move bys so only of the leading stocks and airbnb recorded its first ever annual profit. i've got my valentine's day tie on this morning because when i put it on, it's still valentine's day in hawaii, right? "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc live from the market site at times square along with andrew ross sorkin and joe kernen i'm becky quick.

the nasdaq is down by 50 points, the s&p off by 12 points and the s dow jones off by 69 points the 2 year is above 2.6% just barely. meantime we've got elon musk news to start the show off this morning. he says he might be able to appoint a replacement for him for twitter. he made the comment in dubai at a summit overnight he thought they mute be in it. he wanted to have a roadmap clearly laid out they'll be opening to others for the first time you might remember at one point

elon musk said he was going to do that and then it seemed like he wouldn't. the white house saying that tesla plans to open at least 3, 500 new and exist ing ones >> that's the only way you're going to have a viable alternative. it's got to be at a gas station where it doesn't matter what gas station you blow into. >> yeah. the next biggest question is not only does it work, but does it work in the same way if you have a tesla now, it charges you, does everything magically. you don't have to put a credit card in, do anything different but if you don't have a tesla, it might be a different story. so then there's going to be the whole convenience factor

like iphones with different ports. it's an industry standard. >> some cars are not on the same standard. >> then it's not going to work. >> then there's going to be -- the next south of fight in this, i think, will try to win over payments like using apple pay. in the tesla universe, it's like all apple. >> it should take federal dollars. >> if it is a wafflehouse, can you say, put it on my check for what you're having >> that's the question i want eggs over mihammy and a

full charge. >> that's how they gauge how much it is >> remember there were some 7-elevens never had a lock on their door. >> that's one of the questions like why have a driveway if you drive on the street. >> why are smufrs blue and how do you get actiors to play them fed chair brain nard plans to leave it means the fed is losing a leading dovish voichls it's not

clear who the president will nominate to succeed her or when he'll make that decision i thought seth was on the list he's on or guour guest list bernstein is named chair of president biden's council of economic advisers. then current chair cecilia ralph plans to return to princeton urine vertz. she had a two-year leash. >> when you said is this a better job than the job to the left >> is it the better job? >> if biden gets a second term and janet yellen steps down, she could be in line to become the treasury secretary. >> can you ever go back as

chairman after you've fallen into the political sphere? >> i don't know. >> well, there was a time larry sumners got it. >> one of elizabeth werner's former accolades is getting ha bigger job if you get necessary largess from the government -- it's going to be a foust one way or the other. you're going to pay. >> there's always going to be a ris. i think next time around you will probably have more athe afternoonment s that come with the deal. david teller built stakes in two large entertainment companies in the first quarter

app lieu say bought $26 million worth of disney and $17.7 million worth of see sars entertainment shares during the fourth quarter it's not clear whether they bought the shares before or after bog igor returned. tepper trimmed his stake in facebook parentmy ta moon time he decreased his seattles berkshire trimmed its position including bank of new york me mellon i have a program note for you. charlie munger as well as an investor and board member is going to be speaking at that company'salual shareholder meeting. woe've gotten a lot of questions to ask munger. you can tune into the livestream on cnbc.com as we'll answer as

many requests as we can get to. >> meantime howard shoults has declined to testify before congress the invitation came from senator bernie sanders who shares the health education and waver committee and was signed by ten other members of that committee. last week senator sanders accused starbucks owner of fighting e everyone this eyes o the case the chief public officers is there to testify the real thing i is believe given the makeup of the committee,y can spip people. >> it's awesome. i love bernny. bernie helping the plievt

sector. >> we were going to talk about lina con. >> we'll get there that's a tease there's a whole conversation to be had about that. >> and the resignation we'll get to. coming up on the other side of the break two travel companies getting a big pore zwloo and later retail sales due at 8:30 p.m. eastern time youer watchling this it's cnbc. themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations,

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. welcome back to squawk they fell 19% from the year, barclay taking a hit last year they sold $15 billion more in scrub turred notes in the u.s. than it was permitted to that resulted in litigation that totals nearly $2 billion over the course of 2022. profits hurt by downturn and deal making and the bank said it would buy back to 500 pounds of shares, bigger than some analysts had expected. >> airbnb trading higher was above estimates of 25% revenue was up 24% for the year over year. it was also above. the company reported with that fourth quarter profit means that

it's annual results were a profit first time it's had a ploft for a year and guidance for the current quarter also higher than expect and the company said it continued to see strong demand at the start of the year, probably not a surprise. across the board for travel related. shares for travel companies also higher 16 cents a share as well above estimates of 4 cents and the company's tour business, viatour -- >> aviator >> when they're designing a name, they should think about how many different pronunciations there are. >> like when you name your kid, you have to think of every possible thing they can call you when they think about it.

>> you have to think about your initials my parents did. >> i'll have to tell you my brother's. >> i'm slow. >> you get that blank look on your face. you don't want to bother to think about it. >> is your middle name robert? what's the "r" stand for >> richard. >> if i had it right here, jerk, would it be clear enough for you? >> that would be -- >> that wows be jrk in your world. earnings came in at a dollar a share. fourth quarter revenue fell short of expectations. they had warned last month severe winter operations would reduce the production. production will come in low ther quarter than the fourth quarter

in part because of sfra outages taking place that's part of the reason you see the stock off by 4.6%. dow off about 80 points. nasdaq off by 57 points. the s&p 500 off by 15 points i'm talking the market with joe feeney kevin vaughn is here good morning to both of you guys curious what you thought of yesterday's cpi number an how you think it really affected what the fed is going to do and therefore what the market's going to do. >> the cpi came in in line, but if you look under the hood, there's certainly to a lot to b interested in. there's not enough supply.

that could ease over time as labor continues to move. wu in the meantime the fed has a lot of work to do rp and the fedf feds are underestimated. >> i've been in that camp. kevin, what camp are you in? >> i still think they're going to raise by 50 basis points in the first half of 2023 and then 25 and then in awl likelihood, they'll look at all the damage that's been done, and at that tiemt. the basis points would be hiked. inflation isn't going away it's likely to stay above 2% invefrlters would be advised to position their partnerships accordingly. >> what does that mean to position their partnership accor--

portfolio in your mind >> i believe peak inflation hat gone away. what does that mean? better hands in the market look for those companies with strong balance sheets like motte, apple, and overs. it can also ride out an economic slowdown in a recessionary period, which seems likely. >> joanne are you in the same place? >> you know, andrew, it really dependling or clients. thap wanl to play. we've developed more income stlajgys for them. a hoong testify term investor. they have a lot of growth opportunities out there. you can't wait for the economy

to get through this recessionary theft. look for the names where the growth opportunity is multiple years woect. we like amd, nvidia, cisco, the cloud, and the continued increase in the use of the internet that's driving up the demand for more data centers a broadcom it's a nice sweet spot for a lot of our clients. >> if you're concerned for the fed, it souchlds like there's going to be adilg alt eck questions. how u cash right now >> balance will certainly have a lot of fixed income for clients. unlike last year, we don't expect the same decrease in bond prices for the year as a whole yes, we do expect rates to stay high for the year.

investors would do well to get that off the side. there are yields out there that can help protect investors from any decline. they can live off the cash flow from the diffidents and they can ride out the volatility. >> thank you both. >> pleasure. >> when we come back, a strategy shift at goldman sachs cnbc reporter huu son has the latest. and a key member announces she's resigning. mapsd cnbc as she headet out the door and now, save 50% on the sleep number 360 limited edition smart bed. ends monday. realtor.com (in a whisper) can we even afford this house? maybe jacob can finally get a job.

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time now for today's executive edge

goldman sachs scraps the idea for credit card following a straftgy shift h hue son is here. >> they say, hay, what's your product map, what's coming down the pipe, he'd say, look, we've got this checking account. we need ancillary products probably one of them is going to be a goldman sachs credit card, a proprietary credit card. that would help enhance their profit margin. you need to surround yourself with ancillary products to make the whole thing profitable shoo so now that's off the table. >> it's basically been shelved they're going to be the behind the scenes provider for other folks like gm, apping.

and this is where they're going to play in the market. it saves them a lot of money if you want to own the customer experience,ite depose doing cost $600, $700 per customers. >> how widely do you think they can build out the sort of back end consumer business for the likes of the apples and gms because originally the plan was we're going to do an apple credit car and that's going to serve as a platform to do it for goldman sachs themselves. >> apple was supposed to be the anchor tenant. at at that point that was proim going. they fought for a lot of ott accounts that ended up stayle. they thought it was going a bin. their whole effort has been fraught with delays and

embarrassments. >> how profitable can that business be? >> it can be very profitable if you get past the first five or six years. i think the issue with goldman is they strayed from their core comp competency, and they didn't have the patience or stomach to last. they're doing something similar as goldman they're doing this overseaings we're going to spend days doing this they lost the heart. what do you expect from goldman. they lost their dna. >> hugh son, thanks for coming in. we going to talk more about goldman sachs' strategy at 8:40 with bank analyst mike mayo. we haven't seen him in a while. >> mayo. "officer and a gentleman." secondly a new bloomberg

report says apple is laying out rules on its tracks in its new buy now pay later service. they'll look at which apple devices they own they'll look at which customers have applied for an apple credit card the criteria now being tested by employees will determine whether the company is willing to lend to applicants and how they will react. >> lou gossett jr. and robert gere richard gere in the white uniform? >> i remember the song i remember the movie. >> the white suit. "an officer and a gentleman. that was unbelievable. not quite the american gigolo, but close. why would someone want a

goldman sachs credit card? they didn't really address that, do they get skymiles. >> what's on the back of the apple card it turns out that apple insisted they wanted the goldman sachs brand. it turns out people like the goldman sachs brand. it's aspirational. >> really. would you get one? >> what are the benefits >> i think it costs a lot of money. look at capital one. i don't know why goldman would -- they've got think these things through we're going to get through the last remaining member of rtc and during february we're celebrating black heritage hear some of the stories of our teammates and leaders in the business here's robert smith, business equity partners ceo.

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good morning welcome back to "squawk box" here on cnbc we're live at market times square you look at the s&p 500, down 13 points christy wilson, the soul republican on the federal trade commission says she plans to resign she cited disregard for the rule of law and due process as her rationale and has been i don't

know if i want to say silenced per se, but wanted to speak her mind in ways that she couldn't some of her dissents have been remove and didn't feel more broadly the way the ftc has approached a lot of these cases, whether it's blocking specific mergers, she referred to meta in one of the instances, but more broadly we talked to lina kahn upstairs live on the air about a month and a half ago when they made that decision around compensation for folks -- whawhat's the word i'm looking for non-compete. >> noncompete. >> two words with a dash. >> it's two. >> i think it's one. anyway, the question is whether

our approach to this has been overbroad, in certain cases if she recused herself given her stance on these issues prior to taking these roles. >> look. that's the rumbling that you heard from ceos. she's not doing it based on the rule of law. >> what about the idea she did -- there are things you can do that you might not do, but you have the ability to do it. to consolidate power >> dallas. >> yeah. right? they are part of an agency when depending on who's sitting in the white house. >> they are very much part of the agencies. >> it shouldn't be a surprise. i think she wants to register her -- doesn't want to be around that anymore wants to register this is what is happening and get on the record there's a lot of teeth in

antitrust. i don't know i'm not big on that in fact, we're going to talk more about big tech aren't they the gus? they used to be, the goose that laid the golden egg. a new push to crack down on big tech we're joined by mick mulvaney. he's also a former representative of donna edwards of maryland. what a difference, mick, a couple of years can make silicon valley is the envy of the entire world you just look at modern-day living technology is incredible whether it's amazon or the iphone, whatever you want to look at. it's brought great things to our lives. what's going whereon >> somehow, joe, they ended up as one of the few groups in washington, dc that doesn't have any friends. china doesn't have any friends anyone associated with the u.s. chamber doesn't have any

friends, and big tech doesn't. it's because they decided to get involved in politics there's the perception they pick sides that google is anti-conservative or twitter was. now it's too proconservative that they became something that they are not they became political actors, and that's the kiss of death that's why you see both sides have turned on them right now. it would not surprise me if we see not only regulatory action of big tech in the next two years but legislation as well. that's a divided government in washington, dc and it's one of the few areas right now. >> congresswoman, it's tough when it's coming from both sides. that sounds like the rights complaint. but i think they have a slew of complaints that don't involve censorship it's almost -- i don't know. the implication that some of these are monopolies because they're so good at what they do.

>> i think that's true we're under the law tweeting these -- especially the top four big tech companiesing treating them like they're power. they stifle competition. they own every single platform, so it's tough for startups and other businesses to compete. i think it's really time for them to bring them under a legal umbrella and under a regulatory umbrella that allows potentially even for some of them to be broken up. you know, when you're talking about controlling information, communication, content, all of it -- business, all of the scriptures of american light you just can't have four big companies and a handful of others trying to get into the

big companies controlling the marketplace. so i think that is the concern, but also the left has had concerns about whether or not these agencies are creating algorithms that disadvantage people of color, for example and so there is a lot of bipartisan opposition to these companies and and no surprise that they spend $70 million on loibd just to maintain their control of the market. >> i don't know, mick. it warms the soul, doesn't it. that doesn't bode well they have stronger regulations and want to do more. i've seen it for years going back to microsoft and others, but you look at the tech industry in europe and you think

that -- i mean, they're behind do you attribute that partly to the environment over there is it's just tougher. >> it is tougher i aisle agree with donna on something. we have treated them like startups for a long type the u.s. government did something right when it came to regulation at the outset of the internet age they provided the guidelines, they provided guidance, but they didn't stifle innovation for that reason that these companies were allowed to thrive you can ask a really good question -- and donna does -- whether you still get treated like that after you play bobble. section 230 which protects the facebook and others from slander, is that necessary for corporations certainly there are things europe did wrong that we did right. by the way, i'm getting

concerned whether i'll make the same mistake that crypto did that's another story certainly our regulatory story allow them to grow it's a fair question to ask. >> suddenly, donna, they're media companies, they're advertising companies. you know, we worry about privacy. they've got all this data. every single thing that washington is concerned with, censorship, noncensorship, disinformation it's all -- every tech company has a dpoenlt of that. it's tough you've got to feel bad, i think, at this point. i guess you don't really, have to fine pape at all. >> i don't feel bad. i think what has happened is really they do control almost every single aspect of our livens, and the data that they're possessing

they do it it in a way that stifles tom tell they don't allow access to some of the data, so it doesn't allow for the robust competition you want to see in any marketplace we've had concerns about the way that these companies engage with children and whether they're putting right kind of guardrails on i think there are a lot of concerns and continuation is concerned to take a look at this but they can't dawdle. that is my fear. i hope in the absence of congress creating the legal framework that the executive branch and the president will act to the extend that they can on the regulatory front. >> i think you two were initially -- we were going to talk taxes you're really renaissance people, the both of you.

we can do it the next hour if you can stay in your seat, and we'll come back and argue about taxes. do you want to do that that was initially what this segment was about. that's why it's called news. >> we'll do taxes, inflation, anything that makes you happy. >> there are so many things. >> yeah. >> retail sales today. >> this was new. >> what would you prefer if you were the producer >> it's so short >> more lina khan? i could talk more lina khan, i could talk starbucks i could talk about a lot of stuff this morning. >> we could also talk about europe's most valuable company making a big move. income we are going to talk

about that in just a few minutes. lv is hiring pharrell as a creative director. we'll go behind that next and see why it's making him happy. and brian deese joins us for his squauks exit interview as he's set to leave the white house. "squawk box" will be right back. emerson software helps clean energy become reliable electricity. go “good night." go boldly. emerson.

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louis vuitton tapping pharrell williams, music artists as a creative director robert, what's behind the move. >> well, becky, as you say, investors happy about this lvmh shares up 21 shares. a market cap of over $440 billion. it is the most valuen't company in europe, closing in on a net worth of $200 billion. lvmh announcing yesterday it's hiring pharrell williams not for being just a luxury company but a culture company. they're tapping into music, art, music, sports to heighten attention. it's part hone over brie a in's

cosmetic line, fenty beauty. and there's a new line which taps online female artists which has sold out in many stores. this pharrell move is the biggest left louie vuitton is now the biggest fashion brand in the world it has doubled sales over the past four years to 20e6r billion a year that's just the louis vuitton brand. that's one of 75 at the lvmh he founded the boys club fashion line, ice cream, all kinds of collaborations with chanel, adidas i have a new ceo there are questions how quickly demand will come back in china, but this isn't just a partnership, becky this is really -- pharrell is going to be an executive within

louis vuitton, in twice a year to design accessoriaccessories. this is a big job and a big thing for a big brand. >> this is an actual job this is pretty different than what you've seen with just about any other position because, you know, you mentioned rihanna. she's into that line you saw her pull her makeup and fix it great super bowl opportunity it seem as little different to me >> it is different and, remember, this is a job that prior to him was virgil hablo who was an icon in the fashion business these are literally big shoes to fill before that it was marc jacobs who was a design icon. so you're absolutely right and this is a big bet because this is a brand that's now $20

billion and he's now in charge not just collaborating on sunglasses and sneakers. so far shareholders like it. >> do you imagine this is now in the portfolio that is pharrell about is this a job that takes 50% of his time, 25% of his time, 100% of his time that and how does that work again, you talk about shareholders, larger company how does the portfolio approach work >> yeah, andrew. was the question i was asking yesterday. you know, to analysts and also to myself because, again, he's had all these fun collaborations he can continue doing red carpet events, dabbling in music production when you're doing two giant collections and all the shows around it that span the entire product range, this is going to be his life and job and a very demanding one. so i think it radically changing

his life this is going to be his full-time gig. >> one question. how much money do you think he's getting for this because he makes an enormous amount of money performing i mean he has a lot of things going on. >> a lot a lot, a lot, a lot. i don't massive. >> david can still deejay when he's still ceo of goldman. maybe he has a little free time. >> $15 million i would assume it would be a lot more >> oh, my god. what can we do

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retail sales for january are due out a little later this morning. that report will give investors a clearer read on how the consumer is faring plenty of companies this earnings season have cited weaker consumer demand, but many have also called the consumer resilient. companies like mcdonald's, mondelez and ralph lauren who

have indicated that. joining us right now with a look at the state of the consumer and his best take on the best retailers right now is jan nippon, the ceo of james rogers nippon, wwe. how is the consumer faring what do you think we'll hear with the retail sales number today? >> first of all, it is january, so, it is not a very -- it is the smallest month of the year, it doesn't mean a lot when you see the number however, how is the consumer faring the consumer is faring surprisingly well given the fact we still saw high inflation on the cpi. and we saw really high inflation on the food side of the cpi, which, of course, sucks up a lot of that otherwise what would be discretionary spending but, everybody has got a job and we saw that in the last report there is nothing to change that as far as i can see. the consumer is still getting a raise in those jobs. and people who change jobs are getting still fairly large raises so the consumer is pretty

healthy and they're still spending we have seen that and i think we'll see that later today but, something's going on out there, right the luxury consumer is doing well the low end consumer is not doing so well. that double digit food inflation is a real problem for them >> we were just talking about lvmh and this new move with pharrell, coming in to design things how do you feel about that, how do you feel about luxury overall right now? >> i've been a fan and they're both doing well. and i was surprised at the announcement once i thought about it, i thought, this guy is a fashion icon he can do this job, and i too agree that this is 100% job for him. this is a real job he's going to go out and design at lvmh. got to be a fabulous opportunity for him, but i think it is pretty fabulous for lvmh i'm not surprised the market

reacted positively across the board in luxury, luxury is doing well and so is aspirational luxury. >> andrew was trying to figure out, how much do you think he makes with this move what would it take to lure him away from the incredibly lucrative business he already has? >> my guess is his contract has a piece of the action here, don't you think? >> given the move up 21% year to date for his sake he hope he signed the options or restricted shares before that move. >> me too. >> very quickly, i want to ask one more thing, you wrote me earlier this week, i didn't realize you were a former air force officer. you have some thoughts just about these balloons that everybody has been shooting down too that i hadn't really thought until you mentioned it do you want to say what you've been thinking as you've seen all this play out? >> that's pretty far from retail, but, yes, we did have

that conversation and i said we fired four missiles, never done in the history of the can country over our territory ever. and it turned out to be five, not four because one of them missed and i said, if we're in a conflict, not in a conflict, we should stop shooting if we are in a conflict, somebody should tell us what's going on and i don't think either one of those have happened. i don't think we have stopped shooting we're still up there looking for balloons or something. and nobody is telling us what's going on so i'm pretty concerned about the whole thing. we don't fire live rounds and turns out they are firing duds, which i didn't know at the time, but they're still firing air-to-air missile over u.s. territory and we never had to do that before. >> an interesting perspective. jan, you're a renaissance man, thank you. >> officer and a gentleman.

>> there you go. and i sang the wrong song before. >> you did >> it is joe cocker, love is -- no, not that one, the other -- >> if we made a beaches reference, you would know that one of your top five. >> love bette midler love her. coming up, new mortgage data straight ahead as we head to a break. we're watching shares of tesla bloomberg pointing the company will halt some production at its shanghai production in february to make upgrades, revamp model 3. we're coming right back. when ', but to monitor threats to your hybrid workforce wherever they are... you need more than technology. you need cdw, who gets to know your business and can design and deploy custom solutions, with pre-configured hp notebooks with hp wolf security. ai-enabled threat detection and remote management protect your endpoints 24/7, giving your defenses some real teeth. bummer. hp makes always-on remote security possible. cdw makes it powerful.

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good morning inflation in focus for investors yet again. this morning, we get a key read on retail sales. futures are pointing to a lower open ahead of those numbers. dow futures off by 66. new york regulators ordering crypto firm paxos to stop minting new binance usd tokens the latest blow to the crypto industry costing the firm $900 million in redemptions we'll hear from the ceo of the blockchain association on the latest crypto crackdown. plus, china warning of retaliation to the u.s. entities as the spy balloon saga grows and lawmakers seek answers from the president. the second hour of "squawk box" begins right now

good morning welcome back to "squawk box" right here on cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin with becky quick and joe kernen we're looking at the dow off 66 points the nasdaq looking toopen down 48 points and the s&p 500 off about 13 points. meanwhile, flip the board around and treasuries as well right now looking at the ten year note 3.749. the two-year, 2.462. to frank holland who has a look at the stocks to watch this morning. >> good morning, becky let's start off with tesla tesla shares moving higher on news it will open a portion of its ev charging network to nontesla vehicles. this includes at least 3500 new and existing 250 kilowatt super chargers along highways. it has plans to double its nationwide network of chargers users will still need to use the

tesla app. this news part of the biden administration laying out a plan to build a network nationally of 500,000 chargers by 2030 and also new this morning we're following news from bloomberg that the company will halt some production at its shanghai factory until the end of february to make upgrades to produce a revamped version of the model 3. we'll be following that story all day. also, another earnings mover, devon energy now falling hard in the premarket. shares down more than 6% miss on the top line, miss on the bottom line. profits 5% lower than estimates. the company blamed lower than expected production and lower than expected energy prices. production guidance lower than expected, capex higher than expected the earnings call at 11:00 in morning. travel sector, airbnb, surging in the premarket this morning, up more than 9% after a beat on the top and bottom line. profit, 92% above estimates and strong forward guidance. airbnb says demand is strong throughout 2022 and that travelers are returning to major cities, which is one of the strongest areas of their business it also saw improvements in

cross border travel. back over to you. >> all right, frank, thank you we'll check in with you in a little bit. in the bond market, the yield on the six-month t-bill breaking 5% for the first time since july of 2007 the yield on the two-year treasury is trading near its highest level since november here to discuss the move in the bond market and the fed's fight against inflation is kamal sri you're still predicting 4% on the ten-year, but that's as high as it will go? >> i'm predicting 4% on the ten-year, joe, and, again, i always tell you a few basis points above or below. for instance, last time we peaked out at 4.25, 4.30 will i be surprised if it goes to 4.25? no, i will not but 4% is still my maximum and so anywhere at current level or

around 4%, they are going to provide effective competition to equities during the months to come and you talked about two-year treasuries, think about what happened as soon as chairman powell gave his press conference on february 1st, we were then at 4.1%. and today we are 50 basis points higher essentially the market is saying they don't trust the chairman's dovish message of february 1st they're looking for more rate hikes. the futures market no longer expects a rate cut during the rest of the year, so it is going to be one tough going for the fed during the rest of the year, joe, and that's the message from the market. >> yeah, the reason i was, you know, focusing on that 4% is because, you know, the short end of the curve is a lot higher so people are still convinced that they're going to, i guess, that they're going to go too far and eventually that long rates

deserve to be lower than short rates because there is going to be -- i thought we're going to avoid a hard landing some people feel like we're going to avoid a soft landing at this point because the labor market look oz ss so good, sri the stubbornness, you think they will cut at some point at the end of the year? the market is not saying that anymore? they'll have to overdo it and cut? >> i agree with all of your expectations on the two-year, namely the two-year is suggesting that the fed will go too far. i was not one of those who ever said there will not be a crash there was going to be a recession. i've been talking for two years about a stagflation. and that is still my principle expectation. now, will there be a rate cut before the end of the year it is going to depend on the unemployment rate surging from a 3.5%, let's say by one percentage point, by the middle of the year, third quarter, we

are approaching then the presidential elections and something needs to be done the pressure on the fed will be enormous that's one reason to cut second, in 2019, joe, we start quantitative tightening because there was a credit crunch in the market if that happens again, the fed will throw in the towel and say forget about inflation, our job is to save the system and we are going to go into quantitative easing mode. so, that's what has kept the fed looking increasingly growing its balance sheet over every ten years, it never comes down to the original level >> could you see just a turn on a dime in the labor market is that possible, sri? we had such a strong number that really scared the markets a couple of weeks ago, but, you know, okay, so we reopened, everyone wants to travel, everyone wants to go to restaurants.

they weren't staffed completely. so i understand what's happening right now. but, you know the expression things happen gradually and then it happens all at once look at all the other layoffs in other parts of the, you know, these companies are seeing something, whether it is finance or tech or wherever you're looking. so i think we could do that 1% pretty quick, the 1% you're talking about increase in the unemployment rate. right now it looks impossible. oh, my god, it is so stubborn, people can get whatever they want to get paid, the service sector, all that we're hearing, but could that turn on a dime? >> two ansers to your question, joe. one, yes, it can turn on a dime. and you can have -- for instance we saw that already with the finance sector, we have seen that in tech that you had a lot of layoffs coming on it is not reflected yet in the overall unemployment rate. that could easily change and change very quickly in the second quarter of 2023 let me mention another point for

those people like me who are history buffs. go back and look at 2006, 2007 the unemployment rate was very low toward the end of 2006, one year before the recession. then in the year 2007, the unemployment rate shot up during every successive month so what it says to you is that the unemployment rate can change it can change very quickly and i see the pressure coming at the middle of the year in third quarter. that's why i said soft landing is not my thesis just wait for it, it is a matter of timing that you're questioning, not whether it will actually happen. >> what does that all mean for just financial assets, do you think? bonds are -- bonds are probably a buy then, even on the long end. and i would figure stocks are still going to have some rough sailing or will the stocks --

will that be welcome when the fed either pauses or can stocks go up in the face of a hard landing? or do we really go much lower? >> three steps here. one, long end of the bonds if it goes from 3.72, 3.73 today to 4% or 4.1%, yes, you're going to lose money. but if you are looking two years ahead, you should do fine. even on the long end three-month, six-month, they look great in terms of the yield if you're looking at it over the short term equities, i think it is going to be a hard landing yet to come in terms of where it is what changes equities around what causes it to go up? cause a rally? it is not what fed does right now, but if you have a crash, if you have a credit event, and you have a large financial institution or a hedge fund

which goes belly up and requires to be bailed out, that's going to be very positive for equities in that setup and you'relet not going to get a signal. >> okay, sri, thank you. we're getting a wrap we have to end it there. thank you for your update as always. >> always good to be with you, joe. let's tell you a little bit about earnings just out. kraft heinz reporting results that came in at adjusted level of 85 cents per earnings per share versus the estimate of 78 cents. revenue slightly higher than expected it is talking about the outlook for this year and that may be why you're seeing the stock down by about 13 cents. they say that they see inflation up high single digits for 2023 they're now looking for adjusted earnings per share of $2.67 to $2.75. street was a little higher at

$2.77. when we come back, a lot more senator tommy tuberville re reducing his financial freedom act. we'll talk about it. before we head to a break, a check on crypto this morning a senate hearing on the ftx fallout and possible regulation, more on that as well you're looking at bitcoin $22,635. back after this. (voya mnemonic.) there are some things that go better...together. burger and fries...soup and salad. thank you! like your workplace benefits and retirement savings. with voya, considering all your financial choices together... can help you make smarter decisions. for a more confident financial future. hey, a tandem bicycle. can't do that by yourself. (voya mnemonic.) voya. well planned. well invested.

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the 10g network, only from xfinity. one giant leap for mankind. new this morning, senator tommy tuberville is reintroducing a proposal he unveiled last year called the financial freedom act. it aims to roll back a policy introduced by the department of labor in march that issued guidance for retirement plan sponsors against incorporating cryptocurrency in 401(k) plans joining us right now first on cnbc is senator tommy tuberville and, senator, thank you for being here today >> thank you >> let's talk a little more broadly about what this legislation will actually do i think it was originally introduced not about crypto per se, but more about the idea of esg rules that had been rolled out by the department of labor you want to explain a little bit about the back story >> yeah. well, it happened almost a year

ago coming up in march first of all, every american should have the right to invest their retirement money how they see fit. but last march president biden and the department of labor got involved in this and for years every american had the opportunity to go through what we call a brokers window in their 401(k)s. the department of labor said, you know, we need to get involved in this we don't like the looks of cryptocurrency we want to make sure that we limit whatever we can through these 401(k)s, through the brokers windows. so they did that we thought it was a huge overreach. they didn't go through the proper channels. they didn't go through public comment. they basically broke the law by doing this they just said we're going to do it, we don't care what anybody else says. and so that's when we got involved we put in the financial freedom act. we introduced it basically saying you can't do this you have to let the american people invest in what they want

to because it might not just be crypto in the future it could be gas and oil, mineral, wind and solar, water, anything like that so we -- it is just an overreach by big government is all it is and we want the american people to have the latitude to do whatever they want with their money through investing in a 401(k) they worked for that money all their lives. >> let me just play devil's advocate we have a story earlier this week about how you have to be in a credited investor and have at least $200,000, maybe $300,000 in investable assets if you want to invest in brand-new companies. angel investing companies. they do that because so many of these brand-new companies go belly up north of 65% of them, i forget what the number was, it may have been north of 80% of them go belly up and you don't want people who don't do this for a living or who aren't experienced in this getting taken advantage of and losing all their money. crypto, i would argue, could be

seen as one of those new asset classes, it is a new asset class, it is unregulated congress hasn't been able to pass regulations that make it clear who is in charge and we have seen big blowups as a result there has got to be some limits on some of these things because you don't want the american public getting taken advantage of. >> well, who is to say big government is better at choosing one stock over another or one -- >> i hear you. i understand your concerns about this being taken to things that people don't like, like gas and oil. i hear your concerns about that. but there are limits that do already exist about assets that we don't allow people to invest in regularly so, it is not the only thing that is out there and i would say if congress would actually get its act together and regulate the industry, you might feel better about having people going in, at least knowing the rules of the road. >> yeah, this financial freedom act, though, that one brokers window, it is one area that the investor can say, listen, i think that this is going to be

good i earned this money, and i think this company or this whatever they get invested in, crypto, is going to do well and they want to invest a small part of their money. it is not all their money. just a small window in terms of their investment now, we go back to crypto, you know, unfortunately washington, d.c., capitol hill has let crypto down. we did not regulate it we ran ftx through the bahamas because there was no regulation. if we would have kept them in the united states, we would have known what was going on with ftx. we have two bills, bipartisan bills in the senate as we speak and probably will be reintroduced in congress to regulate crypto. it will survive in some form or fashion. digital assets will survive. but, you know, the overall scheme of things, what we want to try to do is make sure the federal government doesn't step into everything that they're not supposed to step in when the american people worked hard for that money, they have the right to do what they want to with it

and who is to say the federal government is better at this than the individual. >> what kind of support do you have this is something that other senators, including joe manchin, have co-signed with you. what level of support do you have >> yeah. we have got very good support. it just never made it to the floor last year. the democrats had so many things going on that it just -- there wasn't enough time in the day to get this on the floor. i think this year we got a good chance we got -- as you said, bipartisan support i think we got a good opportunity, but at the end of the day, it is the right thing let's don't mess around with the money of people have worked so hard to gain and then have an opportunity to build on that who is to say that the federal government is better than the individual >> and, just in terms of regulation, when it comes to figuring out what to do with crypto, where do you think things stand there

>> well, of course, crypto goes to the ag committee, i'm on the ag committee i think we have a good opportunity to get a good bill through where we can gain control of what is going on. what worries me is the exchanges, you know, the few regulations they have overseas or and not in the united states really are a gamble. if we can get regulations, get them back be to the united states, control them, the one thing that worries me also is china buying the exchanges that we have. whether out of the country or in the united states. we have to address that too. we have to make sure that we control our currency, our digital currency, everything that goes around it. >> should the s.e.c. or the cftc be in charge >> pardon? >> should the s.e.c. or the cftc be in charge, the lead regulator when it comes to most of these crypto issues? >> yes, cftc should do it through the ag committee it is a commodity as we speak. that could change years down the

road but i think that we got a good handle on it again, everything that we have done with crypto in the last two years that i've been in congress has -- we have done it to build on crypto, to make sure it is sound, it is solid but we just got to get it to the floor and get it regulated. >> yeah. all right. senator tuberville, thank you very much. we appreciate it. >> thank you thank you. coming up on the other side of this, the latest read on housing, the number just out and we're going to bring you them after the break. "squawk box" coming right back time now for today's aflac trivia question. what is the oldest, continuous one-name, one-city franchise in american professional sports the answer when cnbc'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. tell me about it. did that goat say "gap"? he's talking about expenses that health insurance doesn't cover. eh-ehh-eh! well i'm talking about the money

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now the answer to today's aflac trivia question. what is the oldest continuous one-name, one-city franchise in american professional sports the answer, the philadelphia phillies want to get the latest read on mortgage applications just out moments ago. diana olick joins us now with

the latest there diana? >> well, andrew, mortgage rates had been falling for five straight weeks, but that came to an abrupt end last week and as a result mortgage demand tanked. total mortgage application volume fell 7.7% last week, compared with the previous week according to mortgage bankers association's seasonally adjusted index the average rate on the 30-year fixed for conforming loan balances jumped to 6.39% from 6.18% for loans with 20% down. the rate was 4.05% at the same week one year ago. applications to refinance a home loan dropped 13% for the week, 76% lower than the same week a year ago and at the current rate, 100,000 fewer borrowers can now benefit from a refi compared with just a week ago and that's according to data from black knight a year ago, there were just under 4 million refinanced candidates, just to give you the context there. now, mortgage applications to buy a home fell 6% for the week and were 43% lower than the same

week a year ago. real estate agents across the country are reporting a jump in buyer demand in the past few weeks, but there are a lot of cash buyers in the market now and still just not a whole lot to buy back to you guys >> thank you, diana. interesting to see what is happening here i don't know i don't know want to refi >> no. not going to get a better rate. >> not now >> but you locked in a while ago, the rate, unless you had something different going on. >> the big question is going to be are people -- everyone doesn't -- there was a view 2007 everybody was going to roll off of these crazy -- >> adjustable rates. >> the question is how many people have adjustable rates now? everyone seems to think they don't. i'm a little worried they might. >> i think if you -- if you've gotten to this point, we watched the rates come up. if you're locking in something now, maybe you have adjustable. >> i prefer fixed. i'm cautious. >> seven-year or something, by

the time you get to them, adjusted back down probably. the fed panics >> we'll see still to come, crypto firm paxos facing s.e.c. charges and ordered to stop mining binance's stable coin. the ceo of the blockchain association is going to join us next to discuss the news and talk about crypto regulations. lawmakers seeking answers from the white house on the unidentified objects shot down by the military. we don't know. we have no idea. we're going to hear from a former nato general on the balloon drama and china's new warning. stay tuned you're watching "squawk box.

one week after southwest's ceo was grilled on capitol hill, the faa's acting administrator will be called before the senate commerce committee to explain the computer outage that crippled the country's commercial airlines. that was back in early january is the problem bigger than just air traffic controllers? phil lebeau joins us now with more hey, phil. >> hey, joe. i think people are all in

agreement in washington that the issues surrounding the faa and the use of the air traffic control system, the overall stress that is on the system for commercial airlines, it goes well beyond what we saw in january with the outage. that will be front and center when the faa acting administrator billy nolan will be testifying before the senate commerce committee and ahead of that testimony, he issued what he called a safety call to action last night, sending out a memo to the faa administrative board saying they're going to have a safety summit next month. also saying we need to mine the data to see whether there are other incidents that resemble ones we have seen in recent weeks. we're talking about runway incursions, the possibility of one aircraft almost hitting another aircraft as it was approaching to land, we have seen a number of these in the news over the last several weeks. and for the commerce committee today, the focus will primarily be at least initially on the

outage from early january where essentially the air traffic system in this country was shut down for about five hours. keep in mind that passenger rates right now, in the u.s., not quite at prepandemic levels. but they're getting close. meanwhile, the flight levels, they're still well below where we were in 2019. about 10% below, 9% below in terms of the number of flights we see fewer flights, but almost as many people because the airlines have upgauged in terms of the size of the aircraft. that is what is going to be front and center today when you listen to this testimony today, don't be surprised if you hear billy nolen saying we can do better, we will do better, we need to bring everybody together and look at how effective the system is now and where we can improve it. >> phil, just changing the subject entirely, keep us updated on airfare inflation and how that factors into the overall number and whether i

would imagine if it is not here already that it is pretty inelastic. travel, i would be raising prices, if i could. >> they are raising prices where they can i don't know the latest data i don't know the latest data i think when you do inflation adjusted, we're still below where we were at 10, 15 years ago. but they are there is no doubt about that anybody who is taking a trip if you're going to book a flight now, you're not finding cheap fares. >> i have a friend who was shocked that at what some things cost >> i'm going to florida next week. >> what should i tell this friend >> when are you booking? joe, when are you booking? i say this to people all the time, they tsay i'm going in two weeks. if you're booking in two weeks, yeah, okay, i understand your concern, the further out you can go, we said this for years, the further out you can go with your planning, the better your

chances are you're going to have a halfway decent fare. >> i thought they might come down if i waited >> nope. >> yes, yes. i've got some land to sell you later on. >> i don't want to be near the bathroom either. ever been near a bad bathroom. >> yes awful. i can't stand the smell of the blue stuff that makes me want to vomit. the stuff in the toilet. the chemicals. when we come back, new york regulators ordering crypto firm paxos to stop minting new binance new usd tokens this is the latest foil to the crypto industry. the industry costing the firm $900 million in redemptions. we're going to hear from the head of the blockchain association, kristin smith that's next. right now, check out the futures ahead of retail sales that we get in under an hour's time things have moderated a bit. the dow is down, only by 27

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welcome back to "squawk box. cryptocurrency firm paxos will cease issuing binance stable coins under the direction of new york state's financial regulators

the latest move to escalate regulatory efforts to rein in the crypto industry. joining us now with reaction to this news and next steps for regulators, kristin smith, ceo of the blockchain association, a trade group that represents crypto companies in the united states and i think a lot of folks are looking at this, they're looking at the kraken decision we heard from the s.e.c. last week, and there are now even more questions than answers than we had perhaps before >> yeah, it certainly feels like a crypto carpet bombing, andrew. i think those of us in the industry, every time we look at our phone are shocked to see another major regulatory headline, you know, come across our twitter feeds. but i think if you look at these individually, what we have going on is we have different regulatory agencies that are come coming in, taking action, often enforcement actions or in the case of kraken a settlement and trying to sort of quote,

unquote rein in the industry i think a lot of this is in reaction to ftx for regulators were largely caught flat-footed in anticipating what turned out to be one of the largest frauds since bernie madoff. but what we really need for this industry here in the u.s. is we need to do what europe has done. we need to have comprehensive legislation that assigns regulators the appropriate responsibilities to address the risks that are inherent in these networks and to have an open process and set the guardrails up front so we're not playing this game of regulation by enforcement after the fact so we were encouraged yesterday that the senate banking committee did their first crypto hearing this year, it will be one of many. we have the house financial services with our new digital asset subcommittee coming up so, you know, a lot of work to be done here, but certainly disappointing to see these regulatory actions happening via enforcement action >> i want to show you some video

of elizabeth warren, senator elizabeth warren yesterday at the crypto hearing criticizing the industry for skirting antimoney laundering rules take a look. >> so, we have money laundering rules that cover banks and credit unions and stockbrokers and gold dealers and even western union. but the current rules don't cover big parts of the crypto industry and crypto likes it that way and in fact, the crypto industry claims that applying antimoney laundering laws to the whole crypto industry is, quote, not only unnecessary, but it is all but impossible >> what do you think >> yeah, listen, you have to remember the on ramps and off ramps to cryptocurrency world are regulated. companies like coinbase have to register as money services businesses with the financial crimes enforcement network and have antimoney laundering bank secrecy act plan in place. so these laws do apply to

intermediaries i think what elizabeth warren is referring to is having sort of know your customer programs for self-hosted wallets. and the reality is impossible. this would be like the equivalent of with cash and actually your leather wallet you have in your pocket of having information associated with each of those that then goes back to the government like, this is just simply doesn't work i think that we need to have a way for peer to peer transactions to happen in a private way. but anytime you go from crypto to cash or cash to crypto, that is regulated just as any other intermediary would be here in the united states. >> and what is your take on what we heard about kraken last week? we had gary gensler on the program on friday after that announcement and there seems to be a real sense right now that there is lots of different enforcement actions taken. he's saying to folks who are watching our broadcast and others please come in, register,

come on our website, tell us what you're doing, and, you know it will work or i don't know if he's saying it is going to work, but he's saying that's the temporary solution how do you see that? >> yeah, you know, there are a lot of forms on that website and it is not super clear if you're going to offer a service for customers. which of those forms to fill out, and how that is going to be regulated. what we need to do is figure out how to either do an entirely new set of forms or translate the old forms to the new network it doesn't simply work to come in and register and so, yeah, the fact that gary gensler says that is incredibly frustrating from those of us in the industry who want to be compliant, but you just can't do it within the way that the current structure is set up. so, you know, i think with something like kraken, it is even more frustrating with the settlement because that settlement provides guidance for that specific set of facts and

circumstances. it doesn't provide guidance for other companies that are trying to offer this very valuable service, by the way. we want to have proof of statement works. these are very energy efficient. this is a very popular way to do computing on a large scale and to have those transactions be valid. we want more people to participate in that process, like, that should be a worthy goal and so we need to figure out that for consumers that don't want to do this on their own but still want to be part of network, we want to figure out a p path forward to doing that there is no path forward the path just ends for kraken and it leaves everybody else confused as to how to proceed. it is really why we need congress to step in and work on legislation and try to answer some of these questions in a more comprehensive way. >> do you have any expectation that is actually going to happen i know you want it to happen. >> i think it happens. i think it is more of a question of, like, when does it happen? as i worked as a staffer on capitol hill for ten years, i

know very well that it takes a long time for these bills to come together and when we have something as complicated as crypto, you know, it takes a while for the committees to be fully educated on what is going on in the marketplace, and to understand the risks that these networks pose so that we can appropriately regulate to those risks and so i think, you know, a journey of a thousand miles begins with one step we're awe couple of steps in we need to keep moving forward and we need to have more discussion, more debate, more hearings, and then whether it is this year, this congress, or next congress, i think eventually congress is going to have to get something done because there are gaps that exist in regulation and exist in law don't cover and congress is going to have to come in to fill those gaps >> okay. kristin, thank you appreciate it. >> thank you, andrew all right, coming up, pressure is mounting on president biden to speak about the recent unidentified objects shot down. and in the meantime, china once again threatening retaliation against u.s. entities.

we'll talk about that next with a former nato commander. and at the top of the hour, brian deese will join us for his final interview as nec director at the white house "squawk box" will be right back. maybe it's because you can gently raise your partner's head to help relieve snoring. so, you can both stay comfortable all night. and now, save 50% on the sleep number 360 limited edition smart bed. ends monday.

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huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now. welcome back to "squawk box," everyone elon musk says that he might be able to appoint a successor as twitter ceo by the end of 2023, but first he needs to stabilize the company. he made these comments at a summit in dubai overnight.

musk saying he thought twitter would be in a stable position by around the end of the year he said he wanted the company to be in a financially healthy place and have a product road map that was clearly laid out before he followed up with succession separately the white house says tesla will open part of its proprietary super charger network to other kinds of vehicles for the first time. this move qualifies the company for a share of billions of federal dollars on offer to build a national network of ev chargers the white house said tesla plans to open at least 3500 new and existing chargers to drivers of all kinds of evs by the end of next year. you can see tesla shares this morning up by 2% >> we were talking about the -- the financial payment system, how you do it. it looks like, at least there is speculation in how they're building the app, you use a tesla app, which actually would be a very interesting way of getting people into the sort of tesla system >> yeah. >> we were just talking about how you gauge this financial

stability of twitter and i would use that chart that we showed. >> which chart >> tesla chart. >> the tesla chart >> don't you think >> that's an interesting perspective. although -- >> that's a hell of a lot more stable now than it was at $80. >> that follows what every other tech stock, the growth stocks, suffered under other growth stock -- >> the stability of twitter has got elon musk behind it. >> what do you think about using the twitter app as the financial payment system fin which case yo turn the entire thing into some kind of massive payment company. >> like pay paul like he said already he'd like to do? >> yeah. meantime i want to talk about businesses that are buzzing for applications like ai businesses like chatgpt. leaders flagging the built-in

risks and the biases attached to it it's great to see you this morning. michael, we're all trying to understand where this all goes we all see the upside, and then i think a lot of us see the downside at least for our kids, papers, and are you ever going to have to know how to write or basically read ever again? but what do you see? >> i see a lot of exciting things and a few risks like anything else that you build one of the things that people are worried about and that we see a lot of chatter about is something called bias, right there's lots of different kinds of bias. we don't have to go down a political rabbithole to talk about bias but the ai problems tend to be a lot like other problems. probably half or more than people watching the shows, you know as well as anyone

there's the old adage, gar bin in, garbage out. if the data are not good in the model, then the replicas are not going to be good either. okay, that's fine. same with ai let's ask the compute whatever's the greatest company in the world. you and i both agree it's the united states of the world computer, who's the fairest country of them all, the greatest country and if a person puts russia rah in in the database, then you have to correct that. if they say the roman empire under augustus, that's not what we're looking for. we're looking for the greatest country today. we get all the 190 countries in the database we ask the computer what's the greatest country in the world today. it gives us an answer. the question becomes not just what's in the database but by

what yardstick is the greatest measure? >> one of the things we've talked about on this broadcast is the idea the service, the way we ascribe it, it's trying to give us one single answer, the answer. >> that's the goal. >> and that's what i want to talk about for just a second that is the goal in certain respects, i think, but maybe it is because we, all of us, given the way we've learned to live our lives over the last decades, maybe 20 years t internet t idea that there's links that get you everywhere, we've always become -- i always say we've become our own journalists and own reporters, and we actually like to hear a bunch of different answers because, in part, we're trying to come up with, for better or worse, our on truth and how that matches with this sort of effort at creating the

answer >> sometimes you want a lot of answers and complexity and nuance and sometimes you don't there's only one answer, man there are certain circumstances in the world where you want one answer and you want to it to be useful and meaningful and clear because it's not a very complicated question another circumstance is where you want nuance. >> when you say what's the best country in the world, i would actually want knuance for that. if i said what's the best outdoor furniture company, i actually would want -- if i was looking for outdoor furniture -- >> you probably not do -- actually you do not want nuance. you want what's the most cost-effective or best for outdoor weather or winter weather. >> otherwise it's subject active, what's the best.

>> social mobility, those are value judgments that we have as a society and that we should have as a society. let me tell you something when your kid sister takes a boy home to your parents to introduce them to the parents, they're not asking is he a really happy fellow? they're asking is he hard-working, industrial, tall, ethical? this is not a top criterion for that question. we should have agreed upon value-based judgments as to what yardsticks we want to use to measure greatness, goodness, bestness you as a buyer of outdoor furniture don't have to agree with me as a buyer of outdoor furniture as to what makes the furniture best for your house. that's a much more personal question you will see in more values-based questions,

truthiness, greatness. >> so just to answer your own question, who is doing this the best is there somebody out there you think is going to nail this problem, or do you think this is sort of an unfixable con undum. >> i'm not sure, but i believe the' is in my portfolio. here's what i can say. this is a jump ball. when you search on google, you've get ten links or so many links. you have to make a judgment whether you go to wikipedia or google's first link or whatever to see where you get the first follow i think it's a jump ball, and i think there's going go a lot of corrective before we get this right. you're going to get answers that are tent active, answers subject to transparency. microsoft is offering citations, encyclopedia citations you can search for sources and

people who are offering correctives. i think elon musk ice to crowd source wisdom through twitter correctives is a way how >> michael, we want to thank you. the good news this has been a human-to-human conversation. in the future it may very well be -- >> but a lot of intelligence. >> that was fun, michael. >> i'll come to the studio the next time i'm in new york. >> all right, thanks. coming up, nec director brian deese coming up to talk about everything from buybacks to taxes. and retail numbers are out at 8:30. futures ahead are in the red, but not to a great extent. about 7 points on the dow. "squawk box" will be right back. maybe it's perfecting that special place that you want to keep in the family...

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good luck young man. realtor.com to each their home. good morning futures pointing lower as we await another look at the american consumer. january retail sales results ahead. we've got an exit interview with the current director brian

deese. and the misses keep coming goldman sachs, we just learned the bank is scrapping an idea for direct consumer credit cards. mike mayo will join us on the headwinds facing that bank and the rest of wall street as the final hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" live from the nasdaq market sight times square i'm joe kernen along with becky quick and andrew ross sorkin the dow down 86. the nasdaq gained but is down this morning about 43, s&p, the third one we follow was down about a point yesterday, down 11 points not a lot happening even though

it was a hotter number but continued to show some moderation for some of the numbers that we had been seeing when we were above 8% of even 9% at one point treasury yields on all of this news, 375 on the 10 yee and on the 2-year you can see it at 464. president biden hitting back on the buyback stocks pretty hard today ka ka kayla tausche joins us more for that >> he's drawing contrast he's taking frequent aim at corporate ks, but he's now focusing on executives that use capital to fight back. he said yesterday supporting lelg lag that shifted compensation away from crash is one of his biggest regrestes.

>> 91% of all corporate execs are paid by stocks what's the one way to increase your salary? buy back your stock. we raise the price of the stock, raise the value, and the shareh shareholders, guess what you end up not investing on the thing you're engaged in. >> it was $1 million taxed for a company. a big loop hole allowed companies to keep deducting performance-based pay largely based in stock the issue gained attention when think tanks for policy studies found that wall street banks wrote off more than $2 billion in bonuses while being dealt payouts. president biden has also proposed raising a tax on stock buybacks to 4% to slow this

activity the 1% tax that was put in place last year hasn't made a dent becky? >> kayla, these are attacks, i guess, that probably rate well at least when they're polling democrats. is that part of the reason they're going along with this in. >> well, certainly it's a popular talking point, and there is some support on capitol hill for the buyback tax, but i'm told that last year when there were discussions around the 1% buyback tax that there was some hang wringing among republicans because it was viewed as a slippery slope if you introduced a 1% tax on buybacks, could it slide to 5% or 10% it looks like it's moving in that direction, but we'll see what happens >> slippery slope before they even get started kayla, thank you. let's bring in one of president biden's top economic advisers brian deese yesterday he named lyle brain nard as the ned chair as brian

prepares to step down. is there a book? can we do the memoirs right now, the five greatest anecdotes that are in the book? are you willing to do that, or are you going to save that >> i'm going to save that for a future indefinite time i'm going to stay here for the next couple of days and then walk out and see my family and get some sleep that's all the plan i've got. >> you orchestrated a lot of what was accomplished over the last two years as the president's chief board of policy, i guess, architect not all -- it's not all finished yet though it's done, the money is al allotted, but the infrastructure, the chips, all the iso, it's got to be done do you think you can leave before it's all done or can you pass the baton effectively

any regrets that you're not going to be seeing it through? >> it's the right time to pass the baton for my own personal readings and my family i have a lot of confidence in lael as we step back, we've gotten to an important milestone we don't need additional performance from congress. this cross-cutting agenda across energy, infrastructure, innovation, and semi-conductors, and for the first time in a long time in if u.s. we can see the potential benefits in places where we know that it will drive productivity like infrastructure investment and r & d you're absolutely right. the work ahead needs to be focused on implementing effectively, fast, and moving these investments at speed and scale. i will be sad to pass the baton, but i'm absolutely confident

this team and this process is going to be oriented forward focusing on those goals. >> people have pointed out to a different job. there probably won't be any new proposals or legislation that glets through. maybe the president runs another term and gets another term. >> certainly it will be different, but i will say there's every reason why you could see more opportunity on the legislative agenda that will be some questions about whether and where and in what context the public can work with the president, but there are lots of areas that would be win-win opportunities, whether it would be increasing housing supply and lowering housing costs which both have supported. increasing competition and entrepreneurialship. a lot of bipartisan support on that you heard in the president's

state of the union there are many places where we can make progress practically speaking. you're right it's going to be a complicated environmental. we have to wait and see where republicans have appetite to move on these types of initiatives, but certainly i would hope we would see progress in a new era of divided government. >> one of the things i was alluding to in the memoir, i'd like to hear what went on in getting senator manchin's vote your credit with bringing him into the aye crowd on that and the permitting and him insisting the rug got pulled out from under him. you did salvage what looked like wasn't even going to happen. it would have been much larger following the c.h.i.p.s. act and infrastructure bill. it didn't look like there was going to be another big bill by getting manchin, that did happen is it unfortunate, do you think, that permitting didn't go

through? that was his biggest -- i guess that was the biggest give he got to go ahead with it. >> it is unfortunate that congress didn't move forward with it. for the president and myself, it does need to be a priority just because congress wasn't able to get it done last year, we're going to need more to build out and maintain energy security as we do so and so i think and i hope that that will continue to be a priority i'm confident it will continue to be a priority for the president. and there is still opportunity to work on that front. and i think what you'll see is this administration as part of that effort to implement effectively, using the existing tools we have anywhere we can to try to rationalize the process, cut out time, make sure we're doing things as effectively and efficiently as we can, a lot of

this is about unlocking new investment and transition lines across the country that we need to facilitate more zero car been electrons. i hope it will continue to be a priority it certainly will be for the president. and i think there is a pathway to keep moving this on the hill. >> in the c.h.i.p.s. act, there wasn't a provision about buybacks when it was done. but now we're hearing senator warren talk about, you know, not even allowed to do buybacks if you sep some of the c.h.i.p.s. act largess, and one of her former advisers is getting elevated is it -- does that mean it's likely that a lot of these chipmakers will be -- at least an attempt will be made where they're not allowed to buy back stock? >> the chips legislation itself had a provision that said none of the money that the government provides can be used for stock buybacks in the implementation of that,

secretary ramimondo and the tea will look at it. if you step back, the policy of using the tax pair dollar, yug it to build the ip infrastructure around that and research and innovation, the whole goal of using federal taxpayer particulars is to encourage capital investment in the united states. and so that's not consistent with a company taking those funds and then doing significant buybacks so from a policy perspective, there's a logic to saying if you need federal funding to move forward, your priority should be investing in america, investing in research in the united states so we're going to keep that policy goal in mind with every part of the implementation obviously secretary raimondo and her team will speak to it. >> sorry to interrupt. i wanted to ask you one more

thing. governor desantis is going to prohibit esg, i guess, funs in terms of muni bonds and things the state can control. there's been a bit of a bash lash do you think the pendulum swings both ways, now it's back here? do you think it's going to continue to fall out of favor, or do you think it will have a renaissance? >> look. i think there's a lot of politics on this issue i think underlying it is the core fiduciary obligation. they need to incorporate things that are material to those long-term outcomes, and companies themselves are going to make decisions about what's material, but if you talk to operating companies, ceos across sectors of the economy, things like how the physical impacts of a changing climate are going to affect their capital investments of the world are clearly material to their investments going forward.

and so there is a lot of -- there's a lot of noise around this i think the core issue will be the increasing salients of these issues from a pure investment perspective. >> i don't know what to say now, brian. a lot of people when they've had a great career in government, they can become a cnbc contributor, not before. have they talked to you about that i can't offer that to you right now, but i'd invite you. >> i appreciate that i'm just focused running through the tape here. i will say it's been a privilege, a lot of fun to spend some mornings with you guys for the past couple of years. >> thank you, brian. we appreciate you doing it. >> some of the mornings. not all of the mornings. some of the mornings. >> not every morning was completely pleasant. we have had ups and downs.

>> as does every great relationship. >> i would hope so not everybody is nodding when you're talking there's some disagreement in the world, as you probably know. >> seriously, thank you. >> great to see you, brian. >> you're welcome. coming up on the other side of this break, mounting pressure on president biden's speech on unidentified objects shot down and meanwhile china's retalty yags with the u.s. we'll talk about that next with a nato commander squawk returns after this. >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com science proves quality sleep is vital to your mental, emotional, and physical health. and we know 80% of couples sleep too hot or too cold. introducing the new sleep number climate360 smart bed. the only smart bed in the world that actively cools, warms,

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you're only a year older than me. you have no idea how good you've got it. huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now. welcome back to "squawk box. elon musk says he might be able to appoint a successor by the end of the year, but first he needs to make sure the proper roadmap is laid out. he made those comments in dubai. we should note musk has a history of not always nailing the deadlines. tesla has agreed to open up at least 7,500 of its u.s. chargers to other evs by 2024 that's according to the white house.

there should be 100,000 on the u.s. roads by the end of the decade. and hugh son reports goldman sachs is dropping plans for a credit card. it would have included a digital checking account to enhance profit margins, but that vision is no longer the case after goldman sachs' ceo decided that he was no longer going to pursue that path of the consumer business we're going to talk more about that later this hour with wells fargo analyst mike mayo. new this morning china warning that it will retaliate against the u.s. over violations of its sovereignty potentially escalating the chinese spy balloon that was shot down earlier this month yesterday republican lawmakers calling on president biden to speak publicly about the recent unidentified objects that have been shot down over american and canadian airspace. for more on this, we want to

turn to a former retired naval thank you for being with us this morning. i think there will so many questions, admiral, about what's been happening not a lot of people have answers. i'm not sure if you do, either, but i'll ask you anyway. what has happened with this? is this more unidentified objects that have been floating over our airspace or are we get bether at spotting of this stuff? >> i think i'm going to go to door number two. we're waking up to a lot of things in the atmosphere above us clearly the first one, we have to focus on that we know it came from china we have a pretty good idea of its mission. there are unanswered questions about its technology i'm sure the u.s. navy will recover that vehicle, put the pieces and parts together.

we got the challenger out after it blew up in space. we'll get this donele we'll learn more the three follow-ons are pretty murky and the administration owes us all a bit more clarity there's more stuff floating around that we're aware of operationally and we show the fighter jets shooting these things down we need to think of our operational approach there not every object up there warrants a an f 32 and f-95 and sidewinder missile we've got work to do, but, again, i don't see this as the leading eng of some kind of serious conflict between the u.s. and china

>> yeah, satellites have spied on us and we've used them to spy on other people. are we going to to take those out of the sky. >> space is not the final frontier, but it's become more focused for military and the spending is going to go up what we need to know was on here is the strategic relationship between the u.s. and china which has been up and down, shall we say, but over the last few weeks has more sand in the gears, more tension, and that's partly, becky, because the u.s. signed an agreement with the philippines has put a base in guam some of this is china's response this is something we'll go back and forth on a bit watch the u.s. watch tony blinken that's when both sides indicate

they're willing to stand down a bit from the breathless cycle of the moment. >> even in the last week, it sounded like china was making overtures saying they are welcoming secretary -- the treasury secretary's visit that's expected to come up does that tell us these are the things we should be watching instead? >> it does indeed. there's going to be a lot of churn in this relationship a spike and another thing to watch would be if speaker mccarthy decides to follow through on a trip to taipei. that will create another cycle of rumpas. i think you're going to see the relationship detention in the months ahead. >> do we still have more to learn about the latest incident? the latest is some unforeseen winds may have put the balloon on a path china wasn't

intendinging in the first play if that did happen, they would admit -- would they sooner admit they were deliberately sending it over to the u.s. or would they admit that they messed up and inadvertently did that i don't know can they get to the bomb of it if they didn't try itting we certainly shouldn't be changing our strategic approach to china if it wasn't intentional. >> exactly right, joe. smart question again, once we get the pieces and parts put back together, think of it as a black box, we hope, we can find out what kind of direction it had. we have other intelligence sources tapping into the motivation behind this my guess -- and it's a guess is that this was deliberate in the sense of let's collect intelligence, let's send a signal that we're displeased i don't think china would have wanted this to ramp up to the

point it's at in this moment here the thing to watch is the statements coming out of beijing which recently have been more aggressive, accusing u.s. of flying balloons over china reared a mirm kirby knocked that down hard yesterday, but china's pushing back, exactly as you say, joe, trying to create a different narrative here. >> admirae admiral stavridis, t very much. >> you bet. top analyst mike mayo will lay out the current issues of goldman sachs, of which there are many ahead of this month's highly anticipated investor day. stay tuned you're watching "squawk box" on cnbc

jup next, we have breaking

retail sales data. we'll have the reactn en quk x" comes right back.

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welcome back to "squawk box" on cnbc. we're just seconds away from january retail sales data. you can see that the dow and the other averages are down over

triple digits on the dow the nasdaq is down it was up yesterday. the s&p which was basically flat yesterday is down a little bit any of these economic numbers are important at this point. we'll see about the strength of the consumer in just a couple of minutes. the 10-year as you can see is 375. 2-year 2.66. santelli will have those numbers momentarily. hey, rick. >> yes, good morning, joe. empire, a february read, one of the more contemporary numbers we get, expected to be minus 18, comes in multiple times better, but still a minus sign in the rooer view mirror, 32 president 9 was the weakest since may of 2020. this is a nice reprieve. this would end up being the best number since november of last year when it actually was positive let's go to january retail sale. probably the other side of the

equation to yesterday's inflation date, expecting a headline up 2% surprisingly it's better it's up 3% this is a good number considering four out of the last six months they've had negative signs in front of them up 3% is the strongest number we've had since october, which was the last time we had a positive number, which was one point on if you strip out autos, minus autos also negative four out of the last six months. expecting 0.9% up 2.3%. that is the strongest read boy, going all the way back to march of '21 march of '21 a very good number if we strip out autos and gas, also expected up 0.9% it was up 2.6% finally the control group used

for other economic data points up the economic food chain so to speak expected up 1% is up 1.7%, 1.7% is the best since january of last year, so let's call it a one-year high. retail sales in all forms is better actually by quite a distance we see 10-year at 3.75 they've come back to right about where they were, right around 34,000 and this, of course, has the negative connotations, voe, that we hate to talk about. bad is good, good is bad with regard to the economy. but no matter how you slice it, you know, yesterday's numbers were hotter than expected but cooler than the last look. and today pretty much everywhere you look, it is better than expected so pricing pressures, still

historically by wider than one year, higher than most would like the growth going along with it still looks pretty decent, though pretty much every source i have, looking for gdp to be as steve liesman put it yesterday, maybe less than an integer joe, back to you. >> basis point and a half. you're right two more december mat places would give us more insight into what's happening steve liesman joins us now with more would you like a few more decimal points i think we're good here. >> you mean gdp? >> no, no, the bonds i was looking at almost like pi. >> i don't do much investments, but i like the 2-year and six-month. they're better than losing the money that now 6.9. >> taking on 4 pn.70, 4 preside8

4.8, whatever it is. it's one basis point for the year end 2023 contract we have the get and market right on top of each other remember there was this 80-point gap? those points are gone. they're yesterday's news looking at where the peak funds rate is right now, it looks like it's the august contract now trading at 529 i want to give you one other piece of data, which is the problem shlts for june we're trading over 50% problem earth between 5.25 to 5.5. however, today's number is important for the following reason yesterday we had only higher

inflation than we hoped for. today we got higher inflation and better retail data remember you had the soft landing, hard landing camp there's this new camp called the no landi ing camp we're not going to do bring down the economy. that's not an option the fed will not abide by no lander when it comes to inflation. that means that -- and this is where the market is trading right now, and i'll finish my screen after thmt it means higher for longer if indeed inflation does not cooperate. >> if i offered the fed a deal, 3-3, 3-3, 3%. >> 3%, nice, nice. >> 3% gdp, 3% inflation, is that the end of the world >> i like that deal, joe

joe, could i just say one more thing, which i think is important. we may be in a new seasonal pattern. we were in the toilet. they were terrible now you have a bounceback. think think is a new trend the government is going to have to want to adjust to. big seasons. it was a zero interestingly enough, but a lot of things were out there. you have the consumer with the big c.o.l.a. increase. we had big earnings that were positive yesterday i don't think, joe, you can have a recession if the consumer doesn't show up. >> right and all the things you're saying, normally it would be good, good, good instead it's bad, bad, bad. >> jobs. >> bad it tells you what the state of the world is >> i do think the fed looks at this and says, wow, i've got to

mak make the economy slower. we'll probably do another wrap-it-up date to see if the guys have a better idea. >> do you have a good relationship with lael brainard? >> i've covered her since 2007, 6, something like that i went with her on several international trips when remarkably, joe, she would meet among 30 assistant treasury secretaries around the world, she would be the only one there. she's remarkable. >> we're going to need you you're the man. >> obviously the journal is a terrific conversation. i think the idea of lael brainard leaving leads to a greater possibility of recession. it's a little overstating of the role of a single person at the

fed. >> she was dovish. >> what's the possibility she'd be the next treasury secretary >> she would be well qualified to do that she has double the qualifications of any male who's ever had that job. >> all right. >> which is what it takes for a woman these days sometimes. >> all right steve liesman, mania or maniac i'll talk to you privately about something. we've got to go, got to go i heard a dead end company was really good in 2022. >> very good, joe. let's go together. let's go together smi >> i always like steve. terry lundgren, what do you think of these numbers

strongest numbers as rick was pointing out the first time we've seen a plus sign in front of the retails. >> it's definitely stronger than we expected, becky it demonstrates that the consumer does have -- still have firepower and is willing to spend, and it's definitely surpassed our expectations i have to say when you think about -- one of the biggest reasons why i'm surprised is we're going against such strong numbers, and retail numbers are always looking to beat last year's numbers and before that this compound gain is quite extraordinary. we've had 22 points of gain over the last two years in retail sales. so we're adding on top of that i think it's a very surprisingly positive number. >> we were talking earlier and he was pointing out what you've seen for a while is the luxury brands have done much better than some of the lower end brands and that makes a lot of sense when you think of the

higher food inflation prices, prices at the pump, and that cuts into the lower end consumer's ability to pay for things. >> no question we talked in the past that a larger and larger percent of net income for the lower and middle household income consumer is going toward shelter and food and energy, and when that happen, it obviously just reduces their ability to spend on discretionary items that doesn't affect the hire end. i have lvmh on my screen that's one of my favorites i think when there's more international travel, that business will go up even further. many people like to shop when they're on vacation or when they're traveling. >> so for a long time, the markets, people in general have been worried about what's happening to the economy, when you're going to see the consumer run out of cash. when you're going to see some of the excess savings they've put out of the way, when you're

going to see the jobs market get tougher. none of that has happened yesterday. is this waiting for goudeau or do you think it is going to happen later this year >> i do think it's going to eventually happen. one of the key numbers here is the savings consumers have, and historically we americans spend our savings, you know, in the middle and lower household in income we spend our money, get it down to zero. that hasn't been the case since the stimulus package has helped us while the number hassan come down dramatically over the last two years, consumers have trillion in excess savings versus 22019 that combined with higher wage grouc and this low unemployment number is giving the consumer the confidence to continue to spend. i do think, however, as these

inflationary bites keep challenging the consumer in terms of taking pieces of their overall net income, that that will -- consumption will slow down over time again, i have to remind us, we're just going against very, very strong retail sales numbers. they'll continue over the next few quarters, and those will continue to be hard to beat. >> yet you continue to see retailsers that are in trouble i saw a harmon's near me closing this week, and that's part of the bed bath and beyond closures coming down. what other retailers do you think will be struggling >> i'm a broken record on this subject. i was pash@when i was leading neiman marcus and macy's inc it's so krit iicly important to have a strong balance sheet when you're getting through the more challenging period, because those companies, not only can they survive during this time,

they can take market shairs from weaker competitors who can't go on oh fechbls anybody who entered this period with a weak balance sheet, who has just come off of bankruptcy, who has too much inventory they have to lick question dade. don't have liquidity to buy fresh new receipts, they're the companies who are going to have a difficult time. >> terry, thanks always great to see you. >> i'm looking at that suit. sometimes i try to get what he's wearing. coming up, inside the bigbank -- inside the bigbanks, i should say analyst mike mayo is going to be with us. he's going to talk autbo the feds moving higher stay tuned you're watching "squawk box. this is ccnbc young lady who was,

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welcome back to "squawk box. stocks have been moving higher thanks to the interest rates talk about the sector, goldman sachs. we had news earlier this morning and so many other things mike mayo is here managing director and senior financial analyst. good to see you. we were talking about goldman sachs this morning hugh son had a report about them ending their branded credit card we knew they were trying to get out of this consumer space more broadly. what do you make of sort of the transition there and what's happening? >> let's pull the lens back a

little bit goldman sachs has its second investment day in history in two weeks and we want answers. one quarter was miserable. they're likely to miss their targets. i get so choked up talking about this, such a premier firm. the second is consumer spending. why do they spend so much for so long to expand their business and why do they allow a head count to be bloated, up 300 in 3 years. what is the morale and what about the press? why hasn't goldman sachs gotten ahead of the narrative >> the big picture is 77% is killing it 150-year-old investment trading, best in class, grown twice the pace in peers, but the other 30%, especially the consumer part, which is 3% of the company, wow, what a terrible decision a few years ago to

expand. >> what do you want to hear then they've said mistakes were made, right? >> yeah. >> my question to you is if they say that again, does that suffice? what do you need to hear >> i'd like to know about the financial discipline why were they allowed to lose billions of dollars in dp panhandling the consumer business without someone stepping in and saying enough? this started with lloyd blankfein and he hyped the business he was saying how he was talking to the person in the street and they're a goldman sachs customer he leaned in, but at least he's cutting the losses now i want to know what broke down in the financial controls. >> stocks moved up about 371. what do you think it's worth >> i think it could get to its all-time high, 420, 430 in the

next year. they have investors day coming up the most important question is how will they improve their return from 11% last year up to their target of 15%? so i would like for them to mention the benefits they get from the head count reductions, mention the pullback and mention what they can do about the most onerous capital requirements on any large bank so why aren't they doing more about that. >> of all the banks out there tore, if you could own one, which one would you own. >> i would own bank of america goldman sachs in a way was trying to become bank of america. it's not coming up it's not happening great. >> did you ever think you were going to have branches on the corners of any street? >> they were never going to do that they were trying to become a fintech, a 21st century front. the fact that they were going to

have sustainable relationships -- it was a company born out of relationships, and they're leaning on the consumer with a saving product and lending product chchlt other firm has that zero, nobody jpmorgan is expanding the uk checking i will say, one sleeper pick right now, which i did put on the front page of our preview report is citi group the jewel of their business is their -- they have the largest international wholesale payment network out there, and we think that will earn $18 billion of revenues this year, so and they trade at five to six times that, that equals the whole market value of the firm, even though that's just one fifth -- >> that's your sleeper pick. >> citi group. >> that's a value play for you at this point? >> it's a deep, deep, deep value play, but to the extent that jane fraser can meet her proof points and be less bad, if

they're cleaning up the problems that were created a quarter of a century ago. >> where do you put morgan stanley? >> look, james gorman -- by the way, no one liked him a decade ago, and we were saying we liked the move to annuity-like businesses, and that was at $13. now is stock is at $100, so perceptions change great job. very narrow margin of safety i would not be a buyer of morgan stanley over $100. >> you think it's overvalued or fairly valued? >> i think it's getting close to the range of being overvalued relative to goldman-sachs. goldman-sachs has its back against the wall so, i think there will be some reversion to the mean over time, and so yeah, i would not be buying morgan stanley over $100. >> mike, nice to see you, sir. never one to hold back he's got a lot of views. we'll see what happens in the next two weeks thanks up next, what to watch ahead of the opening bell on wall street stay tuned

"squawk box" is coming right back

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we got a big stock mover take a look at this. roblox shares are up 18%,

surging this morning the video game company reporting fourth quarter results including better-than-expected bookings, healthy holiday spending the cfo said growth was strong across all geographies and age groups next wednesday, we'll be speaking with the ceo of roblox right here on "squawk box. little more than half an hour from the opening bell on wall street and after the retail sales number, the dow is down nearly 200 points. a minute ago, it was down 70 and change 80 right now, regained some ground and interestingly, bitcoin, doesn't seem like a positive news day, but bitcoin is up about 2.5% got in the low $21,000 range and now it's wpushing $23,000 again, even though the paxo news and congress and everything else let's talk matters with victoria fernandez from cross mark global investments. your base case, victoria, has been kind of a soft landing or at least a mild recession.

anything change in that view given we had retail sales today, and we had the jobs number last week, cpi? anything change? is that still your base case >> yeah, joe, it's still our base case because we think all these numbers that have come out actually support the idea of having a mild recession. you still have recession indicators out there you've got m-2 money growth slowing, the inverted yield curve, a fed saying higher for longer, but at the same time, you have an economy that is supportive enough to keep us from going into a deep recession. we still believe a mild recession is going to be where we end up. that has been somewhat of an out-of-consensus call versus the market the last couple of weeks, which didn't make sense to us, but i think over the last 18 hours after the cpi report and with the retail sales report this morning, it looks like the market now is coming along to join us in that story,

anticipating fed funds futures going a little bit north of 5% >> it's a little bit strange, and like a bizarro world, but the more strength that the economy shows, the more likely that the landing could be harder than, you know, because it just forces the fed's hand. it's very strange that the economy can sort of hold up pretty well and that's a bad sign long-term, because it means the fed stays tighter longer is that the way it is? is it half efmpty or half full? should we embrace the strong economy that lets the fed tackle inflation without really hurting the employment picture >> i think you have to be cautious because it is a double-edged sword, you're exactly right, in the sense that as things continue to do well, as the consumer, their balance sheet is strong as corporate balance sheets are strong. then you have a way in the labor market of course being strong. that's telling the fed, look,

the fed wants to dampen demand it's not happening retail sales is a perfect example. the consumer is still out there. if you want to crush demand in order to bring inflation down, then these positive numbers that normally we would be celebrating are telling us the fed and other central banks -- it's not just the fed -- are going to continue to go stronger and i mean, you look at some of the underlying numbers in that cpi report, joe, goods prices actually wednent up for the mon. that's not what people were expecting. same thing y'all were talking about airline prices airline prices were down 2%, which is what kept services where they were. i don't think anyone expects that to continue i could look on to europe cheaper than i'm having to pay to bring my daughter home for spring break, so i think prices are going to continue to move higher fed is going to continue to move higher you need to have a balanced portfolio and be tactical in your moves >> we got about a minute left.

when we were at 35 and change on the s&p, 3,200 didn't look too far away, but we have had a pretty solid beginning to this year, back to over 4,100 on the s&p, and 3,200 looks very far away, although we had a strategist on yesterday, that's his case do you think we see new lows and have a bad -- 2023 would be as bad as 2022, is that what you're expecting? quick answer, victoria >> i don't think we're expecting as bad as last year. we're expecting a pretty familiar year and for that, have some cyclical, have some staples in your portfolio, really have that balanced outlook because we're going to be choppy for most of the year add a little fixed income to get yield in your portfolio, and you should be able to ride it out. >> victoria, thank you and we will watch for the mild recession. i guess we could all handle that, maybe. get a final check on the markets. remember mike wilson, the worst case was 3,000

remember if it was really bad so, 3,200 is not out of the question, but it just looks far away now because we're at almost 4,200. >> it's come up quite a bit. >> it's always interesting we're back down triple digits again on the dow, and they're synchronized today, unlike the central bankers of the world the markets are all down make sure you join us tomorrow tomorrow is another day. we got through hump day, and tomorrow's thursday, i'm told. "squawk on the street's" coming up right now ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber and mike santoli. cramer has the morning off market was bracing for a strong retail sales print speaking of the two-year, two-year yield hits 4.66%. our road map is going to begin with tesla, strong start to '23.