i want to take a final check on the markets on the day after the super bowl right now, we're looking at the markets down, dow off about 17 points it was sort of hovering around there for a while. nasdaq up about 38 points. there you have it. i think. >> march madness >> that's the end of it. now we're into march madness >> something to look forward to. >> nba there's a lot of stuff going on. join us tomorrow "squawk on the street" begins right throw. ♪ good monday, welcome to "squawk on the street. jim cramer has the morning off premarket pretty steady ahead of the big event of the week. je yields do continue to creep higher our road map begins with national security mystery, the

u.s. now shooting down three unidentified flying objects since friday, but details remain thin plus, apple shares are moving higher ahead of the open. the stock is up more than 16% so far this year, and that has outperformed the nasdaq. and the super bowl's legalized gambling boom, the american gambling association predicting more than 50 million people bet about $16 billion on the big game thinking about jim today and that eagles loss we'll start with the markets, though, as we kick off a new trading week lot of discussion over the weekend about, is the market making sort of same mistake that it made last summer, counting on a fed pivot that at least morgan stanley thinks is not coming soon >> that seems to be the crux of the debate stock market has been acting all year as if, okay, we got the soft landing scenario coming into view the that would imply inflation taking care of itself, and that's last year's problem and then the fed, it's not pivoting and i don't think the stock market required the fed to get

cutting but getting to the end of what the fed's going to do. and on the other side, the kind of, no, this is a slide that can't be reversed into recession, and we're not going to get any relief on the economic front both of those are challenged right now by this idea that the economy's holding up better, yields are going higher, maybe inflation could be stickier and it essentially becomes the, as it's being called, the no-landing scenario. mike wilson is basically saying, look, in anything that we have in front of us, earnings are going to be challenged and so he's been calling for an earnings recession for quite a long time, and now he's basically saying, you're not going to get the fed's help. the most bullish people out there are bullish because of what the market itself has been doing. they're bullish because of the internal readings of the strength and the breadth of this rally and a lot of momentum triggers and saying, maybe the market's sniffing out a good scenario, whereas bearish people are saying, we never had a yield curve this inverted without

getting to a recession not too far away, and the fed hasn't really given you a green light it's just moderated its tone by the way, last week probably felt like worse than a 1.5% decline in the s&p we're only 2% off the highs from a couple weeks ago on the s&p so it's very much in the normal pullback zone, but i think that nerves are pretty raw because nobody's -- has high conviction this can last but also, if you're bearish, you feel you're already behind market's up 6.5% so far this year >> you know, what you said about last week feels right to me as well just people seem to be taking it hard, those people being, i guess, a lot of the hedge fund managers that i speak to, whether it was alphabet's decline or disney after the earnings print being up 8% and then ending the trading day down i don't know if there's anything else in terms of sentiment last week, mike, that caught your

attention, but i felt like it was worse than a down as what you said, what, 1% week. >> i think alphabet just dismantling was a little bit hard to take, not because it was such a consensus long, but just the idea that you could sweep that much market cap away. >> $165 billion in two days. >> exactly >> i think also, all the stuff that really worked well in january did retrace lower, so a lot of the speculative stuff just felt like it was hard to catch. also, we're conditioned now. we get a rally that pauses, and we're not used to just, oh, normal, sideway, we'll chop lower and have a regular pullback three or four times since the peak of the market, you didn't really have time to reposition that smoothly before it fell away and you were threatening new lows so, i think that part of it is just that muscle memory as well. >> i know you've been looking at the spread the premium spread between microsoft and google, which, according to bank of america

today, hasn't been this wide since the advent of alphabet >> that's right. since alphabet came public in '04, first of all, it was a younger, faster-growing company, super premium valuation, but right now, we got 11 multiple points or something like that. alphabet is -- maybe the earnings are coming down, the projections for alphabet, but at this point, it's basically 18 times its -- you don't even have to net out the cash and you get to a market multiple for alphabet, whereas microsoft, and again, it's microsoft and apple that have just retained this safety bed now, i think microsoft now is a fundamental story behind it where people think they have the advantage here and what comes next and they have maybe some margin to gain because they're attacking it in search for google, but it is fascinating to actually have, after meta became the value play in internet and communication services late last year, alphabet's, you know, kind of sagging in that direction but i think it's a tough call,

because meta didn't stop when it got to a market multiple it got super cheap and washed out, and i think you have to weigh all that together. >> meantime, "ft" has this piece talking to meta employees that argues that more cuts are expected in march, as the decisions from the november cuts start to filter through hr a big part of the theory there, in terms of tech head count, is that tech companies had to make assumptions about attrition down the road that actually didn't come true. >> it's pretty fascinating, yeah, because they built their expectations on super tight labor market, highly mobile workforce, and -- >> we're going to lose some of these people >> we know that, you know, people get to two and three years, they get a better offer, whatever it is, so they ended up with a lot more people staying they're doing the same piece of hiring built on those assumptions and so gentyes, it' formula for a lot of the big companies to find themselves even more overstaffed than they thought. we keep talking about it

it doesn't really budge the macro labor picture that much at this point maybe there's kind of a lag there because people don't just rush out and apply for unemployment insurance if you have severance and things like that, but it is amazing. i think the thing about meta is, its fate on wall street was completely in its own hands, if they just sent the message, we're cutting spending, we're going to chop away at head count, that pleased investors. >> efficiency, efficiency, efficiency >> a year of efficiency. >> that was the endless mantra from mr. zuckerberg in the last call, and it worked. i'm not sure that elon musk has been saying the same word, but somehow that seems to have worked pretty well for him as well, backed off just a bit, but we were at new recent highs certainly all last week, mike, up 60% for the year is tesla >> amazing it did back off friday, so we'll see if maybe as it got to th that 200 level

what's also amazing is it accounts for a tremendous percentage of the retail trading activity that's gone on. you have had this little bit of a burst of small trader excitement again this year, so the options volumes, all the things that we got used to in late 2020 and 2021 are being funneled to a disproportionate degree into tesla. you could take that as, okay, they turned the machines back on again and maybe the stock can regain more of what it had lost or, this is just, here we go again and it's not the smartest money that's running into this stock, especially based on the fact that not much has really changed. i grant that it got beaten up pretty well last year. >> it did. >> for all the reasons we know and there seems is to be some stabilization on the fundamental front there but also with twitter, people not thinking there was somehow another immediate shoe to drop in terms of the finances there. >> we did get that picture of musk and murdoch at the game last night, super bowl lvii, as you know by now the kansas city

chiefs won their second nfl championship in four years, defeating the philadelphia eagles 38-35 on this field goal with eight seconds left in regulation chiefs qb patrick mahomes, the g game's mvp you had rihanna, the billionaire superstar confirming she is pregnant with her second child we can talk about the holding call on bradbury or the nfl's prowess in an increasing fragmented media market. >> completely on display in terms of the size of the production and the, you know, the obviously, the ad demand we knew going in, and it's kind of fascinating that what people said about the game ended up being true in the sense it was going to be close, and so theoretically, you probably -- i haven't seen the minute-to-minute ratings, but in theory, people would have stuck around the entire time hard to argue with it being anything other than a business success along the lines of what

you would have thought >> the nfl is the post powerful sports league in our country always brings me back to sports rights and the interview with bob iger from disney and the future of espn and what they're going to be willing to pay they're locked up on their nfl deal for ten years, but others as well, and other leagues, which perhaps are not in quite as advantageous position to charge nearly as much. it was a good game too you don't always get that. i'm kind of sad we got to keep watching that play i mean, they had four seconds left it wasn't like there was going to be anything to do there obviously, it was the series prior to that in which kansas city was able to move down the field choosing not to take the touchdown and leave any time, really, left for the eagles to do anything. >> and a little controversy. one team thinking they got robbed, it's always good to have the game live for a few days after it's over. what did you think of fox

advertising tubi >> we were at a big party, thinking somebody hit something. it was clever. the ads were interesting they're trying to make it happen i was going through some of the advertisers. we have that list last year if you had shorted that bucket of sch super bowl advertisers, you would have been very happy you couldn't start shares of ftx, but -- >> no doubt. although last year was a lot more upstarts. it seemed like it was a lot more kind of newly flush companies that were -- >> it was reflective of a period in which cash was still extraordinarily cheap. >> carvana >> so many companies were willing to spend it on a 30-second ad at the super bowl not the case as much this year with more typical names that we expect to see. >> or some 60-second ads t-mobile like disney. slate gives this bud light ad some high marks just for being genuine and easy to understand

miles teller dancing with his wife as they're on hold. i think they also liked crown royal with dave grohl talking about how great canada is. others, though, they argue, just didn't work, either too complex. i think the doritos elton john, jack harlow, i thought, worked >> the triangle thing. absolutely >> but maybe not as ambitious thematically as we had last year >> right >> we just showed the stock performance of those companies that -- or valuation results since then to me, it was those companies that their biggest cost is customer acquisition cost and they have all this pile of money to get them and they say, how could we not get in front of a hundred million people and pay a few million bucks for 30 seconds? >> we should point out, shares of carvana, though, mike, have been amongst that group that have moved up dramatically over the last couple weeks, showing the signs once again of a little bit of speculation in this market >> yes things that were priced for, you

know, decline or demise. >> t-mobile, the only stock that performed well over the course of last year that was an advertiser again this year i don't remember seeing verizon or at&t, despite the fact they are such huge advertisers during the nfl season t-mobile was kind of alone there with bradley cooper. >> i would argue, maybe, other big marketers, mcdonald's, for example, domino's, things like that maybe not as much you might have thought. we'll see. inflation on ticket prices and ads, 30-second ads, just unstoppable. >> the other macro theme to pull out of it, every, you know, legacy car maker had, i think, an ad for their evs. >> you saw the ram truck i think we have some video of thaem. >> you had chevy with will ferrell, i believe and jeep >> yeah. by the way, we're expecting some news out of ford today, perhaps what they're expected to announce this $3.5 billion

lithium ion phosphate battery plant in michigan, which is interesting because of the technological transition we're in but also it's a partnership with the chinese company at a time where these flying objects have been such a political hot point. some reports suggested this would be subject to review it's going to be interesting to see how much of that political tone starts to collide with real business decisions >> yeah, and the limited access that anybody has to these resources, battery resources when we come back, as you know, a big night for super bowl betting. take a look at the futures here. david mentions disney. we have a resumption from jpmorgan we'll talk about sell-side calls including zillow group, downgrade of cat, muted emkepiure. don't go anywhere. this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat.

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super bowl betting resulting in a record-setting night for sports books contessa brewer is here. not unexpected that we would get a lot of volume. >> we had more states than ever legalizing sports betting, so that's one it's becoming more common. we're seeing more ads, but over the busy super bowl weekend, 100 million sports betting transactions nationwide, up 25% from last year and they work with the sports betting operators to confirm the

physical location of gamblers, and glendale, arizona, the company verified 100,000 transactions in and around state farm stadium yesterday look at that action. first-time betters, it's the first time they have been able to bet legally on the super bowl from the super bowl. fan duel tells me at its peak it was taking in 50,000 bets per second and averaged 2 million active on the platform throughout the game. even in nevada, which is the nation's most mature sports bettin betting state, it took in a half million bet on the chiefs to win $525,000 so, half a million dollars to win $25,000, essentially that's a confident better, right? how about this player in new york who plunked down

$1.2 million bet on live, over 62.5 be caesar's and of course won. draftkings has opened betting for next year, as have the other sports books draftkings, chiefs, six to one odds that's the favorite. >> they open at six to one for next year. >> yeah. it was fun all the prop bets. did you see rihanna? she just wore red. i didn't see any prop bets, is she going to come out and announce she's pregnant again. there was the octopus. you know the octopus where hertz makes the touchdown and then he has the conversion that was, like, 1,400. >> i was going to say, a close game with lead changes, you would think it creates more in-game betting volume >> i mean, that's the whole thing. if you look at 2 million active users, people who are on fan duel while the game is going on, making bets, that's a lot of people who are very engaged in not just the game but in the odds of the game by the way, that's another

reason why lag time, when you're watching streaming, matters. if it's a 60-second delay, you're not seeing the action in enough time to go forward and make your bets watch for movement on that in the years to come for super bowl >> are we getting draftkings earnings this week >> yes, friday well, thursday, they're going to announce after the bell. friday morning is the call we did talk to jason robins in phoenix. it's a switch from how they've done it in the past. but i think it's going to be really interesting, given the gauntlet that has been thrown down caesar's nearly profitable in its interactive business, penn announced profit bability. we haven't heard from fan duel how their seed is going. >> you wonder, as time goes on, the convergence of sports betting and streaming of sports and the sports rights, i do wonder sometimes again, having espn on the brain, but just in general, you know, at what point you see total convergence because they are so aligned. >> you watch, tap, bet

>> there's economic interest between them i mean, not with the disney, obviously, because they can't really go down that road in a full way, but you do wonder. >> that's why fan duel went down this path of buying the horse-racing channel, tv g, and turned it into fan duel tv bally's owns a regional sports network now. this convergence between media and sports gambling is going to become more and more entrenched. >> another conversation in which macao is like, oh yeah, china's opening. >> the biggest gambling destination in the world and we haven't even brought it up on this monday morning. >> biggest gain for us over the weekend. thanks, contessa when we come back, we'll talk goldman and job cuts, some reporting about the company and their view of how head count should be reduced. take a look at futures here. opening bell in less than ten minutes. interesting piece.

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coming off the biggest weekly pullback for the s&p since mid-december as the market begins to wring its hands a bit about cpi tomorrow and maybe retail sales later in the week, but for the time being, some of the premarket gainers, meta on some of those reports that more cuts may be coming, got an upgrade of ralph as well we mentioned microsoft and the premium it's getting to google opening bell just a few minutes away

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. "ft" today reporting that goldman's chief has some layoff grets, not about the cuts but about how soon the firm started cutting. in a private meeting in miami, solomon reportedly said he was too slow in reducing the bank's workforce, even as signs of headwinds began to emerge. "as the environment was growing more complicated in q2 of last

year, every bone in my body believed we should be more aggressive in slowing hiring and reducing head count. >> it's a dilemma that a lot of ceos have felt how much do we want to extrapolate the immediate slowdown it also fits with something that david solomon has said before, said in interviews with us, which is that they held off on the usual culling of 5% or whatever of lower performers in recent years so, with covid, with the pandemic, they were trying to retain people. they were not going to do more routine annual trimming of payrolls, and maybe that also fees into this idea that they found themselves overstaffed, stretched a bit in the consumer side as well, but it's always a tough trick. i mean, when deal volumes go down, investment bankers immediately become expensive overhead >> they do of course, the -- otherwise, it's an incredible margin of business when things are really

good solomon has been more negative in terms of prospects for the economy. that may have moderated a bit, but certainly during the course of last year, he was more likely to see a recession, then, for example, the chief economist at the firm was the consumer business is really where you hear a lot of investors sort of settle right now and kind of question, and just, you know, was it smart to have doubled down after blank fine could you have changed course to a certain extent where do we stand right now in terms of what we're spending and whether there is going to be a serious return that's generated? >> unwiding markets, essentially, and using this new acquisition of green sky as kind of the core of the new consumer business >> lot of questions, how ambitious they want to be. >> "the ft" points out he used a big piece of his prepared remarks to reassure shareholders and by the way, goldman cut its

forward recession odds from 35 to 25. >> that'sright yes. the economy strategy team has been much more in that direction, believing no landing, really >> let's get the opening bell. at the big board, it's chart industries, manufacturer of engineering equipment for energy and biomedical at the nasdaq, fast innovation, a platform collecting fashion and entrepreneurs. that reminds us of ralph lauren today. b of a ups to buy. meanwhile, cowen puts capri, a bit of a mixed picture in retail given questions about the consumer and disparate outcomes regarding inventory >> i think the ralph lauren call is a bit of a quality operator, well positioned, looks like they're past some of the tough stuff. it's not a table pounder about some real change of trajectory for the business but it's like,

you stick with the better operators. huge questions you see some stocks like tapestry, making new highs consistently recently, so some of the branded goods companies were doing well, but nobody, i think is very confident about a macro call you're not likely to see re-acceleration in consumer, even if wage growth is still here and nobody's fallen apart yet. >> although, one of the arguments lately has been the january jobs print was fueled by warm weather, for example. i've seen some estimates that it added a hundred k, and as a result, retail sales on wednesday could come in hot, as well as cpi. >> it was real activity, even if you can't necessarily say that's the new run rate >> absolutely. i think we're in a mode now of clenching up in advance of potential hot numbers. both cpi, it seems like, even mike wilson at morgan stanley says, well, all clients seem to think it's going to surprise to the high side at this point. a lot of the tracking numbers of inflation suggest cpi is going

to bump higher than the published forecast but i agree on the spending side of things also you're hearing about, cost of living adjustments and social security checks running through. that's probably going to get spent. so, it's interesting that there are these offsets in this economy where you would say, you know, the consumer has plenty to do and even the ramp in consumer credit balances. some people are laalarmed by th, but it gets them right to the trend. >> apollo with some charts over the weekend, basically arguing what "the journal" said yesterday, no landing, home-buying traffic, inflation expectations, ceo confidence i know diana did a piece this morning about how realtors are getting more calls than they did a few months ago >> it was an interesting test. you go down one percentage point in mortgage rates from the high, and it seemed like it refreshed demand, at least for a little bit. so, now, yields going back up, we'll see if you have a little bit of the turn of the dial in the other direction. i mean, you're back to 3.74% on

the ten-year, 3.4 held has a low several times. the argument is, if we're going to have to deal with a little more on the rate side, that could be the thing that keeps both the real economy and the markets in check for a bit >> the trade that we've talked about a number of times, guys, continues, with microsoft up another 2% right at the $2 trillion mark that's a market cap level i don't recall in fact, it just crossed it, that it has not seen in some time it's been a while since microsoft was a $2 trillion company. obviously, trailing only that of apple's market value around $2.4 trillion. but the enthusiasm around a.i., its ability to integrate chatgpt and whatever new iterations of that will be coming into its bing search have captured the imagination of many shareholders who are deciding, i guess, that the multiple should be higher. at the same time, alphabet, not really down, but not benefitting at all right now

and so, that basic trade there kind of shorting alphabet because of concerns about whether or not it really will have any sort of a lead in a.i., despite what has been, we assume, billions invested in that technology over many years is a concern at the same time, microsoft benefits >> and even beyond the utility of a.i. or whether that becomes the new phenomenon, this -- the aggressiveness that satya nadella has voiced about going after google's search margin they have everything to lose, we have nothing but gain ahead of us just if we essentially make it more competitive and sort of sideline the ad exposure on search in general. so, it is interesting. now, microsoft did hit $2.5 trillion at the market peak >> is that what it was >> last time it hit $2 trillion was last august when the overall market was a little bit higher from here. i was saying last week, if you're capitalizing a company at $2 trillion, don't you assume

they're going to be ahead of the next technological curve i mean, that's why you give them the $2 trillion. but clearly, if you can get the numbers to go up in terms of earnings forecast, because of this, there's room it did trade well above 30 times earnings not that long ago you're in the mid to high 20s at this point >> that's interesting. goldman today, the desk writes, increasingly think the super bowl consumer applications on chatgpt are going to be broader, and maybe even for macro they argue, as eric sheridan has written at goldman, that google's already made cumulative investments in a.i. in the tens of billions of dollars, maybe nearly a hundred billion, but it feels like, last thursday was a locate top for a.i. hype we'll see. >> that seems fair local top. we'll see. it has to cool off a little bit. and certainly the hype that

tangential companies are getting pops and things like that. there has to be a reality check in terms of what really is going to matter. it's going to be like all technology, software gets faster and better mostly it happens invisibly. mostly it helps out efficiency on the corporate level as opposed to anything else >> microsoft leading the ndx, followed by meta not too bad a sampling of action in travel today. we are going to get airbnb and trip advisor later in the week global air traffic a five-year high, thank you, apollo, and the snowfall in vale, for example, running 30% over last season so, consumer spending, coupled with some good fundamentals is good for travel. >> again, the services side is right at the center of, is the economy going to be resilient, but also what happens with inflation? the world has been put on notice by chair powell that nonshelter

services, core inflation that's where we're slicing it down to as perhaps the thing that has to buckle before they can declare victory, and hasn't yet. you don't necessarily have the makings of that. >> guys, i'm going to divert here to a name that we haven't talked about that often, but it is a feature today in terms of the losses fis is what i'm going to talk about. >> i was hoping >> fidelity information services you did have an activist in the there in the form of d.e. shaw and there was essentially, would you get them to agree to split the company, which many would have viewed as a positive, and they did announce their plans to spin off their world pay business world pay is the merchant business, something obviously that they put together to create this company but they have announced plans to spin it off. why that negative reaction not because investors are

disappointed with that outcome, but because the guidance from this company was way off base, far, far below what had been anticipated on the conference call, which began at 8:30, the cfo said, in records to the guidance, it assumes further macro deterioration in the uk and a recession in the u.s this recessionary assumption accounts for approximately five points of headwind in our merchant guide but let me put it in perspective for you from the various things that wec have had this morning, analysts that have come out here in terms of where they are the eps guide, down 12%, not expected at alla guiding at 1 to 3% revenue growth 3 to 5% had been normalized, less one percentage point for a slower sales cycle they're also pointing to a slowdown at what will be the spunoff company as well. decline of 2 to 4%

they're talking about headwinds from a lack of new products, the global recession possibility as well but all of this adding up to really what was guidance number that is simply far, far below what any of the analysts who followed this company had anticipated and therefore you're seeing a significant decline one of those situations where you're set up with an activist, thinking, okay, maybe they get an outcome in fact, they do get the company to announce that plan to split, but they accompany it with guidance that is crushing the stock. by the way, when it does come to estimates on what spin co is worth, and this is a large company, $2.3 billion in adjusted ebitda expected, let's assume a multiple of nine times, at least i'm looking at one of the analysts this morning you can get to as much as 25 bucks a share. they got debt of $6.5 billion but it can get you somewhere close to $25

jeffries estimates well above the current stock. that would get you to 79 bucks but there were many investors coming into this print who expected we might get the language about a spin but not this guidance >> right not with guidance almost a dollar a share below previous estimates. i was looking to see if there's collateral damage by their macro -- pfizer is down 0.5%, probably not exactly a one-to-one with some of the other financial information and services technologies. it's considered to be kind of a stable part of the business. clearly, there's macro influences on the payments volume and things like that. >> the banking part of their business doesn't look particularly good, up 4% organic. okay but i see some analysts saying, margin contraction is really what's gotten a lot of people's attention here so, we'll keep an eye on it again. not a name we talk about that often, although, by the way, a $45 billion plus market cap

coming into the morning for fidelity national information services >> this downgrade of cat is interesting. baird goes to neutral. nearing a cyclical pivot point following a recent strong outperformance, history shows their relative performance is driven by things like dealer stocking, backlog, price cost spread others would argue, and i would imagine if jim were here, he'd do the same, that we're in what some argue is the mother of all capex cycles and a lot of it's driven by government demand. >> there are afterburner effects of this cycle, whether it is government demand, the china factor you know, cat was a great stock through all of, i guess, late last year when people thought that didn't make any sense so, it does tend to kind of sniff things out and have these leads in terms of handicapping better times to come but it is an interesting call to say that, you know, there are certain parts in the cycle where they really reap the benefits. if you look at it from the october low, cat went from $162

to $264 in three months. so, you know, it had its run in a sense, and so i guess now we're arguing around the edges of the staying power of the earnings resurgence off this >> guys, as microsoft continues to be the story of the morning, i did want to make one further point. we talked about what it might mean in terms of incorporating chatgpt into search but not as much about what it would mean in the enterprise, where microsoft really has a franchise that is far in excess of what alphabet has, and i saw you just tweeted something, carl, about the verge and some reports there in terms of expectations microsoft makes some announcements related to some of their enterprise products >> yeah, verge says microsoft is tentative lowe planning an announcement in march, and if the market is bouncing on events, we're in an event hch driven part of this early cycle, we are back in it.

>> i guess we are, because i think a couple of years ago, people were like, oh no, another event, it's not going to move the needle if nothing else, i think it just conveys that sense of urgency of the -- around the company and mow fast they're moving and how they think it could be very relevant to their business and their clients sooner than we were anticipating. >> right we'll see how long that lasts. >> and david, one thing we don't talk about a lot is activision, unless it comes from the uk. >> there's still a ray of hope out there that smomehow they're going to figure out a tiny window to get that deal approved by the cma i was seems unlikely, and we won't know much for a little bit here the next regulator will probably be the eu while we wait for it to play out in the uk, but again, as i said last week, mostly dead but not all dead >> right i mean, $70 billion is -- >> by the way, activision -- it's nothing, and many are looking at activision, which has this cash hoard, $12 billion

now, what they're going to do with it if, in fact, they are once again an independent company. bobby kotick running it, returning that $12 billion to shareholders that's why atv i has held up so well >> apple shares up more than 15% this year. will their sponsorship of the super bowl halftime give it the boost necessary to take on names like spotify and other competitors? before we go to break, take a look at bonds today as we do await a couple big tent pole macrodata points back in a minute

last night was the first super bowl with apple as an official sponsor of the halftime show take a look at apple shares today, up fractionally, up now more than 16% year-to-date and outperforming the nasdaq in that same period. our next guest believes the stock is in the midst of a relief rally joining us this morning, tom

forte. great to have you back i am curious if we're in a period where near-term supply-demand dynamics are kind of cloudy, is the sponsorship of the show -- i mean, is it thematically interesting to you, directionally interesting in terms of what apple has in mind? >> i think it's definitely interesting. what you had was a match made in marketing heaven you had the biggest hype event from a sporting standpoint married with the company who's best at self-promotion, being apple. so, i do think that services has been the key to the higher multiple the stock has earned. they have seen a slowdown in their services business on macroeconomic challenges, so any improvement in apple music subscriptions, i think, would be well seen by wall street >> right what was your view coming out of this last print, and are you of the view that whatever demand is getting lost near term will be made up inevitably because of the stickiness of the ecosystem? >> actually, i do think, carl, that you saw some lost sales, so

going into the december quarter, on the supply chain challenges from covid zero policy in china, i thought you would just see december quarter sales move into the march quarter. i do think you have lost some iphone sales on those supply chain challenges, and on some demand destruction in china on covid zero policy. i do think, though, that you're seeing a relief rally because despite the fact that the december quarter was weaker than expected, it was better than feared, and on a near-term basis, the reopening of china is beneficial to apple both from a supply chain standpoint and a demand standpoint to the extent they generate about 10% of sales to consumers in china. >> tom, you're being bombarded with client questions about a.i. and what apple's strategy is or what the threats are, whether the smartphone is still dogoingo remain kind of the node of intelligence in terms of personal communication is that something you can dismiss for now? >> i don't think you can dismiss it, but i like what tim cook said in the december earnings call, that artificial

intelligence is more of a vertical technology than a horizontal one when you think about apple, they're clearly using artificial intelligence on multiple levels to make their product better, so what's interesting with microsoft is it's giving microsoft an opportunity to play catch-up on google and search, a game that we thought was over, but for apple, they're using ar intelligence and makes their products better. >> wait. you think that apple makes all of its products better by its internal use of a.i. it's not like -- for example what does it mean for the siri platform >> yeah. so i think they're using artificial intelligence to power siri i think they're using artificial intelligence when you think of some of the new feature sets on the current generation iphone, sos, things of that nature in and of itself it's not the needle move for apple than microsoft, microsoft playing catch-up with google, but apple is using artificial intelligence

and i think it is making all their products better. >> finally, tom, we're in this period where it seems like lots of industries are adding premium layers, whether it's live events or broadway. this report last week in bloomberg that perhaps there's the possibility of an ultra high-end phone what kind of odds do you put on something like that, and does it move the needle on asps in a way that is material to the stock? >> well, all right so ultra high-end is what plays to apple's strengths historically they've had a hard time coming up with a lower priced iphone so anything higher end for apple, super premium would be positive for apple, likely a needle mover. where they do well is getting all the profitability in a category like smartphones. that plays to their strengths. >> 150, 160 today. it's going to be an important name to watch the next couple quarters good to see you. >> you too, carl thank you. as we these a break, let's

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we were chatting here during the break we haven't touched on crm today. marc benioff talks to the "new york times" and says i wish i offered lifetime employment but when you have a big company with 80,000 employees there are going to be times when you have to make a head count adjustment bofa did cut numbers on channel checks, lumpiness of the quarters and share shift going on in enterprise software. >> sure. i mean it's, obviously, true that crm has done a lot of acquisitions over the years and expansions and a growth, growth, growth story by the way, what the activists are saying right now is -- was like, the short thesis of like 12 years ago that didn't work because the stock kept growing and kept doing well. but now they're at a point where they feel like there has to be a recping on costs, what do we do with rolling up these companies and other agendas as well.

>> yeah. you can look at the long term and what's happened but you can see there has been a move up baseline enthusiasm amongst investors that these activists will be able to force the company to focus more on profitability and perhaps on succession as well you know, i pointed out the deadline or i should say the nominating window has opened, elliott is still the largest of the activists out there we have not heard from in a significant way. value act has something on the board. you know, loeb has been more constructive starboard, jeff smith started this off in october. i go on and on more activists in this name than any other we've seen but elliott is the key i don't have any new reporting on it unfortunately. >> and for the most part they are just saying, you know, get efficient, focus on profitability. it's not about - >> get your margins up to 30% or more and give us a succession plan. >> it's not like a reorganize

this some way, split it in some fashion. >> it's not about that it's not about that. as far as i was aware, not about spinninging. >> nothing intuitive you would do. >> make some money. >> right when you declare the proxy fight over. >> come on. >> although i would like them to declare the proxy fight on too we get them both. >> the proxy fight is on. >> dow had some early session highs up 122 and creeping above 4100 don't go anywhe.er ill active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply.

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good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with david faber at the new york stock exchange and morgan brennan is joining us as well as we'll talk some markets, bulls trying to reclaim some ground here after the biggest weekly loss for the s&p since december. >> 30 minutes into the trading session and here are three movers we're watching this monday morning norfolk southern sliding following reports the epa sent a notice of potential liability related to last week's explosion and derailment of railcars in ohio, shares down about half a percent now.

plus caterpillar getting downgraded to neutral from out perform at baird saying cat is, quote, nearing a cyclical pivot point and revenue growth is set to he slow those are down about 1.5%. we will end with meta, which is on the move higher again today on a report that company is planning for another round of layoffs after letting go of 11,000 employees last november that stock is up 2% this morning. it's up nearly 50% year to date, but keep in mind after a rough 2022 carl >> morgan, speaking of reports, a lot of them over the weekend, the u.s. shooting down the fourth unidentified object and expects to recover it. you have a lot more on what this means long term for our aerial defense. >> this raises so many questions spanning so many different topics there's a lot of ramifications here i will say there's more questions than answers in terms of the details and what we know so far about the events over the weekend. four objects in eight days in a series of military strikes over american air space for which

pentagon officials say they believe there is no peacetime precedent. the three objects shot down friday, saturday, and sunday, over alaska, canada's yukon and lake huron, much smaller in size, different in appearance and flying at lower altitudes than that massive chinese suspected spy balloon that was downed earlier in the month. origins of the three latest, though, still unknown. their purposes unknown recovery efforts are underway. but the details are scant. so scant, in fact, that when asked at a press briefing last night if extraterrestrials could be involved nor rads's commander says they haven't ruled anything out. i think that's unlikely, though. for the downing details raytheon sidewinder missiles used for the shoot downs fired from a lockheed martin made fighter jets f-22s and yesterday an f-16 and raises questions about north america's air defense

vulnerabilities. rait raytheon makes the detection systems. getting upgraded an announcement around the u.s. and canada last fall satellite constellations a big topic as well, all of the data aggregating an analysis of the raw data from the radars and other intelligence sources officials says saying closer examination on the heels of the first chinese balloon has led to the discovery of radar nurse that signatures unseen. speaking to the you can session of shoot downs in recent days. the investor implications, defense spending likely will not be cut, perhaps increased, and david, at least that first object was concerned the first balloon, you're seeing ratcheting tensions between the u.s. and china which we want to talk about for a second here >> so many questions here. i know you can't answer them, but it's fascinating

on china let's get to that part of the story here. eu eunice eun is live from beijing and she has more on the reaction from that country. >> thanks so much. the foreign ministry continues to distance itself or attempt to distance itself from the flying objects in the united states accusing the u.s. today of flying balloons over chinese air space. now the ministry said that american balloons have trespassed over ten times last year, they said, though they didn't provide any evidence to support that claim now that accusation comes as the state media have been reporting about an unidentified flying object over a chinese port near a naval base where military exercises were supposed to begin today. authorities are being quoted as saying that they've been enlisting the help of fishing vessels to see whether or not they can take photos or collect

any debris once china shoots down this ufo. the ministry itself didn't have any further information about this ufo as to, you know, any pictures or exactly the status of it next to the port what's interesting here is that the chinese authorities, as well as the chinese state media, very often will discuss and attempt to redirect issues that are seen as unfavorable to beijing by bringing up other information. for example, the state media commentator from the global times had said, this year can be called the year of ufo it's so mysterious, seeming in a way to try to equate the situation going on in the u.s. with china now the object over china is

being discussed online here and people are starting to suggest that maybe this is a u.s. spy balloon in china guys >> yeah. on that subject, eunice, we should say the u.s. government spokesman has said, you know, any claim the u.s. government operates sue herera balloons over the prc is false. it is china that has a high altitude balloon program for intelligence collection that it has used to violate the sovereignty of the u.s. and 40 countries across five continents china, i mean you've told us, they continue to say these are -- this program is what, weather related? >> yeah. that's right the chinese have said that the first -- that this first balloon that u.s. had shot down was a weather related airship and that this has nothing to do with the military and that the u.s. acted in a very over aggressive way. that's been the narrative here

and one that's perpetuated in the state media. when you were talking about this kind of tit for tat, i think it's a bit of a shame or at least it seems too bad that two sides haven't been able to kind of push past this, at least for now, because the relationship appeared to be on the mend, but at this point it's just on the one hand you see that this is very enough because they haven't been able to and that political environments in both countries seem as though they're forcing the leadership in both countries to appear tough, which is a big challenge. at the same time last week, we saw that china said that they still would welcome the visit by the u.s. treasury secretary janet yellen there is some hope here, as well, i would suppose in the united states, that the relationship would be able to move forward, at least on economic matters. >> yeah. eunice, i got another question

for you, but i want to get to morgan on this broader story of ufos morgan, you know, there have been some reports that we've widened the aperture for lack of a better term for radar capabilities identifying more things perhaps we may not have in the past, taking a lookat is that a factor here? what do we know? >> listen, there's still a lot we don't know, but that does appear to be a factor here, and it sort of goes back to something i touched on a few moments ago, the fact that you have these radar systems, capabilities that are pulling in so much data and then are basically funneling through to officials, and it would appear that, based on what we've heard from the pentagon at that briefing last night in the middle of the super bowl, i might add, was that they are looking at more of this data it's going through more analysis defenses are heightened and stepped up and that is why they're finding more of these objects now and deliberating

what could potentially pose a threat and why and how to react to those and when. this is the type of work -- by the way, i have reached out to the company, i have not heard anything more on this and these are the types of programs that could potentially be classified, but you're going to get palin terter earnings after the bell and using things like a.i. to sort through all of that raw data you're talking about defense contractors like palintear and other startups and companies that are increasing their tech capabilities to work with the u.s. government this is why so many military officials have come on our air and talked about the fact that future warfare is a warfare that is going to be focused around software this is case in point in real time how you're seeing some of the technology come into play where it comes to homeland defenses and u.s. air space. i'd also say one last thing to go back to eunice and the idea of economic implications between the two countries, given the

heightened tensions, david, you would hope to not see the reverberations but the fact that you did see six chinese tech companies on friday sanctioned by the commerce department for their surveillance bloom efforts and the chinese military on those efforts and we've known that more export controls and types of high-tech goods could potentially be in the pipeline does speak to now the potential you could see those accelerated as well, speaks to the potential of further disentangling, at least where technological trade is concerned between the two countries. >> right finally, eunice, it's the first time that i've seen you in some time thankfully you're back you took a well-deserved break, i know, and our viewers know i'm curious, what -- the beijing you left and are returning to for our viewers, how different is it, given last time we spoke to you, we were just at the beginning of the covid protocol?

>> yeah. it's very different from early december when i left at that time the protocols were definitely in place and now because of the lifting of all those restrictions, you see the economic activity. people are out more. yesterday i went to a shopping mall and i was having a little bit of ptsd where i thought, wow, i don't have to scan anymore. what's going on? you don't have anyone shouting at you, at least not at the shopping malls but at the same time, you know, it's not quite fully back there yet. i mean, a lot of the conversations i've been having here have been that yes, people want to travel, but it they're -- for example, but they want to buy new things but they're going to hold off on some of the bigger purchases because they are concerned about their loss of income over the past couple years. i think right now, it looks as though we're having a bit of a bump in terms of excitement because of the end of zero covid

but how long this bump is going to last, how sustainable it is, whether or not businesses decide they're going to change and recommit to china after they've been turning to diversify outside, all of these are big questions i think are a little bit too early to say at the moment i'm enjoying being able go out more, even though at least in public places masks are still at least required or strongly advised here in public places. >> well, we are happy that we can once again rely on you to tell us what's going on on the ground, eunice welcome back and thank you as we head to break here, let's give you a road map for the hour including more on the u.s. shooting down that fourth unidentified object. former defense secretary mark esper will join us. >> retail investors appear to be chasing momentum again honing in on a.i. stocks and tesla

we've got those details. and as mortgage rates settle back and home prices ease, demand is surging in the new year resqwkn e re" is straight ahead don't go away.

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the choice is clear: make your business future ready with the network from the most innovative company. comcast business. individual investors appear to be chasing momentum again retail inflows to u.s. stocks hitting the highest levels in years. our kate rooney has more on this it's definitely coloring the tone of the market. >> it absolutely is, carl. good morning that action has been concentrated in just a handful of stocks and the big trend

artificial intelligence names thanks to recent buzz around this technology. according to vander research, c 3 a.i. saw a surge innet inflows last week after microsoft unveiled its updates to that search engine using chatgpt and google revealed its own a.i. chat bot. you can see that pace of net retail buys spiking. it has slowed down, though, which typically foreshadows a loss and some of that price momentum a notable rise in net inflows to the small cap a.i. names like big bear, sound hound a.i., and then you got microsoft and nvidia seeing interest which could benefit from that a.i. demand jpmorgan, guys, points out a similar trend both older and younger cohorts of retail investors are adding to risk and have added to risk year to date with buying hitting the highest level since last august. as far as what's driving this, vanda says it's fomo, fear of missing out and momentum they warn that retail investors

remain especially susceptible to negative catalysts out there right now. we have tesla, that is consistently the most bought stock by individual investors. last week, though, it saw what vanda described as unprecedented flows. tesla alone attracted 24% of single stock net purchases, likely an effort to chase some of the momentum and recoup 2022 losses there's a tesla investor day on march 3rd and expectation that my mow tum might slow down after that back to you. >> thanks. we're going to stay with tesla, of course. our next guest sees the stock going to 370 in the next 6 to 12 months even as ev competition amps pup let's see if he's going to join us gary black is with us. good to have you the last time we spoke, you were bemoaning the fact that twitter was taking an awful lot of mr. musk's time. you were encouraging him to move

on from that to a certain extent, if i recall. he hasn't yet. i've reported he's looking for a new ceo and hasn't found one still spending a lot of time on twitter and we've had this amazing rally in shares of tesla. what do you attribute it and why do you believe it will continue? >> tesla is still very cheap you can't find other mega cap growth stocks with 30 to 35% volume growth trading at my number 40 times earnings, and that's going to continue you see ev adoption going through the roof look at california where it's now 17%, china is 22%, tesla is the best way to play that surging adoption when you look over the next couple months, you have investor day coming, you have a blockbuster first quarter coming, cyber truck coming, you've got some sort of fsd single stack product which will improve that, you got mega packs coming so many catalysts reminds me end

of 2019 into 2020 with all the catalysts coming. >> yeah. would you argue in recent weeks then the positive fundamentals, whether it's the reopening of china, the price cuts, on and on, have simply outweighed what continues to be, i would aassume a concern that mr. musk is focusing a lot of time on twitter? >> that's your term. he will give up twitter. clearly there's an overhang last year from him spending as much time as he did on twitter and all the noise. no question about that that's temporary and he will give that up and find a ceo who can, you know, basically drive the ad spending, drive the product and monetize the dmaus, and that's just matter of time i think you have to ignore that because that's just noise, but looking forward, the reason you own tesla because the street is missing two big things -- they're missing cyber truck and the mega packs those two things are probably worth 1.50 to incremental

earnings to 2024, about 25% of where the street is today. that's why you want to own tesla, not because he will give up twitter he will give up twitter, there's no question in my mind that that's coming. >> gary, meantime pricing has been all over the place, right we had the price cuts which looked like it would lead the industry into a price war. now with the credit and the apparent strength in used cars in january, pricing is being he rethought the other way. i wonder whether you thought they were too quick to jump the gun? >> they have been taking pricing. they took another $500 increase over the weekend on they call it the automobile drive standard range model y and the performance version and there's no inventory if you look at the inventory of model ys there's nothing to sell it makes sense they're taking a pricing back up. but when you get to the end of the first quarter, we're going to see a number for volume that's in the 450 to 475 range that's way above where the

street is. the street has 425 i think -- look, they could just keep pricing where it is, but there's no inventory so you might as well get some pricing up because they took it down so much the other thing i would point out is, at the end of 2022, there were a lot of people saying there's not enough demand it was not that there was no demand at the end of 2022, they just had a lot of people waiting for resolution on the ira 7500 ev credit which we've got. all the model y trims qualify for the ev credit, all the model 3 trims qualify for the ev credit, and that's what's driving volumes in the first quarter. they could take a little bit of pricing on model y. >> gary, just to shift gears here since i see that google is one of your top holdings in future fund as well. artificial intelligence, the fact that we have this race if you will, between microsoft and alphabet as well as some of the chinese tech companies announcing their own chatbots

but the fact that you've seen this headiness in the market around any stock that has a.i. attached to it in terms of trading right now, i just want to get your thoughts on the capabilities and the future monetization possibilities around a.i. and who the leaders will be? >> chatgpt is cool it's fun to use. it's useful. i think it's going to change the way we do search but don't bet against google google has been hiring and working on a.i. since 2017, and when i look at google and the reason we own it, it's trading at 15 times next year's earnings, growing revenues 11, 12%, growing earnings of 15% they will figure out a way to add a.i. into their search capabilities and it's just interesting. everybody is throwing around a.i. as a buzzword if you listen to conference calls, we do, the ceos used a.i. six times as much in the last conference call as they did in the third quarter conference call it's become the magic bus buzzword some people are going to get it

and some will have products to your point will be monetized but others are throwing around the word hoping investors see it and reward them for it i think google is somebody that hauls been able to use a.i. in their products an they will incorporate and do as well as microsoft. >> finally, we'll land on tesla. i mean, ev is now a priority for virtually every major auto manufacturer in the world. toyota, add that to the list, sort of changing their allocations to increase ev as well you're not concerned as so many others seems to be ultimately, market share for tesla starts to decline in a marked way? >> we've been hearing about ev competition forever and yet, when i look at global ev shares, what is tesla's share of evs it's been pretty steady. it's come down in europe and gotten basically nowhere in the u.s., 65%. china it's gone up so you saw this last night with

the super bowl ads, right. tesla didn't advertise but you had gm and dodge ram and jeep all advertise. what happened to google search activity for tesla it went up. it jumped up because when people see an ad for a competing product, whether a jeep ev, or ram ev, what they do, they search for tesla and consumers are very educated and they're resourceful and they will find out when you look at performance, you look at range, you look at the technology, you look at the safety ratings, the number of charging stations, they will walk out and buy a tesla even though they may have seen an ad for ram last night. we heard about competition forever. tesla still has the best product on the market, most charging stations i don't think elon musk is losing sleep over all the competitors. he's probably glad because he's growing the whole ev market and that's, again, why you own tesla. ev adoption around the world is surging. it will go from about 10% last year to 35% by 2026 to 60% by

2030 dot math you say okay, if tesla holds its share that's 30% volume growth per year that's huge. >> problem for elon musk is not losing sleep, but he doesn't sleep. that's a matter for another day. always good to have you. gary black. >> thanks, guys. as we head to break a flurry of news out from twilio. the company will lay off 17% of workers, close more offices as it aims to cut costs the stock up 2% right now to start the week more ahead with all the major averages in the green.

. s&p trying to give back some of what it lost last week. worst week for the markets of the year so far. dow up 240 here. during february we are celebrating black heritage throughout the month with the stories of some of our cnbc teammates, contributors and leaders in business. here's longview global managing director and cnbc distributor gerregard mcneil. >> my personal and professional journey is highly influenced by

the history of the african american experience here in the united states. the struggle and sacrifices made for freedom and justice and equality has made it clear to me the need to press forward no matter how difficult the challenge. the advancement in the nation and education, science, politics, arts and culture, has inspired me to make my mark in my profession. i am proud of my heritage and proud to be an american.

i'm julia boorstin and here's your cnbc news update at this hour. 182 hours after the devastating earthquake in turkey and syria, rescuers are still finding a small number of survivors. today a 13-year-old was pulled out from the rubble of a building in southern turkey. the estimated death toll is now above 37,000 and expected to keep rising. in israel, tens of thousands

of people are demonstrating against benjamin netanyahu's plan to weaken the country's courts the prime minister says israel's activist judges need to be reigned in opponents see a threat to secular freedoms. in kansas city, fireworks as thousands of people gathered to celebrate their team's victory against philadelphia in last night's super bowl a parade to honor the team is scheduled for wednesday. carl, over to you. julia, thanks so much. julia boorstin speaking of the super bowl, ads this year came with a hefty $7 million price tag companies who shelled out the money leaned heavily on celebrities like steve martin, ben affleck and john travolta. engagement soaring search ads up over 95% compared to last year here to help us break it down, contributor and wharton school of business professor marketing, it's great to see you. after all this time and given the price of a 30-second spot,

what is the business case right now for investing in a platform like this? >> well, first of all, thanks for the opportunity, carl. really appreciate it here's the value proposition there is only one event where you have 100 mullen people tuned in at exactly the same time and they want to watch the commercials. this is the value proposition that says, why would i do that, as opposed to perhaps going to an instagram celebrity who has 2, 3, 400 million followers on their platform the point is that you're capturing the fact that consumers are actually willing to be watching these different commercials at that specific time so you have an opportunity as a marketer, product brand service organization, to tell your story as one small piece, one 30-second piece, it's going to cost $7 million, but a 30-second piece to spread across a larger time frame and to integrate all of the other opportunities to tell your narrative because marketing is essentially all

about story telling, carl. >> right speaking of which, i mean, we look to the sampling of ads and the universe of at tizers during the game as a tell, as an economic tell. obviously, crypto money is gone. that says a lot. others have argued fewer automaker ads this year than you might have expected. did you see clues in last night's game >> i did i saw a lot of clues we saw this idea that we're coming in on hard economic times as you know and report on your show, and so people want sort of uplifting sort of experience, so they're looking for humor, they're looking for light kinds of experiences that can sort of, you know, really lift their spirits, and you're not seeing a lot of the typical types of things you see you're seeing humor and you're seeing not just slapstick but witty humor to make people feel good so they can have a wonderful experiencep you're seeing a lot of like you said celebrities, co-branding, seeing

a lot of integration with the technology so you probably saw three or four qsr codes last night that popped up on the screen that were meant to take you to some other experience to keep that engagement going. >> when you have advertisers paying as much as $7 million for a 30-second spot during the game, how is value being, i guess, understood or assessed by these companies? is it qualitative or quantitative to point to say this has translated to more sales? >> that's a great question, morgan, and the answer is, absolutely yes because now you have these companies, they basically say i've got four weeks, i've got before the super bowl, during the super bowl, and after the super bowl i also have the opportunity to prerelease my ad on youtube, for example, and track measurement there, then the ad hits in that 30 seconds, 100 million eyeballs, i can literally track a qr code, what are they doing now in terms of trying to

convert them deeper into that purchase funnel. this is an opportunity from a measurement perspective to be able to track very closely your impact that you're having when you launch one of these very expensive ads. it's an opportunity to capture the measurement analytics, but to also create conversations, morgan be, around the water cooler now there's a qualitative side of people talking about the commercials the next day and that can be tracked in terms of sentiment on the various social media platforms as well. >> finally, you know, over the years, nfl has had a share of controversies, whether that's about the clock or officiating or politics. are we done with an environment where companies think twice about being associated with the sport? just given its incredible leverage, cultural leverage? >> i think we are, carl. i think people have moved on now, and i think people are ready to have a fantastic experience and they don't want all that other stuff that's going on i will say this, there were two jesus commercials that showed up

last night that were very much sort of different from all of the rest there are from time to time, you know, other sorts of political religious ideological things that might happen during the event but you're 100% correct, carl, to say we've moved on from that sort of deep analysis around trying to make political statements around what is this nation's most popular sport. >> it's definitely something we're going to watch the follow through now and see whether the tone from the -- certainly the cost of the ads here reflect the direct ad market thanks. good to see you. >> appreciate the opportunity. well, still come, the housing market showing signs of life after a sharp drop in sales over the last few months first a check on the markets where all the major averages are higher session highs right now in these early parts of the monday morning in the new week. see the dow is up about 245 points right now the s&p 4119

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welcome back to "squawk on the street." i'm pippa stevens. stocks are mostly higher to start off the week including notable gains in technology. microsoft leads that sector and is one of the top gainers today on the dow solar stocks are largely rebounding with solar edge and first solar firmly in positive territory, though end face is lagging. and fidelity national information services is deeply negative territory after announcing weak guidance and plans to spin off its merchant payments business. that unit largely consists of world pay, which fis bought four years ago and shares down more than 14% right now. >> pippa stevens, thank you. after the break, do not miss

our big interview with former defense secretary mark esper as the u.s. shot down a fourth object, unidentified object, over the weekend we're back in two. good night!

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welcome back to "squawk on the street." want to turn back to the unidentified object shot by u.s. military yesterday the third aircraft shot down in three days it's the fourth in the last eight days object, not aircraft flying close to sensitive sites for the pentagon joining us is mark esper, now a board member and partner at red cell ventures. thank you for being with us today. >> good morning. >> as i said at the beginning of our show, more questions than answers right now, but i guess just walk us through the significance as some pentagon officials said last night of these shoot downs, which have been unprecedented in times of peace over u.s. air space. >> well, i think you have to go back to the chinese spy balloon that traversed the united states it clearly caught us off guard

in a number of ways, and the pentagon went back and adjusted both its instrumentation, its filters, its reporting procedures, and so now what you see is, i suspect what's been happening for some time, we often have objects violating our air space and my hunch is that these latest on the over the past three days are probably not spy balloons, maybe they are, but more weather balloons, scientific research platforms, you name it. we witness know until the wreck am is recovered, forensics done and civilian made. i assume if it's a civilian, private, corporate, you name it, product that we should know that pretty quickly if it's a spy balloon or spy device it will take more time. >> okay. ahead of these three shoot downs over the weekend, general from nor rads disclosing there are gaps in our air defense picture. it would seem that, based on the

activities over the weekend, that perhaps they are coming more of the data and maybe they're trying to close some of those gaps, but what can be done to close those gaps and how does that speak to what future capabilities are going to be needed in terms of the u.s. defense air space defense picture? >> yeah. i think on the technical side we need to modernize our ground-based radar station we've been talking about that for years. northcom wants to do that pretty bad because we need to see further over the horizon if you go to the other end of the spectrum, what we need to do is build a.i. machine learning in the back end so as we get radar feeds an other data we can sort through it in a methodical way, more quickly, and sort out what i think that's what happened here recently in terms of the instrumentation, we adjusted our filters, like you would adjust your spam filter on your iphone or ipad. on the other part we need to improve reporting procedures that seems to have happened

quickly at the pentagon. third, what are our policies with regard to aircraft objects entering our air space and how do we decide what to do, authorized, unauthorized, manned, unmanned, military, commercial i think there's going to be a really policy review about what we do and how we do it, now that we know so much of this is happening. >> how quickly can that policy review happen? i ask that because, especially where the first balloon is concerned, there's a concern of escalation between the u.s. and china now? >> yeah. on one hand the policy is being written in real time because what the biden administration is saying, if you are unauthorized in our air space and unmanned and we can verify if it's unmanned doing the flybys we will shoot you down. over time it needs to be refined. with regard to the escalation between the united states and china, and i think this will be important for your audience here, this is -- what's happening here is more of a downward spiral between the two country and, you know, the two

lar largest economies in the world and in the last 24 hours, china is claiming now that the united states is flying balloons over china and they're playing this tit for tat game the bigger picture analysis is that the relationship is spiraling downward and what type of decoupling will we see between the two countries over time it's already begun, but how far will it go >> could we be flying spy balloons over china right now? >> i'd never talk about what we could or wouldn't do if there are unauthorized balloons violating their sovereignty they have the right to shoot them down like we do. we don't like the fact that the chinese contest our surveillance flights conducted in international air over international waters and what not. that's where they violate the rules of the road and that cannot be tolerated. >> okay. so looking at the chinese perspective spy balloon from a week and a half ago, maybe perhaps the fact that we don't know what these last three unidentified objects are, so putting those to the side here, what does this mean, what does

all of this mean in terms of the trajectory for future defense spending and also just as importantly, how we prioritize foreign military sales to the likes of say taiwan? >> yeah. look, i think all of our nato allies, for sure, other partners around the world, are also probably looking at their aerospace defenses, their ability to defenses, their ability to detect intrusions into their air space and they should rightly do that. i think this signals defense spending will be strong for the coming years there's no threat to our country. russia seems to be continuing an offensive in ukraine. this is another domain that militaries across the world, western militaries, will be looking at to guarantee their air space and their sovereignty. >> how crucial is software, how crucial is ai, the adoption of that, not only from the

established defense contractors, but from the defense tech startups that are trying to win defense dollars from the pentagon as well >> yeah, look, it's very important. i'm part of a firm called red cell one of our specialties is ai machine learning all agencies, military and commercial are inundated by data if you look at what's happened both space launch and happening in air space, so many more objects are in the sky today than ever before that radars and other signal intelligence need to be able to collect this data, sort through it quickly, determine friend from foe, man to unmanned, authorized, unauthorized and make quick decisions about what do you do, do you intercept, intercept and take down, so on and so forth. i think firms that have a specialty in ai machine learning that could help the united states government in this case the military, consume large amounts of data, quickly label it, sort it, categorize it and tee it up for decision-makers to

make a decision, i think there's a lot of opportunity there going forward. >> were you surprised to find out with all these disclosures we've gotten over the last week and a half that there were potential surveillance balloons from china that flew over u.s. air space while you were defense secretary? >> i was surprised i said a week and a half ago that no one came running into my office or saw a briefing saying china is flying balloons over the most strategic spots in our country. they are smart, clever they might have found a gap and exploited it we're discovering more and more. and it could be they realize we had this gap before. we weren't looking to commercial drones, scientific balloons and whatnot and decided to start inserting military spy balloons, if you will, in that same kind of crowded space and began surveilling us and doing it persistently, which is something satellites can't do. they can do persistence

surveillance. >> given the fact we have been talking about things like tech and software and some of these new next gen capabilities, do you expect this to continue to propel and accelerate the disentangling of the u.s. and china where tech supply chains are concerned? >> absolutely. and i think it should. we should consider how far those supply chains reach back i work for a major defense corporation for several years. we looked at this. we were concerned not just about, you know, corrupted items but counterfeit items in our supply chain i think we'll continue to take a hard look at this. the biden administration is doing some smart things in terms of decoupling on the most sensitive technologies semiconductors is the headline there. there are other things we need to look at i've talked before about strategic materials, rare earth, stuff like that. we need to be reliable and confident in our supply chains china has a grand plan, strategy and they are intent on pursuing

it in multiple areas commercial, science, you name it, they have a plan and we have to compete with them >> yeah. and it's a very public display of potential surveillance and spying, at least where the balloon was concerned, based on what we've heard so far in the past week and a half but it speaks to the fact that a lot of this dynamic has been going on in many other ways for many years now, which i know you have discussed with me before. secretary esper, mark esper, former secretary of the defense department, thanks for joining me today. >> thanks, morgan. have a good day. as we go to break, take a look at some of the biggest gainers on the dow, up 275 s&p back to 4124 got some relief in yields on the back end of the curve. with that, the nasdaq is better than a better. microsoft, 4 bucks there a six-month high lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way

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after a sharp drop in home sales over the last eight months, the spring housing market may already be seeing signs of life. diana olick was out with the house hunters over the weekend and has some details for us. diana? >> david, first i want to note an upgrade on zillow group from

evercore isi to outperform analyst steven kim calling a bottom to both existing home sales and prices in q1 of this year what i saw at an open house in bethesda, maryland, he may be onto something the house was listed at about $1 million, which the agent called a first-time buyer property. folks started arriving before the opening and kept coming and the agent said she has 40 private showings. >> i thought, my god, this is amazing. look how fast it turned on a dime we went from no showings and nobody coming to open houses that every single thing i've launched in the last couple of weeks has had multiple offers. >> reporter: and she said she just got back from a large real estate conference in vegas and the story was the same from other agents in markets across the country. mortgage applications to buy a home have been rising steadily and redfin reported its demand index, which measures requests for house tours, just hit its

highest level since september last week. buyers we spoke with didn't seem that concerned about higher interest rates and were pleased to see prices easing a bit one cash buyer was worried >> i'm very surprised to see so many cash offers in the market i thought i would be at a much better position, but the competition is still there >> reporter: and to a person, every buyer said there's too little for sales while we are seeing activity rise from an historic drop, sales can't rise too much if there's nothing to buy we'll see if more sellers see the buyer competition and decide to get into this market again as it heats up this spring. back to you guys >> diana, thank you. diana olick. well, before we wrap up here on "squawk on the street," it is notable that is the moves in microsoft and meta, for example, both up over 3%, helping the nasdaq comp to a 1.1% gain thus far. we talked a lot and we'll be

discussing a lot more ai and what it's going to mean to the future of microsoft. not just in consumer search, for example, the bing platform, but enterprise and things it could incorporate, chatgpt into for its products alphabet down 0.5% that's going to do it for us on "squawk on the street. "techcheck" starts now good monday morning. welcome to "techcheck. i'm deirdre bosa along with jon fortt and carl quintanilla tensions in the sky with u.s. penn dual with a super bowl ad cyber security company checkpoint beating estimates and in positive territory. we'll talk exclusively to the ceo. is the nfl that keeps linear tv alive we'll discuss that. >>