good morning u.s. equity futures pointing to solid gains ahead of the open. we'll hshow you what is moving right now. including disney it is up 7 points. that is part of the move for dow. ceo bob iger announcing the reorganization resulting in 7,000 layoffs and $5 billion in cost cuts. details ahead. plus, china investors warning about hype risk. some ai names jump 200% year to date it is thursday, february 9th, 2023 "squawk box" begins right now.

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. equity futures at this hour right now, you will see green arrows dow indicated up 285 points. s&p futures up 40. nasdaq up 178. this does come after some losses for the major indices yesterday. dow down 2208 points the s&p was down 1.1%. nasdaq down 1.7% you are talking at this point about down three of four sessions for the major averages. if you are looking at treasury yields, we are continuing to see the higher yields. 10-year treasury is below 3.6% well above 3.5%. that had been the line we were

under before the stronger than expected jobs reports on friday. 2-year treasury is 4.41%. let's talk about it. disney shares are higher this morning. let's show you exactly where they stand you are looking at them up 7% this morning the company is planning to reorganize into three divisions. entertainment, which includes streaming and media. then espn and then parks and experiences and products unit. here is ceo bob iger talking about the structure on the call. >> i have always believed the best way to spur great creativity is to make sure the people who are managing the creative processes feel empowered. therefore, our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially our former structure severed

that link and it must be restored >> the plan to eliminate 7,000 jobs the company plans to cut $5.5 billion in costs $3 billion from content that excludes sports. the remaining $2.5 billion is non-content cuts here is iger on the cost cuts. >> well, we are extremely proud of what's on the screen, but it has gotten to a point where it is extraordinarily expensive we want quality. we want quality on the screen, but look at what they cost we will continue to go after subs, but be more judicious. >> in the process of that reorganization, lots of speculation of the future of espn iger saying the company is not engaged in conversations or considering a spinoff. we look forward to david faber in l.a he has an interview with bob

iger at 9:00 a.m the first time iger has been interviewed since he took the top job at disney in november. not only in the process of that, but in the process of the proxy battle with nelson peltz who has been making a lot of noise about getting on the board and unease and unhappiness with the house of mouse >> bob iger talked about bringing in pixar and he brought in lucas films and marvel industry that was interesting to hear joe, you were making the point about the number of layoffs. >> if you go person by person, it is a big number you know, we all work with people you think if they get up to 7,000, it is a big company with tens of thousands of employees and i understand that. we can say 7,000 easily.

i know him to get to 100, that's a lot of people i know. were they doing a lot of important things some had to be doing important things, right? is there always that much -- can you always find that much? >> in this context, it is 3% think of the big tech companies we reported over the last two months where the number is 10% in some cases, the number has been much higher than 7,000. >> 10,000. 20,000 >> it is a lot of superfolous employees? >> there is academic literature. the mass layoffs are typically back firing on companies companies that hold on to their employees. >> the pressure?

>> the pressure. they need to because the companies are actually in genuine trouble. >> i think elon musk changed the equation and gave people room for layoffs when he got rid of 50% of twitter >> that is true in the tech world. in tech land, the ceos are looking at 3%. it is not in the same. >> we can have the larger discussion about capitalism and corporate governance in had this country because we heard that speech there will be a dividend reinstituted that is important. a lot of talk about shareholder value at disney and what they want to try to generate for its shareholders this is coming at the expense of employees, obviously there could be an argument made instead of focusing so much on shareholder value, you have an employee base that has given -- i'm saying this is maximizing

profits at the expense it is a somewhat darwinian system and it just is. companies need to be able to do it -- >> take all of the companies and this is a boom-time phenomenon with esg and everything else the statement in 2018, the stake holder stuff >> you wouldn't do it. >> the idea at the time is shareholders and customers and p employees were all equal they're not. >> they can't be it still does come back to you if you don't do something like this and you never did it and never cut expenses and never slipped down the work force, the company itself doesn't prosper and the worst-case scenario the company doesn't stay in business >> this is not just true at disney, but every company in

america, for the last two years. >> nobody laid anybody off. >> bingo they were not only not laying people off, but not just an esg thing, but a social good piece a lot of companies felt uncomfortable laying people off during the pandemic. goldman sachs laid people off now. histo historically, they would have laid people off every year because that's how they have a natural churn to the business. >> let's ask about disney in particular and iger when he says he wants to streamline and make sure the creative leaders -- >> i was going to say -- >> what does it mean >> that quote got me here. we played that sound and i thought of us. >> for some reason >> the creative engines of a company need to have the freedom to do that creation and not be looking over their shoulder and

thinking something is going to happen all managers could learn from the creative entities and need to be liberated. >> is this related to streaming? these companies put streaming alongside management is this a way to -- >> my understanding -- >> they need more accountability >> the p&l used to have that and under chapek and the re-org and centralizing it. the way they were adjusted >> thousands getting laid off. remember when ge came in and nbc and the move with universal. people said you have to be kidding me you want me to tell you how much i'm spending here on this movie? >> can you put -- >> i know.

these guys make light bulbs. there's no way -- the purse strings to allow the creative people might spend millions on a crappy movie there has to be a combination of creative and financial >> if you have a freedom with that, you have to be responsible. with great freedom comes great responsibility >> okay, uncle ben franklin. >> you have to wear the big boy pants. >> mixing a lot of stuff >> okay. you win. you get to keep control. >> i don't this was it. you are waiting to hear. faber is out there >> he did the exit interview the last time. >> the first time he has spoken. kudos to our friend from "squawk

on the street. all part of the "squawk" family. it is a franchise. why would you take that name away at 11:00? whose idea was that? it was called "squawk alley. ridiculous. let's talk about earnings that are out this morning. pepsi out with earnings of $1.67 a share. that beat heexpectation by 2 cents. revenue beat the company is raising dividend by 10% and buying back $1 billion of stock the vice chair and ceo hugh johnston is joining us this morning. coming up, morning movers. we show you what is behind the drops in affirm and mattel and gain in the shares of robinhood. if you missed it yesterday,

woz made a surprise walk-on appe appearance he is back today for a formal interview. he will join us at 6:30. we will interrupt it and bring on amy wu silverman. just to make it fair you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

i screwed up. mhm.

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welcome back stocks to watch this morning shares of pay now -- buy now pay later company affirm plunging down 17% earnings and revenue missed estimates and the company lowered the guidance the ceo announcing 14% of the work force layoffs he says because of the numbers coming in, the layoffs were necessary. >> size and scale. that's a big one. robinhood shares are higher this morning the board approving a plan to buy back shares owned by sam bankman-fried with a stake of 7% revenue missed thanks to processing error which would explain the cost to the company. on december 16th, shares of cosmos health nearly ctripled as

online members went into a meme frenzy and they fell into a short sale and that resulted in the $57 million loss as they tried to buy back against the shares of the rising stock price you can see in the world of exchanges and if something goes wrong, even a short period of time, a lot can go wrong >> the new york stock exchange and what they deal with the opens. it is like 50% of the gameclaime paid out in full we don't know the numbers. >> it is a tough situation think about it if one trade -- if one thing goes wrong who is on the hook >> you know my best trades when i was a broker for ten years and dow did the wrong thing?

>> really? >> no. kidding. >> bad >> there were things in 1987 in the crash and my associates never recovered because of the error. if you put sell put instead of buy put and you are locked in and you are there and you are on the hook for a $500,000 loss or whatever it is the rest of the career, they are garnishing your wages to pay that off many stockbroker or house with fat finger problems ended many a career people ended up saying do you want fries with that i'm not disparaging people that work in that industry, either, because you can start there and end up having five franchises. whatever you need to do. you are not a stockbroker anymore. mattel shares fell revenue missed estimates as

holiday sales tumbled 22% from the prior year fewer toys were purchased as higher prices for food and other necessities led to tighter budgets. mattel is calling for a flat year in sales. retailers have been shrinking orders futures look good. 250. part of that is disney the portfolio manager for dcla and cnbc contributor we have a lot of money spread around sarat, are you sleeping okay >> i sleep okay. it is not easy times when client capital is where it is at this point. there is good opportunity out there. >> are you positive on disney in. >> -- disney >> i am. i think iger is doing a great job. he is looking at the

organization and your point of the creditor -- creatives be responsible. the stock was $200 a couple years ago. covid was not good to it separating the businesses. core businesses are worth more than what we have. it is a cash flow company. reinstating a dividend and focusing what disney is all about, i think, will bring great value back to the company. >> i guess looking at the three divisions and i guess it makes sense. there are times i wonder about espn and how it fits in and how much it would be worth outside the company. they considered it, apparently, but before iger came back, they considered it and decided not to spin it off. now he is back, is that going to stay that way or will they revisit that >> i think the way they

structured it implicitly is to say we can separate the financials and make public disclosure and give it time. whether it is 12 or 18 months and if it is forperforming well, you can spin or sell one thing is companies are creating value not by merging, but spinning off divisions he is saying it is not on the block, but when you identify the financials of the divisions, they could be a potential to spin it or actually sell it is a smart move to separate from the rest of the company to see. if it does perform well or doesn't, you can identify the different parts of the company create value for shareholders. >> with the advent of big tech and ai and metaverse, sarat, what is the advertising base company of the future look like? is it a streamline content creator or have the pipes for

distribution what is the perfect model in your view? >> actually, interesting you bring it up for a disney context. content is important getting the customers and recurring revenue. the netflix model they are trying to do with everybody. disney has an interesting thing with the asset base. recurring revenue with the amusement parks. "star wars" and "arrvatar. every business wants to add to it you have a combination of hard assets he talked on the call that "avatar" will have a separate piece in the parks you watch this on the big screen or at home and that is the model with the future and the re recurring revenue. i do think they have a great model here it is under valued or not run the right way. content is important you need people to watch

>> disney plus will eventually be a -- is break even good for streaming service? is that good >> it has to be, joe i think rationalization in this place is important he didn't spend much time talking about hulu it is between comcast and disney you have so many streaming services it goes back to the race of let's get eyes or pull demand with retail. you give this a few months and a lot of the companies are saying this is a negative value to our shareholder. if we don't bring this down, we will have cash flow positive and companies will be careful. you have so many streaming services, at some point that is the key. meta efficiency. they need that in there. >> i would rather be able to sell hulu for a big premium to someone who needs it than be

stuck with it. it's all flipped our view of extremie streaming. >> it is a hot potato. who really wants it? >> one company has to get it the other company, i would make that company that needs it, pay up for it. i won't mention names. sarat sethi? thank you. just calm down it is important you are managing this money, but you are only human. we are all human >> maybe the ai. see if they do better. when we come back, we will talk about news this morning shell's board members are being personally sued over the company's handling of climate change risk. this is a first of its kind lawsuit and we have the details right after this

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steve wozniak just walked in right now. can we get steve a microphone? i had an apple 2gs with his signature on it. this is cool to have you here. good morning >> is this microphone working? i was joking >> how are you >> i'm doing great >> he was our surprise visitor for the show yesterday we were lucky enough to get him to come back today

there is a lot we want to talk about. steve, welcome welcome. >> good to be here your show is so early. i'm on california time >> we apologize. 3:30 in the morning for you. we get it. we are appreciative you came back here today. yesterday we had a minute to talk about artificial intelligence that is all the rage people are making tons of money and losing tons of money if you watched yesterday with alphabet. you are the engineer's engineer. you are always somebody who looks behind the soocenes. when you talk about ai, you said the first word is right. arti artificial the second is not. >> the thought of intelligence like a human brain yes, the results can be impressive because for years and years, we have been making technology from the hammer that makes a person more powerful than a person without one. the technology with computers, it is so a person can do something they couldn't do before and be do it better

computers provide help in that artificial intelligence is the top floor. it is intelligence because the programs, we can't just write a program to tell it what to say we have to learn and teach and study everything in the world. we call it intelligence, but we don't know how the brain really works. we pretend we do and we don't. i know because when i went back to school to get my degree, i was a psychology major we don't know the memories are in the brain we know that processing centers for memory are in the brain. we assume memories are there >> or the soul >> i was at a company where the engineers figured out how to make a brain it takes nine months only one way to make a brain. >> yeah. >> if it is not intelligence, what is it >> i would tell it the high end

of -- for example, a computer can sit down and play a billion games of chess and remember everything no human could ever do that. a computer can figure out how to be better at chess eventually. it is following algorithms it doesn't have the human feeling or emotion that is part -- >> love. is it possible to eventually generate some higher functioning -- something like love in a machine? >> after the book came out saying the computers would do as much memory. i loved his later books. >> i'm hopeful for that. that i'm alive >> i was convinced that yes, by a certain day, we would have computers with emotions and feelings and could look at your facial expression and read your face and body position and be like humans. bill gates came in a couple of years later and elon musk and

steven hawking said similar things and said i'm in good company. then i changed my mind all of the artificial intelligence and doing the smartest jobs and doing what you used to do with a brain, all of those would do things to help humans and we would be in control. not a machine thinking what should i do today. they will not have that intuition. we program them to solve individual problems, but not the life look at the car. you are driving along and the car sees the speed limit signs if they put up the flashing digits to change the speed >> the quantum advances are shorter and shorter and once machine learning is a million times the human, that is the sin singularity. it took 4 billion years. we are not going to do it if it is 10,000 years. >> the machine has to sit down and say what can i do to figure out a way to program

>> what changed your mind? >> it was largely a statement by someone who is more brilliant than i all of the artificial intelligence is helping humans have something to take us further. you know, we'ring ge going to h errors a car can be smart to do things. it makes mistakes all the time my tesla it's a horrible and frightening experience what will happen with chatgpt when it makes a few errors it will. it is not like a human who recognizes that can't be right that is not what we want to communicate. it will be part of history that the other chatgpts study it is like when media gets something wrong about you and major media, every book and magazine copies the same store

f -- story i for your life. >> remember what calculator can do for math skills >> that was big. i worked at hp >> can you do integral calculus now? >> no. can you do cursive >> chatgpt will make it how no one knows how to write a composition? >> that is happening we have so many aspects of what computers brought to us. you want to train the mind to think for itself i'm not going to fear it the humans will always be in control. >> you mentioned tesla i compared them together i'm curious if you do or not elon musk and steve jobs >> yeah. they are actually very similar i don't like to say that steve jobs is such a good

friend. >> do you think or do you put them in the same patheon of great entrepreneurs? >> no. i put them in the category of having the ability to communicate and wanting to be seen as the important person and like a cult leader a lot of people will follow them no matter what they say. they get beyond the point of really judged. there are a lot of consults lik that >> is that good or bad >> to me it is a good thing. my life has been based on honesty. you don't hide things. you don't make things up to make yourself seem better a lot of honesty disappears when you look at elon musk and tesla. they robbed my family and myself and wife of so many money with things they said that we believed would be real >> you were a believer in 2017

of a lot >> no. we had a tesla in 2016 we upgraded. paid a lot of money to upgrade to a camera and radar. elon musk said it would drive itself across the country by the end of 2016. then we upgraded for $50,000 to one with not enough sensors. we knew it would not see a child in front the car it had eight cameras extra sensors. it would drive itself across the country by the end of 2017 okay you know, i get a little bit tired of this, you know. tesla did great things elon musk built a car for himself and understanding his needs. we have the model s. we will have a huge hit getting to evs sooner because of elon. i admire some things about him i don't admire being able to

speak in marketing terms it is lost and misleading. >> are you suggesting steve jobs was similar in that regard >> no. steve jobs really wasn't dishonest. he would say things in ways. he had a way of grabbing you and grabbing you and following whatever he said regardless. it was rn't really that untruthful you didn't buy something thinking you would get a and then didn't get it. >> i'm intrigued you said we don't know if memory resides in the brain itself that is some type of metaphysical outlook you have. are you spiritual? >> not at all. totally logical engineering like i am >> how does the memory transcend

what is -- >> you don't say you know it is because we can't find the memory >> do you believe in god, for example? >> no, no, no. i believe in logic and tryiuth. i went back to college to get my degree i had a plane crash with the macintosh. i had my name famous my diploma reads rocky raccoon clark. i was a psychology major i wanted to study the brain after the crash. i read the top books in the world and continue to read them. top stories and research we know processing of memories is in the brain. we have that in the hypocampus we don't know how to read the memory look at the synapses here that must be the memory.

i came up with it 40 years ago you lose two things between ages of 6 and 10. your childhood auto biographical memories and you lose your teeth. i made it up to show my proper f -- professors and class if there is nothing about mel memories -- memories. >> we need the singularity >> search for memories and teeth. you will be shocked and the test of alzheimer's in the satilivia and the gums >> if my dogs aren't going to heaven, i'm not going. >> interface ui that is something that you and steve did brilliantly. the future of interfaces and if we are all wearing goiggles.

the metaverse. is it real or fake >> if you track the development of computers and up to where apple got reputation for making it easy and intuitive and the move to the touch screens. it is input and output voice and personal assistants. how humans interact with computers is a big change. >> would you bet on, obviously what meta is doing or what apple may do with vr and ar? >> funny i get asked questions. what do you think the device of the future is going to be? a hand held touch screen device. i say that how could you say that the world changes so fast. all of the changes don't mean anything i didn't upgrade to the latest phone. too many times i got the same thing thinking i was getting something more

so we're -- what was i going to say? >> whether you think you are wearing. >> yes i think that cars lasted for 150 years pretty much with the same four wheels and compartment for the same purpose it didn't change that much we have all of the sizes of hand held device is the future. metaverse is tough you know, you could put on the amazing experiences in the world and after half an hour or hour, i've had enough. will it become total life or another thing on the side? type of entertainment partly. >> we have to run. before you go, you sound like you had a personal experience with the media gets something wrong and it goes on forever what did they get wrong about you? >> oh, my gosh one time where i was going to go off and start a new company and make the first universal remote control.

i had one engineer who wanted to do it with me. wall street journal. the incident with the shareholder meeting. i called john. i said the engineers are unhappy. they did not get noticed once. all of the money of the company is coming from that. the wall street journal printed i was leaving the company because i was dissatisfied with the macitaking over. i'm leaving to start a company with a great idea. forever, every book and article said i left the company. i didn't leave the company i'm the only one who had a paycheck every week since the start of apple still do i'm very loyal i don't want to lose it. it meant so much >> steve wozniak, thank you for being here >> thank you >> some people thinkwe meet ou pets at the rainbow bridge >> we all hope so.

>> i've got my former dog czar and reagan coming up, we dig into the ai race. check out the warning about the hype of the stocks details ahead. "squawk box" is right back >> announcer: currency check is sponsored by interactive brokers. the professionals gateway to the world's markets. why are 93% of sleep number sleepers very satisfied with their bed? maybe it's because you can adjust your comfort and firmness on either side...

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still to come this morning, the ai gold rush is on but china out with a new warning against investing in the hype. we've got the details next , and we would experience turbulence. i would watch the flight attendants. if they're not nervous, then i'm not going to be nervous. financially, i'm the flight attendant in that situation. the relief that comes over people once they know they've got a guide to help them through, i definitely feel privileged to be in that position. ♪♪ why are 93% of sleep number sleepers very satisfied with their bed? maybe it's because you can gently raise your partner's head to help relieve snoring. i definitely feel privileged to be in that position. so, you can both stay comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday. rail vision is at the forefront

of an evolution in train safety. using advanced sensors, ai and big data technologies rail vision is taking rail into the future, making it safer and more efficient, reducing railway accidents and downtime saving lives and money. billions of dollars are expected to be invested in rail safety in the coming years. rail vision has the solution today. learn more at rvsvinfo.com. rail vision is at the forefront

welcome back to "squawk box. china raising a red flag about overhyped stocks, some smaller ai names in china now seeing gains between 100 and 200%, sparking a warning the shanghai stock exchange sent a letter to affected companies, abnormal trading in those stocks urging companies to pay attention to investors, avoid capital risks and hype and make rational decisions and invest prudently chinese state media warning traders about the risks of betting on ai-related companies saying some companies are simply riding on concept without conducting actual business separately, google announcing that its chatgpt competitor bard yesterday in an embarrassing

turn of events, it gave an incorrect answer during the live stream demonstration that sent shares sliding 8% on the session. it goes to what we're talking about with steves w wozniak the stock did move lower, should it have? >> probably not as much. when i think of those kind of gaffes, i think of tesla, cybertruck, elon musk throwing the rock through it, it had that screeching effect. ultimately he was able to vector that into a positive direction there was another layer to the sell-off in shares yesterday, microsoft's comments they're going after search, that's a profitable business. i think the combination of the first negative read on how google is doing with bard along with that comment about the excitement that microsoft has around bing, i think it pushed shares down. i think it was an overreaction, i think it was an overreaction

because when we think about ai, this is a multidecade endeavor and we're talking about something that is really been forefront to investors and consumers since last november. and so to make a decision that google has been negatively or behind the curve based on a demo i think is a little premature. i would add one vector that -- one piece that is just really surprising about the whole conversation around microsoft and ai and google, is that google has invested far more into ai than microsoft in 2017, google changed their mantra from organizing the world's information to being an ai first company they talked so much about ai machine learning we used to do a buzz game bingo on their earnings calls and count the number of times they would reference it, 17, 25 times in that range my point in saying that is that google is not to be counted out when it comes to this ai race. >> what do you think this ultimately looks like.

the reason i ask is google's success thus far and the way search as we have known it so far has been to link out, right, to link to other places. and that created an ecosystem for the entire internet. and chatgpt at least as we have seen it today is effectively a one way closest, you ask a question, it actually gives you an answer, don't know if you think it is the answer, but it is an answer, but not an answer that then has a sort of choose your own adventure or options or other ways to get to places to go see whether that answer is right or wrong or what other things you might want to know. and how you think that changes the broader dynamic around the internet, if that becomes the norm or does it >> well, what is probably going to become the norm, you'll have an option and bing experimented this and google talked about this too, but to have kind of the quick answer, the gpt chat type of an answer, something that is very clear, but not

necessarily backed up with citations. and then separately they will have kind of further questions to further drill down, so you can make sure you find what you want i don't think we're going to get to a place where the -- the search is going to be you enter a query and there is this omnipresent answer that is d-- that you can lean on. >> is there a suggestion there will be a limited number of folks who will then end up going to other places on the internet as a result of it, and if that is the case, how does the business model for everything change because i would imagine right now i think there is a lot of folks who don't have, you know, there is a lot of people or companies that are willing to have their stuff scraped, if you will, because there is an opportunity to get those pe pepeople to traffic generator at some point, if there is no traffic coming from this, i think you're going to say, no,

you can't scrape my stuff. in which case it changes the dynamic of whether the answers are going to be any good >> i think, to kind of further that point, you're spot on to further that is that the risk to me from google's perspective is less about bing starting to have this renaissance and based on chatgpt it is more just a fundamental shift in terms of how the search business has been operating. and i'll tell you, a job i don't want to be in today, it is a search engine optimizer, these marketing firms, they have done an incredible job over the past 20 years, but trying to navigate that dynamic you just talked about. it is going to be more difficult in an ai-driven search results world for you to buy your way up to the top i think that those types of sponsored types of blue links will be a thing of the past. and if it is true, ai can distill it down instead of 30

blue links to one kind of central answer and then five other kind of suggestions. that's a change to how these companies, how google ultimately makes money. and that's a piece that i think is the biggest risk to google. >> they have won the stake in the -- the shares went down, honestly >> like 100. >> i'll take you back in time. >> yep >> 2011, ken jennings, who is great, the most phenomenal -- >> "jeopardy". >> he should have that job he was playing watson. remember this? >> i don't >> final "jeopardy," here was the question, this -- it was u.s. cities, its largest airport is named for a world war ii hero, second largest world war ii battle, both human contestants answered -- watson answered toronto

watson still demolished the other two because it didn't major very much and won -- tripled the total. it is exactly what we're talking about, isn't it? it is so smart, but it -- under u.s. cities it comes up with a canadian city, so even back then -- so what was -- do we know what the question here was, what did it mess up? was it an easy -- >> what was it, i read it and had forgotten it already do you remember it >> i had it a second ago lost it. >> i read it -- >> was it really obvious >> what telescope first discovered some distant star >> yeah, and it came up with -- yeah >> i didn't watch it live. but i will tell you, when we launched wsj.com and they started doing a press conference in europe and we were in new york and i remember calling and saying don't click on x, y or z

links right now because they don't work >> if you're going 70 miles an hour on the highway in a tesla, you hope it doesn't come up with toronto for u.s. city. >> steve wozniak's point. >> want to thank you appreciate it. great to see you as always we should say it is just after 7:00 a.m. here on the east coast. you're watching "squawk box" here on cnbc i'm andrew ross sorkin with becky quick and joe kernen look at the futures this morning before the market is set to open dow opens up higher, 236, 237 points higher. nasdaq up close to 150 points. 146, 147 now and the s&p 500 looking to open about 33 points higher >> to dom chu who had hank heene, tigers coach, as his personal swing coach, i wonder why it is not a fair fight what is going on >> that was years ago. that was years ago. >> you perfected it. he gave you the swing thoughts and you perfected it it is not a fair fight what's going on this morning

>> first of all, if hank heene saw my current golf swing, he would say you forgot everything i taught you over the course of the last eight years let's talk about the morning movers, we'll kick off the earnings story today with arguably the story getting the most attention for earnings premarket. that is disney, the stock is up 6.5%, roughly 50 points of the dow's gain so far premarket is just what is happening with disney around 180,000 shares of trading volume after disney reported better than expected profits and revenues helped along by most other things, strength in the theme park operations, disney also reported a smaller than expected drop in the number of subscribers for its streaming service after it recently hiked prices there the stock is also likely getting a boost from ceo bob iger's plan to restructure the company and target cost savings of roughly $5.5 billion during that span, which will involve unfortunately the loss of around 7,000 jobs, which equates to 3% of disney's workforce. of course, we will hear much more on that disney story later on today as bob iger joins the

team in an exclusive interview on "squawk on the street." shares of wynn resorts up 6% remarket, around 4,000 shares of volume the casino giant reporting better than expected revenues on a loss of $1.23 per share adjusted, which may not be comparable to estimates. but wynn did see better traffic at its macao casinos during the lunar new year holiday seeing some momentum here. and we're going to end with a check on tesla, which is helping to contribute to the big outsized gain for the nasdaq premarket. it is up right now 3.5% itself on just around 2 million shares of premarket volume, getting some help from headlines that a u.s. auto safety board investigation into a fatal crash of a tesla model s back in texas in 2021 found that there was no evidence that there was an operation on auto pilot for that car on that particular time and that it was likely that higher

speeds for the driver caused that fatality. so tesla shares up 3.5%. and, remember, joe, they got a big investor day coming up the beginning of march there is probably some -- at least anticipation, it has been a big juggernaut of a stock to start the year we'll see if it continues. >> that's in march all right. we'll put that on the calendar dom chu, thank you when we come back, pepsico's vice chair and cfo hue johnston is going to join us to break down the company's quarter and later, we will hear from quk x"ilbeigenator tom cotton, "sawbo wl rht back. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living.

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intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed. global, soft drinks giant pepsico out with earnings. revenue $28 billion also beat. the company is raising its dividend by 10% and buying back $1 billion worth of stock. joining us on the first on cnbc interview is hugh johnston, and hugh is now vice chairman and chief financial officer of pepsico. i don't -- i try to keep up with you, hugh. when did the vice chairman title get added? is that -- we got to go have a drink. >> that's not a recent one no, i picked that one up about seven years ago. >> oh, my god.

maybe we didn't say it all the time i would like to be vice chairman of something but i'm not hugh also serves on our cnbc global cfo council what's different this quarter sequentially from the last in terms of -- is inflation moderating we're told it is moderating. eggs seem to be coming down. other prices that we have been watching >> yeah, to tell you the truth, joe, no, inflation didn't moderate at all in the quarter if anything i think our pricing probably finally caught up a little bit with what the inflation is that we have been facing overall the quarter was very, very strong for us 14.6% revenue growth, that's the fifth quarter in a row where we had double digit growth. we really feel great about the business the investments that we have made behind our brands, and the fact that consumers really are still pretty healthy in terms of their balance sheets for inexpensive items like our products has caused demand to continue to be strong for us

combine that with the fact that our customers are working well with us, they just named us the number one supplier for the seventh year in a row. we really have, i think, a pretty winning formula right now. and obviously this is one of the biggest weekends for the year for us with the super bowl, with a bunch of great advertising, with people like missy elliott and jack harlow and the guys from "breaking bad" and elton john, of course. we really feel like we have a formula that wins right now. >> hugh, same kind of questions we ask all the time. is there any sign that people are trading down for things? are they still buying premium? you said inexpensive products, you have premium and lower priced, any trading down at all? any sign of weakness in the consumer you're seeing none >> we don't see that on our -- in our business. the one thing we see a little bit of is for some consumers, they're moving down in the retail chain

so they may have previously shopped at a premium store and maybe now they're going to a mainstream store or mainstream store to a dollar or discount store. so you see a little bit of that behavior going on. but in terms of our products, no our premium products and our value products are all doing really, really well right now. i think in a world where consumers have money but they're also nervous, they'll not buy cars, not buy personal technology, but they will treat themselves to our products because they bring a little joy to your day. >> the dividend increase, the buybacks, you're at $235 billion company, billion doesn't seem like a very large buyback. it is going to be taxed, i guess, at 1%, maybe eventually 4% and your dividend is pretty nice, 10% added on to what 2.4%. why only a billion dollars or why a billion dollars why do a buyback >> well, i think the billion dollars is basically going to

offset employee stock compensation and other potential dilution that is out there the biggest piece of the cash return is dividends. we have been a big believer in growing our dividend we have grown it now 51 straight years. and that's about $6.7 billion. we'll earn $7.20 or so this year and the dividend is $5.06. we're big believers in conveying more money back through dividends. >> does it make sense, buybacks, the taxation is created differently. the current milieu we have coming out of the biden administration, and on that side of the aisle, in terms of buybacks do you care to weigh in on that? you never weigh in on these controversial issues, hugh, but does it make sense you are trying to enrich these wealthy shareholders with the dividends. >> well, i don't candidly understand why taxing buybacks

is a good idea, but that's policy that obviously gets made in washington. >> so you -- it is impossible to understand i like the way you said it, i don't really understand it, but since it's made in washington, i don't really expect to understand it. >> all i know is we'll deal with what we can control. i expect over time probably you'll see more money going to dividends and less money going to share buybacks. particularly at some of the proposals to take the buyback excise tax -- sorry? >> i was going to say, do you feel your workforce is where it should be, is it lean and mean or is it -- we're seeing a lot of companies decide post pandemic that they didn't lay anyone off, and maybe it is time anything like that on the horizon here >> no, no. i mean, i think we generally are always looking to restructure our workforce, to make ourselves

more efficient, but nothing like the things you're seeing out of the tech industry or what disney announced. nothing in that area and frankly most of our workforce is front line. and there is a real challenge in terms of getting frontline workers these days in a lot of ways, we're happy to have the terrific frontline workers we have. we have a better employee value proposition for them than i think most companies do, with the good benefits and competitive pay. but generally speaking, we actually feel like we're going to continue to grow employment the company isdoing so well. >> all right not going to ask you about things settling in the bags, you know, whether there is less. but i know how you do that did you guys get -- did you try any of the new pepsico products? did you get a -- >> i tried some quaker oats chocolate. >> those are good. the rice cakes. >> hugh. i'm not criticizing, i'm not criticizing, you know the doritos that come in the pringle things and they're supposedly

miniature? >> yes. >> do you know what you guys did? you took all my broken doritos from the bottom of the bag and put it in this little tube and expect me to think that's a new product. did you notice -- did you open those? >> no. >> they're like the crumbs at the bottom of the dorito bag you can't reformulate that and tell me that's a new product it is genius it is genius >> well, they actually are smaller triangles that you see in the bag and this is going to be the year of the triangle with doritos anyway as you'll see in the super bowl s . >> the year of the triangle. that's a new one on me. >> when we mail things to you, i'm not sure it gets handled as well as our salesman >> i'm not complaining i like the crumbs at the bottom of the dorito -- it is a great idea for me, in fact more surface area. thanks, hugh we will see you next quarter with more? >> absolutely. thanks to you guys

>> the super bowl. >> the advertising what do you want to do cat got your tongue? you can't -- you're sitting right there. hugh, what about the super bowl? andrew wants to talk about the super bowl. >> it is okay. we got to go >> it is coming up -- >> it is coming up this sunday. >> you have no interest in the game itself, but you like all the -- >> yes, absolutely the business of the super bowl >> okay, all right. >> this is network. >> do you know who is playing? >> no, who is playing? what inning? >> he's wearing green for the eagles. >> you've given one of the whishe o t other team. >> baseball? baseball is it baseball

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still to come, can microsoft dethrone google search the latest ai battle is unfolding and we may find out who is going to come out on top. jon fortt joins us next with this week's on the other hand. "squawk box" will be right back. time now for today's aflac trivia question. what was the first product to have a bar code? the sw wn anerhecnbc's "squawk box" continues ga-a-a-ap! oh... hi. what's this, a hospital bill? mm-hmm. for 1,100 bucks? ga-a-a-ap! looks like your wallet may need a sling too.

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now the answer to today's aflac trivia question. what was the first product to have a barcode the answer -- wrigley's gum. >> welcome back to "squawk box" this morning microsoft this week announcing a new version of its bing search

engine from open ai. the big question is will the company behind chatgpt help microsoft dethrone google search jon fortt who is in seattle this week is here with us now at the table. to answer the question >> yes, andrew i think there is a good chance it will help microsoft beat google in search i did fly out to seattle this week, interviewed satya nadella about this and got access to the bing preview it's good. the searches are uncovering information about things like company financial performance faster and in more detail than i've ever seen in search so what this means is we're seeing first serious assault on google's core product and business model for this to work, microsoft doesn't even have to steal all of google's users overnight. it just has to peel away a couple of percentage points worth of search share. every point of share is worth a couple billion dollars what about google's response google has ai too. can't they just catch up here is why that's not as easy as it sounds

to hear nadella tell it, microsoft spent the last three years customizing azure, cloud platform, to run the kinds of jobs chatgpt demands google needs to configure and test the cloud resources to do that, which requires that they get people using it, spend a bunch of money, and it is not just about building ai, google also has to get other companies building on top of it too. microsoft has a head start, and a hugely profitable search business to attack, andrew. >> so, google has more than 80%, i think now of global search, currently, just where we are so the question is can microsoft actually topple them all of a sudden >> well, on the other hand, andrew, i mean, no there is almost zero chance microsoft beats google in search with ai. it is just rare to see that kind of dramatic shift in a technology market, unless the incumbent implodes for example, apple's iphone was able to beat rim and nokia because they fundamentally misunderstood the potential of

the multitouch smartphone. they were laughing at it at first. even with the formidable design prowess, apple and ipad hadn't displaced windows pcs. today, google won't have an easy time matching microsoft in ai for search, but that doesn't mean the masses are going to switch to bing google spent the last 15 years digging a moat around the search business apple devices default to google for search and so does chrome browser, android phones. this network of google services and platforms are like a "star wars" tractor pulling users back into google search it is not enough for microsoft to have a more competitive search product na nadella and his team have to build on ramps for the most popular services and that will take a while at this point, a bet on google losing significant search share is that google is going to blunder its way into the ai race for the next couple of years while failing to improve its bard competitor and losing the power of its tractor beams it is not going to happen.

>> i got two questions, likely impact on google, in your mind, is what? >> i think the likely impact on google is google having to reduce its revenue in search to experiment with ai so this potentially forces google to weaken itself in the near term at a time when that's really -- >> this is a little bit like the media companies with streaming they have to cannibalize their own business to some degree to get to whatever you think the other side is. >> it is like that in a way. but i like that analogy. it is also challenging for them because they got to engage developers in building on top of it, they have to put stuff out that proves that they're as good as what -- >> two quick other steps when you talk about google being on the phone, they pay for that privilege, currently talk about the on ramps. >> yes. >> do you see a period of time where microsoft starts to get aggressive and competing for that do you think satya will call up tim cook and say, you know what, i'm going to bid for that, i'm going to bid for those rights.

>> i was looking, trying to figure out how long the contract period is. i don't know but i think that's exactly what microsoft is going to have to do you asked me a question last week about what i would buy if i were -- what company was it? >> i think we're talking about facebook are meta, instead of spending $40 billion on buybacks, if you can buy whatever you wanted. >>palantir. >> together? >> you get both. at least as of last week >> last one i know, i'm going to get in trouble we talked with gene munster earlier, the whole idea of chatgpt or the other services providing the answer as opposed to multiple answers and howtha changes not just the dynamic of search, but actually the whole traffic system of the internet if news companies or content companies or stores or whatever can't get the traffic back, do they say, you know what, we don't want you training on our

stuff, we don't want you to have to be scraping and boiling the ocean of our content >> yes, nadella is saying this week that part of the way that they are measuring how this new bing is doing is by measuring how much traffic gets sent back to the sources they want traffic sent back. so we'll see if they're able to optimize for that. and if they're able to make the argument, we're sending back just as much traffic as you normally get in search, because i think he knows that, you know, you kill the golden goose, egg prices rise. >> right. >> or something like that. >> something like that >> great it see you. appreciate it. this was fun all right. up next, duke energy just out with earnings. we're going to break down the quarter with the ceo lynn good that's next. and later, senator tom cotton will join us to talk about why he says continuing to support ukraine is in america's best interest stay tuned you're watching "squawk box. and this is cnbc of an evolution in train safety.

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welcome back, everybody. duke energy reporting fourth quarter and full year results just a little bit ago. you can see that stock is up by

1.75%. company came in with earnings of $1.11 a share on an adjusted basis. the street was looking for $1.07. they came in with guidance, affirming what they said before. the street was right in the middle for 2023 at $5.65 duke provides electric energy and natural gas to customers across seven states and also operates wind and solar facilities across the country. for more on the company's numbers and the outlook, we want to bring in lynn good, who is the chair, the president and the ceo of duke energy and, lynn, it looks like your numbers came in better than anticipated for a few reasons. why don't we run through them one by one first up, higher electric volumes, more usage? >> yes good morning we continue to see strong growth in our regulated utilities in the states we operate, three are in the top six in the u.s. for population migration so we had about 2.5% volume increase, residential,

commercial and industrial, which was a part of the strong results this year. >> it tells you the economy overall is doing well. you have to be a pretty good gauge of what's happening. >> we have seen very strong growth of course, we're cautious as we think about 2023 as every business leader is but we have not yet seen a slowdown in the consumption of electricity. >> okay. another positive thing that you had going for you in the quarter was lower operation of maintenance costs. was that because inflation has come down? is that because you didn't need to fix as many things? what happened? >> we continue to work very actively, becky, on operation and maintenance costs to control those costs, not only as a way to reduce the price of electricity long-term for our customers, but also to be good custodians of our resources. as we put new technologies in place, particularly on our grid, we have been able to save costs and we see that continuing as an important part of driving growth and lowering costs to customers

going forward. >> and finally, the other thing you had going for you this past quarter was favorable weather. it was not as cold as anticipated. energy prices overall came down, if you were looking at wti or probably more importantly natural gas, how much of that played into this >> we did have positive weather. for us, that means a bit colder than expected in the fourth quarter. commodity prices are something we have been chasing all year. i'm pleased to see some of those prices coming up in '23, which will be a benefit it our customers. >> one of the things i was shocked was when seeing that you guys are actually asking for a rate decrease for customers in some places like indiana that shocks me i didn't think anybody ever rolled back prices what happened? i think you're looking for a decrease in residential bills of more than 15%? >> becky, it is all driven by commodity prices as we digest the increased costs of gas and coal that occurred in

2022, those prices were put into place for customers. in a place like indiana, we reset price every quarter. those prices are coming off. as those prices come off, we're just delighted to decrease price to customers so that they can feel the benefit that we're seeing in the commodity markets. so, it has been, you know, in a challenging period, as you know, with commodity prices and we're pleased to see the prices coming off. >> one of the head winds you've been facing is higher and rising interest rates how has that impacted your business, what do you do to manage it? >> rising interest rates are a key issue in our business because we're very leveraged, becky. the amount of capital we spend, extraordinary $65 billion planned over the next five years, associated with our clean energy transition. it just means we need to look for ways to drive costs out of our business and so we undertook an initiative in 2022 that will deliver $300 million of savings in 2023, just being more efficient in our corporate

operations, relooking at service levels, relooking at our investment in i.t. and the way we undertake those projects. and it is that reduction of costs that is really helping us weather the storm of increased interest rates >> lynn, if you look at overall profit, you swung to a loss for the fourth quarter you did report an adjusted gain in earnings per share, but you took a $1.3 billion impairment charge and that's for the commercial renewable energy business that you're selling, you want to explain that a little bit >> yes, you know, becky, we announced an exit of our commercial renewable business in november of 2022 it has been an important part of duke for a long time it has been an important way for us to bring renewables into our portfolio, and learn about the technologies as we look at this accelerating capital in our regulated utilities around the clean energy transition, we thought it was time to step back, and really identify who is the right strategic owner to grow that commercial renewable business into the future. the net result of that is we

took an accounting adjustment in the fourth quarter, and given the earnings profile of renewables, where a lot of the profit occurs early in the asset's life because of tax incentives, it sets up the opportunity for an impairment. but the important point is that we're moving forward, that sale process is under way and we expect to close it later this year. >> lynn, can i ask one claire if iing question. you said that most of the value in these things come early on because of the tax issues that you can write off. would renewable energy plants not be anything that anyone would be interested in doing if you couldn't get the government to subsidize part of it? >> i think the push around clean energy transition, the reduction of carbon is really an important one, becky way i think about it is the tax incentives actually make the investments more affordable for customers. and those incentives are important as we think about the scale of the transition -- >> would that be a no? would that be a no, lynn

>> i'm sorry, joe? >> the short answer would be no, it wouldn't be worth it if it wasn't for -- >> i don't agree with that >> you didn't really -- okay it sounded like what you were saying, that it is -- in a nice way -- that it is important that we need it and we want to do it and, yeah, it is nice we have them, but they're not economically -- a company trying to satisfy shareholder value would not do it without the subsidies. >> look at those tax incentives is a way for us to lower price to customer in a period where that clean energy transition is so important to our customers and our communities. our customers are demanding renewable energy and to be able to accomplish that transition in a way that lowers cost i think is goodness for our customers and for our investors. but i would also point to the fact that renewable technologies have continued to decline in price. i look at solar, i look at wind technologies, and i believe the same cost curve will be accomplished for batteries so they are competing.

but the incentives make it possible for us to continue the scope and scale of this transition at an affordable price for our customers. >> lynn, thank you very much >> thank you pleasure to be here. >> come coming up, how much are you willing to pay in rent for a new york city apartment? well, can you describe the apartment to me? a little bit >> one bedroom. >> if it is down in, you know, there is rats or something, not that much. robert frank has that story next and the futures now have moderated a little bit still up over 200 points and my banking relationship was getting... well, complicated. hahaha! so, i broke up with messy accounts and moved my money to sofi. now i earn higher interest on my checking and savings, and bank, borrow, and invest-all in one app. feels nice being in control. break up with bad banking. get up to 3.75% interest, and bank, borrow, and invest—all in one app. plus, download the sofi app and earn up to $250

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welcome back to "squawk box. rents in new york sitting near record highs and with a lack of inventory and strong jobs market, it is adding to the inflation pressures facing the fed and the mark hes robert frank joins us right now with more on all of it robert >> good morning, andrew. the median rent in january hitting $4100 a month, that's up 15% over last year and marks the highest january on record the average rent in manhattan is still above $5,000 a month and, by the way, more renters

are actually paying it the number of new leases in january jumped by 8% over december and up 9% over last year real estate brokers saying new york's strong job market is keeping up demand and low inventory means they don't have a lot of choice. the vacancy rate is now only 2.5% that is well below the typical average of over 3% these high prices are the new, quote, equilibrium in manhattan. brokers say they don't expect rents to come down for the next six months the top end may move even higher as wealthy buyers stay in rentals until the sale prices move lower nearly one in five luxury rentals in january actually saw bidding wars andrew >> robert, we were talking about just how crazy new york city has become in terms of pricing is this happening everywhere

>> i mean, rents are falling throughout the country broadly and everyone expected manhattan would start to fall. we had this huge run-up in the summer and early fall, and everyone said, well, by january, because we started to see inventory rise and people were not leasing, january we're going to see a decline and it hasn't this is important. even though the rest of the country is seeing a decline, new york is the largest rental market and as we have been talking about housing is a huge component of the cpi so if the largest housing market in the country is not seeing a decline in rents, that's really going to put continued pressure upward on inflation and certainly not going to help it come down. so, this has a big cpi impact as well >> right but what is the -- i still don't really get what the explanation is meaning if rental prices are going down everywhere else except here, who are these -- who are the buyers or renters in this case?

>> in this case, you know, it is a strong job market. some people say that basically because new york was sort of late to the game in every phase of the housing boom and decline throughout the pandemic, we're now seeing prices sort of start to moderate and what is happening is a lot of people are sitting on the sidelines in manhattan, waiting for the sale prices to decline and that's why you're getting not just the normal renters, but otherwise people who would be buyers now becoming renters, and all the new product in manhattan that is being built over the last sort of couple of years is new condos for purchase as opposed to rentals. so you got a whole new cohort of rentals, but no new product that is coming on the market as rentals, so it is really a supply issue right now as opposed to -- and the strong demand, but not a huge increase in demand. and maybe, you know, return to office too, we're seeing in manhattan, especially more and

more people return to the of office, people may say i have to be in the office more, i want to live in manhattan to be close to the office to avoid the long commute. >> robert frank, mr. i know everything about real estate, he does, he really does love it. great seeing you, sir. when we come back, a lot more on "squawk box. senator tom cotton talks china, ukraine, the president's state of the union address, and so much more. and then at the top of the hour, we got more on the big mover of the morning and that is disney tom rogers will be with us to his reaction to last night's h earnings and restructuring announcement you get the best of "squawk box" on the daily podcast follow and listen anytime. "squawk bo cesacafr isx"om bk te

there is a battle over spending unfolds on capitol hill, our next guest makes the case in an op-ed in the "wall street journal" that continuing support of ukraine is good for the u.s., and helps us with our geopolitical standing with china as well. senator tom cotton of arkansas joins us he's a member of the armed services committee, intelligence committee, and thank you for joining us senator, it is good to see you this morning. >> thank you for having me on, joe. appreciate it. >> like so many things nowadays, neither party is really

monolithic on either side of the aisle on this. where do you think the pockets of not wanting to support ukraine reside more at this point, senator on the left or on the right? i think maybe i heard more coming from certain republicans about being very careful carefut backing ukraine or spending too much when we don't spend certain things here even in this country. that their border is more secure than ours. >> joe, we can do two things at once, we can try to stop this war of russian aggression against ukraine and europe, we're also protecting our own border, which joe biden was doing both but it doesn't change the case that it is in the u.s.'s benefit to stop russia it's to protect our own national security interests we've seen time and again throughout history when unprovoked naked wars of

aggression goes unpunished, it only leads to broader wars and i want to see an end to the slaughter in ukraine i think it's important for americans to understand, if we withdraw support, we won't have peace. we'll have what's known as a frozen conflict. that's the way almost every conflict vladimir putin has initiated in the last 20 years has start. have control of most of eastern and southern ukraine rebuild his combat power he'll be able to restart this war at a time and in a manner of his choosing that won't allow us to focus on china as some people say we should it will only create the risks of continuing instability on both fronts in europe and in asia the best solution here is to support ukraine, to back the ukrainian army to the hilt, to have a durable peace and then we can focus more resources in the long run on the graver threat of

the chinese communists. >> no one wants to appease putin. we've seen what it leads to. it's not a good outcome. we have seen both the united states and its european allies tread gingerly on what type of weapons we're willing to offer the fighter jet, they could -- they reside in poland but they can't be trained by the united states they can send them, but i can't go over german air space it's unbelievable that the type of backflips we do to basically app appease putin. but would you be so bellicose to where we could eventually be in some type of global conflict to result from -- you know, if we did escalate too much? shouldn't we consider that >> no, joe we should support ukraine fighting its own war -- >> no matter what? tanks, fighters? >> joe, as i write in my "wall

street journal" op-ed, we can learn something from history here for much of the second half of the 20th century, we were engaged in proxy wars with russia around the world. we supported afghan insurgents for ten years after russia invaded that country russia didn't just arm our enemies in places like korea and vietnam, but killed our soldiers in case did that lead to a broader war. right now, vladimir putin is in no position to be escalating against nato or the united states he's got all he can handle in ukraine. however, if we withdraw our support for ukraine, in time he will be able to rebuild the combat power to take not just what he has in ukraine, but to take the rest of ukraine, thrusting russia deep into the heart of europe, being able to threaten nato countries which we are treaty-bound to support.

as i argue in the op-ed, this is exactly what joe biden did throughout 2021. time after time, whether it was the nord stream 2 pipeline or arms control treaties or not responding to the colonial pipeline hack. joe biden tempted vladimir putin to do what he always wanted to do which was go for the jugular in ukraine it's not a consequence that just a few weeks after the debacle in afghanistan, vladimir putin began mounting an invasion force on the border of ukraine just a few months after barack obama's red line debacle, vladimir putin invaded for ukraine for the first time >> what does this say to china about taiwan and what does the -- you can weigh in on the most recent soap opera that they were singing, how to characterize the balloon, previous balloons, why we didn't do it earlier, how it got in and we didn't hear about it -- what

do you make of that most recent saga >> well, first off, if xi jingping who is watching very closely what's happening in ukraine sees the west and the united states falter after just a year or so, he'll know there's no chance that we will come to protect taiwan should he go for the jugular there. after all, ukraine borders nato, it has long-standing cultural, historic, religious and economic ties to europe taiwan lacks those things. it's important that we stand up to naked aggression in europe so we don't see it in asia. what happened over the last week, you had a spy balloon become a trial balloon testing president biden's resolve and strength, and i think he failed the test if he's not willing to shoot down a spy balloon but let it float through the united states, i think that sends a dangerous signal to xi jingping.

>> how long do you give taiwan some people say -- it's not going to be right away it could be five years this is all setting up sort of a -- maybe a less -- might not have to be an armed conflict that finally brings taiwan back into the fold of china >> well, what you've seen in recent years in taiwan is the taiwanese people watching what happened in hong kong and watching what's happened in mainland china for all major political elements of taiwanese society, there's not going to be any chance that kind of political compromise or outcome, that leads to xi jingping wanting to fulfill his long-standing ambition of invading and annexing the island back to communist china. it could happen as early as next year it could happen in two years i have no doubt he'll want to do that by the end of this term for

him, which is 2027, and the best way for us to avoid that kind of cataclysmic war is to make it clear that we will come to taiwan's aid if china does in fact attack taiwan joe biden has stumbled into that position four times only to immediately reverse himself which is the worst of all possible worlds. you get the provocation towards china, but you don't get the deterrents of china. i think it's important that we be clear that we will not stand by if china tries to invade and annex taiwan. >> senator cotton, thanks. we can talk other issues next time debt ceiling, et cetera, but this was going to be mostly up to korea and china and we kept it in that lane. thank you. when we come back, disney shares soaring overnight after better than expected earnings and plans to restructure the company are unveiled you can see that stock up by 6%.

we're going to get you up to speed on the latest right after this as we head to a break today, let's take a quick check on the futures this morning dow futures up by 214 points s&p futures up by 29 the nasdaq up by 132 quk x"ilbeig"sawbo wl rht back. ? maybe jacob can finally get a job. the house whisperer! this house says use realtor.com to see homes in your budget. you're staying in school, jacob! realtor.com. to each their home.

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good morning stock futures point to a strong open on wall street. you can't discount the effect disney is having that stock soars after bob iger announcing a major restructuring. and how the wealthy are dodging a ban on a certain kind of stock sale we've got the report behind that story. the final hour of "squawk box" begins right now ♪ good morning and welcome 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 u.s. equity futures are up they were up a little bit more early on disney part of that. treasury yields, we did see the ten-year, just below 3.6 it's 3.59. still a big inversion as you can see from the two-year, trying to do the math on that. it's like 80 points at least, isn't it 83 that's 83 basis points that's a lot goldman sachs was out saying it doesn't necessarily mean a recession. i don't know what it means it's one of those things where in the past, it's predicted, you know, 9 out of the last 4 recessions or something they say. let's get to dom chu what are you watching today? >> we'll start with one of the bigger earnings reports of the morning and that's coming from snacks and soft drink giant pepsico. those shares are higher by one

and three quarters percent after it reports better profit and is revenues than consensus estimates. pepsico was helped by its ability to raise product prices. chief financial officer hugh johnson joined "squawk box" this past hour and spoke a little about what they're seeing in terms of the evolving consumer behaviors given some of the economic uncertainty >> the one thing we see a little bit of is, for some consumers, they're moving down in the retail chance. so they may have previous shopped at a premium store and maybe now they're going to a mainstream store maybe from a mainstream store to a dollar or discount store you see a little bit of that behavior going on. >> pepsico boosted its quarterly dividend payment by 10% and will look to buy back a billion dollars of stock by the end of the year shares up 2%. get a check on hilton hotels it is out with quarterly results

that were better on the top than bottom lines shares up two2.75%. hilton seeing some of that travel and leisure momentum still out there. and let's cap things off with a consumer trifecta and a look at shares of mattel which are going in the opposite direction. down 11% right now profits and revenues fell shy of consensus estimates. mattel saying that its shoppers bought fewer toys this season as inflationary pressures on things like food and other consumer stables crimped buying power it fell 22% during the holiday quarter. joe, a big kind of discrepancy there among some of the consumer names. i'll send things back over to you. >> thanks. bob iger answering questions on his first earnings call since retaking the helm as disney ceo late last year

the company beat expectations of both revenue and earnings per share. the biggest news was the reorganization which was announced, the company is now going to have three divisions focused on entertainment, espn and parks and products disney also cutting 3% of its workforce in more than $5 million in costs. >> we're going to take a really hard look at the cost for everything that we make both across television and film because things in the very competitive world have just simply gotten more expensive and that's something that is already under way here in addition, we're going to look at the volume of what we make. >> join us now to talk about disney's shift is tom rogers, engine media executive chairman, former nbc cable president and a

cnbc contributor do you think nelson pelts thinks it's enough, tom >> well, good morning, joe i think he said what he needed to with an activist on his tail in terms of cost cuts and reinstating the dividend i don't think he really said anything in terms of major strategy shifts and i think that will continue to get a lot of scrutiny in terms of whether what he seemed to suggest, which is streaming continues to be the number one priority, they're going to keep espn, they're going to maintain their focus on general entertainment and not be reduced to a kids family fly wheel company and no mention of hulu those are all still major issues and not ones that i saw any particular shift and nelson pelts may take aim and say,

look, you really have to have some kind of shift here. i can't be doing everything, being all things, and still be in a position to take on the massive challenge of declining traditional business which bob iger has said is going to fall off a precipice and no clear indication yet that that decline can be made up for with the growth of streaming. so a lot still to work on. but the divisional internal organization announcement, that was very much the right thing. >> i guess i mean, there's -- those are -- the initiatives that we heard leave all the big decisions still in front of the company, though we don't know how streaming becomes profitable, really, we don't know how much you spend to make it profitable you don't know how much you spend on content you don't know what you're going

to do with espn. i guess you kind of said it. i don't know whether that closes the book you don't know about hulu or anything else. >> yeah, so -- >> there's a lot that we don't know. >> there was a lot unsaid, absolutely in my mind, hulu is a very significant issue for the company. as i've said before on this show, i think the dream scenario which is probably unrealistic given the relationship between the companies is for the two companies to figure out how to make hulu a bigger deal, put more of their streaming resources into that and build it out together rather than one or the other companies buying it. but if that's not going to happen, i've come to believe that disney is stronger without hulu than with hulu. there was no real mention of that and i think that's a key issue that it's going to have to -- >> can we drill down on that idea so you -- it sounds like -- that's where i was going to go with this. it sounds like you're in favor

of them selling hulu, then to me, there's two questions, if you're selling hulu, which -- what part of hulu are you actually selling are you selling what i would describe as hulu the shell, which is literally just the subscribers and some kind of multi-year license to certain types of content that's already on it, i'm thinking of fx and some of the stuff that came over from fox, or are you actually selling part of the content library plus potentially even studios with it? and that's a different game. >> it's complicated. it's further complicated by the fact that a lot of the subs that they have now are bundled subs between the three services, even taking espn and divisionally walling it off from other parts of the company, it is still highly dependent on its growth in terms of bundling with disney+ and hulu

that's clearly a complication. you have to ask, what does hulu do for them that they can't do on their own with disney+? i would assume they would keep the fox library, i would assume that they keep fx. they're going to lose the nbcu programming anyway so why couldn't they build out disney+ into a broader, general entertainment, kids and family service, which is what they're doing internationally. hulu is only a domestic play they're putting star and disney+ together internationally and when you think of what does hulu do for them hulu is very young it's not generally demo-broad the way netflix is disney+ is now -- >> the value of it is, if you take all of those component parts out, i assume you have to do a multi-year license for some of that content. whoever is buying this isn't

wanting to lose all that content overnight. if you think you're a comcast who is going to buy that, and i imagine the argument is, you merge peacock into that. but you have to backfill that with more content because of all the other content that's coming off the platform, i assume, abc and abc news and all of the documentaries and other things get lost there's questions as to what the value of that is >> well, you may be right. in looking at how those pieces pair off, you're not going to get a huge windfall from the sale of hulu, and i don't blame bob at all for not announcing the direction there. he's got a very sensitive negotiation with comcast if you commit yourself at this point publicly to a direction, you're undermining your negotiation position i think you have to ask the question, does levering up considerably and buying up make

sense when you're looking to reduce costs if you can focus all your entertainment activity in one service rather than two, isn't that going to be a great way to create some efficiencies. when you think of what hulu should have been doing in terms of advertising, i pointed out before, that for four quarters in a row, its advertising per sub has declined even though it has had to itself, the premium advertising streaming role before netflix and hbo max and even disney+ announced their advertising plans, this quarter it declined in absolutely ad revenue which is a total head-scratcher to me the only way i can explain that is that they really are pushing back hard on hulu right now because they don't want to drive up performance to drive up value. >> we have an asset that they're

both trying to negotiate for you make it sound like it's not worth much at all to either side >> well, i think -- >> i think that's the dream scenario probably unrealistic given the relationship between the companies. i think hulu has some real value to nbc in terms of the subs it has and the sub fees it has and where it can combine with peacock to drive a streaming presence -- >> the thing that i like about hulu is the virtual cable bundle model which is to say to compete against the likes of youtube tv, but also to potentially create a sort of national network -- to the extent that comcast is located in certain locations do you think there's -- but there's a question, i think, about whether there's money in that long term >> yeah, that's a tough model.

it's a low-model business. the program services are continuing to try to milk the cable channels bundled in there as their linear business declines i think it's also going to be heavily challenged by youtube tv now that youtube has nfl sunday ticket and the packaging they will do with that, i think, will make hulu live's competitive posture even weaker. think of the number of shows that have been on hulu of great quality that get busyness. when you look at the weekly top ten lists coming out through most of 2022, in terms of minutes watched on those top ten list shows, 82% of that minutes watched was netflix. about 1% was hulu. and so you have to think, there's some great shows there, they're not getting promoted enough it's a lot easier to streamline

your promotion all in one service if you really have to think about how you're going to make a more cost-effective streaming business than having that spread over a couple services with that kind of competitive issue that you're already dealing with >> go after disney again, comcast, and -- when was that, tom? was that -- was that 2004? >> because lina khan would think that's going to happen. >> one of the advantages here, they have regulatory approval for a joint venture and a lot of that can be used to build out before i think you hit a place where you're going to be dealing with a new level of regulatory approval and antitrust scrutiny. >> i'm not giving up on this idea >> keeping separate companies --

look, as i said before, i was cochairman of the board of a and e and history for ten years and that was a joint venture between nbc and abc, including when disney owned abc and it was a joint venture that worked terrifically well under the time when the cable business model was at its height and there are ways to do that if you want to cooperate to drive a business together. again, it's probably unrealistic and that's why i default to selling hulu >> not going to be there forever. thanks, tom. make sure to watch david faber's exclusive interview with disney's bob iger at 9:00 a.m. eastern. has anyone talked to him since he came back >> first one it's on squawk of the street. >> we're going to speak with a

reporter showing how the ultra wealthy how to turned equity losses into money. this is "squawk box.

coming up, former federal reserve vice chairman roger ferguson joins us. next, the story of how america's ultra rich sidestep a century old rule to lock in market losses and save themselves billions of dollars. remember the scaedaso-ll wh sale laws talk about that. "squawk box" coming right back >> announcer: this is cnbc program is sponsored by baird. visit bairddifference.com. prizefighter... ...meets trailblazer. ♪ ♪ classic meets modern. ♪ at morgan stanley, we may seem like a contradiction...and we are. ♪

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welcome back to "squawk box. some of the richest people in america are saving nine figures or more in tax payments by skirting a century old law against what are known as wash sales. selling shares of a company and buying them again in a very short period of time it flags members like steve bomber and mark zuckerberg and also the mega bank goldman sachs who helped effectuate some of these trades paul joins us on the set to explain it let's -- as they say, tell it to me like i'm 5 years old. what happened here >> sure. i think the easiest way to think about is it, to go back a 100

years ago, you could sell your stock, and buy it back it's a strategy that went viral in 1920 when the market was down and so congress said, no, you can't do that. that's too easy to collect that loss flash forward to the present date, investing has changed a lot since 1920 this is a law that actually had bite even going back to the 1990s. essentially the shift that happened -- it's toothless now it's easy to get around for anyone who is reasonably sophisticated. investing has changed. you can follow indecixes. there's a lot of way to get the same exposure without getting the exact same position again. and that has led to all sorts of products springing up, particularly something called direct indexing. you can own a pod of stocks, tracking the s&p, and then asset managers, iconic capital is

another place, they handle the facebook guys, zuckerberg, they have set up these products that are just serving up tax losses to their clients and no one -- this is not a secret this is like a popular product it's in the hundreds of billions of dollars -- >> here's the question, though -- >> it tracks what you're selling. it tracks whatever it is and -- >> there's two issues here, one is, with steve ballmer in particular, he was buying, for example, one class of shares of shell, for example, and then buying another class of share of shell afterwards. >> yes let's start there. because that's the same company. >> right >> is that illegal >> so the only thing that is legal is same stock, same account, right that's what it is. that's all that is enforced. >> from a tax -- then the question becomes, from a tax

policy perspective, if you're the government, the irs, do we believe that class "a" shares are the same as class "b" shares that's the most obvious version of this. >> when we noticed this, when i saw, hey, steve ballmer is buying shell, selling shell, that seems like the same thing they're different classes. we brought this to goldman sachs and said, hey, we're seeing hundreds of these types of trades it's not just shell. it's other companies and they said basically, whoops, we didn't mean to be doing that. this goes back ten years they told us, they're notifying clients, they're unwinding these trades steve ballmer said he's going to amend his taxes. >> that's one version. the more complicated question is, let's say you're buying this basket that we think closely tracks another basket. but the baskets are

fundamentally different stocks, right? >> yeah. this one might have microsoft in it this one might have alphabet in it if you mix them up with a couple other things, they have tracked each other relatively similarly. >> right. >> are they really different or not? >> right. >> and, therefore, if you are sitting atop the irs, sitting at -- something else -- >> it's going to be hard. >> should those positions be allowed to do what you're describing -- >> they said, it's a perfect inrun around the law as it is written right now. it's very easy to get around and so these products, you know -- if you pay attention to what you're doing, the only people who run afoul are going to be retail investors who don't know how to do it. >> it must be done all the time. >> and the products say to people like steve ballmer who are in these direct indexing funds, we track this perfectly, basically. you're going to be able to

follow the s&p up while we spit out tax losses for you on paper you're getting wealthier, but you get tax losses. >> is the point to embarrass these companies and investors to stop doing this, or get the ieirs to change the laws >> it's a part of the system that a lot of people don't realize. investment gains is the easiest part of the tax system the basic thing, you have gains, you don't sell, you don't pay taxes on them. when you do sell, you pay a lower tax rate and on on of that, the products can shave off your gains -- >> it's an argument for a much simpler tax code as long as you have ways around complicated tax codes, you're going to have firm who is are advising people -- >> right there's all these rules around the way that we tax investment gains. >> i can't imagine anybody who doesn't have a lot of money who doesn't do this. >> right it's a big business.

it's something that is spread out into the retail market. >> here's a policy question. if you could rewrite the policy -- >> i don't know how you would do it. >> you would simplify it so you can get tax losses. >> the perfect -- actually, there is part of our tax code that works for this. ken griffin who is a hedge fund, you're investments are up, you're taxed on those, your investments are down, those are los losses for you it's automatic you don't have to do anything. hedge funds choose to be taxed this way. >> but that's taxing unrealized gains at times and that seems crazy because only guys who have a lot of money where they have years where they have big losses and years that they have big gains that they can take it off against, that matters. if you're a regular investor and that gets to unrealized gains, i'm never going to have years where i make that much money and i can take it off the top again. to me is the crazy part about taxing unrealized gains.

>> it's a policy question. biden has a proposal to deal with this where he treats it as a minimum tax. you have to have assets at a certain level and over time -- >> you could could have sold bitcoin and bought ether -- >> but those are two separate things >> highly, highly, highly correlated where do you stop? >> it's a complicated tax code simplify so -- >> we're going to have breaking news very shortly. we're going to run out of time president biden talking about his 15% minimum tax on both individuals and corporations is there a way to do it so that you're not taxing unrealized gains or some kind of threshold, multiple threshold, you need to have "x" in assets, you need to have "x" loans, you've written about how people use their assets to take loans to live i would love to have you back, actually, because we don't have enough time to do this to sort of think through -- >> never gets tired of trying to

figure out higher taxes. fair taxes to the extent -- >> you're using the fair word. >> come up with a system that the american public believes in. that we can all agree that the american public believes that there is something wrong with the system. >> 80,000 more guys -- >> please come back. this is just the first of many. >> you can use the 80,000 to find every person that does something like that. great idea. >> are you available tomorrow morning? >> sure. once we get the money, we're going to spend it so well. it's going to be -- >> that's a different conversation all of your problems are going to be solved. >> we'll have you back to discuss this more. rick santelli is standing by rick, take it way. >> this data is a lot more complicated than the tax code, that's for sure. the week ending february 4th, 196,000, 196,000, that is a bit higher than expectations that's actually the highest

level of initial claims since the very first week of the year when it was 206,000. if we look at continuing claims for the week of january 2nd, 1 million, 688,000, above expectations, above the slightly revised 1,650,000 in the rearview mirror and that actually is the highest level since christmas week, the third week of december of last year. as you look at interest rates, you can see that for the most part, they aren't responding to these numbers much, you can actually say yields are starting to slip a little bit as we hover right around 357, 358. preopening equities have lifted just a little bit off that number so the fact that it's a bit higher on continuing claims and even a smidge higher on initial might be considered good news if you're a fed watcher what a great conversation you guys are having about the tax code the behee myth monster created by congress that congress doesn't like, back to you becky.

>> thank you, rick we will see you soon when we come back, we'll have more reaction to the jobless claims data and some new ceo insights that you don't want to miss we have former fed vice chairman, roger ferguson, he has the resultofs a new survey and we'll talk to you right after the break. "squawk box" will be right back. rail vision is at the forefront of an evolution in train safety. using advanced sensors, ai and big data technologies rail vision is taking rail into the future, making it safer and more efficient, reducing railway accidents and

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welcome back to "squawk box" on cnbc. futures right now back close to their best levels of the session. 236 points disney helping the dow, s&p up 33 and the nasdaq getting back quite a bit of yesterday's bigger than relative loss that we saw there there's the ten-year, 3.58 two-year, 4.41 we heard from rick already it hasn't really moved anything that much at this point. jamie dimon says it's too early to call the war on inflation over in an interview with reuters, the jp morgan ceo said the federal reserve could hike rates above 5%

referring to recent inflation data, dimon said people should take a deep breath on this one before they declare victory. we have some new data out today on how ceos feel about the economy. corporate chiefs felt better about economic conditions at the start of the first quarter however, you got to look deep to make sure that you see the silver timelining there joining us now, roger ferguson he's the survey vice chairman of the business council and a cnbc contributor. roger, the good news is, only 93% of ceos think that they're going to see a recession happen in the next 12 to 18 months. believe it or not, that's better information. what were we looking at the last time we did this survey? >> thanks, becky the last time we looked at the survey, it was 98%

it's a moderately improved view. very importantly, out at the other end, those who think we might have a deep recession, the last time we surveyed 13%, thought that was a possibility that's now down to 5%. so i would argue overall this is a less pessimistic set of ceos right now but not moving into optimistic territory. >> the good news is, the majority of them think this will be a shallow recession even if one does come in the next 12 to 18 months. >> absolutely true they think it will be a shallow recession. they also see some easing in some areas of cost pressure, particularly in transportation and energy which is consistent with other stories still, they see very, very tight labor markets. they are expecting to have to increase wages by about 3% what's very interesting in that number, though, is those who thought they would increase wages over at 5% is much lower

now and so i think the wage pressure while still there may also be easing up just marginally so i think less pessimistic. but i think they're managing through this reasonably well. >> that may be the key that's what the fed is watching so closely right now the strength of the labor market we saw that with the better than anticipated jobs number and everyone started thinking this is great news for the workers and the economy. it may mean that they're going to have to raise rates to keep them there higher for longer are you in that camp, roger. >> look, i've always believed that the fed is going to get the so-called terminal rate over 5%. i think the incoming data is consistent with that i think chair powell's statement most recently are consistent with one, probably two 25-basis point hikes. i also think that they'll keep the rates higher for longer than the market currently expects and the market was expecting some

easing of rates toward the end of this year i think that's becoming less likely but, you know, i think that's not new news i think it's just the market catching up with where the fed has been for a period of time. >> so do you fall in jamie dimon's camp too we just read what he had to say, if these high prices, if they stay sticky, you're going to look at more rate hikes, he said people should be taking a deep breath on this one >> i think that's always the case the numbers move around quite a bit. and as we've talked about in the past, i think markets are really hungering for anything that suggests that the feed is going to ease and i think markets tend to be overreacting to the numbers that look as though they're inflation friendly and underweighting the numbers that suggest labor markets are tight and the fed has some work to do. so i think i would -- broadly speaking be in jamie's camp, too

early to declare victory and i think jay powell said something like that. >> i have to say after being out in davos and talking to a lot of ceos in different industries, being at pebble beach and talking to a bunch of ceos there, it really feels like most ceos are concerned about the broader economy, but most of them feel pretty good about their own businesses is that what you heard too >> absolutely. so noticeably, we saw that the expectations going forward have moved very positive. when we asked them about the likely economic outlook over the next six months, the last time around, 74% of them said think expect things to work. in this survey, that number went down to 48%. so i think it's fair to say the majority of them are feeling much better and they think things will be improving they think that about the

overall economy, they're more confident in their own industry sectors. >> so if you had to look back just in your time of doing not only the survey but also in talking to lots of ceos and talking to a lot of businesses out there, small businesses when you were at the fed, what does this time feel like to you can you compare it to a past time in history. >> it feels as though we're in for sort of moderate group, maybe a slight recession it's not as posessimistic as it has been in the past when you look at the survey itself, i think we're seeing some glimmers of moving in a more positive recession. maybe we dodge one altogether is becoming more and more likely. i think the issue is how the consumers hold up because we're such a consumer-driven economy, and there i think we're seeing

some concerns because the amount of money that consumers have left in their checking accounts has been declining obviously inflation is taking a bite out of the paycheck but on the other hand, you know, job markets are still very, very tight. it feels like a close balance versus history nor are we necessarily sinking i think we're going to skirt a softish economy, maybe a slight recession. but things will, i'm sure, a high degree of confidence will be better a year from now than they are today. >> roger, thanks for your time good to see you. another activist reported involved in salesforce this morning. dan loeb's plans are unclear he's the fifth known activist shareholder to jump into shares of salesforce. a number of them calling for marc benioff to tighten things

up from an efficiency perspective and likely bring down the staffing levels which remain i think right now they're about 71,000 people. that's down from 80,000 people however, prepandemic, i think the employment picture was closer to 50,000 people. so if in fact you were trying to get your employment picture to look like a prepandemic number, that would be a lot of people who would be losing their jobs coming up, jim cramer's first take on the trading day ahead. take a look at futures right now, dow up 230 points nasdaq up 160 points s&p 500 up 33 points bob iger is going to be coming up on "squawk on the street" and a reminder that you can get the best of "squawk box" in our daily podcast. you can follow squawk pod on your favorite app and listen any time we're coming right back.

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jim cramer joins us now. faber is not around. >> he's going i think bringing home the best story there is right now which is how iger pulled this off.

it's a remarkable story. >> so we were talking about -- these were sort of things that i think we could have predicted to some extent. some rationalization and maybe it was bloated and maybe restructure some things. i don't know about the dividend. but what about the big pressing issues what do you do -- how do you make disney+ profitable sooner what do you do with advertising, espn, and hulu we don't know any of those things. >> no, we don't. particularly hulu. but we do know that with iger on board, he'll look at the fox inventory and decide how to monetize that much better. that had not been monetized well and that could help disney+. the stand-alone sports move is one that people find quizcal

the people were let go, that's a very big restructuring gimmee. i don't know i obviously hate it when anyone gets fired, but, joe, i think he's going to bring back the magic so to speak, and i was thrilled with what he did. just thrilled. it was fantastic >> what does -- if you were running it, jim, what would -- how would you see the future of the media conglomerate what do you put your biggest bets on? >> well, i think that you have to be -- beat disney+. they don't need to bundle. i know the regular broadcast businesses did do better i think that was a rare spike frankly. but disney+ is a winner. if i were bob iger, i would be trying to figure out how to get more theme parks theme parks numbers were extraordinary. people are traveling they believe life is too short they're going to disney world

and bob has a good hand here that was obscured by management and couldn't shoot straight. >> you could split all of these companies off. they got -- but you think that it works, you think that you got the theme parks, you have the animated movies, you "avatar" part of the theme park goes down. you think it does make sense -- why espn how do you figure that into how it fits in with everything, synergistically? >> well, thag that's the toughest one, but live sports has demonstrated remarkable staying power. this year, live sports really did phenomenally i think that they, obviously, have great characters that are long-lasting, something say, for instance, that netflix doesn't have it is a cost control situation they were not making nearly as much on the revs as netflix has, and i think bob's going to change that. >> there's a conglomerate with nothing that makes sense, and

then there's something where everything -- you know, pepsi with salty snacks. >> where's jim on hulu what do you want to do >> well, look, i think hulu is a great brand. i don't think that disney's balance sheet is -- when you listen to bob, with this restructuring, if it works, there will be no -- look, if comcast wants it, that's fine. if bob wants it, i think bob's balance sheet is going to be much better than we think. he's making real changes here, and if he saves all this money, they're going to be not fortress but pretty good. i think it's up in the air they didn't address it at all. i felt, andrew, that was the biggest question mark on the call >> all right, jim, thanks. we will see you. >> that's it i was enjoying that. 00 see you and david right at 9: we'll be right back with what you need to watch ahead of the opening bell on wall street.

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welcome back, everybody. a programming note for you charlie munger, berkshire hathaway's vice chair, also an investor and board member at the daily journal corporation is going to be speaking at that company's annual shareholder meeting, streaming exclusively on cnbc.com next week, february 15th, at 1:00 p.m. eastern time. and guess what

you can ask mr. munger questions too. if you are interested, just send an email to dailyjournalquestions@cnbc.com we will ask as many of those questions as we can. he recently wrote an op-ed at cryptocurrency that was pretty interesting. charlie's had a lot of takes on a lot of different things, but this is your chance to ask questions too. just go ahead and send them into that address >> never one to hold back, mr. munger our next guest says we are in economic purgatory. i want to bring in emily rollins. i know what the word "purgatory" means, but explain it. >> well, it means we're essentially stuck in a late cycle environment. on one hand, you have this blowout jobs report last week. you've got initial claims coming in still under 200,000 this morning. the ism services data, huge bounce last week, but you have the leading data suggesting that a recession is imminent.

we look at the conference board's leading economic index, negative 6%. we've never not had a recession with a reading this depressed. you look at the ism index of new orders, 42 yield curve inverted to the tune this morning of 83 basis points on 210, so the path to a soft landing, in our opinion, becomes more narrow in this environment where the fed's got the pressure on now, given the hot labor market, but at the same time, the leading indicator suggests this is not going to end well. so, i think the path, again, is more narrow and narrow as we go in terms of the soft landing >> okay, so, if we're in this narrow -- if you have this sort of narrow window, path, whatever we want to describe it as, what do you do about it, as an investor >> well, i think, you know, markets are just acting like there's absolutely nothing wrong, and we've seen this rally that's really been based on a shifting sentiment, a change in positioning. you know, you've seen a weaker dollar, looser financial

conditions really help this rally and risk assets, and you have seen, because of it, the s&p 500 is now reset or trading at about 18.5 times forward earnings now as prices go up and earnings estimates go down so, we want to be really mindful and thoughtful about managing risk in this environment if we were to put money to work right now, we would be kind of trimming strength into these more cyclical, more speculative pockets of the market and looking at higher quality, more defensive assets, companies that have great balance sheets, lots of cash, more durable profitability, and a limited need to tap the capital markets in order to grow we'd also be looking at plain old boring bonds right now we look at the back-up in bond yields as being really competitive in terms of the type of income that investors can earn, and it's a compelling opportunity, given what should be a more challenging macroeconomic environment. >> we had ray on last week, and he said, cash is king. you talked about bonds just now and some of these equities

if you had cash, would you just hang out and wait for some kind of moment, or do you think that's a fool's errand >> yeah, i mean, i don't think cash is the most efficient asset class right now, especially because the biggest alternative to cash, in my opinion, is bonds, and the fact that right now, you can go out the curve into the intermediate part of the curve and earn an income of close to 4%, to me, is really compelling our view is that the entire yield curve shifts down over the course of 2023 in anticipation of a global recession, and in that environment, whatever return that you're earning on the short end of the curve simply goes away and has to be reinvested at a much lower level a year from now. so, i think investors can really get paid to really embrace intermediate core, core-plus type strategies in this environment. >> emily, i want to thank you for joining us this morning. we'll see what to do with all that cash or maybe you'll turn the cash into some equities and

some bonds thanks again >> thank you all right, let's take a final check on the markets if you're watching the futures this morning, we have been in pretty strong territory all morning long dow futures are up more than 250 points the s&p futures, up by about 36. the nasdaq, up by 177. part of those gains, at least for the dow, coming from disney, and you're going to hear more with david faber sitting down. >> super excited to hear about this >> this is something you want to pay attention to very quickly, let's take a look at what's been happening with the ten-year there's disney it's up for about 5.9% of this >> you know who's going to be watching this interview very intently >> who >> nelson peltz. >> nelson spoke with "squawk on the street" crew earlier and talked about it, so now you get a chance to hear from mr. iger himself. we've been watching the ten-year, 3.582% the two-year, still well above

4.4% at 4.432% oil prices, which had come down a little bit, but you're still talking about $77.78 we will all be back here tomorrow with you. but right now, we're going to hand things over to "squawk on the street." we'll see you later. bye-bye. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange david faber is at disney studios in burbank his exclusive with bob iger is coming up in a couple minutes. meantime, futures pretty resilient here as yields back off a little bit, and some decent corporate results, especially in consumer, pepsi, hilton, sonos tapestry, all higher, premarket. let's begin with disney. up sharply in the premarket after announcing thi