bipartisan >> is that a 9 we're out of time. let's do this again. great having you on. we need to reminisce about -- >> go buffs! >> it was herbie's deli, the sink, and back to the sink again. we got to go >> that does it for us today we'll watch the state of the union tonight. make sure you join us back here tomorrow morning right now it's time for "squawk on the street. good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. market waits for chair powell today speaking in the noon hour. the ten-year yield back to 3.7 bostic and kashkari talk hawkish. our roadmap begins with the street as we seek clarity about rates. the president expected to push for quadrupling the stock

buyback tax. and chatgpt in focus the chair later on today -- yesterday it was bostic, this morning it's kashkari, not lowering my rate path. still 5.4. argues that core services x housing has made little progress >> i think it's the opposite i think the only thing that has not made great progress is they have not had disinflation of wages. housing is actually lower in a lot of the hot areas a lot of the raw costs that go in natural gas is so incredibly important to our fabric and that's been -- talk about disinflation, that's crashed i find that where we are now, is that there are companies that have put through price increases and they got rolled back costco will take care of food. tyson took care of it with its own bumbling one of the worst conference

calls of the year. oh, my god they should have said we screwed up catch us next time it was that bad. there are lots of areas where things were quite good for powell i think he can say, we have to do more quarter point increment increases. i don't think he'll come out and say we have to go to half point. it's just wage he can't create people that's the problem >> right >> we're short people. yesterday there was a conference in the capitol about how to get more people in from el salvador and honduras to get them to work here it was amazing we don't ever think about legal ways to get those people up to help us. i found it reassuring that some people in washington recognized the problem. columbia spumbia spportswear sa can't just do business with china. we have to go to central

america. that was creative thinking >> the times piece looking at maybe a wave of immigration is allowing us to have a hot headline jobs number and decent inflation internals. >> i think this will be the story. the vice president ran this conference yesterday the story will be how do we have orderly immigration so that we can increase the labor pool and make it so wages stabilize or get disinflated, and then we win. we meaning people who favor not endless rate hikes that's why powell can't do it immediately. look, let's play it out. you can't just send boats to el salvador but it does sound like there's a lot of people working on how to get more workers here. >> bostic says we need to figure out if this 517,000 number is an anomaly. morgan stanley says you get one more of those, 50 is back on the table. >> we do know a lot of people want to look through the numbers. there's been a lot of documentation that the numbers

are not wrong. it is odd to see all the pmis down and this number up. i did a piece last night at the top of my show which said you can make a great bull argument or great bear argument, yet all i hear are bear arguments. there's no way powell can pull this off he has to be aggressive. he's been the most aggressive in history. let's stick with the roadmap he raised last week. people said he didn't need to raise. can you imagine what a fiasco that would have been you would have liked to have raised a half in retrospect, but who knows. i think it's still good. there's plenty of stocks to buy, but they're not the stocks people are buying. >> morgan stanley has some heart work out today this is global industrial downcycles they're arguing that we're at the cusp of a new industrial

downcycle. >> when i read through this, the chart that caught my eye, i wanted to say, okay, look. let's put the shoes on from the old business and recognize that there are revisions leading to downgrades but they're not in industrial dupont, you can argue there should be a downgrade. the part that's bad is semi. you look at carrier, which is just a terrific business, both residential and industrial, they're doing great. last week i had otis they're practically doing the best the industrials are the new leaders. it's only in tech on the dispiriting pinterest conference call everyone is happy with 3% growth you have to be kidding tech has 3% growth and we're excited? it's all wrong it's all upside down what is amazon's real growth rate who the hell knows

>> you're right to point to dupont organic was up bottom line beat they say they see a ramp up of chips in china q2. they'll probably do some bolt-on work this year >> i never heard a ceo more bullish about china than ed breen. he said it's just coming back, period end of story residential doing well his ev business is doing well. water business is doing well that stock was down $1.50 in pre-market trading the industrials are the saving grace of this economy. why people don't understand that is nuts. itw is so positive positive we'll get to a bunch of those earnings there's a bunch to get through the president tonight set to deliver the state of the union address. he is expected to push for quadrupling the stock buyback

tax. already some figures out from bank of america. executions are up, but announcements are not. >> the president acts as other presidents have that he owns the senate and the house he doesn't i think this is a nonstarter with the republicans i don't think this is where they want to put their bread and butter the tax has been paid. look at chevron. $3 billion there's a lot of money that could be -- that could be lost to congress, so to speak i don't think it's going to happen i think that we can't -- we can't vote our dollars as if it is we'll end up making mistakes >> right >> we have to stay the course on industrials. not sure about consumer products tech is slow that's the problem down 37% pcs at dell that's inconceivable i remember when dell used to go

against compaq it was who is up 9%, who is up 11%. >> remember the gateway days >> oh, my god. i look at it people don't understand, to have numbers down like that are extraordinary. then you look at what dupont is doing, you say, wow, they put through price increases. raw costs are not going up margins are good i want to be in dupont, not in intel. >> so you were in the cyclical trade. >> caterpillar, which my trust owns, is doing so unbelievably well one of the things like carrier where is all this business coming from? so, carrier would tell you there's been 30,000 schools built or being built they all need carrier. wow, 30,000. the stock is down off the free cash flow number that's ludicrous >> some of this was weakness in

refrigeration. yeah especially transport but down -- they basically -- they guide in line organic up five. >> it's money in the bank. if i look at carrier and otis, their growth is so much better than when they were underneath the ceiling of united technologies i don't think carrier will end up being down. i don't. >> you don't think there's much value in pursuing this buyback tax idea >> no. >> never going to happen >> it's a sideshow >> what about the other silo, looking for bipartisan ways to regulate tech. >> those are funny >> meaning >> they just -- yes, the republicans don't like it. democrats don't like it. let the justice department go after them having read the 187-page believe, i'm the only other one than assistant attorney general cantor to get through it -- it's a conspiracy business.

ad buyers didn't know what google was doing ad sellers didn't. they were marking things up. operational pro was about trying to fool everybody into rethinking they were getting a good deal when they weren't. the bidding was rigged it's a nightmare let the justice department handle this. the justice department will take care of it you don't need legislation >> do you think tonight is bearish for tech incrementally or -- >> it's such an easy target. >> right >> it's just easy. it's fun the republicans don't like them. democrats don't like them but it's judicial. that's what has to happen. these guys can't legislate it out of business, but they can break up google. they can win i don't think people -- people yawned or told you, look, there's nothing. they looked into this in 2013. no that's not what they're saying they're saying ever since they got through in 2013, every year they're more powerful. every year they're like -- if goldman sachs owned the new york stock exchange and they could

see both sides it's time for them to pick a side this breaking up google is a false narrative. if you want to hurt the mega caps, you hurt them through justice and the ftc. >> we've been following atvi, mostly as a uk story now they had results it is a beat no guide or call >> i'll give you a guide that stock should be up substantially but it's handicapped by the microsoft bid. >> it was on "squawk." here's what was said >> i think there's no legitimately good reason why we shouldn't have the opportunity to compete against japanese and chinese companies. western companies need to be able to compete. >> if it doesn't go through, what happens >> i think it's going to go through. >> some argue the results are a

sign that maybe if it doesn't, things are okay? >> the quarter was amazing making money in mobile the call of duty franchise is amazing. they have other titles bobby is running it well he does the party line he won't come out while he's agreeing with microsoft and say i'm had it with those guys it's not their fault that was about as good a quarter as you'll get. take two did not have a good quarter and ea did not >> that's true take two, revenue shy. they guide below are you starting to think about activision as a stand-alone? >> i would buy it. absolutely they have so much momentum they are probably the best positioned tech company out there in terms of explosion of earnings that's because they have all these great titles it's doing really, really well it's time for them to get out of

that deal. let's let the brits take care of it everything they said is true big deal the company is doing -- in the industry is doing well before they went into it, take two was good, ea was good. activision was okay. then activision blew it open microsoft will pick them up for low. but they're mobile nobody is making money except for them bobby is very good i think he was ready to create his own company and leave. that won't happen. speaking of microsoft, after the break, we'll talk about this event today which we expect to learn more about their open ai partnership. >> regenerative. >> the bing revenge along with google's plan after that blog yesterday. a look at futures here a lot to get to ahead of powell at lunchtime "squawk on the street" will be back in a moment we got this.

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. microsoft holding a news event today that could be related to chatgpt after they released their own chatgpt rival called bard. later today, satya nadella at 2:00 p.m. eastern time >> that will be great. first of all, people will lose fortunes on these plays.

i can already tabulate how much money people will lose it's pretty big. it doesn't matter. i can tell people until the cows come home not to play this game, ai, then they -- >> it's the cramer cycle >> i'm saying point blank if you buy the ai thesis now you'll lose money i'll be known as the guy who put you in ai, you sound hounds. then i'll call them -- i can't call them morons, that just makes it worse ill-advised people alphabet has a thing bing stinks, so maybe they had 9% there there is the tweet there was an article in the "journal" this weekend about all the things the retail people did wrong. it's everything i urged people not to do. >> the guys who had 1.5 million and lost it all? >> the only thing he didn't say was it was cramer's fault. how can they possibly say he lost money without mentioning me

as a reason. there's something to bing. the tougher thing is google. google is ad-driven. you won't have to look at your cell phone, take me to the best apps there's usually a queue of many. then -- no no you won't need to look at the queue. so bing is the big winner. alphabet, i think, the bard, they don't have the mojo >> high bar for safety, security up premarket 13% as they plan to launch their own style bot >> it's stupid it's important to lose money remember i did my life's too short to -- >> yes >> this is something like how to you lose money as quickly as possible that's the name of the show. that's the 1:00. the 1:00 is that losing money fast. >> are you talking about in the

context of microsoft or ai >> there's a note out today, i don't want to mention who did it when davidson -- shoot i just mentioned it. c3ai, not too late to participate in generating ai they are platform agnostic >> stock up almost 3 >> let's buy it, it's not too late then it's the most impactful technology in years. this is the kind of thing that is so dangerous. because, yes, it does matter chatgpt can matter but when you see this kind of frenzy, it is nft. it is what we first saw with crypto it's pretty much -- every one of these. i put together a list earlier today. they're all the same, these meme stocks, meme thoughts.

i don't want people to lose money. but that's not -- people don't care >> we'll talk more about some of the swings this week, whether it's amc yesterday, bed, bath. >> oh, my gosh >> we'll get cramer's mad dash and count down to the opening bell look at futures here as the w do is down about 130 on this tuesday. don't go anywhere. late themselv. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed. conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all.

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. time for cramer's mad dash >> i'm trying to say industrial versus tech. pinterest, pinterest is down badly. the number looked bad. then they looked through it and said, wow, the operational expenses are much bigger

todd, best of luck to you, the cfo is leaving i really liked him everyone is all excited because they had 4% revenue growth it's rah-rah for 4%. if i won 4%, i can get a utility. aep is probably going to grow close to 3%. the excitement about engagement and cost cutting, i don't want that from tech i don't want that. i want growth, profitable growth i don't want, wow, they made the number because they fired people no >> yeah. >> this is all nonsense, carl. >> what about the argument that we've reached a period where tech is disciplined, they're going to consider profits as well as growth revenue guide is 1 to 3 on these guys >> i want good sales growth. i want them to not have to spend a fortune to get it. everyone was so excited about pinterest last night i come back and i say, really? is that what we're excited

about? are we really excited about 4% growth when i can go to caterpillar and get 10% growth i would rather go to an industrial if the fed is almost finished, wow! if china comes back like dupont said, wow. >> how long do you think this thesis can last? >> ai? >> your cyclical over tech thesis, years? >> as long as -- yeah. i think so if china comes back. united states is ascendant everywhere europe will come back. our companies have figured out -- our industrial companies are well ahead of our tech companies in being lean. i think we're giving tech way too much credit for engagement engagement per share it reminds me of eyeballs. i thought pinterest was -- the initial take being down was a good one >> we'll explore that later. opening bell in a few moments.

you can catch us any time anywhere follow the "squawk on the street" podcast. back in a moment

we've seen no progress so far, virtually no progress in core services x housing. that's tied to the labor market. we try to get information where inflation is headed. i've not seen we've made enough progress to declare victory. >> that's kashkari earlier june fed funds futures back to the november peak almost >> i know. look, i think that it's a little hyperbolic what he said, virtually no progress. there's virtually progress in everything other than wages. he could have said we made virtually no progress in keeping wages down i could buy into that after the 500,000. i need to see what he's talking about that's different from what i've got it's not >> i've seen some charts this week looking at hotel room rates beginning to soften a bit.

airfare should soften if they're going to -- unless they're going to keep the money they're saving on gas >> then we have unbelievable numbers from hertz where you have a 28% increase in corporate -- which i thought was amazing. 90% in -- for people who use uber cars. more than 50% of people who are coming from overseas so, travel is still big. steve at american express was the greatest conference call he said people are really -- >> we'll talk to him in the 10:00 a.m. >> i know. i told him -- i said how could you not come on? my conference call >> you could have a break. come on. son of a -- whatever i like him most of the calls were f-box when he was at golden. now it's hey, how is it going? >> hertz was a beat.

u.s. transactions up one pricing a beat let's get to the opening bell and the cnbc realtime exchange at the board, spice company mccormick. >> they had a quarter that was very suboptimal. the stock has a 10%-year-old it's almost at its low they had raw cost problems if you get raw cost problems unsolved, they is a big question they had supply chain problems a lot of companies have supply chain problems everybody is shocked >> the nasdaq, deloitte product of audit consulting and tax services on the meme stuff we mentioned, bed bath & beyond doubling yesterday on the news of this equity raise i couldn't tell if you were being sarcastic on twitter when you said it was brilliant.

>> i've been saying when the meme guys raise your stock, you have to take advantage of it and issue stock that you couldn't otherwise. you were left for dead at 2 bucks. at 5 bucks, you can go on the backs of them. b bed, bath new. it was almost like they were ready to hit them with everything they had. they're just taking advantage of the stupidity of the meme people it's kind of funny because they were ready to just kibosh everybody who bought it. 250 million shares traded yesterday. there's only 117 million shares. who is advising them, just really figured out the memesters are morons coopt them, use them, crush them, so we can live another day. i think the memes have to understand their game is up >> meaning what?

>> if you're bed bath & beyond and about to go under and they take your stock to 5, you have a plan to crush them and make money and then you can say, hey, guys, look, we made money. you're okay. >> so you think we're wiser than we were in the spring of '21 >> the companies are so much smarter, the memesters are as dumb as always i don't mean to offend anyone. >> when the fat pitch comes over the plate, the corporate treasures are like, boom >> exactly that's the best example. they were left for dead. they owed money. they missed a payment. the memesters takes them to 5. they just obliterated the meme people there's 46 million shares traded already. there's only 117 million shares

outstanding. this is the kind of thing that i find -- it's like a bad soap opera. >> yeah. >> the memesters deserve it. they're foolish. >> the boat is flipping more than once a day. >> you're not allowed to say anything about the memesters because they are -- while it's happening, you have to let it play out i won't do that. yesterday i was urging people to sell it at 5, 5.5 and 6. they hated me for doing that i was trying to get ahead of an obvious ploy by bed bath & beyond they are better at selling stock than towels. >> amc had more fundamental news on this dynamic pricing coming to theaters. >> adam aaron is the master. the best thing is when he sold the stock for himself. he said it he gave you a heads up i'm selling for myself here. you can sell, but they don't want to sell they don't like selling.

it's not in their lexicon. >> dime in hands >> they would rather be blown out and proud. i lost money i'm proud. all i have left is this t-shirt. what are they doing? they don't understand the capital system they don't understand the bed bath & beyond was on its last legs so they take it up for whatever reason and bed bath & beyond lives to play again on the backs of the people who took it up >> it's a good gut check on the price action we saw yesterday. >> if they come out with a statement about regenerative ai that they're using to sell sheets -- >> is that the new crypto press release? >> unbelievable sheets i went in. i was the only person in there so i was able to see everything. if they come out for toasters, we have ai toasters. >> good action in semis. it's on the back of skyworks >> skyworks is good. they did a good job. >> little buyback. >> liam griffin made his quarter

every single time. those are real numbers he puts up real numbers. he has what apple wants. people think apple is doing badly. it's hard for apple doing badly and skyworks doing well. liam can't come on and say apple orders are great the journalists come out and say the apple orders are bad sell apple they kept you out of apple the journalists have said sell at 160 -- sell at 120, buy at 160. they're going to do it again skyworks told you again and again that apple is doing well follow the skyworks money. liam is very transparent nvidia is up because of regeneron. >> yes for skyworks, that's an eight month high you think it's a canary on apple's price? >> i think when you look at how well skyworks has done and how well apple has done, skyworks leads apple.

in the stock then apple comes out and says things are better and china got better we're doing better when i talked to tim cook last week, the confidence level is so high that you don't say, wow, tim cook doesn't know what he's doing. that's false when he tells you it's pretty good, don't say it's bad >> right let's go some rcl. interesting -- travel names are not doing too badly today. narrower than expected loss. revenue misses they guide roughly in line they talk about this record breaking wave season >> i learned from frank del rio that what really matters is the wave season and the reservations they are off the charts. people are cruising again. frank said that many times i think that we're used to

richard fame, we don't have him, but the stock deserves to be up. they did a very good job >> considering the dark days where they were completely existential crisis >> people want to cruise my daughters cruise. i was going to take a cruise unfortunately it was canceled, but cruising is a great bargain. people are traveling because it's yolo and life's too short my life's too short etf is coming along just fine >> throw hertz in there. >> my god. life is really short life is short. steve, take it easy. >> if david was here, we might mention cvs. >> that's about medicare advantage, which aetna was disadvantaged at i think it's a very good deal. cvs is hitting a 52-week low and does yield almost 3% this is a war between cvs and

walgreens to get more customers. cvs needed this. oak street is good it's a good product. i have humana, which i think is the best in medicare advantage one thing i'll tell you, i hope you get to the age of medicare, when you're there, i had to hire a consultant everybody is the best. humana was the best. they didn't do well last year, so they added new benefits this is a free-for-all you want to grab these people. i think cvs stock should be up, not down humana is doing a great job. the rates -- the rotation out of this group istor rend douse. >> given what we've been through the last few days. >> chegg getting hurt not just on the guide, which you argued wasn't all that bad. >> i want to talk about chegg for a second dan, fantastic guy stock was at 3 came on the show

there's a moment in the call -- actually several moments of the same thing school is not rigorous, you don't need us. when you came back from covid, school is not rigorous i want to put the stop sign up there. i think school as rigorous as it was before covid i'm not buying what he's selling. dan talked about other reasons why. the not rigorous came up several times. people are not using our stuff because school is not that hard? >> education standards are lower? >> that's what he said yeah people are going to college to get stupid i'm not a believer in what he was selling. i suggest people listen to the call it's very "alice in wonderland." it's, like, through the looking glass. it's also "wizard of oz. pay no attention to the down four pay no attention to that stop looking behind the curtain.

>> key does go to sector weight. >> key didn't get taken in they got back to real. i want to say everybody is doing well i can do that. take two is really good. i like how chegg was i'm trying to buy pinterest. off the record they're saying that was a bad quarter >> congratulations >> dan, i liked that my daughter goes to school she says it's a dummy's retreat. but the subtext is i buy into school is no longer rigorous are you kidding? that's the thesis? no company is not doing as well strauss said, you know what? we're not doing as well. strauss did not go ai. he did not go ai that stock, because of the truth he gave you is up. >> that's interesting. >> it's up he said we screwed up, we'll get

better >> that's good treatment after guiding the march quarter below. >> yeah. he said, look, you have to have faith in me. we'll have a better year he went all farley farley apparently using my comments about tesla being a better buy as kind of like, you know, put it in your locker. >> really? >> yeah. >> i want to obliterate cramer here >> your critics are your best friends? >> yes i love that. listening to take two, strauss did not say we'll do it with ai. he did not say, look, don't pay attention to how we did. but he did say i'm money good but i did a bad job. it's all on me i found that refreshing. it was refreshing to have a guy be like a really good nfl coach. i didn't do a good job that's how the stock goes up admitting things admitting it >> jim, on oil and energy,

there's been some discussion the last couple of days about why oil couldn't catch a bid in this soft landing thesis. it is today. we have bp talking about buybacks and sort of turning the dial back on their renewable strategy >> yeah. they're kind of -- they're doing it the independent oil companies in our country, stocks are going down i think oil is finding a bottom here if you feel that way, you should own the independent permians they're all at their lows. they seem very attractive to me. i'm not writing off oil. i'm not writing off the oil companies with oil going up. that seems counter intuitive >> where do you think the floor is right now >> i feel 70 >> you think 70? >> yeah. we used to talk about choina opening and we wrote off china we had three days where china wasn't open. how about ed breen he's run dupont -- this is a

seasoned ceo he is saying, look, china is coming back. am i supposed to say, no, ed, you don't know anything, i know better no china is coming back, therefore i want to own oil. >> almost a 52-week high on dupont maybe a month or two short >> he did a very good job. ed breen is a guy, again, another guy who said there's problems here, problems here the secret with dupont, why it's up, like many industrials they raise price more than the raw costs. now the raw costs are coming down, margins are expanding. that's what you hope that is a real stock doing real things >> amazing it's been a year where we were watching europe and thinking about their -- would-be energy crisis, could chemical companies produce, what would basf do? remember all that?

>> yeah. i remember at what ed is doing at dupont and say he's buying back fortunes. just huge amount of stock he bought back last quarter he had more firepower. he believes in his company and believes in himself. take two, believes in his company, believes in himself chegg, school is not as vigorous as they used to be school is easy they don't need my product >> canada goose had a five-year plan unveiled. >> yeah. they raised the price target from 19 to $20 i think they can maybe tell a good story about china i don't know i had columbia sportswear on last night they told a good story the sorrell brand is very hot. they have jalen hurts, a guy getting a lot of tiktok, a lot of -- he's the only guy -- how

can everyone not be -- mahomes -- how many times do i have to say, here. buy -- what is that? andy reid does this and you buy state farm i haven't figured that out if you can tell me how they're related, then i can go and do geico. >> did you see the "journal" piece where 16 million in legal or illegal bets likely this week that's troubled last year. >> i say travis kelce will have 16 1/2 catches his father, a long-term professor at university of miami. i think this is -- i false felt jason can't make all the money he needs until every state adopts it, california didn't you have to check out that kelce bet. that's a home run. >> we can't wait for media day later in the week.

dow down to start let's get to bob pisani. >> 2,000 ira's gathered to figure out the state of the economy and the state of the stock market there's an awful lot of confusion down here. look at the markets at the open. the third down day in a row for the s&p 500. 2/1 declining to advancing stocks metals, mining, energy sector strong staples are having a tough time. procter, johnson & johnson, a tough start to the year. overall a confusing time talking to the registered investment advisers here, the attendees to this conference, they're having a hard time figuring out a few things. they want a consistent story to tell clients and they don't have one. these are the kinds of documents they're passing around they're amazed in the rebound in the stuff that was beaten up small caps off to a great start.

growth underinvested, great start to the year. even the bond is rallying, up 3% the other big topic here is how much more is left of the tech rally. many of these investment advisers underinvested in technology they're handing around the stock charts down here with tesla, nvidia, amg up 23% even amazon rallying this year what a disastrous last year, up more than 20%. micron apple up 17% netflix is up strong here as well you see the story here, they're basically underinvested in the stuff that's been rallying the last six weeks, they need to figure out what to tell their investors, do they need to get back in? they're not sure how to explain the tech rally a lot of them believe the tech rally is because of the after-effect of tax loss selling, not a fundamental rebound.

a lot of people trying to explain away the tech rally. the big issue is what will happen with the market can we reverse this rally? what would reverse it? everybody here agrees if we get evidence of inflation reaccelerating or more significant downturn, it's fine. one thing everybody agrees on, the strong jobs report is no reason to sell off the stock market they love it because it's easier to support the soft landing story that is an easier sell to their clients. one person everyone wants to hear from here today, tim buckley. the ceo of vanguard. he will be on here, but he'll be on with us exclusively at 4:40 we'll talk about why bonds are competitive asset class. they're very big on bonds. the focus on long-term investing and why you may have to expect lower equity returns in 2023 they had that team in 2022

i think buckley will remeet it again for us carl, back to you. >> bob, see you in a bit as we go to break, let's check bonds. everybody is waiting for powell in the 12:00 p.m. hour east coast at the economic club of washington ten-year yield off the session highs. 3.65 at the moment two-year just south of 4.5 as we get some data but not until later in the week. we're back lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.

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in the coming years. rail vision has the solution today. learn more at rvsvinfo.com. some s&p gainers this morning. definitely in the travel and semi space we mentioned rcl and skyworks earlier and industrials that we talked about dupont this morning and some of their guidance about a china reopening, a chip ramp in the second quarter. dow down 113, holdg tinono 4100 stop trading with jim after a break. the world with the wonder of new eyes, ♪ helping you discover untapped possibilities

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let's get to jim and stop trading. >> okay. i sound like i'm overly critical of tech but why i say i want growth aecom, a boring tech company with thousands of engineers hits an all-time high because the federal infrastructure money is

coming and you can't build roads without engineers. the stock 24 times earnings, this is the new intel, not intel meaning they're making chips, these guys are using construction, but the engineers. the science, the power of mind, is not ren generative a.i. at whatever tech company claiming it has it. it's the companies getting all that money to build the plants, the factories, like that think about all the bills that passed, recklessly or whatever, the ira -- >> i'm with you, but i wonder, what about when intel slashes capex or when meta cuts capex? >> that's like -- i like good tasting tuna, not tuna with good taste. i want sales and these guys have sales. and sales, they can't -- here's what i like about them they can't handle all the business they have the other guys are making phone

calls. here they're -- that's the distinction. >> tonight >> talk about place you don't have to make phone calls, chipotle and then linde. the headlines like dupont, looks like they're doing awful, the stock down on 4, and on comps calls they are now up 7. no people should buy bed, bath & beyond carl, if i just say everything is good, i get in much less -- >> yes. >> however just don't -- what's the point of the truth i don't know i think i'm paid to tell the sfloouts that's what we love about you. >> we'll see you tonight on "mad money," 6:00 p.m. eastern time in the next hour, the ceo of hertz as we mentioned, stock rising on the latest earnings beat as the markets are having some trouble getting out of the red. s&p down 7 back in two.

new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and mike santoli david faber has the morning off. live at post nine of the new york stock exchange. some decent action out of

materials and energy, but some of these elevated yields on the back of this hawkish fed speak is hurting tech a bit. dow down 111. >> we are 30 minutes into the trading session. here are three movers we're watching this morning. bp, that is headed higher after becoming the latest oil major to report record results for 2022 almost $28 billion in profit for the full year. shares up about 5.5% right now the company announcing a further $2.75 billion share buyback plan and boosting the dividend by 10%. a different story, though, for online educator chegg. that is plunging after another weak quarter, forecast also coming in below estimates for the once high flying pandemic darling. see the shares are down 20%. keep an eye on activision blizzard and microsoft, the former in the green after strong results for the video game publisher with bobbie telling "squawk box" it's confident the acquisition by microsoft will go

through and the comments coming as we await more news from microsoft on the a.i. front. we're going to dig into all of that in a moment in more detail. in the meantime activision shares up 5% and microsoft trading 1.5% higher. >> markets broadly in the redhead of fresh commentary from jay powell this afternoon. our economics reporter steve liesman joins us with more on what he might say and the highlights from a sit down with a different beneficial this morning. >> fed chair, jay powell, takes to the stage for an interview in washington amid a dramatic reprising of market for the fed in the wake of the strong jobs report the jobs report prompting minneapolis president neal cash cardi to tell us on "squawk box" that the fed may have to do for inflation and slow the economy. >> we're not seeing much of an imprint of our tightening to date on the labor market some evidence it's having an effect, but it's muted i haven't seen anything yet to

lower my rate path but i'm keeping my eyes open i'm still at 5.4%. >> just to add, at 540, he's above the average official at 530, the third official to react by saying it might mean the fed needs to lean harder against the economy but kashkari said the fed should not overact rhee act. the fed funds future market is fully met the fed's average forecast for year end, 513, moving from -- to 489 to 514 now, and the market has dialed out rate cut from the peak rate it saw 50 basis points of cut and now sees 33. another way to look at it, the market and fed for the year and now differ by a quarter point, 33 basis points. it was three quarters of a point before the jobs number if powell is satisfied the market is on board where the fed needs to go it means the fed

chair doesn't have a lot of heavy lifting to do today. the market has done it already on the other hand if the fed chair feels the strong jobs number puts it further behind its inflation target does he have to move the goal post, embracing kashkari's 540 target, which would mean he wants the market to tighten further, guys? >> this is fascinating we had jeff lacquer, former richmond on our show, and he said they may need to go to 6% at the time it seems crazy versus the market reaction and then as you point out we get the strong jobs report and three fed officials signaling, in fact, maybe rates need to go higher and the market reaction now. i guess it raises the question to me, again, i know we've had this conversation repeatedly, steve, does the stronger labor data and now the fed reaction to it, push out the possibility of a recession and maybe deepen

what that recession could look like if you continue to see such resilient jobs numbers despite the fact that the wages are the growth of wages is slowing slightly >> so all of that is a potential part of the forecast i mean, morgan, if you're confused it's only because you're paying very close attention. there's a lot of stuff happening now, we keep trying to do the analogs, like the '70s or '80s or '90s. this is a unique circumstance of the job market still coming back i was looking yesterday, there are still industries far behind where they should be if they had normal growth from the pandemic. there's still hundreds of thousands of job shorts. you're going to have that happening regardless of what's happening in the economy yet the fed has this, i don't know what you want to call it, construct where the economy has to run below potential in order to create slack, ease off the job market and wage gains. i think the answer to your question is, kashkari told us this, follow the inflation

numbers. he said inflation needs to drive policy, not the model. and so if inflation comes down, even if you have a strong jobs market, it sounds like the fed might be okay right here so that's really the key to watch. right now you're right, there was a slight decline in wage growth and that's the thing to follow. >> yeah. steve, it's another way of saying that, you know, on an unstated basis from the fed we are all data dependent we always are. but now that fed is down to a quarter point pace,it seems, from meeting to meeting if it's going to do anything, and you have these numbers coming at you in between, it seems to dial down the suspense or the tension level just a little bit right here the other point, when the market is coming closer to the fed's outlook for rates, that's because of the numbers, the jobs number the standing forecast from the fed from december is that unemployment is going to 4.6 this year. we're not on track to do that. >> no. >> the numbers have come away from the fed, as the market has

come closer. >> if i could make what you said simply and eloquently more complicated for a second, what i would say, we don't have a disagreement about the fed's reaction function. we understand each other the fed, if the numbers come in this way, the fed is going to do that i think we had a problem with the reaction function in july, when the market was rallying and powell had to come with this short speech pointed in august, and he redirected the market and made the market understand the reaction function. now we're arguing over what data say and the forecast is, and when the forecast and the data change, watch what happens the dramatic move of the market towards the fed. so in a sense, powell today f he's satisfied with where the market believes the fed is going, can really just coast his remarks on wednesday which some said were too dovish, they

look good because of how the market reacted to the data and i think he's going to be satisfied with it. >> we'll see what happens in a few hours. thanks for that. steve liesman this morning. let's bring in david harrow who sees opportunity in international markets. great to have you back i am curious about your thoughts about, say, europe versus u.s. we've had some recession calls on europe hold because of the surprising strength we've seen is it by far your favorite >> well, when you look at valuations, and as long-term value investors this is exactly what we do, and the hunt for value really does begin in europe because the market sold off quite aggressively last year by the time the european market that is, especially with the war concerns and energy prices and the fact that europe, the european economy, is more attached to china than the u.s. economy, so all of these factors weighed on european share prices but a funny thing happened share prices went down, but earnings kept going up and so that opened up this value

gap. so by the time we get to the end of 2022, we see european equities roughly at 10 times earnings, u.s. equities at about 17, 18 times earnings, and forward earningsgrowth for 202 is projected to be higher in europe than in the u.s so absolutely, this is exactly where we're finding opportunity because the companies keep earning money and now, we've seen energy prices plunge in europe, the chinese economy reopening, so i think for the most part we're going to see more than acceptable growth in europe and plus you have the very low valuations which means that companies will continue to increase profit growth, cash flow growth, and distributions to owners. >> right some would argue that indices, let's take the dax, are beginning to reflect some of those positive surprises there's the added worry that

there will be a new aggressive push on both sides in ukraine come spring, gas storage in germany next winter may not be as lucky as it was this winter if the weather doesn't cooperate like it did. how do you process some of those concerns >> yeah. i think the fact that these european multinational companies, let's keep in mind that these companies are based in europe, but they do business all over the world, so one of the big mistakes investors make, it's a european company, there's a war going on in ukraine, therefore, you know, we can't own europe instead of looking at it that way, one has to analyze and examine where companies earn their money. you take these big european companies, whether they be the luxury good companies or the pharmaceutical companies, or companies like seamans and daimler truck and mercedes and bmw, they do business all over the world and sell at these huge valuation gap between where they

should based on cash flow yields, because people are afraid of these macro forces there very well may be an acceleration in the war in ukraine, but what we saw last year was that these companies were able to overcome these challenges and still grow cash flow and profit streams. >> so david, let's name some names here what do you like here at these levels and have you been rethinking some of your investments and buying in to certain names to start the year, given the thesis you laid out? >> well, as you know we're gradualists. we ease into companies as they meet our criteria and we slowly exit them. and we're still significantly overweight in european financials because you have literally a triple positive happening there. rise in interest rates finally remember, europe was negative rates which meant lower for longer and inability to generate

good income growth they still generated growth, but it was low single digit it instead of mid to high single digit it at the same time you have this improving european economy which means credit costs should be subdued and lastly the capital positions of these companies today b and p reported their earnings very strong, and, you know, they sold bank -- they're going to buy back their stock at 70% of book. this is the type of value activity we're seeing in the european financials. just about every one of the major european financials is over capitalized and distributing that money back to shareholders so to me, this is one of the areas b and p and alliance, lloyds bank in the united kingdom where you see this most acute value and the industrial

sector like mercedes, bmw, daimler truck. >> i was just going to get to that, david. bmw and mercedes and whether that's just a broad cyclical call or do you feel as if the way the auto industry is set up now, that there's somehow better positioned than, you know, some of the other legacy automakers around the world >> yeah. the beauty of these premium auto producers are that they've learned a lesson, by the way, during the pandemic you just don't spit out volumes for volume sake, because they have taught themselves to be able to protect their margins. maybe they look at companies like ferrari and porsche further up the value chain wa what we're seeing is free cash flow yields, 2 1/2, 3, 4 times, and if there is a slow down, they have the net cash on their balance sheet to protect themselves bmw bought $30 billion,

mercedes, $25 billion, and their businesses are diversified between the north american market and the european market and the asian market so when you add to this the premiumization, slowly goes up through time, as people go from middle to upper middle to upper class, you see this in all luxury good companies v a little growth tailwind behind them. to us three times cash flow is way too low for what they are. >> david, it's a good peak across the pond. the china reopening has many paths. good to see you. >> thank you. as we head to break, here is our road map for the hour. the consumer top of mind for investors digging into quarterly results. companies tied to travel, posting some promising results so far we'll speak to the kceo of herts >> the big tech battle over a.i. live to redmond, washington, with more on what we can expect from microsoft.

>> and finally with the fed chair this afternoon and the president tonight, we're joined wnheoody's mark zandi to break do t market expectations big show ahead don't go anywhere.

welcome back to "squawk on the street." hertz reporting fourth quarter results beating expectation, shares rising 7.5%, the company citing renewed demand for travel joining us exclusively, hertz chairman and ceo stephen scherr.

great to have you back on the show. >> good morning. great to be with you. >> you talked a lot on your call about what you're seeing in terms of both leisure and corporate demand and particularly here in the u.s. that both are progressing back to prepandemic levels, but importantly, at higher pricing at a time where inflation is in focus across the board in terms of markets and consumers and what that means for the health of the consumer as the economy begins to slow down, walk me through that higher pricing and whether it's sticky here. >> well, i think our view is that we're going to see volumes and price really hold in and part of what's happening is that demand is not lessening at all i mean, even in the month of january, we saw both corporate and inbound, inbound being non-u.s. travelers coming to the u.s., as really moving up, and it continues to show demand. i'd also say to you, if you look away from just the rental car industry and specific travel

companies, look at what the tsa did this past sunday they processed 1.7 million travelers. that was up from the prior four sundays of about 1.2 million demand is there, travel is there. we're seeing it leisure, corporate, inbound and we're also seeing it among uber drivers to whom we rent vehicles. >> hertz, dollar and thrifty brands under the company's umbrella have you seen shift, trade downs, focus on maybe more affordable options in the midst of the higher prices and inflation? >> well, part of what we spoke about on the call is a desire on our part to revitalize the thrifty and dollar brands. they've been rather dormant for an extended period of time, and i think they will play to a more cost conscious traveler, both corporate and leisure. i think that will bring a creative margin to us. it will also help us defend, if you will, our premium brand being hertz and i think if you

look back at christmas, reliability in the brand and the ability of our company to service changing needs of our customers, is critically important. christmas people were, obviously, stranded as air travel became more challenging we were a company in a position that enabled us to put people in one-way rentals moving all across the country it was higher rate for us, high utility to them. it moved our cars to places where we wanted them to be, but competitively speaking, that's what hertz can do. a lot of smaller rental companies are not in a position to provide that kind of reliability of service that we were able to provide to our customers at christmastime. >> are you seeing a tailwind from china reopening >> i would say inbound travel is strong it's coming mostly from europe i would say on the inbound travel that will come from china, i suspect some of this will be delayed and we won't see it sort of right away.

part of that is going to be a function of the delay in the issuance of visas to chinese nationals looking to come to the united states. as i understand it, anecdotically, that backlog is pretty severe. it may take a while to work through. obviously, we don't have a strong business in china, but we do have a strong business of chinese tourists and business people that come to the united states i think that holds enormous promise for us on the forward. i just don't think the chinese are going to be here, you know, taking up in travel in the near term it will be a more medium to longer term proposition. >> steven, i know on the call you addressed trends in used car pricing. we've seen an uptick in some of the wholesale used car indexes it feeds into your business because of the residual value of your vehicles. what's currently happening in that area? >> well, remember, 2022, we were at a peak about mid point in the year it dropped quite precipitously

in the decline we were able to capture quite a bit of that excess of fair market value over book value what we've seen in the first five weeks of 2023, is a reversal of that trend now hard to know that that has a permanence to it, but it's been quite prominent and quite noticeable in that it's playing out, obviously, to the benefit of companies like ours, and others part of the reason for that, i suspect, is a recognition on the part of consumers that, in fact, new cars are still pretty hard to come by and equally that they are at elevated prices people by necessity returned back to the used car market as their source of cars i think that has led to, you know, a considerable reversal if you will over the five weeks you see in the manheim index or otherwise. i would say as a general matter, though, when you look at the declining prices of cars, obviously, for a rental car company it has a number of different elements to it

one, of course, is that we are a buyer of cars, and lower priced cars, even in the used car market where we buy good condition, low mileage cars, is of benefit to us as lower cap cost is kind of the first ingredient, if you will, to depreciation. >> steven, you mentioned manheim. we got it today as you know, first time it's gone up month on month since may. i wonder if you think that's a dangerous sign of a potential double scare in auto inflation >> well, it's hard to say. i mean, i think that, you know, the used car market is still enormously liquid. if the new car market is 12 to 14 million units a year, the used car market is at a minimum, 50 million a year. it's a deep liquid market. there are variations within that market where consumers can buy older model or younger model, the choice is theirs inflationary effect on pricing is not going to be equal across

all elements of used cars, and so i think, you know, there's a price point for people to enter, including ourselves, if you need to. >> i got to talk to you about electrification. you've been striking all these deals on so many fronts where hertz is concerned and, of course, tesla, we had a long-time tesla bull and investor ron barron on earlier today talking about the fact that, might be biased here, the demand for tesla is unprecedented. i wonder what you're seeing on that front from a rental car standpoint. >> we're seeing the same the demand for electric vehicles and for the moment our vehicle fleet of electric vehicles is dominated by tesla, but we have gm electric vehicles coming on as we signed a five-year deal to buy 175,000 general motors electric vehicles. but the demand is there. it is there in leisure it is there in corporate where corporates are compelling their

employees to rent electric vehicles to satisfy their own esg needs. we're, obviously, seeing it in our ride share business, where we are profitably renting electric vehicles to uber drivers who are realizing 10 to 15% better monthly take for themselves when they drive an electric vehicle the demand is there. we think it holds promise on the forward. >> stephen scherr, thanks for joining us fresh off of earnings this morning ceo of hertz. >> thank you very much all right. baidu shares surging after plans to launch its own competitor to chatgpt, and that is not the only name with a.i. news this morning. more from microsoft ahead of a surprise event there after the break. s&p right at 4100 down a quarter of a percent stay witush thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts

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the street." let's call it a battle of the bots, shall we microsoft holding a somewhat last-minute but already highly buzzed about event focused on a.i. at its redmond headquarters

later today and this, of course, as alphabet and google has made its own chatgpt rival official jon fortt is in redmond washington at microsoft and joins us with more ahead of an interview with satya nadella what can you tell us >> well, yeah, jsatya nadella live on cnbc it has been years since microsoft has gathered press on campus to focus in on a technology announcement. probably hollow lens, six, seven, eight years ago this, though, the question for investors is, is this an inflection point for a.i.? is this a point where microsoft, with its openai partnership with chatgpt, is going to be able to pull away from the crowd and have a first mover advantage in this space that will generate revenue and profit beyond

competitors? google certainly hopes not amazon certainly hopes not i expect that we're going to get a little bit of more of a case today from satya nadella and the executives at microsoft they are building this into products such as search in a way that people are going to be able to sort of touch and feel and try out in the near term. i liken this a.i. moment to mobile, right. we've had a.i. for a long time, just like there were a lot of mobile devices, pocket pc, et cetera, before the iphone. the iphone was an inflection point and because of the way apple architected that they had a dramatic first mover advantage. can microsoft or one of the other players turn this into that kind of moment for them, we're going to start to hear those arguments. >> to pick up on the word you used, architected, the fact that you have this, you have google, racing with its own competitor and shares of baidu surging on news that that company, too, in china, out of china, is also

developing something similar, what does that mean? >> do we know what architecture, i guess the rules of the road, around use of this type of technology, is going to look like as it moves quickly out into the mainstream? >> those things are starting to take shape, but i think something, again, for investors to think about, where this kind of software goes, the more you feed into an a.i. platform, the smarter it gets, right it's important to have attention on these things to get them out there for developers to build on top of them, for them to start getting built into products people are using because if people have a good experience and are training this, you get to develop things more quickly that's why we see companies scrambling now to get this stuff incorporated into thuc and intos that because, hey, if you're not getting smarter, relatively

speaking you're getting dumber and that doesn't make money. >> says a lot about all of us, jon. we can't wait to chat more next hour on "tech check" and tune in this afternoon with the man himself, microsoft ceo satya nadella. see you in a little while. let's getting a sector sort with our dominic chu hey. >> so carl, markets are trading cautiously right now ahead of fed chair jerome powell's speech this afternoon, but earnings are driving gains in several notable outperformers including dupont in the materials sector and over in discretionary, the cruise stocks are rallying after royal caribbean noted strong recent booking demand and higher customer spending thanks in part to price increases there norwegian and carnival getting a boost, all of those names are up more than 40% since the start of the year and on the other end of the spectrum, we're tracking weakness in consumer staples that includes conagra and campbell soup and general mills as well, that group has been under performing the broader

market with each of those names down double digits in this past month alone. keep an eye on those sectors we are sorting them. i'll send things back down to you. >> all right dom, thanks. the president set to make his annual state of the union address with a few targets in the cross hairs. we'll talk about that story and thais veo onreha tdo wi it after the break.

welcome back to "squawk on the street." i'm contessa brewer. rescuers in turkey and syria are working in freezing temperatures, digging for survivors in the ruins of yesterday's massive earthquakes. the death toll has risen above 5200, another 26,000 are reported injured and both of those figures are expected to rise further much of the worse damage along turkey's border with syria

here's aerial footage showing rows of collapsed high rice buildings. officials say more than 8,000 people have been rescued so far, but the search efforts are being criticized as being too slow and under equipped in some areas president erdogan has declared state of emergency in ten provinces to manage the search and recovery efforts president biden is planning to visit poland this morning to mark the first anniversary of russia's invasion of ukraine, according to nbc news. the trip would be -- would underline allied support for ukraine as russia is expected to launch a major new offensive mike >> contessa, thank you very much. president biden set to take the podium tonight for his annual state of the union address with many expecting fresh scrutiny around billionaires, buybacks and big tech eamon javers has more for us on what to expect. >> we're going to see some of that new details from the white house today on how the president will target big tech companies in the

name of protecting children and preserving mental health in a speech tonight the white house says president biden will call for bipartisan support to ban targeted advertising online for children and young people, and enact strong protections for their privacy, health and safety online the white house also says there should be clear and strict limits on the ability to collect and use personal data, especially geolocation and health information and says the burden must fall on companies and not consumers to minimize how much information they collect. now those two items are going to likely ring some alarm bells in silicon valley with republicans in charge of the house of representatives this year there is some interest in targeting tech companies from politicians on the right as well, but the two parties have such different approaches to tech, it's really difficult to see how a bill could emerge from this congress that president biden would actually sign. now two other items the president is expected to lay out tonight, a billionaire minimum

tax designed to ensure that super wealthy can't use loopholes to zero out their tax bills and call for quadrupling the tax on corporate stock buybacks which the president argues send tax advantage payments to wealthy and foreign stockholders instead of dividends which can be taxed back over to you. >> appreciate that eamon javers that's where we begin with moody's chief economist mark zandi. great to have you. you know, part of the challenge of covering the address, usually, is trying to decide what's worth talking about for the market because a lot of it is not going to wind up being policy, especially when half the congress is opposition controlled what do you think is going to be truly important tonight. >> well, carl, i think markets aren't going to be focused on it, right. as you say a lot of this has been telegraphed and digested by the marketplace and these aren't big macro changes he's proposing tonight. i don't expect any real market

reaction obviously, the big news for markets would be jay powell's speech at the economic club of washington later this afternoon. i think that's what they'll be focused on not the state of the union address. >> and certainly if we can tell from bostic and kashkari the last few hours a lot will center around whether that print on non-farm payrolls was real you don't buy it >> no. it's making a case, though, carl i mean, the job market is very resilient. businesses are really reluctant to lay off workers they know that, you know, once we get to the other side of the adjustment, to the rate hikes and high inflation, their big problem, number one problem, is going to be holding on to workers and finding workers. they don't want to lay off workers. that's clear in the jobs data, clear in the unemployment insurance data by the way, that's a reason for some optimism that the economy can navigate through without a recession. it's hard for me to see a recession without significant layoffs. that's critical to, you know,

getting people to pull back on their spending and so i think that's all really good news. you know, i think that it's making a case that job market is strong but overstating the case, right. i mean, if you look at other data, if you look at data with regard to future revisions to what we're observing now, this is going to be revised down meaningfully i suspect the job market is creating lots of jobs, too much for the fed to like. you know they want to see job growth down below 100k a month i think we're headed in that direction. it's not 500 k but something south of closer to 250, not as far as -- we need more but headed in the right direction. >> i mean, just to pick up on that thread, you've had three officials, talking with steve liesman, three fed officials post that jobs report on friday come out and say either explicitly or implicitly, if this continues at this robust rate the terminal rate needs to go higher.

your thoughts on that? >> oh, yeah. that's pretty clear, right 500 k, that's a lot of jobs. you know, i think 100 k is the benchmark. anything north of 100 k over time, the unemployment rate will continue to climb. the unemployment rate is 50-year plus low 3.4% that can't be what they want so they need to see job growth moderate more fully here i do think, though, again, job growth is moderating that will become clearer as we get more data and we get the revisions. the other thing i point out with regard to the last month's job numbers, that was really juiced by weather, right. it was a very warm january and felt like a lot of things were juiced up by weather and seasonal adjustment issues and measurement issues as we get more data and these measurement issues get ironed out, we'll clear a signal the job market is slowing to something more consistent and we don't need to see a terminal

rate much above 5%. >> of course, as the fed looks to tamp down, you know, that -- what was inflation at 40-year highs last year, it's not just monetary stimulus, unprecedented monetary stimulus during the pandemic, it was fiscal stimulus that helped the strong blistering pace of inflation i want to get your thoughts on house speaker kevin mccarthy and what he had to say about this. he was on our air on "squawk box" earlier today take a listen. >> the number one goal what i see from the fed they have to tackle inflation that is their mission, that's what they should do, but they missed the opportunity what else can we do about that we can stop the runaway spending in government when it comes to inflation. we have billions of dollars sitting out there. we had runaway spending when it came to the pandemic there was money that hasn't been spent sitting there that we can bring back in. >> this idea there's still money that hasn't been spent, i wonder how real that risk is, there's still stimulus money that has yet to be he deployed to the economy. so that's the first thing i want

goat your thoughts on. and the second thing on this is how it all ties back, not only to future spending and negotiations around that, but also, the debt ceiling >> look, there is excess savings still throughout, but consumers have done a marvelous job of calibrating their draw down of that excess savings to support their spending, particularly because their real nincomes were nailed by high inflation look at consumer spending, it's kind of where you would want it, right. not too hot, not too cold. i'm not worried about consumers overdoing it, spending and causing the economy to overheat. i don't think that's an issue. in fact, pretty thankful that we had that excess saving to navigate through the inflation which, by the way, i don't agree with the premise that the inflation is largely or even significantly related to fiscal policy it's, in my my view, almost entirely due to the fallout from the pandemic, the russian invasion and the conflation of

those two things and the inflation expectation and wages. it's not about fiscal policies it's the supply shocks that economy has navigated through. having said all that, i think it is appropriate and i think key that going forward, any policy proposal, fiscal policy proposal, spending, taxes, it has to be paid for you can't deficit finance with regard to any kind of legislative policies going forward. we do need to address our long-term fiscal issues. i don't think we need to address them next quarter or next year, but over the next 10, 20, we've got to tackle this and address it and the first place to start is any legislation that's put forward, tax spending policy, it has to be paid for. >> yeah. it's going to be interesting to see whether a higher rate environment actually makes that conversation which we've had for years a little more urgent tonight. mark, thanks so much good to see you. >> take care, now. >> let's get more on the markets here as the s&p continues to circle right around 4100

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welcome back rates not the only thing worrying the home builders as lumber soars, again, diana olick joins us with a breakdown. hi. >> it's true lumber prices have been on a roller coaster you may remember they jumped in the first few years of the pandemic and then fell back last year, finally giving home builders a break but take a look now up nearly 38% in just the last month why? home builder sentiment ticked up and scott reeves of domain tim ber adviser says the positive moment after a year of declines in the index indicates market participants see potential for increase demand in the next few months while the home builders may see more demand from consumers, they are not going to get a break on costs and costs for other building materials are still

rising, though, not as fast. the gain in building product was around 8% last year compared with a 19% annual gain the year before so that's a 60% drop in the gains, but again they're still gaining. take gypsum, your wallboard, although the price gain of 18% was more than three times the 25-year average, it was substantially lower than the 23% increase in 2021 other materials like copper, steel and cement, are also up. residential construction material skrcosts have increased 36% since the start of 2020 and chief economist robert dietz will give testimony to a housing hearing in congress on thursday saying as a result of these higher construction costs, median new home prices increased from 328, 900 in january of 2020, to 442, 100 in december 2022 and why builders can't

lower prices and are turning to mortgage rate buy downs to sell homes. back to you guys. >> yeah. diana, so that's, i guess, the way that they try and address this as foribility simply cutti prices >> it doesn't address their margins. when they look at mortgage rate buydowns, that can go through mortgage lending arm of them or can be through other venues. it's not specifically how much did it cost for me to build this home versus how much i'm selling it, so on paper they're not reducing home prices >> diana, quickly, one of the things we don't talk about very often is what this means in terms of insurance rate increases for homeowners because if you see things like lumber prices tick higher, the rebuild value of the home goes up as well that's very sticky when it comes back to the inflation debate. >> that's all going to come back to the appraisal of the home

itself when you look at what's going into the home, that's what it is, what it costs at the time. if you're looking at reconstruction costs, again, i'm not sure how that would factor into the appraisal of the home when you initially get that homeowners insurance policy. >> diana, thank you. that's diana olick this morning. still to come on "techcheck," a deep dive on ai and what it means for big tech ahead of this event at microsoft this afternoon what our very own jon fortt will break things down live at the en aticks on of in ten minutes. stay with us but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

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bowl this weekend? you're not close with one in five americans expected to wager on sunday's game contessa brewer joins us with who stands to benefit from all this. >> well, whoever wins a bet, for one, and a record breaking number of americans plan to plunk down money on the game, according to a survey just released from the american gaming association a record 50.4 million americans, 61% increase from last year, will bet $16 billion, double last year's estimate, according to the survey. with the pandemic in our rearview, office pools are making a comeback. bets among friends for super bowl parties 50% more people this year than last say they will do some sort of social betting. as for the sportsbooks, the super bowl provides an incredible opportunity for exposure to a sports fan who's maybe just occasional. market leaders, fanduel with 45% of the national market share with draftkings and betmgm look

to lead, and caesars and bally's are looking to grow their customer base. and the nfl grows from the expansion of legalized gambling. the ag survey shows 34% of those surveyed says legalized gambling has made it more enjoyable to watch a football game. america has their money on the eagles, 1.5 points over the chiefs, though the survey showed respondents evenly split over which team they're betting on. this could be an opportunity all around not just for the sportsbooks, the nfl, but think about payment platforms and broadband suppliers, it's an opportunity for everyone to get into the action on this front guys >> contessa brewer, thank you. it's going to be interesting to see what it means for future player negotiation contracts, too. >> if those projections are right, it's an average of $300 a person betting the average is skewed pretty high by the high rollers

a lot of people going with 10 bucks. speaking of spending, i want to call out royal caribbean, up 4% right now it goes back to the conversation we had with hertz, this idea that people are continuing to spend on travel and on experiences, even as we've seen the weakness in retail look, carnival and norwegian are trading higher as well that's going to do it for us on "squawk on the street. "techcheck" starts now good tuesday morning welcome to "techcheck. i'm carl quintanilla with juliannajon fortt and deirdre bosa we'll tell you what's driving the latest buzz word. the exclusive with arm ahead of the coming ipo. later on, the future of television, the biggest media insiders in the industry predict the next three years for tv. jon, you definitely have the lead today >> yeah, carl, i'm here live