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.

shares up 74% and rising again ahead of the open. plus, we do have meta's warning. it's not an earnings warning it's company executives warning that despite that rise in the stock price, the company is not quite out of the woods and call it the airbnb boom, posting its first annual profits, brian chesky saying no matter what happens in the world, people want to travel we're going to begin with a tesla rally today. stock, as we said, up more than 70% so far this year number of news points on the stock today. going to shut some china production to make some upgrades for the model 3, but the bigger news is opening up its charging network to qualify for some federal dollars. >> yeah, so, probably, you know, a net positive, not necessarily core to the immediate stock case, but a net positive not to be kind of at odds with the government, basically, install itself at the center of the ev infrastructure more than it already is you know, yesterday, the reason the nasdaq was positive was tesla and nvidia

those are two stocks that have kind of moved together over the past several years they have very similar valuations again, and now, you can't even really attribute the tesla move to, oh, shutting a shanghai factory, kind of swings in pricing it doesn't look like earnings estimates are kind of being rescued. they're going down for this year next, but we're back in excitement mode about not just the general push to evs but tesla's advantage within that group. what i find interesting, david, october 27th of last year, stock closed at 225. that was the day the twitter deal close it went down to $109 from there. the fourth quarter dump in tesla obviously musk himself selling but also just this general sense that the -- this unstable kind of finances at twitter, maybe it was going to leak over into tesla somehow. that's been reversed, and we have had a rediscovery of a lot of the 2020, 2021 kind of

favorites of growth, and now what's interesting is the street's kind of chasing tesla right now, because the consensus price estimate is like $200. the stock is above $200 right now. it's going to open near $212 $225 was the october 27th level and that was down from over $400 at the peak. so, if you want to contextualize all these moves, it's massive snapback, revival off of, you know, really kind of washed-out levels or at least a huge test of the long-term conviction of people who have been with tesla for a long time. >> you know, is it indicative of sort of this, i don't know if i want to call it animal spirits, i'll leave the language to you, mike, in the market, a bit here? because it's re-engaging retail investors once again with a name they've loved in the past that obviously must have hurt for some period of time? >> there's no doubt it is. it's not back to those levels that we got of excitement, and

there's two ways to play it. one is that, oh, back to their old tricks they got burned in this area before now retail just can't stay away. on the other hand, to get a bull market, you need people to get more bullish, and so you have seen the overall sentiment picture perk up. i would say if it were just kind of the high valuation kind of glamour stocks like tesla and nvidia that were working along with the low quality, you know, left-for-dead stuff at the end of last year and nothing else, you'd worry. but semiconductors are broken out as a group you do still see parts of industrials doing very well. consumer cyclicals, consumer finance, so it's not, to me, a matter of the market being, you know, kind of having blinders on and just going back to the fun stuff, so to speak >> right we're going to talk some semis later on as well by the way, barclay's today, big initiation note.

259 -- no, 289 pages in which they do name tesla, rivian, some top picks, initiate tesla overweight $275. they like gm over ford, and they have some interesting thoughts on autonomous where they say we're entering a trough of disillusionment given some of the hiccups to get that software to understand how to drive by themselves >> it is interesting that you essentially have had this rethink of whether that's core to the whole premise where barclay's settles down on tesla within the universe is a familiar place, which is, such a head start, such a margin advantage to begin with. the rest of the companies have to remake their kind of antiquated business model. the whole story we know. the question is, what do you pay for that today and what you're paying for right now is 50 times forward earnings, so you're back in the zone of, you have to really believe. >> is that where we are, mike? we had gary black on, huge tesla

bull, his etf has not done particularly well, but he owns a lot of it, and he was talking about huge earnings numbers which would take that multiple down because of all the gains they're going to make in so many different areas. >> you're back to 50 just about on a forward basis you had huge declines in earnings forecasts for this year and next after they, you know, they came out with those recent results, so it was definitely kind of a step back in terms of the trajectory of earnings it's not that you've kind of unwound the profitability. it's profitable now. >> yeah, no doubt. and quite profitable >> it's a difference discussion than it used to be, which is, on the way up, you know, you could argue with how the hype behind the stock -- it was like, fake it 'til you make it for years, and he was faking it and goosing the stock, and he had these retail traders capitalizing this company way in excess of what the business was >> and he was able to actually fund the business as a result of selling it >> so, i guess that's where we are now. >> credits and zero cost of capital doesn't hurt >> exactly

it doesn't no marketing by the way, i don't know, carl, did you see the autopilot workers in new york state, in buffalo, unionization campaign >> unionization attempt. what is up with buffalo? >> it's the center of union activity in the country, apparently it's the same people who were behind the potential starbucks unionization something else somehow, i think musk and unions -- i don't see that working out. >> well, speaking of tesla, you can't talk tesla without talking twitter, and the twitter ceo did say this morning that he might be able to appoint his successor by the end of the year take a listen. >> i think i need to stabilize the organization and just make sure it's in a financially healthy place and that the park road map is clearly laid out so, i don't know i'm guessing probably towards the end of this year should be good timing to find someone else

to run the company >> david, you're reported on succession there is that too long to wait for tesla shareholders >> i think it's longer than i anticipated, based on the reporting i did from six weekends ago or so musk, even prior to putting out that poll, was certainly querying people, some people that i had spoken to, do you know anyone, who do you think would be a potentially good ceo? there seemed to be a lot of activity around finding somebody at that point. clearly, that's not the case and judging from his comments, and i do think, not sure how that will be received. again, there was so much focus on twitter and tesla might be brought this up, and obviously, we saw the fall in the stock price in part because musk was spending so much time on twitter, and yet that seems to have passed despite the fact that he's still in charge, he's still ceo, and he might not find someone to replace him in that role for let's call it another six months or more surprising, perhaps, to some who

hoped he would somebody in charge there sooner, but it doesn't seem to be as much of a concern any more to investors. >> not a clear and present one, i guess, and i don't know if we have a window on, you know, twitter's actual need for financing, right i always felt as if investors were -- if you wanted to say, what's my worst case scenario with tesla, it is some kind of continued stock sales that tesla is going to be this -- i mean, twitter is going to be this kind of sinkhole of capital and that's where it's going to come from, and who knows what else down the road in terms of trying to have -- bail out twitter. but it seems like they got past the debt payment >> they did. for now. i mean, obviously, he's cut costs dramatically there we've talked a lot about where they are in terms of staffing. he started at close to 8,000 i've heard reports they're down to around 2,000. people have told me he has said to them, at least, that he thinks he could run it with 500

people that may have been hyperbole they have cut costs dramatically he said they're okay now at least, he's tweeted that. but it's still a distraction it's still something he's spending an enormous amount of time on, and there are those who are tesla shareholders who certainly would want his focus to remain, not solely, because he has spacex and so many other efforts, but certainly more on tesla. for his part, musk says publicly, i sleep six hours and the rest of the time i'm working seven days a week and i get to everything >> maybe it's an arrow in their quiver there's this platformer report last night in which they argue he forced the algorithm to boosted his tweets by a factor of a thousand. that's not insignificant for a company with no marketing budget, right? twitter is the marketing budget. >> sure. i mean, there's no doubt that it's an asset. to me, it's not so persuasive that that's -- that's plan a for musk taking over twitter it seems a little more of a visceral move or whether it's, you know, ideological, visceral, he simply likes to have that

platform but i agree with that, that tesla doesn't spend money on marketing. he stays in the mix. again, at what point does it become a liability because you seem not to be in a smooth and seamless way figuring out what twitter needs. you're the ceo on display every day. they're tweaking things constantly with the platform, how it works subscription plans, you know, et cetera. but yeah, i mean, i think it's probably some kind of -- and also the question is, what kind of ceo job would bit if he were to -- >> well, that may be one reason why he's had a harder time finding people i do believe if he could have found somebody who would have checked the boxes he's looking for -- but it's going to be difficult because he's still going to be the boss, and that can be hard. although, he has had long-time employees in senior levels at tesla for quite some time. but you know, we still -- >> and spacex, really. >> even more so, perhaps

that said, we still don't have a great deal of transparency in exactly what is going on at twitter, and none of the banks, by the way, as far as i'm aware, have tried to get out of their commitments in terms of selling it down, so we don't have a market value in terms of the value of the debt at this point. we'll see. >> all right still to come this morning, the president picking fed vice chair brainard as his top economic advisor how might her departure affect the fed? we'll talk to alan blinder take a look at the futures here two-year is off the session highs of the morning but still near 4.64% "squawk on the street" continues in a moment. the first time you connected your website and your store

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welcome back to "squawk on the street," rick santelli here live at cme hq with breaking news we're looking for our january read on industrial production and capacity utilization and just to put a face on it, industrial production, before this release, had seen four out of the last six months negative, and utilization rates at 78.8 are at a one-year low. we're expecting improvement in both of those. unchanged. unchanged is industrial production, month over month, unchanged, and if we look at the utilization rates, they actually moved down from 78.8% to 78.3%

and 78.3% would be the lowest month-over-month rate of utilization since may of '21 we see that interest rates are still biased to the upside that really has been the case since the big jobs report on the 3rd of february, and we are now seeing revisions creep in. last month's industrial production, minus 0.7%, and last month's 78.8 becomes 78.4% on utilization, and "uasqwk on the street" will return after a short break. y td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade

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the national economic council and his top advisor on inflation. joining us this morning to discuss, former federal chair himself, now professor of economics at princeton university, alan blinder good to see you again. author of "a monetary and fiscal history of the united states." on brainard, i'm wondering, the easy read right now is that her move basically removes a net dovish participant to the dots is that the most important thing? >> i think it is i mean, in the fullness of time, her job at the nec may prove more important we don't know what's going to happen with that, the nec is involved in many, many, many things, and she'll be good, so half of me is happy about that, but the other half of me is sad for the reason you just said i think this is -- this is a point in time where the fed has some crucial decisions to make, and it's starting to divide along hawk/dove lines, which has not been true for the last few years. there have been no reason for the fed to be divided that way

but it's starting to get divided that way, and it seems clear that lael was the leader of the dove faction, and now she's going to leave >> does any of the recent data, i'm thinking the last payroll print and obviously retail sales today, make you worry about maintaining any kind of dovish stance >> it does yeah a little bit i was extremely disappointed in the change in the seasonals. i had been talking about and writing about the very sharp decline in inflation during the year 2022. there still is a decline, but with the revisions in the seasonals, which rarely happens, the decline is not as dramatic as it was, and then you have jobs, very strong, of course, and retail sales, so yeah, there is reason to rethink, i think, and i am rethinking the notion that we were on a very nice glide path to a soft landing

it's less clear today than it was two weeks ago. >> it's interesting, alan, because as always, the investor discussion around fed policy swings a lot more dramatically than the fed's own stated message about these things i mean, if you look at it, they have been saying all along, look, we can't consider the job that gets inflation done we expect the terminal rate to be above 5% and the market maybe doubted it in the absence of persuasive economic data that we're substantiating and now we're there. and so i guess perhaps even though brainard may be leaving the board, chair powell himself has not, for example, said, well, unemployment really has to start going up a lot before we consider ourselves to be at a place we want to be with the fed funds rate >> yeah, i think the fed has felt the need to show its teeth, to growl and snarl a bit, to try to get the markets in line, because they were getting way ahead of themselves.

as they always do. i mean, this is not new. markets are much more mercurial than the fed is. maybe now that the markets are sort of coming in line with the fed's projections, they'll be less of that snarling and growling we'll see. >> alan, you mentioned, perhaps, a growing division between hawks and doves. how much does that matter? i mean, versus where powell is and just what's the dynamic like in terms of why that would be something that's important to keep an eye on >> the main reason it matters is the debate that goes on inside the chairman's head. the chairman -- any chairman -- that includes powell, even greenspan going way, way back -- looks around the room, figuratively speaking, and counts noses and looks at where the vote is. now, if he doesn't like it, he's going to try to change it and push it in another direction or

in the limit, actually, push the committee to decide in another direction with dissents. powell hasn't had any dissents to deal with, and they're in general fairly rare on the fomc, but the main thing is a battle for jay powell's mind, and lael brainard was an influential part of that battle, and now she'll be gone. >> of the important questions at the moment, alan, before we let you go, any thoughts on where you think the terminal rate should be, and on the curve inversion, i think we -- i think we might have gotten to 88 basis points how relevant do you think that is right now in the context of conversations about recession? >> i don't worry so much about curve inversions i think markets worry much, much, too much about that. what they show you, of course, is the fed is tightening, and the long end of the yield curve or the medium end, depends which kind of inversion you're looking

at, hasn't responded as much as the short end. that's very normal for -- that, in general, is very normal for a fed tightening, and if there's enough of it, you get an inversion of the yield curve on your first question, i think the -- i'm in the process of rethinking that myself i was thinking before this recent data came in and before the brainard announcement was made that the fed might well -- would probably pull up shy of 5% i think that looks less likely now. i think going over 5%, at least somewhat, is more likely, and maybe to 5.5%, depending how the data come in lately, they've been carrying a kind of a hawkish message. lots of jobs, lots of spending >> right that definitely rhymes with what the market's trying to put their

chips on, at least at the moment maybe we'll talk soon art brainard's early tenure, alan. great to see you thank you. alan blinder oun opening bell coming up i abt five minutes don't go anywher

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the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. airbnb shares are up sharply in the premarket, and will be up most likely in two minutes when we start trading as well the company beat analyst expectations and posted its first annual profit. it gave great guidance and on the earnings call yesterday, brian chesky, the company's ceo, expressed optimism about current travel demand >> looking forward, we're already seeing some really strong demand in q1. consumer confidence to travel remains really high. i think part of that is, like, no matter what happens in the world, people want to travel and for many people, the office is now zoom, the mall is now amazon, the theater is now netflix, and travel is going to become a very important way that people experience the world this

year and so, therefore, this is going to be an exciting year for airbnb >> cross-border nights book grew 40% of gross nights booked also, they're controlling costs, guys, which, of course, as we know, for any number of stocks or companies, has been a path to success, at least, in the stock market of late >> yeah. it's a theme with the class of 2020 or 2021 and new listings, as airbnb was. i'm kind of dogmatic about looking at two-year charts like we see right here just to see the whole life cycle here. so, it's going to open up around $130 it was last spring, last may, where you really had that stock buckle pretty bad. stagflation concerns also, there was a sense out there that we had a relatively fleeting resurgence of travel demand you had the revenge travel theme. now it seems like at least chesky is arguing maybe there's a structurally higher appetite for travel than we saw before. he was talking, i think, about

seeing europeans book their summer vacation already. they're in the mix nice to be profitable. certainly you have questions about the valuation, even for the leader in non-hotel lodging. >> yeah. bunch of price target increases today. needham, wells, all in the 155, 165 range. i think only goldman reiterated their sell, although they did take their target up to $98. that's the opening bell. cnbc realtime exchange, at the big board, it is china focused etf provider kraneshares, and at the nasdaq, intuitive machines, focused on space exploration by the way, a couple of the travel names, trip advisor did have upside on eps, ebitda, and revenue. they were up premarket as there was a concern that others would have the stumble that expedia had last week. marriott got downgraded at evercore, just on valuation.

>> marriott had a great day yesterday. it's been on a nice run. we talked about avis budget as well this theme of travel-relate services names have been a strong area. with the trip advisor, it's a little bit noisy when it comes to the otas for the booking networks priceline, clear winner. the others, struggling around the edges. there's some sense out there that low vacancy rates, when you have a strong lodging market, you don't have as much inventory, so the power goes to the hotel operators. but i still think that that's a relatively strong current throughout the economy we saw the stronger than expected monthly retail sales this morning people are, you know, poking some holes in it, saying, look, it's still trailing cpi, still looks like it's seasonally got some help. but it's stronger than expected. >> and there's much more spending than we anticipated >> every category was positive >> exactly >> i don't know if you saw department stores up 17%, so maybe consumers were clearly waiting for after the new year to dive into some sales. they took advantage of bloated

inventories or something >> it was very weak in the fourth quarter, so you have this comeback, and you couldn't extrapolate the weakness of last year, and also at the bank conference yesterday, you had all the bank ceos saying, look, savings and checking account balances are still above pre-pandemic levels. consumer, we're not seeing it really get worse in a hurry. so, that leaves the question, what does that mean for the fed and yields yields had their move in the immediate term, anticipating the cpi. since then, direction of travel, still been higher. it's still a test. we've still got the short end of the curve, six-month and one year, 5%-ish, but it doesn't seem to be causing this real panicky move in yields for now, we're absorbing it. >> but that number yesterday didn't do us any help in terms of at least the idea that the fed is going to pause in some way at all >> no, no. >> i mean, are you surprised that we haven't seen more of a reaction >> what i think it really is, it's a test of whether the stock

market truly was anticipating and needed a fed pivot to start to cut rates late in the year or not. and i would have argued, no. i think what the market has needed is a line of sight to where the fed's going to end up. >> right >> we may not have that. >> we may not. you heard alan blinder saying, i'm rethinking it, and i may go to 5.5%. he wasn't even at 5% as the terminal rate it hav >> to mike's point, last time two-year was here, we were 400 points lower on the s&p. >> exactly so, the "don't dofight the fed" argument is hard to quibble with, hard to push back against it, except if you consider fighting the fed to be owning stocks since last fall when the fed was still raising rates, that hasn't necessarily been the automatic win. look, i think that even if they have to go farther, it's at a slower pace. i keep saying, they're moving a quarter point every six or seven weeks. they were moving 0.75% every meeting last year in the latter

part of last year, and so i think you have time. the frog boils slowly, maybe, and we might end up at a place where they slow the economy too much or the comst of capital gos too high or yields are too much of a competition for stock valuation. >> the weighted average cost of capital is up 250 basis points, at least over the last year for most corporation, so that's not insignificant. >> it's not. >> at all. and in fact, it may be one reason why we're starting see the some of these companies consider splitoffs and things of that nature, because their capital structure can't quite support exactly what they're trying to there. >> you could spin that the other way and say, that's what the fed's been wanting to do that lag -- the slow kind of assimilation of a higher cost of capital is what is going to restrain the economy and they don't have to do more on the rate side as you might expect. you can really bat these back and forth quite a bit, but i totally agree. we haven't really seen where that ends up in terms of

corporates bond spreads, incredibly tight and tame for where we are. >> right >> i don't know if that's because nominal growth in the economy is where it is, so interest coverage isn't as hard. you got sales growth all over the economy. it's not that much of a reckoning. >> that's why harvey over at wells said that the bear market's over. because those spreads got so tight, and earnings haven't fallen apart, and the fed is ostensibly at the end of the cycle. >> sure, yeah. >> we've rallied since the fall. >> there's -- look, exactly. we've rallied since the fall, and you never can make the declaration that a bear market is over until you're up 15%, 20% over it. the market has to prove there's not going to be stresses we're below where we traded in august let's keep that in mind. we topped at 4,300 in the s&p in august, and spreads were similarly tight as they are now. >> that's a good point good point getting back to stocks this morning, of course, we start the show talking about tesla those shares up another 1.1% this morning as it kind of moves its way toward what could be a $700 billion market value again

for the auto maker got apple up i got alphabet up. guys, i also have paramount, a company i follow kind of closely. they'll be reporting numbers tomorrow i believe it's before the open there's paramount global up 2% has been, you know -- well, you can see what it's done over the year warner bros. discovery, also incredibly strong. question is, after the disney quarter, linear cable networks, that is a tough business, and the declines continue. you're spending a lot of money on content to support, of course, you're direct-to-consumer efforts, that being paramount plus, and you're still trying to maintain a dividend to keep your largest shareholder happy. that would be shari redstone, national amusements. are there going to be cost cuts in some way? we'll see what we get tomorrow from paramount, but could be an interesting quarter, particularly in the light of disney, because the analysts have visited some of the numbers from linear cable networks at

disney, and what they were saying was they're taking numbers down a bit for what their expectations are led by espn, but others as well. at paramount, you got nickelodeon is the star, mtv, b.e.t. you know the line-up there. but they provide a lot of the cash to fuel business and you come back to scale and whether they've got anywhere near enough of it. >> another group of stocks that were in the, just, kind of discard bin at the end of last year, big in every value index, so they've come back, warner brothers and paramount >> huge companies. >> why berkshire owns so much of paramount, i'm not quite sure. >> and added to it >> they own a lot of it. you know, most likely, looking for consolidation. best i can come up with at this point. >> did you see the video of spielberg telling tom cruise at the oscar luncheon that "top gun" single-handedly saved theatrical distribution?

that went viral. insider has a study today that says that adults will spend more time this year -- it will finally spend more time on digital video than you spend on linear tv. that's going to be a huge milestone. >> i've wondered if the idea that even the netflixs and the disneys are no longer in spend as much as you can mode and they're starting to say, look, we can't keep escalating this arms race. at the margin, that can't hurt a paramount or a warner bros. discovery just because you're no longer chasing somebody that's completely undisciplined >> that is true. and warner bros. discovery, we'll get those numbers next week, late next week, sort of said, we're out, in a way. we're not playing that game. we're going to write down a bunch of stuff we're not even going to let it be seen by anybody, and we're going to be a lot more disciplined. and that, you know, listen disney was less than a week ago, $3 billion cost cuts and not from sports. so, they're spending $16 billion on direct-to-consumer.

that's coming in yes, mike, there's no doubt, and that may take some of the pressure off for paramount >> did any of the 13 -- i know tepper added disney, cut some meta did anything move you? >> i always find some of those -- it's interesting to see in the larger sort of sentiment around certain names, but it's so dated sometimes, especially for hedge funds that you know are moving in and out of things. i'm often like, are you still in that are you kidding? no i was out weeks ago, why are you even asking me >> speaking of berkshire, taiwan semi is down 5.5% this morning, and it's interesting because they didn't trade it well by all appearances, bought in the third quarter. by the tend of the fourth quarter, had sold most of it it was up over that period, but since the end of the fourth quarter is when taiwan semis had really a nice move it is up even with the decline today at 24% there was a sense out there that they're sort of -- the berkshire

endorsement was working to its favor, to taiwan semi. one thing berkshire buys is crucial infrastructure around this country, in terms of pipelines and utilities. >> shovels >> railroads and things like that and the idea that maybe they viewed -- who knows if it's buffett, it probably isn't it's probably the investment -- >> that's right. >> but nonetheless, that's a little bit of a step back. in terms of sentiment around taiwan semi, even though the overall story seems pretty good. >> speaking of semis, morgan stanley with a great note out today about chatgpt, and they say, in every news cycle, we see new bubbles. however, the hype around generative a.i. may be justified and the technology feels genuinely exciting we haven't had an app scale at this pace in history, and they got a nice chart about platforms that try to -- they get to a million user base. nothing's ever come close. instagram, i think, took months. >> it is fascinating and also, the sense -- and it's

articulated in this report as well that not that much needs to be built from scratch here it's almost as if all the big companies had their chips, you know, in this area they've done a lot of the baseline spending. it's obviously the cloud infrastructure that you have in nvidia on the processing side, so it's more just about emphasizing it more. you got consumer adoption. you have every company that realizes they're getting rewarded for seeming a.i. adjacent or friendly, and so maybe you get this spending cycle. i mean, in terms of the adoption of chatgpt, i don't know for instagram, i see you have to download an app. you're a user in a more defined way, as far as i'm concerned, as opposed to visiting the site and having it write your term paper for you, but nonetheless, there's no doubt that there's so momentum behind it i do think that's a big story behind the nvidia move it's down 1.1% this morning. but the move is about a $600 million market cap as well.

it's all of a sudden allowed people to have those open-ended fundamental storylines come back into play. whether justified or not, that's where we are >> speaking of momentum, roblox was one of those kinds of names back in, where was it, the late part of 2021 when it soared and then of course precipitous fall, but this morning, the shares are up over 20%, almost 24%. revenue was up 2% year over year, 3% year over year on a constant currency basis. free cash flow, only negative $38 million. bookings up 17% year over year and 21% year over year on constant currency. average daily users up 19% all the metrics investors like to look at were positive and perhaps more positive than had been anticipated >> for sure. and again, we showed the two-year so many charts look like that, and it's not in a negative way they're way off those highs, but they have been kind of going

sideways, and you see that kind of curling higher from that base, and so it's -- to me, it's not so much, okay, let's dial it back and we're going to have another speculative tech run and all the young, less profitable companies are going to be at the center of it they're just going to be less a source of downside pressure, and now you're figuring out the ones that have real businesses versus not. >> in a related space, vox has an interesting space today getting ahold of a leaked memo out of meta in which the chief marketing officer basically says they remain at the whim of apple, despite trying to clear some of that roadblock through -- in the ad market. and also adds that, you know, i believe in this company, but we are still early in this turn around, not everything will pan out. even as the stock obviously has had a tesla-like run off the lows >> it has had a great run. and look, i mean, a lot of that run is based on actual results, so it's not as if people are trying to anticipate that apple's becoming more friendly in the privacy and targeting stuff is becoming easier, but

yeah, a little bit of a giveback here after you did have the -- certainly not as cheap as it was. certainly not as cheap on relative basis compared to alphabet as it was, so i think it's a little more of a close call up at these levels. i do think part of the bull case, too, was, whatever the situation is with the apple changes, you've anniversaried them if you're looking at this year versus last year, it shouldn't get worse, if nothing else >> right >> guys, quickly, we'll take a move into antitrust policy this morning. you may, guys, have both seen that that i hadeditorial from commise wilson at the ftc, very critical of lina khan "i have failed repeatedly to persuade ms. khan and her enablers to do the right thing."

that's one of the things that was said by christine wilson in her resignation editorial, if you want to call it that, "and i refuse to give their endeavor any hint of legitimacy by remaining. lina khan says they simply disagreed, they respect her, and they wish her well, but it does put a focus on lina khan and the ftc overall and what seems to be certainly their willingness to challenge so many things that different administrations certainly or even any other administration would have not been the case. which gets you back to the market cvs's two deals, whether it's signify or osh, not trading with enormous spreads, not thought to be in the crosshairs, per se, of being significantly challenged, unlike, for example, amazon. of course, we know lina khan made her name by that long piece she wrote when she was at yale about amazon and antitrust irobot is being reviewed by the

eu it's also expected to potentially face challenges from the ftc. that's why that stock is trading at an enormous spread. and then, you know, real questions there about one medical, even though, again, on the merits, it would not seem to be something that the law would support challenging. the question is, do they try and find a way so, there you see, irobert, 20 bucks below. take a look at amazon as well. but guys, rare to see that kind of contentious back and forth. of course, the ftc, there will be some openings there that will be filled by president biden >> that was one spicy op-ed. >> it was. >> i couldn't believe some of the things she was saying in print. >> it was basically just saying that lina khan is breaking the law. simple as that "we spent countless hours seeking to uncover her abuse of government power." >> i was -- >> i know. >> i was curious if it was just about that effort to essentially

try to get documentation or if there is a particular transaction or investigation that is at the root of all of this >> unclear she talks about sort of descending on due process grounds and the fact that she felt like khan should have recused herself from a number of different regulatory focus or reviews, i should say, particularly one involving meta's acquisition of within, the virtual reality gaming company. >> yeah. pretty fascinating worth a read if you haven't looked at it yields lower across the board with the exception of the seven-year as market continues to digest retail sales we're not done with data for the day, by the way. business inventories and nahb coming up in about 15 minutes.

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president biden ramping up his push to tax stock buybacks kayla join us with more on that. >> reporter: president biden has been taken aim at buybacks but now he's looking to take aim at the stocks issued to compensation executives. yesterday president biden said supporting legislation nearly three decades ago that shifted compensation away from cash was one of his biggest regrets >> 91% of all corporate execs are paid in stock. what's the one way to increase your salary? buy back your stock. it raises the price of the stock. raises the value and the shareholders and you do well but guess what, you end up not investing on the thing you're engaged in >> reporter: president biden saying the road to hell is paved with good intentions saying he regrets his vote to support the clinton era law that limited to $1 million, the

amount of cash compensation tax deductible for the company but a loophole allowed companies to keep deducting performance based pay in stock it came when the think tank found that wall street banks wrote off more than $2 billion in executive bonuses while receiving bailouts that let to tax code changes above $1 million beginning in 2018 president biden has proposed raising a tax on stock buybacks to 4% to slow the activity there's already a 1% tax in place from last year's inflation reduction act but so far that hasn't made a dent >> kayla, it's been the case, i think, for a while that this issue certainly seems to work for the administration on a political basis. setting a gesture against wealth inequality and even for procorporate interest to say stock based compensation is

within the prerogative of companies and an efficient way to get it back to shareholders so it's not necessarily an issue that has high stakes unless the tax goes through i'm wondering if you think there's a decent prospect that something like a 4% levy gets through congress on this. >> i think it depends on what it would be used to pay for that's always the other side of the ledger here. you are right that it is politically popular to place the blame on corporate america on, you know, very wealthy executives, especially when the cost of everyday goods is still such a pain point for main street america it's something that polls well it's something that's easy to do but we'll see if there's support in congress, carl, to go through with that. >> we've seen a split of buyback announcements versus executions this year. that's been interesting. thank you. weaker open, dow down 200.

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welcome to another hour of "squawk on the street" i'm carl quintanilla with morgan and david. markets starting with losses dow down 200 on a busy day for eco data of course the headline number so far has been retail sales, 3% versus a 2% expectation. auto and gas up two six. almost three times the estimate. rick santelli has more >> december reads, it's two months in arrears for business inventories and if it's higher it can add to fourth quarter gdp which is strong. came in as expected, expected up three tenths, three tenths was delivered. how does that figure in? october was two tenths and in the rear view mirror november was four tenths, right in the middle interest rates have been tame this morning thus far, especially considering strong

retail sales, at least on a seasonably adjusted basis. we have another number out our february read on national association of home builders, housing sentiment index, and for that we head east to diana o' l lick >> ohome builder rose for the second straight month. it had been as low as 31 two months ago this is the biggest monthly increase in sentiment since june of 2013. of course sentiment was 81 in february of last year when mortgage rates were lower but rates are now lower than last fall some of the index's three components, sales conditions rose to 46 sales expectations in six months, increased to 48. that's a big one almost positive and buyer traffic rose to 29 additional signs that the housing market is settling, the nahb reported that 31% of builders reduced home prices in

february but that was down from 35% in december. the average price drop in february 6% down from 8% and the share of builders offering an incentive dropped from 57% to 62 in december we are seeing more buyer activity in the market now, according to both builders and real estate agents for older homes. the question now, of course, will this translate to housing starts we get those numbers tomorrow. back to you guys in the meantime i think about compass' ceo who said he thinks the housing that it bottomed at the end of last year do we have enough data under our belts and signs of green shoots ahead of the season to say that could be the case or way too soon to tell >> this is the data, the home builder data we got, two straight months starts to see a

trend. we watch mortgage applications that demand has been rising, pulled back last week because rates bumped we do have a lot of cash buyers in the markets that's come off the lows and that's the most recent indicate e we're seeing more buyers in the market go to an open house, i went to one over the weekend and there were a lot of buyers there >> thank you we're 30 minutes into the trading session. barclays shares a sliding after posting a fall in profits. they're taking a hit after o overissuance of securities you can see the shares are down about 8% roblox is surging saying bookings accelerated meaningfully in december and january, strong across all graphics and age groups when you

thought video games were struggling, look at that, up 24.5%. keep an eye on silver gate, in the green after adding to a 20% plus gaines on the week. crypto is in focus in general because you have new rules on the docket at s.e.c.'s open meeting that could up end the business entirely. shares of silver gate up 11% more right now we'll have more on the s.e.c. regulatory situation later this hour. we'll turn to another name benefitting after earnings that's airbnb. the stock has been higher this morning seeing a lot of price target moves higher as well from analysts who follow the company after strong results, guidance, cost cuts. let's bring in deirdre bosa to give us more here. picking up speed on the upside right now. >> up more than 12%. you said cost cuts, that's it,

david. efficiency that mark zuckerberg can only dream of. listen to what brian chesky said on the call last night. >> in the height of the pandemic we made difficult choices reduce our spending, making us a leaner and more focused company and we've kept this discipline ever since and over each of the past two years, we've only modestly increased our head count in fact, compared to 2019, our head count is actually down 5% while our revenue is up 75%. >> guys, think about that. it's a pretty amazing stat that they did mention quite a few times on the call, decreased head count 5%, increased revenue 75% since 2019 that's how this became a profitable company it is in the sharing economy which we think of as money losing but airbnb made nearly $2 billion in gap income last year

the cash flow more than $3 billion, notched its first full year of profitability it is sitting on an enormous stash of cash at this point. interest income alone was $103 million in 2022 and this speaks to all of this efficiency that chesky and his team have had their eye on not just over the last few months where other tech companies had to get in line but since the pandemic this is an expensive stock, which i think some of those notes took issue with, why you see neutral ratings on it. it's expensive compared to the ota space, the hotels, expedia, but it's a company that's executing and maybe the next question is where does revenue go how does the company diversify what does it do with the cash? >> your point on expense, $9 billion expected for revenues this year. trading at a hefty revenue as

well chesky went on to make comments like it's less obvious being less efficient, having fewer people in meetings, moved faster, focused on what mattered and said it made them more attractive as a place to work because it made it easier to get stuff done interesting comments. >> he takes to heart something he has been saying the last few years, the way travel is going to look is different you can work from anywhere that's what he's doing from his workforce, more intentional coming to the office not on set days but for a purpose they've been able to reduce their office space here in san francisco significantly. there was one thing, though, guys, i want to bring up investors really overlooked it, let me show you this charge of average daily rate airbnb booking listings have demanded a higher premium than other home sharing also hotels, it's been rising at a faster rate but it's come

down, $153 in the fourth quarter of this year that's expected to come down further this year and that's going to make profitability flat on the year while revenue is going to be around 20% how much more can brian chesky and company squeeze out? that's an interesting question they talk about things like offering insurance, perhaps a loyalty program in the future to raise that adjusted ebitda margin we talked about this compared to the others and the margin looks good >> it's like you took the words out of my mouth for my question, which was the outlook around pricing and what that means for airbnb and how that factors back into more broadly an area of services that has been sticky and elevated given that folks have continued to spend on travel. >> look at airbnb you might think it's starting to level out or you get a little bit of respite here from the others not sure they're showing the same picture but what airbnb said, the adr,

they're not upset about it, it fluctuates need to keep supply and demand intact and raised theamounts o listing on their platform. that's where it's competing with expedia and booking opinion it's all about supply they need to keep it in tandem with demand. so they don't have too much supply, hosts aren't giving up too much and guests aren't paying too much. they've done moves around transparency that is interesting. they'll show you the upfront price including cleaning fees, i know folks take issue with that, whereas competitors don't. they were asked about the impact on demand on bookings and they said it was neutral. they expect more transparency is going to put them in a better position going forward we'll see. >> talk more about it on tech check later today. a lot of news on the auto front today out of ford and tesla. for that we turn to phil lebeau this morning hey, phil. >> carl, let's start first with

ford, the ceo, along with the company's cfo giving a presentation today, a fireside chat if you will at wolf research and the research is how jim farley expects to restructure the company. remember they fell about $1.1 billion shy of their own guidance for all of 2022, in terms of what they plan to earn. he said today, look we're 7 to $8 billion cost wise above our competitors, 3 to 4 billion of that comes from materials, complexity of the entire supply chain and the other 3 billion, that's on us that's structural and engineering issues that need to be resolved and they are front and center for jim farley. he said this is about redefining what we do with the 120-year-old part of the company. let's be clear, he is not talking about the future with evs. he's talking about redefining the ford that you and i grew up with, that everybody knows about. when you talk about the ev part of the business. he spent a long time today talking about the fact they do

believe they can get to their target of 8% ev margins by 2026 he said i'm surprised we're number two in terms of ev sales at this point. did i expect it? no but this is not enough he said today they're going to move towards nonany -negotiable pricing of evs and tesla, if you are a tesla owner you can use the shooup supercharger network you're driving a chevy bolt you're not using it now. though they have agreed to work with the white house and opening up the supercharger network by the end of next year in exchange, that will allow them to tap into billions of

dollars, federal money going towards not only the development of tesla superchargers but all superchargers around the country. don't forget, tesla's investor day less than two weeks away and that's going to be a big day because people will be focused on whether or not elon musk gives us a clue about a next vehicle. i'm not talking about the cyber truck. i'm talking beyond the cyber truck. many people believe that's where we'll hear about a more affordably priced vehicle, call it a model two if you will, the term a lot of people have used a lot happening today on the auto beat. >> we know phil you'll bring us those headlines in a couple weeks. going back to tesla opening up part of the charging network in the midst of this biden administration standards for ev chargers announced that we got yesterday you brought up a key point earlier today. i want to go back to it. it's the fact that standards don't necessarily include

pricing to charge at those tesla networks >> right i think it'll be similar to what we see with gas stations right now, morgan. if you go -- say you go to a bp gas station. five cents off a gallon if you use a bp credit card nothing that stops tesla down the road going into a supercharger station for them to say if you have the app, if you are a tesla owner, you will get this price when you charge up. if you are somebody else, you're going to pay a different price i think that's exactly what we're going to see you already pay when you go to a charging network whether it's with charge points or somebody else, it's not free. it may be free through your company, they may have a charger set up, but generally speaking for the public you are paying. and that's what we're going to see. so it's great they're going to open up the network especially o on highways around the country but that does not mean it's going to be free for everybody there will be a cost.

>> phil lebeau, thank you. as we head to break. our road map for the rest of the hour markets are in the red as investors work through a murky outlook for the fed. why one former fed official warns a soft landing may not be in the cards. plus more on the autos we'll talk to mark fields. >> and we have some fresh crypto headlines this morning we'll discuss later this hour. big show still ahead don't go anywhere. my ameriprise advisor helps me feel confident about my financial future. he knows me and my goals. it's not the first uncertain environment he's helped me navigate. probably won't be the last. but with his advice, i know i'm on track. the plan we created can withstand uncertainty.

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welcome back to "squawk on the street." markets in the red this morning as investors weigh more rate hikes ahead. here's former fed vice chair allen blinder with his take on the terminal rate after b brainard's announced departure from the fed. >> i think that looks less likely i think going over 5% is more likely and maybe to 5.5% depending on how the data comes in lately they've been carrying a kind of hawkish message. lots of jobs, lots of spending >> our next guest agrees warning the rosie view for stocks is unconfirmed. lisa shallot joins us now.

great to have you back on the show we have been increasingly getting more of this type of commentary in recent weeks as the data has come in stronger than expected and this morning that robust retail sales print as well. i want to get your thoughts about the market rally we've seen so far to start the year. and how that jives with what the fed has been saying and what former officials like blinder have been saying. >> look, i think it's very clear that the liquidity in the market, consumer savings and optimism about the job market continues to support consumption. and, you know, for the fed, this is really problematic. because part of the reason that central banks raise interest rates in a battle with inflation is to cool demand. and that cooling of demand on the consumer side of the economy, on the services side of the economy is just not coming through yet.

and so, this is a stock market that, in our humble opinion, began to rally last october, in large part on these grand hopes that the fed was quote/unquote near done or at the pause and were imminently going to cut in 2023 i think as every day goes by and we get data that suggests that the first quarter of this year is quite a bit stronger on almost every dimension, that thesis starts to go out the window and as allen blinder said, the probabilities that the fed is higher for longer become a reality. and as rates are higher for longer, the price earnings ratios of stocks have to come under pressure as these ideas about imminent rate cuts just get extinguished. >> so to you is this another bear market rally? if so, how far could we fall

here >> yeah we're in the camp, as you know, we're very close colleagues with mike wilson at morgan stanley we have talked about the potential for kind of a boom/bust scenario and, you know, as folks recognize that, in fact, maybe the cost to capital is going to be much higher and the longer run pressure on corporate earnings is going to be much bigger, we would not be shocked to see a 15 to 20% pull back from current levels which would take us below the prior cycle lows of roughly 35, 3,600. >> which, of course, raises the question, what is an investor to do right now with their money if that is what is ahead? >> so, you know, we've talked about the fact with our clients that we anticipate that this is going to be a year where markets are extraordinarily range bound

against a backdrop of very high volatility that means on the one hand lock in some gains in the fixed income market, very short duration, 4 to 4.5% returns from interest rates and potentially total returns as much as 10% in fixed income you know, we think are something that should be in your portfolio. as far as equities go, we're pursuing active stock picking, highly diversified portfolio with a focus on growth at a reasonable price and value and we're finding that today across the board so we're finding things to buy in biotech and semiconductors and software on the one hand but on the other hand in places like energy and industrials and financials and consumer services so a very diversified portfolio, there are lots of things to buy.

they're just away from the s&p 500 index, which continues, we believe, to just be overly concentrated in megacap tech expensive stocks that are going to have earnings headwinds >> lisa shallot, thanks for joining us. >> thank you still to come, more on today's market moves after the break. we'll get a deep dive as well on the outlook for autos as david said earlier, a word of caution ent comes to the middle class consumer that's coming up next.

watching tesla this morning adding to its strong start to the year so far. barclays initiates coverage with an overweight, target of 275 tesla committing to open 7,500 chargers in this country to other evs by the end of '24. qualifying them for some federal dollars. joining to discuss former ford ceo and cnbc contributor mark fields it's great to have you back. it's interesting for a long time we talked about the urgency to get evs affordable

especially vis-a-vis tesla but anyone who's gone to price one of any brand lately i think is facing sticker shock. i know you're watching that. >> yeah. overall, the industry has a bit of an issue right now in the middle class consumer is essential shut out of the market just given how the auto makers have biassed their production to the high end models. the average payment for a new car is over $750 think about that, that's about double what it was just in 2019. and when you lay on top of that the fact that the average electric vehicle is about 25% higher than a nice vehicle, that's an issue. because there's not many people that can afford 60, $70,000 vehicles as we transition to evs. >> so is this why, when we look

at some long term adoption forecasts, the chart goes up and then flattens out before it starts to reaccelerate are we in that period now where it's only something that the high end can afford? >> right now, until some new models come on board, for example, general motors is going to be introducing new models at the end of this year that are supposedly in the 30 to $40,000 price range. that's right smack in the middle of where mass adoption can take place. but that being said, you know, it's kind of interesting when you look at the intent of consumers to consider an ev, it's off the charts where it was versus a couple of years ago but reality is going to strike when they see what the costs are. i think you're going to start seeing some of the high projections from some of the auto makers, they're going to have to adjust those or adjust their pricing to reach their

volume goals >> so mark, as all of this is happening we touched on it earlier in the show, the biden administration basically establishing standards for u.s. network of ev chargers, tesla is going to be part of this process as well, opening up some of its existing network, then you have hertz and bp saying they're going to build out a national network as well to accelerate adoption you help to lay the ground work for some of these partnerships with tesla and other evs where hertz is concerned when you were running things there on an interim basis. i wonder how quickly you think all of this infrastructure can, in reality, be built out, what it means in terms of pricing of that infrastructure and whether the electrical grid, which is strained in so many parts of the country, is going to be able to handle the demand. >> i think overall, when you see the guide lines that came out from the biden administration today. it's a real positive for the

transition to evs. it gives the incentives for all the charging companies to build out their infrastructure clearly, you know, i think one of the most positive things in that is it requires all evs to charge on what they call the ccs standard so you have one charging adapter for the entire industry, which i think is a good thing. to your question i think everybody is going to be working hard to get the input materials to build these charging stations i think that's going to be not so much of a challenge given the inputs there around steel, et cetera i think the bigger issue as you point out is what is the strain on the electrical grid because you put all these charging stations in, depending upon where you are in the country, the electrical grid is either in great shape or not so great shape. so i think that's the next step a lot of these utilities have to look at, look at their loads, see what they can accommodate to

meet these volume forecasts coming from the auto makers. >> on the charging stations, mark right now if you're going to stop, it takes, what, 30 minutes to get a full charge i'm not sure how long it is. i just wonder in a world we're accustomed to getting gas in five minutes are we going to adjust or does it turn quicker it does open up for concessions at the stations it seems to me. >> there's different levels of charger. there's a level charger 2 which you can charge your vehicle to about 80% in about an hour or so then there's the supercharger which a lot of tesla infrastructure is supercharger you can get 80% charge in about 20 minutes or so there is a physical limit, given the existing battery technology on how fast you can charge

there is something called solid state battery technology coming down the pike which should cut that in half if not more but you won't see that until the beginning of the next decade i think to your point, consumers are going to look and say i'm interested in evs. then it comes down to other issues, around convenience, do i want to, you know, wait, 20, 25 minutes, 30 minutes when i have to charge my vehicle so i think you're going to see, you know, good uptake in the ev market but maybe not as fast as everybody expects as consumers look at the inconvenience factors but those will be solved over time. >> you need production going off without a hitch at the auto makers too which brings me to ford. which you used to run. they halted production of the f 150 pick up, battery issues there. we saw a net loss for 2022 cutting costs, particularly in

europe, those headlines i want to get your thoughts on what's going on at ford specifically as you do see these more legacy auto makers make the big shifts towards ev >> i think every automaker and ford is a good example, they're planning for the future now. when you look at the redundancies that they've announced in places like europe, that's the reality is that it takes less people to build evs than to build ice vehicles and that has implications for your workforce. you're seeing the automakers, including ford saying how do we get our organization as fit as possible as we transition towards evs to continue to maintain our margins, invest in the technology that's required not only the battery technology, but also the connected services that a lot of the automakers including ford are banking on to

contribute new revenue sources for them over time >> quickly, what you said, to touch on that more, what does this mean in terms of the labor dynamics, especially for yuan y unionized workforces in the country. >> you have the uaw contract up this year for all domestic automakers those are going to be tough negotiations because the automakers are looking at the forecast on the workforce they need, the uaw obviously wants to protect the membership and jobs. and, you know, as usual, what always works the best with the uaw negotiations is you're constantly communicating not just when you go into negotiations and that means open book, what's the strategy of the company, what are the facts so by the time you get to the negotiations you're not debating the facts back and forth you're understanding how do you come to a contract that keeps the company healthy but also at

the same time protects workers as best as possible. >> mark, we're going to watch that partnership with china and the mix shift and the charging network and deliveries in the weeks to come with your help good to see you. thank you. mark fields. >> thanks, carl. coming up why oak mark is betting big on the financials and where they see growth. we'll discuss that next with the s&p at 4121. let me bring in my expert. mmm so many scratches... oh those are from my car keys. - such a rich history. - yeah. this won't do well at auction. but at at&t, it's worth a brand-new samsung galaxy s23. - wait really? - mmhmm. what about this? at&t's deal is back. - wow. pre-order a free samsung galaxy s23 with a galaxy phone trade-in. any year, any condition.

hello everybody i'm contessa brewer here's your cnbc news update 222 hours after a massive earthquake hit turkey and syria and rescuers are still finding survivors buried under collapsed buildings. crews found a 42-year-old woman alive in southern turkey today the death toll now stands at more than 40,000 and is expected to rise. in florida a close call for a family when a stolen dump

truck crashed into their living room the driver of the truck and a person in a car that was also hit are in the hospital but we're told their conditions are stable. thousands of passengers aren't going anywhere today after the german airline's computer system shutdown workers at a frankfurt railway station cut a cable. the airline hopes to get back to work today i wonder if someone is saying did i do that? st steve,le >> i got it. the s&p down about .4% the nasdaq down a little lsz than a quarter of a percent. our next guest said his fund is focused on opportunities particularly in the financial sector, names such as capital 1

or kkr mike nicholas joins us now to discuss. let's start with kkr people think of it still as a private equity firm but it's more than that and a $50 billion market value why is it a big part of your portfolio >> thanks for having me. kkr is one of the largest asset managers and they have strong positions in the faster growing pockets of the market like infrastructure investing if you step back a little bit, al tern alternatives have been taking shares for quite some time and kkr is taking shares of alternatives we think they have an attractive long term earnings growth outlook. earnings have doubled in the last four years and we think they could double again or close in the next four years what's interesting is more nuanced analysis of the valuation can reveal what we think is a more attractive

opportunity than the headlines would suggest. kkr has significant investments on balance sheet within their own funds today that currently account for something like $18 a share. almost 30% of the market cap that's an unusually high percentage relative to peers if you adjust for the balance sheet investments i mentioned we're paying a low double digit multiple for what we think is a strong franchise capable of earnings for quite some time. >> interesting, why not a black stone or apollo or an aris or a car carlyle? why is kkr the one that you have chosen as opposed to the other names? >> we think kkr well managed, growing faster than black stone and trades at a lower multiple adjusted for some of the balance sheet adjustments. so we think you get the best of both we favor the outlook for

earnings growth there and think the valuation is cheaper. >> last time you joined us, which was back in october, you gave good advice too your viewers you were touting willis towers watson and pfizer both up sharply in the period since then well done. >> thank you. >> do you still like the names or have they moved to the point oakmark may look to take profits? >> we still like the names we're always looking to allocate, you know, our dollars into the highest risk adjusted returns we can find. but no, in both instances we believe the companies are kind of executing according to our expectations our fundamental expectations and think they look cheap. in the case of pfizer we think it's 13 to 14 times next year's earnings we think a company is capable of growing high single digits that's a pretty cheap multiple

certainly lower than a market multiple today and willis similar where we think the gap between its peers is still quite wide. we think there's a lot of opportunity in both. >> mike we had bill on set a few weeks ago. we talked about alphabet at the time when i think oakmark i think alphabet to a large degree we were thinking ahead to whatever ai options they may have and since then it's a whirlwind of news from microsoft and alphabet what's your sense of their response and whether they can come back from this recent loss of market cap? >> it's a good question. we think -- we certainly think that alphabet has the resources to be able to respond here they've been investing heavily in ai for years to improve search results and ranking algorithms and spent $40 million a year in r&d and investing in their own language processing

capa capabilities we think the combination of the technical, brand, distributions they have that have enabled them to have 90% of the market share in search for 15 years puts them in a good position to respond i think the second part of the question is really, you know, what are we paying for the business here and as we look at the valuation today, the stock is selling about as low of a pe multiple relative to the s&p since it's been public and as you know, as we think about some of the underearning or nonearning assets within the company we think we're paying even a significantly lower multiple than that so we still like the risk/reward at oakmark >> will you be watching data of bing down loads in the months to come or is that not material to your view? >> we monitor all the data points as it relates to bing and

microsoft. but i think it's still -- there's still a long ways to go to determine how disruptive, how much of a pure substitute some of these chat bots could ultimately become. >> mike we're going to end the conversation there certainly want to continue it, though, when it comes to alphabet and so many of those questions. appreciate your time thank you. >> thanks for having me. still ahead, my exclusive with the u.s. army undersecretary talking all things defense, artificial intelligence and yes, that chinese suspected spy balloon and those other unidentified objects, that's coming up right after thbrk. e ea ♪ choosing miracle-ear was a great decision. miracle-ear made it easy. i just booked an appointment, and a certified hearing care professional evaluated my hearing loss. and helped me find the right device, calibrated to my unique hearing needs. now i enjoy every moment, the quiet ones... ♪ ...and the loud ones. ♪ make a sound decision.

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welcome back to "squawk on the street." turning back to the unidentified objects that captured the nation's attention this month resulting in military action over american airspace i sat down with the unde undersecretary of the u.s. army

to discuss the impact on the military and how the whole situation speaks to the current geopolitical climate. >> i defer to the white house on the specifics of an ongoing investigation with regard to the objects that have been shot down but we're being collaborative as far as our allies and partners are concerned, sharing intel, sharing information. and it validates that many of our particular security capabilities are of interest and probed which is why we know in our national defense strategy it's important for us to make sure we have robust capabilities to detect and address these threats. >> the chinese suspected surveillance balloons and subsequent shootdowns of other objects is putting into the spotlight the data the army and pentagon have been pursuing more capabilities including artificial intelligence it's something that alex carp

earlier this week raised post earnings when he said widespread of adoption in civilian applications will come soon but in the military it has already arrived. >> ai is very much a part of our military capabilities and the future i would say in many context it has arrived but it's continuing to evolve. if you think about how the army is going to be use ai and machine learning in the future, there's a couple of considerations first we have to look at sours of data and the ability to process data, you don't have access to significant infrastructure, bandwidth may be limited so we're working through those challenges and making the right investments not just in the capability in terms of hardware and software but also talent because the ability to work with those algorithms to understand how to unlock data sources is going to be important. >> that's part of this major push by the army and the military overall to modernize

and the role that software and the newer technologies are going to play in the coming years in that process overall we also talked about ukraine and supplying ukraine and replenishing stockpiles here as well. because the army runs point on so much of that when it comes to getting that security assistance and those weapons to ukraine as we do come up on, it's kind of incredible to say, the year anniversary of russia invading that country. >> that is coming up i know the defense secretary had comments today about what he sees happening in the future that ukraine still has the opportunity at least to make some headway interesting how rtx is flat for the year underperforming the broader index because there's questions about funding down the road. >> its's $29 billion and counting so far where the ukraine effort specifically military and security assistance specifically is -- has been dolled out by congress and the administration not all of that has made it to

contract but we discussed that, and how the army and contractors are moving more quickly to try and get more of these production lines ramped up and trying to get, in the case of the army specifically, more of the stock piles that the dod has out into the hands of war ukraine but you've got supply chain issues as well, and it's something we've been talking about for quite a while. and that the covid situation really thrust an extra light, an extra issue into that process, too. but it's a slow process, and i would just say for the defense stocks, and a company like raytheon, specifically, it's going to be a while yet, until you see all of these orders actually make it into the sales category on their quarterly financials >> meanwhile, we're shooting things down, and we don't know what they are, right that's fair to say >> with raytheon missiles. >> yes, that's right >> we still don't know what they are. >> the recovery --

>> whatever it is, we'll shoot it down! >> the recovery efforts continue and there is not a whole lot more to say on that, because we don't know, other than, there was a briefing to senators yesterday and you had some commentary on the heels of that, that perhaps those last three unidentified objects, perhaps, you know, they have not been recovered and maybe they won't be fully recovered >> right >> but we're getting good stuff on the first one that's what the word was >> yes >> we knew what it was >> yes still ahead on tech check this morning, the airbnb and roblox breakdown, as both of those names surge on the surprisingly strong results. we'll also talk to dan niles of satori on where he sees opportunity and is betting on a rebound -- well, we'll let you know what name that is, when we come back in about nine minutes. hey! like your workplace benefits... and retirement savings. with voya, considering all your financial choices together... can help you be better prepared

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the s.e.c. taking aim at crypto currencies like coin baste in their latest meeting. we'll get more on that story in a few moments. but first, during the month of february, we are celebrating black heritage through the stories of some of our cnbc teammates and contributors here's cnbc senior field

producer, karen james sloan. >> my parents emigrated to the u.s. from guyana, south america, in 1997. during that time, african-american leaders like martin luther king and malcolm x were helping to pave the way my brother and i are first generation americans and our parents instilled in us the importance of education, hard work, and to recognize the sacrifices of foundational black americans that led the civil rights movement. today, i pay it for by mentoring young journalists of color

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visit coventrydirect.com. the s.e.c.'s latest open meeting currently underway some of the new rules under consideration could impact names such coinbase and other crypto related names, although coinbase shares are up a great deal maybe you can explain why that's up and tell us what's going on with the s.e.c >> yeah, david, could be anothe blow to coinbase the s.e.c. looking to increase requirements, for what types of companies can legally hold investor assets. the commission is set to vote today on expanding the scope of requirements for qualified

custodians, which include banks and brokers, but crypto companies like coinbase have started offering that service as well it's meant to include other asset types, not just crypto, but gary gensler explicitly says those crypto companies' current practices might not meet some of these new requirements in a statement, gensler says today's rule covers a significant amount of crypto assets, and though some crypto platforms may claim to custody investors crypto, that does not mean that they are qualified custodians spoke to coin baste's chief legal officer about this he says right now, they're willing to fight >> we're not looking topoke th s.e.c. or any other agency and i would much rather have, frankly, conversations that are part of a formal process but unfortunately, you know, in certain situations, we've faced regulators who are very eager to make a public display of their regulation by enforcement campaign and even create shortcut videos and other content that seems to take -- want to take the conversation beyond a productive dialogue and

make it much more about a fight. we don't want a fight. we're prepared to fight if we have to. >> david, back to you. >> all right, yeah, we can take a look there at coinbase shares, they're up 9.7%. i'll let "tech check" figure out why that stock is up for now, we'll wrap it up on "squawk on the street" with the s&p down half a percent. >> here's carl quintanilla with jon fortt and deedra bosa. tech has been soaring this year, but is the rally in some of the most beaten-down names real or a reversion of the mean? we'll talk about that with dan niles. his fund made money in a very tough market two earners going in opposite directions, airbnb with this massive beat, profits and shares surging. is the company a tech pioneer or a well-run travel business we'll discuss. and shares of akamai down.