs report we are at the high end of the range. we are not above the high end of the range. did you see oil? 73 >> down 8% >> below >> natural gas was down 23%.

>> i'm a cramer clown. i think this is a -- you saw him on friday. >> yes >> i think i'm a clown i have to get a red nose and put it on. i just -- >> makeup. >> i guess i'm a santeli-ite the wages, if you just have a lot of people -- brian sullivan put out a chart. did you see that we are barely above where we were pre-pandemic. total number of people working >> you don't have to be. >> be what >> you don't have to believe the question is not what you believe or somebody else believes >> i believe the market. i don't care what jay powell believes i believe the markets are telling it >> that's what i mean. >> the bond markets. the two-year barely got back above what it was. >> i don't understand.

a human being. >> he was wrong. >> he can be wrong and therefore it can have an impact. that's the point >> if he could, he would like to avoid killing the economy. he would like to avoid raising unemployment if you didn't have that inflationary problem >> if you can find more of those people coming back into the market. >> these could be revised lower. we don't know if these are revised lower. if you -- i think a lot of the inflation is pandemic reopening and supply chain and oil if you think that the long-term answer to our energy problem is to just constantly weaken demand we will handle that. we'll kill the economy you have to go the other way get more of it you have to do the supply side. >> oil is still the wild card. >> the supply. not the demand

you can't permanently hurt global demand just to keep oil prices low. >> that was the idea we are going to see higher oil prices as china reopens. this is the thing that comes back to catch you. >> and the war still going on. stupid war end this thing please >> i agree >> you are saying all of these things and you are like i want it to end. i want this to happen. you can't do anything about it there is one person who can actually do this and i believe there is psychology and every smart person who knows about him and the fed says the same thing. >> why aren't they selling bonds then why aren't they getting the ten-year higher? the smart people the academics listening to them. oh, i was going to come up with something else, too. now i forgot i can't believe that we've got to raise unemployment. you have to kill the economy to

fix it is that what you want to do? >> i'm not saying what i want. >> i know what i was going to say. do you believe it was a pandemic reop reopening, supply chain caused inflation or do you really believe that we stimulated too much during the pandemic through too much money and too few goods? do you think that is what it is? >> nothing is black and white. >> it is m-2 and fed asleep at the switch ands of spending. then i would not brag about the great jobs numbers tomorrow. >> sure. you are trying to get everybody coming and going. >> no, no. i'm saying either you own the inflation that goes along with the jobs numbers or say no, inflation is not a problem my jobs numbers are great and the fed should back off a little bit. >> that is what he is saying

>> i think biden administration is saying that i think behind the scenes they are saying that. i should argue my side democrats spent so much money. the deficit. i'm not. i'm saying it is supply chain related and not systemic inflation. >> for his purposes, he would be happier if the economy was not as hot as it is this second. the chances are if there is a recession, it keeps getting pushed out not happening sooner and you actually want it to reverse. >> is the economy that hot or are we finally getting back to people coming back to work and participation rates going up back on the chart to where we should have been before pandemic i don't know if we are rip roaring. you talk to barry sternlicht and he thinks we are ready to fall off a cliff. i'm a clown. i'm looking at the 10-year and

the 2-year and think there is a reason that just strong jobs don't equate to the inflation. >> it is coming. >> the 2-year is 4.2 it is supposed to be 5.5 >> we almost fell below 3.4. >> i'll be like arthur burns >> brooks. >> montgomery burns and arthur burns. i'll be wrong. i'll let inflation out of the bag. it will last for ten years. we will see. we are watching other things diplomatic tensions rising with the united states and china over the chinese spy balloon spotted over the united states and shot down by an american fighter plane over the ocean we have eamon javers with the latest on this front >> reporter: good morning, becky. in the end, it took one f-22

fighter jet and one side winder missile to bring down the balloon. now the blowback from this internationally and domestically republicans criticizing the biden administration saying you waited until after the chinese balloon had left the continental united states. the chinese angry with the united states. united states cancelling a diplomatic mission to china. tensions rising between the two countries now. all of this happening after air force pilots at 58,000 feet firing up at the balloon it landed in feet of water off the coast of south carolina. now the united states intelligence community will try to recover the balloon and figure out what the heck it was doing here in the first place. one mystery in all this, guys, is exactly why you need a spy balloon, 1950s technology, here in the 2020s

presumably, it is cheaper than a satellite or sensors on the balloon gathering information you can't get outside the atmosphere atmospheric testing may be part of the package they will know more when they figure out what the chinese were doing. a lot of finger pointing in the united states. guys. >> eamon, i anticipate we will hear more about it with state of the union tomorrow >> reporter: absolutely. for president biden, the white house pointing out chinese balloons had been over the united states in the trump administration you will see the president take credit for this tomorrow in terms of having shot down the balloon. also in terms of waiting until it was over the ocean and safely not over residential areas this was a size of three buses put together this is a big object you don't want that kind of

thing falling from the sky in a populated area they waited until there was no risk as they said in "top gun," there was no danger. i had the target i took the shot. >> eamon javers, thank you we will see you later this hour. a new cnbc investigation piece and bank fraud we are looking forward to hearing about it. coming up, fallout from friday's hotter than expected jobs report. that is straight ahead hot. hot is good. later, jobs reaction from the white house. we talk to economic adviser heather boushey in the 8:00 hour you are watching "squawk box" on cnbc

futures are rough. rough morning so far we'll see. there were a lot of days in the last couple weeks that started like this. beach ball type trade. definitely got a little digesting to do after 500,000 plus what did liesman say he had the over and it was 50% below the number that hit. nobody had the over. let's talk about the markets and the economy in the better than expected or worse than expected job numbers depending on your perspective. joining us now is sri kumar.

we are calling them better than expect ped that is why the market is down 300. that is warped what do you think? is the fed looking at that does this mean inflation persists when you have strong jobs should the fed be worried? >> you had a great discussion with andrew and becky earlier this hour. i think the concerns are well placed you say why shouldn't i have more jobs? what is wrong about it it is the rate of change how fast the jobs are coming through. you are not reached pre-pandemic level, but if you are going to do that over two or three months, you will cause inflation. second, look at the other characteristics of the labor market the labor market participation rate is still relatively low you have 1.9 jobs for every

unemployed worker. previously 1.76 jobs available powell said he needs to lower the ratio, not raise it. what the market is reacting to today that was sanguine about last week, joe, is things are opposite of what the chairman has wanted and what will he do about it what is he going to do tomorrow? what will he say the economic level at washington, d.c. when he speaks midday those are important issues for me. >> why have you thought they, perhaps, would have feet of clay you thought 4% might be the high you thought they were going to probably fold too early on the volcker imitation. you thought they would not have the resolve to go to 5 or 5.5. you think they will now, sri

>> i thought last week that powell would not have the resolve to go up to 5% or higher level on the federal funds rate. today, i don't know if he will change if he doesn't change by tomorrow and gives the same dovish message tomorrow as he did last wednesday, when he spoke did the disinflation phase starting out and he kept repeating that the market rally does not affect the fed thinking, then we will have the market rally again for a while and you come up with the reckoning later on the question is a matter of timing joe, you cannot avoid the arthur burns moment pretending to be somebody else. you have to play that role we will see tomorrow if he will change his message or not change it if he does not change the

message, he is going to, again, cost more stipulation in markets and eventually increasing the danger of the crash. >> you are definitely in a different place than last week you thought that was pivot light last week with powell. you thought he was dovish? he has been talking tough. >> yes he was talking tough before the fed minutes which were released january 4th. they were very tough the fed minutes said rates will keep increasing throughout the year there will be no cut in rates. then you find the chairman telling us that the disinflation process has begun. financial conditions have not eased in january that is an important statement we had a big rally in equities we had a rally in bonds. the chairman telling you a rally

was not a rally. he was dovish. >> at this point, maybe we're beginning to see the markets come to a point of reckoning bitcoin was $24,000 now at 28. you think the equities which had been every morning down and ended higher they were shrugging off a lot. you think the jobs number fundamentally changes how the sentiment is going to be and maybe chairman powell will go back, not talking about disinflation, but back to emphasizing more hawkish language >> yes to all your questions, joe. yes. the market is going to react by saying the jobs number changed the picture. we, meaning investors, we all believe the chairman on the dovishness we thought we had a great rally in january we were correct. the fed was wrong. we are winning the fight against

the fed. the jobs market numbers changed it the market realized the chairman cannot carry through on his promise of being dovish, so the market, once again, is leading the fed and the fed is led by the investors. that is not a hefty sight. >> you think the 1ten-year heade back to new highs? >> 4% is still my target you may recall when we had a rally, i still told you 4% is my target rather than -- >> you said it could go back that high would stay in. >> exactly i repeat that. that point has not changed >> i take notes. i take mental notes. >> i appreciate that >> we do, too. thank you, sri could be different. >> thank you, joe. >> we'll check back. thanks >> thank you coming up, big banks have a

big problem. check fraud. cnbc investigation finding that crooks are using popular messaging platforms to coordinate the crime eamon javers has that story next. later, jay clayton is img ing us to talk about easin clate disclosure rules "squawk box" is coming back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. it's hard to run a business on your own. make it easier on

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the price of eggs is pulling back from record highs the wholesale price dropped to $3.29 by the end of january according to the usda data prices soared because of the outbreak of avian flu in several states the cdc estimates 58 million birds have diedbecause of the

outbreak. america's big banks have an enormous challenge check fraud. one of the oldest crimes in finance popularized by the apps. it is a one-stop shop for ch criminals. eamon javers is back with us with a cnbc investigation. fascinating story, eamon >> andrew, when i learned of the issues question is are people using checks the value of checks in the mail is going up although the total number of checks is not near where it was in the old days take a look. >> it is a big problem that is getting worse. >> reporter: paul is the senior vice president of cybersecurity of risk at the american bankers association. paper checks are one of the weakest points >> would you say that every bank

is experiencing this >> i think that would be a legitimate statement >> reporter: in 2021, banks reported 250 tho,000 cases of c fraud. by 2022, the number sky rocketed to 460,000 cases that is an 84% increase in just one year >> it is concerning. it is. >> reporter: in many cases, checks are stolen from blue postal offices like this and change the name and dollar value of the check using forgery techniques they open an account at the bank in a phony name and hire someone to deposit the check that happened here this video from the florida bank shows an elderly homeless man depositing a fraud check the police report says it was cashed for $3,000. driving the checking crime spree is organized gangs using

technology to coordinate theft to coordinate stolen checks in the mail and then having people, walkers, go into the bank. >> the walker is what it says. walks into the bank to cash a check. the mule >> reporter: on telegram, users can message in private and public group chats the platform is popular among criminals with the anonymous messages police can't trace them. we found group chats with posts from criminals advertising network of walkers to help other crooks to cashout stolen checks. >> this individual is advertised as a walker. >> reporter:maria is a cyber intelligence analyst at q6 the consultant to cnbc. >> you see the walker is ready everybody who wants to get with the walker to contact the threat actor that posted this

>> this is a criminal advertising i have this guy. he is a walker he is ready to go in and deposit a bogus check. call me. >> yes >> reporter: cnbc reviewed dozens of requests on telegram some asked for specific genders. others wanted someone elderly. this criminal boosted about buying a new hat for their walker. >> when i say grooming, not just brushing hair. a lot goes into trying to make these guys look as legit as possible this guy is getting his hair bleached >> this is a dye job >> it looks. >> reporter: the big banks say this is causing headaches for the industry. >> we can't do it alone. the postal service needs to be better we need law enforcement to step up their game and prosecute more cases. >> guys, the walkers we see advertised on telegram are the elderly or homeless. it seems clear they are getting the smallest cut of the crime which can produce big money.

we saw crooks posting receipts for $20,000 in some cases. telegram moderates channels and bans any that violate service of terms. they are getting help from insiders at the banks and postal service who are helping these gangs get away with it to stop the fraud, the u.s. postal service has been actively educating the public to prevent check fraud. back to you. >> go back to the beginning, eamon. >> our cyber consultants at q6 flagged the telegram channels. they said they are discussing check fraud. there are a lot of these some groups have 20,000 members chatting about this. this is an enormous topic the criminals are educating even other. they spotted that and we went to the american bankers

association. >> what is the total cost to the banking business >> that's the big question we weren't able to answer yet the bankers association knows this is thousands and thousands of cases we don't know the total amount of the fraud it could be hundreds of millions of dollars >> eamon javers. was there a big check you saw in the investigation? >> the big egest one we saw was the receipt bragging to his buddies. we got $22,000 here in one hit you know, you do that again and again and it adds up >> eamon javers, i appreciate it congratulations. nice story >> you bet when we come back, reaction to rising tensions with the united states and china. we will talk about the impact for investors right after this during the month of february, we are celebrating black heritage through the stories of some of our cnbc teammates, contributors and

leaders in business. here is the cnbc control room operations director. >> what i'm really proud of it how jamaican folks persevere we know how to survive we take the small amount of things we have and we make really big things out of them. working for cnbc has been great. they provide so much to me and being a director now and grown up in the company and i'm able to have what i have today and able to give back to my small community back home and i'm grateful for that. when you make it and become successful, try to give back veac mh you can

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good morning well come back to "squawk box. we are live from the nasdaq market site in times square. if you look at the futures, not looking too bright this is one you may want to go back to bed for. the dow futures off 250. the nasdaq down 157.

s&p down 40. we will see. it is early. let's talk about china tensions with the u.s. and china running high following the u.s. downing of the suspected chinese spy balloon off the coast of south carolina for more, what investors look for as the story develops is michelle cabrera we have founding partner daniel rosen joining us this morning. michelle, i'm curious of your take on the balloon. is there more to this, do you think, than meets the eye? have we done things like this? should we be furious or is this standard operating procedure what is this >> when it comes to the investment community and business community in the united states, andrew, what is significant about the balloon incident is that it caught the

zeitgeist of the american public it codified people who were aware of the intentions with the chinese. on friday afternoon, cnn interviewed an independent videographer on myrtle beach he said it was packed. it was a cold day in february. the beaches were full. everyone wanted to see the chinese balloon. why is that significant? because when washington sees that, they know they have to react. you saw the unanimously hawkish approach and this comes when there are three important things happening in washington. what to do about tiktok and is the u.s. prohibiting americans from investing in chinese companies and the china select committee. all of those things are impacted because of the balloon >> daniel, what do you think the interesting part about this is does the u.s. prevent american companies do business

in china rather than the other way around which is how people were thinking about it up until recently >> i think a couple of things here you asked the question is there more to this and one of the key questions is how much more is this china doesn't make a single balloon. china does things at scale the concern is a fleet of balloons that we'll have to deal he with if we don't draw a line around this incident and make it clear this is not acceptable that explains the extreme reaction that we've seen in terms of who has leverage over who to threaten or pull back from conversation, i think that is absolutely clear china needs geopolitical good news more than the u.s. does china is on the cusp of a debt crisis for local government financing and the imf and the china forward report which would

have been front page news if not for the balloon, said chinese property is already in crisis. the concern to beijing with global investors seeing more escalation in the geopolitics with the u.s. are that much more inclined to wait on the sideline or pull back further from china instead of buying into the good news bounce. >> dan, can you get anything from a balloon that you don't get from a drone or satellite? is it easier to go unnoticed did some go unnoticed the last three or four years that we had no idea it was there do you get decent info or is this a test of president biden could it deliver a nuke that paralyzes our grid what are the ramifications what does it really mean

what were they doing >> i have done my best to come up with answers over the past couple case to those questions one example of the difference of this device and a low earth orbit satellite that we know every chinese satellite and we know which 15 minutes of the day they will pass over the given part of the united states. they are not in stationary o orbit. they are circulation the concern, unmistakable concern, about this device, is it can loiter. it can stay in one place for a long period of time and wait for something to come out from underneath the hangar. there are differences, i think, there are two things we will talk about here for a while. one is trying to understand why this was so concerning and problematic. that is looking at the technology and all that. the other one is regardless of what we think of all of the

technological questions that we will never fully understand as civilians, but what this will do to the interest of getting back to business with china no matter what you think of the technical stuff, this is going to push -- >> there are deep sea divers in freezing waters, michelle, trying to find this. should we have shot it down? could we have recovered the stuff to see what they found out? >> look, those are military questions. we don't have a lot of answers from the military. if you watch the pentagon briefings, they have been withholding a lot of information. it is really tough to know at this point i will say going back to the point that dan was making and i would ask this we are supposed to be in the middle of the diplomatic reset with china if this is how china does a diplomatic reset, how much can you believe their business

reset? the heralded private sector? we will not beat up on the private sector any longer. this is one of the most important diplomatic resets. secretary of state blinken on the verge of going to the first state visit in years >> michelle and daniel, we have to legalave the conversation the it will take time to get to the bottom of this >> they have been going unnoticed for years? >> apparently there have been other balloons >> i don't know. >> down to texas >> there were some in the pacific near hawaii that were spotted. >> is china -- who us? it's just for weather. >> that was the response

they managed to come up with outrage for having shot it down. >> not as much as they normally would. that is probably telling people go out to see that. i would on my birthday after the balloons and are you done with them, you let them go. >> yeah. >> i thought who knows did you see the other one? they zoomed in on this one remember the baby trump balloon they had >> i do remember the baby trump. >> that was a meme they zoomed in on the china balloo balloon. it was a baby trump. coming up, verdict secured musk found not libel to the 420 tweet. and coming up, mohamed el-erian will join us on the

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welcome back to "squawk box. a jury found elon musk not libel after he tweeted in 2018 that he secured funding to take tesla private. you may remember investors sued musk the statements had devastating consequences for the board and investors. lawyers for musk argued he was a successful businessman and could easily obtain financing to take tesla private. the federal judge ruled that an the statement was untrue and the jurors found that the musk statement did not cause investors losses separately, musk tweeted yesterday. last three months were extremely tough as had to save twitter from bankruptcy and fulfilling tesla and spacex duties.

wouldn't wish that pain on anyone twitter has challenges and looking to break even. public support is much appreciated. he clarified that twitter is not financially healthy yet, but trending to do so. twitter and musk did not respond to cnbc request for comment. >> be careful with the tweets. funding secured was the first one. then qualifying with we are nowhere near it. i see more ads >> i did, too. i bought stuff before the holidays i was disappointed with sales. >> it will happen more for you >> he has new advertisers. not new. anheuser-busch and others that advertise on the super bowl. doing takeovers on twitter some scaled back prior that is a good sign.

>> did it used to be only people that you follow? now it defaults for you and gives me stuff i didn't ask for. do they know what i like >> they are trying to follow the tiktok algorithm style kind of thing which is to say a lot of people onboard twitter and they only follow five or ten people they are not getting served constant information the tiktok method, it is a better mouse trap. use the algorithm and serve you stuff whether you follow them or not. they move people over there. i stick on the people you are following. i follow 1,000 people. it works okay. >> i don't like following people >> i don't want too much information. >> let me say -- >> if i talk about toe fungus, will i get an advertisement? >> you would

wait for it. >> toe fungus. >> kevin >> oh, my god. >> kevin who with found instagram started a service called artifact. it is rocking. >> social media network? >> news. people interested in headlines and news it is like the -- i just got on it fabulous mouse trap. >> you are finding old stuff why artifact >> i don't know. to me, it blows all of the other stuff away >> are you invested? >> no. i try to get in to follow the stuff early. this is the next thing >> full disclosure >> check it out. >> you like it >> i do. when we come back, more gains last week adding to the rally in some of the mega cap names. we have more on this right after the break.

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welcome back, everybody. the nasdaq is congresming off is fifth straight weekly gain that is the largest streak since november of 2021 meta surging 55% this year, amazon's up 23%. apple and alphabet are up 19% this far joining us to talk more about this rally in tech is ray wong, constellation research principal analyst. thanks for joining us. >> good morning. >> what do you think happens does this rebound in the tech stocks continue? >> i think it's going to continue i mean, we're coming off some massive lows and if you think about where we are, we've had an earnings expectation, a

valuation reset, and we've been calling the -- what's been going on, we're talking about almost 300,000 tech workers in terms of announced job cuts there's still tech talent in demand people are looking at hiring tech workers in different areas, and the tech stocks are really where the growth is. we might see it in digital advertising but we are definitely seeing it in cloud growth we're seeing it in the enterprise side. we're also seeing it in a lot of the b to c infrastructure areas, and then of course we've got china reopening. that's going to impact q2 and q3 if you're looking at companies like apple, tesla in china, there's still growth options out there. >> i was going to ask you about the layoffs. there have been a huge amount of layoffs and continue to be so. as you said hundreds of thousands of people. did those workers get rehired quickly? is there still demand other places for them what happened? >> you're absolutely correct what happened was, you know,

between 2019 and 2022 we didn't have the normal calling of the herd, typically 5 to 10% of tech workers are let go every year. people were so worried about not having enough workers to meet demand that they kept everybody. and so a lot of companies have taken advantage of this opportunity to let go folks that might not be the right fit, hire in the right areas, and the good news, it's never good news to lose a job but where we once ha three opportunities per applicant, most people are finding work within 60 days or less, and that's good news. >> it's not saying that they were not necessarily the best hires, just maybe not the best fit. if you can get picked up somewhere else immediately, someone else wants your skill set. >> well, it depends, right in the high-tech industry versus what's happening in public sector versus what might be happening at an smb, you're seeing a bunch of things you're seeing migration definitely out of here, in silicon valley people are heading to austin, to atlanta, to rally durham, people are heading out to other tech centers like south florida,

which are becoming tech centers, but you're also seeing other things that happened as well some people were definitely in the wrong fit as you were mentioning. >> so have earnings expectations come back to earth just in terms of what these companies are saying they're in the middle of earnings season. it's been disappointing for a lot of these big companies, and yet, you haven't seen the stocks get knocked too hard is the street now in line with expectations >> i think the street is closer in line to expectations. here's the wild card as you and i know it really comes down to what we see in the federal interest rate meetings, and it also sees what happens because of the last job numbers. we don't know if the fed's going to continue to be hawkish and raise rates. if they do that's going to have a negative impact. i think we're starting to see the end in sight in terms of where the nasdaq's going to be and where the tech market is going to be. >> this is really tied to growth getting hurt to higher interest rates. >> the macro factor is still interest rates that doesn't change. >> ray, thank you. ray wong

>> thank you. >> coming up, a lot more on squawk a closer look at what the strong job market could be signaling for wage and inflation. you don't want to miss our interview with housepeer vimcrthy, that's going to take place tomorrow at 8:00 a.m. eastern time "squawk box" will be right back. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent. 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.

good morning, futures are falling after a strong jobs number on friday, and a speech

by fed chair jay powell tomorrow and a wonder what he's going to say. a search continues for debris after the u.s. shot down a chinese spy balloon over the weekend. what china is saying about what it calls an attack we'll talk u.s./china relations. and the artificial intelligence race is heating up. should businesses embrace the technology or steer clear? we will debate the ethical issues and possible regulations surrounding the technology as the second hour of "squawk box" begins right now ♪ ♪ good morning, and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square, i'm andrew ross sorkin along with becky quick and joe kernen all back at

the table together u.s. equity futures at this hour the dow looks like it would open u down about 194 points. the s&p 500 off by 30 points the nasdaq down about 120 points then let's show you treasuries we've been talking all morning about what the fed may or may not do what the market thinks the fed is going to do we're at 3.6% right now, two-year sitting at 4.38 and then oil we've been talking about -- well, oil has been inflationary in all of this. 73.57. things are getting back more in line with where we were before crypto, the barometer perhaps of risk on, risk off and we're now under 23,000 again on bitcoin to the extent that that's the barometer, ether sitting at 3,638. that sector moving up. friday's strong jobs report has economists questioning their forecasts for the weak first quarter where they were.

i think they were below 1% just how close and inevitable a recession may be at this point steve liesman joins us now with more steve, i don't know, i've seen a little bit softening in your view, i think. you almost seemed likeyou had little bit of empathy for rick's viewpoint about whether we can just strong jobs, high inflation, whether you just make that connection, and it's always true are you waffling -- or not waffling, but do you -- you sort of can see the other side of things at this point, i think. >> i mean, you can see that in the question i asked fed chair jay powell, right? just asked him point-blank, could you be wrong about this? i think that's an important thing. joe, get back to that, but the conclusion among forecasters, among the stuff that i read this weekend in the wake of that shockingly strong jobs report, pretty simple. if the job market is really that strong, it's hard to imagine the economy really being that weak so the result as forecasters, considering how low gdp may go

this quarter and even next, and the market's rethinking its forecast for rate cuts for year end, our friend ian shepherdson, investors now need to brace for strong retail sales, industrial production, home sales and construction data for january. morgan stanley says another year of strong income growth could lead to another year of strong consumption. the cnbc fed survey from last week showed respondents forecasting just 0.1% gdp growth this quarter followed by a negative 0.6 and a negative 0.1 in the third those weak numbers will be hard to hit if jobs, income, and spending are indeed stronger this morning, rates continuing to surge from friday two-year year-to-date up 30 basis points before the news that the u.s. created 517,000 jobs in january, almost three times the estimate the fed market gap closed considerably as the market prices in the fed going to 5%

but now bakes in 30 basis points and cuts economists offered lots of unique reasons for this big job surprise and the big miss in the estimates. and though it's going to be revised. no smoking gun explains it like seasonal adjustments or anything the best argument that it's overstated is how weak earnings and guidance have been, but here's the thing, if the jobs number is right and the economy is stronger than forecast, maybe the profit outlook is brighter too, joe. >> 30 basis points doesn't get us to where we should be in terms of the market. i mean, it was already from such a low level, like the two-year got to where it should not have been if the fed's right about all this stuff getting back 30 is okay, the one thing that's really occurring to me now, steve, that i really have a problem with is if a lot of the inflation starts with the energy sector, and ukraine, whatever you want to blame it

on, but if a lot of it passes through that because of higher energy costs, if our only -- if our only solution is to hurt global demand to keep energy prices low, what do we do? okay, let's just accept that we can't have the global -- the globe grow quickly, international trade's got to come down. we just got to just pair back everything we do to make sure we don't use too much oil because the price -- that's not the way to do it you got to do the supply side, steve. you cannot solve the inflation problem permanently by hurting demand it's no way to do things we want demand to be strong, and we want strong growth. so -- right? >> so the thing the fed -- the way the fed looks at it, joe, is they only can control the demand side of the equation they can't make -- >> then stay out of it then we shouldn't depend on them to solve all of our problems. >> they're not supposed to solve all our problems, just

inflation. >> and employment, how do they do both then they can't do both >> so just to be clear, joe, the powell view of the world is it's not just -- it's not just oil. it's also the labor market that is the source of potential inflation here. >> that's the question >> but you sound a bit like lael brainard who a couple of weeks ago -- that's really what i asked powell about is do you agree with your voice chair who said if you bring down all the other costs that went up that maybe have been responsible for the rise in wages, maybe you don't have a wage price problem or a wage price spiral problem >> right >> and there's a lot of commentary on i guess you could call it econ twitter about whether this connection, joe, between higher wages and higher inflation really is true, and people are beginning to question that i've been questioning it for a while here all i know is that's the way that powell looks at the world and sometimes, joe, you know, if

mom is and dad say no, they're the ones who make the choice i don't know if it's right or wrong. that's how powell is thinking about the -- >> he stated independent though. he'd be like that quote until the facts change you know, he could theoretically, if your question is -- he could change. >> he sounded more dovish before we saw the strong jobs report. >> anyone would. >> here's the thing, joe, do you expect him to back off with these kind of jobs numbers, his basic view of the world is one we call this phillips curve view of the world, if unemployment is lower then the ability of the economy is sustained it's going to drive up his view of inflation. >> we've still got a participation rate that's still got so much room to rise that that wouldn't necessarily happen >> you know, joe, in powell's defense, let's remember he waited until he was i guess

despondent or pessimistic about workers coming back before he reversed himself he waited until, what was it, september '21, october '21, and it was in november '21 when he thought look, i've waited for these folks to come back their not coming back. therefore we have to change policy, and that was really the key. >> right thanks, steve. >> and you had the over -- what was your wimpy over? >> i had the pathetic over, joe, i called it the pa ththetic ove. >> what was it >> i was the high side 250, i didn't buy all of goldman's 300 so i said all right i'll take the 250 side of it, which was half of what it was. >> it will be interesting. unless it's a huge revision. that will be bad anyway, thanks, steve. >> do you remember the other way around when it came in and it was like 100 and something, and i said, this is absolutely wrong, and it was revised up to 750. it's just when i looked at this thing intensely over the

weekend, i couldn't find a single smoking gun out there for the reason why this thing was so high >> okay. all right. >> steve, thanks right now we want to talk more implications for the markets after that red hot jobs number and what it could mean for the fed and rates. we want to bring in the head of the investment strategy group at goldman sachs. she's also goldman's chief investment officer for consumer and wealth management, and charmaine, let's just talk about this number. i mean, larry summers said this may be the the most difficult economy to read that he's ever seen i think you're in that camp. >> we have been in that camp for quite some time, our 2023 outlook, we actually called it caution, fog ahead because we wanted to convey to our clients that there's a lot of uncertainty and nobody should position the portfolio with too much conviction. they shouldn't go from one extreme to the other don't assume we're definitely going to have a recession and position a portfolio for a recession with an underweight in equities, but don't also

position a portfolio for an overweight in equities, assuming that we're going to have just a soft landing and so -- what does that mean though if that's the constraints in trying to figure it out? how do you perfectly balance a portfolio? especially after a year where stocks and bonds went down >> the most important message for our clients is always to make sure they have the right strategic asset allocation nobody could have a view in terms of overweight or underweight if one doesn't know what mutual is for every client there should be what is the right reference benchmark, how much stocks, how much bonds for those who can have diversified portfolios, those who qualify for having alternative investments. the idea is you have to have a view of what neutral is, and in the face of so much uncertainty, with so much uncertainty about the probability for a recession, then one should be at that neutral position so you say what does that mean that means be at whatever neutral is at this point in time. >> it doesn't mean sell out or stay out of the markets for now?

>> not at all. one of the most important investment themes we've had since the trough of the global market is stay invested. even a year like last year where we had both stocks and bonds go down, which is very rare -- >> kind of wished i sold at the beginning of last year. >> on the other hand, unless you timed it perfectly, for most urs inve u.s. investors the tax burden would have been far greater. if you're a new york city resident, california resident, the market didn't go down enough to make up for the taxes you would have to pay for the capital gains. so in fact -- >> don't sell until you move basically? >> it's very important to factor in these taxes for taxpayers that's why we say stay invested. on average something like last year only happens 2% of the time since 1926. >> you mean with equities and bonds both down. >> it's very rare that both go down and only 20% of the time since 1926 have you had a negative

return for a stock bond bl portfolio. it happens, but the portfolios tend to recover. on average they recover between eight to ten months so the message to clients is nobody's going to time the market perfectly, no matter who we talk to sometimes they'll get it right sometimes they'll get it wrong on this there's huge conviction we're going to have a recession. the market hasn't already priced that recession, one shouldn't go underweight. with the market high to low, that was down about 25%. that's already been priced in. >> we have seen a big resurgence in the month of january in the markets. it's been very good news, especially for the nasdaq. does that make you feel good about things, or does that make you nervous as a value investor? >> our base case for this year was a 13% return for the s&p 500. that was our base case, and we always like to encourage our clients to think about scenarios. there's always a probability to the downside and a probability

to the upside. our base case of 13% made us generally optimistic, but then we've had such a strong rally in january, far beyond anything we would have expected, and we think that's because there was so much pessimism from the buy side in terms of what we were going to get from earnings and what we were going to get on the downside if you look at companies that missed earnings, in fact, they rallied. it's very unusual typically companies that miss earnings, the prices decline, but here, in fact, aggregate prices were up un just under 1%. clearly the market was much more pessi pessimistic. maybe a little bit too fast. >> i looked at short covering. the hedge funds and the short covering they were doing last week was pretty phenomenal, especially on thursday these were some big numbers that people had to say, look, we've got to get covered in a very big hurry here things are looking better. >> to that point exactly,

generally people are still underweight, they're less underweight. but on average, if you're looking at hedge funds, macro hedge funds, ctas, they are not actually neutral relative to their long-term history. people are still a little bit underweight. and one of the arguments for not trying to time the market is who would have expected a market up over 7% in one month and so you can just get whipsawed and end up trading a portfolio and actually losing money. and that's why we do encourage our clients to have a slightly longer horizon. >> so a slightly longer horizon makes you feel, what, you're feeling pretty good about things >> we generally have said the probability for recession is 45 to 55% that's the highest number we've ever had since the global financial crisis, and it's a wider range than we've ever had. so we are trying to convey that uncertainty. so do you say we feel good about things, we do expect portfolios to have positive returns we're saying it's really not noble whether we are going to have a recession or not. you may recall in december chair

powell made the same statement he said nobody really knows. and i think this surprise on the nonfarm payroll number is evident that, yes, there are surprises in the data. nobody's forecasting them consistently, and again, maybe the number gets revised lower, maybe it doesn't but given this uncertainty, clients shouldn't try to follow every single move and anticipate every data. >> sharmin thank you very much. >> thanks very fghaving me. we've got former s.e.c. chair jay clayton who's going to join us next to talk about how that move could impact financial reporting and so much more. and former ways and means ranking member kevin brady is going to be with us. we're going to talk taxes, the debt ceiling, u.s./china relations after that balloon as well "squawk box" coming right back

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welcome back, the s.e.c. report considering loosening its planned rules for climate closures the house committee announcing a working group. joining us now is former s.e.c. chair, jay clayton, also board member at american express and a senior policy adviser. you've got the portfolio. nice to see you this morning. >> good to see you. >> let's talk about these climate disclosure rules that may now it seems get either watered down or loosened or something. and i'm curious how you think about that but also specifically how you think about that relative to what's happening in europe a lot of the american multinational firms that are doing business there may ultimately have to do some of these disclosures anyway so what's really happening >> look, you just raised a number of issues that all need to be considered together. let's start with europe.

>> okay. european financial market regulation has proven to be inferior to u.s. financial market regulation, at least over the last several years europeans are using financial market regulation to drive social policy. it's incredibly inefficient, ineffective. why would we -- why on earth would we import that to the united states. that's like a fundamental question as we negotiate with our european counterparts, many of whom i know and i like a great deal, there has to be a little bit of -- well, look at what we've done in the united states in terms of financial market regulation which is all about disclosure, efficiency, and choice as opposed to in europe where maybe it's not about choice maybe it's more about what the state wants in terms of di directing capital. >> let me ask you a related question whose models do we use to try to -- companies have no idea how to do this themselves. they're going to have to

outsource that to some agency that's going to tell them what to expect five, ten, 15, 20 years in the future for them to tell shareholders what their risks are when the models that we've used at this point, the standard deviation is like 3 or 4 on, you know, how accurate the models have been in the first pra place. who do we depend on? >> the point you're trying to make is why i'm not surprised why the s.e.c. climate rule is being reconsidered it's also why it's being scrapped half of a bad idea is still a bad idea the rule -- >> we're going to use the euro model. it's great. >> the rule that's proposed is an entirely new disclosure regime, not based really in economic return but based in an idea about how we are going to transition or what are going to be the drivers in transition in our energy and climate policy when we don't have an energy and climate policy. >> let me ask you a different question, which is, a, some people would say -- advocates

for this would say disclosure unto itself should be a fabulous thing. i mean, disclosure is transparency it's the disinfectant of -- >> that is one of the biggest appeals and bogus arguments because disclosure of everything is disclosure of nothing you have to have a limited principle on what's going to drive your disclosure. we have a fantastic one in america. it is whether it's material to a financial decision if you have that as your north star, which the supreme court -- then you can filter through the information that's provided. >> hear me out advocates for this would say that the more disclosure you have, a, the better, and b, that these decisions increasingly may become material and i guess we can decide what's a material statistic or not a material statistic. by the way, we could debate, you know, and actually you and i may be on the same page about this

sometimes we had the ratios, compensation ratios. i don't know if that's material information, but i think it's been marginally helpful to somebody to look at. >> those metrics around employment, wages, the like, they're very relevant to the department of labor. they're very relevant in terms of how we're going to set what i would say is social policy in america. at a granular company by company level, they're often not very relevant to how that company is going to perform there are much more relevant metrics that the people in the boardroom and the people in the management use those are the metrics that investors want not a top down metric that you would use to, i would say set social policy. >> so you would have no new information. >> no, no. >> because you talk about esg all the time the other piece of this is there's got to be some stats in the esg world.

if it is anything, you'd want some more data, no >> when i was at the s.e.c., we promulgated a new rule around disclosure on s. what metrics sis the company using to measure their human capital, their human talent. if it's an engineering company, are they measuring turnover, are they measuring new entrants. what level of experience if it's what i would say is a more blue collar labor-intensive, what metrics are they using to measure the availability of labor in particular regions those are very interesting statistics what level of employee satisfaction, but the very top down across all sectors. >> i guess the question is why a disclose unto itself is, look, if you believe, and we can debate whether the paris climate accord is a real thing. >> i think it's proven not to be. >> but there's a movement, at least maybe in parts of europe and parts of the rest of the world that i think think they're going supply and wouldn't you want to know the data that might lead you to that or not?

>> look, i think a number of industries and particularly the fossil fuel industries are providing a lot of data. what i would -- what i would want to know as an investor thinking about the evolution of environmental regulation and energy policy over time is if as we hypothesize, we're committed to some kind of carbon neutrality at 2050, whatever that means, how is my company going to get there what are the steps i can make? what are the steps i have to rely on others i think we'll find that a lot of companies are going to say without technology or without, you know, very low growth, i can't get there on my own. if you look at -- >> i don't disagree with you then the question is should there be data behind it. i don't know >> the question is to have data, right, that is relevant you have to have a defined path forward let me give an example that i put out there. projections, financial projections. financial projections are based

on today's performance, an idea about the future that companies have we all know financial projections beyond 18 months two years. >> is often wrong. >> are often wrong. >> here we're asking people to look at 5, 10, 15 years with no model and project a financial impact back to today's financial statements, it's no wonder companies are writing in and saying is this really what you meant? >> jay clayton, appreciate it. we always talk china with him, so curious what you think of the balloon. >> look, let me be very blunt. the chinese view of complying with what i would say is our view of international norms has once again proven to be different. >> and i bring that back to my world. when is the day that american companies are going to be told you can't do business in china if that's the case >> look, that is incredibly blunt. we've talked about this before the effect on the economy of that kind of quick take, the question that i ask is are we

eroding, or are we improving i think we've been eroding for a while. we ought to be focused on improving. >> okay. thank you. >> when we come back, chat gpt starting an ai war of sorts, but how will the technology impact business, education, and government, and what are some of the ethical issues surrounding that technology? that conversation is coming up check out the futures right now, you're going to see the dow is still indicated off by just over 200 points the nasdaq down by about 123 do by 32 "squawk box" will be right back. prizefighter... ...meets trailblazer. ♪ ♪ classic meets modern. ♪ at morgan stanley, we may seem like a contradiction...and we are.

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shares of tyson foods are tumbling after the company reported its first quarter earnings results revenue coming in at $13.26 billion that was just short of the estimates of 13.52 billion in the meantime, eps fell 70% last year to an adjusted $0.85 a share. that was well below the street's estimates of $1.34 still to come, former congressman kevin brady is going to join us to talk everything from taxes to the debt ceiling and a lot of other stuff stay tuned you're watching "squawk bo is is cnbc super heroes are everywhere. in our movies, communities,

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welcome back to "squawk box. as tax season gets underway, one deduction continues to be a thorn in the side of many across the country. even though democrats failed to remove that $10,000 cap, one group of americans may have found a way to make that disappear. how do you do that, little magic

trick? >> yeah, it is magic, andrew more than 30 states have now passed these special laws allowing a special work around of the salt cap. it is called the pass-through entity cap the pass through pays an extra state tax. it takes the full federal tax deduction. then passes that deduction on to the owner through a credit or income exclusion so the result is the owner gets an unlimited deduction on their state business income tax. now, the biggest beneficiaries are hedge fund managers, private equity partners, lawyers, doctors, the irs approved this loophole in 2020, but critics say it is costly and unfair. most of the benefits go to those making more than $1 million a year the tax policy center saying taxpayers in new york and california have already channelled more than $40 billion in income through these programs an analysis by daniel hemmel found the federal government

will lose more than $50 billion in revenue by 2025 hemel calls it a, quote, scandal and says the irs should rule it as illegal as long as they permit pass through entity owners to take advantage of the workaround, the biden administration and the irs will abdicating their duty to enforce the law. this month new york became the first municipality to approve the workaround so that means they can write off or deduct the full 3.9% city tax as well andrew. >> so explain this, though, robert why has the biden administration and this irs allowed this to persist if, in fact, it says problematic as you have laid out there in r your reporting >> yeah, i mean, they haven't given a reason obviously we've been sort of in between irs commissioners, so there's a chance the new irs commissioner will take a close look at this, but remember, the

democ democrats believe the whole salt cap is unfair, so any way to reduce it, even if it is more unfair because it's those with a million more and business owners and hedge fund managers that are benefitting, i guess they might believe that any erosion in the cap is beneficial since they believe the whole cap itself is unfair but they haven't issued any guidance or said anything certainly from the irs since 2020 when they first said, yeah, we bless this. >> robert, does anybody taking this workaround risk getting in big trouble if there's a new administration that does decide to crack down on it and go pback seven years? >> no, because right now it's legal. while you're doing it, the irs has blessed it colorado even said, look, you can do this retroactive to 2018, so they passed a law in 2021, but said you can go back three years and take this deduction. as long as the irs has blessed it it's legal until they say

otherwise. >> okay. robert frank, thank you. we're going to continue this conversation and more, joe, with someone who knows something about taxes. >> joining us now on what congress intended to do with the salt cap and whether congress will review state workarounds, former u.s. congressman kevin brady. he served as the lead republican on the ways and means committee. and congressman, it's good to see you. this really benefits even a higher level of income earner than i think of with salt, and i don't know -- you're from texas. i think that the idea was that states that were viewed as profligate in their spending, that they shouldn't be able to have their constituents, you know, sort of enable the legislatures to overspend by being able to deduct it. but then when josh gottheimer and other people want to get rid of the salt, it's, you know,

he's supposedly a democrat it's just rich people are the ones who benefit from getting rid of the caps, right now in this case it's the super rich that are able to get around it that can't be something you are supporting >> yes, well , the short answer is we put a cap on the salt deductions for good reasons. >> why >> under the old tax code, low income subsidized the wealthy. rural communities subsidized bigger cities. low tax states subsidized high tax states and there's an argument for doing away with it completely just let everyone pay their own state and local deductions at the end of the day, we reached a compromise with lawmakers from red states or blue states, excuse me, for the 10,000 limit, which at the time was twice the national average deduction for salt so we found, i think, a fair compromise there but i think anytime you're talking salt and listing it or loopholes to it, you're going to benefit the wealthy. but there's one key thing here

that wasn't really focused on, which is we're talking passthrough income, which just as likely could be your main street small business, your plumber, your electrical guy, or woman themselves the intent of congress on the salt cap was not to focus on small and main street businesses but rather on individuals and homeowners i think treasury tried to do, secretary mnuchin, treasury tried to follow the intent of congress, not to hammer small businesses and main street businesses they try to look these work arounds in a fair way. certainly there is an impact anytime there's an exemption to salt i think that congress will look at the state-directed workarounds as we look or as congress looks at the extension of it in 2025. >> so you don't think -- you think that they should be dealt with, you don't think this should continue. that's a big problem with passthroughs in general, you

know, the same people that you described are thrown in with the hedge funds and other people that are not the kind of people you were describing. >> yeah it is, actually, the small business deduction, a new 20% historic deduction for small businesses i think is overly complicated for that very reason passthrough income goes a lot of directions the pass code can have trouble really trying to capture between them i think, you know, congress is going to be looking in 2025, a couple of key things which provisions delivered, the pro-growth activity, how did regulations impact what congress intended then of course 2025's economy is much different than 2017's economy. they're going to be looking at other provisions such as how do we become more medically independent from china how do we strengthen more investment in the u.s. so all of those factors will be involved in what congress is going to review. >> the debt ceiling is something

we talk about a lot. the democrats would like just a clean raise and there are republicans that want to get something, and there's some republicans that want to get quite a bit, i would think how is speaker mccarthy going to wrangle the cats and what's the final deal look like in your view what would appease or satisfy the different segments of the republican party that the speaker's dealing with now. >> i think the speaker'ds made i clear we're not going to default on the debt. it's time to have an adult conversation about the direction of the government's finances clearly it's not sustainable every administration seems to kick it down the road, but if we know it's not sustainable, why not have that adult conversation about how you change that direction. and we know the solutions are really growth, economic growth that delivers high tax revenues. that's what we're doing now thanks to the current tax code

but you need guardrails around spending, just smart and force ones, the rise size of government i think you're going to have for the first time in a long time those conversations. to me, you know, whether you -- you know, the bucket's here, do you choose a certain program that needs to be cut, do you pick a number or do you look at the budget reforms that could long-term right size the government, get us back into financial sanity again, you know, i'm hopeful that that third direction is where the conversation goes. a lot's up to the president. i think house republicans who i know the best are having some serious conversations about how do you do this reasonably and responsibly? >> well, just discretionary spending, congressman, can you -- can we accomplish everything we need to accomplish because now i see speaker mccarthy saying social security, medicare i know rick scott tried to, you know, in the sort of softest way

saying maybe those things could be mean tested and you just get absolutely hammered if you say that can we do it without ever addressing those two programs? >> so the bottom line is speaker mccarthy has been very clear in these discussions. social security, medicare are off the table. >> that's political, isn't it? that's just expediency because you can't talk about it but it needs to be talked about. >> i think he's going to be very honest the only way we save social security, medicare for the long-term, is if both parties sit down probably over an extended period several years and work solutions through for both those programs. i think the speaker understands that's not happening in a couple months, but we ought to begin really that conversation about how we come together no one party really can save those two programs >> any of the really hard things it's like let's have the conversation we really can't do anything because we just -- you know, we hate each other and we really can't do anything. >> i don't know that that's the

case, joe. i think in the past 11 changes really in budgeting and spending that congress has achieved has come around the conversations of the debt ceiling so it doesn't have to be political. it doesn't have to be adversarial. we can have those adult conversations. that's what house republicans want to have >> congressman, thank you. tomorrow's going to be a big day. we'll talk to speaker mccarthy, and then we'll have -- watch the president tomorrow night, but it's a big political day tomorrow we're going to kick all this around maybe maybe someday. maybe someday you're right maybe we can all act like adults and solve some of these things inc instead of just yelling at each other. >> i think we can. good to see you. when we come back, a jury ruling in favor of elon musk, finding him not liable for investor losses related to his

2018 funding secured tweet we've got that story and other headlines next. and then the power of ai and how it's being used by business. should technology li ct kehagpt be regulated we'll be right back. maybe it's because you can adjust your comfort and firmness on either side... your sleep number setting. to help relieve pressure points and keep you both comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday.

dell says it's eliminating more than 6,000 jobs or 5% of its global work force citing market conditions that in its

words continue to erode with an uncertain future the cuts, the latest to hit the tech sector as pc demand continues to decline pc sales fall 37% in the fourth quarter of last year compared to a year ago and while a jury has found elon musk not liable for losses suffered by investors after he tweeted in 2018 that he had secured funding to take tesla private, investors sued musk, tesla and the company's board arguing that his statements had devastating financial consequences for them, but in a federal civil trial in san francisco, lawyers for musk arkd that he was such a successful businessman that he could have easily obtained financing to take tesla private the federal judge had already ruled that musk's funding secured statement was untrue, but the jurors found that musk's statements did not cause the investor losses. sfmusk tweet and update on twitter yesterday where he said the last three months were

extremely tough, had to save twitter from bankruptcy while fulfilling essential tesla and spacex duties. wouldn't wish that pain on anyone twitter still has challenges but it is now trending to break even if we keep at it public supported is much appreciated. musk later clarified that twitter is definitely not financially healthy yet in his words but is trending to be so twitter and musk did not immediately respond to cnbc's request for comment, but tomorrow on "squawk," we will be talking all about elon musk with major tesla shareholder ron baron. he will join us live at 7:30 p.m. eastern time. we'll talk to him abouwhe t erhe sees twitter, tesla, spacex and beyond "squawk box" will be right back. o connect with customers, and too bring your dream business to life. because when we work together, the future is bright. these days, your customers are not just down the hall. they're all over the

world. so cute. it doesn't have to be lonely at the top. join the millions to finding success on their own terms. start your journey with a free trial today.

. good morning welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. u.s. equity futures are under pressure we've come off the worst levels of the morning you're talking about the dow down by 160 points below fair value. if you've been watching european equities, in the early going there, also some pressure. the biggest loser right now is the cac in france. the dax is off and treasury yields in the united states have picked up significantly since that much stronger than anticipated jobs

report on friday we had been below 3.5%, the ten year is now yielding 3.601 the two year to 4.397%. a soft landing is possible here is what she said last night on cbs's "60 minutes." >> the u.s. economy is also going to slow down this year but at least based on the data we have today, we think u.s. would be able to go through the year narrowly avoiding fallen keen to recession. >> does that mean a soft landing? >> that means a possibility for a soft landing for the united states our advice to the fed is to stay the course until core inflation starts to remain down. the fed has to be very careful not to start easing financial conditions prematurely

>> she said the imf expects to see somewhat weaker labor markets but isn't anticipating a big unemployment wave in the u.s. meantime, the other big topic, chatgpt, is taking capitol hill, college campuses by storm but many are grappling with ethical questions. joining us right now to talk about it is founder and ceo of niva, an ad-free search engine that launched. good morning to you. there are lots of ethical questions about this perhaps the biggest one being what's going to happen to all of us when this is over >> stepping back models like chatgpt, they have incredible power to understand language what you say, but also what -- so they can translate it into things that we can understand. so lots of functions that

involve consuming information, creating information are going to be changed in a pretty big way. think search, advertising, content creation, blog-writing, but also things like call centers. it's hard to tell how much impact it's going to have. but it's clear that it's going to have a lot of impact. but these models also have qual qualities that we don't understand i think applying them has to be done carefully and this is part of what's going to unfold over the next several years. >> let me ask you a question which is, one of the things that's fascinating about the internet and the web as we know it today is, for the most part, things are footnoted, if you will, through links and the like so you know where the information is coming from, you can actually -- if you're on a wikipedia page, you can check to see the original source and the like chatgpt is not like that it's a one-way system. meaning, you actually have no idea where the stuff came from do you think that long term that will be the model, do you think it will go back to some kind of

footnoted program? i wonder because i think there's a transparency issue that's missing in all of this as we try to understand it >> chatgpt is a stop along the way. it's very lucid, but it can also be on. what we've done over the past few quarters is ftake the part f search and combine with our large language models to create a search experience that's closer to what you're talking about. we quickly -- i predict that this will quickly evolve to that there was a leak yesterday of a new search experience by bing that's going to have footnotes i think we're going to combine what's great about the models, the ability to create great answers with things like citations and real-time information that we have come to

expect i expect that this will rapidly get better this isn't a matter of months. a matter of years. >> for these content creators out there, do you think there's going to be a big business in licensing content to train ai on right now you don't know where -- again, this goes back to the issue of footnoting most people don't know really where the information is coming from and there's a boil the ocean situation going on here. but i wonder whether long term, whether it's cnbc, nbc, the "new york times," "wall street journal," all of these folks effectively sell a license to allow ai to train on it. >> yeah, this is a fascinating question there are business considerations, i think these large language models are going to alter, like the publisher platform, search engine kind of balance in a very, very significant way.

i don't think anyone knows ex exactly going to happen. we see a role in which content creators pay a lot more attention to the search on their own site because they're going to realize that having your own chat bot is going to make your users look into your content who figures out how much revenue should go to the platform or to you because they're going to be all of these questions we see this publisher dynamic over the next few years. >> it's great to see you i hope we still see you and it's not a -- you know, kind of an emoji that's doing all of the -- thanks >> thank you, andrew. coming up, mohamed el erian is going to join us with his take on friday's big jobs report big number and how it could impact the next fed decision don't miss our interview with house speaker kevin

mccarthy that's tomorrow at 8:00 a.m. eastern. "squawk box" will be right back.

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futuring sliding as we move closer to the opening bell on wall street. the s&p is up four out of the past five weeks. the nasdaq up five out of five it's best streak in more than a year the fed back in focus. investors want to know how the central bank views friday's huge employment number and what they're going to do next about it

we're going to talk jobs with heather. and the u.s. working to recover debris this morning after it shot down that chinese spy balloon. we're going to get reaction from california congressman ro khanna who sits on a committee focused on u.s./china competition. the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square, i'm joe kernen along with becky quick and andrew ross sorkin the futures are down they were down even more earlier. we were down about 250 on the dow for most of the morning session. now down 150 we'll see if that comeback continues. it's been a playbook for the past couple of weeks

a lot of weakness in the morning and then by the end of the session, maybe better numbers for the bulls, anyway. the nasdaq down just under 100 and the s&p -- solid week last week, the s&p did, down just a little bit this morning. 359 now on the ten-year, two-year, just under 4.4%. more than 1400 people are dead following a 7.8 magnitude earthquake that hit central turkey and northwest syria earlier this morning that was followed by a 7.7 quake in the afternoon there turkey's president said more than 900 people were killed in that country and close to 3,000 buildings had collapsed. rescue workers worked in bitter cold conditions across the region this is turkey's worst earthquake since 1999. let's turn back to the business world for a moment on earnings front we've got new results from tyson

foods. profit falling 70% from last year to an adjusted 85 cents a share. that's well below analyst estimates of $1.34 tyson missed on the top line as well falling beef prices and lower volumes in tyson's pork segment hit results. common strength of the market's early year rally has undercut the long-standing bear case on stocks along a few fronts i don't know how much solid work we've done to rectify that is it -- are we in a position to keep going higher? mike santoli >> it's improved for sure. the bulls winning back some of the benefit of the doubt nothing is final but a lot of the technical work, that's where a lot of the observations of improvement really do crystalize we obviously have broke this long down, this goes back to the peak of the market we keep drawing this line. we did cross above that. also the 50-day average has

crossed the 200 day. all of these measures of more demand, you have each pullback has settled at a higher level since october. you've had this series of moves. very constructive. last thursday in particular, burst of upside momentum and you have a lot of new highs. it triggered a lot of people saying maybe this could be something real it means the market is short term stretch today the upside. we get the pullback. if we get a 5% pullback, that's probably no big deal there's definitely been amplification of this rally by some forced repositions. take a look at the momentum factor etf along with the high beta normally these are moved together high beta is the most volatile stocks in the s&p, momentum have been outperforming recently. mostly in sync what's going on with momentum? it became a defensive eff last

year, they relanbalance it it became very much the kind of stocks that people want to rotate out of to grab riskier. massive short covering last week depleted some of the short base. a lot of this stuff has to be digested technical stuff happens for the changing perception of fundamentals that's why you get technical readings moving. this is the one year note. we don't look at it a lot. the stock market got stability right here when they figured out the destination of where the fed was going to be ending up. last friday's jobs report got this higher. the one year is now the highest yield on the curve that means we're building in the prospect for maybe another 25 basis point hike beyond what the market was already pricing it. it's not a dramatic move it's not a complete repricing. it shows you that it's a little bit of a delicate balance between too hot, too cold. this has been the case for

months. >> yeah. hard to figure out it's weird, isn't it, mike, because a lot of times you're looking for technically -- you want to see some strength, which makes you think, okay, some of the breadth looks better or the advanced decline starts improving. but at the same time, now we're getting overbought it's always an either/or with the signals and you can never really just be sure. have we gone too far too fast, or -- >> that's always the question. >> has it been constructive that we've gone this far? >> to me, what determines those answers to those questions is, how does the market digest a bit of a pullback. a kind of routine pullback you're going to have some selling profit-taking, is it going to be kind of -- that's it, we're goingto break down again and roll back toward the december lows. that would probably get a lot of people rethinking that this was

anything real. again, nothing -- the verdict is not in and who know what is the upside is even if in fact the lows are in in october. but it does show trend improvement, cyclical stocks doing a little bit better, even though the junkie stocks of last year are also flying >> still no big sell-off, no big vix, no big capitulation but i -- i think it could be either -- it could be duration not how deep it went this has been going on for a long time. >> two years, really >> right okay all right. thanks, mike joining us now is mohamed el erian. president of queens college cambridge. and looking at what larry summers had to say earlier, he said this may be the most complicated economy he's ever had to try and read. where do you come down on that the jobs number on friday surprised a lot of people. >> he's absolutely right

and something that we have discussed on many mondays is that we have significant uncertainty on three key issues. one is the way the economy functions. we can talk and defend many different outlooks for the real economy over the course of the year two, inflation, i can think of three possible scenarios for inflation. and then finally policy and the disagreement between the markets and the fed. so there is an unusual level of uncertainty and then it feeds onto the structural uncertainty that we've been talking about, the change in globalization. so i completely agree with larry. it is a very difficult economy to read and we have to get our head around the notion that there are many potential outcomes and no one can convince you with a high-level of conviction and foundation that

one will prevail we just don't know, becky. >> so what do you do where are you going to low your hat? >> so, first, if you're a portfolio manager and it goes back to something we discussed the 7:00 hour, you think about the tails. you don't ignore the tails as thin and unlikely. you think about the tail you don't just position yourself for the baseline because a baseline is less -- as an economist, if you take a lot of time going through the data in major, major details because that is what's going to show you. i think the service sector is probably the most important sector to understand today >> okay. in terms of what you think the fed is going to do, how much more complicated did it just get. jay powell was sounding dovish last week before we got these jobs numbers but you look at the jobs number, my guess is they're game on again in terms of higher rates

>> he said disinflation 11 times during the press conference. 11 times that word wasn't mentioned a single time by the ecb president or the governor of the bank of england who spoke the following day. and he gave the market the perception of a hard turn towards soft landing and then we got the friday report. so he's going to have to decide whether he wants to clarify tomorrow where he sees things going. look, you know that i would have preferred that they do 50 basis points and wait and see. i expect we have two more 25 basis points ahead of us and my major concern is the possibility that they end up hiking into a weakening economy. the economy is very strong now that's why you wanted to get the hikes out of the way i worry that we may end up hiking into a weakening economy and that would be unfortunate. >> where is the economy showing

signs of cracking? where does it happen and when does it happen >> so the forward-looking indicators are the reasons why some people -- not me -- some people predict a recession with 100% probability i'm not there. i've said it over and over again. there is nothing predestined about a recession. but if you look at a small set of forward indicators, the forward indicators themselves, the leading indicators themselves, manufacturing in particular, the layoffs that we're hearing, you can make a case for a significant slowdown. that is what people are looking at but you can't deny the strength of the labor market. and that's why people say it's not a done deal by my measure that we're epind up in a recession. >> what did you take away from the jobs numbers is this that people are coming back into the workforce because the government is not paying people to stay home anymore? is this that -- you know, there

is much more strength in the economy than we anticipated. the layoffs in the tech sector, those people are getting picked up somewhere else. they're on -- they're still getting paid for awhile, so those numbers haven't come through? >> yeah, i think it's -- most of the layoffs that have been announced haven't come through yet and you see this in weekly jobless claims they haven't come through. that's going to happen in the next few months. look, i think -- let's look at what's really positive and not talked about enough. and that's labor force participation went up. more people came back into the labor market that is the solution you know, joe and i don't tend to agree on very much. but we totally agree on the supply side. we agree that that holds the key to good things happening going forward. and labor force participation is very important the wages element is a puzzle. it's a real puzzle labor force participation isn't

going up fast enough to explain why we only got a 0.3% increase in monthly wages keep an eye on that. that's going to go with the inflation dynamic. the last issue is, keep an eye on the fact that the most dynamic element of our economy, services is a low-productivity element of our economy we can't lose sight of what's not happening elsewhere in the economy. >> meaning what? >> meaning that we've got to think very clearly about supply side issues. we've got -- we have to have a growth strategy for the nonservices sector because we cannot simply rely on the services sector. and that's what we're doing right now. that is what's keeping the economy going and that is wonderful. it's necessary, but it's not sufficient so for those of us who look beyond 2023 and care about high-inclusive growth, we're spending time to figure out how do we get the goods part of the

economy bouyent again. we haven't got strategies for that as developers should have right now. >> thank you >> thank you, becky. okay coming up on the other side of this, heather boushey is going to join us to talk about friday's blow-out jobs report and the joe biden economy in 2023 a check on crude oil take a look right now. we're at $73.99. it's the lowest close in a month. stay tuned you're watching quk x"nd"sawbo a this is cnbc

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welcome back to "squawk box," everybody. watching the futures, we're in negative territory but off the worst of the session lows. you're looking at the dow futures off by 170 we've seen down by as much as 250. the nasdaq down by 101 the s&p down by 56. attention turning back to the strength of the economy and the fed's path

employers added more than 500,000 jobs last month, that was more than double the expectation. we'll talk about the report and economy, want to welcome heather boushey. good morning to you. we've been having a wild debate here on the set this morning about the impact of those jobs numbers on friday. and what the fed should or should not do about it what they will do about it what the bond market is saying they're going to do about it it is -- it is -- there's no question it's good news in many ways, the question is, whether the white house should take credit for that given the sort of crosscurrents of what's happening over the last two years. >> well, certainly i do believe that the president deserves a lot of credit for the strength of this economy. when he came into office, his number one priority was to get the pandemic in check, get the vaccines out there, get the economy back on track.

took big bold steps to do that got people back to work. and, you know, throughout the past couple of years, we've seen this economy be able to weather a series of crisis thrown at it, different variants of the pandemic, different supply chain challenges as businesses struggled to get up and running after the pandemic had happened and, of course, the war in ukraine. and yet we have been able to see this kind of strong, steady job growth and growth overall and, you know, of course we have seen that prices have been high, but those numbers have been trending downward and so i think this is the strength of the u.s. economy, this is what the president means when he says he's going to build an economy from the bottom up and middle out >> i know you probably can't tell us exactly what you think about this, but there's a huge question now about what the federal reserve is going to do jay powell has been pretty public about his views that the employment picture is probably

too strong in his mind and therefore the question is, whether he's going to continue to raise interest rates and whether he should. >> well, as you know, andrew, we can't comment on fed policy. what we do see is the signs of inflation pressures are easing so in the latest data on prices, we've seen that the annual rate of inflation has been falling for the past six months. it's moving in the right direction. on friday's report on jobs, well, we did see wages tick up, that pace, again, is slowing relative to the past six months. you're seeing a downward trend there, even as things are rising so that means that you're not seeing pressure coming from the labor market, from wage gains on inflation at this point. so, you know, we're recovering from a global pandemic and it's challenging and you see these repeated, you know, challenges with businesses, with their supply chains, with some overhiring that maybe have happened during

the pandemic as businesses are trying to figure out where demand is going to come from next you think you see the economy working its way through that in a positive direction >> a goldilocks scenario would be where you stimulate the economy with demand side stuff, we did spend a lot of money over the past couple of years, and you get these great job numbers. but if inflation truly were to be moderating, that would be the best of both worlds. i guess the criticism could come when you think aboutthe averag u.s. worker and when inflation is running too hot you wonder whether all that -- all that stimulus was counterproductive. do you think that you did -- overdid it to some extent or it's external -- >> joe, i think it's so important to keep our eyes focused on what is important to american families and the american worker and we know that seeing an unemployment rate of

3.4%, a low that we haven't seen since 1969, that is the core and the crux of exhibition security for the broad majority of american families who get -- >> if it was -- if it was still 8.5%, it would all be getting eaten up, any wage gains -- >> that is very, very important and yet we have seen the pace of inflation falling over the past few months so, you know, i think what the president's perspective has been, we don't need to see a trade-off. we can make sure we get americans to work, make sure they have the economic opportunity to support their families, and then do everything we can to release those price pressures. the president has been focused so hard on, you know, making sure supply chains got back up and running, helping the markets do what they need to do. doing what he could do to contain high gas prices, gas prices have fallen sharply from their peak last summer and the numbers move around day to day, but that's been a seriously important trend for american families

but this strong labor market really is the core of that economic security. and the investments that the president has put in place through the chips and science act, through the inflation reduction act and the bipartisan infrastructure law, these are all going to, you know, continue those investments in american communities all across the country, delivering good jobs for families, for workers and their families >> heather, do you think that -- what number do you think inflation can come down to without unemployment going up? >> well, i think that -- you know, there's a lot of things that go into that. i'm not going to put a fine number on it what we want to see is that even as we're maintaining the stability in the labor market, as we're continuing to see people to be able to access jobs, that that is not fostering the kinds of price pressures that we're seeing start to abate. we're seeing a lot of indications that businesses are having to reconfigure what it

looks like postpandemic for where demand is going to be. and so we're seeing some signs that that is some industry that is were important during the pandemic and people were demanding a lot, those are shifting back to perhaps pattern that is were more common prepandemic. but the important thing is that as we all get back on track, we are starting to see and we have seen for the past six months the annual rate of inflation has been coming down and i think that's a testament to the fact that a lot of these are due to the supply side challenges >> we can't let the spr go to zero that helped in china's reopening. this may -- we may see a resurgence of energy issues or even inflation but i guess the most worry something is, if you run too hot for whatever reason, the fed is just in this position where they feel like they have to act and you can imagine, heather, what our national debt of 32 trillion, what it's going to cost to pay the interest on that if rates go up to 5 or 5.5%. we're not going to have money to

spend on anything else there is a concern that we can stimulate it too much and it can run too hot. >> we've been having this debate now for two years, right the legislation that we're talking about has been in place for quite some time. so what we are seeing is the benefits of that for the american worker and certainly rising interest rates do affect the debt the president has been focused in all of his budgets on making sure that his policies lead to a reduction in the deficit he's done his part he's reduced the deficit by 1 trillion that's a significant step in the right direction and easing some of the pressures on the economy. >> heather, why do you think the participation rate went up in the jobs number that we saw on friday where are those people coming from >> what we're seeing is an economy where there's a lot of opportunity for workers. that's what a 3.4% unemployment rate means and it's good to see folks coming back. you know, and we saw for both men and women last month and, you know, we saw a lot of jobs

created last month in the bottom half of the wage distribution. so, you know, many of those jobs in leisure and hospitality and those sectors which had been, you know, not so viable during the pandemic, we've been seeing those coming back for many months now that was a source of strength last month you also saw workers come back in some of the care sectors, childcare, nursing assistants and the like, those are the kinds of jobs that make it possible for everyone else to have a job and a family, where there's care responsibilities. so those are some of the place that is we saw last month. >> okay. heather, thank you appreciate it very, very much. coming up, ro khanna joins us to talk china and the surveillance balloon that was downed over the weekend. china should figure significantly in tomorrow's state of the union speech. we'll have complete coverage starting at 6:00 a.m. eastern and an interview with house speaker kevin mccarthy at 8:00 a.m

i think that's -- it's been exactly 30 days, pretty close, first 100 days for a president, the first month as sakpeer with speaker mccarthy tomorrow. "squawk" will be right back. >> announcer: this is cnbc program is sponsored by baird. bairddifference.com. hing tons of polygons here! 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

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take a look at cryptocurrencies right now. you're looking at bitcoin at 22,873 it had crossed 24,000 last week briefly. when we come back, we're going to hear in ro khanna or u.s./china relations in the aftermath of this weekend's spy balloon saga and another programming note for you, don't miss a special interview tomorrow at 7:30 eastern time we're talking to ron baron of baron capital. we'll be right back. and customl on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world.

♪ welcome back to "squawk box" on cnbc. we're live from the nasdaq market site in times square. first up, pc maker dell technologies is the latest to announce layoffs the company says that it will cut more than 6,600 jobs that's 5% of its global workforce. in a memo to employees, they said the move its taken like pausing hiring and limiting travel are no longer enough and it will no longer need to do

additional layoffs elon musk sharing an update on the financial health of twitter. he noted in a tweet that the social media network is what he called trending to break even. in november, musk said twitter had suffered a massive drop in revenue after advertisers pulled spending cnbc hasn't been able to independently verify the break-even claim this all followed a jury's decision friday that musk and tesla were not liable for misleading investors when musk tweeted in 2018 that he had funding secured to take tesla private. and the "national enquirer" has been sold. the magazine publisher is selling the tabloid along with the globe and the national examiner the price wasn't disclosed but it was a little less than a hundred million dollars. the military is searching for the remnants of the chinese spy balloon that floated its way across the country this week an f-22 pilot brought it down

with a single missile on saturday lawmakers on capitol hill want details and we want to know what the details will mean for u.s./china relations let's bring in ro khanna of california he's a member of the select committee on strategic competition between the u.s. and the chinese communist party. we don't know how much more you know -- welcome, good to see you. we don't know how much more you know than we know. i guess i'll just start by asking you, what was the motivation initially for sending this balloon across, in your view, with china what were they trying to do? were they trying to figure out some nuclear arsenal that we had in montana were they testing the president? or -- i'm not sure how you view that >> joe, it seems that they were engaged in espionage, spying i mean, i don't think it's coincidental that the balloon is

supplying over montana where we have so many sensitive weapons, icbms flying over idaho. these are very sensitive sites they can get a lot of this information from satellites, better from satellites, but it's hard to believe that these were innocent balloons as they claim. we will know more once we collect the debris, once the investigation happens. but it's a serious matter and we need to make it clear this is absolutely unacceptable and it's not the first time it's happened. >> people have pointed out that the ccp, they kind of -- they're troublemakers at times and they push the envelope for things that they're able to do. they get caught and express a little bit of outrage. you think it's no more than that it's business as usual do you know for a fact if it was done previously and we just didn't notice? was it too high to see what do you know -- there's a lot swirling around in the media about whether it happened three

times under the previous administration, earlier under this administration. do you know at this point? >> joe, based on the public reporting, it looks like it happened a number of times before but the china committee is going to get a full briefing from the relevant administration officials so we can get the facts. the point is, though, that this is unnecessarily escalatory for china and they have a lot to lose i mean, we've got a 400 billion trade deficit with china we have far more leverage. they need us to buy things from them they're economy is far more dependent on us. for them to take these kind of escalatory measures is not in their self-interest. and we need to be very, very clear that this is unacceptable. >> it seems like they never do things that aren't in their self-interest, which begs the question, why would they do these things do you think that they thought it would go unnoticed? and it did go unnoticed for awhile and we didn't talk about

it do you think that if it hadn't been reported in the media, do you think the biden administration would have been content to let it go all the way across the continent and out the other side without saying anything do you think it was right to wait that long to shoot it down? it's hard to imagine that there wasn't some desolate area where it could have been done where it would be easier to retrieve the remnants of it we may never get these -- once it fell into the cold waters of the atlantic >> the president followed the military advisers. his instinct from the public reporting was shoot it down. he said that on wednesday of last week and the military who i have great confidence in said let's wait let's wait till it won't hurt any american town, any american citizen. unlike other countries, we value the dignity and life of every american citizen and every person living in this country and i think they were prudent

and they did it over the water where the debris was collected this -- i think the signal to china is, we will shoot it down whenever we want don't underestimate us and we're going to listen to the military and they would draw the exact wrong lesson if they thought this was some kind of weakness we can't have a balloon traverse the entirecontinental united states without having coincidences. >> do you think, is it a casablanca incident, that we're shocked they're spying on it don't we have extensive operations to try to find out what's happening in china and what they're doing and the islands that they're building. countries do this, don't they? should there be a response from us regarding tiktok or regarding doing business in china and whether we allow companies to do that >> sure, joe, look, we understand through our satellites, we have information about china. it would be irresponsible for us

not to protect american national security and they have satellites that they have imaged probably every quarter, every inch of the united states. but that's very different than having a balloon traverse the united states air space and go across the entire continental united states. we don't know what was in this balloon or what could be in a future balloon, that's why i think this incident is different. i do think it raises serious questions, again, about tiktok i have raised them others have raised them. i believe there should be a forced sale to an american company. you can't ban something millions of young people are using. but the issues are serious about who is collecting this data. is it being used to manipulate information to american young people and there has to be reasonable action that the congress takes on that >> i guess if you really wanted to be conspiratorial or even almost science fiction, you could get scared on what the possibilities are, ro, and i'm talking about some type of

nuclear warhead that could pulse the grid, shut down the entire grid of the united states. that would be an offense use of the balloon and you might say, that's crazy, china would never do that. there are still people that point to china not closing down international flights but closing down domestic flights at the beginning of covid whether you believe it was an escape from a lab or however you want to look at it, what happened during that, china's behavior was not very -- it could have made things a lot worse for the entire world the way that covid was spread. do you worry that they're looking at offensive uses down the road in testing something like that? >> joe, it would be naive to underestimate them look at what happened at the taiwan strait. they crossed the median line

there. they've launched missiles over taiwanese air space testing missiles they've crossed air space. they have taken under xi jingping aggressive action and the united states has to be prepared for that with tough action and consequences if they act. but we also need to engage just like president reagan engaged with the soviet union. we don't want -- it would be catastrophic, joe, for there to be a war between china and the united states, let alone something that escalates into a nuclear conflict we have to be tough, make it clear that there are going to be consequences but engage in diplomacy, in some ways what we did with the soviets in the cold war. >> in the back of everyone's minds is taiwan and what this means in relation to the future plans for that island as well. it's dangerous times uncertainty future, congressman. out in your neck of the woods, i didn't get to talk to you about

the 49ers. sorry about that >> i was born in philadelphia. it was a tough one for me. i was rooting for the 49ers. >> a lot of -- >> who is your team, joe. >> the weather out there gets a little iffy at times, up in northern california. >> it's been a tough few weeks for us are you for the eagles or the chiefs >> after -- my daughter went to penn and after -- i don't know the nfl seemed to really want the kansas city to be in there i'm hoping for the eagles. >> you're complaining about the refs too >> did you watch that? >> i watched it. >> you thought that was normal you think people always -- you think two third downs is normal and you stop the second one and then call the defensive hold at the end. you don't call that illegal block -- >> the guy was -- >> there was six or seven -- that was the worst thing i've ever seen. >> quarterback was out of bounds, joe, you know that you know that. >> i'm from colorado we won a national title with

getting five downs on one of those plays. it was years ago thanks, congressman. we'll see. i don't know what went on. i'm not talking godell. >> someone is still a little bitter you know who is not? jim cramer we're going to talk to him next. we will get his first take on the new trading week ahead we have dynamic funds noah blackstein joining us on the markets. and we have an interview with bobby kotick tomorrow right here on "squawk box." stay tuned, we'll be right back. , you know, mid 30s, couple of kids, recently went through a divorce. she had a lot of questions when she came in. i watched my mother go through being a single mom. at the end of the day, my mom raised three children, including myself. and so once the client knew that she was heard. we were able to help her move forward. your client won't care how much you know until they know how much you care.

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want to get down to the new york stock exchange. jim cramer joins us now. good morning, jim. monday morning -- >> you got some good guests coming up. you have bobby kotick tomorrow. >> we have a lot of good guests coming up tomorrow. >> activision blizzard, you can ask him point-blank if he's walking away. >> what would you do, by the way, jim >> i think the stock would go higher at this point i would walk away. i know i think he wanted to form his own company once they merged i'm shocked that he's coming on. maybe he's got something which basically clarifies what we've all been waiting for. >> they have earnings tonight. we'll hear more about that and then, yes, obviously what's going on with the microsoft

sale. >> yeah. >> jim, that's your view, you would walk and you think the stock would be higher? >> yes, i do although the other video game companies aren't doing as well they've kind of bottomed hear from take two but i think this thing is a gem and i don't know why he doesn't walk away. they're obviously -- look, the ftc is not going to let that deal through the ftc -- >> just to put a fine point on it you would argue that he made a mistake by selling it at this price? >> no, i think they made -- >> a massive premium at the top. >> people thought microsoft was cuckoo. >> i think microsoft misjudged the ftc. if you read the law review in harvard law, it says when you put these deals together, it's antiworker and it's also anticompetition. every deal, basically. i think she could argue that

every deal would be this way this deal -- who does it hurt, andrew that's why i think that i wa shocked that they're blocking this one but i don't think they're -- they're a dog with the bone, the ftc. they're not going to let alone. >> i don't know if you heard the 6:00 hour -- >> i was going to talk -- >> the fed, job? >> no. >> eagles. >> eagles and how an enemy of my enemy is my friend and i'm really -- i'm still mad, jim, about that officiating i am >> officiating cost you that game it did it cost you that game. >> not only that, you know that buffalo is offered -- if buffalo would have won, it would have been at a neutral site the crowd noise was unbelievable the whole thing was -- >> the stadium -- louder than seattle. that's the loudest stadium in the nfl. >> there's more money in k.c. -- it's going to be a great super bowl now i don't have any -- i can totally be an eagles fan on this

with you. >> why don't you join me out there. i'll get you a ticket. >> i would -- i would have gone if it was the bengals. but i was watching it, actually -- i just walked out of the room after watching that -- those last 15 minutes. >> if it were the eagles, i would be throwing things attv. i mean, it would be enough already. you're totally right they had it in for you, joe. they wanted a kansas city -- they wanted an andy reid matchup. that's what they wanted. >> they did. they did i really believe that. all right, see you later >> bye >> i can't wait to hear bobby. i love him i've known him about 30 years. >> jim, thank you. we'll see you in just a couple minutes. meantime, "squawk" is coming right back with noah blackstein to talk markets.

a little more than a half an hour to go until the opening bell on wall street. we want to talk about the markets right now with noah blackstein, who is senior portfolio manager at dynamic funds. noah, it's been a heck of a start to the year. i think the gains we've seen in the first month of the year have caught people as off guard as the declines did last year

how are you feeling about things overall at this point? >> i've been doing this for a long time, becky typically the end, whether it was 2002 or 2009, the start of a new bull market usually starts off with a significant rally in stuff that was beaten up the most, and that's probably what we're seeing now this has been really a bear market led by inflation, certainly, but more recently by fed policy and aggressive rate hikes, and so, you know, we're coming to the end of that. we'll see the damage done to the economy. i think the jobs report should alleviate some concern anyway in the first half of this year that there's a recession coming but for the most part, it's not something that i haven't seen before when things start moving off the bottom that's for sure. >> well, let's maybe clarify, not gloss over the headline here you think this is the start of a new bull market? >> well, i think there's been significant damage done to the underlying market for sure

i think last year was a very, very unique year in terms of, you know, typically, when the fed is raising interest rates, the stock market is going up, not down but the aggressiveness was quite severe last year it became a one-way bet for shorts you just have to stay short the overall market, despite strong earnings for companies and if the market ever rallied, you didn't have to worry, because you'd have a speech by a fed governor or chair that would hopefully talk down the market on your behalf i think that's coming to an end here, and so we really had a one-way trade of high correlations and heavy short selling and difficult positioning overall, so i can't say this market is going to be gangbusters this year, you know, just annualize the first month and that will be your annual return, but i do think we'll see wider dispersion, and it won't just be a single one-way bet so, i think there are certainly opportunities in 2023, that's for sure >> you think we've seen the lows

at this point? at least uphill from here? >> i think we haven't seen the lows for some stocks, and you probably have seen the lows for other stocks there's a lot of companies who have had very difficult time since 2021 who people have written off who may have been pandemic beneficiaries who have gone over a year and a half, perhaps two years, for sure, of difficult times, and i think that those businesses are looking better, just comparisons alone, they're looking better, and if they retain customers obtained during the pandemic, they have a better runway forward. there are other companies, though, who i think have reacted as opposed to artificial demand during the pandemic, have reacted to inflation, who are overearning because they raised prices significantly and are seeing decline in volumes. i think those are probably the pelotons of 2023, the companies that have just jacked up prices in declining volumes in response

to inflation, so i think it's a bifurcated market for sure, but i think there are a lot of opportunities and probably in different areas than most people think. we'll see what the fed decides to do, obviously, and if they've chosen to continue to destroy the market, that's their call. they seem to like talking it down last year but we'll see where things go. rates have gone a lot higher, and the economy is certainly slowing. i don't know if demand -- there's certainly a pause right now or a certain amount of uncertainty among ceos and cfos in terms of planning for 2023. whether that progresses into a recession, we'll see as this year progresses. >> noah, we don't have a lot of time, but let's focus on some of these opportunities you see that are different than where other people see opportunities what do you like right now >> i think the entire -- we're in a world where growth and value investing has now come down to factors where you can use a python program and extract factors and bet on factors whether they're growth or value.

i've never really seen anything like it before, but last year, we had a period of time where you had the highest correlation amongst growth stocks in every category, in every index, in every market cap and in every global market, they have underperformed as a single entity so, i think there's a lot of babies thrown out with the bathwater for sure whether that's in medical devices, whether that's in retailers who have held on to customers during the pandemic and are starting to see a re-acceleration of their businesses, i think there's continued opportunities in technology i think where you want to be in technology is where most people don't want to be i think you want to make sure you have companies that are elect leveraged to the cloud, volumes and workloads. i don't know whether employment is coming back, but i know they're going to continue to grow and those stocks have been bombed out here due to short positioning and just overall negativity >> within those sectors, you talked about technology where you're leveraged to the cloud and other things with medical devices, with retailers that kept and held on to their

customers. you got a name or two you've been buying? >> yeah, well, i can't be too specific on names, especially any ones i might be buying right now, but there are a number of -- i would say specifically in the software space for sure, you should take a look i think every other day, we walk into another acquisition by private equity at multiples that are two times where some of these companies are trading at, so i think it's in the area where it's certainly worth doing work workloads are only going to continue to grow over time, and that's sort of where i think -- how you want to be leveraged over the next number of years, regardless of the first or second quarter this is the time for the longer term shift to workloads driven by a whole bunch of things, including a.i. and ml and how companies are now integrating that into their sales process and their advertising process as well >> all right, noah, great to see you. >> thanks, becky take care. ten-year hits its best

level, and the yield, its highest level. final check on the markets, which may or may not end like this after the session it should be interesting, because certain people think that last week was fundamentally different, what happened on friday so, maybe we don't see the beach ball with the markets, and maybe we're in a bit of a consolidation phase. we'll know eventually. make sure you join us tomorrow "squawk on the street" is next ♪ good morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at mpost nine of the net new york stock exchange. disappointing corporate results today and yields back on the ten-year fed returns this week, including the fed chair tomorrow our road map begins with rising hopes for a soft landing goldman ups its near-term s&