but then approppi yesterday wash a negative surprise. i think you're going to have investors clinging to every jobs report, clinging to every inflation data release >> yeah. i know guess i'm not dreading them. gives us something to talk about, but it is a little bit scary. three-day weekend for a lot of people, gunjan, hopefully for you as well. thanks for coming on, and make sure you -- i like saying this -- make sure you join us on tuesday. "squawk on the street" is next ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at the new york stock exchange mike santoli is with us in a moment cramer has the morning off premarket is adding to thursday's losses, biggest pullback in four weeks as these higher yields pressure stocks. ten-year pops to 3.92% options expiration today road map begins with rate fears and the fed.

goldman and bank of america now see three hikes before the end of the year. deer raises quarterly profits and cites stronger demand in favorable market fundamentals and you have shares of doordash getting a boost from stronger sales quarterly deliveries topped analyst forecasts. let's start with the markets. dow is on pace for its third negative week in a row the ten-year hit the highest level since november earlier today. dollar this morning, six-week high david, some of these notes from goldman and bank of america almost rhyme, adding another 25 to june would take you from about 5.25 to 5.5. i think bank of america, still looking for a cut next march, but obviously, trying to read what the market's already telling us >> yeah. and there you can see jan talking about, in light of the stronger growth, adding 25 basis points in terms of their expectations as well it's been the story of the week, of course, hotter than expected

inflation report, suddenly a market waking up to the fact that the fed may not step. you've heard it all week, whether it's alan blinder going up 5.5% or john gray, blackstone yesterday, sort of intimating the same idea and staying at a higher level for longer, carl. you can take a look at the ten-year where that is. that's what we started the show with that said, risk premiums are tight right now. financial conditions, some say, still continue to loosen to a certain extent hence, the fed may be tougher than we thought, even a week or two ago. spread's remaining pretty tight, too, in fixed income >> that's been one of the bull arguments about this entire rally. interesting, you had apollo this morning just basically remind you that higher rates for longer puts pressure on corporate earnings, corporate spending, corporate capex. they argue the fed is not done, which means that the trading environment from 2022 will be coming back, and 60/40 may be

poised to underperform once again after what's been obviously a difficult year we'll see. others will point out that the last time we had yields here at these levels, david, stocks were in much worse shape. so, is the market willing to look past any kind of near-term pain bank of america today, historically bearish, but hartnett says, look for 3,800 by march 8th. >> that's very specific. march 8th is pretty close. that will be quite a downturn over a relatively short period of time. carl, again, it's been confounding to some extent for those. more of the people that i speak to tend towards being less constructive on the equity market, but that hasn't stopped, and perhaps it's one of the reasons why we've hit some nice levels until, let's call it, this week. i mean, if we end down today, we're going to be down for the week i don't know what the numbers are, exactly usually, you've got a good take on what -- where we may end. >> i think the s&p's already

taken out the weekly gains, and of course, the 2% loss for the nasdaq got a lot of people's attention. oil is interesting too as it starts to discount, maybe weaker demand? you got wti set for 2.5% loss for the week that's four days down, haven't had a streak that long this year so far and then, chevron yesterday, david, adding 100,000 barrels a day of venezuelan oil to the u.s. in month. >> little bit of production they've been working on for some time carl, what was it when we were talking about the chinese economy coming back online in a more significant way and therefore being such a large consumer of oil? that it would be going higher. we were pushing $80 or above, and here we are now at this level. there's, you know, a lot of volatility, as we point out all the time >> yeah. jeff currie at goldman, who's been looking for higher energy prices for a long time, i think, the title of his note this

morning is between the fed and a hard place basically, arguing exactly what you said, david. the fundamentals will be there in time in goldman's view, but the fed obviously pressuring what had been historically bullish call what's interesting, i think, also, david, is even though the macro is tilting bearish for the week, some of the individual corporate results are being very well received this morning amat, deere, hubs, draftkings have all raised their guidance, and you put deere and amat and cisco together this week, it's not a bad string of largely industrial names with a good outlook for the year >> no, it isn't. on deere, right, i know that was once your area of coverage many years ago, back in your "journal" days again, 34% net sales gain, and you can see the stock is performing quite well, carl. haven't looked deeper into the report, but certainly, you know, how is it typically taken, a name like this, when it does

outperform in terms of any impact beyond its stock? >> i mean, well, it's a comment on commodity price, which would be net, i guess, inflationary, but also just a signal of -- and i remember doing stories about deere in the '90s where they were adding all kinds of bells and whistles totractors becaus farmers had the income, and it does point to some amount of money still sloshing around at least the agricultural complex, david, which is going to move the needle at least in terms of machinery. we'll see. we have had some negative calls on cat in the recent days, although cat's exposure to agriculture is not near what deere's is >> you can take a look at ceo john may talking about what was a solid outlook for the company. fiscal year 2023, in terms of net income and again, another strong year

on the basis of positive fundamentals he says, "low machine inventories" and a continuation of what they call solid execution. m amat are not going to be up much, but we had cisco yesterday. seemed to be something of an outlier. we had chuck robbins join us, positive on all counts, and certainly more so in terms of the guidance than had been anticipated by many of the analysts who follow that company. >> talking to chuck robbins about this viewpoint among ceos that even though you might face some near-term challenges, what is normal anymore? what does it take to really shake you off your spending plan in his view, it takes a lot because this new generation of ceos has seen a lot. >> those were interesting comments, as were his comments about what they see as the opportunity for a.i., in terms of being demand for their products obviously, we've talked a lot about the demand for chips, but it being perhaps as much as 3x in terms of what you've got

right now. that got my attention. i didn't ask bing about it we didn't get into a conversation about whether there was any love at all. >> did you see these reviews >> i did >> in the "times," kevin's review where he takes it for a tres drive and the "washington post" where it basically says, i think you are a threat to my security and privacy, and of course, tells kevin that he thinks -- that it believes kevin should leave his wife and be with it. >> i was speechless. i mean, as i think mr. russ was as well. we're referring to yesterday's story in "the new york times." that review, so to speak, of bing, which he sort of liked at first and then really got freaked out by, and he's not alone. it does raise this question, of course, we've been talking so often about this, that move in microsoft that you see in part because of the enthusiasm that surrounds what will be and is this new offering that is going to accompany their bing search engine in terms of being able to have a conversation, so to

speak, with the chatbot. we've talked about alphabet's entry as well, whether they're behind somehow, but carl, the larger existential questions in terms of what this means, these are the earliest days. are we going to look back in a few years and, i don't know, say, those were good days before the machines took over >> i know it's been bubbling underneath the surface with all the investment for years, but i mean, we've only really been talking about it for a month, let's say, in this form. if we're already here where we're having interactions like this, it does raise a lot of questions. >> yeah. and microsoft, to its part, is saying, this is obviously a test run. they're only making it available to certain people, and they're using it as an opportunity to tweak it but they got chatgpt, you know, version 4 coming soon, which is supposed to be a significant leap above where we are right now. it just -- it is going to raise so many questions. i keep thinking back to that

google engineer who said that a.i. had reached consciousness, and they fired him i don't know, man. >> by the way, russ did tweet this morning that you can no longer have hours-long conversations. they've truncated your ability to speak with that version of bing, at least in terms of duration so, as i joked on twitter, maybe somebody got a talking-to after that tryout. >> apparently, the longer you go, the weirder it gets. >> yes >> kind of like life >> pretty amazing. still a lot to get to this morning. we got this new report showing that u.s. credit card debt did hit record high levels amid this rising inflation we'll talk about that. a bunch of smaller names but important reactions to get to from the likes of draftkings, hubs, doordash, and other news regarding things like etsy and meta today as well take a look at futures here. continuing the weakness that we got on thursday as the s&p is looking for a ekwely decline more "squawk on the street" straight ahead .

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welcome back too "squawk on the street." u.s. consumers are turning to their credit cards more as inflation leaves them feeling financially stressed credit card balanced jumps $986 billion at the end of the year lisa ellis is here at post nine the talk about how it's impacting some of the credit names we follow. these numbers are always hard to put into context when they come out, because they're so large. what do you say about this one

>> look, so, for the first time in three years now, credit card balances are back above where they were pre-pandemic, but the important number is that as the measure of, like, financial stress, meaning, the amount of any individual's income that they're spending to service their debt, we're still well below pre-pandemic levels, because incomes have gone up as well >> right so, is a return to trend on that ratio dangerous at this point? >> yeah, it's coming i mean, we're still below -- it's about 14.5% currently, that's the amount of any individual's income going to service debt the pre-pandemic average is, you know, about 15%, and we're trending back toward it. and given the rise in rates and of, obviously, inflation, we're monitoring that really closely >> you cover american express, and there's been some talk that that's the way to maybe have it both ways, where you have the higher incomes, more spending volumes, lots of travel come back, and yet maybe less risk of credit loss down the road. does it make sense at this

point? >> absolutely. amex is one of our favorite names, one of the best-performing stocks in our coverage in the last two years they took advantage of the pandemic to really embrace that affluent consumer base, so their chargeoff levels are still hovering only around 1%, and they have already guided that in 2023, they expect them to stay well below where they were pre-pandemic and you're seeing, still, all the recovery in travel their volumes were up 15%. visa and mastercard is only up about 8% of 9% >> what to you look at in terms of overall transaction activity? is it migration from more debit volume to credit as a macro signal at this point, what's relevant? >> so, with them, it's the overall number that really matters, because they are such a diverse view into the health of consumer spending. almost 50%, in the u.s. it's

almost 75% of spending is done by cards you can see that overall health in realtime, and so far, it's extraordinarily healthy. the consumer, while they still have jobs, you know, they're still spending >> and then -- >> lisa, just love to come back to some news earlier in the week because it is a name you cover not related to this. fis guidance was just horrific, stock down, but they announced the possibility of a very large transaction so to speak in the spin of what is world pay. any new take stocks come back a tiny bit since that significant down day earlier in the week. >> yeah, yeah. this is one that's been in a very rough road over the last six months our outlook for 2023 for fis is down 35% from where it was only six months ago they are really suffering at the names -- at the hands of, like, a square, a clover, a toast, those players. they don't have a product like that, and it's crept up on that business over the last couple of

years, and the problem is, as they're losing share in that market, it's very high-margin volume, so you've seen this sort of cascade effect that their revenues are decelerating and their profits are falling off more dramatically. so, they have new ceo, a new cfo, several new members of the board, the activist is somewhat involved, not heavily, and they've decided to spin off their troubled unit. it's the big payments unit >> so, it's going to take a while, potentially >> yeah, this one's going to take a while >> i'm not sure names like discover or capital one or affirm are in your universe, but, i mean, the rollover in some of those names, is it pointing to worries about the lower income strata? >> yeah, so, definitely, we are -- there's nervousness about a bifurcation, for sure. because the number of consumers that have taken on credit card debt is up significantly it's nearing 50% of consumers, which means it's heavily in that middle income band so, there is this bifurcation.

and then, players like affirm, for example, where you've seen really struggle in these last couple weeks, they also have the problem that they're not a bank, and so they actually have to source their funding from banks, and as a result, in a rising rate environment, they're basically just getting squeezed on both sides. higher cost of debt or higher cost of lending and then also they're struggling with chargeoffs on the consumer side. >> right it will be key to watch, especially if the labor market does soften up a touch at the low end. >> yeah. >> lisa, great to have you good long weekend. thank you. >> thanks, guys. take a look at futures here as we are in the red not expecting a whole lot of data points today, but we'll watch volume on this options platn iday ba in a moment old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan

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check out shares of doordash today, getting a boost from its revenue beat and some pretty upbeat guidance as they do have -- guide pretty much in line for a full year ebitda, but pretty much across all metrics, orders, ebitda, revenue, it was a beat nice little buyback there as well, mike, $750 million >> yeah, which is an interesting piece in the story i do think the guidance on adjusted ebitda, as they calculate it, it was at least a relief not sure it was too far from the published consensus, but people thought there was some encouraging signals there. another one of these stocks that, you know, lot of excitement when they came public they were perfectly situated both in terms of investor excitement as well as the part of the consumer market they were in, and then it was, like, the big rethink. on a two-year basis, they crashed. now, making new highs above where it traded last fall, and

it's more about we can try to see our way clear toward a real bottom line profitability. so many of these companies, they still have the kind of stock-based comp to chew through. it's a big portion of the market value. still don't know, long-term, if this model is pristine in terms of what you have to pay people to deliver the stuff, but so far, i think a decent message in this market. so, you can see it in airbnb this week as well. all very similar kind of, you know, the consumer apps that had such promise and now they're maybe turning it into a sustainable business model but i still say, if not, not for sure because it just -- they still have a lot to prove that they can justify even where they're valued right now >> adjusted ebitda is something we occasionally wander into, and then we kind of don't discuss it, but it is worth mentioning shopify, yesterday, you just mentioned stock-based compensation

such an important component, of course, because they take it out for adjusted ebitda. >> right >> i will say that doordash's credit, they have a part of the release here that talks about the value of their shares and goes into some detail about reported stock-based comp and the expense can sometimes, they say, provide a good proxy for what it would cost to pay employees in cash, but it also can deviate from the estimated cash equivalent cost, depending on the source of the accounting. they do explain why they do it and the buybacks they use to offset it, but it's important for investors to remember, we use adjusted ebitda, we let them all use it >> you're absolutely right that is the single biggest line of adjustment is the stock-based. draftkings, up today, they're still projecting half a billion a year what is it now, an $18 billion market cap maybe it's pretty significant. $15 billion or so. so, yeah, i do think you have to keep in mind -- you know, ubs, the strategists there have

actually, i think, are alone in saying one of the bigger risks to earnings in general for this year is the lower quality of earnings, so if you look at not just the adjustments to reported earnings but also things like accounting accruals and things you can look inside the books and say, are things getting better or worse, they're suggesting that there's a little bit of vulnerability there, because companies are basically kind of exhausting their ability to show reported earnings for a little while so, i don't know that that's going to be the dominant narrative, but it's interesting to keep in mind. >> to your point, they issue the stock-based comp, then have the stock buyback to offset -- >> if they're lucky and have the cash flow to do it >> i mentioned it to harley finkle stein yesterday >> meanwhile, we knew uber eats business, for example, came in a bit strong, but dash continues to lag uber on the one-year charts >> for sure. yeah it does seem as if uber has the

bone it's a more seasoned public company. it's trading even with the comeback at levels it traded at shortly after the ipo. so, it's not necessarily, to me, like, uber is all of a sudden the winner it's more just kind of a comeback on a longer term frame. >> although, you put lyft in there and some argue uber is the self-funding giant now >> without a doubt yeah >> no, i mean, the winner in that mode, yeah. it's just, again, it's about, what is it is it just kind of a mobility utility that's kind of not all that profitable, or is it really going to get escape velocity on the bottom line? >> that's a good point we'll get the opening bell in about five minutes yields have come off the boil in terms of the session high, but the ten-year, still just south of 3.9%. back in a minute

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. welcome back this new piece in the "journal" this morning on meta says managers gave thousands of employees subpar ratings in their last round of performance reviews, possibly signaling some more job cuts ahead for the company. really interesting look at the hr process at meta

there are five different ratings at the company the second lowest is where you meet most expectations, and it's rare to get lower than that, but of the second worst rating, they're going to give about 10% of workers that. >> right "the journal" pointing out that level of underperformance ratings is not unprecedented, pre-pandemic, but there has been such a staffing up, and obviously, maybe a change of mode in how people are evaluated that it seems like it's a lot of people, in gross numbers, and obviously, would set the scene for further cost-cutting down the road, presumably, if it allows you some justification for more staff cuts. but it is kind of interesting. reminds me of what david solomon at goldman said. we didn't do the normal cut the bottom performers every year thing around the pandemic, and now people are getting a little more stringent about these things >> right old-school mark is what some employees -- >> you grade on a curve, i guess, you know? somebody's always on the wrong end of it.

>> let's get to the opening bell and the cnbc realtime exchange at the big board, it's wells fargo, celebrating black history month. and at the nasdaq, essence ventures, a black-owned private equity company and the new voices foundation. >> this notion that even though it's not been the best week for the s&p, we have hung above the 200-day, which is interesting. >> the 200-day right now is like 3,940. so you bid above it for long enough that it tends not to happen in the context of a completely doomed bear market rally. you go back to, for example, the 2000 to 2003 experience. yeah, there was a 20% rally in there after 9/11 you got into 2002, and then it failed from there. but you never spent this much time above the 200 day, so it's

along with the breadth and momentum readings we got in january, it's leading folks to say, look, the technical characteristics of this market are the kind you see when a low has been made and you're starting to lift off from there. it doesn't mean you're barrel high or in a straight line, but maybe there's some insulation on the downside that's why, coming into this week, the technicians, in my view, were the most high-conviction bulls out there, the most high-conviction bears, to me, are the, look, all the leading indicators of recession are in place it's just a matter of time buy bonds. so, what's fascinating is this week, has challenged both those views. you have slippage in the indexes, we're in pullback mode, so the technicals and dimmed a little bit on the other hand, we're not talking recession. we're pushing out recession. it's all about how hot the economy is and how high inflation remains. that's kind of typical of the market where it's going to challenge the clusters of conviction as much as possible

>> right and we mentioned, in the a block, the firms that are adding another hike to june, in the case of b of a and goldman, to may in the case of ubs, but even so, you got bullard saying, i wouldn't discount 50 basis points again >> so, you have that wing that's a little more hawkish, nonvoting at the moment, saying, we could do -- go in bigger steps i think there's a lot of comfort, though, in that powell does not want to slow down to 25 and immediately accelerate back to 50. he was very reluctant to say if they paused rate hikes that would want to resume them. he wants to have a more predictable glide path in december, we thought, fed will be pausing or done in four months right now, we're saying, four months, it's just that you keep pushing it ahead there were some in december, some on the fed who thought you had to get toward 5.5% on short rates, or whatever, and that's where the consensus is moving

towards. so, is it moving slow enough that the market can, you know, kind of make a peace with it that's the question, i think, we have right now rates are much higher than when stocks were at this level before that's the issue >> david, i see you're reading intently >> thank you, yeah it's funny, there are a handful of sort of contested situations out there. remember, we got gold mining, a hostile. we got the storage wars. and worth hitting that, because we did get some news overnight life storm waage, public storag made this offer, it's a maryland-based company, tip clooep typi typically has -- it's incorporated in maryland, so they have laws that are favorable if they want to use them to defend against a takeover offer but life storage has unanimously rejected that unsolicited proposal from public storage it was 0.4192 shares of public storage. life storage isn't doing much of

anything it is trading below the implied value of that deal, roughly. they did bow out of a conference in a week or two, not a big deal there, necessarily, but there continues to be a question as to where this thing ends up you knew going in, if you're public storage, that they had a number of actions they could use defensively to sort of thwart you if they chose to do so i mean, i think they're advised by -- they know their way around this stuff but we'll see if they choose to come back at public storage. but life storage, again, citing a number of different reasons, but the basic one is, listen, we think our operating strategy and execution resulted in best in class performance and rapidly growing markets, and they go on to simply say this undervalues the company. you can read the rest of it, if you want, i know it's very exciting to read about storage >> i do think storage wars is the intellectual property of the a&e network. >> i'm not allowed to use it >> we have to acknowledge, that's all >> okay. that's the only fun about actually doing this, mike.

you're going to take that away from me. >> although, it has been a really longer-term, an amazingly strong part of real estate >> it has. >> almost to the point of cliche, where people talk about, storage entrepreneurs and as if it's automatic riches and things like that. >> yes and we'll see, again, we'll continue to follow this. one of a number of contested situations out there, sort of surprising, again, all-stock, hostile or unsolicited bids for a maryland company, you think, maybe that's not going to work out. we'll see. >> overall, you know, moderate weakness here. oil is not having a good day a lot of the energy names leading the s&p lower. moderna down 5%, though, is going to get your attention, will take you back almost to november of last year, mike, as this flu vaccine data does disappoint stock's been hitting a series of lower highs and lower lows since christmastime. >> yeah. it's -- it's another one of those, like, what's the next act? is it really going to come

through to fruition as much as hoped? it's a really fascinating situation, because all of a sudden, it started to look super cheap because of the massive rush of profits from the covid vaccine, and what are you going to do with that war chest? we've seen things like this before in biotech, and not to say this is where it's going, but remember gilead. it looked cheap forever because they were front-loading a lot of earning, and the market said, that's great, what's next? we're there with moderna to some degree, even though everyone thinks the applicability of their technology is going to be vast so, definitely the kind of thing where it's not quite the part of the market that the hot money is racing toward right now. they're actually been a pause in biotech in general after a good little comeback, but to me, it's all about, let's get back to the buzzy digital tech stuff, and cyclicals, frankly trucking stocks are working and they're not particularly dazzling, but that stuff is happening as well. >> we mentioned the consumer

have you seen auto nation this morning? 637 crushes 582. revenue ahead. new vehicles up eight. aftersales up seven, but the stock has been b-- what a barn burner as we talk about dealer pricing in this environment. >> it's amazing, and you wonder if it's a positive for the overall economy and markets because it's really about car prices to a fair degree, but yeah this is not a part of the economy that is faltering just yet. you know, it trades at seven, eight times earnings so it's always looking super cheap when people are worried about where we are in the cycle. and it just continues to work. i was looking, too, the street is kind of lukewarm on it. i mean, i think the consensus price target is under $150 we've hurdled that today, so it shows you that, you know, we've kind of pulled forward a lot of the worry about when the consumer's going to falter, and the auto cycle has been so off-kilter this entire time, so

you know, you can't keep cars on the lots, but we're worried about the consumer, and we're worried about auto delinquencies from loans made a few years ago. it's a bit of a funny moment >> it really is. yeah look at that move. all these stocks i mean, unexpected twists. >> just amazing. i was looking at other charts like that yesterday. it was high after their numbers. so, again, it's like, cars, travel, white hot. and the stocks are starting to reflect some of that >> highest point yesterday was that they've really, early on, decided to pin their fortunes to the high end >> absolutely. >> it's some of the nicest hotels you can stay at, but that's where certainly the leisure -- >> it's a quality over quantity approach it has been for a long time. they were in only some markets, and usually want to have more of a destination hotel as opposed to just franchising it out, and it's worked. i remember it came public in late '09, really unheralded in

lot of ways, doing okay. >> remember that ipo day they passed out fluffy white robes. >> you know what i don't, actually. fluffy white robes >> slippers. >> it's got the same ceo >> yeah, he's still there. >> absolutely. >> it's been a long time, he's been there guys, i did want to sort of look ahead to next week, of course, hope everyone enjoys the long weekend, but we were talking about salesforce for quite some time here. of course, so many activists and perhaps not as much time the nominating window is open. i want to look ahead to next week because, you know, at least based on a number of conversations that i have had over the course of this week, it seems we could get a settlement next week on salesforce. unclear exactly what that's going to be, and again, i don't want to say it too strongly, because these things can go by the wayside. but certainly, it would appear elliott and salesforce have been engaged in serious conversations

to avoid a proxy fight on a board that already is undergoing some change. what would a settlement look like what would it involve? obviously, a key question for salesforce shareholders. you know, would it accelerate margin targets to some extent? would they commit to saying, hey, we're not going to do anymore m&a. there's been a lot of criticism about the large m&a they do and whether they're getting value out of it. also potentially raising the buyback. they have a $10 billion buyback in place, but about $11 billion in cash and marketable securities on the balance sheet right now so there is a thought, if they wanted to, they could significantly increase the buyback. when you get succession planning, some sort of a road here that says, marc benioff, obviously, the much-loved founder and ceo right now, will he sort of agree to some sort of plan under which a new ceo would take over? are there going to be seats? all the questions you might, of course, involving a potential settlement there, but wanted to

get on the record in case we get one that's called on the earlier part of next week. timing on these things, difficult, but it does seem they are moving towards that, rather than an all-out proxy fight, which, interestingly, my read a few weeks ago, was sort of, that seemed the more likely outcome here >> and is that largely because the company seems more amenable to whatever would have been achieved through a proxy fight >> i think they don't want to fight. i think benioff is a lover, not a fighter. >> that was jim's point a few weeks ago. >> right it has been. >> that there would be some meeting of minds with crm. >> we'll see but i certainly am hearing it enough that i thought it was worth sharing at this point, and we'll stay tuned next week it's been an unusual situation, to say the least, with this many activists. obviously, remember, they've already got one coming on the board inmason. starboard has been there for some time. jeff oven at lucid capital has been there he was there earlier than value act, his old firm, and elliott

and then dan loeb also i mean, rare that you see these kinds of names by the way, an activism overall, guys, the names that are out there, we know, but i'm hearing there's a lot of activity that has yet to come to the surface, but it does seem as though there are advisors on the defensive side that are preparing for the possibility of activists does seem as though, while m&a has been relatively quiet, activism is pretty active. >> good one. >> i didn't want to say it >> can't beat you guys when it comes to play on words >> pretty good >> let's do amc really quick, because 17% move here is going to be the first peek above the 200-day since may. revenue does come ahead, and 11.8 million streaming subs in the quarter. there's been a lot of discussion about dolan. >> yeah, that's a different amc. that's the wrong amc that's the movie theater chain we're talking about, which is up 2.3% but we're talking about amcx, of

course, which has been struggling to figure out a real strategy after, of course, that string of hits for so many years, "walking dead." >> "mad men. >> what are you doing, and controlled by dolan, put his wife in there. i shouldn't say it like that she's a very talented executive, actually, who's had a lot of senior jobs. she's now running the company. i don't mean to imply somehow she's not qualified. and you can see the stock's reacting >> but an -- it's a billion dollar market cap now. it's sub scale in every way. you just wonder outside of the basic cable, you know, economics, which sustained them for so long, and what do they -- i mean, i think they may actually have an amc + app >> they do >> it's like -- it's a big percentage of what everyone else charges, and it's a narrower offering >> it's a very tough road, as you say. how do you nafvigate a world in which you simply have fewer

linear cable viewers period? every year, they're going down by a lot >> i don't know if you saw bernstein's note about paramount, saying, listening to the paramount call yesterday, my main conclusion was, buy netflix. >> yeah. >> you know? just because, it just felt like that was -- everyone's looking up at them and how much they've done >> i made that point yesterday everybody's trying to engineer their own strategy to figure out how they can cut costs or get to a place where netflix is, which is one of significant profitability at this point. none of the other streamers are close to that. >> two other points on media one is a double upgrade for roku over at b of a they go to buy they take their target up to $85. roku, of course, this week, first trip above the 200-day in more than a year and then this disney memo, david, that the "washington post" gets ahold of, an employee petitioned to fight back against iger's mandate for four days in office, saying that it could

have unintended consequences for the long-term health of the company. >> yeah, you know, 41 minutes live with him last thursday, and we didn't get to a few things, including the back-to-work memo that you're referencing, and i had been hearing about some pushback that disney has been getting. by the way, any number of other companies, even for three days, are getting some pushback. but four days a week was somewhat dpaggressive he feels very strongly that for a creative company, you need to have people together there's sort of that magic that comes from people being in the same area and he's going to stick to it. i don't think there's any doubt about that but it may result in -- listen, they're laying off 7,000 people. so, you don't want to come to work, maybe that makes you an easy layoff target >> remarkable. we were just talking this morning that when does leverage return to the employer in this market i guess with unemployment at 3.5%. >> that might be the lesson, people re-evaluating how much i want -- it's an interesting fix

right now. >> we've talked about this for two years now. obviously, the world has changed. we know hybrid is here to stay, but there is -- this continues to be taking up a lot of psychic energy for leaders of organizations in terms of getting people back because usually, they do want them back, not everybody, and fighting, because many just do not want to come back more than, let's call it, two days a week. >> and you know, economy-wide, when this debate was really heat, people say, look, if you're in the service industry, you have to show up every day no matter what the risks are, no matter what you want to do within disney, you have theme parks where thousands of people, for their jobs, show up every day. so, it's a tricky thing if you're not wanting to go in the office a fourth day, you know, to burbank or wherever >> there's some reports this morning about the tron light cycle ride at disney world finally getting there. doing some test runs if you're going to florida, you might want to stop by. really quick, you mentioned next week, david, and we're going to get walmart and home depot and

nvidia and toll and baba i just wonder, some argue that the walmart-home depot combo will be the most important data point until we get more important macro. >> it's an interesting one, and there's a lot of give and take walmart has underperformed it's always the defensive name it's much more about consumables and all the rest of it so if there's a bit of a catch-up move, target hasn't had that great of a run, but i know it's outperformed recently, so those two for sure, and then nvidia, i mean, it's back to almost, you know, the real go-go days in terms of how the stock has performed and the whole atmospherics around it, how it's an a.i. play and all you have to do is worry about the long-term momentum there that will be a key one i do think, although, nvidia has given back some from midweek we'll see if it's cooling off. >> as we go to break, watch bonds today. ten-year got to 3.929%, i think, was the highest tick that i saw. would be the highest since

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. we talked a great deal, of course, about tesla's big rally to start the year up about 63% the stock is amongst the best performers onth s&p 500 and the nasdaq 100 don't forget lucid also you can see that stock has moved up nicely in part, though, because of sort of vague akeout rumor, saudis, a while back, it sold off a bit since then phil lebeau joins us to discuss the battle when it comes overall to electric vehicles good morning, phil. >> good morning, david when you look at the ev stocks keep in mind, they were among the most beaten down last year, so the rebound we've seen year

to date, to a certain extent that was expected. they were just sold off as much as they were in terms of sales, this is still tesla's market tesla leads the market with two out of every three being sold in this country it is also worldwide number one just ahead of byd the china market and charlie munger's comments this week getting a lot of attention that's the main focus in terms of global sales. it's the largest ev market in the world. europe is also intensifying and tesla, because of its production in germany is increasing sales there. we will be hearing from rivian and lucid in the next couple weeks about their q4 results more importantly, it's going to be what they say about their production targets for 2023. i think a lot of people are looking at those two and saying okay, if there's going to be an independent start-up that is going to be able to survive, let's see what they can do this year and next year as general

motors rolls out more evs, ford increasing its production and then, obviously, tesla being tesla. that is going to be the focus over the next couple weeks, guys >> yeah. not to mention next couple years given all the ambitious targets. specific to tesla, phil, we had the recall, the self-driving feature. i guess it's over the air, but what do we know about it and how quickly does that get done >> over the next couple weeks they'll do an over the air software update. tesla disagrees with the findings from nhtsa. you know how this works, if nhtsa say we think there should be a recall your choices are you agree to do the recall or if you're an automaker you say take us to court and almost always nhtsa will win in court. tesla decided we'll issue a voluntary recall the allegation from nhtsa is that they're in rare instances, are cases where the full self-driving data technology, which is not fully autonomous, just what they call it, it

doesn't work as it should in certain intersections, maybe goes through a stop sign. >> right. >> you turn it goes straight in turning right. that is expected to be fixed with the software update done over the air you don't have to bring it in to tesla to repair shop. >> got it. phil, thank you. phil lebeau. >> you bet. coming up in the next hour, ohio considering suing norfolk southern the state's attorney general will join us in a few. the market lows, dow down 170 and back to 4050 on the s&p.

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make a sound decision. our best deals of the season are happening february 20th through march 3rd. call 1-800-miracle and book your appointment today! welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber live at post nine of the new york stock exchange equities continue to get squeezed here as yields remain elevated the s&p almost back to 4050 and the dow down 130 not a huge day for data, but we are getting lei. let's get to rick santelli. >> yes we're expecting our read on january lei to come in down 0.3,

and it delivers exactly that down 0.3%. but there's something special about this one what is it well this is the tenth negative lei number in a row. the record is 24 in a row, which spanned from april of '07 to march of '09 but this is not a good run, and minus 0.3 actually is the best, it's the best since it was 0 unchanged in march of last year. so lei is, if they are indicators, they're not indicating an optimistic future. keep in mind the two-year note at 4.66 is up 14 on the week, 10-year note at 3.87 are up 13 basis points on the week so we see that a combination of hot jobs and hotter expected inflation, continues to boost treasury yields. morgan, back to you. >> rick santelli, thank you. we are 30 minutes into the trading session. here are three big movers we're watching

farm and construction equipment maker deere in the green after quarterly profit more than doubled as higher prices and strong demand boosted sales by nearly a third see the shares are up more than 6% right now redfin, recouping all of its premarket losses after revenues fell 25% year over year amid what the company calls a spooked market for housing actually you can see the shares are back down 2.5% auto nation heading higher reporting record profits, beating estimates thanks to strength in new vehicle sales, while tee plademand for used cas slumped those shares up 8.5%. hawkish commentary rolls in from the fed following this week's hotter than expected inflation data steve liesman joins us to try to wrap it all up a lot of data points we've gotten. >> great week, david, if you're following these markets. treasury yields on the rise as rick said in the wake of hotter than expected wholesale prices,

low jobless claims and hawkish talk from two fed officials supporting they could support a 50 basis points rate hike at the march meeting. they said they supported a half point hike at the february meeting and again wouldn't rule it out for the next one. the effect out of all this in the funds future market to move the pricing from the peak or terminal funds rate near a new high of 5.30 for the august contract and bring the year-end pricing almost directly in line with the fed's average forecast of 5.13. it has come a long way the two-year yield surging 4.50 to 4.72 as it digests the recent economic data and fed talk they are voters this year replaced by somewhat more middle of the road fed presidents when it comes to policy hawker of dallas they haven't indicated support for a 50 but think rates need to go higher. austin is a bit of an unknown.

neal cash carry said he supports 5.40 for the year-end rate the comments of mester and bullard said the fed is not unanimous in the new fed regime to respond to economic data through more modest quarter point hikes. they want to do this thing they called front-ended loading rate hikes to get ahead of inflation. the market continues to price in a quarter for margin i think for now that's the most likely bet, but i say for now because minutes next week of the meeting will show how much support there is for a 50 basis points hike and you have jobs and inflation data that's ultimately going to be what the decider is, guys >> yeah. speaking of the decider, powell is the decider but how much does growing division matter on the fed? >> well, right now, not so much i think, david first of all i think rates are going up that's the first thing a question of 25 or 50, i think

powell is more inclined towards a 25, but he could be convinced for a 50 powell is going to work to get consensus and we have to listen to more fed speak over the next couple weeks, read the minutes and how much support there is. when i look at the fed presidents i don't see a whole lot, those that are voters, clamoring for a 50 right now, but look, another massively strong jobs report, more disappointments on the inflation front, could convince them that this idea of we don't have to frontload anymore, may be wrong. they may have to continue frond loading and responding to a quarter may not be adequate if we don't get the inflation reductions that most economists have now built into their forecasts for this year, david. >> more will be revealed never not an exciting day these days, steve liesman, when it comes to this discussion thank you. doordash shares are on the move after losing all of their premarket gains, but that said sales showing strong consumer for the quarter.

shares down 2% right now let's bring in deirdre bosa with a breakdown. >> hey, morgan shares have been volatile up 13% right after they released the results last night as you said they're down more than 2%. in a risk on environment, maybe investors are looking at the gov gross order value guidance for the year, which was better than expected and 40% revenue growth, which some argue is better than what uber is seeing at uber eats in a risk off environment like the one we're seeing this month maybe looking at gross margins and that has been decreasing over the last six quarters as it relates to the consumer, obviously, doordash has a good look especially at the u.s. consumer and here's what tony xu said about them. >> we continue to see resilience in our business, and it's been, you know, six to seven quarters now that we've been living in the post-covid world and we've shown is strength on the top and bottom line. second straight consecutive

quarters of mid-20% growth on the gov line, 30% plus on the revenue line and improving profitable year on year. we continue to see that strength and i think it really goes to show that food is the most resilient commerce category and we build a service people love. >> see more of that interview on "techcheck," but i pushed him on the profitability piece because he talks in adjusted ebitda profitability and the gross margin has been compressing over the last few quarters. he's an interesting ceo and doesn't necessarily give investors what they want right now, which is pure profitability, but he justifies that i heard david and carl talking earlier or mike as well, about that part of the letter last night that sort of talks about why they're doing so much in stock-based compensation and focusing on free cash flow. >> deirdre, i'm curious going back to a conversation we had i think it was last week, the days are blending together a little bit, on the heels of lyft's

earnings and this idea that maybe you see more consolidation when it comes to the delivery sector is that something you got into in your conversation with xu at all? >> it did. you're front running our sound on "techcheck." >> sorry. >> it's a good question because i asked him about that basically dash and uber are kind of locked in a fight in their subscription services. dash pass for doordash and uber 1 for uber doordash has more members, but i did ask him you don't have the ride sharing piece of the product that uber offers, would you look at a lyft basically said no. there's a high bar for m&a and plus, morgan, he has never seen the synergies between food delivery or any delivery and ride sharing he was not willing to entertain that. >> all right. >> yeah. deirdre, you mentioned i mean, just to get your take as well, stock-based comp is an important component of creating adjusted ebitda, given when you take it out you get a higher number, but he does defend it, you know, and

they, obviously, have a buyback to help offset it as well. any further conversation in terms of the expectations there going forward? >> he did agree to a sort of longer term target he said he was going to get stock-based comp to about 2% of outstanding shares, so he's looking at it, but he didn't try to say, you know, we're getting it down. we heard that from lyft last week they said they were going to bring stock-based compensation down, but didn't talk about why it was so important to them as a company. it was unique to see tony xu say this is why we're doing, and he was consistent in his comments to me and has been over the years they're building long-term value. even in this market moment when investors are looking for gap profitability, he doesn't -- he wasn't willing to say he was going to get there he said listen, we think spending money on dash pass will set up our investors better for the longer term and that's what they're focused on and stock-based comp is part of that he wants his employees to treat

the company like they're owners themselves. >> we'll you on "techcheck" and talk about dash down 3%. deirdre bosa one key factor in the inflation story is housing we've seen some argue, yet to see the big declines in the biggest component of cpi, shelter and there's hope for more deflation yet to come let's bring in diana olick she has breaking housing news that plays into all of this. hey, diana. >> hey, carl redfin reporting this month this morning the housing recovery has hit a pause based on its demand index, which measures request for home tours and other services the index dropped this week compared with the week before not by a lot but the first decline after a month of steady increases. this goes along with the drop last week in mortgage applications to buy a home that reported by mortgage bankers association. it's about the turnaround in rates which spent all of january in the low 6% range, but which are heading towards %.

back to you guys. >> diana, one of the things i'm curious about is whether it's a zillow or redfin, or whether it's others, there's so many investors in the housing market, have those investors exited and is that having an impact on some of the dynamics we talk about more broadly where the sector is concerned? >> well, actually, in the last quarter investors did pull back a bit. there have been several reports on that and that's because housing has got son expensive. when you have higher mortgage rates some do use mortgages, not the big institutional and most use cash they did pull back out because it is overpriced right now we've seen prices pull back a little bit, but not nearly as much as we need to get any buyers, especially first-time buyers, back into the market. >> diana olick, thanks. as we head to break our road map for the rest of the hour norfolk southern potentially facing a lawsuit from ohio's attorney general as tensions continue to grow there after a

catastrophic train derailment. we'll talk to the a.g. himself next. >> plus we'll have a lot more on the markets and why jefferies chief market strategist says there could be more pain ahead. >> inflation data coming in hotter than expected but the under secretary of defense thinks things have peaked. huge show ahead. stay with us ♪ ♪

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white house saying it, quote, will hold norfolk southern accountable even as another norfolk southern train derailed just yesterday near detroit. that one with no reports of injuries and no hazardous materials aboard the overturned portion of that train. turning back to east palestine, ohio where the february 3rd accident caused hazardous chemicals including toxic materials to be released into the air, at least five class action lawsuits have been filed against the railroad and the state of ohio has the possibility of filing a suit of its own. dave yost joins us now attorney general yost, thank you for being with us today given the letter that you did write to norfolk southern in recent days, are you still considering a lawsuit here and how are you thinking about that as more information does unfold on a daily basis? >> well, we actively are considering litigation and what form that will take. there are significant federal

preemption issues that we are researching, but, yeah, we believe that norfolk southern needs to be held accountable for this that's why we sent the litigation letter. >> understood. and to what you just touched on, it is a tricky thing because the freight railroads, class 1 railroads, are federally regulated and common carrier, they do have certain carve outs within the law based on those regulations and how they operate and the types of materials they're essentially -- i don't want to use the word forced but forced to carry and transport around the country and there are precedence from a supreme court standpoint about what litigation could look like. walk me through how you're thinking about it on behalf of the state, on behalf of residents of east palestine, as more information has yet to be revealed >> so, obviously, as you mentioned we're still finding

the facts and fablgtsz are important to a lawsuit you've got to produce evidence, not just law. that being said, we think that state of ohio probably has several causes of action, including nuisance and trespass. where that goes at this point is going to be partly dependent on the legal landscape. it's also going to be dependent on what facts are found. right now, governor dewine has his epa, his ohio emergency management agency, on the scene and doing their fact finding there could be actions available to the state as well we're looking to see if we get a referral from those agencies. >> are you speaking to the federal government in the midst of this as well, and what is your take on the biden administration's response so far? >> well, we appreciate the fact

that u.s. epa has a strong presence on the ground in east palestine. we're a little more concerned about the continued hands off approach that the department of transportation seems to be exhibiting secretary buttigieg has had very little to say about this, was silent for the first ten days. however, governor dewine has been in contact with the federal officials. we're continuing those interactions. >> so in terms of i guess potential deciding factors on how you move forward in terms of legal action, norfolk southern is certainly on the ground and involved in removing the contaminated soil, they're involved in removing the contaminated water they have stood up a fund. they seem to be directly

reimbursing residents as well, something like $2.7 million and counting has gone back into the community. the ceo was on yesterday and said they're there and they're going to stay there as long as they need to be there. how do you see that, if that continues to play out and that continues to be the case, and how do you factor into that any potential litigation you may bring forth in the coming weeks and coming months? >> well, i'm hoping that this isn't just corporate p.r., and i'm glad they're on the ground doing some things. let's not minimize the epic proportions of this toxic derailment we've got a plume of pollutants that is moving down the ohio river. it's d it was just outside gallopolis last night, and there's a lot going on here, a lot that we don't know, and a lot that needs to be fixed

in addition, how do we keep this from happening again there's indications that sensors were giving alarm. there's video showing sparks for crying out loud, coming off of a train going mile after mile after mile with hazardous cargo on it. so i think that it's good they're on the ground in east palestine. i think that making the people of ohio whole and making sure that this doesn't happen again, should be the goal of any litigation. >> you raise such crucial points in the situation it's incredibly tragic what has happened in the area and we don't fully know the ramifications of all these materials longer term, even though i know the epa and the state and others have been saying things like the drinking water is safe and the well water of the town's well water is safe, the air quality is safe,

et cetera, at least to date. when it comes to a situation like this, if you do see potentially longer term health effects and they can be linked back to and there's a lot of ifs here, that can be linked back to this accident, what does that mean in terms of legal ramifications and your ability to enact those or bring those forward in a court of law, given the fact that this could be a situation that, if the worse case scenario plays out, takes years to play out? >> right and the downstream effects might even be longer than five, six, seven years. the litigation my turn out or take look, the attorney general's office is going to fight not only in court, but in the regulatory sphere. we're going to work with congress to make sure that whatever reforms are necessary happen in addition to standing up to the people of this little town

who, frankly, don't have a pr machine, don't have millions of dollars to lay on the table. all they've got is their individual homes and lives and their businesses that's what i'm post concerned about. >> there's been a lot of misinformation swirling around this entire situation which certainly has an impact on the residents and the american public at large right now. i guess just final question for you here, lay out the facts as you know them, the state knows them, on the ground right now so far? >> well, as you say, they're still under development. it appears there were -- there was at least a 15 to 20 mile period of travel where alarms should have been going off we have a lot more questions than we have answers at this point. but we're going to keep digging. we're going to keep investigating and keep asking

questions until we know the truth and the full truth we're going to bring it to court. >> attorney general yost, thank you for joining us today and our hearts and our prayers go out to the folks of ohio in the midst of this situation. about an hour into trading here let's get a check on the laggards energy is by far the worst performing sector at the moment. you see devon and eog in there as well. the dow has gone green more on the markets in just a moment don't go anywhere.

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hey mario lopez here with access hollywood and i am inside the brand new super nintendo world at universal studios hollywood now open. meet mario, luigi, and princess peach and explore the mushroom kingdom like never before. welcome back you can see the real-time exchange back at our headquarters there more red on that board energy also something that you want to keep in focus here it's not just oil, but take a look at natural gas. we have a chart of that as well. i mean, we're hitting lows we haven't seen in quite some time. very warm here in the northeast lately and you're going to be paying a lot less that's deflationary. we have a lot more coming up don't go anywhere.

here's your cnbc news update at this hour the five former memphis police officers accused of second-degree murder in the beating death of tyre nichols pleading not guilty during their first court appearance also the fbi said it has contained what it calls an isolate the cyber incident on its computer network and working to gain additional information ukrainian president volodymyr zelenskyy opened the munich security conference with a video address he urged the west to speed up their military support and compared russia's invasion to the be biblical fight between david and goliath. india's finance ministry is accusing the bbc of tax evasion and citing evidence gathered during a three day search of the offices in several cities. the bbc aired a documentary in britain that looked at the prime minister narenda modi and deadly riots 20 years ago

back to you. >> thanks, frank holland. mixed day amid the growing commentary from the fed. while the next guest says credit should be just fine it's equities that could struggle to break out. jefferies market strategist david zervo srgs is with us. i was looking at your notes in january, the notion of a cut was gobbledegook i have to imagine you have applauded this hawkish rhetoric. >> i don't know that i've applauded it, but i just think that people were getting too excited about this idea that the fed would be declaring victory early. i think they have had a lot of success. jay highlighted that in his last press conference two weeks ago we're down 260 basis points from the highs and cpi inflation over the last eight months, but there's a lot of work to do and they keep telling you there's a lot of work to do. as you know, it does seem like the data is suggesting that the path to 2% might be a little

bumpier than folks had imagined at the beginning of the year. >> right when you say data, are we talking about january jobs or retail sales and if we are, i mean, how reliable do you think those things are there's been stories this week about survey fatigue, for example. >> yeah. i mean, you never want to take one data point, as you know, as an indicator of a major trend, but look, at the end of the day, over the last eight or nine months as inflation has come down from 9% to 6.4%, the labor market has gotten stronger the labor market is at a, based on the unemployment rate, something like a 53 or 54-year low. we have one of the best labor markets we've seen whether jolts data or the unemployment rate or the signs that you see for help wanted at 18 to $20 an hour across the country it's a strong labor market and the fed has tightened 450 basis points they're going to tight somebody

more and they've done 500 billion of qt, and it seems it hasn't had the same impact as many people would have thought we've written pieces about why that might be as well for our clients in the last week. >> this is where i was going, david. this note about the massive unintended stimulus from rate hikes in qt that the central banks have become a socialized buffer for large portions of the losses break this down for me what's your argument here? >> well, i guess i teed you up perfectly for that, morgan that's great i think it's an exciting piece it's a bit of a revelation for me and we talked a lot with our clients about it this week and it's been something that i think maybe people missed, that the mark to market losses not just on the fed balance sheet, but the bank of japan balance sheet, all the rates have gone up, there's a bunch of losses. now you think that's no big deal, they can ride that out, but, you know, for anybody that took out a mortgage at 2% or any corporate that fixed their debt

for five or ten years at a low rate, they're winning. they actually have a large mark to market gain on the liability side of their balance sheet. typically when there was no quantitative easing or fed balance sheet or ecb balance sheet that held all this debt, there would be a loss, a bank would hold it, hedge fund would hold it, some, you know, insurance company would hold it, but that got taken out of the market we have this gain for a bunch of homeowners and a bunch of corporate and actually for the government in some sense, municipalities, and we don't have the natural offsetting losses there's a kind of net wealth effect that doesn't show up, but now that we have quantitative easing and now that we have the big balance sheets and didn't sell the assets first it's providing a stimulus we don't normally get from rate hikes and that may be having an impact here i'm not sure i think it's having an impact and why -- one of the reasons we haven't seen a lot of blow ups in the fixed income market and

one of the reasons why maybe the economic data suspect as bad a some people feared after 11 months of rate hikes. >> it's fascinating, david of course it raises the question, is it going to help us to evade an economic blowup, or more pain down the road? or does it just prolong this in between process before we get there? i guess, bottom line, in the midst of a he very aggressive fed tightening cycle is this time different >> it's different with balance sheets, right. we know we've never had these sorts of balance sheets and the government taking these sorts of losses on purchases of security. so it's different. is the stimulus big enough to offset the traditional monetary headwinds that come from raising rates that affect consumption and investment and net exports and all the demand cycle it's not clear there's plenty of pain and

losses i think at the margin it's been a cushion that you kind of forget about, and there's a bunch of people out there that are looking at their 2% or 3% mortgage rate or the bond that they issued last year or the year before last, that got put into the ecb balance sheet, and they're saying wow, we're doing pretty well here we're feeling okay maybe that's causing homeowners in some jurisdictions to go out and say i'm going to stay in this house for a while, not moving, not going to pay this mortgage down and make myself a better house i think there's some truth to that whether that explains everything, i don't know i think as well, morgan, we're better at macro regulation than we've ever been. the regulators have gotten really good since '94 and '98 and '08 pap lot of these losses are not in concentrated hands. they're spread out and not creating the systemic risks we once feared from rate rises. >> and david, to get back to sort of a broader market call

then, i mean, at 4.63.8 on the two-year would you rather own that piece of paper than exposure to the equity market? >> definitely to the equity market we made the call this year the equity market is going to torch you on both sides. rise up to the top end of the of the range, like 4300 what we got to just before jackson hole last year and down to 3600, which is where we were in the summer of last year and in the late and mid to late fall i think that's the story it's a range trade there's a lot of reasons why it's buffered on the bottom and reasons particularly in the fed why it's not going to runaway to the upside in that world i think we talked about this before on the show and i've written a lot for our clients about this, you're better off taking large coupons from senior secured credit in the u.s., loans, structured credit or high yield bonds you're getting close to double digit yields in places for taking on equity level risk and

that 4.6 is a big part of it, but there's a lot of spread there that you can collect and you're up to very enticing yields in a market that's probably not really going anywhere as the fed has to keep rates at the elevated levels for a long time. longer than maybe -- >> finally, david, wild card question, on the tape this month talking about structural labor shortages, low immigration, population aging, suppressing labor force growth do you think a.i. will change that meaningfully in a reasonable time period >> i'll tell you something, carl, i've been in a lot of client meetings this week and this chatgpt a.i. thing is all over the place every question, every person i don't know if you have been playing with it and putting it in and asking it questions, but this thing is unbelievable i'm -- i don't know. i think there's something to it. i think it has very long-term disinflationary trends to it

but, you know, it's early days it seals like a technological advance that could really change a lot of industry and a lot of time that we spend doing things or hiring people to do things. i didn't see the comments from the fed president, but i don't think that's a story that makes me worry a lot about labor shortages. it makes me worry we've got a game changing technological advance on our hands, and i'm not here to claim that it is, but it certainly seems, from what i've seen and i'm hearing from really talented tech investors, that are clients of ours, this thing is real and it's moving forward at pace nobody really thought it was moving forward in. >> yeah. it's going to be fun to kick around certainly in the next few quarters dav david, have a great long weekend. >> good to see you guys. take care. government spending is a crucial focus on the hill not only for lawmakers but wall

street too as the clock ticks to a summer deadline to raise the debt ceiling meantime the white house's fiscal 2024 budget proposal is expected to be delivered march 9th, after a 10% year over year increase in defense spending for 2023, a key question for investors is whether that budget will continue to grow as on the one hand geopolitical tensions continue to mount, but on the other, you have pressure from deficit hawks mounting as well tug of war that's been playing out since the start of the year for defense stocks i sat down with the honorable mike mccord, under secretary of defense comptroller and the pentagon cfo to discuss a spending trajectory that the biden administration would like to see continue to increase. have a listen. >> budget can only be higher or lower than last year i think we're going to try to continue moving forward and the big uncertainty for us, congress by over 5% and the notion that

came out from the time that contested discussion about whether kevin mccarthy would be speaker involved this plan that was not ever really reduced to paper in a way i saw but was talked about going back to '22 levels, freezing spending, kind of a return to the austerity of the budget control act era that for us would be somewhere in the neighborhood of a 9% cut. that's a lot of uncertainty and that i think is the biggest uncertainty we face is, which climate are we in as we're here on this side and some has to be built across the debt ceiling debate and are we going to emerge with a differently fiscal picture as a result of any negotiations that could take place which we're not going to be central to that at d.o.d. but an interested party. >> the defense department like wall street like main street has been contending with inflation in the meantime via energy prices, materials prices or

wages which are a process that goes through congress. since the u.s. military is the largest employer in the u.s. mr. mccord telling me he believes the worst of inflation as the d.o.d. measures it, like indexes like ppi than cpi, has passed. >> inflation has been a thorn in our side as it snuck up out of the covid response out of the pressures on supply chain in particular and tight labor market which are still with us, by the way, cpi does not speak to really what we do at d.o.d. we don't peg anything we do to that, but we do more of the produc producer price and wholesale that's the top down. statisticsyou it's there, the problem is there the bottom up side, contract by contract off $400 billion of contracts we have for goods and services, everything from printer printer toner to fighter aircraft the data is much more

sketchy there. >> are you seeing from your vantage point right now, i realize there's murkiness, but the worse of pressure from inflation has passed >> it appears so i've been encouraged what we saw the last couple months new comes came out this month, we're not out of the woods we're still in the 6 range from what i thought i saw this month. that still leaves us with work to do. i think the worst has passed, yes. >> all right you can catch more of the conversation within we dive into more on krukraine and software d it can and what that does to future dfs spending and why there's still a risk around the budgets as that plays out over the coming months on cnbc.com full interview is there. >> on the tape right now they say inventories will be tight but as inflationary pressures

abate we'll see prices come back to what we've seen in the past. >> it is interesting to hear whether it's government officials in the case here, you know, senior department of defense official or whether it is, you know, the ceos of the largest multinational companies and members of corporate america saying that, you know, those prices are starting to come off, but the key question is, how quickly are they coming off, how much are they coming off what are the final levels going to look like in the midst of the fed cycle? it's the conversation we're having across the board. even the pentagon is having these conversations, right. >> sure. they buy an awful lot of commodities. >> they do huge, huge amounts of energy that the military uses for its endeavors across the world, which we could have another conversation about on another day. maybe we will. >> okay. as we head to break, a huge move in a space exploration company that went public just this week. intuitive machines, take a look at that chart. it's down 11% right now an

giving up some of those gains. look how much it's up since it started trading earlier in the week 325% it completed a spac merger on monday, started trading on tuesday. the company's contracted with nasa to deliver cargo to the moon's surface after the break we have more on the space sector on the heels of comments yesterday from president biden about the unidentified flying objects that were shot down last weekend. stay with us with the s&p at 4061 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply.

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. got down to 4051 on the s&p. a bounce here as the dow shaves some losses the market still tossing around the notion of higher yields with the 1ye0-ar close to 3.9 we'll be right back.

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comcast business. we don't yet know exactly what these three objects were, but nothing right now suggests they were related to china's spy balloon program or they were surveillance vehicle from any other country. we don't have any evidence that there has been a sudden increase in the number of objects in the sky. we're now just seeing more of them partially because the steps

we've taken to increase our radars, narrow our radars. >> that was president biden addressing those aerial objects shot down last weekend in the wake of that chinese surveillance balloon earlier in the month, pointing to an awareness gap, as biden talked about. the entire episode thrusting into the spotlight an old technology making a comeback, stratospheric ballooning the majority of the contracts are at least so far, with the u.s. government. ceo ryan hartman discussed the technology and its use cases, at least here stateside, with me. take a listen. >> we have dod customers, you know, it's a technology that is, you know, fantastic for doing all kinds of different remote

sensing. you know, i talked about the ability to take different size payloads into the stratosphere but there are other elements of operating in the stratosphere. one is you're five times closer to the earth than the closest satellite so you can produce very high-quality imagery. and with high-quality imagery, you can create new use cases some of the things we do are things like methane gas detection or, you know, monitoring pipelines or, you know, power lines and those kinds of things. >> so as for my conversation with hartman of world view, you can catch more of it where we go into more detail on "manifest space" where you get your podcasts we talk about contested space, guys you know what, the stratosphere, which starts at about 100,000, give or take 25,000 feet, is also an increasingly contested area as the events of this month have sort of shed a light on

of course, there's a lot that can be done at that level of the atmosphere that can't be done at space with satellites. by the way, world view is going public later this year via spac. so, we talked about that in the podcast, too >> pretty remarkable piece in "the journal" about trump era pentagon officials had similar episodes but it wasn't clear they were the balloons -- or were balloons at all so she didn't report it to the white house. reuters has a headline out just now that we're probably close to getting some recover conclusions regarding that first balloon off the coast of the carolinas. >> one we will watch. quick note, starting on tuesday, you can join morgan on "closing bell" at 4:00 p.m. eastern time as we sort of rejigger the day are you excited? >> i am. this is bittersweet because i'm incredibly excited to rejoin my old coin anchor jon fortt and

take on the 4:00 "closing bell:overtime" and i feel blessed to have spent time between you, literally or figuratively on the desk where you guys are concerned you guys are amazing i'm learned a lot sitting here with you i'll miss you. although i'll still see you. >> you'll still see us i've learned more about space from you, morgan, than i ever knew. >> and defense and freight and transportation and everything else >> all the really exciting, sexy topics. >> the space stuff has been great, actually. i hope you will join us sometimes when there's something worth to talk about. >> i'll be here. >> it's going to be great. join morgan on "closing bell" 4:00 p.m. eastern. that starts on tuesday. coming up, it's been 17 years. former microsoft ceo and clippers owner steve ballmer still betting on developers.

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jpmorgan facing heightened

scrutiny over its relationship with disgraced fansier jeffrey epstein. epstein accused of sexually abusing young women and girls. he died by suicide in 2019 eamon javers joins us with what are the new developments >> david, new documents filed in a lawsuit brought against jpmorgan by the u.s. virgin islands alleged the bank turned a blind eye to evidence of human trafficking over more than a decade because of the size of epstein's accounts that were held at the bank the suit also alleges that decisions about epstein's accounts at the bank were advocated and approved at the senior levels of jpmorgan, including by jess staley, a former high-level jpmorgan executive who would later go on to become ceo of barclays and who himself had a close, personal relationship with jeffrey epstein. the suit also alleges emails even suggest staley may have been involved in epstein's sex trafficking operation. when jpmorgan compliance officials flagged the epstein accounts, it was allegedly

staley who vouched for epstein in 2009, epstein pled guilty and served time in jail for procuring a person under 18 for prostitution that same year, the suit says staley sent an email to epstein, who was incarcerated at the time, presumably from epstein's private caribbean island saying, quote, presently i'm in the hot tub with a glass of white wine this is an amazing place i owe you much and i greatly appreciate our friendship. i have few so profound jpmorgan employees reviewed the epstein accounts in the wake of news stories they decided to enhance monitoring of those accounts an internal email allegedly said just staley discussed the topic with epstein, who replied there was no truth to the allegations. the suit also alleges that jpmorgan ignored red flags in epstein's use of his accounts at the bank in one case the suit alleges epstein paid more than $600,000

to a woman who, according to news reports, epstein had purchased at the age of 14 jpmorgan terminated epstein's accounts in 2013 after staley moved along to another firm. we reached out to jpmorgan, but the firm had no comment on the record staley has not responded to an emailed request for comment. according to news reports, he has previously denied any involvement in epstein's actions. the u.s. virgin islands are requesting jpmorgan pay damages and fines and provide restitution of all ill-gotten gains. back over to you, david. >> eamon, thank you. eamon javers that will do it for us on "squawk on the street. a great long weekend to all of our viewers. "techcheck" starts now good friday morning. welcome to "techcheck. i'm carl quintanilla with jon fortt and deirdre bosa this hour, higher for longer a couple of fed officials with hawkish commentary as hedge funds rush to rally at t